There’s a LOT of talk these days about how cheap it is to build a product, specifically a software product.  So yes over the past 5 years managed hosting has driven down server costs and the need to hire a DBA.  Ruby on Rails has made prototyping quick and easy for the masses, and it doesn’t cost that much test out your product idea using a marketing channel like Google.

Great.

But for some reason people have completely discounted the other side of running a business… marketing, cost of customer acquisition, and that elusive word monetization.

Competition is Heating Up

Literally everyone and their mom (including my own) is working a startup.  People are building iPhone apps, mesh businesses, and e-commerce sites.  Needless to say there’s a lot of disruption going on today.  However, the increased interest in high tech is causing the market to be flooded with products.  The result is that it costs more to market your product.  People are discovering SEO + SEM, Content Marketing, Social Media, and buzz wordy online channels that are out there.  So while it might be cheap to build out a prototype, it’s definitely more expensive to sell the product because of all the channels and making sure your product’s message can sift through the noise.

Finding Customers to Monetize

The corollary to the competition heating up is trying to get at meaningful demographic data.  Life used to be simple.  Market to people based on gender.  Then market based on gender + age maybe income + race.  Now its more nuanced gender + age + race + income level + geography even sexual orientation.  Where does one go to find these people?  Facebook alone is not enough.  There’s behavioral analysis that needs to take place to determine if people are at the point they can make a decision i.e. ready to buy.  So then you have to track them…  AdWords, re-targeting, email campaigns… now you see the costs are adding up!

If your message isn’t clear and you haven’t discovered your distribution channels yet, which most early stage startups haven’t, there will be costs incurred to run these experiments.

Even if you do find a channel its very likely that there will be copycat looming in the midst.  Keep in mind that as technology makes things go faster, it also means competition has faster access to your marketing campaigns as well.

Even if you’re able to outdo your competition by building a better mousetrap there will be those customers who want something for free.

Cost of Human Capital

Any Jane or John Doe coming out of a decent college is getting offered a six-figure salary to write code!  And then of course there is the cost of a designer.  Not to mention that technical jobs are getting more specialized.  You cannot expect a developer to do both front-end and back-end work, or an interaction designer to create some landing pages.

Yes you could offshore your initial prototype, and make the landing pages yourself.  But at some point the product needs to be maintained so you’ll need to hire at leave one developer and possibly a designer.  If you’re smart you’ll know where to look, and how to pitch your company to a potential recruit.  And if you’re successful at building you’re startup, you’ll need to scale hiring, and at this point the best way to do that is by looking for a recruiter.  What’s 20% of a six-figure salary?! Ouch.

Finally, even if you do decide to offer that developer or designer a six-figure salary, don’t expect them to stick around for long.  While you can protect yourself from competitors with a non-compete clause, the person most likely to poach your prized recruit is themselves.  People will get itchy to start their own startup.

But maybe you can dissuade them by having them read this post

OK I realize I’ve been a little negative in this post, which I didn’t really intend to be.  I just wanted to shed some light for those who are considering a startup.  My parting words: stay scrappy, stay happy

Excited to be heading off to She++ at Stanford today!  The conference is hosted by an amazing group of young femgineers.  These young ladies have already recognized a dearth of femgineers in the Silicon Valley, and are taking steps towards inspiring their generation of women to get interested in engineering and the tech industry.  Their approach, pretty simple and courageous:

• Find women leader in the tech industry and showcase them as role models
• Luncheon to given the speakers and the young ladies a chance for mentorship
• Educate a day in the life of a woman in tech by highlighting various careers

Honored to be a part of this conferences and will do my part to  help you young ladies out out!

Last night they hosted a dinner for the speakers and I was amazed at the thoughtfulness of the group.  They were systematically thinking about ways to decrease attrition rates from computer science classes, and motivating their peers to try out a computer science course.  Not sure who is mentoring whom

What was also fascinating to me was each of them sharing stories of how they got interested in engineering and technology.  The vast majority spoke about an early childhood experience with either a parent or adult figure who spent time with them and showed them how to build something.  It empowered them and arouse their curiosity.  That just might be the secret to she++.

