SoCal CTO

StartupRoar Adds Personalized Subscriptions

2012-01-05T14:33:00.001-08:00

Aggregage, the platform that powers StartupRoar has added a powerful personalization engine. That means that the site now allows users to sign-up and have their content personalized based on their interests.

You can sign-up via the "Personalize Your Content" button on the right side of the interface shown to the right of the red arrow below.

By the way, I should point out that the four top articles on the site when I took the screen shot were all great:

The Long Grind Before You Become an Overnight Success- Vinicius Vacanti, September 12, 2011
Hacking Angel List | VentureArchetypes Blog: Seed Stage Capital- Seed Stage Capital, July 13, 2011
Hiring a CTO for Your Startup- SoCal CTO, April 27, 2011
Competitive Research 101 for Startups- Instigator Blog, August 30, 2011

It's what I love about the site. It always has great, fresh content from a wide variety of industry professionals. Every time I visit it, I find something that I missed that was really good content.

Now with personalization it's even better. The picture below gives a sense of what's happening:

Curators handle finding the best sources of content. The system then uses social signals such as those coming from Facebook, twitter, LinkedIn, delicious as well as clicks and views. These are compared to averages for the source and also looks at who is providing the signal, how often they signal things, how often they signal for that particular source, etc. Those aspects existed before and it does a good job of finding great content.

What's new now is that the site allows you to sign up and provide your Twitter and LinkedIn information. The site will look at your activity on these sites and the content of what you share. It will use that to find interests as well as to cluster you with other users who are like you based on interests and sharing. You can partially control your interests via the Subscription page as shown below:

This will change over time based on your LinkedIn and twitter activity. You can always visit and manually select interests as well. You can read a bit more here: Personalization Explained.

The system then can combine three pieces of information to figure out what will be most interesting to you:

Social signal score – are people in the audience finding it interesting
Topic match – does it match up with your interests
Like sharing – are individuals who are like you sharing this

The system uses these to both rank things on the site and to generate Daily and Weekly newsletters.

The reason that I'm most exited about this is that I partly use StartupRoar to make sure I don't miss things that is good content that is relevant to me. Now with personalization, it is even less likely that something will sneak by.

I also personally like the format of the new newsletter.

Give it a try and let me know what you think.

Registration Form Design with Facebook, Twitter, LinkedIn Authentication

2011-10-24T10:39:00.001-07:00

I continually face the challenge of designing and building registration / sign-up pages on a wide variety of different web sites and mobile applications. Back in January 2010, I wrote a post that's one of the most popular on this blog:

When to Use Facebook Connect – Twitter Oauth – Google Friend Connect for Authentication?

That post looked at when and why you would use Facebook, Twitter, LinkedIn, etc. as part of your registration and authentication mechanism. While some technical aspects in the post quickly changed (e.g., Facebook changed its data caching policy), many of the issues remain the same. It's definitely worth a read if you've not seen it before as background for this post.

Design Challenge

In this particular web site, we needed to get the user's email (and password). We also wanted users to provide information about twitter and LinkedIn to help personalize the application. At first it seems like this should be pretty easy to design - think again.

Here's a classic example that illustrates the issue - the sign-up page from Mahalo.

Mahalo offers you the choice of sign-up / registration via a host of social networks (powered by JanRain). They tell you the other option is to provide your email and password.

At the heart of this is two main advantages of having social network sign-up / registration.

Allowing the user to click on the Sign-Up / Register via a social network such as Facebook, Twitter, etc. means faster, easier sign-up and increases the likelihood of sign-up.
By having the user sign-in to twitter or Facebook, we can ask for permissions to tweet or post to their wall or other social actions on their behalf. We also can get access to their social graph.

For some solutions, it's sufficient to just have authentication via the third party, but in my experience it's pretty rare to have that be the only mechanism used during a sign-up process for a startup.

In my prior post, I point out two major downsides of relying only on registration via a third-party social network:

Multiple Social Networks. If there are multiple social networks offered, returning users may not be recognized if they click on a different social network. In other words, the first time I sign-up with Facebook. At a much later time or on a different computer (no cookies), I come back and try to sign-in with Twitter. The system won't recognize me.
Email Address. The other problem is that only Facebook currently allows us to grab an email address. If you want an email, you will need to either limit your sign-up to be Facebook only, or you will need to ask for an email address after their initial sign-up. In other words, you are likely still going to go through the registration that's on the right side of the Mahalo sign-up page.

This is exactly what Mahalo ends up doing. I signed into my twitter account and gave them permission. But now Mahalo must come back and ask me to either establish my account (New User) or sign-in as an existing user.

As a user, this feels a little strange. I first click on the register or sign-up button. I am presented with a choice of using a social network to sign-up OR providing my email and password. I choose a social network, but then I'm forced to put in an email and password anyhow. Huh?

I've tried a few times to design around this and do something else, but it doesn't really work out in practice. And you will certainly see this design pattern all over the place. Here's XYDO's sign-up box:

It's behavior is a little different, but also a bit funny. At first it seems like I can sign-up with Twitter or Facebook. However, if you sign-up with twitter, it puts a check mark next to it and leaves you on this page still requiring you to enter your name and email address. Even with Facebook, where you can get a name and email, it still needs to ask you for your user name and password.

StoreEnvy has a sign-up with Facebook option on it's first page. It grabs your email. But it still is left asking you for more.

Bottom Line

In our case, we were designing an application where we needed to get the email and password, but we also wanted to get users to authenticate with LinkedIn and Twitter in order to get information about them and their social networks.

At first we tried down the same path as Mahalo. We provided a sign-up page that had an alternative of signing up with a social network (twitter or LinkedIn) OR signing up by providing an email and password. However, we ran into the same problem as Mahalo where our second page was then asking for more social network information and the email and password. The confusion factor was just too high. So, we went back to a more basic design.

Up front, we have a well designed sign-up / registration form. You can see a bunch of great information on designing these forms in the following posts:

The second step of the sign-up process asks the user to authenticate to their Twitter and LinkedIn accounts. This is more along the lines of a multistep sign up using a progress tracker.

In our case, the steps are:

Step 1 - Get email and password
Step 2 - Get social network information / authentication
Step 3 - Confirm additional information

I personally think this is a more "honest" approach and makes it much more clear to users what is going on.

Customer Validation - 33 Great Articles

2011-10-06T12:31:00.001-07:00

I saw a great post from Tristan Kromer Pivoting on Investor Feedback a.k.a Beware of Mentors. It was a top post on StartupRoar on Tuesday. His basic point was:

If someone, including me, tells you something isn’t a great idea and there’s no market for it there are only two acceptable responses. Either:

"That’s interesting. I’m going to take that thought out into the field and validate it with my customers."

OR…

"You’re wrong. I’ve spoken to dozens of customers, I have a validated customer persona, built an MVP to test key behavioral hypotheses, and the data doesn’t back what you’re saying."

Today I had two conversations with early stage startups (see Free CTO Consulting). In both cases, I was the mentor telling the person that the idea, as I understood it was "not great." One was an enterprise software product. The other was a consumer play with possible viral growth. Neither felt like a slam dunk. Would it take more work to sell the enterprise product than they could make on it? Would the consumer one get traction and be viral? In both cases, my gut said that as framed it needed work.

In both cases, the founder and I brainstormed on ways to shift the product in order to get closer to what I perceived as something that would be great.

Neither had done enough customer validation to be able to say the second line that Tristan suggested. There certainly had not been enough validation of the concept as it stood. I would guess that most people who are providing feedback on your idea have a pretty good filter for what you have done to validate the concept. If you've not Done Your Homework, it will be obvious.

In both cases, the answer was that the founder would go to find other ideas, turn those into paper descriptions and validate it with customers. Customer Validation 101. And that's the first response that Tristan suggests.

Now some helpful articles on Customer Validation, Customer Development, Lean:

Equity for Early Employees in Early Stage Startups

2011-09-27T07:03:00.000-07:00

I was asked by a reader how much equity he should give out to early employees and to service providers in a very early stage startup. I'll get to service providers in a later post.

Founders vs. Early Employees

To help with this discussion, let me start with a definition of "early employee." Steve Blank divides the individuals associated with startups as:

Founders
Early Employees (Employees # 1-25)
Later Employees (Employees # 26-125)

The reality is that the definition of founder and employee is not clear. The first few people into a startup are on a spectrum of founder vs. early employee. Founders are likely not paid for a long time and have a sizeable equity percentage for early risk and having the concept. An employee is later, has a greater portion of compensation as cash, has lower risk, and generally does not bring as much to bear in terms of the concept.

Early Employee Equity is an Art

I somewhat agree with Fred Wilson in Employee Equity: How Much?

For your first key hires, three, five, maybe as much as ten, you will probably not be able to use any kind of formula. Getting someone to join your dream before it is much of anything is an art not a science.

Equity Formulas

While it's somewhat an art, there has been a lot written about how you can look at equity compensation.

Paul Graham provides what is roughly the core formula for equity at any point in The Equity Equation:

You can use the same formula when giving stock to employees, but it works in the other direction. If i is the average outcome for the company with the addition of some new person, then they're worth n such that i = 1/(1 - n). Which means n = (i - 1)/i.

For example, suppose you're just two founders and you want to hire an additional hacker who's so good you feel he'll increase the average outcome of the whole company by 20%. n = (1.2 - 1)/1.2 = .167. So you'll break even if you trade 16.7% of the company for him.

Let's run through an example. Suppose the company wants to make a "profit" of 50% on the new hire mentioned above. So subtract a third from 16.7% and we have 11.1% as his "retail" price. Suppose further that he's going to cost $60k a year in salary and overhead, x 1.5 = $90k total. If the company's valuation is $2 million, $90k is 4.5%. 11.1% - 4.5% = an offer of 6.6%.

Of course, to be able to use this kind of formula, you will need to be able to determine how much impact the person will have and figure out a valuation. I've talked about this topic before in How Investors Think About Valuation of Pre-Revenue Startups. You can also take a look at StartupRoar's topics: Startup Valuation, Pre-Money Valuation, and Early Stage Valuation.

Same Value for Sweat Equity as Investment Dollars?

Jason Cohen in How to think about cash vs. equity compensation (definitely read the comments) provides similar kinds of formulas. The key in his approach is that equity compensation should be viewed the same way that you view investment. In other words, the loss of compensation for the early employee as compared to market rate should be viewed as equivalent to the equity for that same dollar amount from an investor.

Logically, that's correct, but I personally would put a risk premium on equity compensation. I also believe that early employees should be bringing higher value than early investor dollars as they can and should contribute to the concept greater than an investor. They are partially rewarded by the increase in value of their equity. But their contributions raise the value for everyone. I believe that Paul Graham's core formula takes that into account.

Ben Yoskovitz gets to a similar point In Changing Equity Structures for Early Startup Employees:

The more that those first employees feel like founders in terms of their ownership, emotional attachment, responsibility and overall understanding of the startup process (including financing, running day-to-day activities, etc.) the better the startup will be.

David Beisel puts it another way:

Being an early hire at a startup gives an individual the ability to make tremendous impact on an organization as it grows – and both the founders and those hires should know it.

Of course, all of that assumes that the early employee does make an impact.

Risk Premium on Equity Compensation?

While Jason Cohen suggests that investment cash and sweat equity should be viewed the same, quite a few people suggest that there should be a risk premium for early employees at early-stage startups. A risk premium is a multiplier that says that any equity compensation should be viewed as being worth less than cash for that employee because of the risk.

The risk premiums that I've seen vary widely with seemingly camps of:

None - like Jason
20-50%
3x - 4x

In a way, suggesting there should be a risk premium is just arguing over valuation and expected return. There's also the aspect that the equity that you typically get as part of equity compensation is behind other equity in preference and thus effectively has lower value.

But the more important rationale is raised in the following about why employees most often do not have significant outcomes even in fairly positive liquidity events.

Memo to CEOs And Founders: Share The Love

Consider the proceeds of a $50-million acquisition for a 100-person company that has raised $14 million with a typical liquidation preference:

Because of the liquidation preference, the investors get $14 million right off the top. The remaining $36 million is divided according to equity ownership.

