Mark LaRosa is the founder of QuotaCrush. Started as a blog on sales techniques for start-ups, QuotaCrush now provides outsourced sales consulting and services to several start-ups, incubators, and universities. Mark also plays an active, key role at Angelsoft, where he was also previously the VP, Sales.  Angelsoft provides software that helps angel and venture capital investors manage their investments.

In Part 2, Mark talks about why its never too early for startups to think about sales, how most entrepreneurs underestimate the need for sales teams because they think their products will sell themselves and the amount of client out there that want to buy from another human being.

Sean: You’re consulting for startups on sales and building out sales teams or sales organization or just trying to get the first deal in the door…

Mark: Right.

Sean: …probably more typically… What advice would you give, you know, to a couple of, typically, engineer guys, you know, starting their internet company in their garage about when to think about sales and how to think about it?

Mark: The bottom line is it’s never too early to think about sales.  The Twitter’s of the world where there’s a product that figures out the sales strategy later on is very, very, very rare.  You’re not probably get money and you’re not going to really succeed unless you’re really starting to think about that anybody really wants this product, anybody really needs this product. And so you need to be thinking about that real early on. And it is very important because you have to create something that somebody wants to buy… If nobody wants to buy you, I would say, by definition, you don’t really have a business. So you need to figure out what that is. And you need to not be afraid to be out there talking with prospects talking to potential customers to basically figure out what that product is. Now your ultimate vision may be here (gestures), and you may have to take a diversion over here (gestures) before you get to here (gestures), but getting the product over here that funds, the vision – the ultimate vision – is a way better path than just trying to go blindly out and build something that you think the people are going to come to because that’s whatever you see as the vision. When I talk to a lot of these very, very smart engineers that are building companies, sometimes there is a tendency to say, ”No, but this is a vision. I’m changing the world,” which is great, but you need to think about how you’re going to get it into people’s hands and how they are going to accept it and how you’re going to bring them along with you in your vision and you’re going to sell things along the way.

Sean: Last question: you’ve seen a lot of these startups, and so I’m thinking you’ve seen enough to have some statistical relevance… as a percentage, how many are building a product that they think will just be self serve, meaning people will just come to the site to buy it, versus those who kind of think and understand that they’re going to have to go out and sell it?

Mark: I think that there’s a very large percentage of people that don’t appreciate the amount of people-effort there is in sales and how much there has to be, and people ultimately buy from people. And some of that’s marketing, you could argue that, you know, but you’re not going to be able to do it with just SEO. The companies that are going to do it with just “Hey, it’s going to be SEO and I’m going to put a couple of ads out there, I’m going to get an ad on TechCrunch and next thing I know millions of people are going to come to my door,” again, that’s very, very rare. There’s really a large people-to-people relationship thing that happens, and as a result of that sales actually becomes even more critical to your business because as technology costs go down, as development costs go down, sales becomes a larger and larger and larger percentage and it has to become a larger and larger and larger percentage of your budget. So you’re going to be hiring people and making large decisions on who you’re paying and how you’re paying them and where they’re travelling to and all of that. That becomes a very large percentage of the money that you’re going to raise from whatever channel and so, therefore, it’s very important.  Back to your original question, you know, there’s still a big amount of people buy for people. They don’t just buy blindly off of websites, for the most part.

Sean: I think what people don’t get is: your product might be the best product ever, but there’s so much noise that have to convince someone to pay attention long enough to figure it out.

Mark: Yeah. I had a conversation with a startup yesterday, and we were discussing, and he was explaining to me, “But you don’t understand, this is the way kids think, and that’s why this is going to be a smart buy for these customers.” And I said, “Yes, I understand that and I probably agree with you that you’ve got something new and innovative that advertisers would want. However, you’re going to talk to that guy, and sitting ac77ross the table he’s going to say ‘I have to report to my boss and tell him why we’re taking money away from this ad campaign and giving it to you, and you have no metrics to prove your vision. I have to just jump off this ledge with you.’” And that’s going to be a tough sale. So I said, “I’m not saying that I don’t believe you, but that’s going to be a tough sale.” So how do you get the product, how do you get the deals that you strike so that you can bring that person to that vision with you? And that’s where a really good sales guy comes in and that’s where you’re going to need those people that can figure out how to structure those deals to get people to have your vision until you get to that point where people just look at you and say, “Oh, yeah, it makes total sense. Of course I would buy that because I can see the return.”

Sean: Absolutely. Mark we’re out of time, but thanks for coming.

Mark: Thank You.

Mark LaRosa is the founder of QuotaCrush. Started as a blog on sales techniques for start-ups, QuotaCrush now provides outsourced sales consulting and services to several start-ups, incubators, and universities. Mark also plays an active, key role at Angelsoft, where he was also previously the VP, Sales.  Angelsoft provides software that helps angel and venture capital investors manage their investments.

