January 11th, 2014 — business, design, economics, philosophy, trends
Much has been said about entrepreneurs and their oft-stated ambition to “change the world.” Making money is nice, they say, but they really want to “put a dent in the universe,” as Steve Jobs once said.
Some see this as high-minded conceit: Change the world? Through tweets and hashtags? Photo oversharing? A world where everyone is constantly staring at their phones? Is this change actually for the better? All valid questions, to be sure.
I’ve given this a lot of thought over the years, and while “changing the world” might be a bit of an overreach, one thing is true: Entrepreneurs are the people who get to decide which universe everyone else lives in.
And this has some other deeper implications.
The degree to which quantum physics has any impact on our everyday world is hotly debated by philosophers and physicists. But there are some ways we can interpret quantum effects as entrepreneurs that are interesting.
One theory is that there is an infinite number of parallel universes, and the world we live in is just one of many possible worlds. So who decides which universe the rest of us will live in? To be sure, political and military leaders do, but so do writers, musicians, scientists, inventors — and entrepreneurs.
When you think about it, we all have the power to propose something new. These proposals may be modest, or they may be starkly different from what has come before. Our ability to nurture these new proposals and steer our world into the universe where these new ideas take root is really the fundamental act of entrepreneurship.
So in some sense, entrepreneurs are quantum time travelers — able to steer the world into a new dimension that might not otherwise have existed.
Can you imagine the world we’d be living in if Steve Jobs hadn’t willed the iPhone and iPad into our universe before he passed on? It would be substantially different (and Microsoft’s stock price would certainly be higher).
Entrepreneurs aren’t the only people who have this power to shift us into a new universe: anyone can do it. Whether you’re a nonprofit worker, a lab scientist, a musician or just a rank-and-file employee in a company, there is almost always a way to start with what you have, what you know and who you know, and transform it into something that’s fundamentally new.
It is the collective output of those who dare to make these proposals that defines the shape, rhythm, texture and nature of the world we live in. That puts each of us in a position of incredible responsibility and power; for if each of us is capable of steering the planet in a new direction, then why aren’t we doing it?
Entrepreneurship researcher Dr. Saras Sarasvathy coined the idea of “effectuation,” a theory that states that entrepreneurs use a particular kind of logic in advancing their proposals.
Essentially, they gather up everything they are, have and know, and then they place a bet on a next step. That bet will typically have a higher upside than downside, and they can afford to continue if they lose the bet.
Following this continuously almost always means you can advance an agenda and make it grow. And Sarasvathy discovered that this is exactly how expert entrepreneurs operate. They don’t typically have a big master plan. They just execute a series of modest bets, and they’re aided by the people and experience they gather along the way. That’s it.
I find all this incredibly empowering; we have a simple recipe that enables us to continuously and collectively select a better universe than the one we are currently living in. And anyone can do it, just by thinking the way entrepreneurs think.
The money that comes from creating a positive change is a nice side benefit, but it’s hardly the point. Money’s just a tool to enable us to keep selecting a better world.
So can we change the world? Perhaps not. But we can each help to choose a better one. And that’s true power.
This piece originally appeared in the December 2013 issue of SmartCEO Magazine (Baltimore).
January 6th, 2014 — business, economics, software, trends
While I’m deeply involved in entrepreneurship, breathing it day in and day out, and actively follow many discussions around it, I tend to shy away from writing about it most of the time. Why? Because I’m generally too busy doing the entrepreneurship to talk about it. In the end, it’s the facts of our accomplishments that will speak far louder than some hollow words.
But every once in a while it can be helpful to take note of where one stands and what one has learned. This is one of those moments, and I’d like to take a moment to share a few thoughts on what it takes to start a product company. (Most recently, I’ve been hard at work building and launching Mailstrom through my company 410 Labs.)
- Building a sustainable business is the only thing that matters. Entrepreneurs get caught up worrying about all kinds of shiny objects: tech trends, investors, hot markets, compensation schemes, founder personalities, community — you name it. Those things are interesting, but there’s only one thing that matters: building a sustainable business. That means recurring revenue and controllable costs. Watch those two items and then maybe you’ll have something to talk about.
- Know your CAC/CPA and LTV. If you’re building a recurring revenue business, you need to know your customer acquisition cost and lifetime value of the customer. You need to understand this really, really well. To understand customer acquisition cost, you need to know all of the costs that go into acquiring a new, paying customer. To understand lifetime value, you need to understand your customer retention rates really well. If this makes your eyes glaze over, you’re not an entrepreneur.
- The hard part comes after the funding. It may seem like securing funding is a great milestone, and you’ll be tempted to pat yourself on the back. Do that for a minute, but get the hell back to work. You have real work to do now. If you don’t understand how to deploy that funding, and more importantly have a plan for what happens when (not if ) you run out, you’ll be out of options. Be humble. This stuff is hard.
