July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

This is a guest post by serial entrepreneurship expert Steve Blank.

One of my ex-students recently gave me an update on his startup. When I asked, “What are you working on?” the first words out of his mouth was his fundraising progress.

Sigh. What I should have been hearing is the search for the business model, specifically the progress on product/market fit, but I hear the fundraising story first at least 90 percent of the time. It never makes me happy.

Entrepreneurs need to think about 1) when to raise money, 2) why to raise money, 3) who to take money from, and 4) the consequences of raising money.

It all starts with understanding what a startup is.

What’s a startup?

As a reminder, a startup is a temporary organization designed to search for a repeatable and scalable business model.

It’s worth parsing this sentence.

• Temporary Organization: The goal of a startup is not to remain a startup. The goal is to scale. (If you don’t have scale as a goal then you shouldn’t be raising money from angel or venture investors, you should be getting a commercial or government small business loan.)

• Search: Although you believe your idea is the most brilliant innovation ever thought of, the odds are that you are wrong. If you raise millions of dollars on day one, simply executing the idea means you’re going to waste all those dollars attempting to scale a bad idea.

• Repeatable: Startups may get orders that come from board members’ customer relationships or heroic, single-shot efforts of the CEO. These are great, but they are not repeatable by a sales organization. What you are searching for is not one-off revenue hits but rather a repeatable pattern that can be replicated by a sales organization selling off a price list or by customers coming to your website.

• Scalable: The goal is not to get one customer but many — and to get those customers so each additional customer adds incremental revenue and profit. The test is: If you add one more sales person or spend more marketing dollars, does your sales revenue go up by more than your expenses?

• Business model: A business model answers the basic questions about your entire business: Who are the customers? What problems do they want solved? Does our product or service solve a customer problem (product-market fit)? How do we attract, keep, and grow customers? What are revenue strategy and pricing tactics? Who are the partners? What are the resources and activities needed to make this business happen? And what are its costs?

Who to take money from

First, decide what type of startup you are. If you’re a lifestyle entrepreneur or a small business, odds are the return you can provide is not what traditional angel or venture investors are looking for. These types of startups are better suited to raising money from friends, family, commercial and government small business loans, etc.

If you’re a scalable startup, you want to spend small amounts of money (seed capital) as you run experiments testing your hypotheses. Why small amounts? No startup ever spends less then it raises. And at this early stage you’ll be giving up a larger percentage of your firm to investors. A seed round can come from friends, family, Kickstarter, angels — and most importantly, early customers.

These sources are a lot more forgiving of iterations and pivots than later-stage venture-capital funds.

When to raise money

In a “lean startup,” the goal is to preserve your cash until you find a repeatable and scalable business model. In times of unlimited cash (internet bubbles, frothy venture climates) you can fix your mistakes by burning more dollars. In normal times, when there aren’t dollars to undo mistakes, you use Customer Development to find product-market fit. It’s only after you have found product-market fit (“value proposition – customer segment” in the language of the business model canvas) that you spend like there is no tomorrow.

Don’t confuse “raising money” with “building a sustainable business.” In a perfect world, you would never need investors and would fund the company from customer revenue. But to achieve scale, startups need risk capital.

Raise as much money as you can after you have tangible evidence you have product/market fit, not before.

The consequences of raising venture money

The day you raise money from a venture investor, you’ve also just agreed to their business model.

Here’s a simple test: If you’re the founder of a startup, go to a whiteboard and diagram how a VC fund works. How do the fund and the partners make money? What is an IRR? How long is a fund’s life? How much will they invest in the life of your company? How much do they need to own at a liquidity event? What’s a win for them? Why?

There are two reasons to take venture money. The first is to scale like there is no tomorrow. You invest the dollars to create end-user demand and drive those customers into your sales channel.

The second is the experience, pattern recognition and contacts that great investors bring to the table.

Just make sure it’s the right time.

Lessons learned

• Fundraising is a means not an end
• Preserve your cash until you find a repeatable and scalable business model
• Focus on product-market fit
• Run small experiments testing your hypotheses
• Raise as much money as you can after you have tangible evidence you have product/market fit

Serial entrepreneur Steve Blank is the author of Four Steps to the Epiphany. This story originally appeared on his blog.

George Washington up close on dollar bill via Aperture51/Shutterstock

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

NEW YORK CITY — New York VC Fred Wilson always likes to share his insights to a wide audience. Today at TechCrunch Disrupt NY, not only did he talk about why Foursquare is doing fine, but he also shared what he thinks makes a good entrepreneur — being a little crazy.

Wilson is the cofounder of Union Square Ventures and someone who has placed a lot of smart bets. He’s invested in companies such as Twitter, Tumblr, Foursquare, Zynga, Kickstarter, Etsy, and Dwolla.

“You don’t want a psychopath, but it happens,” Wilson said. “You want someone who is crazy but mentally healthy. … To see things differently requires you to be wired a little differently.”

Wilson refused to name “pyschopaths” that he has funded, but he was willing to name a few people who fit the bill of “good crazy.” Two entrepreneurs he thinks fit that are Kickstarter’s Perry Chen and Zynga’s Mark Pincus. “They just do things differently,” Wilson said. “Perry and Mark have some common traits. … Pincus can drive me crazy.”

What not to do in a pitch session

Wilson also gave insights into things founders and entrepreneurs had done in past pitch meetings that were ill-advised. Here are few tips of what not to do:

• Don’t give a lengthy background. Get to the point. (“Going through a long backstory is a bad idea.)
• Don’t pitch something incredibly derivative. (An example of what Wilson hates: “I’m taking a Pinterest model and I’m applying it to automobiles, and there will be flash sales.”)
• Don’t demo a product that doesn’t always work. (“I had a meeting yesterday with an entrepreneur and the product didn’t work. It was a painful moment for both of us.”
• Don’t talk for 20 minutes and then show off your product. Show your product for 20 minutes and explain it.
• Don’t show 20 slides when you can show one really great slide that explains your product.

Photo via Sean Ludwig/VentureBeat

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

This is a guest post by Matthew Howard, managing partner at Norwest Venture Partners.

There was a time when investors would rush startups to market, but a shift has taken place during the past 20 years where the pace has slowed a bit. Now I find myself increasingly advising entrepreneurs to avoid putting a product to market before it is truly ready.

Seed funding and Series A rounds are intended to help startups tease out their big idea and begin laying the product development groundwork. But it seems best practices for customer validation/product management are being frequently tossed out the window. This is so counter-productive that it will almost certainly place the next funding round at risk and can sink the full enterprise.

Over 30 years of operational and investment experience, I have refined a list of five critical things entrepreneurs should do to maximize their first round of funding. Keep in mind that these goals don’t have to be addressed in a particular order.

Take a look at these five important things you should be doing now.

1. Let customers dictate products

While “fail forward fast” may be good self-improvement advice, it is a recipe for disaster in the world of business. At the same time, one can’t over-build the product and never take off from the runway. This is why the single most important goal at the outset is customer validation. Your time and reputation are your most important assets, and you don’t want to squander either of them on wrong ideas. Burning customer prospects can just about send you back to the Stone Age of productivity.

I often see product development charging ahead without best practices and customer validation, so you need to keep your developer-happy tendencies measured. Resist doing material coding until your prospective customers have weighed in and you have built a product requirements document (PRD) based on their input. You don’t want to build something that ends up requiring substantial alterations.

Enterprise and infrastructure startups in particular should identify about 20 broad-based prospective customers. The number of prospective customers for consumer startups needs to be exponentially higher. They all must be cultivated over multiple engagements, mined thoroughly, and consulted with regularly throughout the life of the business. Every conversation and interaction should produce gold nuggets of insight.

2. Borrow experience

While you are working on your product and business model, start assembling an advisory board. Members might include customers or prospects, former startup CEOs, consultants, and other qualified individuals who become a collection of experts at your company’s disposal. Collectively, your advisory board helps you stay customer-driven and focused, while it also lets you learn from mistakes others have already made and keeps you firmly grounded in market realities.

3. Hire the smartest people you can

Hiring is where first-time entrepreneurs often need the most help from their mentors, and getting the right people on board during these initial stages will immensely shape the company and product.

I like to advise founders to think of themselves as owners of an NFL team trying to hire talent. The NFL is so competitive that a single compromise can make a team non-competitive.

4. Counsel patience

Startups face tremendous odds. According to the U.S. Bureau of Labor Statistics and the Kauffman Foundation, about two-thirds of startups last less than three years, and only one-third make it to 10 years.

As we continue to examine failed companies, we find that some or most of these five important things were never achieved. Careful mentoring, planning, and hiring during the seed round stage are critical. Although taking a shortcut may save time now, it will only cause more pitfalls down the road.

5. Put the customer first

Whether you are in the early stages of developing your first product or preparing your company for an IPO, everything should be tested against your customers. During intense and chaotic times of building the business, sometimes we lose sight of the most basic principles. Chiefly, entrepreneurs must follow this critical commandment: “Thou shall always put the customer first.”

Matthew Howard is a managing partner at Norwest Venture Partners. Matt brings more than 30 years of experience in marketing, product management, engineering, business development, and sales in a wide range of technologies to NVP. Matt has appeared on the Forbes Midas List as a top 100 investor for three years. He currently serves on the boards of Avere Systems, Bitglass Blue Jeans Network, ConteXtream, Exablox, Hadapt, MobileIron, and Pertino Networks.