Growth is fun and exciting in a startup, but it can also be just a little painful and scary.

Its scary because people can’t anticipate problems that arise from growth such as having customers, supporting them, answering their requests, and fixing the issues they experience with your product.  Or adding employees, training them, educating them on the vision of the company, keeping them motivated and collaborating with each other.  And then there’s the product itself!  More customers are using it, and generating data which leads to a less than awesome experience for your customers.

This isn’t the time to feel overwhelmed.  Its the time to pat yourself on the back: you found product market fit and you’ve recruited some stellar people to help you out!

Now you’ll need to change some processes to handle the growth which can be the painful part.  Its easy to throw money at the problem, but lets just say you you may or may not have access to a seemingly bottomless pit of cash.

Figure out what you need not what you want.

It all comes back to milestones.  Where do you want to be in 3 months, 6 months, and 1 year?  You don’t need to have definitive growth numbers for your startup but you need to put things in perspective.  Lets say you’re shopping around for a customer support ticketing system, and right now your growth is fairly predictable and manageable by a single human being and possibly part time.  In that case don’t buy something that’s going to cost more than what a single customer is paying you monthly.  You might even be fine  doing support via email and phone, and it will probably aid in your customer development process to have someone listening for feedback.  If your customer support person starts to get inundated then its the time to look into a system to organized.

Start shopping for products when you want to cut down on human labor costs that are quantifiable by time and money.  The people you hire are smart, so invest in their productivity and happiness, and don’t let them become drones by having them do repetitive mundane tasks that aren’t advancing themselves or the company.

Building vs. buying?

You’ve isolated a few areas in which you need to put a new tool in place or replace an old one.  As engineers running a company its easy to say: “Oh I’ll just build it!”  Wrong answer.  Yes it might be super easy for you to whip something up, but who’s going to test that new tool, maintain the code base, and add on to it?  If its you great!  You now have a new department: internal tools.  Oh you’re small… well then you just cut down on product development.

Save yourself some keystrokes and shop around for products instead.  As I mentioned before, if you identified your needs then it becomes easier to tell people what you want and to shop around for it.  Yes there are times when you might not find what you’re looking for, and it might make sense to build it in house if its cost effective (cost == time + money).  If you find a product that satisfies 70-80% of your needs and is within your budget buy it!

When I was working at Mint I had the painful task of searching for an email provider to handle all the outbound emails we were sending.  Integration was a nightmare especially given the products that were in the market at the time.  Had I taken a little more time to do research I would have found MailChimp and been happier.  Live and learn.

Fortunately I did learn, a different lesson while working there, put off managed hosting for as long as possible.  Which is why  when I started BizeeBee I went with Heroku.  Could I have written deploy scripts, and the add-ons that they offer on my own?  Sure, in fact I wrote some of them at Mint (sms and email messaging, performance monitoring, etc) in Java!  But going with a solution like Heroku for less than $100 a month gave me the freedom to build, iterate, and launch BizeeBee all in the same year!  Did I mention $100 is also less than the going rate of a developer pretty much anywhere.

How long will the solution last?

Remember the title of this article is retooling.  If your startup is on a growth trajectory it will outgrow tools, and you’ll need to refine processes.  Get comfortable with it.  They key is to identify when you’ve outgrown a product or anticipate when you will.

Sometimes you can live with a less than perfect solution for awhile, especially if its cheaper than the alternative in terms of setup and maintenance.  Just acknowledge the limitations, and prepare to fix them if they cut into progress.  For example, at BizeeBee we have a customer support tool that I built.  Its not perfect,  it drags the system down a little when we run large queries, but we’re operating with limited resources.  I’ve optimized the queries once they really start to impact application performance, but I haven’t yet setup a dedicated database, and optimized the heck out of it, because I have other priorities.  I’ll throw resources at it when it start to cost us customers and time, or isn’t serving its purpose.