In Part 1, Mark talks about how when, where and from whom to raise an angel round of financing and the pros and cons of professional angels vs. friends, family and wealthy individuals.

Sean: I’m here with Mark LaRosa, from QuotaCrush. So Mark, tell us a little bit about you.

Mark: So, I’m the founder of QuotaCrush and I founded it about 18 months ago, although I ran it as a blog – just a blog about sales – for about a year before that.  It’s really about advice for salespeople and sales managers within organizations that are startups.  That’s what the blog mostly is about, and what I’ve done is extend that to be a consulting company for startups. I’m working, right now, with about four different startups as their acting VP of sales, and essentially helping them develop their sales strategy, move their sales strategy, ultimately get their product out there in a more sellable way.

Sean: Before QuotaCrush you were VP of Sales at Angelsoft which, of course, was started by David Rose from New York Angels.  So, and you’ve done a couple other startups in your life; both good and bad results…

Mark: Yeah. (chuckles)

Sean: So, if there’s two things that I could ask you today, one would be:  I guess, what advice would you have for a couple of founders in a garage about from whom to raise money? How much and when?

Mark: Yeah.  So I can tell you that you should …don’t just raise money for money’s sake. You want to get money because it’s time, because you need to expand out your business, and you want to hold that off as long as you can. So if you can do anything with bootstrapping or friends and family or if you’ve got a contract and you can take that to a bank and get a loan based off of that contract, that’s the better way to go. And then when you do ultimately get money, you want to make sure that’s smart money. It’s not just money for money’s sake.  Somebody that can help you that’s going to understand your vision that’s going to help you carry your vision that maybe can take you and give you advice. So that may be waiting until the VC rounds that may be some angel money. But you really have got to make sure that you’re getting a partner when you get that money.

Sean: So if you think about angel money, you have friends and family and fools – [inaudible] friends and family and fools – and then, sort of, professional angel communities, which is what Angelsoft tries to harness both for that community as well as entrepreneurs trying to access, right? There’s clearly pros and cons to both.

Mark: That’s right.

Sean: You just mentioned one pro for professional angels, assuming they have been an entrepreneur before and now are investing; they can give you lots of advice. What would be a con of raising money from a professional angel versus, you know, a [inaudible] guy?…

Mark: Yeah, so, with a lot of the professional angle groups, it can add some complexity to the deal. You know, with friends and family, a lot of times you getting an in and they’re just giving you the money and it will be convertible at some point. You know when you get into a professional angel group a lot of times you get into the same situation you get into with VC’s where you’re going to go through an entire round and spend up to $50,000 trying to get lawyers to close this deal and it may take a very, very long time because – we always call it, you know – “you’re herding cats”  because you’ve got all of these individual people that are making their own decisions and you’re trying to bring them together. And there’s a lot of work that you have to do to bring these angels together even though they’re a part of a professional group. And you will also find that a lot of the professional angel groups – not New York Angels and a lot of these real professional angel groups – but there’s a lot of angel groups out there that do a lot of looking at deals but they don’t actually do a lot of actual investing. So you will spend a lot of time working with these guys and you actually won’t get money in the end. So you need to look really towards the real professional organizations. You know, like right in New York here we have the New York Angels, we have Golden Seeds, you know, a lot of really great angel groups, and those are the ones that you should be making sure that if you’re going to go the angel  group route that you’re sticking with those types of groups.

Sean: Top-tier? Reputable?…

Mark: Exactly.

In Part 2 Mark gives startups some advice on how and when to think about sales.  It will be published on Friday.

Do you agree/disagree with Mark’s advice around how, when and from whom to raise angel money?  Share your opinion in the comments!

On the heels of last week’s post about how to run a startup board meeting, I attended a speaker event last week at the West Side YMCA in New York and the guest speaker was Jason Fried, author of REWORK and founder of 37Signals. One of the chapters in his book and topics that night was about how “meetings are toxic” and can be totally eliminated from a company.  I couldn’t agree more with the former, but have been thinking about the plausibility of the later ever since.

Unfortunately, “meeting-creep” is all too common as a company grows in size. At first, you have weekly meetings, then daily meetings, then quarterly meetings and finally, the semi-annual and/or annual meetings.  You have meetings of all varieties: one-on-one meetings, product meetings, strategy meetings, team meetings, meetings to coordinate all the meetings, etc and so forth. Before you know it half of your company is in meetings at any given time, which inevitable requires lots of senior management’s time to manage the meetings, or just attend the meetings “out of respect” for the employee hosting the meeting, which only makes the meeting seem that much more important or necessary to attend. It’s a vicious cycle my friends!

Here are the top two reasons I think meetings are toxic:

1. Productivity & Opportunity Cost – What could have those people been doing instead if they had been left to focus for that hour on big projects? Most topics discussed in meetings either could have been done via email or some other form of communication and/or didn’t need that many people even if an in-person pow-wow was necessary.
2. Expense – If there are 10 people in a meeting for an hour and the average salary of each person is $150,000 that meeting is costing over $720 per hour, not including benefits, which would tac on another 20% for a whopping $865 per hour.