Investors own 50%, and get $18 million, split between two firms

The two founders own 33%, and split $12 million

The 3-person executive team, including a CEO if one was hired, owns 10%, and splits $3.6 million. The team gets another $3 million as a severance payment or an earn-out, to sweeten the acquisition offer.

The remaining 95 employees split 7%, each earning $27,000. Unlike the founders, the employees have to wait until their grants vest, working at a company no longer of their choosing for two years.

Is it Time for You to Earn or to Learn?

You get 1%, you sell for $150 million and it’s in 3 years (e.g. you won the lottery). That’s an after-tax gain of $287,500 / year for 2 years. Not bad. Doh! Wait a second. Stock vests for 4 years. You didn’t get acceleration on a change of control? Sorry bud. We’ll have to either cut your earnings in half to $143,750 or you’ll have to complete 2-years at BigCo that bought you making the money spread out over 4 years so it’s $143,750 / year for 4 years.

The reality is that an early employee in a pre-funded startup that eventually raises a few rounds of capital will be diluted significantly, is down the line in preference, and will likely be locked up for a while to harvest it. And that's assuming that it's a fairly positive outcome. If it's anything less that positive, preferences will mean they get nothing other than what's required to keep them working if that's needed at the acquiring company.

Sample Equity Numbers

I personally always like to see some actual numbers rather than basing things on formulas. Because of the Art aspect of early employee equity, I had trouble finding much in the way of numbers for that specific aspect. I did find a few things for later points.

Wilson Sonsini and DFJ Gotham Ventures:

The Option Pool Shuffle:

Title Range (%)

CEO 5 – 10

COO 2 – 5

VP 1 – 2

Independent Board Member 1

Director 0.4 – 1.25

Lead Engineer 0.5 – 1

5+ years experience Engineer 0.33 – 0.66

Manager or Junior Engineer 0.2 – 0.33

It's important to note that this is all post Series A. If the company is pre-funding or only has a small friends and family seed round, then the numbers should go up from there based on expected dilution and greater risk.

You can also look at some data around this in Startup CTO Salary and Equity Data at some specific numbers at different stages

Where I Come Out

Again, like Fred Wilson says, early employee equity is more art than science. I would look at the individual involved and factor in:

Domain expertise
Connections
Experience with related ventures
Ability to make significant contributions
Replaceable - are there lots of other people out there who can do the same thing.
Part-time vs. Full-time - doing something on the side is less valuable

In other words, if I find someone who's willing to dive-in, who's going to significantly contribute to make the company a success and it would be hard to get anyone else, then I would provide significant equity, most likely an equity premium. If this is a junior level developer, then likely you can provide significantly less equity. The example numbers above bear this out.

Oh, and one last thing, make sure you figure this out upfront, you have it vest, you have ways to get it back, etc. There's a lot of advice out there on structuring equity compensation agreements. Go read up on that and do it right.

More Resources

There's a lot out there on this topic that's well worth reading.

Equity Compensation at a Startup is a Big Gamble

The bottom line is that you shouldn’t even think about joining a startup, stock or no stock, unless you believe in it and are ready for the adventure of your life.

Splitting Startup Equity for Your Piece of the Pie

Equity-Only CTO and Equity-Only Developers

CTO Equity and Compensation at Venture Backed Companies

Visualization of Startup CTO Equity and Salary Data

CTO Equity - Negotiation After Funding

What is the best way to divide up ownership in a startup?

How To Calculate Sweat Equity

Startup Equity For Employees

A VC: Employee Equity: How Much?

How to figure out what those VC terms mean for your equity

Make Sure Sweat Equity Vests

How To Allocate Founder and Employee Equity

Is Dilution Considered When Talking About Equity Ranges?

How much equity for investors and employees?

NDA Stealth Mode and Sharing Your Startup Concept

2011-09-20T07:26:00.000-07:00

One of the readers asked my opinion around sharing your startup concept:

My first question has always been - how do you protect your idea while shopping around for feedback, partners, developers, etc.? Especially if the idea could be whipped-up by a few 24-year olds in a few weeks?

Lots of thoughts here. First, if your idea really is something that a couple programmers can whip up in a few weeks, then you may not have much of a business here. But let's leave that aside for a minute.

My basic claim is that you MUST HAVE LOTS OF EARLY CONVERSATIONS. As Chris Dixon says in Why you shouldn’t keep your startup idea secret. He tells us you'll get the following benefits from talking to lots of people:

There are lots of benefits to talking to people. You’ll get suggestions for improvements. You’ll discover flaws and hopefully correct them. You’ll learn a lot more about the sector/industry. You’ll learn about competitive products that exist or are being built. You’ll gauge people’s excitement level for the product and for various features. You’ll refine your sales and investor pitch. You might even discover your idea is a bad idea and save yourself years of hitting your head against the wall.

Niel Robertson in The Stealth Mode: Trada’s Position on Staying Stealth captures the basic communication needs of early stage startups pretty well:

In the beginning there are three basic things every startup needs: experts to give you input on your product as you’re building it, users to help you beta test your product in a real-life setting, customers who will give you real money for what you’re building and take real risk in doing so. You need all of these people to bake the cake.

He left out capital sources, but it's still a pretty succinct list of the types of people / communication you should be having early stage.

What is Stealth?

What's also interesting in Niel's piece is that he defines Stealth Mode not as not having conversations, but rather he says it's not make public pronouncements. Seth Levine in To stealth or not to stealth says this pretty well:

There are varying degrees of stealth, ranging from companies that won’t tell anyone what they are up to, to companies (like the one I’m referring to)that don’t have a web site and haven’t made any announcement of their business intentions or funding but aren’t hiding what they are doing in daily industry conversations, etc.

The reality is that Stealth is defined differently in each case. What we are talking about is a spectrum of how you restrict early communications around your business:

Who you will talk to including the public / press / etc.
What you will convey in your conversations
What protections you will place on those communications

For example, you might decide that portions of your concept will be controlled more closely (a secret algorithm). This will only be disclosed when there is an NDA in place. But you will be able to convey other aspects freely, even publicly.

How Stealthy Should You Be?

This is going to be fairly specific to the company. I would suggest that it's best to be as open as possible. My general take is similar to Chris Dixon. In that same post Why you shouldn’t keep your startup idea secret where he argues to make things open, he defines only one group of people that you may want to avoid having a conversation with:

The handful of people in the world who might copy your idea are entrepreneurs just starting up with a very similar idea. You can probably just explicitly avoid these people, although by talking to lots of people your ideas will likely seep through to them.

I might also be concerned about taking my idea directly to a large, well funded competitor who is know for innovation. And I probably will not announce detailed specifics publicly prior to creating them. Beyond that, I want lots of conversations with experts, users, customers, VCs, partners, etc. I may decide to hold back some detailed specifics around algorithms. But generally I'm going to favor being open.

Since I fall into the expert category, my belief is that you should be pretty open with me. Startups that come to me and ask me to sign an NDA in order to get Free Startup CTO Consulting really are missing it. And getting into a discussion but not being able to tell me about your business also hurts you. "We are doing something in mobile advertising." Ummm ... "Good luck with that." What can I say.

I like how Mark Suster handles the question in 10 Marketing Lessons for Early-Stage Tech Startups. Definitely take a look at he suggests you balance the choices.

I also will point out that in the The 15 Mistakes of First Time Entrepreneurs:

9. I don’t want to share my idea because someone might steal it – the benefit of sharing is greater than detriment- investors won’t sign an NDA.

And there's more via StartupRoar in Stealth Startups including:

NDAs or Other Protection

So you decide you want to be able to share with experts, users, customers, VCs, partners, etc. in order to get the benefits that come from those conversations. You decide what you will convey in those conversations (and what you will not).

Again, relying on StartupRoar this time looking at NDA for Startups, I found some good stuff that you should definitely go through in more detail.

Startup Reality Distortion #3: The Fallacy Of the Non-Disclosure Agreement (NDA)

Don’t rely on an NDA to protect the truly “secret” stuff. It’s likely not going to give you the protection you think it is.

More more via StartupRoar in NDAs for Startups including:

Don't Lead with Protection

I want to close this with one bottom line thought. Please don't make protection of your idea a major topic early in conversations. This is much like condoms. You don't bring the topic up early in conversation. Condoms like protecting your idea can come up naturally later in the conversation. Instead go in knowing what you will share and won't share with this person. Try to be as open as you can, but be prepared when questions reach the border. Simply say that you have some secret sauce in that part of it and aren't prepared to share it. And make sure that does preclude you from sharing enough to make it an effective conversation.

You really should go read Brad Feld's Implied Suspicion Versus Implied Trust. It captures the typical scenario and some of the logic and emotion that goes along with early conversations.

Entrepreneur: Following is an email describing my idea. Since you won’t sign an NDA, you agree that by reading beyond this paragraph you are agreeing not to share my idea with anyone, forward this email to anyone, or discuss the idea without my consent.

....

Feld: You seem to be operating from a perspective of “implied suspicion.” I don’t work this way – I much prefer to operate from a perspective of “implied trust.” Since you clearly don’t trust that I’ll behave responsibly, then I don’t think I’m a good match for working with you.

Definitely read the whole thing.

Startup CTO Resources

2011-09-19T11:39:00.001-07:00

I've posted quite a few things on the topics associated with being a Startup CTO. I've tried to collect them together here as a starting point for this topic.

Technology Roles in Startups

Visualization of Startup CTO Equity and Salary Data

Startup CTO Salary and Equity Data

Hiring a CTO for Your Startup

Startup Founder Developer Gap

Startup CTO or Developer

CTO Equity - Negotiation After Funding

Equity-Only CTO and Equity-Only Developers

CTO Equity and Compensation at Venture Backed Companies

And you may want to consider a Free Startup CTO Consulting Session.

Here are some resources that come from other sources:

Want to Know the Difference Between a CTO and a VP Engineering?

Lessons Learned: What does a startup CTO actually do?

Startup Advice: When to Use a Consulting CTO

Attracting a CTO to your startup

Startup CTO: Could It Work?

How I Found a Great CTO

We have a CTO, and so can you!

Why Your Startup Can’t Afford To Hire a CTO

Advice for CTO Founders: Don't Let Business Kill the Business

The Different CTO Roles

Why Your Startup Can’t Afford To NOT Hire a CTO

HOW TO: Hire the Perfect CTO

You can find more here: Startup CTO. And you may also want to review Startup Development.

If you are interested in this topic, I post on it frequently. You can sign up for free email updates using the subscribe box on the right side.

How to Hunt Programmers for Your Startup - A Field Guide

2011-09-14T07:38:00.001-07:00

This post is admittedly the outcome of a conversation with a few people over some beers. Some of it is a bit tongue-in-cheek and certainly we are greatly simplifying things. The people around the table included a bunch of us who would be prey in some situations. So, please take this in the spirit intended.

The conversation centered around a founder who's key question is "Where Do I Find a Developer for My Startup?" In this case, he had a pretty compelling idea, had very little money, and didn't have the capacity himself to build it. His goal was to find a programmer who would come in as an early partner and work as an Equity-Only Developer. The situation is pretty common it got us to riff a bit around how to get programmers to help him build out a proof-of-concept version for his startup. Along the way, this gradually turned into hunting programmers in the wild.

Before You Hunt - Be Prepared

But before I answer the core question, let me address a few up-front questions. Don't go hunting for programmers until you've answered these.

1. Have you done all you can on paper?

Do you have wireframes? Have you tested the concept with customers using paper? Have you signed some test customers? Have you tested what you can without development? Don't try to hunting programmers until you've pushed this as far as you can on paper and get early customers.

2. Do you know the relative effort to build your prototype or minimum viable product?

The relative size of the development effort will make a big difference in your strategy. There's a cutoff point once you reach roughly 3 person months of development time. At that point, you can't really just try to find someone to build it on the side, do equity only, etc. It needs to be funded to be successful. The grind is too much and too long if it gets beyond that size.

What do you do if you don't know the size? Ask a few CTO type people. Or ask me Free Startup CTO Consulting Sessions.

3. What are the key developer skills that are needed?

Is this a Wordpress hack? Is it big data? Deep algorithms? Have a rough idea of what you are looking for in terms of talent. Again, if you don't know you should ask people who will know.

4. Is this compelling to a developer?

Be prepared to sell this to the developer. More on this below.

