I have a 17-month-old son, recently left one startup after five years of growing it from 5 to 110 people and launched my third startup in 10 years at the beginning of this month.   So I can tell you from deep in the trenches that there are tons of parallels between stating a family and starting a company.  Here’s a short list of my top 7:

1. Dependant – both kids and companies are completely dependant on you, the founder, for survival the fist several years of their lives.
2. Emotional– startups are full of high-highs and low-lows.  One day you are celebrating a huge deal and the next your trying to save the company from bankruptcy.  Similarly, with kids you can be celebrating the first step one day and be in the hospital getting stitches the next. Both are roller coaster rides.
3. All Consuming – raising kids is 24×7 and by far the hardest job in existence. The only thing that comes even close is a startup.
4. Fulfilling – while both are 24×7 jobs, building your kids/startup from scratch and watching them grow up, take on a personality of their own and become independent is by far the most rewarding and fulfilling feeling in the world.
5. Unpredictable – you can and should always have a very detailed plan when starting a family/company, but the only certainty is uncertainty, so expect the unexpected.
6. Surprisingly Expensive – however much you think it’s going to cost to run your company/family, triple it!  It never ceases to amaze my how many little unforeseen expenses pop up from school trips to servers.
7. Ever Changing – kids and companies change drastically every six months for the first several years. This is why age is referred to in months for the first two or three years of a child’s life! Maybe we should recite a startups age the same way? “How old is your company Bob? 22 months Joe”

People outside of the technology industry are always bewildered that multimillion dollar, highflying startups like Facebook can be started by college kids with little to no real world experience. Well, the fact is that this is the best time to start a company because at this stage of your life you are full of the energy needed work around the clock, have nominal living expenses (and nominal startup paycheck to match), and have little to no responsibilities outside of yourself.

So if you are starting a company around the same time you are thinking about starting a family, just know that you are starting multiple companies at once. You better make sure you have a good partner/wife/husband that can help you keep all the balls in the air.

Did I miss any comparisons? If so, please add them in the comments section.

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.

A month ago we found out that my nephew Bryan, who was born a week before my 16 month old son Christian, has a brain tumor.

Nothing in this world can give you perspective like staring death straight in the eye.  It makes you see the big picture really quickly and realize that you can be “here one day and gone the next.”  My perfectly healthy cousin Michael literally got run over by a bus in Philadelphia not even a year ago and was announced dead on arrival.

I share these incredibly personal and tragic stories because I hope that some good can come from them. Yes, I hope you appreciate life more. Yes, I hope you live today as if it were your last. But I also hope you are inspired to take a chance on yourself. I can’t help but think how many dreams and good ideas never get realized and how many would be entrepreneurs never made because they lacked the courage to take the plunge.  If that describes you then I  hope these stories help give you the courage to make a run for your dreams.  It doesn’t matter how old you are or how many bills you have there is never a better time to go for it than right now.   I am living proof of that!

A few weeks ago I announced here on this blog that I am leaving the company I helped build from 5 to 110 people and 0 to 7M monthly users for the past five years, at the end of March to start another Internet software company.  A lot of people think I am nuts to leave such an amazing team just as all our hard work was starting to pay off, right as the company is poised to make a run for the #1 spot in its category.  Add to that a rather hefty mortgage on an apartment in Manhattan, a 16 month old baby with plans for another and the fact that my wife left her VP job 17 months ago to be a full time mom.  In most people’s opinion this is the exact wrong time for me to be taking a risk and starting another company.  But this is all I have ever dreaming about doing for as long as I can remember. I started my first business when I was 16 and had three people over the age of 30 working for me. Ok, for like a minute I majored in finance in college because I thought I wanted to be Gordon Gekko after seeing Wall Street, but I got over that really quickly and have started a few other businesses since then.  A month ago “they” started making me question if I was indeed nuts. But then I was coming out of my health club while an older gentleman in his 70’s was coming in and I thought to myself, when I am his age I want to look back and say I went for it. I don’t want to be spending my golden years wondering “what if.”  No matter what the outcome, I want my kids and grand kids to know I had the balls to try and they should too.

Ben Franklin said “if you have your health you have everything”.  When Beatles drummer George Harrison died of Cancer in 2001 I remember thinking even a billionaire can’t pay his way out of death and no amount of money can save your when your number is up.   So for all you would be entrepreneurs out there, what are you waiting for? The longer you wait the harder it will be, so there is never going to be a better time than right now. Tomorrow might be too late.

If anyone else has a story about what made them take the leap and start a company that you think would inspire others please share in the comments.

Part 2 of my interview with Charlie focuses on why New York is a great place to start a company and talks about why the early stage funding gap in New York has largely been closed.

Sean: So change of focus a little bit, what do you think about, sort of, what I’m calling the reemergence of the internet startup scene in New York?