So here are the top 5 ways I plan to reduce or eliminate meetings at my new company:

1. Standing Room Only – When New York’s own Mayor Michael Bloomberg was building Bloomberg, what is easily one of the largest, most successful technology company started in New York, he had a policy of taking all chairs out of the conference rooms. He found that when everyone is forced to stand up at every meeting the average meeting time went from one hour to 15 minutes or less.  When I build my first conference room it will have a table that is just high enough to take notes and zero chairs.
2. Optional Attendance – Jason mentioned a 5000+ person company (size doesn’t matter) who’s CEO has made all company meetings optional, including his own. He leaves it up to his trusted employees to decide for themselves is there is something more valuable they could be doing. I personally love this idea!  This forces meeting organizers to have to sell others on attending their meeting, which in turn forces them to really think hard if the meeting is valuable enough to spend the time convincing others to come or if it could be done another way or just not done at all.
3. Strict Start & Stop Times - The only thing worse than the people who schedule lots of meeting is the people who come late and make everyone else wait for them. These people are making the statement that whatever they were doing was more important than the pressing things the collective group has to do.   I am a big fan of starting exactly on time and locking the door on everyone, including the CEO, who is late. It is also crucial that you stop strictly on time, as then others will learn there is absolutely no spare time at the end so if they want to get their point across they better do it in the time allotted. Frankly, the people that are late probably don’t think the meeting is worth their time anyway and you will be doing them a favor by locking them out. Your new motto should be “lock’em out and throw’em out!”
4. Alternative Collaboration Tools – If meetings are all about communications and collaboration then use one of the many collaborate tools available that enable people to work on projects together real time, including Campfire,  Google Docs, the newly minted Chatter by Salesforce.com and the list goes on and on.
5. Just Say No! - Eliminate Meetings altogether as a rule. Do you have the guts to do it? 37Signals did and they are doing just find without them.

If you are at a startup, or any company for that matter, please don’t make the mistake of thinking that more and more meetings are “normal” as  you grow.  Normal is what YOU make it! If you decide that no meetings is normal than, voila!, it’s normal!  Don’t be a sheep, and for God’s sake don’t follow the sheep to slaughter.

Companies are filled with people that have nothing to do but fill their day with meaningless meetings.  It makes them feel as though they are accomplishing something.  The problem is that there are other employees that need to actually get work done.  If you are amongst the later don’t let the former drag you down or make you go home or work nights and weekends to “get real work done.”  You have a choice, even if that choice is to quit the company your working for to join one where you can be more productive, like mine:-)!

I found this post from Boston based Andrew Payne, founder of FanSnap, investor in HubSpot and advisor to Kayak, among other things, on his wiki and thought it very much worth sharing:

How to Run a Startup Board Meeting

There are no firm rules for running board meetings at early stage startups. The CEO needs to find a format that works for him/her and the board. It’s helpful to settle on a consistent format. This helps keep the meeting focused, as board members know at which points on the agenda certain items will come up for discussion.

Board meetings needn’t be formal; they just need to get the work done.

Purpose of the Board

It’s important to remember the board’s primary purpose: to hire (or fire) the CEO. The board really only makes that one decision at each meeting.

A secondary purpose is advising the CEO and management team. In a well-functioning board, the directors give advice and opinion, but the CEO and team make the decisions (which might be against board advice, but they’ve got to live with the consequences). The board does not set the plans, objectives, goals, or strategy; instead, the CEO develops these, and presents them to the board for discussion, feedback and (possibly) approval.

Finally, the board formally approves certain business items (as dictated by the company by-laws and investor agreements), such as: stock and option grants, 401(k) plans, compensation for executives, etc. Also, in smaller companies, board approval may be needed for any obligation above a certain threshold (e.g. $100k or $250k). If there’s a question about an item needing board approval, it’s best to err on the side of caution and get formal approval.

Scheduling

Schedule board meetings well in advance (e.g. 6-12 months out). Many VCs are on 5-10 boards and are impossible to schedule on short notice.

Avoid Mondays (the typical day for venture firm partner meetings), and Friday afternoons. Most meetings are 3-4 hours long.

Meeting cadence varies based on company stage and the amount of “stuff” gong on. Early stage companies may have meetings monthly, falling back to every 6-8 weeks (e.g. twice a quarter).

If you are managing to quarters, note where meetings are scheduled with respect to quarter boundaries. If you have a meeting on Sept 20th, you’ll be grilled about how the quarter is coming together.

Venue

Meetings should be at the company whenever possible. This gives the board a “feel” for the company, as well as access to anyone on the team that might be needed during the meeting. You will be discussing confidential stuff; you usually can’t have it in an open area.

Some VCs like to have the meeting at their office, for their convenience. If the company has adequate conference space, push back.