- The Series A crunch is real. The funding environment today is quite brutal and you can expect to spend several months of your time working just on securing a “Series A” size funding round (for the sake of simplicity let’s define that as a post-seed round of $1M or more). Investors are looking for not only traction, but real revenues, social proof, and growth. They want to know why you are the entrepreneurial team that’s going to survive and thrive. There are thousands of other teams out there who won’t, so the odds are against you.
- My dog can raise a seed round in this climate. With the myriad startup funds, accelerators, and crowdfunding available today, it’s easier than ever to raise a seed round. While raising a seed or small angel round is definitely a validation that you may not be insane, it’s no validation that you’re sane either. Startups are hot and these days, everyone’s an “angel investor” (even me.) But just because you raise that seed round doesn’t mean you will have a clear path forward.
- You are responsible for your success — not your investors or advisors. It’s tempting to think that having a rockstar list of investors and advisors is going to catapult you to success. In fact, that’s just not the case. While having “name brand” people on your team can accelerate the growth and create additional options for your successful business, the onus is on you to deliver that successful business. They are not going to make it happen for you. It’s ALL on you.
- Building products is hard and requires tireless analysis and iteration. Building products is ridiculously hard work. Every day you need to devise new experiments and analyze the results. You need to continuously iterate and improve every aspect of your product. You have to make clear headed choices about what is important and what’s not, frequently leaving even good ideas unfinished. In short, if you’re not comfortable with scientific method, numeric and statistical analysis, and ambiguity (yes, ambiguity ALL THE TIME) then you have no business being a founder.
I hear new entrepreneurs talk all the time about how everything is going so great — they had a great pitch meeting or secured a funding commitment, just hired a new person, or setup some shiny new piece of technology. And those things are all great. But remember, until you have a product that is generating real recurring revenue and you fully understand the dynamics, you don’t have a business, you have a conjecture.
And don’t get me wrong, as a fellow entrepreneur, I love a good conjecture. But what is really impressive is when you can start to make make it sing and scale. That requires tons of hard work — hard work that’s not flashy, doesn’t let you write upbeat self-congratulatory status updates, or put out self-serving press releases.
All that matters is your customers, the value you’re creating for them, and the dollars and goodwill that value generates. Let’s talk about that, because the rest is noise.
December 14th, 2011 — baltimore, business, design, economics
It can be difficult to see the forest for the trees when it comes to defining what it is we in the so-called “tech community” are trying to achieve.
The confusion begins with names: some call it the “startup community,” the “tech business community,” or #BmoreTech. Whatever. I’ve been splitting these hairs for several years now, and with the help of many others and after many personal experiences with organizing groups, events, venues, and businesses have developed a simple but powerful vision for the community.
We’re all trying to build an ecosystem that looks something like this (click to enlarge):
Before we get into the specifics of this vision, here are a few basic values that underly it:
- People are the lifeblood of the community. The ecosystem requires educated, creative people. We should strive to enrich and build compelling opportunities for the people in our community.
- Businesses generate the wealth that powers our community. Strong businesses make a strong community. We should aim to make our businesses stronger and more valuable.
- There is a role for everyone. Diversity of expertise and background is essential to a strong business community. We should aspire to have a healthy mix of product companies, service companies, business service providers, and many types of venues and events for relationship building.
- We should celebrate our successes. Celebrating successes, whether they are successful exits or just milestones, is essential to creating a community that values growth, curiosity, and experimentation.
- We should connect people together. Trust and strong relationships are a precursor to new business formation. With strong trust relationships, we’ll have more new businesses and they will be more successful.
With this in mind, here’s how this model works, step by step. It’s a cycle, and for simplicity, we’ll start at the bottom.
- Getting into the mix. (6 o’clock) New participants, exited entrepreneurs, investors, hackers, new entrepreneurs come together via a mix of venues and events. By “venues” I am talking about spaces that offer opportunities for daily, ongoing interaction between individuals. They’re “high touch” while being “low risk.” Think coworking, hackerspaces, regular café coworking, incubators and accelerators, and educational institutions. By “events” I’m talking about one-off or periodic events that afford people an opportunity to get together, get to know one another, and try new things. (Think Bmore On Rails, Startup Weekend, EduHackDay, CreateBaltimore, etc.) New investors can participate in angel groups and pitch events.
- New business formation, access to capital. (9 o’clock) With trust, exposure, and experience, new businesses can form. With the prolonged exposure made possible by the “mix” phase, entrepreneurs can make more informed decisions about who to go into business with and have likely had more time to refine their ideas before ever beginning. This means a lower failure rate for new startups than in a less-developed ecosystem. As for investment capital, some will come from exited entrepreneurs, some from venture capitalists, seed funds, and governmental initiatives like TEDCO and InvestMaryland. We should aim to connect investors with nascent businesses. This will happen naturally to some extent in the “mix” phase, but we should consciously encourage it; bootstrapping should also be an option.