Young businessman moving knight on a chessboard via ollyy/Shutterstock

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

This is a guest post by GoodData CEO Roman Stanek

For everyone giving European entrepreneurs a hard time, consider this: Christopher Columbus created a model for the modern entrepreneur to follow.

Think about it.

Columbus spent seven years pitching his business plan to Genoese bankers (the world’s first angel networks) before convincing Castile’s King Ferdinand and Queen Isabella to fund his crackpot scheme. He underestimated the risks of the voyage — stocking only 60 days’ worth of food and water. And he had the confidence to turnaround a mutiny when common sense told everyone else to quit.

Rational people don’t take these risks. Entrepreneurs, on the other hand, thrive off of them.

Over the years, I’ve realized Columbus was the entrepreneur’s entrepreneur — with the same personality traits that, for better or worse, we all share. I also recognized that insight into his personality can give all entrepreneurs greater understanding into their own motivations, enabling them to chart their own course to success.

So here are four lessons entrepreneurs can learn from Columbus.

Lesson #1: Confidence attracts money.

Columbus had the superhuman confidence he needed to raise the funds for his venture. His conviction that he could reach Asia by sailing west into the unknown, (at a time when sailors still hugged the shore), eventually persuaded Ferdinand and Isabella that a new route to Asia would disrupt Portugal’s monopoly on Asian exploration and give Spain new sources of commerce.

Today, that same self-assurance helps all entrepreneurs raise money. In fact, I’m convinced that the higher your confidence, the more likely you are to attract bigger valuations, build larger companies and gain customers.

Lesson #2: ‘Unreasonable’ risks achieve the impossible.

Like all entrepreneurs, Columbus also miscalculated the risks of his westward voyage, assuming the earth’s circumference to be only about 18,000 miles. This might surprise some, but I believe this is a critical component of an entrepreneur’s personality.

We constantly underestimate the risks involved when we start our ventures. It’s a kind of cock-eyed optimism that enables us to tackle hurdles when the more-cautious around us tell us we could never succeed. More than that, it pushes us and the people around us to achieve the impossible — much the way Steve Jobs’s “reality distortion field” drove colleagues, partners and suppliers to create insanely great products.

Lesson #3: Your belief in yourself is contagious.

An absolute faith in our vision also defines us as leaders. With it, for example, Columbus fended off a near-mutiny by convincing his crew that newly sighted birds and floating vegetation meant Asia was (literally) over the horizon. This may have been the first case in history of an entrepreneur being able to pivot a venture to capitalize on changing conditions. Today, every entrepreneur I know possesses this certainty to some degree.

It’s that certainty — in ourselves and in our vision of what the world will look like in six months or six years — that makes us successful leaders and able to rally our teams in adversity, drive them to excellence and attract customers.

Lesson #4: Technology founders have a competitive advantage.

The traits discussed above clearly define today’s entrepreneur. But I also know that the quintessential startup personality isn’t enough for success. Founders also need a deep understanding of the technologies and markets they aim to disrupt. Five hundred years ago Columbus was a navigational genius who understood the westerly Trade Winds better than just about anyone else.

Today, technical entrepreneurs have similar advantages. Andreessen Horowitz says they always invest in technical founders because they have the knowledge, the commitment, and the passion to achieve their goals. That’s especially important in the tech industry, where there’s a new trend almost everyday, and you can’t rely on business advisors to tell you how to steer your company. Instead, it’s for us to suss out which steps hold promise and which will lead to disaster.

Sadly, that’s where Columbus got it so terribly wrong. Despite his glowing reports back to Spain, Columbus had no riches to send back from the New World. In desperation, he forced Native Americans into slavery to dig for gold. And he was hated for it. Entrepreneurs can learn from that, too, and make it a point to never act out of fear.

Columbus might not have been the great hero that early history books make him out to be. Even so, I praise him. By charting a route to the New World, he showed that confident entrepreneurs willing to take great risks — and who can pivot at a moment’s notice — can achieve world-changing disruptions.

Isn’t that what being an entrepreneur is all about?

Roman Stanek is the founder and CEO of GoodData, a company that offers a range of business intelligence software and reporting tools to help companies monetize big data. Prior to this, he was the founder of NetBeans.org, sold to Sun Microsystems, and Systinet, which was acquired by HP. Follow him on Twitter @RomanStanek 

Christopher Columbus via Shutterstock 

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

This is a guest post by entrepreneur Austin Smith

This month, I participated in an epic hack trip on the “StartupBus” — and it was the 12th hackathon I’ve been a part of in as many months.

I love everything about hackathons. The idea of simultaneously building relationships, teams and products for a fleeting moment under various constraints is fascinating, exciting and educational — and most of all, fun.

But post-judging, participants typically feel disillusioned. When they don’t win, the team is bitterly disappointed. When they do win, they argue over who gets what part of the prize. It happens nearly every time.

I’ve watched this again and again, and thought, “Isn’t this just about having a good time? Just relax!”

On the StartupBus from San Francisco to Austin, I got to know lots of brilliant, friendly people and was inspired by the ideas and passion of every team involved in the event. For those unfamiliar, it’s an annual 72 hour hackathon on a bus ride to the tech conference SXSW.

If there’s a better way to transition from a group of strangers to a tight-knit group of friends in 72 hours, I have yet to see it. From the lack of sleep to the sprints of work to the downtime without internet to the confined space to the rest stops to the steady stream of alcohol to the hard, looming deadline; everything about StartupBus seems designed to make you walk away with some new best friends.

As the week progressed, six buses from six cities converged in San Antonio. Emotions, stress and energy fluctuated aggressively. After the first round, half the teams were eliminated. After the second round, half the teams were eliminated. In the final round, 8 teams remained — mine included.

Each time we progressed, I was thrilled to see my team move forward, but disheartened to see the road end for other teams that worked just as hard as we did. And after each round, there was more chatter of disillusionment around the whole event. In some cases it was petty, while in others totally justified (as was the case for the teams Robert Scoble was admittedly disrespectful to.)

In the final hours, my team rallied and got really excited about our prospects in the event. We perfected phrases, designed a pitch deck, planned transitions and talked about what would happen if we won. Then we lost.

Shortly after, we joined in on the negativity party. “The judges didn’t understand our product vision,” we said. One brilliant losing team had built an anonymous chat platform called Ghostpost, so without missinga beat they created a #losers room where we could all complain behind the cloak of anonymity. One person even complained on StartupBus’ public blog. Nearly every losing team was complaining about something, myself included.

It took me a bit to realize that I was engaging in the same exact behavior I’ve watched with bemusement at past hackathons.

Once I realized that, I looked around me. I saw a group of people whom I know will be successful as they push onward, because I’ve seen them go through hell and still come out on top.

Suddenly, I was smiling again. The event was never about prizes and pitches and organizers and judges and equity. It was hardly even about product development and traction. StartupBus was about people and shared experience, and I got my fair share of each.

I’ll never forget being in a taxi at four in the morning with five people from five different countries, all of whom made the bold decision to go out to the San Antonio bars despite having slept just a handful of hours in several days. I’ll never forget working until 6am in a random town in New Mexico, as the rising sun glistened on the self-proclaimed “World’s Largest Chili Pepper” outside the hotel.

Most importantly, I often think about that ephemeral moment when I came together with three strangers and nothing mattered except moving our project forward, regardless of the outcome. Those strangers are now my friends.

Next time you find yourself at a hackathon, consider this: If you and your team want that first place iPad Mini so badly, couldn’t you find a couple of hours of contract work and buy it? If that decidedly easier path to the prize isn’t as alluring, then think for a minute about why you’re participating in the hackathon.

And if you win, great. Winning is fun, and the aspect of competition is key in making hackathons fun. Of course, I wish I had won StartupBus.

But if you participate in hackathons just to win hackathons, then you’re missing the point.

Austin Smith is the community manager at Singly, a service for transmitting personal data between applications. 

Follow him on Twitter @awwstn

photo credit: hackNY via photopin cc

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

This is a guest post by Shayan Nahrvar

After winning a competition, I had the chance to fly down to South Africa and spend three days with my idol, Richard Branson.

It all started in 2011, when Branson released a book “Screw Business as Usual,” where he argued that for-profit businesses should play a role in addressing today’s social and environmental challenges. To celebrate the release, he asked startups from around the world to submit their business model and explain how it will change the world for the better.

Over 500 companies submitted their application, and my own company Raise5 was selected as the winner. We help people sell their skills and talents in exchange for donations to their favorite non-profit.

On returning from South Africa, I put my thoughts down on paper. Here are five things I learned from the world class entrepreneur and founder of The Virgin Group:

Embrace adventure — go where others don’t

The thing that’s immediately obvious about Richard is his love for adventure. Whether it’s in the business world, or in the jungle, Richard simply loves to go where others normally don’t. During one of our safari trips, he picked up a giant millipede and giggled as it crawled all over his head (see above). I realized on the trip that while many people are attracted to the glory of being a successful entrepreneur, Richard really cherishes the process of getting there, and that seems to make all the difference.

Don’t be afraid to question conventional wisdom

During one of our dinners together at Ulusaba, Richard shared his perspectives on the world, including the issues of conventional corporate culture and the failing war on drugs. We even spent some time speaking about the issues facing my birth country of Iran. Richard’s attitude was all about bringing power to the people. He is pretty much the same in person as he is on television. I would describe him as a gentle rebel. He’s kind, humble and down to earth, and yet he still loves to shake things up and openly challenge the world.