ROI

Retooling is not a cost.  Its a cost if you do it prematurely.  If you do it when you absolutely need to or when you anticipate a need arising then it can actually be aid in the growth of the company.  Once again figure out what you need.  Do you need to grow your user base?  Do you need to keep your customer happy?  Do you need to get paid on time?  Do you need your employees to be happy and productive?  Those should translate to what you’re looking for in a solution.

Retooling isn’t just about finding the right tool, its also about finding the tool that will help you you meet your next milestones, and once you reach them you’ll need to retool again.  Happy retooling!

I was initially a management major, but my college required one computer science class during our first semester. It was in that class, amidst loops and pointers, that I fell in love with programming. Soon, I switched my major to computer science. Now, I’m about to graduate as a software engineer, and I love what I do. I feel alive when I solve problems and create new things that improve people’s lives. I especially love the endorphin rush I experience once I get a pesky bug fixed!

During my junior year, I went on a software development internship where I was often the only woman, the youngest, or the only Asian in the room. During those six months, I realized that the trailblazers of technology, or at least the ones we know of, were all powered by testosterone.

And it made me wonder — why don’t we have a Martia Zuckerberg or even a Steph Jobs?  I look around me, and I notice that there are simply not enough women running tech companies or founding the next Apple. Actually, there are not enough women on the top, period. In a TED speech, Facebook COO and Harvard Business School alum Sheryl Sandberg commented that only fifteen to sixteen percent of executives in the corporate world are women.  In fact, companies such as Facebook and Zynga do not have a single woman in their boards. Those dismal numbers have to change, and I want to be part of the solution.

That is why I want an MBA. I want to leverage technology and business to change that ratio. I want to equip myself with the skills that I will need to run a tech company with that mission someday. Maybe, I’ll be gutsier and even start one myself.

Some people are brave, though. They found companies right away, but at the young age of twenty, I feel scared that I won’t know anything or that people won’t take me seriously, especially since I do not have an American undergrad degree. Perhaps that’s the imposter syndrome talking, but I do feel that an MBA will better prepare me for the career path that I see for myself. I will get to be intimate with every nook and cranny of a company’s structure, finances, etc., before I have to do it in real life. I guess that’s just my style – I want to have a broader view before I have to make tough business decisions, whether for my own venture or for the next Twitter.

But whether I do go for an MBA or not, one thing is for sure: I will stay in the tech industry because I believe in its capacity to ignite social change. In fact, what I love most about tech is that it is a great “democratizer.”  Imagine, a poor student from the streets of India who does not have the means to hire private tutors can still learn through organizations like the Khan Academy. Students who are not privileged to attend prestigious schools can still have access to the same caliber of information through ventures like MIT Open Courseware and Harvard’s courses in iTunes U.

Growing up as the daughter of an immigrant in a small, Midwestern town, technology is what empowered me to be what I am today. It was the backbone of my education, the very reason I was able to have a job in a top ten software company. I want to use that unique quality of tech, coupled with solid business acumen, to empower the underdogs of the world, the children of underprivileged immigrants, all young women. I want them to be able to look up to strong women like what I aspire to be, and realize that yes, they can code, they can be scientists, they can be CEOs. I want them have the opportunity to be leaders, not just followers. I want to be part of the transformation of our society into an America where women creating tech startups and running big corporations is part of the norm, rather than the exception.

Frances is about to graduate with a degree in Computer Science with specialization in Software Engineering. Previously, she interned for six months for Accenture Software and will be joining them as a Software Engineer in June.  She also contributes to The Levo League, Women 2.0, and STEMinist.  A proud geek girl, she’s sure she is the only one who can’t play video games. Follow her random musings at @FranAdvincula.