In the case of the entrepreneur that was the genesis of this post, he had done a lot on paper. He had a few early customers ready to go. The size of his initial build was roughly 3 person months and it wasn't particular complex. It was a mobile app, so he ideally would find someone who had experience with mobile development or someone who could pick up a mobile framework. And generally, it seemed pretty compelling for a developer.

In this particular case, because mobile development is hot, it was pretty unlikely that this founder would find someone with experience with mobile development willing to jump on this. So, instead he was really looking for two people: (1) someone with experience who could spend an hour here and there guiding development, (2) an up-and-comer who wanted to get into mobile development. Did we just make his problem twice as hard? Not really. This will still work if you run into exactly the right person.

Getting to Know Your Prey

At their core, programmers are often motivated by a few specific things:

Solve a problem, create something neat from scratch - basically all of us technical people love to tackle problems. The beauty of programming is that you take a concept and turn it into reality with just typing some stuff into the computer. It's about creation. It's really an amazing beautiful thing.
Learn something new - most programmers love learning new technologies or solving new kinds of problems. They don't want to do the same old thing again.
Food and other Rewards - Programmers (like most people) love to be treated nicely. Most days, they toil away and no one really seems to appreciate what they do. If you buy them food (pizza, donuts, coffee) or free stuff (tech gadget, big monitor, t-shirt), they will love you for it far beyond the cost of the actual item.

There are also a few things that programmers really do not like, make sure you avoid these:

Salespeople / Being Sold - Does anyone like this? You are selling them, but be subtle. Ask for help. Enlist them. Don't sell them.
Pretending to Know More Than You Know - When people are speaking a non-native language, they often miss subtle things. I remember how my Swiss German colleagues would say "his English is perfect." No one who grew up in the US would ever say our English skills rise to the level of perfection. That's just too high and there's always more. It tips you off that the person doesn't quite get the nuance. Speaking tech to programmers is the same thing. Programmers will hear your little mistakes and if you pretend you "speak perfectly" - it will immediately lose respect with them.
Not Knowing Enough - Unfortunately, you also cannot get into a conversation with a programmer and not know the first thing about the technology. If you don't understand the basics about mobile technology, then read up on it. Admit you don't know the details, but at least get to a 101 level before you talk to a programmer.
Time Wasters - Don't talk too much. Stay on point. Only go social when they go social.

If you need more help on really getting inside the mind of programmers, two great resources are Dilbert and Foxtrot (the little kid is a budding rock star developer).

Find Your Prey

Urban Legend - Willie Sutton, the bank robber, is known responding to the question "why he robbed banks" by saying, "because that's where the money is." Turns out that's disputed, but it's still the basis for Sutton's Law.

Where do programmers hang out? The answer is that programmers are hard to find. They are generally less social creatures. They tend to cluster and don't like to talk to people who have lesser abilities (i.e., anyone who doesn't program).

Some places you can find programmers locally:

In your company or other companies. Find your dev shop. Find out who the programmers are. Visit your friends and ask them to bring you to their dev shop. Ask your friends to visit their dev shop/programmers on their behalf.

Tech Events / Meetups - There are lots of Networking Events in Los Angeles and Southern California that are techie oriented. In this case, looking for mobile developer events in the local area makes a lot of sense. But it would also be good to look for developer oriented events aimed outside mobile to look for people who might want to get into mobile. You should definitely hit up the Startup Weekend events as well. And look at StartupDigest.com

Make sure you meet the people who run these events. They often can help a lot in navigating to expertise and to possible resources.

Student Groups - Go to the local university and find out what student groups there are for programmers. Ask around for ideas on where they hang out.

LinkedIn - This remains one of my primary tools. It's a bit hard to use for this kind of request, but I would certainly go ask everyone I know to introduce me to programmers they know. And then use them to get to even more. You can certainly do this through Facebook as well, but I would use LinkedIn.

Twitter - You can run searches for various types of techie terms being used in a given geography. Follow them and reply to introduce yourself.

Sites - There are a bunch of sites out there aimed at this or similar issues. Most of them suffer from lack of activity, but it's worth a shot. Some sites to check out:

CoFounderNetwork.com
PartnerUp.com
Namesake.com - more of a social network, but still a good way to network
TechCofounder.com
Foundrs.com
Startuplinkup.com
Cofoundrs.com

You can lookup also on this Google spreadsheet: https://spreadsheets.google.com/...

You can try finding folks via

Oh, and often there are forums for particular technologies where you can look. In this case, these sites didn't pan out all that well for the entrepreneur. Part of the issue was that he wanted someone local.

Approaching Your Prey

Actually, before you approach any programmer, please keep in mind to use caution. Don't scare off your prey. Remember that programmers generally are skittish and don't trust outsiders. You are an outsider. If you come up to a programmer and just ask them to help you build your product. Game over. They will be thinking at that point - "How can I gracefully exit this conversation with my limited social skills?"

Instead think about what will motivate them. If we take the example that was the genesis here, the founder wants two types of people. He wants a person who knows mobile development pretty well who can help direct the action (the expert), and he wants someone who is a good coder who can learn to build out the needed mobile application (the developer). What will motivate these two people?

The first person (the expert) will likely be motivated by being involved in a fun, exciting problem/venture, lots of immediate rewards, not too much time commitment.

The developer will be motivated by getting involved in a fun, exciting problem/venture, lots of learning opportunity.

So, if I'm at an event that's full of prey, I will go around the room introducing myself to people (probably starting with the host) and roughly say:

"I've got a concept defined and some early customers, but I'm not sure if using a mobile framework, building native apps directly, or maybe even doing an HTML 5 app is the right way to go. Who should I talk to here who I can buy a coffee and tell them about my concept and get their input on the concept and especially on technical direction?"

This is intended to find the experts in the room. A few notes about this:

Make it clear that you've done your homework: I already have some people who want this, but I need to get it built.
Present up an interesting question: I need to figure out what my technical approach will be.
Show you also want their input on the idea.
You are willing to buy coffee, pizza as an immediate reward.

By the way, this works just fine if you happen to already be talking to the expert. By the way, if the person tells you that you should talk to a particular person then please say, that's great, "could you introduce me?" and start leaning to prompt them to start walking with you. Most often people are happy to do it and it helps with immediate rapport with the prey.

Once you are talking to a person who's been introduced as a likely expert, the language is pretty much the same as above, but you likely will get into a bit more detail and then ask them if you can get them coffee sometime. They likely will want to try to solve your problem right there (did I mention us techies like to solve problems). Resist this a bit. It would be much better to build more rapport with them.

When I'm looking for the developer, my approach is pretty similar.

"I've got a concept defined and some early customers and have someone who's helping me from a technical strategy perspective, but I'm looking for someone who's a good developer and interested in getting into mobile development."

More Resources

You can find a bunch more resources in this post: Startup Development

32 Questions Developers May Have Forgot to Ask a Startup Founder

2011-08-04T09:48:00.001-07:00

Almost every day I'm talking to early stage startup founders (see Free Startup CTO Consulting Sessions) about what they plan to do. I tend to ask a lot of questions, challenge aspects, make suggestions. But I've often been very surprised by one aspect of these conversations. Many of these founders have talked with several developers or development firms about their plans. Yet, I'm often the first person who's asking them questions that I consider to be pretty basic. Of course, it's way more complex than just these questions. It needs to be a conversation. There's just too much variation. Still, if you've not heard these questions from a developer, they are not helping you as much as they should.

Before I jump into the 28 questions, let me start with 14 questions that I will want to go through first so I know a bit more about what we are talking about. Think of these as the big upfront questions:

Who are the customers? What’s their specific need / pain? Please be able to provide me with a few specific examples of different types of customers, what they need, what the system will do for them.
Tell me about the business. How are you funding this? What level of funding do you currently have? What are the big milestones you have as a business? Do you have any specific deals done that are a basis of this? Where are you today and what's happening right now?
What have you done so far to validate the concept?
What’s different, special here? Where’s the mystery (see Matching Algorithm)?
Who are the other stakeholders involved? Other types of users? Partners? Administrators?
How will you be taking this to market? What channels will you use (e.g., SEO for Startups)?
What are your key Startup Metrics? How do you make your money? How do you measure success?
What already exists in your space? Who are your big competitors? What are some good examples of similar sites? How will you differentiate from these?
What special data, content, APIs, etc. are you going to leverage? What’s the state of the relationships that brings you that data? What’s the state of those systems?
Where do you stand on your brand, name, logo, positioning? Examples of other brands/sites that are similar from a brand perspective?
Are there any specific hard dates or important time sensitive opportunities?
What do you see as some of the bigger risks / challenges?
Major Phases / Major Features - What are the major features in the major phases for the product? What set of functionality would make your company launch-ready?
What has been captured so far? Are there specs? Mock-ups? Wireframes? Comps?

Questions Developers May Have Forgot to Ask

So here are some of the questions that developers may not have thought to ask and a little bit of commentary around each question.

1. eCommerce - Is this subscription? If so, how many kinds of subscriptions? What are the rules for subscriptions? Discount support? Free-trials? Bundling? Coupons? Often this ties to marketing support. In other words, you want to offer a discount to a given group to provide incentive. Is it pay-to-play? Do you transact immediately or on delivery of some product or service? Do you have a merchant account already set up? Do you have a payment gateway?

2. Targets - Is this browser only? How concerned are we about design for mobile? Which devices? Native mobile apps? Obviously, it's far simpler to aim for browser-based systems and basically aim your design to work okay on mobile devices with some additional effort on the part of the user.

3. Registration - will you support Facebook Connect or similar authentication? Will you also have a separate login? See also - When to Use Facebook Connect – Twitter Oauth – Google Friend Connect for Authentication. Do you need to round trip an email to validate the email? Captcha? How much member profile information do you need before allowing a user to login?

4. Member Profiles - What data is included? Is there a step-by-step wizard? Pictures?

5. Social Integration/Viral Outreach - are you integrating in some way with social networks? Is your integration limited to login and “like” buttons or are you building a presence within the social networks themselves? Messaging? Any other kind of viral outreach? See Branchout an Example of Viral Spread Opportunity for Startups. Refer a friend? Cloudsponge for email invites to large group?

6. Communication/Forums - are there discussion forums? Commenting? Messaging? Flagging? Moderation?

7. Social Interaction - how do you represent users/members to one another? Is there interaction? What kinds? Friends? I would actually suggest that asking if you want friending/connections is a bit of a trick question. Generally, the answer should be "no." How, if at all, are users grouped by the system? By background (employer, university)? By preferences?

8. Location/Geography - are you using geographic information? How? Is your application location-aware? Will you tap into geolocation services provided by the browser or license a third-party lookup table? How does the application behave when location data is not available?

9. Gamification/Scoring - any kind of scoring and/or gamification to encourage participation? Are there achievements and badges? A leaderboard among users or groups?

10. Video (and Audio) - if you have video, are you hosting it or can we use YouTube, Vimeo? Do you need to process user-contributed media? What about reporting and moderation? Do you want Flash video, HTML 5 video, or both? Does it need to playback on mobile devices?

11. Notifications - what notifications are needed in the system? Dismissable? Do they generate emails or other external notifications? Do you need to provide RSS?

12. Email - are you sending out emails periodically? Are these blasts manually created? Are there complex rules for when emails go out? How often are emails updated, i.e., do you need to be able to edit the email easily? Do we want to use something like SendGrid in order to help with delivery? Do you need to track views and bounces? What are your privacy rules?

13. Marketing Support - what will the system need to do in order to help track with marketing and tracking marketing effectiveness? Are there specific landing pages? Tracking URLs? Referral sources? Affiliate tracking?

14. SEO Support - will URLs need to be well formed? Will back-end support for SEO be needed?

15. Content Management - do we need to allow easy editing of content in the system? How robust does this need to be? Arbitrary new pages? Lists of pages in the interface? Dates/times for posting? Content access controls? Are regular users contributing content or only system administrators?

16. Dates/Time Zones - Do we need to handle multiple Time Zones and do conversion automatically?

17. Search - is there search? What is searchable? How advanced does it need to be initially?

18. Logging/Auditing - do we need to log certain operations in order to help with customer support or for auditing?

19. Analytics/Metrics - what are the key startup metrics that you will need to track? Are there specific metrics needed for future funding rounds or for operations? Beyond simple web analytics, what is needed?