Prep & Board Package

Send the agenda and any presentation materials a 2-3 business days in advance. Send it too early, it will get set aside to read later (and frequently forgotten). Send it too late, and the board won’t have time to review.

Set the expectation that board members read the complete package before each meeting. It’s OK to send out preliminary data in advance (clearly noted as such), and hand out the finalized data at the start of the meeting.

NOTE: board packages form a documentation trail for the company. It’s not uncommon for acquirers or follow-on investors to request a copy of all board packages as part of their due diligence process.

Also, pay attention to how much time you (and the team) are spending preparing for the meeting. If you’re investing a lot, you’re probably mixing the meeting prep work with underlying strategy & planning work. That’s OK, as long as you know it’s happening. But it’s not good to let important planning work slide because you don’t have a board meeting to force it.

Also, after a few meetings, you should find ways to streamline. For example, with a semi-standardized business update section, each team member can update their material, instead of reinventing a way to present the information each time.

Finally, in the material itself, focus on the key headlines (with the detail available, if needed). Highlight insights, implications and outcomes. The board members obviously know the company, but they’re removed from the day to day details. Many CEOs fail by getting too far into details, robbing airtime from key items.

It’s also important to get in front of issues and opportunities. All companies have problems: the meetings that don’t feel great are the ones where the directors are pointing out things the team should be on top of. Also, avoid surprises; if there’s really bad news, socialize it with the board beforehand.

Attendees

The CEO, directors, and any observers should attend the entire meeting. The CFO and/or company counsel may be present for some (or all) of the meeting, and s/he usually records the minutes.

The management team should attend for parts of the meeting, as needed and dictated by the agenda. It’s good for both the team and directors to interact directly. However, it’s not a great idea to set an expectation that team members will be present for the entire meeting, or for every meeting. Inevitably, there will be a discussion about a team member and it will be conspicuous and delicate when they are “un-invited”.

A Suggested Agenda

Andrew suggests a great four part agenda. Read the full post on his wiki.

A fellow entrepreneur confided in me earlier this week that, while she was determined to remain optimistic, she was experiencing doubts about her two year old startup.  If you can relate, this post will ask you the same simple question I asked her that should instantly dispell your fear and doubts, or at least make you realize you have stronger emotions that far outweigh them. But first, let me assure you that uncertainty is the only certainty in a startup and with uncertainty comes fear and doubt.  So what you are feeling is not only normal, its a mandatory part of the startup experience.  Startups are often referred to as roller coaster rides because they are full of high-highs and low-lows.  So if you want to know if you have what it takes to be an entrepreneur one of the most important questions to ask yourself is do you have the high tolerance, and stomach, for risk?  (no, that’s not the question that will help you overcome fear and doubt, keep reading).

So what’s the one question that will instantly make you overcome your fear and doubt and help you deal with the uncertainty of your startup dream?  The answer actually comes from an unlikely character, the lead singer of Kiss, Gene Simmons, in a now famous NRP interview he did in 2002 with Fresh Air’s Terry Gross that you can listen to here. The reason the interview is famous is because Gene is extremely obnoxious throughout the entire thing.  At the end, Terry asks him if the persona he presented on the show was not the real Gene Simmons, but just one he effected as a member of Kiss as no one could possible be “that deeply into themselves.”  Gene’s response was “I think everybody should be [deeply into themselves]….life is too short to have anything but delusional notions about yourself, which is, you should really like yourself more than you deserve to because….” and this is where the big question comes in “….what’s the alternative?”

When my friend the entrepreneur confider her doubt in me, I instantly thought of that interview with Gene Simmons and asked her “what’s the alternative, to give up on your dream and get a job?”  If you are truly and entrepreneur, that one question should repel you to such a degree that you will instantly overcome your fear and doubt and continue on with your mission, as giving up and getting a “real job” is just about the worst possible ending for any true entrepreneur.

If you think I’m nuts introducing Gene Simmons into a conversation about startups, let’s look at Union Square Ventures’ partner and AVC author Fred Wilson’s opinion on what are the “unique and defining characteristics of entrepreneurs” from his post on the subject in February of this year:

“And I also believe that there are “unique and defining characteristics of entrepreneurs.” Here are some of the ones I observe most frequently:

1) A stubborn belief in one’s self

2) A confidence bordering on arrogance

3) A desire to accept risk and ambiguity, and the ability to live with them”

So as fear and doubt creep up as you go about your day-to-day, simply ask yourself “what’s the alternative?” and you will quickly put down those demons and continue on with your mission.  God speed!

Update: My wise friend Nate Westheimer, whom I interviewed here a few week ago, added a thought to this post worth sharing and expanding on, so here it is:

“My issue is that it’s smart sometimes to “give up.” Sometimes we’re wrong, you know? In fact, we’re wrong a lot. So the question I’d ask someone who’s two years in and stagnating is: what radical thing will you try with your business before you close up shop?