A couple days ago I had a pretty good conversation with another female founder who like me has been through a startup acquisition, to her credit a couple.  We gabbed about ways to market products better, tracking analytics, you know the usual Silicon Valley startup stuff…  Then the conversation turned a different direction.  We started to talk about how the two of us have decided to live a modest lifestyle despite having some financial success.  For the longest time I thought I was the only one who lived in a shack by choice,  ok its not really a shack but I’m sure my parents would call it that

Yesterday I looked over 3 tax returns: 2009, 2010, and 2011.  While I haven’t had a real salary since 2009, and have been living off of my savings since, I’ve actually been really happy, probably the happiest that I’ve been in years.  I haven’t afforded myself luxuries that most people would if they had made bank, instead I chose to bootstrap my business along with some outside funding, cook my own meals, fly to Paris but stay with friends or in AirBnB apartments, and drive my 7 year old fully paid off Honda Civic.  So why have I chosen to live this modest lifestyle?

Well a lot of it has to do with my upbringing.  See my  parents were actually really poor when we came to the US.  I was 2 years old.  I literally went to engineering school when I was 4, my dad would sit me in the classroom as he was taking classes at San Jose State for his masters.  I’d wake up at 5am with my mom to ride the bus and watch her clean houses to support us.  Experiencing all of that at a young age leaves a lasting impression on you.  Fast forward 15 years later, and my parents had a LOT of money.  Not the kind of money that sends your kids to boarding school or buys villas in Europe, but the kind that gives you the freedom to buy Lexuses, go to the mall, and maybe send your kids to an Ivy League school.  But they still weren’t happy.   At one point they got into some pretty bad debt, went through a few job losses, which finally resulted in my brother and I paying for our college educations.

I actually had arguments with my parents regarding marriage, buying a house, and going to business school.  The first two seemed like things to do when I felt more financially stable and independent, the later I decided against because I didn’t want to pay 6 figures for another degree.

Yes its tough have to say no to yourself, and its even tougher to say no to loved ones.  But going through all of that before  you turn 30 makes you realize what does really matter.  To me that’s family, friendship, and pursuing a career that’s motivated by passion.  My desire to get to profitability and build a BIG business is only driven my a desire to have greater freedom.  Not the freedom to buy things, but the freedom to experience cultures, create value, and help others pursue purpose based on passion.

I know its a little uncharacteristic for a femgineer post, but I wanted to shed some light into misconceptions that people may have about success and motivation.  Too many talk about the successes they’ve had in life but fail to share the BIG bumps they experienced.  Its also not meant to be a rags to riches story by any means, because it isn’t.  I always had food in my belly and clothes on my back.  Instead its mean to illuminate the need for not taking anything for granted.

Unlike my parents generation, which wanted to live the American Dream, my goals are to live a modest debt-free life where I can instead focus on accomplishments: learning to speak foreign languages, travel around the world, create products that help improve the lives of others, and hopefully teach my own children the value of earning a dollar.

There’s a cold war going on right now, and everyone knows it.  Its a talent war, and its happening right here in the high tech industry.  Its evidenced by the number of startup teams that are being bought and products being shut down.  I’m not going to delve into the war itself, and I’m also not going to talk about the logical merger of a mature startup into a larger company (a mature startup being one that I define as having been around for awhile, the product is out the door, and it has a monetization method in place).

Instead I’m going to focus on bringing up some issues on why this is a war of attrition: the acquiring company thinking one tactic to outdoing its competition is to snatch up technical talent, and why this practice might not bode well for  the acquiring company or the young startup that is being acquired, if they don’t think about the long term. I’m not passing judgment because I know there are deeper issues that cause people to take extend offers and for others to take them.  I just want to point out some key factors that I think both parties should think about before this war gets out of hand, and people stop generating value (i.e. product development is stalled or worse yet stunted).

Is it really efficient and effective?

Acquiring tech companies see the acquisition of a young startup as a way to get a great technical team.  Finding a group of 2+ individuals can take months and a lot of money.  But a big motivation for the young startup  team is the insatiable need to build, iterate, and carry out a vision.  Will giving them a warm home, comfy chairs, few million dollars or shares in the acquiring company keep them just as hungry?