20. Administration - what will you need to be able to do from a back-end? Administer users? Dump out data?

21. Reporting - What needs to be reported? Are data dumps (CSV for Excel) sufficient? Important note here: reporting can be endless, keep it small.

22. Accounting - Do we just need to dump out transactions or is there more to it? Are you tracking inventory? What does the system need to provide to support fulfillment?

23. Customer Service Support - Do you need specific interfaces and support for customer service? Ticket tracking? Are customer service reps heavily constrained or free to make arbitrary changes (and run arbitrary transactions) on behalf of users?

24. Security - are there any specific kinds of security risks? Is the whole site SSL/HTTPS, only the login process, or something in between? Does the site need to throttle potential malicious activity?

25. Scalability - what do you expect from a scale standpoint? What kinds of spikes in traffic could we have? How will we address these without significant cost?

26. Integration Points - are there any third-party systems that we will need to be able to integrate with?

27. Existing People Capabilities - what capabilities such as graphic design, user interaction, product manager, QA do you already have access to? Who? How much availability?

28. Hosting - is there anything in place for hosting? Any preferences? Do you need help getting hosting going?

29. Site Management - what will be needed in terms of site management?

30. Platform – are there pre-existing technical platform decisions that must be considered?

31. Team – is there or will there be multiple segments in the development team? If so, are specific software development processes necessary?

32. Product Management – Do you have a clear vision of the initial product and a plan for sequencing changes after the initial launch? Do you have the internal staff to manage changes?

StartupRoar - Great Content for Startups

2011-07-13T07:11:00.000-07:00

Today I join Ben Yoskovitz, Vinicius Vacanti, Jill Hubbard Bowman and Steve Blank and others in announcing the launch of StartupRoar.

This site aggregates and filters content from thought leaders who talk about topics such as Marketing, Sales, Design, Revenue, Hiring, Social Media, Business Models, Metrics, PR, Venture Capital, Angel Investors, Bootstrapping, Incubators, Agile and many others.

As you might imagine, when you go to the page on Customer Development, you find the best and the latest content from people like Steve Blank and Vinicius Vacanti. For example:

Similarly, when you look at IP / Intellectual Property for Startups, it's dominated by Jill Hubbard Bowman's wonderful content. Or looking at issues around Founders you find the great post from Ben Yoskovitz on Founder DNA – How Investors Evaluate Startup Founders. Click around on the various topics to find some amazing resources.

The home page always shows the latest and greatest content coming out. You can also “change edition” to focus on content written today, yesterday, this week, this month, this year, or other date ranges. The top items from StartupRoar This Month are some really great pieces:

You can subscribe to a daily or weekly feed of content and you can follow StartupRoar on Twitter.

One thing to make clear, StartupRoar is a jump off point. All content is shown as a snippet and links directly back to the source. The site aggregates content but doesn't own it or try to copy it. The goal is to bring together very high quality content selected by curators, provide a way to navigate through that content, help surface content that might be missed, and be a jump off point to the rich, vibrant startup content community.

Visual Basic Reinvented

2011-06-22T08:14:00.001-07:00

Back in 2006, I posted about the Promise of Web 2.0 - Comparison to Macros, IDEs, and Visual Basic and pointed out that Visual Basic was a huge innovation that allowed many new developers to build applications.

We've been using Google Apps as the basis for developing some very interesting online applications. The announcement today Building UI in Apps Script just got a whole lot easier that shows how you can use a drag and drop - Visual Basic like. It's very crude, but interesting to see.

This is a long way from what you can do with Microsoft Office, Scripting, Visual Basic. However, because of the cloud nature, this is interesting to see. That said, it could very well be that Microsoft is able to beat Google to this.

Branchout an Example of Viral Spread Opportunity for Startups

2011-06-15T10:16:00.001-07:00

Branchout, often called LinkedIn meets Facebook, has done a lot in their application to provide users motivation and opportunity to spread the word about the service. The purpose of Branchout is helping people to network their way to jobs. However, funny enough, I don't see the job search and showing you who you know at the company as being particularly well done. As one review put it:

Searching by company to find connections you might have is arduous at best, and in my mind, basically useless.

But that's not the focus of this post. Instead, I want to look at how they've integrated themselves with Facebook and particularly how they engage users to help viral spread. And it certainly seems to have worked with reports of:

Branchout has seen explosive growth in January 2011, growing from 10K to 250K monthly users, with a total usership now in the hundreds of thousands.

That's impressive growth! How did they do it?

Getting Going Is Easy

Branchout has done a great job making registration easy. You connect with Facebook. They ask for a little bit additional information and that's it, you are up and going.

They've also done a nice job of importing LinkedIn background information. It brings in Work History and Education. It allows you to easily edit items.

You are up and going in just a few clicks. Of course, there's a lot more on any kind of application like this to really get things setup, but Branchout has done a good job making that happen incrementally.

As an example, they walk you through getting your profile more complete.

and as part of completing your profile, it helps you spread the message around Branchout.

But the next step is a bit questionable. Is it even acceptable as part of Facebook's Terms of Service to require someone to Like something in order to "complete" it? This one pushes maybe just a little too hard. Later in this post, I'll talk about some of the downside of how they've made this viral.

One thing I liked in the design is how they treated completion of the profile:

It's now complete and you just dismiss it from that area.

Primary Interaction - Social Interaction

Okay, my profile is complete, now what? Well it's interesting that when you look at the home page interface, most of the interface is really about social interaction. Everything on the left side below your picture is an opportunity to build your network, I've got some details below about a few of them. The right column also contains opportunities to expand your network. It does have jobs and companies a little bit, but it's much more abut social interaction.

I'll explore a few of the social interactions that help with viral growth.

Endorsements

I think they did a good job on endorsements. They use the profile completion to get you to do your first endorsement, so it's more natural to do them in the future. They have the following information on your home page about what's happening with endorsements to get you into it more often.

When you go into the process of endorsements, they show you your friends and allow you to filter to those who are members and those that have career info. Once you select someone, it's very easy to add an endorsement. And, of course, that person gets notified and you can tweet or post your endorsement as well. When you are done, it asks you to endorse more people.

People can also request endorsements which further promotes this and the interface to provide an endorsement for them is very easy to use.

Network and Connection Statistics

Possibly Branchout focuses too much on your network. It feels a bit like the early days on LinkedIn. They definitely push you to be a heavily connected user and give you lots of data.

When you drill down a bit:

Badges

I actually think they did badges pretty well.

They give everyone a badge "Early Adopter" and give you an opportunity to post it. You can also post a Badge Request.

They've made it super easy for you to send badges to other users. Possibly too easy as it likely devalues them a bit. More on this below. You can either first choose a badge and then award it or choose a user and award a badge.

Notice also that on the user screen (Alan Edgett), you can give a badge, vote for Alan, request an endorsement, send a message or give an endorsement. All of these generate social interaction.

I actually think that this particular implementation of badges is a bit weaker than what I've seen in other applications. If you are looking at how your application can/should use badges, it might be good to review a few other sources.

5 Reasons Why You Shouldn’t Just Add Badges To Any Old Game or Website talks specifically to the issues of being careful about adding badges appropriately and not rewarding just any old action.

A lot of games and services are now copying foursquare to offer badges for actions, and in their rush to get ahead they are offering badges earlier and more often, to make players feel more rewarded. As a reviewer, I play with these services every day and now feel as if a badge has zero positive value, and is just an annoyance.

4 Reasons Marketers Should Add Badges to Social Apps - gives several reasons, but also points out that it's important to show how badges are "earned." In the case of Branchout, they really are just votes, not as much earned. There are a few other badges, but it's not clear how you obtain them.

Influence user behavior If users are clear on how badges are earned, badges drive desired user behavior. In our app, unearned badges are obscured visually and accompanied with instructions on how the badge is earned. In the Intel Phone of Tomorrow Challenge, users learn that the Ethernet Badge is earned by successfully inviting three friends to play and the Pocket Protector Badge is earned by commenting on 10 different ideas.

Quizzes

At first when I saw quizzes, I didn't think they would be viral. Turns out they've done a couple of things to make them viral.

Within a quiz they have a question or two that asks you about your friends and when you choose one, it defaults to sharing this on their wall. I have no idea how it chose these friends.

They also give you the opportunity to share your results. They push pretty hard on this by making the little tiny "x" to dismiss and the BIG blue Post to My Wall where you would normally find the default interaction.

They also allow you to invite your friends to take this quiz. I'm not sure if that really sparks that much interaction, but worth a try.

Hot or Not

As long as we are trying everything to go viral, let's also add in a proven winner - Hot or Not. In this case, it's in the context of who you would want to work with.

See the little check box on the bottom left. It's on by default and it shares the result with the winner. If you uncheck it and begin to go through and choose people, pretty soon you get the following pop-up. And the word "ignorant" is used to dissuade you from choosing that option. Having it come up every few times is a bit annoying.

Once I was done going through 30 votes, I then understood what it mean to "vote" for someone which we saw in the interface associated with the user. I get to see my "Friends with the most Votes". Of course these are the people who are most connected hence they get the most votes. So, this is really not quite the same as Hot or Not, but still similar and another way to provide viral growth.

Too Much Social Interaction?

There's been a fair bit of discussion that Branchout is a bit too aggressive in its push for social interaction. From a post BranchOut, Inherently Viral Services And Customer Acquisition On Social Networks they point to the following kinds of responses that being overly aggressive in pushing viral can cause:

Choosing a Programming Language and Framework for Your Startup

2011-06-13T11:54:00.001-07:00

We had an interesting presentation at the LA CTO Forum by the CTO of a startup who chose Groovy / Grails as the framework for their startup. t prompted a good discussion around how CTOs go about choosing the programming language and framework for their startup.

Some common themes from the discussion:

Know Where You Are Going

Before you can possibly make a choice around language and framework you need to ask all the important questions that are talked about in Startup Software Development – Do Your Homework Before You Develop Anything and Startup CTO or Developer.

Closely Aligned Functional Needs

The most common reason that a language and platform is chosen is because there's an existing set of (often open source) functionality that you can tap into that aligns closely with your functional needs. For example, you may have content management and community needs that closely align with Drupal. There are some cautions around these choices, but it is often the basis of a choice.

Similarly, you may also have an existing code base or set of libraries written in a language. This may push you in that direction.

Of course, if you are developing native mobile apps or building something on top of a particular code base or you need to integrate tightly with something, all of those factors may push you directly towards a particular language and framework. For example, you might choose Sencha if you are building apps that run natively on several platforms (e.g., desktop, mobile, browser).

Existing People

In many cases, the choice comes more out of who's involved and existing code than based on what the "best choice" would be. Most of the time, there are people / stakeholders who have a particular skill set. Or you might have an investor (or founder) who's convinced that you need to work in a given language (some VCs love Ruby right now).

Misconceptions

When I talk with founders and VCs there are often quite a few misconceptions around the choice of language and framework.

Misconception #1 - "You can build things 10x faster in Ruby."

With Ruby/Rails, Groovy/Grails and many other language/framework choices, some aspects of development are significantly faster. It's way easier to get your pages setup in these languages than by choosing Java alone. Of course, I'm not sure that anyone chooses Java alone. They start with lots of other things. Still there's no doubt that some aspects come quickly. But if you are building anything with significant functionality to it, then first, don't believe the 10x. You may get 3x improved speed for roughly 10-20% of the effort of building your site. The rest is just down and dirty algorithmic programming. It won't be significantly different in most languages. Bottom line, you really are not seeing that much different between Ruby/Rails and Groovy/Grails in terms of development speed.

Misconception #2 - "Ruby is the obvious choice."

From Groovy/Grails :: Ruby/Rails :: 2011 State of the framework:

Rails and Grails are both excellent frameworks with their current releases. You really can't go wrong with either. Here are some things I find interesting about them though:

Rails (Ruby) does not scale as well as Grails (Groovy).

Rails is slightly better with NoSQL alternatives currently, but Grails is catching up quickly

Rails has more plugins.