I couldn’t agree more with Nate. My post assumes that you have a solid product and market, because if you don’t you should definitely fess up and bag it to find a bigger, better idea to pursue. In the case of the entrepreneur in this post, I believe the product is solid.  Her challenge is that she made some early decisions that cost her too much precious time.  But a few of us are helping her get her back on track to see if the product is as solid in the market as we think it is.

Thanks to Nate for chiming in and reminding us to think big and radical and also of Kenny Rogers’ advice that you need to “know when to hold’em, know when to walk away and know when to run!”

It’s been one full week since I left my last company to launch SalesCrunch, a Software-As-A-Service (SaaS) company who’s mission is to  revolutionize the sales profession and make sales sexy through technology and education.

No matter how great your idea or how much funding you have, the clock is always against you in a startup. That is true when you are two guys in a garage and its even more true when you are 100 people and your monthly nut is in the millions, especially if you are not yet profitable.  So, you need to get a lot done in a very short time with limited resources at just about every stage of growth.  While I am always looking for ways to be more productive, frankly I have been running on a startup clock for so many years I get more stuff done in a day than most people get done in a week or even two.   My biggest problem is making sure I stop to take measure and smell the roses every once in a while.

So when I thought about all that I have accomplished in one short week, I had to share.  Below is a list of just the biggest accomplishments. I elaborated on a few in more detail below and, since finalizing the logo was one of the accomplishments this week, I am using this post to update the one I did earlier this week “What Not To Say To Your Logo Designer.”

Top Accomplishments of the Week:

• Finished 90% of the business plan
• Got verbal commitments for $250,000 from a few angel investors
• Scheduled several more investor meetings for the coming weeks
• Designed the logo and business cards
• Setup up Microsoft Exchange Server
• Secured an office in TechSpace in Union Square, New York
• Hired a kick-ass Director of Engineering – now I can say “we” instead of “me”
• Setup a basic “about us” website
• Met Marc Benioff in person. Marc is the Founder & CEO of Salesforce.com, on top of which we are building our technology platform.

The Logo:

What’s Behind a Name?

1. More Revenue. Less Time. – One of our goals is to empower sales professionals, and therefore the companies for which they work, with the ability to create more revenue (Sales) with less time and resources (Crunch) through education and technology.
2. Bite-Sized Learning – The word “Crunch” is symbolic of a much bigger philosophy we have about how people learn.  One of the biggest problems in sales today is that professional training is so expensive it is often done in marathon sessions that last days or weeks.  Unfortunately, people quickly become overwhelmed and forget most of what learned within days. However, retention increases 2-5 times over classroom training when information is “crunched” into “bite-sized” increments and when they can control the time, place and pace of their training.

What’s With The Rhino?

1. Unstoppable Power & Endurance -  Rhino’s can charge at up to 35 miles an hour. Weighing in at between 1 and 10 tons (2,000-10,000 lbs), experts agree that you can’t stop them or charge their course, so its best to just get out of their way. Despite being hunted near extinction for their horns, Rhinos date back 20M years.  When singularly focused, good sales people are similarly unstoppable and very hard to kill off!
2. Thick-Skinned – Rhino’s have a thick protective skin made of layers of collagen.  Facing constant rejection day in and day out, sales people need to be very thick skinned above all.
3. Crunch-ability - Rhino’s can crunch a small car underfoot.  There are also legends about rhinoceros stamping out fire in Malaysia, India and Burma.  Sales people are put under constant strain to “crush” their sales goals.

The Office:

The gang in our new downtown office. From left to right: Founder & CEO Sean Black, Director of Engineering David Sommers, and fellow entrepreneur in arms Eloise Bune of Gracious Eloise.

Jeff Stewart if the founder and CEO of UrgentCareer, Founder and Chairman of Mimeo, angle investor in several New York based startups and himself is on his sixth startup in New York City.

We talk about UrgentCareer, Mimeo, why he chose New York as the city in which to start six companies and what Jeff looks for in an investment as an angel investor.

[Note to self - make sure the interviewee is facing the camera!]

Sean: So we’re here with Jeff Stewart, CEO and Founder of UrgentCareer and, actually, serial-entrepreneur. Jeff why don’t you do the honors of telling us a little bit more about yourself than I’d remember.

Jeff: So I’m an inventor, angel investor and a big advocate for New York as a great place to start a company.

Sean: Yeah. So you’re currently the founder and CEO of a company called UrgentCareer. Can you tell us a little bit about that?

Jeff: Sure. UrgentCareer is developing a new technology for finding, screening, and assessing salespeople. We’re using computational linguistics to essentially categorize salespeople and figure out what type of salesperson will succeed in which role. So, we do that by recording a conversation, transcribing the conversation, and then algorithmically analyzing that with the hopes of eventually being able to successfully categorize the different types of salespeople.

Sean: So who’s the ideal customer for UrgentCareer?