Integration of anyone takes times, whether its a new hire or a team.  People need to understand the culture of the new company, learn processes, come up to speed on a code base, and have a sense of belonging, all of which takes time.  In the case of a team, if the entire team has come on board then there will be a struggle to shed the culture they had built up and integrate into a new one.  There will also be an emotional dissonance of who and what they were building for before and their new focus.  Not to mention the case of those who may defect in the process and how it might affect the emotional stability of the remaining team members.  I figure it must take 3-6 months after the acquisition for the acquired startup’s team to get back to making progress.

And what about the young founders?  There are two scenarios they can “pick” from.  Either their product will live on and they will continue to build it in their new home with more resources than they had before, which is great.  But what happens in the case of their product being shut down?  If not immediately, then in a few months.  How will the founders feel then?  And how will they go on to motivating their startup team?

Finally, if the acquiring company truly cares about finding the best talent and keeping them motivated for the long haul is that even possible given the entrepreneurial spirit that may be hidden inside the souls of everyone who was at the acquired startup?  Sure an earn out is an easy way to keep around and focused on a product roadmap, but I figure a smart and talented team with an entrepreneurial spirit will start to defect if not immediately then a year or two down the road.  Is that enough time to meet the acquiring company’s goals?

Is it an offer you can’t refuse?

Like I said before I don’t want to pass judgment on founders.  Believe me when I say I know how tough it is to run a startup, and to also feel defeated at times when you aren’t seeing numbers you want or experiencing the progress you had hoped for.

As someone who been a part of an acquisition before (in which I was not involved in the decision making process), and as someone who has been presented with a few offers I’ve learned to ask myself the question: “what next…?”

• for the team?
• for the product?
• for my customers?
• for my own life and happiness?

I’m not sure if people consider the first three, but they actually feed into the last.  Building a team and giving them the freedom to a build a product, and sharing it with customers is what keeps me as a founder happy, even when I’m in the trenches.  I also only do what I do best what I do best when I’m constrained.

Not everyone can think long term…

Ok I get it.  Times get tough, money runs out, and founders burn out.  But at what point does that happen, and can it be avoided?  Let’s go back and re-examine the vision of the young startup, and also ask ourselves as founders: are we focused on a building a product or do we want to build a business?

Businesses take time.

Its been five years since I started Femgineer.com. I can vividly remember the process I went through when I was deciding on a name for the blog, I wanted something that would capture being feminine and an engineer, because my mission was to show women and girls that they could be an engineer and still have feminine qualities.  They didn’t need to change who they were because the field of engineering was male dominated. After a few funny back and forth name ideas between Jason Putorti, Dave McClure, and myself while we were building Mint.com, Femgineer.com was born!

On this five year anniversary I’d like to share what I’ve experienced, and how I see the femgineer  and tech community evolving.

Evolution of Femgineers

When I first moved out to Silicon Valley almost 8 years ago there was a different ambiance. There was less infrastructure and encouragement for femgineers in high tech. Sure there were femgineers working at startups and large tech companies, but at the time most people just complained and very little was being done. In fact I saw most women leaving engineering altogether to become product managers, sales people, or pursue motherhood full time. This was a little disheartening as a young and impressionable femgineer. Nevertheless, I kept searching.

Then another dynamic began to emerge about two years ago. One that was focused on complaints about organizational structures, fostered by panels like “what its like to be a girl coder and how much it sucks”. There were in fact a number of articles published and some pretty bad talks (here’s looking at you TechCrunch). In the midst of the negativity emerged a third movement, one that was focused on nurturing women. A few organizations that led the way were Women 2.0, some communities like DevChix and Women Who Code, social enterprises like Invent Your Future, and programs to empower and educate young girls like Iridescent Learning. These organizations have been supported by large tech companies, women, and a lot of men!