Trust and Delegate

During our trip, Richard mentioned that the job of a leader is to focus on the big picture, and delegate work to the appropriate members in his team. During the 3 days with him in Ulusaba, you would rarely see him checking his email, and making calls. Clearly, the Virgin Group is in good hands, and it’s also clear from Richard’s relaxed demeanor during the trip that he genuinely trusts the people on his executive team. He explicitly mentioned to me that a leader should be able to remove himself from the organization, and everything won’t fall apart.

Challenge yourself and redefine failure

At one point, Richard spoke about the 600 or so companies that the Virgin Group has launched over the years, and 100 of them are still active today. While some people saw this as 500 failures, for Richard, it was an ongoing challenge to improve the rate of success. He said, “You won’t know what will work ahead of time, you just have to know that as long as you keep challenging yourself, you’ll be at your best.”

Work can be fun

We should always celebrate the little things in life, and all the milestones in our businesses. At lunch, Richard read to us this email from his Virgin Galactic team on their successes in testing one of the rockets. The email was very emotionally charged and heartfelt. While reading it, you could tell that Richard was savoring the moment. Don’t just experience fun and joy after 5pm or on vacation. Love what you do!

Shayan Nahrvar is the co-founder of Raise5, an organization that allows individuals and groups to fundraise for charities and non-profits through micro-volunteering.

He is an outspoken critic of standard business practice with the belief that in addition to profitability, social responsibility must be weaved into the fabric of every business.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

This is a guest post by Brad Feld, a managing director at Foundry Group.

Now that we are in March, you should have a pretty good view of how your Q1 is likely to end up. If you are a revenue generating company, you’ve probably got a formally approved 2013 plan by now. (If not, why not?)

Your board is paying attention to your performance against plan, and you and your management team are executing based on the plan you had approved, which likely includes both a revenue plan and an expense plan.

If your sales and revenue are not on or ahead of plan, it’s time to take a hard look at what is going on. Q1 is the easiest quarter to make since you just created the annual plan. If you miss Q1, especially in a recurring revenue, services oriented business, or ad-tech business, there is almost no way you will make it up over Q2 through Q4. Sure, it’s nice to think something magic, special, and happy will happen, but it almost never does.

Here are five steps you need to take right now:

Step 1: Put on the brakes on discretionary spending, especially headcount. You are probably spending at plan. If sales / revenue / MRR are behind plan, you are just creating a bigger problem for yourself.

Step 2: Do an aggressive root cause analysis of why you missed Q1 so far in January and February. Use the five whys approach and keep digging until you actually understand what is going on. Don’t let your sales organization wave things off. Don’t assume it’s all going to come together on 3/31. Don’t assume the high-level metrics you are looking at tell the story. Go deep as a management team. Get everyone on the management team in a room for the day on Saturday 3/9, and figure it out. Yeah, I know some of you are going to SXSW –- figure it out. It’s important.

Step 3: Keep playing through on your plan for all of Q1 other than discretionary spending. Be surgical about what is going on. Use this as a wake-up call that you aren’t executing well yet, or at least to the plan you put out there. Do you have confidence you’ll make it up in March? If you do after you think hard about it, then you’ll know in a few weeks. But don’t wait for those weeks to pass to get your mind into the issue.

Step 4: Re-forecast Q1 and the rest of 2013 based on what you expect the actuals for Q1 to be. Again, go deep. You just created an annual plan so the process and the numbers should be fresh. Use it to re-forecast based on the new information you learned in January, February, and Step 2. Get it in shape so that after you know the score for Q1, you can quickly put it in front of the board.

Step 5: Call a board meeting for around April 15. Make this a Q1 review and Q2 through Q4 planning meeting. As part of this, get a new 2013 plan approved that takes into consideration what you learned in Q1.

Don’t panic, but don’t be caught off guard. Assume you won’t make things up and get ahead of them by figuring out what your real trajectory is.

Oh –- and if you are beating your Q1 plan, then start thinking about how you can accelerate and grow even faster!

Brad Feld is a managing director at Foundry Group; this post originally appeared on his blog. Feld lives in Boulder, Colo. and invests in software and Internet companies around the United States. In his spare time, he runs marathons and reads a lot.

Businessman in stormy weather via ollyy/Shutterstock

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

This is a guest post by Jason Cohen, an angel investor and the founder of Smart Bear Software. This post originally appeared on his blog.

My fingers trembled as I fed page 34 of 72 into the fax machine, deftly pressing the head of each page into its creaky jaws so that this cheap machine wouldn’t snag two pages at once, obscuring the precious scribbles adorning the footer of each page where it read: “Seller’s Initials: _______”.

This is what the last six years were all for. All the labor. All the risk. The brave face for the troops. The self-inflicted unflagging optimism despite no evidence to support it. All those sleepless nights worried about making payroll. The care and feeding of becoming an expert in something. The hard lessons you have to recover from learning. The experience you get just after you need it. The inner doubt suppressed for the morale of the team. No salaries followed by low salaries. The “eat what we kill” mentality. The scrounging and scrabbling and begging and fighting the assholes for those morsels of revenue, those crumbs of validation.

It’s over. We did it. I did it. American dream? Check.

The 73rd page spat out confirming the successful transfer of the previous 72.

And then… sadness.

A profound sadness. Not depression — not hopeless or rudderless — but a pure sadness, when your lungs sink into your belly, the punch-in-the-stomach of discovering your dog was hit by a car or that your dad is terminally ill.

“What the fuck?” I thought, “Why am I feeling this? I’m supposed to be feel… happy? I guess? Something other than this.”

Why sadness?

Almost all startup founders experience a deep and prolonged sadness after selling their company, even when the sale is an outrageous success. Why?

The answer is important and fundamental for all startup founders, whether or not they ever intend to sell their company.

“I sell my artwork on Etsy — want to see?” a barista at an Austin coffee shop says to you.

If you ask her, “Who are you?” she would answer: “I’m an artist.”

If you ask her, “What do you do for a living?” she would answer: “I’m a barista, but that’s just my day job. Want to see my artwork?”

Is she a barista because she pours coffee for money? Is she a driver because she drives a car to work? Is she a maid because she cleans her apartment?

No, she’s an artist because that’s what she really is. “Barista” is one of many necessary means to ends, where the “ends” are the basic human needs, followed by creating art.

A startup founder lacks this distinction between personal identity and work identity, and this is the key to the “sale-blues” phenomonon and other behavior.

A startup is the founder’s personal identity. Startups are not something you do to make ends meet or a “necessary evil” en route to what you “really” want to do.

Your obsession

A startup is an obsession. You do it because you couldn’t stop yourself. Because when you were doing anything else, you were thinking about it. That is the mark of “who you are.” Interviewers ask me “Why did you decide to do a second and eventually a fourth startup?” And the answer is, “For the same reason that I started the first one — because it’s in my DNA and I have to do it.”

What do you do in your spare time when you have a startup? What spare time? This is all your time. It’s not just the last thing you think about before falling asleep, it’s the thing that won’t let you sleep. It’s first thing that trickles into your brain in the morning like The Matrix patterns filling the void, and The Matrix is in fact your reality and there you reside.

It’s why you can weather the painful events like the ones whistling through my ears while I fed legalese into a rickety fax machine. You are consumed, this is your life, this is you. There’s no room for anything else.

When you sell your company, others are quick to throw jabs like “So, you sold your baby?” Which means: “You’re a sellout.”

It’s sort of like selling your baby. But it’s more like selling yourself. While the business is physically separate from you, and its success is undeniably due to your faithful employees even more than you, emotionally the business is not a separate entity.

‘Baby blues’

Speaking of selling babies, this all sounds a lot like “baby blues” — depression caused by elevated levels of the enzyme monoamine oxidase A — that 70 percent of women experience after giving birth. A third of those women will experience this for up to a year (postpartum depression).

It’s characterized as a feeling of loss and of mourning. Which is seemingly at odds with the arrival of a new life which is just the opposite — gain and celebration. This intellectual dissonance creates secondary emotional effects, specifically the devastating belief that “I must be a bad mom for being sad that I have a new baby.”

Are the baby blues the same emotional effect as selling a company? Maybe not — I already don’t like saying “a startup is like a baby.” Besides, postpartum depression is triggered by the arrival of responsibility and, if you insist on the baby/startup analogy, selling your company is the departure of responsibility.

But one thing that definitely is the same is that “feeling of loss and mourning.” A piece of yourself has been eviscerated, irrevocably.

This is not only a normal feeling, it’s by far the majority case. A long-winded-but-high-quality study from Columbia Business School interviewed 22 entrepreneurs and every one of them experienced this effect. Some refocused the energy into the Next Thing (almost always new ventures), but most took years to find that thing which could replace not only the excitement but identity, and many still haven’t found that Next Thing at all.

Life after exit

Selling their companies forced them to answer a difficult question: If you could do anything, what would you do? What’s really important to you, as opposed to a job? What do you really want to be when you really grow up?

The problem is, the startup already was that thing! It’s a grinding, batshit-crazy, risky, irrational, epic adventure. You wouldn’t have done all that in the first place if that wasn’t already the thing you wanted to do. A startup is never the easiest career path.

Does this lead to the conclusion that selling a startup is the wrong choice much of the time? No. It’s true you shouldn’t sell without noticing whether you’re thinking “I can’t wait to start the next thing” or whether you’re thinking “I don’t know what I’ll do with myself.” It’s also true that you must resist the urge to believe that getting millions of dollars will make you fulfilled, or happy. “Money doesn’t make you happy” is cliché because it’s true.