Jeff: Today we work with – as the technology is still evolving –we work mainly with venture-backed, fast-growth startups. Although, more and more we find ourselves working with large corporations who have substantial sales organizations and, like so many companies, understand that getting great sales people is critically important.

Sean: So any founder or startup here in New York – or anywhere – should call you if they’re thinking about building a sales team and don’t want to make lots of mistakes doing it?

Jeff: Well, as we built out the technology we realized we needed to have access to a steady stream of data and the best way to do that was to actually build out a world-class sales recruiting organization. So, we’ve created the capability of finding exceptional sales talent. So, yes, if you’re looking to find exceptional sales talent, we can do that.

Sean: And so Mimeo was the other, kind of, the last big company. Do you want to talk quickly about Mimeo here …

Jeff: Sure, sure. Mimeo is also based in New York. We are an internet-based print service. We take digital documents, literally from your computer, hit “print,” it goes to our state of the art production facility in Memphis, TN, gets produced and it can be Fed-Ex’ed anywhere Fed-Ex delivers. It’s usually faster, easier and certainly a lot more convenient for document production.

Sean: So this is, you said I think, number six, that UrgentCareer is going to be your sixth startup in New York. Why New York, why not the [Silicon] Valley? Why do you choose here for home for all of your companies?

Jeff: Well the Silicon Valley is absolutely amazing, it’s a very special place for startups, but I think more and more you’ll see New York as the number two place on the planet for startups. The reason for that is talent. There’s a vast reservoir of talent here in New York and we’re able to attract talent from all over the world. There’s customers, there’s actually about 150 billion-dollar plus companies that have substantial presences here in New York…

[INTERRUPTION]

Jeff: …There’s about 150 billion-dollar plus revenue companies who have substantial representations here in New York. Also it’s an international city and there’s a great startup community, including second and third time entrepreneurs who are now actively involved in a new wave of startups.

Sean: You said to me earlier that you think New York is going to be bigger than the [Silicon] Valley…in terms of being able to invest. Why is that? Why would New York be a better place?

Jeff:  Well, I think, again Silicon Valley is incredible and has very robust seed and angel stage investment… and even more important, experienced entrepreneurs who can contribute advice as part of that investment. But New York has an extremely high density of qualified investors with deep industry expertise across a wide range of industries and can have a lot to bring to the table. As far as a reservoir of potential angel investors, New York actually surpasses the West Coast as far as the number of potential angel investors. And I think, at least what I’m seeing as an angel investor is more and more qualified investors saying, “How do I get involved in this asset class?” It’s one of the few asset classes left that – thanks to the proliferation of derivatives – is still uncorrelated. So it’s a good performing asset class, it’s uncorrelated, and it’s fun. You roll up your sleeves and you contribute more than just the investment. A lot of the times you can bring important domain expertise to the table which helps the company out.

Sean: So you’ve invested yourself in multiple companies in New York and elsewhere. What do you look for in an angel investment?

Jeff: Well, I like to get involved…

Sean: Who should come see you?

Jeff:  I like to get involved very early, so at that stage it’s a lot about the management team, or the partial management team, if you will. Also, I’m a geek at heart. I’m very interested in technology, so I like to see that there is technical lead and that there’s some depth there. And I look for the ability to move quick and execute quick. I think world-class startups are built through fast iterations and, you know, in some cases, lots of mistakes but the ability to make their mistake learn from it and move from there to the next level.

Sean: Do you have a syndicate of friends and fellow investors that you push your portfolio of companies out to once you’ve made a choice to invest?

Jeff: Oh, absolutely. I think… I do angel investing as a team activity.  You know, there’s just not enough money being put to work to dig as deep as a professional VC would, so you have to rely on a team, if you will, to dig in and do the due diligence. And then also the amount of the investing, you have to rely on a team to make sure that there’s enough money being put to work that it can take the company to the next level. So I think that most successful angel investors co-invest with other angels, and I think that’s in the benefit of the, too, because you get diverse perspectives and it’s healthy for the entrepreneur.

Sean: So any other words of wisdom you’d like to leave behind for some aspiring entrepreneur that wants to say in five or ten years that they’ve been successful six times over?

Jeff: I think it’s… starting companies is a lot of work.  It’s not for everyone, but it’s extremely rewarding and you learn a lot quickly. And I encourage anyone who’s looking to do it to do it.

Sean: You know, six times in, you have enough experience, do you still need to do the 80 hour work weeks or can you be more efficient at it?

Jeff: Yeah, I think you can be a little more efficient, but I think that there’s certain phases that the company goes through that there’s no short-cut. It just takes a lot of work.

Sean: And it needs the founder.

Jeff: And it needs the president, yeah.

Sean:  Well, Jeff thanks for sitting with us today.

Jeff: My pleasure.

Designing your logo is one of the first fun things you get to do when starting a new company. I have gone through the process several times, but a few years have elapsed in between each so I am a bit rusty.