- Business growth. (12 o’clock) Some companies will grow to become strong product companies, others will become service companies. Some people want to grow their businesses to sell them, while others just want to build and run a great business. These approaches are all valid. We should celebrate the formation and growth of all of the companies in our ecosystem.
- Entrepreneur exits. (3 o’clock) Some entrepreneurs will seek the opportunity to exit their businesses and capitalize on their growth. This is most lucrative with product companies. When these exits occur, we should celebrate them as successes of the community as a whole.
- Entrepreneur returns to the mix. (6 o’clock) Exited entrepreneurs should be encouraged to re-engage with the community, either as investors or as active entrepreneurs to form new relationships and new businesses. The cycle starts anew.
That’s really it. If we can make this cycle work, we’ll have a thriving entrepreneurial ecosystem in Baltimore. (This is the exact same cycle that made Silicon Valley great, and is now working in places like Boston, Austin, and New York.)
That’s Great, But Where Do We Stand Now?
We have much of what we need in place: venues, events, investors, and businesses. But the two things we have most lacked are a cohesive vision for how this cycle is supposed to work, and also the last link in the cycle – systematically re-engaging entrepreneurs into the ecosystem.
However, just today came the news that Greg Cangialosi and Sean Lane are forming a startup accelerator in Federal Hill. That’s an example of two successful entrepreneurs getting back into the mix and re-engaging. We need more of that. But we need to make it easier and more attractive for entrepreneurs – there need to be obvious on-ramps and channels. We’re starting to get that in place.
My hope is that this vision, which I have shared in one-on-one conversations with many friends and leaders to much enthusiastic agreement, can now take root as the underlying force that animates our community.
Role of the Greater Baltimore Technology Council
There’s been much discussion about what the role of the Greater Baltimore Technology Council should be, and I submit that this vision, as I’ve articulated it here, is what the group has been moving toward for the last three years – and with Jason Hardebeck (who is himself an exited entrepreneur) at the helm, I believe we can move towards it more quickly now.
The GBTC’s job is to:
- Help build and protect the ecosystem. GBTC should be a watchdog that ensures the ecosystem has the right pieces in place and that they have what they need to function properly. This means working with government, educational institutions, and others to ensure that the conditions required for the ecosystem to thrive are present.
- Accelerate the cycle. The faster this ecosystem operates, the more successful we will be. Specifically, GBTC should connect people together, and celebrate our collective achievements, and help pull our educational institutions into the ecosystem. Ultimately this will pull in more smart, creative people, accelerating the cycle further.
- Make our businesses stronger. By connecting our community together better and providing venues, events, connections, and celebrating our success stories, GBTC can help to make each of our businesses stronger and more robust. This also means connecting businesses to service providers (HR, insurance, accounting, legal) and mentors who can provide value.
For all the drama and hand-wringing, it really is this simple!
Some have wondered whether they “belong” in the GBTC. That’s something every person and entrepreneur has to decide for themselves; there are obviously many valid and valuable ways to participate in this overall vision that are outside of the scope of the GBTC. However, if you care about growing and protecting this ecosystem, and if the group can help your business grow and succeed, I’d encourage you to lend GBTC your support; it just makes good business sense, as GBTC is the only group that has been tasked with this important work.
I know that others in positions of leadership in Baltimore’s tech business community (and at GBTC) share this vision. I encourage your comments and feedback, but before reacting, you might take some time to really think this over. This is something I’ve been looking at for several years, and based on everything I know, this is the right way forward.
The Rest of the Story
Oh, and there’s one more thing.
We all want to prime this pump and get this vision more fully underway, but I also think it’s reasonable to ask how Baltimore’s tech ecosystem fits into the bigger scheme of things. What relationship should we have with other ecosystems, in our region and around the world? Is the point to win or are we trying to thrive? I’ll be touching on this topic in an upcoming post, and it should help to clarify how this vision makes even more sense for Baltimore.
October 6th, 2010 — baltimore, business, design, economics, geography, socialdevcamp, software, travel, trends
Occasionally we here in the burgeoning tech community in Baltimore have paused to take stock about how far we’ve come, and what would be good to do next. About a year ago, Mike Subelsky made some suggestions on the BaltTech blog, and he’s recently identified some awesome emerging leaders who have made a real difference in the last year. Many of the ideas he identified are ones that people have taken up and run with.
In my travels in the last year, I’ve come across several ideas that are working in other places that we should consider pursuing here – in no particular order.