But that doesn’t mean selling is wrong.

It’s like a bad relationship that has to be ended even though it’s painful to do it. Just because it’s emotionally painful doesn’t mean you don’t need to do it.

Building a company in year one is completely different than building that company through year five or ten. The CEO’s job description changes over time, and so does the company, whether you sell it or not. Are you emotionally prepared for this as well?

Are you OK with innovation taking a back seat to developing scalable, mature processes? Are you OK releasing control in day-to-day operations to managers, and then releasing control of the managers to your executive team? Are you OK wrestling yourself out of TextMate, out of Adwords, off the website, off the live chat, out of the sales calls, trusting your managers and not being that sort of meddling micro-manager boss that you yourself hate? Are you OK shouldering the burden of the livelihoods of dozens of families rather than just “pulling 90 hour weeks” to push some code out the door with a co-founder?

The fact is, startups grow up. They grow into businesses and strap on the shackles of sustainability, risk-avoidance, HR law, strategic planning, executive meetings, and all that. The founder-CEO is still steering the ship, but it’s a different sort of ship.

Is this bad? The answer to questions like that is always “it depends.”

New challenges and ambitions

In my case, it changed over time. At Smart Bear, I didn’t want to lead a huge company. I didn’t want to relinquish Eclipse and my ability to check in code. I didn’t want to manage managers or figure out what changes, strategies, hirings, products, marketing, and sales were needed to make $100 million a year. So for me, I sold at a good point: before I needed a CxO, but after the company was big enough to garner enough money to cross the Freedom Line.

Now at WP Engine, I have new ambitions and inclinations. I am now that CEO who manages managers, who sets vision and direction but not day-to-day operations, who worries about company culture but who doesn’t have SSH access to all the servers, and who is driving towards a company with products and a market and a team which we believe can indeed generate $100m/year.

That’s exciting to me. This is my new challenge. I will always love writing code and getting a company from $0 to $1 million a year.

But, today, right now, for reasons unknown even to me, this is who I am.

Jason Cohen is the founder of four companies including Smart Bear and WP Engine. He is also a mentor at Capital Factory and an investor in a few companies.

Sad young businessman via ollyy/Shutterstock

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Many startups have a “make it happen now” sense of urgency that is important to their survival and success. But that urgency can actually hurt the brand-building process.

Your brand is what prospective customers expect of your product, and what often prompts a purchase over competitors. For both B2B and consumer plays, strong brands keep products out of commodity hell.

If you’re leading a startup, you’ve already made the leap of faith that your product will disrupt the status quo. To hell with the naysayers and other speed bumps in your way. You’re charging forward knowing the faster you can translate the vision into product and revenue, the sooner you start changing the world (and keep the boys on Sand Hill Road happy).

Unfortunately, these same fast-twitch muscles can cause missteps in building your brand. At the core of every great brand is a company’s ability to deliver on the prospect’s expectations — or better yet, exceed those expectations. Yet, startups often bake a “desired position” into the brand that strays too far from reality.

There’s nothing wrong with a grand vision and a belief that you are going to change the world. But the promises your brand makes have to come at least horse-shoe close to reality. Otherwise, you can end up souring customers and influencers, which stunts growth (or worse).

Let’s rewind the tape and look at how Amazon’s brand evolved. It’s easy enough to do this by reverse-engineering the boilerplates in the company’s news releases. No doubt, CEO Jeff Bezos himself — if there was a storytelling hall of fame for executives, he’d be a first-ballot inductee –- blesses this copy, a good indicator of how the company wants the outside world to perceive its brand at a given time.

Founded in 1994, Amazon sent its first news release out the door in 1995. You can see in the graphic below how the brand slowly but surely evolves with each advancement, building upon the historical equity.

Evolution of the Amazon brand

Obviously, there’s a massive gulf between the 1994 brand position of “we love books” and today’s brand position: We sell everything known to humankind online, including IT services, and even make gadgets like e-readers and tablets.

But consider how Amazon executed on its brand journey — incremental steps.

The company showed discipline in ensuring that the brand position at any given point in time never got too far ahead of reality. When the gulf between a brand position and reality grows too wide, the horrid “h” word – hype – happens.

I get a kick out of Amazon’s first boilerplate:

Amazon.com operates from headquarters in Seattle. The company maintains a staff of programmers, editors, executives, and all-around book lovers.

Not exactly the most compelling brand proposition: Buy from us because we hire people who enjoy reading books.

A mere two years later the company could credibly call itself “earth’s biggest bookstore” leading into its IPO. Even when flush with capital, Amazon stayed true to aligning its brand with the reality of what it delivered to customers.

For new ventures, there’s something to be said about recognizing the journey in building a brand.

All it takes is a little patience.

Lou Hoffman is CEO of The Hoffman Agency, a communications consultancy focused on the tech sector with offices in Asia, Europe, and Silicon Valley. He made his first trip to China in 1998 before opening the firm’s office in Beijing. He blogs on storytelling through a business prism at Ishmael’s Corner and can be found on Twitter at @LouHoffman.

Grizzly photo via Antoni Murcia/Shutterstock

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

This is a guest post by Eran Laniado, the managing director of BMN!.

Has this happened to you? You needed to consult with a friend about an important matter, but when you finally met, you realized that he was hardly interested in your problem. Even worse, he half-heartedly gave you vague and remotely related advice. Could it get more frustrating?

Similarly, a CEO may feel that the board of directors does not help the company. She may be right — board meetings could be a waste of time; board members may be unproductive or burdensome; in the worst cases, lack of board cooperation may prevent a successful exit. Kevin Rose got an offer to sell Digg for $60 million a few years ago, but his board rejected it. Digg was sold for mere $500,000 back in July 2012.

Board ineffectiveness often stems from board nomination mistakes. Here are five big mistakes that are often made when choosing board members — and, maybe more importantly, tips on avoiding them.

1. Wrong People on the Board

Board members can be great resources who provide support, knowledge, and access to unique professional networks. Unfortunately, not all board members offer such value.

For example, some board members prioritize the interests of the investors or founders whom they represent far above those of the startup.

Scott Kurnik, an experienced entrepreneur and investor, advises not to nominate to the board anyone reporting to the CEO. Interestingly enough, he also suggests putting the founder’s best friend on the board.

Additionally, one should be careful of five types of dysfunctional board members as defined by Jack and Suzy Welch: The Do-Nothing; The White Flag (will do anything to avoid confrontation); The Cabalist (driven by personal agenda); The Meddler (dwells incessantly on details); and The Pontificator (only enjoys hearing himself speak).

How to avoid this mistake:

• Carefully consider board nominees and ask for feedback from people who have worked with them.
• Appoint at least one independent director, loyal to the company only.

2. Misalignment Regarding the Board’s Role

Boards of directors have many fiduciary and legal responsibilities. Still, boards often have additional roles, correlated with the venture’s stage.

At early-stage startups, members should support the management (without micro-managing it). For example, they may help guide product decisions or provide access to recruits, customers, and investors. Ideally, board members could also mentor founders. More established startups, however, may need a different type of assistance related to scaling sales, engineering, logistics, and other functions that no longer fit into a garage.

The above roles differ from those at publicly traded companies, where board members extensively monitor the firm’s performance and confirm that the management does not put its interests before the company’s (“the agent problem”).

Matt Blumberg, the CEO of Return Path, provides a useful summary of what makes awesome board members.

How to avoid this mistake:

• Check whether the candidate has board experience with firms of similar stages and needs.
• Discuss with the candidate expectations of the board’s role and responsibilities.

3. A Homogeneous Board

It is important not to form a board of too similar profiles (e.g., all are engineers or all have similar VC backgrounds) and to diversify your startup to confirm that the various required skills are in place.

David Roth, the co-founder of AppFirst, described recently how the need to balance the board guided his startup’s decisions.

Aileen Lee of Kleiner Perkins Caufield & Byers has an interesting argument, that the next board member should be a woman, especially if women compose a significant portion of the venture’s users.

How to avoid this mistake:

• List the skills and experience needed from the board (Product design? Customer acquisition? Partnerships? User experience? A great rolodex?).
• Consider rejecting solid candidates whose skills and experience are common within the board in favor of candidates who possess the missing skills and attributes.

4. Too Many Board Members

An entrepreneur once complained, “My board keeps on growing.” VC-backed startups often encounter this problem when a new round of financing entitles investors to board seats. Sometimes, “observer rights” increase the number of attendants even more.

At some point, a board’s growth has diminishing returns. For a startup, a ten-person board will rarely be as engaged and helpful as a smaller one will. Further, the logistics (assembling everyone, arranging one-on-one time with the CEO before board meetings, etc.) become exponentially more complex. Fred Wilson from Union Square Ventures thinks a board of five members is ideal. He recommends no more than 7 board members (two founders, one to three VCs, and one to two other industry professionals).

How to avoid this mistake:

• Negotiate the number of future board seats entitled with investors in the shareholders agreement.
• Prefer nominees who will agree to leave the board when it grows or when their skill sets become less relevant.
• Consider building a board of advisors to access additional experience without increasing the size of the board of directors.

5. Poor Organizational Fit

Some board relationship problems can harm the company severely. For example, board members who get involved in day-to-day decisions instead of supporting the management (or replacing the CEO, when necessary) can inhibit the CEO’s ability to lead.

Another problem occurs when board members accustomed to aggressive corporate cultures meet a CEO for whom “aggressive” equals “rude.”