Here is a funny story that reminded me how careful you need to be when communicating your vision to a graphic designer, especially when you have no design skills to speak of yourself.  I should preface the story by saying that I have worked with this designer for a few years and she is very talented and incredible fast, so your laugh is totally at my expense. Below is an excerpt from the high-level list of requirements we sent.  Try to guess where we screwed up and what could have been misinterpreted by a designer:

High-level Logo Requirements:
•    The company name is SalesCrunch – one word, capital S, capital C.
•    Below is a poor attempt of a logo I mocked up in illustrator as a placeholder. I like the light gray/bright red color combo, but I don’t like the logo.
•    I like modern fonts. The one below is Eurostyle. I am not in any way married to it, but wanted to use it as an example.
•    I like the idea of “Crunch” being taller and more narrow than “Sales”, but honestly I have no design skill so I leave it up to you to come up with better ideas.
•    I definitely want a bug or icon as a separate element in the logo.  I have included a few logos below that I really like: FeedBurner, Technorati, LinkedIn.

Did you figure out where I went wrong and what the consequences might have been?  It was using the word “bug” in the description. I have heard this term used to describe an icon in a logo that is separate from the name. The idea is to have a symbol that, as your brand becomes more established, can be recognized even when used without your company name. Think of the bitten apple in Apple’s logo as a good example. Well, clearly the term “bug” is not all that common, because it was interpreted literally by our designer!  As you can see below, many of the first logo concepts came back with bugs in them!  When I first opened them I was immediately puzzled as to why there where bugs in the logos, but then burst out laughing when I realized where I goofed.

There is a happy ending to this funny story, which is that we really like one of the (non-bug) concepts and we will be using it as the basis for the next round of concepts. I will post the next concepts when we get them. In the meantime, have a good laugh at my expense and learn from my blunder.

Don’t forget boys and girls, New York Tech Meetup is tomorrow and there ain’t many seats left for ya: 

This beer drinking duo seems to be the most popular pic for the “This Week in Silicon Alley” post so far. Should I keep it the same or keep changing it around?

Nate is a Co-founder of Anyclip.com, organizer of New York Tech Meetup and Advisor to Flybridge Venture Partners.

In Part 3 of 3 Nate talks about:

• what he’s doing for Flybridge Captial in his role as their New York advisor
• how to get involved in the New York tech community that helped him go from a mostly unknown to one of the more recognized people in the community
• the goal and future of the New York  Tech Meetup, that now stands at 12,677 members and over 800 attendees per month and growing.

Sean: There seems to be a lot more activity in New York from venture capitalists. There’s a first round coming from Philadelphia opening offices…

Nate: Flybridge…

Sean: …Flybridge hired you

Nate: Polaris….

Sean: …. So talk about what you are doing for Flybridge.

Nate: … for Flybridge? Well, I’m technically an advisor to Flybridge, and what that means is, for the most part is, when it comes to New York investments, I’m both helping them source deals as well as due diligence o n deals and then on their investments, help make connections. You know I think that it’s really something that, you know… I put, at the last New York Tech MeetUp, I put DreamIt Ventures up on stage to announce their new fund. I don’t think we should be, you know… I’ve been accused before of being a bit “chest-pounding” about the New York tech scene…

Sean: mmm-hmm

Nate: But at the same time, I don’t think it’s bad to have competition or more investors in New York looking at New York companies and focusing here. In fact, I think it’s a really good thing for the ecosystem, with the full disclaimer that I’m being paid to say that. Right? (chuckle) We’re not paid, but obviously I have skin in the game here.  But…

Sean: But at the same time, the reason the [Silicon] Valley is so successful is because there’s, you know, an ecosystem, and the idea behind a community here is get, build the same kind of ecosystem and you’ve got to support it…

Nate: Here’s the thing… part of the ecosystem is diversity. And the thing that really excited me at first, besides once I met with the Flybridge guys, they’re all just top-tier guys. They are just great, great people. Everybody involved in the firm. And I vetted them with Tengen. I made sure to talk to, you know, Union Square Ventures to talk to them about their co-investment with them and I made sure to talk to Dwight Merriman and a number of the Flybridge guys were at Greylock, which backed DoubleClick, so I vetted them. Something that excited me, beside the fact of who they were as people was the fact that they were doing investments outside of New York that don’t look like New York investments, in that they… As a Boston VC firm, versus a New York VC firm their investing in medical devices, they are still doing semiconductors – there’s still innovation in semiconductors – there’s all these technologies that New York isn’t necessarily strong in, and therefore New York-centric VC’s aren’t focused in. Where if you … When you plug in a VC from outside of the area, you’re getting all sorts of, intellectual capital that you wouldn’t have in this ecosystem anyway. So, you know, First Round Capital goes the same for them. They are more plugged into what’s happening in the [Silicon] Valley than any other, I think, VC firm that’s operating in New York City.  And so they are they’re bringing in all sorts of intellectual capital from Josh [Kopelman] and Chris’s [Fralic] and Howard’s [Morgan] experiences outside of New York and we’re better off for it. So that diversity, those outside agents, these agents that operate primarily in other ecosystems with different components in them are hugely, I think, adding to what we do. Having them here is really good.