Rails is more mature and has more features at this point in time because it's been around longer

Rails REST support is amazing

There are many more "big" Rails websites than Grails

Grails integrates with the JVM better than JRuby

In addition, I'm not quite sure why Ruby has become such a strong brand. There are LOTs of language and frameworks to choose from. If you don't believe me, take a look at some interesting data on what programming languages TIOBE Programming Community Index for June 2011 are in use and the current trends.

Position Jun 2011	Position Jun 2010	Programming Language	Ratings Jun 2011	Delta Jun 2010	Status
1	2	Java	18.580%	+0.62%	A
2	1	C	16.278%	-1.91%	A
3	3	C++	9.830%	-0.55%	A
4	6	C#	6.844%	+2.06%	A
5	4	PHP	6.602%	-2.47%	A
6	5	(Visual) Basic	4.727%	-0.93%	A
7	10	Objective-C	4.437%	+2.07%	A
8	7	Python	3.899%	-0.20%	A
9	8	Perl	2.312%	-0.97%	A
10	20	Lua	2.039%	+1.55%	A
11	12	JavaScript	1.501%	-0.58%	A
12	11	Ruby	1.484%	-0.61%	A
13	9	Delphi/Object Pascal	1.070%	-1.50%	A
14	16	Lisp	0.935%	+0.28%	A
15	15	Pascal	0.731%	+0.00%	A
16	-	Assembly*	0.673%	-	B
17	21	Transact-SQL	0.651%	+0.16%	B
18	25	RPG (OS/400)	0.637%	+0.22%	B
19	23	Ada	0.606%	+0.17%	B
20	-	Scheme*	0.579%	-	B

If you look at Ruby's numbers it shows decline which I'm not sure I believe, but I also don't buy into the hype that surrounds it either. It's a good language/framework, but it's not that savior that some believe.

I would also suggest that languages and frameworks have come and gone for many years. Right now happens to be one of the most innovative times I've personally seen with new languages, frameworks, etc. coming around pretty much non-stop. Not all of the newest languages are going to be winners. If you are planning to build something that will last, I would claim there's risk in choosing something that's the newest thing.

So what's the bottom line? This is a complex decision. Get get help (see Free Startup CTO Consulting Sessions). Get a few different perspectives. And when a VC asks if you are building it in Ruby - be prepared with a smart answer.

Los Angeles Startup Community

2011-05-17T08:27:00.001-07:00

I was just talking with someone who's new to Los Angeles and wanting to connect into the Los Angeles Startup Community. I told them that I had recently seen several posts/articles talking about how vibrant the community has become. As is usual, I couldn't remember where I had seen those posts. So, I promised I would create this post to help point them in the right direction. I will do my best to keep this up to date.

Los Angeles Startup Community Posts/Articles

Here are some interesting articles and posts on the ecosystem around startups in Los Angeles.

Los Angeles Startup Networking

Here are some guides to many of the different networking events around startups, technology, etc.:

and if you want to find informal networking, you might head over to CoLoft, in Santa Monica.

I'd also recommend you subscribe to So Cal Tech Central. It brings together events and content for Los Angeles.

Venture Capital

As long as I'm pulling this together, here are some venture capital firms in Los Angeles that can help get you wired in.

Los Angeles Startup People

Some people to meet in the Los Angeles Startup Community in order to get wired in:

Tony Karrer (me) - organizes LA CTO Forum private group of over 150 web/software CTOs
Jason Calacanis - founder Open Angel Forum, long-time startup guy
Jason Nazar - founder DocStoc and organizes Startups Uncensored
Mark Suster - VC GRP Partners and one of the bigger voices in LA Startup world
Tyler Crowley

I wanted to put a bunch more, but was hoping I could get some help. Who are the people you should meet in the Los Angeles Startup Community to get wired in?

Visualization of Startup CTO Equity and Salary Data

2011-05-10T06:37:00.000-07:00

A long-time friend and colleague, Steve Wexler, who is great at visualization took my Startup CTO Salary and Equity Data and produced a really need interactive visualization via Tableau. You can find it here:

Interactive Version: Startup CTO Salary and Equity Data (US)

Explanation: CTO compensation and equity at venture-backed companies

Probably the best thing for someone to do is to go to the Interactive Version and look things up using their specific situation. You can click on the filters such as Founder Status (#3) and Job Title (#4) to filter to that particular data.

You can also glean additional information by hovering over a mark. For example, if you hover over the big circle in California you can see that there were 303 responses for the San Francisco Bay Area.

The larger the circle, the larger the number of responses.

For example, let’s say you are only interested in seeing non-founder CTO compensation for West Coast-based organizations with 50 or fewer employees that have been in existence for seven or fewer years. By selecting different marks and applying the “years” in business filter, you can glean that the average compensation for a respondents fitting into these categories is $201,495.

You will definitely want to choose some of the other tabs to visualize the data in different ways. One of the more interesting to me was the equity bin analysis:

It shows the dramatic difference in equity for Founder/CTO vs. Non-Founder CTO for startups that have raised <$10M and are Series A or B. Most non-founders have less than 2%. Most Founders have greater than 5%. It makes sense and what I suspected, but good to see the numbers are backed up.

Of course, as you would suspect, equity percentages dilute based on years in business.

Give it a try and let me know if you find anything interesting.

Hiring a CTO for Your Startup

2011-04-27T07:01:00.000-07:00

Several people have recently come to me to help them source and/or hire full-time CTOs for their startup having found me through my post that looks at: Startup CTO Salary and Equity Data.

The first thing I do is suggest they explore if they really need to hire a full-time CTO for their startup and if so, what kind of CTO they need. There's a lot on my blog already around this topic. I'd suggest: Startup CTO or Developer, Startup Founder Developer Gap, Part-Time CTO, Technology Advisor, CTO Founder, Acting CTO. In some cases, this changes the conversation from "I need help hiring a full-time CTO for my startup" to "I need help finding a part-time CTO who can direct a full-time developer."

But let's assume you really do need a full-time CTO for your startup and you've done the homework so that you know the specifics of what this CTO will be doing for you. You now have two issues: sourcing and hiring.

I'm not going to spend time on sourcing because I'm really not in that business. I have a great network of fellow CTOs, especially in the Los Angeles area. I've organized the LA CTO Forum (a private group of 150+ CTOs in Los Angeles) for 10+ years. I often will tap into that network to try to help find people for startups. But that's a pretty small pool and it's really the top end of the spectrum. There are also a few recruiters that I recommend. But sourcing candidates is tough.

Interviewing them is also tough, especially if you are not yourself technical. Get a Technology Advisor that can help. Even with that help, there's a lot you are going to need to do. And I've talked about lots of things you can listen for as a non-technical person to determine if this will be a good CTO candidate. There are a bunch of questions in Startup Software Development – Do Your Homework Before You Develop Anything, Startup Founder Developer Gap, and in Startup CTO or Developer. You should be hearing many of these questions coming up from your CTO candidate.

Interviewing and Hiring Process

Get a resume and LinkedIn profile and review both closely:

Do they know the world of startup technology? It's very different than at large organizations. This is a must.
Do they have a solid development background? A must if you are going to lead developers.
Do they have experience leading developers? Several years, ideally in a couple organizations.
Have they found and hired developers? Have they worked with outside developers?
Have they switched jobs too much? Not enough?
Be on the lookout for words that suggest they were there went it happened, but not really doing the work. This happens A LOT among technical people. Words and phrases like: led, directed, knowledge of, assisted with - all suggest that they didn't really do it. Make sure you plan to drill down to what they really did.

The next step is a phone interview. Often it's only about 20 minutes. It will be spent:

Finding out more about the reality of their background. It's often hard to tell from a resume and LinkedIn profile.
Finding out what skills they think they have and how they match with what you need.

If this will be a hands on role, then you need to conduct some kind of Technical Screening/test. If you are a non-technical founder, you will definitely need help to do this. If this is not a hands on role, then you might be able to get away without it. But I'd recommend someone technical still interviews them.

Then comes the in-person interviews. There are lots of good resources on this, especially for hiring technically-oriented people where intelligence and problem solving is a key ingredient:

Just be warned - asking these kinds of hard questions (and doing technical tests) can result in VERY uncomfortable situations. The candidate clearly doesn't have a clue how to answer the questions. You can nudge them along to help them get to the answer. But it becomes pretty clear when things are not working out. I've seen flop sweat, people who just want to run from the room, and other similar reactions. You need to be ready to help the person out of an uncomfortable situation.

I do have a question though - how long should the interview continue once it's become clear on both sides that the candidate has completely bombed? Is it fair to continue? Should you look for an early exit? I most often look for a graceful, early exit. But it can feel like it drags on a bit even in that case. Any suggestions on what to do?

Make sure you do all the normal things during an interview:

Give them lots of opportunity to ask about the business and any other questions they have. Listen for the right kinds of questions (see above).
Make sure you take notes during and after the interview. It sometimes is hard to remember the details otherwise.
Cover all the different aspects of the job: technical, smart, analytical, able to inspire, lead, direct, manage, good communicator, good decision making, etc.

Now you have a couple of good candidates. They are bright, eager, a good fit. Make sure you do reference checks. Most often I ignore the list of references they provide. If this person is from Los Angeles, I know I can easily find a few people who have worked with them. Even if they are from somewhere else, I likely can navigate LinkedIn to find people to talk to. The references they provide are often a last resort.

Okay, they check out. Act fast. If they are good, the market right now is HOT for CTOs. Have your offer together in a formal letter, but call and make the offer by phone.

Once you have an acceptance, please be nice to the other candidates and let them know that you've hired someone else. Don't burn bridges. You never know when you will run into those same folks again. In Los Angeles, the answer is "often." I personally do this via a quick call and follow-up with email/LinkedIn connection, etc.

I will close with one last thought. Trust your gut. Any time I've hired someone who somehow didn't quite feel right, I was sorry later.

Free Startup CTO Consulting Sessions

2011-03-03T06:40:00.001-08:00

I talk to roughly 2 or 3 new startups every week who need advice from an experienced CTO. Many of the founders of these companies are surprised to learn that I'm willing to review what they are doing (maybe an hour) and get on the phone for an hour with them and provide free advice. Generally I can provide quite a bit of help in that brief time. And I try my best to point them to resources that can help them longer term. Of course, I provide part-time CTO services. But the reality is that I engage with about 5 new startups each year which means that I end up working with less than 5% of the startups where I provide these free consulting sessions.

In talking with a colleague who also does Acting CTO work, he said that he also does this kind of free consulting sessions and offered to help me if I didn't have enough time - which sometimes happens. As soon as I posted this, I was contacted by two other colleagues also willing to jump in as needed.

So, I wanted to use this post to make it official - we are offering free startup CTO consulting sessions.

What Is This?

The simple answer is that there are ~~two~~ a few of us experienced CTOs ready and willing to:

Spend an hour reviewing what you are doing
Spend an hour on the phone with you to try to answer key questions

We can help answer a lot of different questions. Sometimes it's just a reality check on your current situation. Maybe you are wondering if you have a Weak Development Team? Do you have a Startup Founder Developer Gap? Is there some key Homework you need to do? Is it a sourcing question around whether you need a Startup CTO or Developer or both? How can you more effectively work with your developers? The list is very long.

The couple hours of our time is free with no obligation.

If answers will take more than this time, we will do our best to point you in the right direction.

How Does it Work?

You need to send us an overview of what you are doing. This overview (executive summary) needs to include:

Product and Business

What is the product?

Who's the customer? How does the product solve a pain?

What's the business model short-term and long-term?

Who are the main competitors? How are you different?

What are related products/companies? Who might be partners?

What's you believe is your biggest technology risk, if any?

Team

Who's involved? Send brief bios. Part-time, full-time?

What's your experience in this space?

Current State of the Business

What have you done to date?

What do you see as you next big milestone? What do you need to achieve to get there? When do you need to have it done by? What do you expect to get out of it?

Are there specs?

What product, market testing have you done so far, if any?

Have you raised capital? Or how are you funding the next few milestones?

Key Questions

What do you want to achieve in talking with us?

Do you have specific questions?

Send your overview to me (Tony Karrer): akarrer@techempower.com

Based on the type of business, we will distribute it to someone who is most appropriate. You will get a response via email to schedule a time to talk.

Frequently Asked Questions

Will we sign an NDA?