Furthermore, pushy board members can cause CEOs to commit to unrealistic plans. It’s true that CEOs are responsible for their own decisions, but they can still be unduly pressured, especially when the board member is an investor (whom an inexperienced CEO may feel obligated to please).

Last, some board members may be professionally adept, but they do not show interest in mentoring the management, nor can they successfully interact with other members, bond, or build team spirit.

Steve Blank provides a painful example of poor relationships between one of his ex-students and the chair of his startup.

How to avoid this mistake:

• Check each candidate’s track record (tenure, reasons for leaving, relationships developed) as board member at other firms.
• Replace board members who negatively impact the board’s internal relationships. This is not easy, but in extreme cases, it is necessary.

Eran Laniado advises multinational firms and mentors entrepreneurs. He gained corporate experience as VP of Business Development & Strategy of a NYSE traded firm and as a member on boards of directors. He writes about strategy, business models, and innovation on his blog on bmnow.com and can be followed at @EranLan.

Board meeting image via Monkey Business Images/Shutterstock

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Crazy robot dinosaur FAKE GRIMLOCK is known for giving entrepreneurship advice in an unorthodox manner. Now he plans to expand his humorous critiques of startups and advice by moving into books.

We’ve been keeping close tabs on FAKE GRIMLOCK and recently asked him to give advice to our readers and give us his takeaways from CES. As usual, both articles are filled with lots of humorous anecdotes and advice.

The robot dinosaur now has a new project. He has done all the illustrations for the upcoming book The Lean Entrepreneur by Brant Cooper and Patrick Vlaskovits. The book will be released on Feb. 26, and tackles the challenges of being an entrepreneur on a shoe-string budget.

FAKE GRIMLOCK got his start doing artwork on a guest post for VC sage Fred Wilson. Being involved with a project like The Lean Entrepreneur represents an evolution of his brand and a sign that people are taking the “dinosaur robot guy” seriously. And after this, he even plans to release his own book via a Kickstarter campaign.

We decided to ask FAKE GRIMLOCK a few questions about the project and what else he’s seen recently in the startup world. Check out his answers below:

VentureBeat: Why did you decide to contribute artwork to this book over some other project?

FAKE GRIMLOCK: THEM ASKED.

ME NOT KNOW PATRICK OR BRANT AT ALL BEFORE THEM ASK ME TO DO BOOK. IT GIANT RISK FOR ALL THREE OF US.

VentureBeat: Where do you get your illustration inspiration?

GRIMLOCK: ME, FAKEGRIMLOCK, HAVE TINY BRAIN.

STEP ONE, CUT AWAY EVERYTHING ABOUT CONCEPT THAT NOT FIT IN BRAIN.

WHEN ONLY PART OF IMAGE THAT MATTER LEFT, ME DRAW IT.

THIS GOOD WAY DO OTHER THINGS TOO. CODE, UX, PRODUCT, VACATION PLANS, DINNER. ONLY DO PART THAT MATTER, NO WASTE TIME ON REST.

VentureBeat: What’s the big sell for this book, besides your lovely artwork?

GRIMLOCK: LEAN ENTREPRENEUR BOOK ABOUT ONE THING. HOW TAKE “LEAN STARTUP” STUFF, DO SOMETHING WITH IT.

THAT BIG PROBLEM RIGHT NOW. LOTS OF TALK ABOUT LEAN. NOT MUCH DO.

NOW NO ONE HAVE EXCUSE. BUY BOOK, READ EXAMPLES OF HOW PEOPLE LESS LAZY THAN YOU ALREADY SUCCEED, GO OUT AND DO LEAN INNOVATION, OR SHUT UP AND GO HOME.

VentureBeat: Is the focus of this book for tech startups or any startup company?

GRIMLOCK: THIS BOOK FULL OF STUFF FOR ALL HUMANS! PRODUCT MARKET FIT? THAT NOT JUST ABOUT TECH STARTUP. IT LAW OF PHYSICS! APPLY TO EVERYONE!

ME GIVE EXAMPLE. TAKE REVERSE FUNNEL, USE FOR FIND DATE. OLD BUSINESS WAY IS RUN DOWN STREET SCREAMING PHONE NUMBER, WAIT FOR SOMEONE TO CALL.

LEAN ENTREPRENEUR WAY IS FIND SOMEONE WANT TO DATE YOU, GO ON AMAZING DATE, WORD GET AROUND.

SAME FOR BUSINESS. PAY TO SCREAM AT PEOPLE THAT NOT INTERESTED ALWAYS WORST OPTION. TRY GIVE DAMN ABOUT PEOPLE ALREADY INTERESTED INSTEAD.

VentureBeat: Did you learn any new lessons about entrepreneurship while working on the book that you can pass along?

GRIMLOCK: ME, FAKEGRIMLOCK, ALWAYS LEARN!

FAVORITE LESSON ABOUT SQUARE HATS.

EVERYONE LOOK FOR EASY WAY TO FIND MARKET. IF YOU SELL SQUARE HATS, MARKET NOT PEOPLE 14-27, OR ASIAN MEN WITH MUSTACHES, OR FEMALE AVOCADO FARMERS.

YOUR MARKET? PEOPLE WITH SQUARE HEADS.

FORGET STUPID DEMOGRAPHICS! FIND NEED, SELL TO THAT.

VentureBeat: You’ve got quite the personality and are prone to eat humans. Did you get along well with the authors on coming up with art?

GRIMLOCK: YES. US FOLLOW VERY SOPHISTICATED SYSTEM. THEM WRITE WHAT WANT, ME DRAW WHAT WANT.

BRANT AND PATRICK PRETTY SMART GUYS. THAT HELP. ME ALMOST NEVER TEMPTED TO EAT THEM. THAT NOT TRUE FOR MOST PEOPLE.

VentureBeat: The book outlines several case studies for entrepreneurs. Is there one that sticks out as especially enlightening?

GRIMLOCK: THERE ONE ABOUT 500 STARTUPS. BUT EVERYONE KNOW ABOUT THEM, SO IT KIND OF BORING TO TALK ABOUT.

INSTEAD ME TELL YOU ABOUT APPFOG. IT LIKE STEP BY STEP GUIDE TO DO LEAN RIGHT. MAKE MVP, GET TRACTION, LISTEN TO CUSTOMER, STOP DOING CRAP YOU WANT BECAUSE YOU WRONG. AND OTHER IMPORTANT THINGS.

THAT WHAT THEM DO, NOW THEM HAVE MILLIONS OF DOLLARS INSTEAD OF NOTHING.

VentureBeat: Can you name a few startups you admire?

GRIMLOCK: ADMIRE? NO. NONE OF THEM LIVE UP TO ME, FAKEGRIMLOCK, STANDARDS YET.

BUT THERE SOME THAT NOT ENTIRELY SUCK.

ME LIKE IS BRANCH. THEM PROBABLY FAIL, BUT IN RIGHT WAY. ITERATE FAST, LISTEN TO CUSTOMER, MOSTLY HAVE UX THAT NOT BROKEN.

GIVEFORWARD GOOD TOO. THEM TURN BORING IDEA OF COIN JAR AT GAS STATION FOR SICK RELATIVE INTO MASSIVE SUCCESS. ALSO, THEM LISTEN WHEN GIANT ROBOT DINOSAUR GIVE THEM ADVICE.

ME GIVE SPHERO PROPS LAST. THEM TAKE SOMETHING EVERYONE WISH THEM HAVE, ROBOT BALLS, TURN INTO LEAN PRODUCT EVERYONE CAN HAVE! THAT WIN!

VentureBeat: What’s next for you? Will you do your own book?

GRIMLOCK: SOLO BOOK KICKSTARTER LAUNCH IN MARCH.

ALREADY HAVE 2ND ONE AFTER THAT MOSTLY DONE.

Check out some of FAKE GRIMLOCK’s illustrations from The Lean Entrepreneur in the gallery below:

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

This guest post was written by Daniel Saks, co-CEO of AppDirect, a company that offers an “entre-ployee” initiative.

Many 9-to-5-ers dream of being their own bosses, but starting a company is risky business. Over half of all small businesses don’t make it, and the numbers are even worse in the tech industry; a few high-profile success stories dominate the news, but three out of every four startups end up failing.

Despite these statistics, the entrepreneurial spirit is alive and kicking in Silicon Valley and beyond. In fact, some forward-thinking companies are looking to take innovation to the next level by giving employees the chance to launch their own companies while on the job. These new hybrid entrepreneur-employees — or “entre-ployees” — are poised to reshape the face of the tech industry.

This is a big shift in the way that many people think about starting a company, so why the change? There are incubators for almost every type of business — from restaurants to robotics — and accelerator programs abound. The problem? You need to create an actual company, or at least develop a strong business plan, before you can apply. For many would-be entrepreneurs, that bar is simply too high; they can’t quit their day jobs and risk it all to pursue their business dreams.

Some companies do give employees an outlet to pursue independent projects. Google’s well-known “Innovation Time Off” policy has spawned popular services like Gmail, while 3M’s “15 Percent Time” has given us everyday items that include Post-Its and Scotch tape. But there’s a catch: With programs like these, innovation stops at the company door. Employees are only allowed to develop products for their employers, leaving them stuck in the same stay-or-risk-it-all conundrum.