- Startup Weekend – Bring together a bunch of startup-minded people on a Friday, form groups, and build something entirely new from scratch by Sunday. Demo it on Sunday afternoon. I had the chance to attend StartupWeekend Seoul this summer and it was a great experience. Lots of relationships were formed and some truly great ideas were unearthed. We need a big-ish place where folks can hang out for 3 days straight and someone to take the lead.
- Girls In Tech – This organization is a global group of women who are making a real difference in the tech community. Some have griped about the name, and I agree it’s somewhat problematic – however to their credit they are trying to do their best to attract young women involved in tech and create a culture that is at least somewhat fun and edgy. Behind the scenes, its founders and main movers and shakers are some of the most intelligent and connected emerging women leaders in the tech world; with strong leaders in China, New York, and San Francisco. I promise you that a Girls In Tech Baltimore chapter would find good connections worldwide.
- Founder Dating / Find-a-Cofounder – These events have been popping up in San Francisco, Seattle, and New York in various forms. The idea here is that if you can bring together a ton of people who all have a clear intent to want to form a startup – if they can find good partners to work with – maybe something will come of it. This seems like a great way to unearth “startup-curious” folks in boring jobs and pair them up with ambitious entrepreneurs who just need a strong partner. And every other combination. Worth doing. (And it looks like a meeting may be happening next week to start the conversation!)
- Hacks and Hackers – Baltimore has the critical mass to support a chapter of this group that aims to connect journalists and tech/developer people. And entrepreneurs. News here is horribly broken and it’s going to take an entrepreneurial mindset to fix it. The sooner we can get journalists and smart startup people to get to know each other better, the sooner a new model will be discovered. Get on it.
- TEDxBaltimore – I helped pull together TEDxMidAtlantic in 2009 and 2010, and TEDxOilSpill this summer. TEDxMidAtlantic aims to throw a spotlight on a wide range of creative thinkers in and around our entire region. Mel Brennan from YMCA of Central Maryland and Open Society Institute have been discussing a potential collaboration to help produce TEDxBaltimore, which would have the opportunity to focus on Baltimore and its future potential. I strongly support this and anyone who would like to step up will find support from YMCA, OSI, and TEDxMidAtlantic. Contrary to some recent tweets, no date has been set.
- Entrepreneurs Unplugged – This event in Philadelphia features an entrepreneur on stage to discuss their story, successes, and failures. As long as they can keep from lying on stage I think this could be an extraordinarily powerful format. GBTC has had a Face2Face program for several years, which avoids the tendency that entrepreneurs have to whitewash over failings and details by pulling together a very small group over dinner. Both are awesome.
- Reverse VC Pitch Party – My friends Larry Chiang and Dave McClure have been dreaming this one up, so VC’s can do “outreach and education and stimulate deal flow.” I think it’s a great idea and I’d love to see groups like my own Baltimore Angels as well as some of the VC firms in the region get up on stage and talk about the deals they like to see, the reasons startups should seek them out, etc. A great way to turn the tables and share perspectives that are all too often misunderstood.
- CityCamp – In the spirit of BarCamp and SocialDevCamp (both of which could use folks to take the charge for updated events – we’ll all help!), CityCamp is a catalyst and a forum for talking about what’s working and what still needs to be done from an Open Government / Gov 2.0 standpoint. It’s what Baltimore City’s well-intentioned “Data Day” this summer perhaps should have been. There’s a lot of potential for involving folks from the design, architecture, and foundation community here too.
- Junto & Salons – Ben Franklin convened a regular gathering of smart folks in Philadelphia, many much older than himself, to discuss ideas of the day and to trade notes about what businesses had gone bankrupt and the like; he called it a Junto. Lately I’ve noticed an increasing number of evening salon conversations about politics, startups, tech and the like. Our friends in Philadelphia revived the Junto tradition a couple of years ago, with awesome results. We’ve discussed doing it here but it hasn’t happened yet. Are you the charismatic leader?
- Bootstrap Baltimore / Mosh Pit 2.0 – For the last two years Jared Goralnick has put together Bootstrap Maryland at University of Maryland’s College Park campus. This is a great event, and we could use something here in Baltimore that is aimed at drawing out the amazing quantity of entrepreneurial talent here in Baltimore’s many universities. A few years ago, GBTC hosted an event called MoshPit – a business plan competition for college students. We need to revive this program and meld it with something like Bootstrap. And we especially need to reach out to students in engineering, science, and the arts – not just business students.
Go ahead and steal these ideas. There are plenty more where these came from. Borrowing working ideas from other places means they have a much higher chance of success than trying to design a totally new event format from scratch. Plus, it gives the potential for direct exchange with organizers elsewhere.
If you are interested in pursuing any of these ideas, ping me – I can put you in touch with the originators of these events. And thanks again to everyone who has stepped up to make a real difference here. We are changing this city one mind at a time.