No. You need to be able to share with us without an NDA. If you can't tell us the details of what you are doing without an NDA, it won't make sense for us to talk. If we were to engage in paid services with you, then issues about disclosure, confidentiality, work product, etc. will definitely be handled.

I'm looking for free (equity only) development, should I contact you?

No. We can likely provide technical strategy help at little to no cost, but hard core development generally requires that you have found someone to do it for you for equity or that you have some capital available (think $50K+). See Equity-Only CTO and Equity-Only Developers for more on this.

I need a life-sciences CTO, can you help?

No. Unfortunately, we are web, mobile, software, database guys. We can help across a wide variety of types of systems, but once you get into hard core sciences (designing a new compound, bioengineering, etc.) or hard core engineering (new devices) then the CTO (Chief Scientist) means something else entirely.

Do I have to write up the overview?

Yes.

Can you help me get funding?

If you primary questions right now are how to raise capital, that's not us. Longer-term we likely can help with that as we can help evaluate your technical approach. However, there are lots of other people who help companies raise capital.

Startup CTO Salary and Equity Data

2011-02-22T08:06:00.000-08:00

Todd Gitlin of Safire Partners was nice enough to compile some data on Start CTO Salary and Equity at Venture Backed Companies for the LA CTO Forum and present last year. He agreed to make this data public which is awesome. Todd is a go to resource for people looking for talent in startups. He was a great presenter to our group. I highly recommend getting to know him.

The data is a bit tough to deal with via a post, so I've shared it two ways:

You can find a PDF with some analysis at: CTO Equity Compensation PDF.
You can find a public Google Spreadsheet with the data: CTO Equity Compensation Google Spreadsheet.

There's a ton of great data in there that will give you a sense of comps for your particular situation. Here are a few slices of it. Of course, this doesn't really apply to the situations where I'm often involved Part-Time CTO, Technology Advisor, or Acting CTO, but this is still really good to have.

I would be very curious to hear what folks think about this.

Anyone concerned that this is above or below their expectation?

I was recently asked specifically about these kinds of numbers and I'm a bit worried that expectations between CTO candidates

Startup CTO Salary and Equity based on Stage of Company

Note: the rows are a bit out of order.

I'm a little surprised that CTO Founders with growth capital funding only have 15% of their companies. It is interesting to see the salaries of CTOs of pre-Revenue even pre-Launch companies.

Total Funding

Revenue

CTO Compensation and Equity based on Location

A few items jump out at me in terms of CTO Equity and Compensation relative to geography. Caution - there is not much data for many of the geographies.

CTO Founders in India, have a very low equity stake.
CTO Founders in UK, US Mid-Atlantic, US Pacific NW, US Northeast, France, Australia have a higher equity stake.

Southern California - my primary location - looks to be about the middle of the pack.

Poor Software Developers - Pull the Plug Early

2011-02-17T08:31:00.001-08:00

There's an old adage in software development that I refer to all the time:

The first 90% of development takes 90% of the time. The remaining 10%, takes the other 90% of the time.

I used this when I taught software engineering. And I use it all the time now when I get the kind of message that I received:

I'm looking for a web developer to continue work on my website. It's currently in beta. I used a company in India to develop the site, and it's mostly done. But they weren't quite able to get it finished. Then I found a local developer but it was a truly awful experience. At this point, I have very little money left, which makes finding someone even more of a struggle.

My experience is that most often you will find that the project has gone through many of the Symptoms of a Weak Development Team in these situations. And I say that the most common symptom is:

The team seemed to get a lot done early on, but now it just seems like it is taking forever to get it “done.”

So when you get a note about a project that's "mostly done" - you immediately get worried. Usually, once you begin to look at what's really going on, the code is a bit of a mess and the system has a lot of work left to get to an actual "done" state. You may even have as much time left to get it "done" as it took to get it "mostly done".

Normally, when I get this call, it's pretty far downstream (as in this situation). The funds have been used up on the existing development. And the person is trying to get it from mostly done to done with little additional cost.

The problem is that doesn't match with reality and likely they need to find more dollars. Recovery from this situation is hard. I wish I had a better answer.

But I thought I at least needed to do a post that made a few suggestions on how to avoid this situation:

Keep your Eyes Open for the Symptoms of a Weak Development Team
Hire a Part-Time CTO, Technology Advisor, or Acting CTO to help you keep an eye on what's going and increase your chances.
Pull the Plug Early - poor developers who exhibit symptoms of weak development will not become good.

This actually reminds me of another adage:

No one ever tells you they fired someone too early. They often tell you they fired someone too late.

How Investors Think About Valuation of Pre-Revenue Startups

2011-02-02T08:13:00.000-08:00

A lot of my time is spent helping early-stage companies get to proof points so that they can raise capital. They might have some seed money and are thinking or raising a Series A based on success of an early release (MVP). Because of this, I've always tried to stay up-to-speed on how early-stage investors look at valuation of companies. What are they really looking for? What do you really need to prove?

There's a lot out there around Customer Development - read Steve Blank:

Entrepreneurship as a Science – The Business Model/Customer Development Stack- Steve Blank, October 25, 2010

Checklists for Chaos, The Path to Success- Steve Blank, October 28, 2010

and reading about Lean, MVPs, etc. is a requirement. Think about how you can prove your business model with an MVP. I should try to come back and write about this more, but the point of this post is that it's important not to only think about this aspect.

Bill Payne is an expert on how early-stage investors should look at valuation. He just post: Establishing the Pre-money Valuation of Pre-revenue Startups. It's required reading. Especially interesting is the Valuation Worksheet towards the end. He has a bunch of factors that investors should be considering (and generally do).

A few things jumped out at me:

- Experience in sales or technology - considered a minor negative? If you've not had a C-level but have had experience in sales or tech. Not sure why.
Size of target market $100M is okay. Interesting that they don't need to see really large markets.
- > $100 million (will require significant additional funding). In fact, really large markets are possibly a downside.
-- need venture capital - a significant negative effect

Key hurdles that you really should be going for in the early-stage:

++ Good feedback from potential customers - that's the key hurdle
+++ Orders or early sales from customers
++ Key beta testers identified and contacted
+++ Channels secure, customers placed trial orders

Getting Started with a Two-Sided Market Business

2011-01-31T08:50:00.000-08:00

As I discussed in Matching Algorithm, I end up talking to a lot of startups who want to become the eHarmony of careers, eHarmony of clothes, eHarmony of jobs, eHarmony of tutoring, eHarmony of services, eHarmony of investments, etc. This comes up a lot and if you are thinking about one of these kinds of startups, definitely take a look at Matching Algorithm.

When I talk to the founders of one of these “eHarmony of” companies, one of the hardest problems is how to predict and test the concept in the early days – before you have scale. Sean Ellis in Bringing a Network Effect Business to Market positions this via the following two pictures:

In the case of a normal startup, you can launch an MVP and keep optimizing from there to achieve scale. In a Network Effect Startup, you need to drive growth to some degree in order to be able to even begin to test it. And to get growth you need some level of efficient conversion. So, it makes it much harder to predict, test and scale a network effect startup.

Let’s take a particular example: eHarmony of jobs.

In this case, the system will be made up of a classic two-sided market:

Job Seekers
Jobs / Employers

And like most two-sided markets, the value to either side is most often proportional to the number of users on the network’s other side. I.e., a job seeker would get more value if there are lots of jobs / employers. An employer gets value if there are lots of job seekers.

The problem for an early stage startup is that without critical mass, the system doesn’t provide much value. Coming back with no matches is not a very satisfying result and you generally will lose customers that you may have even paid to acquire.

Before you determine your specific strategy a few questions to think through:

A. Do you need real-time response? Do you have time to manually find matches? Who would be willing to wait? How long?

B. How hard is it to find matches on either side? What can be done using information that already exists? How is it done today? What’s the cost of doing it?

C. What are the economics? Who pays? How hard is it to acquire each side? Can you effectively subsidize one or both sides initially?

D. What do you really need to prove? Is it sufficient to show some level of matching and that there are willing buyers?

E. What kinds of tests can I run to simulate and prove aspects of this?

From there, you might consider some specific strategies.

Limit the Scope

Trying to launch the eHarmony of jobs all in one shot would be very challenging. Instead, you should think about how you can effectively limit the scope. Let’s only go after this particular type of worker and this type of job/employer. Let’s limit ourselves to this geography. By doing so, you definitely constrain the problem, but it doesn’t strictly go away. It’s just that you now need to prove whether you can achieve critical mass in a limited scope.

Jason Cohen has a great line about this in Solving the “marketplace” business model:

If you’re bootstrapping and your value proposition includes the words “anything” or “anyone,” you’re probably reaching too far.

Make sure your value proposition works when it’s a limit inventory – ideally on both sides. So, if the job seeker expects to find “every” available job, you likely have a problem. Or if the employer expects to have every possible employee – that’s a problem. What you really want are well matched on either side, not necessarily the absolute best from the universe of all possibilities.

Quick Growth

Let’s say you’ve limited it to a particular type of job in a specific geography. Well chances are there are some partners or sites where you can get information on jobs today. There likely are partner lists that you could hit up to quickly achieve growth.

Go Manual Behind the Scenes

Do you really need to be real-time in your response? In the case of jobs, you can probably get away without being real-time on either side. In other words, someone puts in their information and two days later you come back with a list of potential matches.

What this allows is one of the more common early approaches for startups. Basically you do things manually at the start. Likely there is lots of job information already available. Maybe you are simply doing smart searches on behalf of job seekers and coming back with those job suggestions. Or for each job that you get from an employer, you comb through social networks, LinkedIn, etc. to source potential candidates. Or both.

In fact, if you do both, it’s called a Zig-Zag strategy.

A really great example of this is described by Steve Rentoid in Inventing Demand. He wanted to build a business that rented electronics. So, he would determine what people might want. He would put up ads. And then:

When people rented the items, I went out and bought them, first hunting for the lowest price on line. Then rented it to the new rentoid member in good faith and gave them an exceptional user experience. After the rental I sold the item on eBay for around about 80% of the retail price. I pretty much re-couped my costs doing this.

Jason Cohen also recommends this in Solving the “marketplace” business model:

But just because automation is the goal doesn’t mean it’s the way to start. The good thing about automation is it’s efficient; the bad thing is you cannot learn because you’re not involved in the process. And at the start, learning is where you should be spending most of your time!

Create Network Independent Value

Provide a job seeker some kind of profile that would be of value to them independent of finding a job. Provide an employer a low-cost, free way for them to manage their recruiting efforts. I.e., they get an SAS recruiting solution that allows them to post jobs and manage the recruiting process.

Additional Reading

Some additional resources. I’d love to hear about others:

I definitely plan to blog more about this topic as it comes up quite often.

CTO Equity - Negotiation After Funding

2011-01-18T07:56:00.000-08:00

I received an inquiry from a reader of my blog and thought I would provide some thoughts, but would definitely welcome input:

I am an unpaid CTO of a small startup. I have been working full time with two founders for about 10 months on full time basis. I have been through many months with them but because of lack of funds, I spent lot of time doing non-technical work for first 4-5 months, spending time with them on putting pitches for investors, cash flows, budgets, writing business plans, product prototype setups etc. There was an informal verbal agreement that I would work for a certain hourly rate for my time. During that time one of the founders had mentioned that for the initial agreed time (3 months, equivalent dollars could be translated to 2% of equity but no agreement was reached at that time).

Now, they were able to raise enough money in the last 3 months to launch a product along with all the necessary software development to launch a pilot program for validating the idea. During all this time, valuation pitched to the investors was in the $1M – $3M range. I was also responsible to get a top-notch technical architect to build the necessary back-end at very affordable hourly rate to be able to launch the product in a very short time.

Because we were so busy in the last 3 months, I did not had a chance to talk to the founders about my compensation for the time spent and future salary etc. When finally, I sat down and started talking, they basically tallied up the hours I spent and gave a choice to get equity at current $3 mil valuation or get full cash for my time or blend of both cash/equity. I tried to argue that the equity should be what it was at the time I joined and discussed but there was no formal agreement at that time. Now I feel like I was part of the team to build the company but equity valuation offered to me is not fair. I am thinking of taking full cash and slowly easing myself out. I would appreciate if you could provide your guidance on this one.