Charlie: Well I think it’s been reemerging for quite a while. I joined the scene, you know, back in sort of late 04’ early 05’ when I started working for Union Square ventures. And I was certainly guilty of growing up here in New York, being distracted by the sort of Wall Street world. I worked in an institutional finance, and didn’t really know there was a technology scene. And, you know, when I started working in venture the New York tech meet-up was thirty people in the back of Scott [Heiferman’s] offices. And now they can barely contain the 750 people that show up at FIT, you know, once a month. I think it’s phenomenal. I think it’s fantastic, because I think what’s nice is…I think a lot of the pieces have always been in place. You know access to customers, critical mass of technologists, and look they may not have all been working for startups but there was never any shortage of engineering or programming talent in New York. They were just working on real time trading applications at Goldman Sachs, which by the way is an interesting technical challenge. A lot of people I think knock the financial scene as something that is, you know, not as worthwhile. But if I’m a programmer, and I know that whatever I build is gonna be used by hundreds of thousands of traders a day that’s pretty cool actually. And I think startups need to realize that because technical people look for great challenges there’s never been a shortage of money in New York. It’s New York, you know. I think there is a reemergence of dedicated, early stage, knowledgeable money. Entrepreneurs who have done this before are coming back to make angel investments who can really add a lot of value. I think there’s certainly a bit of reemergence in the community. That you can be someone who doesn’t know a lot of startups, doesn’t have a lot of startup experience, and very quickly get ramped up in terms of who are the people to connect to, where to get your information from, you know where to do hiring. That sort of thing.

Sean: You wrote in your blog a year ago, and actually a couple days ago, that there was a huge gap in early stage financing. And you wrote a couple days ago about [The Open] Angel Forum, and how that gap is closed or solid. Do you really think it’s closed?

Charlie: I think so. I mean, I think in New York there’s a number of very smart sources to get early stage or angel money. And the interesting thing is if you polled the whole entrepreneurship scene, most people would probably disagree. But that’s because less than ten or five percent of all entrepreneurs pitching ever get financed at all right. So I think it’s very fascinating that, you know, poll a hundred entrepreneurs, people who say they have an entrepreneurial idea did you get money? If the systems works well the answer should be no, because frankly most ideas shouldn’t get financed. Or whether or not they are good or bad ideas may not be appropriate for third party financing. I think those people that have good ideas, have good experience, and have the means to execute on a business, don’t find it particularly difficult to raise financing here in New York. I think there are a lot more people, a lot more smart places to get money, a lot more places to go, and for the most part do a pretty good job of financing most of the good stuff here.

Sean: What do you think the best thing is about starting a company in New York?

Charlie: The best thing about starting a company in New York, I think, is living in New York. I mean this is a phenomenal place to live more than anything else. And I think, you know, your access to a really diverse set of people and diverse set of networks…I mean the power of your network I think increases with the diversity. If the only people that you know are other startup people the likelihood that your network , its sort of the power of lose connections, the likelihood that your network is really gonna help you out that much both from a feedback perspective and from an introduction perspective is probably pretty low. In New York, you know I just think of myself as having grown up here. I mean, I know folks that are in the finance industry from when I worked in, and the technology industry. I teach up at Fordham so I know a bunch of educational folks. I kayak, and so you know the potential useful connections that come to me, particularly from the feedback perspective. If you’re gonna be a direct to consumer play, you’re gonna struggle if the only feedback you’re getting is from your other tech friends who are all on twitter, and all blog, and you’re only sort of thinking one way about things. Secondarily, I love the community here. I think the community here is very open. I don’t… I think sometimes in other areas you might feel like if you didn’t work for certain companies or you don’t have a certain pedigree you’re sort of not on their radar. And I think New York has a very kind of blue-collar approach to, you know, building companies. I think as long as you work hard, and pay your dues, and show you’re [very] passionate about something people are very accepting of it. Were all kind of in this together, sort of help each other out.

Sean: You don’t need a Stanford degree?

Charlie: No definitely not. Definitely not. A Fordham degree, but no [not a Standford Degree].

Last week I officially announced that I am leaving Trulia at the end of March after 4-1/2 incredible years to start another internet company.

I am incredibly proud of all that we accomplished during my tenure at Trulia.  Most notably, we grew the team from five to over 100 ridiculously smart and talented people, raised over $33M from prominent Valley angels like Ron Conway and leading venture capital firms like Sequioa Capital and Accel Partners.  We grew our audience from virtually zero to almost seven million unique monthly users becoming one of the top three real estate sites on Comscore in the process. Most importantly (to the shareholders) we acquired hundreds of paying enterprise clients from Bank of America to Home Depot along with thousands of paying real estate broker and agent customers.  The current team has both the ambition and the wherewithal to become #1 in its space and build a billion dollar brand in the process.

