I’ve been meaning to post this link for a few days now.  I hope the identities of the participating students were kept secret…

"Young chimps outperformed university students in memory tests devised by Japanese scientists."‘

As Paul Kedrosky is fond of saying, "remarkable stuff"!  Monkey’s RULE!

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I spent a few hours this past week at Duke’s Fuqua School of Business Entrepreneurship event.  Apart from making fun of them on day one (typical business school — they’d figured out the sponsors, glossy handouts and lots of events, but no-one had thought to put signage up outside the building to help attendees find the event) there was some interesting stuff going on.

By far the most interesting part to me was the energy and enthusiasm of several of the undergrads/recent grads.  I like to call them DYP’s — Damn Young Punks — and I mean it as a compliment.

My favorite word-site, dictionary.com, has the following definition for the word "punk" (emphasis added by me):

"a style or movement characterized by the adoption of aggressively
unconventional and often bizarre or shocking clothing, hairstyles,
makeup, etc., and the defiance of social norms of behavior, usually
associated with punk rock musicians and fans."

The social norm pretty much anywhere except Silicon Valley is to take a job with a company, preferably a big one.  DYPs laugh at the very idea.  They are smart, eager to learn, even more eager to try and  unshackled by the fears and concerns that experience brings.

That last part is particularly important.  I was at a meeting earlier in the year with a group of venerable local entrepreneurs.  I was the youngest in the group (a rare thing), and I have never met a more jaded group of entrepreneurs in my life.  One even went so far as to espouse the idea that nothing significant can be created by two guys in a garage anymore.  If there was ever an industry that proves that idea wrong, it’s tech.  And it’s often the DYPs that do the proving.

Some of the DYP’s I’ve met lately have already founded multiple companies, built real products, raised Angel and VC funding from prominent firms and attracted national press.  All of them were 23 or younger.

The core of being an entrepreneur is mostly about risk tolerance.  If you are highly risk averse, entrepreneurship is not for you.  As a wise man once told me "you should always respect risk, but that doesn’t necessarily mean you should avoid it."  If DYPs have a flaw, it’s that they are risk blind because they don’t yet have the experience that comes with failure.  But that experience can easily turn in to baggage that slows you down.

It’s easy to write off DYPs — "come back when you have experience" — but doing so is foolish.  Just as they have plenty (good and bad) to learn from those of us with more years behind us, we can learn from their drive and relentless pursuit of new ideas. 

I strongly believe that the most innovative companies are built by combining the strengths of experienced entrepreneurs and DYPs. 

My only concern is that most of the DYPs I talked to are already making plans to leave the area.  But that is something I hope disruptorMonkey and other local startups will help to change.

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Folks talk about "early stage" as though it’s a clearly defined and encapsulated process, like birth, puberty or death.  But there are in fact many stages of "early stage" and I thought it might be worthwhile to lay them out for the world to see…

[Update: this turned out to be a longer post than expected, so I'll split it up.  More coming soon.]

The very very very beginning / aka the germ of the seed of the nugget of an idea:

Oooh.  Idea.  Hmm.  Days pass.  You forget about it.  Then it bubbles up again.  You have a profound insight, which is then promptly forgotten unless a pen/phone/spouse/thing-you-can-engage-with is right there.  As the crass fart-gone-wrong joke from my childhood goes "Oooh.  There was something in that".

The almost very beginning / aka the irritate your spouse/partner/friends stage:

It’s cool.  It’s world changing.  It’s keeping you up at night.  It’s something you are utterly incapable of explaining clearly.  And repeating it or talking about it ad nauseum isn’t making it any clearer.  You are probably driving your spouse/partner/friends nuts at this point.

The early beginning / aka A New Hope…:

You said something to someone, and a light went on.  They actually more or less completely misunderstood you, but there was a glimmer of an "ohhhh, so that’s what you’re talking about".  You start to write things down and send long emails at obscure times of the night and day.  If you share your bedroom with anyone, they are probably very annoyed right now as you keep either (a) leaping out bed to write something down, or (b) sneaking the laptop into bed so you can keep working at 3am.

The pre-beginning / aka spousal fatigue:

There’s a shape starting to form, and you’ve got a bunch of stuff written down.  Your circle of spouse/partner/friends have developed the ability to (a) tune you out while nodding appreciatively and (b) spot potential triggers that might send you off on another rant about your world changing idea.