Obviously, in hindsight it would have been a really good idea to get an agreement that spelled out your equity position and how you would be treated cash+equity prior to and after funding. Please let this be a lesson to everyone – founders and CTOs. Don’t put yourself in this situation. Of course, that doesn’t help here. So …

I have probably more questions than answers. The reality of your situation is that you are now in a different negotiation. The situation is what it is at this point and it’s a question of where there’s leverage.

Actually, I should start by saying – I’m not a lawyer and you might want to get someone who can help you understand your position here. Find a lawyer and someone who does CTO searches for VC backed companies in your area. They both would have lots of thoughts and ideas. The lawyer will charge you for more than the initial conversation. The search person likely won’t charge you if you have a strong enough background, i.e., later would provide value to them.

Some things to consider about the negotiation:

Do you want to remain with the company? Likely this greatly affects cash vs. equity. Most founders and investors won’t want you with a chunk of equity if you are no longer there. But they also don’t want to part with cash. Still, likely everyone would be happier with a cash settlement. But I’m assuming you want to remain at the company.
Do the founders recognize that they had verbally agreed to 2% for 3 months work? Do they recognize that you’ve spent 10 months not 3 months on it? Do they feel responsible to honor that? Realistically, you took a lot of risk here and should be rewarded. That said, they likely also are a bit under pressure because of the loss of the reality of funding and investors to keep your equity component down. But, you should probably start with understanding where they believe that prior verbal agreement stands. You likely to get the best result based on this equation.
What are the specifics of the 2%? Was it pre or post? What type of shares? Vesting? Or was it options?
What are the terms the founders got in the deal?
My guess from the way you’ve worded the question is that you’ve done a really good job as the CTO. You’ve put the right team in place to essentially make yourself less valuable to the founders because they feel they can move forward effectively without you. A cornerstone of your negotiating position is how valuable you are to the company going forward. Think Tom Cruise – “With me, without me.” Do the founders and investors believe that your are essential to their success? Do they have a good relationship with the architect? Do they recognize any Startup Founder Developer Gap? You might use some of the key questions in Startup Software Development – Do Your Homework Before You Develop Anything and Startup CTO or Developer to help you point to issues where you have particular input and value.
What’s your relationship with the investors? Do they believe you are important? Do you have a direct line of communication? I don’t think you pull the trigger on this anytime soon, but it’s negotiating leverage.
What’s the rate for your time that would be used in a discussion? Is it market rate or some reduced rate that you’ve discussed at some point? What would the cash equivalent for your time at market rates be for the amount of time you’ve invested to date? Somewhat for the cash settlement or the worst case equity discussion, this would be the basis for the discussion.
What will your involvement be going forward? Are you full-time, part-time, advisory (take a look at Part-Time CTO, Technology Advisor, Acting CTO for other models)? What is your cash+equity compensation for that period? What happens when this round of funding begins to dry up? (Don’t make the same mistake.)

For me – I would definitely start by soul-searching – do I want to still be involved? Do I trust the founders? Do I want to work with them? Having a successful negotiation where you get a reasonable equity position with vesting over four years and a salary going forward only to find yourself working at a place you don’t want to be is probably not a great result?

I would then also consider closely what your real contribution has been to date and what they owe you for that and then what they should compensate you for your contribution going forward.

Some other possible sources:

Again – I would love to hear input on this and other sources of information.

Dilbert on Cloud Computing

2011-01-07T08:07:00.001-08:00

Some days it does feel this way:

Top 57 Online Startups Meets Technology Meets Product Posts for November 2010

2010-12-01T08:41:00.001-08:00

I continue to collect great content that is the intersection of startups, products, online and technology. It turns out that I missed October but here are some previous posts in this series:

This month there are some amazing posts.

How to Take Down Facebook -- Hint: It Ain't Twitter. (aka: An Open Letter to the Next Big Social Network)- 500 Hats, November 1, 2010
I've held off writing this post for a long time, because I couldn't quite get my head around all the issues. It wouldn't be accurate to say there's something "wrong" with Facebook, and it's not like I don't spend a shitload of time ego-whoring around on Twitter too. but: Something is Still Missing.
When It’s Darkest Men See the Stars- Steve Blank, November 24, 2010
When It’s Darkest Men See the Stars. Ralph Waldo Emerson. This Thanksgiving it might seem that there’s a lot less to be thankful for. One out of ten of Americans are out of work. The United States is now a debtor nation to China and that the bill is about to come due. It may be that all the doomsayers are right. But I don’t think so. At once.
Equity-Only CTO and Equity-Only Developers- SoCal CTO, November 1, 2010
I had a recent email dialog with the founder of a company looking for a CTO for their startup. We had several emails back and forth where he provided basic details on the concept. And I tried to evaluate the idea and figure out: What did the founder really need here? Was it a Startup Founder Developer Gap ? Was it a case of needing Homework?