Thanks to changing ideas about entrepreneurship and innovation, however, they may not be stuck for long. More employers are not only encouraging their employees to develop business ideas while on the job, but also use company resources as a foothold to launch independent businesses. The idea may be relatively new, but here are four reasons why 2013 will be the year of the entre-ployee:

1. Entre-ployee opportunities truly set companies apart

Health insurance, creative work spaces, gym memberships, PTO — benefits like these are common at tech companies. In the war for talent, it’s getting more difficult to offer perks that can sway a prospect to take an offer. Even Google-like innovation-time-off programs may not be enough. That’s why more companies will offer entre-ployee programs in 2013. Smart, enterprising job candidates will find the chance to develop a business plan at work and launch a company too tempting to pass up.

2. Entre-ployee programs push employee engagement

Do you know what really makes employees happy? According to a recent Gallup poll, it’s not flextime, PTO, or other work-life benefits; it’s engagement. Simply put, if employees are interested in their work, they will be happier. It may seem obvious, but far too many companies fail to deliver in this key area of employee satisfaction. Of course not every second of every workday can brim with excitement, even at a hot tech startup, but the prospect of working on an independent business idea is a surefire way to keep employees engaged.

3. Entre-ployees help innovation thrive

Tech incubators crackle with fresh ideas, which is why companies like PayPal host them in their own offices. Being in close proximity to innovation sparks creative problem solving and new ways of thinking. Entre-ployees are like incubators of one; even if employees spend some work time thinking about their own business problems, everyone benefits from the free-flowing exchange of ideas. In 2013, more companies will experience this “a-ha moment” and not only move incubation in-house, but in-employee.

4. Entre-ployees prove that quality matters, not quantity

Yes but, you may be thinking, what’s the point of investing the time, energy, and money into recruiting and training employees just to help them start their own companies? The fact is many employees are planning their next move anyway. The typical U.S. worker spends about four years at any given job, a number that is sure to trend even lower in 2013.

Both employee and employer have a finite amount of time to help each other grow, so making those years as creative and productive as possible is crucial. Entre-ployees are excited to find new ways to tackle age-old business problems—that’s wisdom that everyone can benefit from, no matter who the boss happens to be.

Daniel Saks is the co-CEO of AppDirect. Daniel plays a key role in the growth and development of AppDirect, from attracting a leading team, to nurturing relationships with customers and partners. Daniel’s presentation at the Under the Radar conference in the spring of 2011 resulted in AppDirect winning “Best in Show,” earning coverage in Wall Street Journal. Daniel received a BA in political science from McGill University then studied finance and accounting at Harvard. Prior to AppDirect, Daniel worked at Viant Capital, a tech investment bank.

Business woman photo via gui jun peng/Shutterstock

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

This guest post was written by entrepreneur Elli Sharef.

A recent study by my company HireArt, a Y-Combinator-backed recruiting business, showed that startup employees often get fired or quit because they are not a good fit for the company. Part of the reason why that is the case is that working for a startup can be a bit different than working for larger companies.

Here are five things people should know before trying to work for a startup:

1. Working for a startup means having ownership over your work and doing something that you really believe in, but it also means doing whatever is needed of you.

Be aware that working at a startup also involves “grunt work,” well below what you might do at a larger corporation. Expect to do whatever is needed of you. Sometimes this will mean building a revolutionary feature to your product and sometimes it’ll mean making phone calls, signing for deliveries, or other tasks you may think are outside of your job description.

2. We all hope for a big exit a la Instagram. However, you should understand the risks and be aware of how rare startup success really is.

A recent Harvard study notes that 75 percent of startups fail. Will your next employer be a success or a failure? Even if everyone is working extremely hard at building a life-changing product, the reality is that it doesn’t always work out and many startups go out of business within a year. Understand what that would mean for your career progression — having too many “short stints” on your resume is a big no-no.

3. While getting equity is a big plus and many startups have yummy snacks and fun perks, expect a lower salary and fewer benefits.

Startups are usually more strapped for cash than other companies. This means that many of them may not be able to offer comparable salaries or benefits to other opportunities you might have. We recently had candidates for marketing positions asking for $150,000 –- note that while this might be doable at a large company, startups, in our experience, pay about 70 percent of what you might get at a larger organization.

4. You’ll have lots of exposure to founders at a small startup, but you may get less mentoring than you need.

The team atmosphere of startups is what makes it irresistible to many of us — working in a small group to achieve a big goal is energizing and feels like you’re back in college. But your managers are busy and often don’t give you the kind of formal mentorship you might get elsewhere. Don’t forget that your managers are often less experienced than you are in a given field, so it’s up to you to learn on your own. If you’re the only marketing hire at a start-up, you’ll get much less mentorship than if you worked at, let’s say Proctor and Gamble, where people with tons of years of marketing experience can teach you the tricks of the trade.

5. Finally, and perhaps most importantly, while startups are a lot of fun, the pressure can be much higher than at other types of companies.

The pressure to achieve results, hit metrics, achieve growth, and get more traction can be overwhelming for many. We’ve seen lots of people quit startups because they realized the emotional pressures were simply too much for them. It’s awesome to know your work can help make or break the business, but with great opportunity comes great responsibility!

Overall, we still think startups are amazing –- working at one will change your life, how you see the world, and what you think is possible. You’ll become a doer and fixer overnight and things that seemed overwhelming will seem like a piece of cake after a while. You’ll learn more about yourself and about how a business ought to be run than anywhere else. But the risks, discomforts, and drawbacks should not be ignored.

Elli Sharef is co-founder of HireArt, a jobs marketplace that uses online challenge-based interviews to vet job applicants. She began HireArt to fix a broken hiring and interview process and get people hired based on skills, not connections. Since starting HireArt, Elli and her team have placed hundreds of candidates in sales, service, and marketing jobs at dozens of employers. Prior to HireArt, she worked as a Business Analyst at McKinsey and Director of Strategy at the University of Phoenix.

Young businessman photo via Kiselev Andrey Valerevich/Shutterstock

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Now here is the one percent you do want to hear about!  

The world is on the precipice of creating a trillion-dollar crowdfunding market. In Australia, the ASSOB has offered a crowdfunding investment portal since 2005. In the UK, equity crowdfunding is already in progress, with investment platforms such as Crowdcube andSeedups. And in the Netherlands, crowdfunding is ramping up with Symbid.  

The crowdfunding components of the American JOBS Act and the Italian Decreto Crescita are now in the process of finalizing the attendant regulation before securities crowdfunding goes live.  

Industry associations are popping up everywhere, including in India, Europe, Canada, and the U.S. (CFIRA, CfPA).  

If you want to get an idea where things are headed, look at the travel list of the leading crowdfunding advisory team, Crowfund Capital Advisors. Recently, they’ve visited Colombia, Canada, Mexico, Italy, Turkey, Sweden, and Dubai, with upcoming visits to Singapore, Malaysia, Hong Kong, and Sydney. They’ve also secured a relationship with the World Bank to study crowdfunding as a way to unlock innovation in developing countries.

Think about the implications of shifting just one percent of long-term investments to small business via crowdfunding. In American alone, that would create a $300 billion market for crowdfunding (10 times the venture capital invested in all of 2011).  

Indicating where things are headed, for accredited investors there is IRAvest, the Internet’s first equity-based crowdfunding portal specifically created for self-directed IRAs.  

Now imagine the general public investing in crowdfunded small businesses through fund vehicles (as I blogged about in the 2010 three-part series, “The New Face of Venture Capital”) or individual investments. That’s a huge transformation in the small business financing landscape.  

At the one-percent mark, globally this translates to more than a trillion dollar market. And how big is one percent? The average volatility of the S&P 500 was 0.62 percent from its inception in 1957 through 2010.

We now have a material amount of real data in crowdfunding.  As it turns out, the fear, uncertainty, and doubt was hot air.  

The transparency and social networking dynamics of crowdfunding have been excellent at keeping fraud near zero, to the point where heavy regulation will work against this new economic machine.  

It’s not just the crowdfunding platform founders and bloggers taking this position. Legendary venture capitalisst Tim Draper (who created MeVC, an early crowdfunding-style investment vehicle that he says was regulated out of existence) said recently at Techonomy Detroit, “I think we should just sunset all the laws and just move forward.”

We’ve seen a number of other members of the venture community getting behind the crowdfunding trend, such as Fred Wilson of Union Square Ventures speaking at Grind in NY and Manu Kumar of K9 Ventures, who said to the Venture Capital Journal Feb. 2012, “Having companies that have been proven out using crowdfunding will only create better pickings for the venture capital industry to come in and scale those startups.”

To get to this point in crowdfunding history has taken some heroic efforts on the part of so many people. But as this space expands, we need even more leaders, from every continent to rise up and voice your support.

Kevin Lawton is a serial entrepreneur and is one of the authors of The Crowdfunding Revolution, a book about how to raise capital for startups using social media.

This is a guest post by mental health entrepreneur, Sarah Seegal 

While most of her friends were deliberating about their college major, Jessica Mah was leading a company, managing finances, and laying off staff to keep her startup afloat.

By the time she was 21, the trilingual Y-Combinator alumna had already graduated from college and raised $1.1 million from angel investors like Steve Blank and Jawed Karim. Her company, InDinero, had been profiled by the Wall Street Journal and VentureBeat.

But InDinero, a website for small businesses to manage their finances, which Jess had founded with Andy Su in their UC Berkeley college dorm room, was in trouble.

“From around September to December of 2011, we went quiet and were really struggling,” said Mah. “We realized our users didn’t convert well into revenue.” Although the company tracked over $2 billion in customer transactions, according to Mah, they assumed that free users could be monetized at a later stage. When that assumption proved to be false, the entire business model collapsed, and the founders could no longer afford to maintain a full staff.