Sean: So the whole Idea here is to promote the ecosystem.

Nate: mmm-hmm

Sean:  So for those who are outside of the community who are wanting to break in and get involved, what would your advice be?

Nate: Of course, I tell people to come to the New York Tech MeetUp every month, but I actually tell them that that should be… that’s sort of your staple. That’s your daily vitamin, I guess, but you’ve got to do more than that. … There was a time, not too long ago, that I knew nobody in this industry, and where I found the most amount of value were all of the niche, smaller events that are going on. The smaller groups; the more focused ones. Those were the places where I would go and I’d meet one or two people in these smaller setting where it was easier to do so. So that when I did show up at the New York Tech MeetUp, I could leverage those connections. That was the best way to leverage a crowd of (at the time) 400, 200 to 300. Right? Walking into a room that size is pretty intimidating, even for some outgoing people like most entrepreneurs. I suggest people go to Garysguide.org, subscribe to Startup Digest or Charlie O’Donell’s weekly email blast. You know, pick out some of the smaller MeetUps, whether it’s the Video 2.0  MeetUp, if you’re into video,  or the Fashion 2.0, or the Gaming 2.0 MeetUp, or TechAviv if you are into Israeli startups. Just like there is a Boston…  a different profile for Boston MeetUps, there’s a different profile for Israeli companies that operate in NewYork City. Right? Where we are more interested in, sort of, computer vision and advanced algorithms than amazing interfaces.  So I would just think about the different niches that you’re most interested in. Or you might find that it’s sort of like dating, right? You want to hang out at the bars and the cafes where you think you’re going to meet the most compatible person. And then come to the New York Tech MeetUp and you’ll feel like you’re more at home and you can better enjoy the, sort of, grand scale of the New York Tech Meet Up.

Sean: Last question, what’s the goal for the MeetUp? Do you want to grow it?…

Nate: Yeah.

Sean: …Is it getting bigger? Is there anybody that can house it? (chuckle)

Nate: Yeah. Certainly we’re grow[ing]. It’s a hard thing to balance. Strike a balance, right? I think that the goal of the New York Tech MeetUp is to advance the New York technology industry for its people and the world. The goal of the New York Tech MeetUp is not to have more members or explicitly to provide more programs. One of the beauties of the organization, I think, is that everybody involved is doing it on an entirely pro bono basis. And I think everybody involved is doing it from a pretty legitimately good spot in their heart where they really care about this industry and they find that this is a good way to put that into action. So, how do we advance the New York technology industry?   Well I think that one ways is to play, sort of, partner to all the other people who do have ongoing initiatives. Outside of the monthly event, which we’ll continue to do, and we’re actually going to move to, this summer we’re going to move to the Skirball Theater at NYU, because they are right down the street from here, which will now host over 850 people (chuckle), and after that, I think it’s Madison Square Garden.  Right?

Sean: Nice!

Nate: No, no… I think we’ll be fine at Skirball. It’s a beautiful theater.  So, I don’t even know if you want to even have… you want to always accommodate everybody. You hate to turn people away, but at the same time it gets very big. So, what we are going to do in the background is we are going to leverage the community to fulfill, to support niche communities. So, for instance, the education space is really important to me right now and other members of the organization. We feel like there is something that we can do to help be, sort of, the connective tissue among all of the people in the university system as well as the startup ecosystem. Columbia and NYU already have an amazing infrastructure for doing that, whether it’s the Columbia Venture Network or… they sort of compliment that at NYU. But, there’s still a lot of things going on at Pace, and stuff that was going on at Apollo which is now slowly getting wrapped into NYU. Stuff at Fordham, you know, Stevens even. Even Yale – I ran into a student from Yale that was just at the Tech MeetUp because it’s just close enough.  And so I think that we can provide… we can, sort of, fill in gaps where other people aren’t providing services or aren’t actively getting startups into research labs or students internships into startups. One thing I’d really like to explore is providing a scholarship to come and study at universities in New York City and be a part of this community while they are in school. That’s sort of a long-term dream. I think that New York Tech MeetUp, because of its scale and because of the passion in its community, is better suited…and again, nobody… everyone involved, their only platform is to advance the community. It doesn’t write checks for anybody, and so that means that we can really play this sort of dispassionate middle for all of the different people involved in the community. So that’s really the goal is to leverage this to move the needle in the areas like education research that New York could use.

Sean: That’s great. Man, we could go on forever…

Nate: Yeah.

Sean: … I’ll have to bring you back some other time. Thanks for coming. I appreciate it.

Nate: Thank You.

[END]