20 Recommended Quora Threads for Startups- ReadWriteStart, November 1, 2010
The Q&A site Quora has become an indispensable trove of knowledge and expertise when it comes to the tech industry. Ask a question and get an answer - that is, after all, what all Q&A sites offer. Want to know, for example, why Foursquare uses MongoDB to store check-in information? Who better to answer than the company's engineering lead. Sponsor.
Five Reasons You Haven’t Launched- Software By Rob, November 10, 2010
Photo by stevendepolo. This post is an accusation. call to arms. sharp stick that says “get off your ass and make something happen.&#. But I didn’t write it for you; I wrote it for myself. Every one of these reasons has haunted me at one time or another over the past 10 years. Give yourself a month. Keep the day job. Become a lifer.
How To Land a Job at Google (or elsewhere)- FairSoftware's Blog, November 9, 2010
It’s been 11 years now that the obvious hit me: the best way to land a job is to do the job , not talk about it. It’s 2010 and that idea has not graduated to mainstream yet. So let’s be very specific: let’s assume your dream job is product manager at Google, working on the Analytics product. By doing the job. Where is it?
I'm Tired of Creating Your Content- Babbling VC, November 12, 2010
Jeff triggered this post in regards to his Check-in Fatigue on Foursquare. Surprisingly, I was thinking the same thing today about user-generated content, which basically check-in's are too. myself am a bit tired of Qype (German version of Yelp ) and Tripadvisor. These are probably the two sites where I've posted the most reviews.
The Scene Will Kill You- Brad Hargreaves, November 7, 2010
If you’ve taken a deep dive into tech startups, you know about the scene. The scene is the siren song of the innovation community. The scene will kill you. The scene is building sexy things that gain the approval of a certain (small) group of people. Sexy things get lauded, and celebrities coalesce out of the blogosphere’s protoplasm.
Build your own Startup Death Clock- A Smart Bear: Startups and Marketing for Geeks, November 1, 2010
A few months ago I created a fun device at WPEngine to focus everyone's attention the most important thing. If nothing changes, when will you run out of money? Sometimes fear is a good motivator. Clearly it'd be more accurate to say "sometime in Q1 2011.". But the goal here isn't accuracy, it's motivation and focus. Maybe you could get v1.0 Try it!
Timing your startup- Chris Dixon, November 7, 2010
I never had the opportunity to invest in YouTube but I have to admit that if I did I probably would have passed (which of course would have been a huge mistake). I’d been around the web long enough to remember the dozens of companies before YouTube that tried to create crowdsourced video sites and failed. This should not deter you.
Storm Clouds- A VC : Venture Capital and Technology, November 12, 2010
We have enjoyed an amazing run in the web startup and investing space over the past five or six years. In this sector of startupland, company creation is up, investment is up, there are plenty of success stories, and not all of them are based on quick flips and takeouts. However, there are a few storm coulds out there that we need to be watching.
The 11 Harsh Realities Of Being An Entrepreneur- OnStartups, November 1, 2010
There's always talk about the end game in the form of an acquisition, funding announcement, or eventual flame out. Hollywood has even made a movie about the founding of Facebook that glamorizes startup life instead of showing what it really is: a day in day out marathon of work with very little glamor. Your First Iteration of an Idea Will Be Wrong.
Creating Startup Success – Customer Development + Business Model Design- Steve Blank, November 15, 2010
In previous posts I’ve talked about what the combination of Business Model Design, Customer Development and Agile Methodologies mean to startups and intrapreneurs in large companies; it’s the beginning of entrepreneurship as a science with its own rules and methodologies. think his slides are great (and by far much easier on the eye then mine.).
Internet Apps And Native Apps: Why Neither Is Going Away, But The Coming Years Will See A Tremendous Power Shift- ArcticStartup, November 29, 2010
People love a good story, no matter what form of content it is they're consuming. No matter how enticing it may be to remove the complexity of the battle for consumer's hearts, minds and wallets in order to make the story easily digestible, reality is often quite different. Remember those buzz words? billion. How about them apples? That's it.
It’s Easy to Be Great…It’s Hard to Be Consistent- Software By Rob, November 4, 2010
No link from TechCrunch, write-up on Mashable, mention by Leo Laporte, or Tweet by Ashton Kucher is going to make your business.
How to Enchant Your Customer- How to Change the World, November 23, 2010
I love to do business with small businesses—in-store, online, for myself, for others, for pleasure, for work—it doesn’t matter to me. love to find great products and services made by entrepreneurs who are trying to change the world. Put likable, competent and passionate people on the front line. This doesn’t make sense.
10 Tips for Enterprise Software Startups- ReadWriteStart, November 16, 2010
I started my career in enterprise software in the 1980s and after some years working in other areas (outsourcing and online media) I am back in the enterprise software game. This post is my reflection on what is different and what remains the same. have focused this as advice to entrepreneurs building enterprise software ventures today. Sponsor.
Investor Pitches – Do’s and Don’ts- StartupCFO, November 19, 2010
After many years of pitching, it’s been fun (and surprisingly normal) to be on the other side listening to pitches. Over the last few weeks, the Real Ventures team has met with easily 50 companies. took some notes on some great things to do in pitches and some things to avoid. Here they are: DO. What burning need did you see? Know your space.
Anything is Possible (in a Startup)- This is going to be BIG., November 11, 2010
I know you're out there. can feel you now—corporate recruiters at career fairs, sending offer letters to work at banks and consulting firms. know that you're afraid. Google is. You're afraid of startups. You're afraid of change. don't know the future. didn't come here to tell you how this is going to end. Career. What truth? There is, however, hope.
The interoperability of social networks- Chris Dixon, November 10, 2010
Google recently added a caustic warning message when users attempt to export their Google Contacts to Facebook: Hold on a second. Are you super sure you want to import your contact information for your friends into a service that won’t let you get it out? If network B has 20 users than it’s value is 400 (20*20).
Competing To Win Deals- A VC : Venture Capital and Technology, November 7, 2010
The venture capital business is highly competitive. There is more money out there chasing good deals than most people imagine. It is also true that there are good deals and good entrepreneurs that can't find anyone to invest in them. That is a failure of the system. But this post is not about that. Let them see the full picture early.
14 Reasons Why You Need To Start A Startup- OnStartups, November 15, 2010
This post has been ruminating with me for a while. It's not a sudden "a-ha" moment that made it form, but a collective group of "a-has!" over the past few months. Consider this the uplifting post to counter last week's "The 11 Harsh Realities Of Entrepreneurship". Just because it's a harsh reality, doesn't mean you shouldn't be an entrepreneur.
Code icebergs- Gabriel Weinberg, November 6, 2010
A lot of good products have features that appear somewhat trivial to replicate, but in reality would be quite complex to do so. In my experience, the iceberg part of a code iceberg often involves handling of a lot edge cases. These edge cases are sometimes actually created by making the user interface simpler, e.g. less or free-form input fields.
No Business Plan Survives First Contact With A Customer – The 5.2 billion dollar mistake.- Steve Blank, November 1, 2010
At $5.2-billion Iridium was one of the largest, boldest and audacious startup bets ever made. Conceived in 1987 by Motorola and spun out in 1990 as a separate company, Iridium planned to build a mobile telephone system that would work anywhere on earth. And Iridium would do this without building a single cell tower. and China. What went wrong?
The Ultimate Combination of Startup Business Development Methods- ArcticStartup, November 16, 2010
I've been a huge fan of Steven Blank's Customer Development methodology for a long time. I've also read his book The Four Steps to the Epiphany, where he outlines this in great detail. few years ago I also started following Alexander Osterwalder in his blog about his Business Model Generation -mantra. Some time ago I thought these guys should meet!
Meet the New Enterprise Customer, He’s a Lot Like the Old Enterprise Customer- Ben's Blog, November 15, 2010
Meet the new boss. same as the old boss. The Who, Won’t Get Fooled Again. Cause hustlers hit the block when police change shifts. New York, California different toilet, same s#@t. The Game, Let Us Live. So what gives? Are all these smart people out of their minds? Has nothing changed since the early days of IBM? Consumers. Finance, IT, Legal).
Facts, Facts, Everywhere, But Truth is Scarce- Tim Berry's Blog - Planning Startups Stories, November 16, 2010
Tweet I’ve got a new business idea for anyone who wants it: become a paid data liar, by offering to find facts to fit any point of view your clients want to put forth. Call it facts for hire. It would be a bit like the hired gun in the old west, but more suited for today’s times. For example, your client wants to say that eggs are unhealthy?
Risk-takers and Strategists: Jeremiah Owyang on Long-Term Social Media Planning- ReadWriteStart, November 10, 2010
Two years ago, 93% of Americans believed companies should have a social media presence. Today, brands are hiring social media specialists for customer support, crowdsourced product development, promotions and even leads generation. Sponsor. The Proof Is In The Revenue. Hiring The Right Candidate. The conversation shouldn't end after conversion.
The 30 Steps to Mastery- Ben Casnocha: The Blog, November 29, 2010
The commenter Onjibonrenat, on my post How to Draw an Owl , adds a few more steps to the process of achieving mastery: 1. Start 2. Keep going. You think you're starting to get the hang of it. You see someone else's work and feel undeniable misery. Keep going. Keep going. You feel like maybe, possibly, you kinda got it now. You don't. Keep going.
Freemium 101: Customer Conversion- Venture Chronicles, November 18, 2010
At Get Satisfaction we have had a freemium model from day 1, at then it was just free, no premium offerings existed so we’ve lived through a couple of key transition points and now are optimizing a model we know works. The latter part of the business is what I am responsible for. Our trial process is 15 days and that is not arbitrary.
Pacing Yourself- A VC : Venture Capital and Technology, November 21, 2010
I've been pretty clear as of late that I think the market for investing in web startups is getting overheated. When I talk to some people about this, they say "you should shut down and ride out the bubble on the beach." 34; To which I say "we don't think we can time markets." So I prefer to focus on pacing ourselves.
10 Ways To Deliver Awesome Schwag For Your Startup- OnStartups, November 24, 2010
First off, Dharmesh and I would like to announce a contest for the official OnStartups T-Shirt. We're looking to choose a design put together by one of our readers as the official t-shirt for OnStartups. The design should be unique, include a slogan related to entrepreneurs, and something stylish. We don't want "Yet Another Startup Shirt". t-shirt.
Are you in a startup career path or are you one and done?- Gabriel Weinberg, November 2, 2010
Sometimes peoples' first startups are successful. More power to them. I've been pretty lucky, but not that lucky. had a bunch of startup failure before success. But that was OK because I was in a startup career path , which enabled me to think a bit more long-term. Repeat until success. And then repeat some more. I've made that mistake.
Hubris Versus Humility: The $15 billion Difference- Steve Blank, November 8, 2010
Describing your product as “new and “never been done before” instead of “we’re just like those others guys, but better” could cost your company billions. RIM and TiVo are two examples of getting it right and wrong. Research in Motion (RIM). That year the two founders decided to get serious about being a company, and hired a CEO. You got it. Hubris.
Venture Bonsai Takes Crowdfunding To A New Level- ArcticStartup, November 22, 2010
Venture Bonsai is a new crowdfunding platform that is in private "invitation stage" as the co-founder of the company, Antti Hannula, states. Venture Bonsai enters the increasingly active market of enabling new methods to fund startups. Naturally, a big part of the go-to-market includes partnering with other players in the market.
The 10-Step Google Login from Hell- FairSoftware's Blog, November 15, 2010
Last week, I wrote about how to land a job at Google , and it attracted 9,000 readers in one day! So let’s talk about something else Google could fix: logins. How many steps does it take to login to my YouTube account? Just watch and cry along with me… 1. Go To YouTube.com. That should be an easy 1-click experience… 2. Try Again.
How to Get Funding From Friends, Family, and Fools- Startup Professionals Musings, November 28, 2010
Most entrepreneurs have learned that it’s almost always quicker and easier to get cash from someone you know, rather than angel investors or professional investors (VCs). In fact, most investors “require” that you already have some investment from friends and family before they will even step up to the plate. Be upbeat and respectful. Don’t be one.
What Percentage of 2010 Seed Deals Won’t Raise The Next Round?- Feld Thoughts, November 16, 2010
There have been a number of thoughtful "early warning sign" posts in the past few days including one from Fred Wilson ( Storm Clouds ), one from Mark Suster ( What Angel Investing & Florida Condos Have in Common ), and Roger Ehrenberg ( Investing in a frenzied market ). We'll do follow on investments in 10 of them. Who knows?
Small Business Jobs Act Includes Short-Term Full Exclusion from Gross Income of Gain from QSBS- Recent Buzzes - VC Experts, Inc., November 23, 2010
By Julia D. Corelli and Laura D. Warren of Pepper Hamilton LLP Introduction. On September 27, 2010, President Obama signed into law the Small Business Jobs Act of 2010 (H.R. The 100 percent exclusion is an attempt to encourage investment in new ventures, small businesses, and specialized small business investment companies. 17, 2009 and before Jan.
D&O insurance is a “cost of respect” for board members.- Berkonomics, November 8, 2010
Whenever there are outside shareholders, and when there is a product in release, there is a chance, no matter how slight, of a lawsuit against members of the board as well as against the corporation itself. In that regard, even the lowest amount of D&O insurance available, $1 million, provides for legal defense costs to be covered.
Build Your Own Silicon Valley? | Vivek Wadwha- Campus Entrepreneurship, November 19, 2010
Vivek Wadhwa, a leading entrepreneurship researcher at Duke University, offers a piece explaining why so many well intentioned attempts to copy Silicon Valley fail. He focuses on connections between and among motivated people. In other words the culture and social institutions of the place. It simply doesn’t work that way. Absolutely.
Vision Synching in a Lean Startup- Startup Marketing Blog, November 12, 2010
In the age of the lean startup , we often forget about the importance of vision. A big audacious vision is critical for attracting venture capital and for getting the early team to “take the leap.” It also stimulates the emotion/passion needed to fuel your team’s persistence to blast through inevitable hurdles. Vision Needs Traction.
The end of the (startup) world as we know it- Market by Numbers, November 11, 2010
If you follow high tech startups, it was virtually impossible to have missed all the discussions this summer regarding disruptions occurring in the startup environment, including the role of investors , the wisdom of “Lean startups, &# and bemoaning the fall of the “big win&# mentality. there is no going back. Third, startups are social.
6 Things You Need to Learn To Build Your Own Prototype- Vinicius Vacanti, November 1, 2010
This is the fourth part of a series on becoming your own technical co-founder. In 2008, we couldn’t find a technical co-founder for Yipit. m writing about how I became our technical co-founder. Hopefully, I’ll encourage other entrepreneurs with a dream but no technical co-founder options to take their destiny into their own hands. Learning Python.
The truth about small fish- Start Up Blog, November 29, 2010
When starting out or chasing new customers on an existing business it makes sense aim for smaller players first, to build confidence, and get a few small wins on the board… right? The problem with thinking like this is that it makes life harder and less profitable. The truth about small fish, is that they are harder to catch than big fish.
Online Video on Lies About Business Planning- Up and Running, November 19, 2010
Business plans are a waste of time? Don’t bother? Nobody’s going to read it anyhow? Do you think setting goals and steps to implement them are a waste of time? What about establishing how to measure progress and performance, setting it down, and then tracking it, so you can optimize your management? As if managing were a waste of time.
Understanding How The Innovator’s Dilemma Affects You- Both Sides of the Table, November 4, 2010
One of the most influential books of my career is The Innovator’s Dilemma by Clay Christensen. I cannot recommend it enough for people in the technology or media sectors. Professor Christensen uses real data from the disk drive industry to make his points. It is not a beach novel to be sure. I’ve characterized it in a chart below.
Primal Instincts, How Body Language and Personality Dictate Success- Will Price, November 9, 2010
Want to be successful, well-liked, effective? Want to make more money, receive the lion's share of promotions? Want to raise money? Well, according to Amy Cuddy of HBS , it is vital that you understand how our primal psyches process personality traits and non-verbal behavior. do you feel good or bad about this person." His findings? Now you know
Engage with Customers to Shape Business Model- The Entrepreneurial Mind, November 22, 2010
When launching a new business, relying too heavily on the details of your business plan can actually lead to failure. The research that goes into formulating the business plans that I typically see comes from sources such as industry reports, census data and other government-generated historical material, plus articles from business periodicals.
Innovation in a Nutshell, aka “No BS” Innovation- Gregg Fraley, Author of Jack's Notebook, November 9, 2010
Am off tonight to do a Pecha Kucha presentation at an event organized by Simon Strong of Human Zoo. It looks like a fascinating line-up of tasty Pecha’s. It’s good fun to create something as scaled down as 20 slides at 20 seconds each. It forces you to get to the essence of things.
Why do we do this?- Startup Lessons Learned, November 25, 2010
On April 1, 2008, I was as nervous as I have ever been in my life. It was just minutes before I was supposed to go on stage for the very first time and present The Lean Startup to a large audience, at a big conference. To that point, I’d been talking about Lean Startup concepts only on a seldom-read blog and with people in my immediate network.
How I Build Mockups- Ash Maurya, November 15, 2010
A basic Lean Startup technique is doing the smallest thing possible to learn from customers. Applied to the product, this often times translates to a visual mockup of some sort to stand in-place of the actual product. use mockups quite heavily both before and after launch but not all mockups are created equal. The mockup needs to look real. Model.
How to Hold Kickass Virtual Meetings- The Product Guy, November 21, 2010
Guest Post by Saeed Khan. One of the core activities for Product Management is to get out of the office and gain first hand understanding of needs of customers and partners, and other issues in the market There’s little that can substitute for good field research. Here’s how we did it. Holding the virtual meeting. Not a good sign.
Positioning is Yours; Perception is Theirs- Life Beyond Code, November 12, 2010
What triggered this was a simple question from a friend – “ How do I change how people perceive me? &#. You can’t control how people perceive you – but you can control how you position yourself. It’s a little bit convoluted if you think about it. How do you do that? Well for starters, you can LISTEN!!!! All the best.
HR as a core competency- Seth Levine's VC Adventure, November 18, 2010
In the world of start-ups, HR is at the bottom of the bottom of the heap of priorities most companies are working on. The vast majority of companies think about HR as a process and compliance function, outsource it to 3rd party providers (payroll, benefits, etc.) and doing their best to forget about it. failure.
Attackers and Defenders- Seeing Both Sides, November 9, 2010
I met with a senior executive at a top 5 bank last week and he said something that has stuck with me all week. When I asked him why he was interested in pursuing entrepreneurial activities after a nearly 20 year career at one firm, he replied, "I've decided the world is divided between attackers and defenders. I want to be an attacker again.".
Do Investors Invest in Ideas, People or Markets?- Instigator Blog, November 10, 2010
Investors often say that they invest in people first, then the market and lastly, the idea. I’d say that’s generally true, but it’s also very difficult not to triage and make judgment calls in reverse. Instead it’s always, “What’s your idea?”

Web Designers vs. Web Developers

2010-11-30T08:54:00.001-08:00

Funny graphic by @shanesnow that captures the difference between web designers vs. web developers:

Like the issue of Startup CTO or Developer, often startup founders who are less technical have this same question. Do I need a designer or a developer?

I need to come back to this issue and write more in the future – spectrum of what designers vs. developers cover.

Title	Range (%)
CEO	5 – 10
COO	2 – 5
VP	1 – 2
Independent Board Member	1
Director	0.4 – 1.25
Lead Engineer	0.5 – 1
5+ years experience Engineer	0.33 – 0.66
Manager or Junior Engineer	0.2 – 0.33

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