“I guess you just lose hope,” said Mah. But she found the strength to put the company back together. “At first, the goal was to survive. We wanted to return the money that had been invested in us and keep our reputations intact,” she added.

During this low point in her professional career, she needed to take a step back and keep things in perspective. “If we had had better emotional support, we could have fixed our problems faster. It was a lot,” she said. Mah has a firm head on their shoulders, but not all young entrepreneurs are equipped to make such tough decisions.

At 21 years old, would you have been able to fire half a dozen people, keep a company afloat, and investors at bay?

The tragic suicide of Ilya Zhitomirskiy, the 22-year old co founder of Diaspora, a non-profit, user-owned, distributed social network (it recently petered out), and Dan Haubert, the 25-year old YC Alum and co-founder of TicketStumbler, provide clear examples of the devastating pressure that young entrepreneurs face.

“Perspective is very important”, says Michael Groat, a practicing psychiatrist at Baylor College of Medicine, “particularly for young entrepreneurs.” Groat runs the only inpatient psychiatric treatment program for high-achieving professionals who are experiencing difficulty managing their careers and relationships because of a psychiatric disorder, addiction, demands or stress.

In many ways, Mah is a textbook example of failing well. Once it became clear that her company was struggling, she handled the immediate needs of the business, picked up new hobbies, and travelled to find perspective. The young prodigy who had started her first business at the age of 12, had to remember that there was more to her than the value of InDinero.

Dr. Groat told me that young entrepreneurs — highly achievement-oriented people — are often not so lucky. “They find themselves on a road where their life becomes very focused on one thing,” he said.

“When this thing collapses, people can be very vulnerable to collapsing along with it,” he said.

How can investors and incubators support young founders?

Some programs, such as the Thiel Fellowship, are leading the way in supporting young entrepreneurs.

Each year, the foundation awards $100,000 to about 20 fellows to drop out of college to start companies. All of these fellows are under-20, and many leave their friends and family to pursue entrepreneurship. Unlike traditional college students, the fellows often live alone and pursue their projects independently.

“Ilya’s (Zhitomirskiy) death was really scary for us,” say Danielle Strachman, Program Director of the Thiel Fellowship. “For anyone working on anything, entrepreneurship can be pretty lonely and we’ve developed a number of support structures for our fellows.”

While suicide may represent the extreme end of a continuum, the fundamental challenge of coping successfully with the ups and downs of bringing startups into the world, is significant. The Thiel fellowship uses its network of older fellows, advisors, mentors and staff to ensure the fellow stay grounded.

Don’t underestimate the value of a good mentor

When the news of Zhitomirskiy’s death hit the headlines, she reminded the Thiel Fellows about the importance of staying in constant contact with their mentor and the program’s staff. She resent all of the fellows the emergency contacts numbers. Strachman acknowledges that her fellows are on “a path to something big”, but they’re still young and run the risk of burning out.

According to Dr. Groat, mentors can play a powerful role. “Mentors can show us that it’s okay to be exhausted, take time out for vacation and be open about our struggles,” he said. In addition, young entrepreneurs often need help knowing their limits: how to scale back when they are exhausted, speaking up for themselves, and asking for advice when needed.

For the Thiel fellows, regular retreats, quarterly check-ins, tolerance for mistakes and an emphasis on the big picture, are an essential part of the experience. Strachman is very clear with the program’s participants that if they ever need anything from a ride out of a questionable neighborhood at 2 o’clock in the morning to a referral to a psychologist, the foundation is there for them.

Have options! There is more to life than your startup.

Investors, it’s not enough to just write a check to a young entrepreneur. Providing emotional support will make a positive impact on their achievements — both professional and personal. Don’t encourage talented young programmers and designers to have a singular focus. Aside from running their companies, the most grounded founders I interviewed had a project or interest that they’re equally passionate about.

This is essential for those that choose to forgo a college education. At the age of 18, Kristina Varshavskaya dropped out of high school to work at her sister’s company, Wanelo, a social store for international goods.

“I think that I put myself in a situation where if I fail, I fail harder because I don’t have the cushion of a high school degree,” she said.

Wanelo has grown quickly since she joined full time last fall. “Right now, we have a team of ten, [we] have raised $2 million, and have an office and a product that people actually use,” said Varshavskaya. “But I have total uncertainty in my life.”

Despite these early successes, there is a good chance that the company won’t succeed. “If Wanelo fails, I would be without a high school degree and a year behind if I wanted to go back [to college]” she said.

My advice to Varshavaskaya and others like her would be to have a backup plan. Most startups fail, so dropping out of high school or college is a huge risk. As the Huffington Post reported, only one of the five fellows from last year’s class is currently taking home an income.

If things don’t go as planned, I fear that young founders won’t be able to draw a distinction between personal failure and the failure of their company. To stay emotionally healthy, surround yourself with mentors, develop a keen hobby or interest, and think long and hard before dropping out of school. As these entrepreneurs are proving, you don’t have to choose one or the other.

If you or someone you know is feeling anxious or depressed, you can call the National Suicide Prevention Hotline 24 hours a day at 1-800-273-TALK (8255) or you can chat with a counselor online.

Sarah Seegal works at One Medical, a San Francisco-based primary care practice that is focused on the patient experience. One Medical has offices in San Francisco, Chicago, New York, Washington DC and Boston. Prior to this, she was one of the first non-technical hires at Breakthrough, a tele-pyschiatry startup in Silicon Valley. She has worked as a behavioral coach and counselor at Green Haven Correctional Facility and Harvard’s McLean Hospital. Seegal is the founder of The Listening Center, a peer counseling service at Vassar College. Follow her on Twitter at @sseegal

Top image via Shutterstock 

Brooklyn-based entrepreneur, Mason Levey, has never had much of an affinity for punctuation and grammar, a shortcoming that has held him back in his academic and professional life.

With a shoestring budget and a desire to help others conquer those pesky semicolons and punctuation marks, Levey created a service called Comma. The startup, launching today, is the product of $12.99 in capital investment — the cost of a domain name purchased on GoDaddy.

Levey, the company’s only full-time employee, contracted a team of 50 virtual editors who are on standby to fix minor errors in all your personal correspondence, including emails, tweets, and blog posts.

How does it work? Just send a request to edit@getcomma.com, and your content will be polished and returned to you. For subscribers, it costs $59 per month for 30 edits, or you select a pay-as-you-go model. One edit will set you back $2-$5, depending on the length of the content.

“In today’s digital and social-media world, text-based content is king. People in the younger generations, such as myself, need to be able to write perfectly,” Levey told me, when asked about the need for the service.

The idea has merit, although Levey faces strong competition from established services like Grammarly, Odesk, and Elance. The four-hour typical turnaround time may also be a stumbling block to the site’s success, given that it claims to specialize in short form, fast-paced social media content, like Tweets.

More interesting is that entrepreneurs like Mason Levey are starting companies for less than the cost of a movie ticket. Anyone can bring an idea to fruition without the support of the full army of usual suspects: angel investors, advisors, engineers, and cofounders. We can try and fail, and try again — without losing funds or reputation in the process.

Levey said he later used a suite of tools that negated the need for an engineering and sales team: SquareSpace to build and design the site, Paypal to accept payments and subscriptions, Work Market to post and pay for editing tasks, and Desk.com to manage customer requests.

Comma brings bootstrapping to new heights and is an inspiring lesson for all you non-technical entrepreneurs.

Image courtesy of Shutterstock

When Paul Mockapetris invented the Internet’s Domain Name System (DNS), he had no idea his creation would come to shape parts of the web for many years to come. But because he started simple and had a future-looking plan, his concept worked. He thinks startups should follow the same principles.

Mockapetris spoke today to a crowd of startup founders and employees at Montreal’s International Startup Festival, espousing three lessons he’s learned since he tinkered with and wrote the first implementation of DNS in 1983.

Lesson 1: Simplicity is key

Mockapetris said startups need to focus on simplicity and an easy-to-convey concept. In this search for simple, “complexity is your enemy,” he said.

“Don’t be clever if you don’t need to be,” Mockapetris said. “The customer needs to understand the interface, not the inner workings.”

Even as you develop a simple concept, Mockapetris noted, there will ultimately be flaws you encounter.

Lesson 2: Have a plan you can actually explain

Planning is especially important, Mockapetris said. But the first step is to develop a plan that can be easily explained to all kinds of people (including grandmas).

He said people have asked him many times about why the original implementation of DNS didn’t include security, but he said that he was starting simple to execute the idea. The original DNS took three years to launch, while completing the vision of DNSSEC has been happening for 25 years and counting.

“The Wright brothers didn’t have a bathroom or drink cart on the original airplane,” Mockapetris said. “You can add features later.”

Lesson 3: Plan for extension

Mockapetris’ final advice for startups was to have a plan for the future and a way to expand their system or product. He said that you shouldn’t design a system where every possible use is specified because that limits your creation.

He showed the following slide to explain how your simple idea can evolve and add more features as the power of technology increases over time.

But as you come up with ways to extend your product’s use, other people will take what you create and do “wonderful and awful” things you never imagined.

“The future will extend and desecrate your baby,” Mockapetris said. There’s always the possibility of misuse.”

While Mockapetris did not mention the DNSChanger virus, which infected millions of PCs during the past few years by changing a computer’s DNS entries to point toward rogue servers, it easily applies to his lesson.