The not-quite-beginning, but definitely not pre-beginning:

You make your first Powerpoint deck for The Idea.  You’re very proud.  Close friends nod and say encouraging things like "it sounds interesting" and "I think you’re on to something there".  But no-one can explain what the heck you’re up to.

Sweet Relief / aka finding a co-founder:

Kindred spirit!  Oh nirvana!  Now the two of you can babble senselessly for hours/days/weeks at a time.  This step is fantastic for the ego.  You feel like the smartest people on the planet with ideas that will change the world.  This stage often contains your first real bill for legal fees and ends abruptly when you discover that now even fewer people can understand what you’re working on, and the supportive close friends have stopped being as supportive now that you’ve found another genetic anomaly to chat with…

WTFII / aka when you’re a hammer…:

Wutfee.  Say it outloud, it’s fun.  Wuuut-feeeee.  Or if you prefer, "WTF is it?".  Your idea actually needs to be a product that’s part of a business.  While it’s a huge killjoy, figuring out what the hell you’re making becomes quite important at this point.

As the old adage goes, when you’re a hammer, every problem looks like a nail.  Your product takes on the world’s biggest problems, solves them effortlessly and even makes toast.  Everywhere you look, there’s an application seed waiting for your magnanimous sunlight and benevolent watering…  Oh application, only you can save us…

Crushing Indifference / aka your first real pitch:

You’re ready.  You’re off.  It’s your first real pitch.  Your deck is shiny.  You’re optimistic.  You’re chock full of analogies and ready to go.

The investors hate it.  They look at you like they’re the last-minute substitute teacher stuck with the special-ed kid who’s guardian hasn’t picked them up yet.  It’s a unique combination of sympathy, nervousness, mild irritation and a desperate urge to see you leave the premises.

And you’re still not even an early stage startup.  How much more can you take!!!

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Just saw this and thought it was great…  Enjoy!

Update:  the original video apparently got taken down…  If the link above doesn’t work, try this one:

Categories: Old Posts
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They are clearly confused on the meaning of the word "startup".  Dictionary.com says that startup means "A business or an undertaking that has recently begun operation".  Sounds good to me.

On with the rant.

I mentioned briefly last week that we were not chosen as a finalist for the Amazon Web Services Startup Challenge.  We knew applying was a long shot — competitions always are — so not being chosen was a "meh" more than an "OMG, how could they" kind of experience. 

But I thought the idea of the Startup Challenge was cool — anything that helps early stage companies is okay in my book.

I got an email today from Amazon, suggesting I check out the finalists and place my vote.  So I did, and that inspired the rant. 

But first… some history on the competition itself.

From Amazon.com:
"Amazon Web Services (AWS) is searching for the next hot start-up that is leveraging AWS to build its infrastructure and business.  The AWS Start-Up Challenge winner will receive $50,000 in cash, $50,000 in AWS credits, and receive an investment offer from Amazon.

A bit of googling turns up the following:
In a press release, Amazon.com’s Adam Selipsky said the contest is "intended both to encourage more people to pursue their ideas and to give an additional jumpstart to the winners."

Unfortunately the original home page isn’t around anymore and I’m too lazy to find a cached copy.  But I think these two quotes make it reasonably clear that Amazon were looking for early stage startups that (a) would really benefit from the cash and (b) were doing something innovative that could be the "next big thing".

Stage is set.  Let’s look at the finalists…

#1:  Brainscape — "an engine for measuring the networks in the brain."
Okay, this is interesting stuff.  These guys use EC2 (the processor-on-demand stuff) and S3 (online storage) to crunch some nifty new algorithms relating to MRI scans of people’s brains.  They seem to be a University based project, so they’ve probably had some grants, but that money probably doesn’t include
$$$ for commercialization.  I get it — this makes sense to me.  Could it be the next big thing?  Well the market is mostly neurologists and neuroscientists, which are hardly a dime a dozen.

My verdict:  a real startup that would benefit from the cash, but unlikely to be huge.

#2:  Commerce360 — "uses advanced mathematics and statistical analysis to optimize search campaigns."  This too is interesting stuff, and again I think they’re using EC2 and S3.  But a startup?  The Amazon video shows a nice big office, lots of employees, a bunch of VPs and C-level execs.  Their customer list includes: Advanta, Boingo Wireless, Edgar Online, Franklin Mint, Motricity, PBS Kids, Phelps and Fordham University.  Not to mention that they already have significant VC investment from four different VC firms!!!