Being at a fast growing internet startup with so many incredibly smart, driven people for 4-1/2 years is like spending decades at a large company in terms of what you learn.  One of the reasons I started StarupAlley was to start sharing all that knowledge with the community and any entrepreneur who wanted to learn from my experiences.  But as hard as it is, I wanted to leave my fellow Trulians with just one important lesson I learned during my time at Trulia that would last them a lifetime. That lesson is applicable to anyone that has lofty ambitions and wants to change the world, so I included my email to my fellow Trulians below:

I will be leaving Trulia at the end of March after 4-1/2 incredible years. When thinking what I wanted to leave you with there is just so much to chose from, so many great memories, so many stories and so much video footage I will never be able to show you thanks to the cease-and-desist letter Daniel and Rebecca sent me on Saturday.

But seriously, I wanted to leave you all with some profound wisdom or at least a golden nugget. In thinking about what that would be I couldn’t help but think about the last time I had a chance to work so intensely with an amazing group of smart, diverse people for such a long period of time, which for me was business school. The more I thought about it the more I thought it was the perfect analogy because I absolutely went to school on Trulia every day I was here.

Anybody that has gone to business school, or has thought about it, knows that half the reason you pay $50k per year is what you learn and the other half is the people you meet.  Like a startup you spend countless hours, many all-nighters and even more weekends in close quarters with your classmates and you all (ok, many) become very close friends. Thanks to my business school experience I have 35+ of my closest friends and a place to stay pretty much anywhere in the world I go, as 50% of my class was international.

Well, at Trulia I felt like I got MBA every single year I was here.  Not only did we cram just as much learning into every year, but also we added 35+ new incredibly smart, passionate people each year that spent countless, days, nights and weekends together tirelessly building this company.  I look around at Trulia and I see 100 really good friends from all over the world. When I think about what I take away from my time here its something like 25% what I did, 25% the friends I made, 25% what I learned and the memories I made with those friends and 25% monetary. I say that to make that point that only a small fraction of the time I spent here was about a paycheck.

I am so excited for all of you that I leave behind.  As Trulia goes from 100 to 300 people in the next few years you too will learn and grow 10 times over!

So if there is a golden nugget I can leave you with it’s to take advantage of the opportunities you have here to get your MBA every year for the next 5++ years at Trulia.  Take a look around you everyday, because you have the privilege of working with an incredible assemble of smart, ambitious people that are going to change the world. We are a relatively young company in terms of average age, so for most of you the people you work with over the next few years at Trulia are going to shape the way you think and determine a lot of your future opportunities.  So spend as much time as you can getting to know as many of your fellow Trulians as possible.  And I don’t mean just the people you already work with everyday, but all those other people you don’t. Come in a little early in the morning and have coffee with them, go to lunch with them, have a beer in the kitchen at the end of the day with whomever is standing around.  You are a much larger part of each other’s future than you can possible imagine right now.

Finally, I hope you will always consider me a friend and resource and never hesitate to reach out to me for anything.   My business card might change, but I leave a big piece of my heart and soul at Trulia and will always bleed green.  Thank you all for 4-1/2 incredible years.

Your friend and biggest fan,

Sean

Part 1 of my interview with Charlie O’Donnell above and below focuses on financing startups, pros and cons of incubators like TechStarts and YCombinator, and First Round’s own investment criteria.

Part 2 focuses on why New York is a great place to start a company and how the early stage funding gap in New York has largely been closed.

Part 3 focuses on Charlie’s upcoming launch of the New York chapter of The Open Angel Forum, and First Round’s most recent investment in Backupify

Transcript: Charlie O’Donnell Interview Part 1 of 3:

Sean: We’re here with Charlie O’Donnell from First Round Capital, Charlie thanks for being here.

Charlie: No problem.

Sean: Maybe you can just tell us, as a way to get started, just about First Round, and you know what you guys are up to.

Charlie: Sure. So, we’re very properly named. First Round Capital, we like to do investments as early as possible. So I think people like to sort of think of us as a seed or angel stage investor that’s typically what we encounter [with] a lot of the companies we meet with. But at the same time we can follow on and were a hundred twenty-five-ish million dollar fund, and you know can do some larger amounts as well.

Sean: And you’re fund is based out of Philadelphia?

Charlie: Yes

Sean: But you guys are opening an office here in New York and [you] have one in the Valley as well right?

Charlie: Yea, so we got a couple of partners in Philly. Rob Hayes is out in San Francisco with a team there. Josh Kopelman and Chris Fralic work out of Philly office. Howard Morgan works out of everywhere. He spends quite a fair bit of time in New York, and we’ll be sort of needing our New York office, which will be open hopefully by the end of the month if not the first week of March right in Union Square.

Sean: I saw the photos on your blog and posted it as well, where exactly is the office?

