Startup Leadership

Coda—The Song Remains the Same

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 ~ Building a car company isn't easy. Building one from scratch is harder still. And building one using new, bleeding edge drive train technology is perhaps hardest of all.

It can be done, as Tesla shows.

Yet it is more likely to fail, perhaps spectacularly—DeLorean, Fisker, and the latest, Coda Automotive. Never heard of Coda? Launched in 2009, it aimed to produce a plug-in electric sedan for under $40,000. Last month it filed for Chapter 11 bankruptcy.

Why did Coda fail when Tesla, with a pricier offering, has succeeded wildly?

Passion

All Entrepreneurs Have It

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 ~ I've been accused at times, to my astonishment, of lacking evident passion for my startup venture. Somehow, apparently, during investor presentations, I focus too much on the factual details and fail to offer (say some) a higher level of dynamism at the podium.

Does this really matter? Do investors truly demand a theatrical exhibition of passionate enthusiasm? Or a concise and complete enumeration of the relevant criteria for evaluating a prospective investment?

A sober presentation is better:

From now let’s all agree that we’ll only use the word passion when it’s followed by the word fruit. Ideally then followed by the word daiquiri.

Passion is implied. Passion is why you are reading this article. Passion is why you don’t work for Deutsche Post or a big bank. It’s why you believe that in the face of all the advice that tells you not to do it, to stick to your nice, safe, salaried day job, you’re doing it anyway. Passion is no longer a differentiator, it’s a prerequisite. It’s why you’re at the race, but it’s not the reason you’ll win.

No passion, no chance. I wouldn't be doing what I do (rather than a safer, easier and likely more immediately remunerative alternative) unless I was deeply passionate, not just about the startup, but about the difference I intend it to make in the world. Nor would any entrepreneur.

Only the passionless could possibly be confused on this point.

Tesla

Entrepreneur Funding Follies

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 ~ Should the government try to play venture capitalist?

Some think not, and they sure made hay over Solyndra. But—surprise!—we're not hearing from these same second-guessers now that Tesla has paid off its loan early.

The criticism of government playing VC is inapt anyway, and besides, do they really behave like VCs?



(h/t Mark Suster, Both Sides of the Table)

So, Do You Feel Lucky?

Or Are You Too Tired to Tell?

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 ~ We entrepreneurs are a notoriously optimistic (if paranoid) bunch.

Ask most why they are optimistic and you'll usually hear about the unique and compelling virtues of their latest startup, the enormous market opportunity, the great team, the many sustainable competitive advantages, how much traction it already has, etc. Heck, I've said these things myself. Recently.

There's another oft-stated reason: hard work. As Thomas Edison memorably observed, many miss opportunity because it comes dressed in overalls and looks like work. Not entrepreneurs. We expect to work hard. We may even be proud of it.

Some count on hard work so much they come to believe that they succeed (and others don't) solely because of hard work.

It's not true.

It's Hard Raising Money

Serial Startups

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 ~ Or so it seems.

Startup Salaries

Which Risks to Take?

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 ~ How much should startups pay in salaries?

One line of thinking, advanced largely by rookie angel investors and those who have never worked in a startup, is... nothing. The justification? A need to "conserve cash" so the startup can maximize the length of its runway, the period of time it can continue operations (and take self-sustaining flight) before the bills can no longer be paid.

This idea is, simply, wrong. It is behaviorally naive, financially simple-minded, and legally dangerous. Here's why:

An Entrepreneur's Challenge

Tempering Urgency with Patience

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 ~ Sure, you want to get the cheese, but take some time to think and plan first instead of just rushing in.

Or maybe first see how the impulsive mouse fares.

First mover advantage? Bah. It's often the second mouse that gets the cheese.

Is it Investing or Speculating?

Don't Ask YourBroker

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 ~ The word "invest" has become debased.

We hear so much about the supposed importance of investor confidence and about the need for low taxes on investors, and all because, the pundits aver, we need investors to invest so that the economy can grow and solve all of our problems.

Bunk.

Is Entrepreneurship Cyclic?

Should It Be?

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 ~ The number of people starting businesses or styling themselves as entrepreneurs rises in difficult economic times. When the economy improves, as it is perhaps now doing here in the US, such "entrepreneurs" bail out, rejoining the mass of (temporarily) comfortable wage slaves according to the Kauffman Foundation. Some fret that a decline in new entrepreneurial business is worrisome, even though the economy overall is improving, but this misses the more fundamental point; our future economic health is not tied to the growth of entrepreneurial startups, but to the growth of entrepreneurs.

What about the legions of "fairweather" entrepreneurs eager to return to the vanishing and fundamentally ephemeral security of the big company sinecure?

You were part of a trend like jean jackets and spandex, and so long as it was cool you were on board...

Startup Thrift

Just Like Old Times

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 ~ Back in my Microsoft days (1982-1993) I would sometimes sleep under my desk. With intense deadline pressures, it just took too long to go home and come back,so many of us just crashed at the office. We did it to save time.

Now I do it to save money. At Phytelligence, my current startup, I've stopped springing for a hotel room every time I drive out from Bellevue to Pullman. The Pullman Aquatic Center provides a workout room and hot showers for $5 a day—deal!

However, age has imparted a few grains of wisdom, and, as you can see in the picture, I have improved the level of comfort over the carpeted floor.

