Friday, August 26, 2011

It's never "easy" to raise money

It's never easy to raise money. People who say, "It's easy to raise money," usually neglect to mention the second half of the sentence, which is "if you are in a hot space, know the right people socially, and fit the Silicon Valley central casting notion of an entrepreneur (20something white or Asian male with an engineering degree from a prestigious university)."

When speakers tell audiences, "It's easy to raise money," all I seem to hear in my mind is, "Let them eat cake."

Let's stop the BS. Raising money is hard work. Not everyone gets funded, even in good times. And even if you raise angel money, your chances of a successful exit are dismal.

What makes entrepreneurs "real entrepreneurs" as opposed to wannabes is that they hear all that, understand the truth of my words, and start their companies anyways.

Thursday, August 25, 2011

Why Wait?

When I'm at the Palo Alto Farmer's Market on Sunday mornings, I often see the usually-well-groomed residents of my affluent town looking very different. Stubble and baseball caps abound.

It seems so natural...which is exactly why we should question it.

Why don't we get dressed immediately when we wake up? Why do we wait until the day is well underway?

After mulling it over and not coming up with any good answers, I decided to change my morning routine. Now, right after I get up, I shave, brush my teeth, wash my face, comb my hair, and get into my day clothes.

I feel great. I'm more awake, I'm readier for the day, and there's no chance that some entrepreneur will see me at the Farmer's Market and think, "Man, that guy is a slob."

Now I'm on the lookout for other such opportunities. Can you think of any other ways you can profitably substitute immediate action for procrastination?

Wednesday, August 24, 2011

The Long, Strange, Inspirational Trip of Dave McClure

Photo courtesy of toprankonlinemarketing

I first met Dave back in 2002, at an SDForum (now SVForum) volunteer dinner. I was one of the chairs of the Startup SIG (special interest group), while Dave was one of the chairs of the Venture Finance SIG (the two SIGs have since merged). Back then, Dave was "just" working at PayPal overseeing their developer program. He wasn't famous. Heck, this even pre-dated the concept of "the PayPal Mafia."

I wish I could say that on that first night, I thought, "Wow, that guy is going to change the way that seed financing happens." I think my actual thoughts were more along the lines of, "He seems like a cool guy. He does seem to swear a lot."

Since then, Dave has hustled non-stop. He left PayPal and helped companies like Simply Hired and oDesk get off the ground as a marketing consultant. He started making angel investments. He began organizing conferences and events, like Geeks on a Plane, and Startup2Startup. He made himself an indispensable part of the Silicon Valley ecosystem.

A few years ago, I attended a special event for angel investors. At the time, I asked Dave why he worked so hard. He replied, "Hey, I haven't made it big yet. I'm hustling so I can make it big."

Just the other day, I attended his company 500 Startups' first Demo Day. Entrepreneur after entrepreneur, many from the far corners of the globe, pitched their ideas to an all-star audience of angels (most of whom became friends of Dave over the years). 500 Startups occupies the entire penthouse floor of the tallest building in Mountain View, and has made nearly 200 investments.

Nobody gave anything to Dave. Maybe he had some luck along the way, but he also works harder than anyone else in the business. He still swears a lot, but now an audience of millions hears his expletive deleteds.

Dave would probably tell you that he hasn't made it big yet, and in the sense of owning a big piece of a billion dollar exit, he's probably right. But I've got a feeling that will come in time, and regardless of whether that comes, he's still made a bigger impact on the startup ecosystem than just about any other investor around.

This seems to be a recurring theme in my blog posts, but I'll say it again. 9 years ago, Dave was a middle-manager at a startup called PayPal. Today, he's a globetrotting investor who appears on national television, largely through dint of hard work. What are you going to do with your next 9 years? Just do it.

(You know, Nike had a lot of success with bald spokesmen in the past; maybe Dave has a future there!)

Monday, August 22, 2011

It's The Information, Stupid

Marc Andreessen (who is both richer and smarter than I'll ever be) recently caused a stir with his Wall Street Journal op ed, "Why Software Is Eating The World."

Marc is a good writer, and it's a good editorial that helps explain the increasing importance of software. But I can't help but feel that he's buried the most important point:

Software is eating the world because software is how we manage information. The real story is that bits are far more important than atoms in the modern world, and that gulf is only going to accelerate.

For most of human history, things have mattered more than ideas. We're impressed by massive monuments like the pyramids of Egypt, or the Taj Mahal. And this bias made sense, because information started out way behind in the race for importance. After all, you can't eat, wear, or live inside information. And as long as food, clothing, and shelter were uncertain resources for most humans, we didn't have the luxury of worrying about information.

The Industrial Revolution did little to change this; we shifted from monuments to factories and skyscrapers, but the attention remained squarely on the physical world.

It's only been with the rise of the Computer Age and the advent of Moore's Law that information began to catch up with a vengeance. Take a gander at the companies Marc invested in: Facebook, Groupon, Skype, Twitter, Zynga, Foursquare, and LinkedIn. What do they all have in common? Not one of them makes or ships anything made out of atoms. All of their massive market value (well in excess of $100 billion) comes from pushing bits around.

In 1971, Intel's 4004 chip had 2,300 transistors. 40 years later, a 10-core Xeon microprocessor has 2.6 BILLION transistors. That's over a million-fold increase in that time period.

In 1971, a Chevy pickup cost about $2,300 and had a 155 horsepower engine. In 2011, a Chevy Silverado base model cost about $23,000 and had a 315 horsepower V8. True, there are a lot of invisible improvements (fuel efficiency, anti-lock brakes, etc.,) but that's nowhere close to a million-fold increase in price/performance.

Bits probably overtook atoms somewhere in the past decade as we transitioned from the Computer Age to the Internet Age. But now that the crossover has happened, each succeeding year widens the gap, thanks to the inexorable advance of Moore's Law.

In other words, if you think software is eating the world now, you ain't seen nothing yet.