Charlie: So it’s right in Union Square. It’s 200 Park [Ave] South, which is the north end of the park right across the street from the W. So great location, well worth the wait, and we’re excited about it.

Sean: Awesome, so what’s your sweet spot in terms of the amount that you like to invest?

Charlie: So I think our average, at least in New York, our average deal size has been right around six hundred grand. But that’s kind of a mix between, we’ve kind of done some smaller initial amounts and some larger initial amounts. I guess it depends on whether or not were part of a company’s initial angel ground. We like to have the opportunity to look at that. Sometimes companies come to us after they’ve raised five hundred friends and family have been looking to do two million dollar ground or something like that. We’ll certainly take a look at those too, but I think where we feel we have the most value is in the very early stages of a company. The product development cycle. You know, really focusing in on where the most value is going to be created in a company.  [And] helping companies get to a venture round.

Sean: So what do you look at, besides being early stage, what do you look for [in an investment]? What are you guys focused on? In terms of what’s your decision making criteria?

Charlie: I think a lot of it is trying to figure out you know where the value inflection points are. You know, when somebody comes in and says you know we’re raising a five hundred million dollar, uh, five hundred thousand dollar round, my number one question is ok where does this get you. And the answer shouldn’t be a year, because that doesn’t mean anything I can’t buy a year. But uh, and I am quite sure you can spend the money in year but does it lead you to a place where significant value is being created? So, if you’re in the local market, does it get you to five cities, is five cities meaningful for you as a company? Why is that? You know does it get you a certain product that you think is a viable product as a company. That’s really important, you want to see really, really high leverage for that amount of money whatever it is that you’re raising. I think obviously scalability. Um, I think the number one thing I’ve seen missing from most pitches is customer acquisition. Um, how do you, how will people find out about this? Can you efficiently acquire customers? And where are they and how are they going to encounter you’re application, and figure out that you even exist. I was just talking to an entrepreneur the other day who said okay when they come to our site. I said wait wait, they don’t know you. How do they even figure out that you exist, so that’s really important.

Sean: What about team?

Charlie: Team is critical. But team is sort of an interesting thing because you know a lot of the folks that we’ve backed haven’t necessarily been veterans of eight start ups before. And you know so I think, for me personally I like to see a good match between the product and market and the skill set of the entrepreneur. So if this is a product that really, really needs a strong hit the ground running kind of sales team, and this in the DNA of the entrepreneur, and you feel like this is the right person to execute that kind of plan, that’s really important. I talked to a company not too long ago who was really going to depend a lot on search traffic, and that’s something I think is really important to have in the DNA of the founders, to think about. You know how do you make a well-structured, search-friendly site. And you know I think at the early stage we’re playing in there’s going to be missing parts to the team. I don’t think we ‘re necessarily looking for complete teams. But, knowing that the pieces that are in place are really strong pieces is important.

Sean: What do think about these mentor programs like YCombinator and Techstars, and you know what do you think about them in general and how do you guys sort of compare?

Charlie: Well so I think there’s a very wide range right. I think TechStars and YCombinator have clearly taken a lead and those fall into a category of incubator programs. They come with money, and…which is always good. Because if you can get teams to focus on something for a particular period of time, put a little money in their pocket, I think that helps attract people to it. I think it gives good incentives, on you know on the part of the people running the team. There are other kind of incubator programs that are focused on helping people get financing. I think those are tough. I would love to see more of those programs focus on helping startups build great companies, cause at the end of the day great companies get funded not great pitches. You can have the best pitch in the world, if you don’t have a great company and a big market it’s gonna really be hard. And at the same time I think any investor worth their salt can see through a bad pitch to a good product. Sometimes you just don’t have that front man as part of, or whatever, as part of the team. And so I think a lot of focus should be shifted from, I mean not everybody needs to raise venture funding. I probably tell more people not to raise money or to raise smaller amounts of money. Or to go out and just start generating revenues, that’s the best form of financing there is. Financing that doesn’t come with ownership attached to it.

Sean: The model seems to be, you know if you read through the lines, they put in ten to twenty thousand dollars [and] they get five to seven percent of the company. You think that’s a fair deal?

Charlie: I think it depends. You know I think there are some instances where it could be two college kids working over the summer and this is maybe the only way that they will ever be able to access any capital, and you know the kind of networks that folks like TechStars and Y Combinator could bring.  So I think that’s very valuable to them in that situation. But if you come out of an industry, you’ve made really good contacts, I sort of feel like most people should be able to raise, through their own social capital, a couple hundred grand of angel financing to get something off the ground. Because I started to think, if you don’t have good industry experience somewhere and haven’t been connected to successful people, where did you get the idea that this was a good idea. I think a lot of people when they start their businesses they’re working somewhere for a little while. I think that’s when they see the opportunity in markets. It really depends on what the entrepreneurs looking for.