Tag Archives: Financing

A Slow and Steady Approach to Startup Building

…in Silicon Valley?  Bah hum bug!  We have to go fast!  We need to raise capital, build product, acquire thousands of users daily, analyze metrics, recruit… go go go!  What if we paused, just for a second, to take a breathe.  Would our startup still be around?

I know what you’re thinking, “Come on Poornima cut all the yogi crap we need to get back to pitching and product before another 19 year-old moves to Silicon Valley and competes with us!”

OK.  I get it.  For the rest…

Do you remember why you moved here?

I do.  300+ days of sunshine and tech!  I grew up in Texas and I do Bikram “hot” yoga, so I love the warmth and sunshine.  Once I graduated from engineering school I wanted to be in the tech capital of the world, Silicon Valley.  When I first moved here I never thought I’d actually work for a startup let alone be running one, but here I am almost 8 years later.  This will continue to be my home base because of the first two reasons, but its possible that I may move away for awhile or run my startup from somewhere else in the world.

I know there are a lot of founders who aspire to move here, but can’t for a number of reasons.  That’s OK.  The good news is you can build your startup wherever you are, and surprisingly people all over the world are!  And last time I checked Silicon Valley wasn’t going anywhere, companies keep getting acquired, and IPOs keep happening.  We’re founders not microprocessors Moore’s law doesn’t apply to us 🙂

Company Age Is Just a Number

Raise your hand if your startup has been around for more than 2 years and hasn’t exited.  (I’m reaching for the stars!)

I’m not trying to make anyone feel bad and I apologize if that’s how you feel after reading this post.  I think its great that there are founders out there who can come up with an idea, raise capital from VCs, assemble a team, and find rock star developers.  I’ve even enjoyed working for one of these individuals, and I highly recommend it for those who aren’t ready to start their own startup but want to learn lot quickly.

What I’m trying to do is offer some perspective for the founders out there who maybe quietly flogging themselves daily because they haven’t raised a VC round of funding, acquired a million+ users, or exited.

Do you remember why you started your company?

I do.  I didn’t want to be a founding engineer again, I didn’t want to work for a large company, and I didn’t want to spend another $150k on an education (b-school).  I wanted freedom.  The freedom to jump out of bed everyday excited to be doing what I love: pursuing an idea, leading a team who believes in my vision, and building a solution that doesn’t exist but people needed.

Do we need to go fast?

Taking other’s money requires trading values.  You owe someone a return or a quality product, and you owe it to them within a certain time frame.

The reason many of us go fast is because we’ve taken money or we’re running out of it.  Yes I realize having a small exit has given me the luxury of having some money in the bank and time to grow slowly, but its finite and will run out.  So yes its possible to go slowly, but continue looking for alternatives to funding: keep your day job to pay the bills, monetize your users, etc. Isn’t the point of being a founder to be resourceful and bring your vision to reality?

Why do we go fast?

We’re afraid of competition or having the wherewithal to go at a speed that lets us build and deliver value slowly.  Hunger is a good motivator, fear isn’t.  Fear stops us from thinking creatively, and after awhile causes us to burn out.  Fear burnout don’t fear competition.  Competition breeds the hunger that keeps us pushing ourselves daily.  Competition is good, I compete in yoga 🙂

You can go slowly and still push yourself.  It just requires thinking differently and taking a different approach, which may mean bootstrapping, building out more more product, or testing it against a different user group.

Avoid Burnout by Measuring Success Through Happiness

I know many founders out there who go fast and burnout, which many times is the reason for an exit.  The key to being able to innovate and solve problems creatively is having time to oneself to think.

I’ve been measuring success by the following metrics:

  • How happy my team is to build and work with me.
  • How happy our users are to adopt and pay for our products and services.
  • How happy I am knowing that while there maybe problems and challenges I have the ability to find the resources I need to overcome them.

I’m still a capitalist (a conscious one), I still want to make money, and I still want to build a BIG business.  The only difference is that myself and my team are doing it slowly and steadily…

Startup Scene in Europe

scanbucks-startup-europeI’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.

hellofresh-europe-startupCopy 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.

shopandtip-europe-startupMetric 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.

heycrowd-europe-startupWhole 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 🙂