This is when things got really interesting… Because instead of sitting around and complaining there were bright women who were just femgineering. They were starting companies, building products, hosting workshops on how to code, and creating organizations that were pushing for the cause of having more women in engineering. They were leading by example, which is what any good role model does!

Change Isn’t As Easy As Hiring More Women

However, there are still some fundamental ideas that need to change. There are still too many leaders of startups and tech companies who want there to be more women but don’t know how to bring them in. The problem isn’t one of searching for women, it comes down to the type of environment that is present in these organizations. Here are the top three reasons most women don’t join teams.

• Teams dominated by one sex I know there are more than a handful of women out there who don’t mind working on a team of all men, but it can be lonesome. The reason its lonesome is because of the difference in communication style and goals between the sexes. After awhile you either have to give in, or leave if people can’t empathize with your perspective.
• Rigid culture Most women and I’m not speaking for our entire species here, are more into working for a collaborative and cooperative culture, but if the primary sentiment of the team is being results oriented it can be off putting for many women.
• Inflexible work environment Women play many roles during the course of their lives, and one of the roles outside of working is being a mother. Unfortunately, too many organizations don’t understand how mentally and physically taxing this role can be. Long hours, tough deadlines, and less than understanding bosses make it hard on the role of a nurturer. While women are willing to make due with hiring nannies or sending their kids to daycare, it still doesn’t really capture what they need most, time, to spend with their family and loved ones. Even for young women without families they need time to create a support structure for themselves, and yes time to date. I know the choice to pursue a competitive career does require trade-offs, but it shouldn’t mean having to fundamentally give up on other life goals indefinitely.

What’s in store for the next 5 years

I don’t doubt the tech community will continue to pave the way in being progressive and encouraging women to pursue careers in engineering. But I am worried about the additional burden it will place on women’s roles. Encouraging young girls to pursue engineering is great, but they will still need to have environments where they are free to be themselves and pursue other life goals.

Balance is something that both sexes actually need to achieve. But balance doesn’t mean just taking time off. It means encouragement, and being mindful in how teams communicate and the way organizations structure and achieve their goals. The tech community is very competitive, and while competition can build great products and companies, it can also make it hard to attract talented individuals.

I haven’t yet figure out how to breed a healthy culture that is competitive, but I’m searching and experimenting with my own startup. I’m also encouraging younger girls by continuing to share my experiences through speaking engagements.

I look forward to continue being a femgineer and I want to thank a few who have actively supported femgineer.com over the years: Aaron Patzer, Angie Chang, Dave McClure, Jason Putorti, Liz Wiltsie, Lyndi Thompson, Noah Kagan, Shaherose Charania, and especially my dad who strongly encouraged me to take my first computer science class in college.

Every year since 2010 I’ve met some pretty awesome people at SXSW from all over the world.  While everyone moans and groans about how big the conference gets, and how its spring break for tech geeks, I’ve found its the one conference I go to every year and meet the most interesting people.

The reason I find these people fascinating is that they aren’t just into the tech scene, rather they bring another discipline into it such as design, entrepreneurship, writing, food and even yoga!  For a generalist like myself its the perfect place to have a conversation on all the things I’m interested in, which would normally require me to drive up and down the bay area or fly all the way out out Europe!

This year I’ve got some goals for the types of people I want to meet, here’s my list:

1. Tech founders from across the world. Yes its fun hanging out with all of you from Silicon Valley and Alley, but I want to meet those who fly all the way out from South Africa, Asia, and South America.  I’m curious to hear how you do software development, recruit, position your product, and what the business culture from where you are from is like.
2. Bootstrappers. I care about building a business by generating revenue from day 1.  While this leads to slower growth, it also  means sustainability.  Would be great to exchange stories with other scrappy startup founders.
3. Entrepreneurs turned Angel Investors. To me learning from operators who were successful at running their startup is like a secret playbook.  While our businesses might be different there are still a lot of worthwhile lessons for me to learn on how they scaled their business over time.  Those who become investors have an added advantage because they evaluate businesses based on their monetization scheme and market.