My verdict:  while they may have a lot of potential, $50k barely pays their VC golf tab at this point.  They are as close to being a poor startup as I am to being a young girl named Dorothy (sorry, been watching Tin Man on Sci-Fi as I write this).

#3:  Justin.tv — "operates a massively scalable live video platform serving about 500,000 video
streams per day." For once, I’ll keep my mouth shut as far as my personal feelings about a company — that’s not the point here.  But there is a tiny bit of competition in the video market and IMO, a revenue model is always a good thing to have.  Or as Venturebeat put it:

"Justin.tv got previous funding from YCombinator. It has benefited from hype and entered bubble territory more than most companies. The other problem with a network is that anyone shooting 24/7 cams of themselves are unlikely to want to fork over any ad revenue they earn to Justin.tv. Few people are likely to spark with viewers as well as Justin."  Venturebeat, May 22, 2007…

Here’s the thing… You can’t serve up 500k feeds without some kind of bandwidth bill that doesn’t fit on your Mastercard.  Lo and behold, not only did they get $50k from yCombinator plus money from other Angel investors, they also secured an as-yet-undisclosed amount of funding from Alsop Louie Partners.

My verdict:  poor startup?  Not so much.  The VC firm sound as though they’re in it for the long haul.  And next big thing?  Hmm.  I’d lean more towards next best-example-of-irrational-exuberance…

#4:  Milemeter — "an innovative insurance start-up that will offer ‘auto insurance buy the
mile’ ".
They use Amazon payment services to make billing easy.  Oh, and they put some documents on S3 and might even use EC2 to do things. <sigh>.  It has hot high-tech break-out written all over it, doesn’t it???  At least they don’t have a bunch of investors already…

My verdict:  poor startup? Sure.  Next big thing?  They’re just now getting over the regulatory hurdles for a small part of Texas.  Scaling that nationwide has to be a huge challenge.  And I just don’t see how they can be competitive in the broad insurance market.  So no, not the next big thing.

#5: Ooyala — "delivers a high quality interactive
video experience with specific tools for content owners, advertisers and
viewers."
This company, again in the video space (nothing else happens on the web, does it??) was founded by some ex-Google guys.  They’ve bragged about significant funding on several occasions, and several sites peg that funding at $10M or more. They already have offices in Mountain View, Los Angeles and New  York. Back in September, they fielded 18 employees in the 23rd Annual JP Morgan Corporate Chase Challenge (and a bunch more employees were there to cheer them on).

My verdict:  <sigh>.  Yeah, it’s me, Dorothy again.  Maybe it’s big, who knows.  But starving startup?  Hardly.

#6:  UserTesting.com — "provides quick and cheap website usability testing."
These guys make it easy for you to get user feedback on your website.  You pay a low price and they provide the feedback from a network of testers.  No idea what the quality of feedback is like, but the idea seems solid.  There’s very little info on the founders or the company’s background, but they don’t seem to be funded. 

My verdict:  Looks like a startup, talks like a startup…  Reasonable potential if they can sell the broader market on usability testing.  So maybe this is a real-deal contender.

#7:  WeoGeo — "creates a one-stop marketplace for mapping using Amazon EC2 and Amazon S3"
Okay, these guys also actually seem to be a startup without a sugar-daddie lurking in the wings.  And they seem to have a legitimate need for EC2 and S3 services.

My verdict:  Like UserTesting, they do at least seem to be a startup.  I’m not sure there’s a huge market for their product, but at least they seem legit.

So based on Amazon’s own criteria, only two of the startups even come close to qualifying.  Not to mention that three of the finalists should have been ineligible, as they’re clearly not early-stage startups.

So as I said at the beginning of this post, I thought the idea was cool.  But sadly Amazon seem to have really dropped the ball.  What could have been a shining beacon for early stage funding (like TechStars) has turned into the same crap you see everywhere else:  "early stage" means "well established", "in need of funding" means "already has funding from others so we don’t have to worry about due diligence" and "next big thing" means "whatever the herd is doing".

And as a final note on this ridiculousness, I just voted for UserTesting (the only finalist that seems to meet Amazon’s own criteria).  Here’s the breakdown of votes so far:

So there you go.  The front-runner is a funded bubble-baby, followed by the guys with $10M in their pockets.  The best candidate is dead last. 

Welcome to the joys of early stage funding!!!  Bah humbug…

Categories: Old Posts
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