Archive for October 2008
I wanted to make all of the NYC-based entrepreneurs aware of a great program called InSITE.
From their website:
InSITE is an entrepreneurial mentorship program that brings together
the best and brightest students from Columbia and NYU Business and Law
schools to support New York entrepreneurs in the development of their
businesses and their pursuit of venture capital and angel investments.
InSITE’s mission is to accelerate technology start-ups through their
early-stage development, transitioning them from their seed stage into
being venture-funded companies.
A bunch of business school classmates of mine are involved in the program and I from what I have heard and seen it provides a great value for startups who need help on the business/fundraising side of things but don’t have the dollars to hire help.
Amazon has gone live with Windows support in the EC2 cloud while at the same time announcing a private beta for some new scaling and load balancing features. These features will certainly be useful for the smaller customers of EC2, but my guess is that those features were driven by a desire to make the Amazon cloud more “enterprise friendly”. And speaking of enterprise friendly…
In an earlier post I discussed some areas that Amazon and the other cloud providers will need to address before they’ll see mass enterprise adoption. One area I did not discuss, but that is also important, is cloud financial management (cloud “chargeback”).
Chargeback methodologies and technologies are used to help medium-to-large enterprise IT departments meter usage of key IT resources (storage, network, compute) and then allocate usage back to individual business units, applications, etc.
Although cloud computing provides financial benefits like reduction of CAPEX and the ability to pay-as-you-go, organizations will still need a reasonable amount of granularity in the reporting of cloud usage and the ability to map that usage into a financial chargeback model that makes sense. Knowing which applications and departments are driving IT expenses is critical now, and will continue to be critical as cloud computing goes mainstream in the enterprise. Therefore, any cloud chargeback solution should integrate with the chargeback framework that the company uses to manage their physical assets.
I can also see forecasting of cloud computing demand within enterprises becoming more important as greater usage variability drives expense variability. Avoiding CAPEX is a great thing, but if you’re unable to predict OPEX, you’re going to have other problems. Traditionally, capacity planning and demand forecasting has been a dark art (at least in the distributed systems world), but I think the industry as a whole needs to think about new ways to address the problem in a hybrid cloud/non-clouded world.
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Momentum is a key factor in the success of a startup company. I look at the momentum of a company in a couple of ways depending on if we’ve invested or not.
Momentum during due diligence: During the due diligence process (prior to making the decision to invest), a VC firm will typically meet with the company multiple times over the span of 1-2 months and make all manner of calls on customers, partners, and the like. Jeff Bussgang of Flybridge just wrote a great post on how due diligence works at an early stage VC, and the Startable guys also provide an interesting view of the process (including obligatory boulder picture).
Because there are numerous interactions over a period of time during the due diligence process, it gives me a good opportunity to hear about how the team is moving their business forward without any additional investment. It’s encouraging if a startup hits milestones, does deals, makes sales, or releases product over the course of the due diligence process because it shows that the founding team is laser-focused on moving the ball forward regardless of the outcome of fundraising.
Momentum after investment: Closing that big deal, hiring that key employee, or making a major release of your product are all powerful momentum-generating events at an early stage startup. It is amazing to see how these events tend to act as forcing functions, causing other good things to happen to a company in a short period of time. It seems that successful startups capitalize on these events and leverage them to hit other company goals.
My friend and fellow VC Mark Davis also wrote a post about momentum which focuses on how you should communicate progress to your potential investors. Well worth a read.
Update: ReadWriteWeb just posted about taking advantage of momentum after making a big announcement. Check it out.
Benchmark Capital is thinking about doing some public market investing (PIPEs) according to a recent article in PEHub. I wouldn’t be surprised to see other VC firms look at this as a way to augment their investment strategy. After all, there are plenty of public companies that could use a cash infusion and have little ability to generate it through traditional means. I’m wondering in what other ways VC firms will get creative in how they invest their capital during these very interesting times.
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Today I was called by someone who I had met for 5 minutes at a conference a couple of weeks ago.
They wanted me to consider using their services (this was someone who wanted to provide me a personal service, not an entrepreneur) and asked me if I’d consider taking a meeting with them to discuss their offerings.
I declined the request, but made the following two requests.
1) Can you send me some more information?
2) Do you work with anyone that I know and trust?
Regarding #1, the person emailed me after the call with a link to a corporate homepage. There was no attempt to leverage any of the information I provided in our discussion to direct me at a more specific, relevant section of the website. I wanted the person to do the work and point me at the subsection of the website that applied to my situation.
Regarding #2, I stated that I would only work with someone who came referred to me through my personal network, or someone who the service provider and I both know and trust. The objection handling that this person used was “I work with some heavy hitters on Wall Street, and they would recommend me.” Great, but I don’t know these people from Adam, and although a big name is impressive in some cases, you’re not trying to sell me basketball sneakers or a pair of $200 jeans, so some more directed, personalized sales tactics would make more sense.
What will impress me is if this person calls me back in a couple weeks and says: “John, I took what you said to heart and did some homework. I found out that you know Mr. X. at firm Y, and his cousin is using my service and is very happy with it” In that case you can bet I will take a meeting with the service provider. And not just because they were able to track down that connection, but that they are willing to do the work to show me that my business was worth pursuing.
I firmly believe that if you do the work you’ll start to see the results you want in business, and in life.
So do the work.