Urban Farming

Industrial Rooftop Greenhouses

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 ~ Whole Foods Markets has announced plans to erect a commercial greenhouse atop its Brooklyn store:

Today Whole Foods Market has announced Gotham Greens as its operating partner of the nation’s first commercial scale greenhouse farm integrated within a retail grocery space. The 20,000-square-foot greenhouse, currently being constructed on the roof of the forthcoming Whole Foods Market store in Gowanus, Brooklyn, is scheduled to open later this fall. Gotham Greens will grow premium quality, pesticide-free produce year round in the greenhouse for Whole Foods Market Gowanus, as well as other Whole Foods Market locations throughout New York City.

Apart from all the benefits of having a green roof, the initiative will also grow produce that requires fewer water, energy and other inputs. Transportation costs and environmental impacts will also be minimized.

It will be interesting to see how well a retailer can vertically integrate their operations in this way. Locally, a couple of startups,including Suncrest Farms and Urban Harvest, are working on similar concepts.

If this is the start of a trend, and it sure looks like one, where are all the plants going to come from? Especially for hydroponics, tissue culture provides the best answer.

Growing Success

From Idea to Revenue

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 ~ We're making steady (and growing!) progress at Phytelligence, the WSU spin-out providing better fruit, trees, and services to commercial growers and nurseries. We closed our initial funding round with more than 70% of the funding coming from our customers and partners. We've added a top industry leader to our Board of Directors. And this week we received our first revenue.

Never Give Up

The Entrepreneur Credo

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 ~ I like this infographic:

The dip, as in the graphic, looks, and especially when you are in it, feels, more like a yawning chasm, even an abyss. True to the optimism of entrepreneurs, however, when you are there, things are looking up!

And it's still better than working for the Man.

Sextuplicate

IRS Forms Only Your Grandpa Could Love

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 ~ I expect some of my readers may not even know what carbon paper is, or its somewhat more modern, but still ancient relative, carbonless copy paper. If you have received a W-2 or a 1099-MISC income statement from a small business, however, you may have received it printed on one of these papers.

It is bizarrely retro.

Are College Degrees Worth It?

For Most? No

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 ~ We always hear about the importance of getting a college degree, and how it correlates with much higher lifetime earnings. But, as the financial people are always quick to say, the past is no guarantee of future performance, and the current performance of college degrees is dismal indeed.

At left is an excerpt from an infographic from Frugal Dad on college costs. (The original is quite large, but worth looking at it; click to see in its native habitat.) Increasingly, a college education only has direct financial value if one treats it specifically as vocational training. Want to be an engineer? Got get a degree in computer science or EE. Want to study art? You're better off organizing your own reading and gallery tours, perhaps with a trip to the great museums of New York and Europe. Want to go into business? Become an entrepreneur.

College has other benefits to be sure, but the ballooning costs and the crushing debt load are not worth it for most future workers. It is no longer a ticket to the top rungs of the economic ladder. There is a bubble forming in college attendance, rising costs, and rising educational debt, which is unique in that it cannot be discharged in bankruptcy.

I'm not sure when it will pop, but like any bubble, it eventually must.

Pterofin

Renewable Energy Using Biomimicry

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 ~ My friend Wally Kempkey has been working very hard on this for many years.



Not only is it incredibly cool and creative, the concept is very well-suited to slow currents. Faster currents can be harnessed by conventional turbines like those made by Hydrovolts and others, but such currents are comparatively rare. Slower currents can be found all over the world in watercourses both natural and man-made. While the power generated can be small, the Pterofin device would provide huge value in off-grid developing world locations for water pumping or trickle-charging batteries.

Want a scale model for your desk? Give some love on Kickstarter.

How to Get Stuff Done

Making It As Simple As ABC

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 ~ I've multi-tasked for many years, even though I've heard it argued that true multi-tasking is impossible. We can really only do one thing at a time, and trying to do several things at once simply results in doing several things not very well, and perhaps completing none of them. It leads to all quantity and no quality.

The argument is both true and irrelevant.

It's true inasmuch as we can't really focus on more than one thing at a time. It's irrelevant because it's not only unnecessary, but detrimental, and it's not really what people mean by multi-taasking.

Tracking Consequences

Let's Get Empirical

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 ~ The inaptly named fiscal cliff has been (temporarily) averted in a deal that, in part, raises taxes on the so-called job creators.

We've been hearing for years—decades even—that higher taxes on the rich would cause them to stop hiring and investment.

Now that their taxes have gone up, let's all pay attention to see whether they actually throw that petulant fit they've been threatening for so long. I'm guessing not.

Entrepreneur Fuel

How Much Coffee is Too Much Coffee?

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 ~ The latest medical wisdom?

If you like coffee, go ahead and drink as much as you want and can... If you drink [mass quantities], it's not going to do you any harm, and it might actually help you. A lot."

I'm going to tune out any further studies, preferring instead to spend my time brewing another pot.

Who Needs a Business Plan?

Show, Don't Tell

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 ~ Brad Feld, startup luminary, writes that the business plan has become an historical artifact.

He's right. Mostly.

It's certainly true that there's much less demand by investors for full-fledged business plans now than when I was starting my life as an entrepreneur 15 years ago. I'm just finishing up raising a seed capital round now, and of the roughly one dozen investors already in, not a single one has asked for the business plan. Why? None have told me, and I didn't ask, but it's not hard to guess—the only thing possibly more tedious than writing a business plan is reading one.