So if you know any folks who meet this criteria or are this person yourself tweet @poornima.  See you soon at SXSW!

I’ve spent the past month working from Europe, spending most of my time in Paris and some in London.  I know there are more cities such as ones in Germany and Israel that also have startup scenes will visit them soon!  I thought I’d share my learnings from Paris and London, what founders care about, and even give a little commentary on what it would take for these scenes to grow.

Accessibility

There’s a common misconception that’s been perpetuated that there is a lack of innovation outside of the US.  Entrepreneurs everywhere are passionate about what they are doing, even in Europe.  For many the choice of location comes down to accessibility.  Its not like an entrepreneur tell himself, “No I don’t want access to capital, developers, and the support structure of Silicon Valley.”  Many startup founders would love to move to Silicon Valley and part of the high tech scene, but just don’t have the means to make it happen in part due to funds or immigration issues.  The later being the biggest hurdle because many do take the time to visit and work in Silicon Valley.

Hence many have to change their goals and build a strong base first in their native country, then grow in the European market, and hope to eventually create a global company.

Copy Cats is the Pot Calling the Kettle Black

Startups in the US copy each other…  Groupon clones anyone?!  So I don’t think its fair to say European companies shouldn’t be copying US companies.  Yes there is the issue of IP and trademarking.  But leaving that aside, European consumers aren’t going to wait for US companies to think that the European market is large enough or worth selling to.  People everywhere want products!  As long as US companies have a provincial view that the European market is too small and not worth selling to, or that it takes a lot of effort to change a product to fit a culture and isn’t worth it because of the former point, then there will be a market opportunity for startups in Europe to create similar products.

Metric System vs. US System

Everyone cares about customer acquisition, conversion rates, customer lifetime value, and of course creating a profitable and thriving company.  Happy to hear that Eric Ries plans to make a cameo in Europe because founders here love the lean startup movement, and are certainly applying the lessons to their startups.

Funding & Founders come in many flavors

There are serial entrepreneurs in the US and there are certainly many here as well.  The Dashlane and Civiliz founders are prime examples.  Due to their past success they have access to capital and have been able to raise a significant amount of money for their startups.  However, the major disadvantage that first time founders in Europe have when it comes to fundraising is access to an Angel investor market (I have been spreading the word about Angel.co).  Some are fortunate to come across Angels through connections or participating in a local incubator, but the rest still have to rely on bootstrapping their startups.

While there are many startup founders who bootstrap in the US, customer acquisition and traction are what drive the majority of startups who are successful at fundraising in the US.  Monetization is an afterthought for most, please don’t argue I’ve noticed this trend in slide decks and pitches since 2005.

The priority of monetization is the major difference for early stage companies in Europe vs the US.  In a large part because it is a criteria for most European investors to even invest in a startup.

This has some side effects of course like not being able to grow as quickly and thereby being seen as not having a “large vision”.

Limitations

There are of course the usual suspects when it comes to the rate of innovation such as the government laws around hiring practice and tax structures, oh and the whole currency and banking crisis, but its not stopping bright and hungry founders from starting companies!

What does limit innovation here is access to capital, talent, and the negative sentiment of failure.  However, these sentiments are common in many US cities outside of Silicon Valley.

There are also some trends in product development such as Agile and User Experience Design that are nascent in Europe, but I think its just a matter of time.

Whole new meaning to LBS…

As a founder I’m pretty optimistic about the future for European startups and their founders.  I think there presence will add a healthy dose of competition to many Silicon Valley startups.  The scene and the support structure around it are also growing as evidenced by the presence of bloggers, incubators, developer communities, and conferences here.  While there are hurdles those who are the hungriest will figure out ways to overcome them.  I think the added competition will also cause founders everywhere to start thinking about how to create products and companies that can be adapted to fit a global market, at least for those who want to avoid the innovator’s dilemma