Paul Mockapetris photo: Sean Ludwig/VentureBeat

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

I like reading academic papers. They are a glimpse into the minds of talented researchers and provide a great view of what’s next in the infrastructure startup world.

A colleague recently forwarded me a tweet about a paper by Cormac Herley of Microsoft Research. It had one of the most attention-getting titles I’d seen in a while: Why do Nigerian Scammers Say They are from Nigeria?

It’s a great question. Most everyone is familiar with the Nigerian email scam by now. A distant relative of a prince, dictator, or civil servant claims to be in control of a pile of money they must transfer out of their third-world country. The scammer emails the victim with an impassioned plea for their help, and in exchange they offer to split some of the (fictional) money with the victim. The victim is ultimately convinced to put up some of their own (real) money to cover transfer fees, expenses, etc., and disaster ensues.

I’ve always wondered why scammers continue to send emails that the average person can quickly detect as bogus. Why not improve them in some way to get around the defenses we’ve built up to this scam and draw us in with something more compelling? In thinking about “scam optimization” my questions always focused on how to modify victim behavior to attract more attention and lure in more potential victims (improve the pitch, fix the crappy English, come up with a more original ruse, etc.) However, Microsoft’s Herley thinks a bit differently. He looks at the problem from the perspective of the scammer, and draws some good conclusions about how and why they optimize this particular type of “attack”.

The answer to his original question is pretty straight forward. The scammer’s biggest problem is getting false positives. There just aren’t enough victims who’ll fall for the pitch to begin with, regardless of how well constructed the pitch might be. But there are clearly enough prospects out there to make the entire exercise a good use of time — assuming the scammer can focus on the likely victims instead of every potential victim. By weeding out the vast majority of victims who will never reach fruition, despite early interest, the scammer can pursue the potential victims who do show interest in a pitch with much more confidence.

Essentially, scammers face an optimization problem. Touching a huge number of potential victims is easy. The real cost is the time spent converting a prospective victim into an actual victim. The scammer has to spend time to build the victim’s confidence to the point where they wire some amount of their money to the scammer.  The opportunity cost here is massive.  Spending time on a prospect that ultimately gets cold-feet is the worst possible outcome for the scammer. Not only did they fail to collect any money, but they wasted a bunch of time getting a “no.” The longer that victim took to ultimately back out, the higher the scammer’s cost. Since time is a real constraint, finding a way to steer clear of people who start a conversation but won’t ultimately send money is just as important as nurturing the rare victim who will end up handing over his or her cash.

Now, re-read the preceding two paragraphs, and replace the word “scammer” with “entrepreneur”, and the word “victim” with “investor”.

I’ll wait while you do it.

The parallels are real, and worth thinking about. Of course there are many differences between startup fundraising and Nigerian email scams, but there are lessons to be learned. I believe strongly that entrepreneurs must recognize that fundraising is also an optimization problem, and that they will be faced with tough questions like: Should I talk to 15 prospective investors or just five? Am I comfortable missing one investor who would have said “yes” if it means avoiding 10 conversations with investors who would never fund me to begin with?

The constant limiting factor facing an entrepreneur is time. It is often said — quite accurately — that getting to a “yes” is the best outcome, getting to a “fast no” ranks a close second, and that the “slow no” is the worst outcome of all. In a frothy fund-raising environment filled with angels, seed funds, and VC firms, the false-positive problem is very real for entrepreneurs. Everyone wants to play investor. Nobody wants to miss out on hearing a hot pitch. Getting the first meeting is easy, but separating the tire-kickers from the likely investors is the hard part. Spending your time with the former distracts you from the latter, and, more importantly, sucks time away from building your product and you growing your team.

Entrepreneurs need to develop their own framework for detecting false-positives among investors that fit their particular situation. Here are some questions you should be willing to apply as filters to every potential investor you consider:

• Have they invested in my industry before? At my current stage?
• Do they write the size check I need? Am I too big or too small of a deal for them?
• Is there any evidence that they are trying to invest behind the trends driving my business? Can they articulate a theme or thesis that maps to my market space?
• How much due diligence will they do? How can I stage the diligence to get them to a “fast no” rather than a “slow no?”
• How involved do they get with other investments they make? Is that a fit for what I want out of my investment partners?
• Do they have other investments in their portfolio that corroborate / contradict my world view and mission as a startup?

Being realistic in your answers to these questions will save you tremendous amounts of time. The reality is that most companies are not a fit for most prospective investors. The simple math says that for every “yes” there will likely be many, many “no’s”.  Modifying behavior to fit that dynamic is tough for almost everyone.  It doesn’t feel good to be told “no”, and it’s much easier to spend time with people who give you distant hope of getting to “yes”.  It’s even easier to modify your message, tweak your pitch, or otherwise hope to change the ingrained biases of most investors, instead of hunting for the much smaller number of investors who are ready, willing, and able to fund your company.

Optimize your fundraising behavior. Confidently weeding out the likely “no’s” will pay dividends as you focus your time on the investors who have a real chance of getting to “yes”.

Sunil Dhaliwal is a general partner at Battery Ventures, where he invests in IT infrastructure, distributed systems technology and data analytics. His investments include Agari, Continuuity, Fastly, Netezza, Opscode, Precidian Investments, and Splunk. He blogs at The Whole Stack. Reach him on Twitter or at sunil@battery.com.

Top photo credit: lenetstan/Shutterstock

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

The Lean Startup concept, developed by Eric Reis roughly two years ago, has been embraced by the startup community. And though I think it’s the best and most consistent framework available for entrepreneurs to methodically evaluate their ventures, what happens when you get a product into the market that customers actually want and your business starts to grow? Does the “lean” focus end there?

So far, there isn’t enough data to show what happens next. But I would bet that as soon as sales, marketing, HR, IT, help-desk and other departments in your company start to grow, most of the lean principles that guided you during the startup phase will be diluted, and may even vanish completely.

Can lean scale up? A lean startup should strive to follow the path to becoming a lean organization by using its founding DNA to focus building a lean culture. By embracing leanness as an organizational and cultural philosophy, and incorporating principles beyond those found in the Lean Startup model, you can ensure continuous value as you grow beyond the startup mode into a successful business.

What it means to be lean

The Lean Startup model shares some conceptual tenets with the Lean philosophy adopted by Toyota in its manufacturing operations, and which has been employed frequently in software application development. The focus on adding value, simplifying processes, working in small batches, removing waste, the build/measure/learn concept and asking the “five whys” are shared by the Lean manufacturing model. However, for the most part, that’s where the similarities end.

The Lean approach used by Toyota encompasses far more than these basic — and fundamental — concepts, and many of its principles can be extended throughout the startup’s life and woven into its cultural and organizational fabric. In Reis’s “Lean Startup” book, he states: “Lean Startups, when they grow up, are well positioned to develop operational excellence based on lean principles.”

I couldn’t agree more, but there’s a big gap between being “well positioned” and ready. How can a Lean Startup close this gap, and ensure that the new company is built to deliver continuous innovation and value? By considering the following tools and methods.

Use these tools to move beyond the basics

The lean philosophy emphasizes an endless journey of organizational learning. My advice as a lean practitioner and entrepreneur is that any entrepreneur should learn about the following ideas and tools as soon as their company starts to grow, and adapt them to the company’s specific situation.

Here are some of the tools that, once embraced and implemented, can help a Lean Startup become a lean organization:.

Value Stream Mapping:  This is a method that creates a big picture of all processes occurring during the various steps of a company’s relationship with its customers. The goal is to map material and information flow through the process and measure both waste and value-added timing. It’s a fundamental tool for identifying bottlenecks and sources of waste.

The 5S’s: A set of five very simple workspace organization principles that, unfortunately, many organizations tend to ignore. They focus on promoting visual order, organization, cleanliness and standardization:

• Sort: The first step in making a workspace clean and organized.
• Set In Order: Organize, identify and arrange everything in a work area.
• Shine: Regular cleaning and maintenance.
• Standardize: Make it easy to maintain; simplify and standardize.
• Sustain: Continue what has been accomplished.

Visual Displays & Controls: This is the use of visual displays for quick recognition of the information being communicated within the organization, in order to increase efficiency and clarity. They include the following:

• Andons: Signboards with embedded alerts, crucial to quality control systems.
• Kanbans: Visual and physical signaling system that ties together the JIT (just-in-time) production.

Continuous Improvement and Planning: These fundamental processes and rituals are crucial to a lean organization, as they allow the company to create consensus among all stakeholders about optimization needs, solutions and goals. They include:

• PDCA (plan-do-check-act): An iterative four-step management method used to control and optimize a process. PDCAs are a great way to formalize the “build-measure-learn” iterations of a Lean Startup.
• Kaizen: Practices and rituals designed to involve stakeholders in the discussion of issues, to find solutions and to create changes in the processes to ensure the issues do not occur again.
• A3 Management: A simple-to-understand mechanism for fostering deep thinking, thorough analysis, a problem-solving attitude and follow-up action. A3 eases consensus-building and paves the way for the quick and easy implementation of changes. It’s applicable to all areas of the business, including HR, finance, IT, help-desk, production and others.
• Hoshin Kanri: A method that helps the organization to focus on a shared goal, to communicate the goal to its leaders and Involve  leaders in planning to achieve the goal, and to hold participants accountable for achieving their part of the plan.

Seem daunting? This is just the beginning. There are a host of other processes and tools in the lean toolkit. But remember — the path to lean is a journey, not a quick fix. The principles outlined above, and the others that comprise the lean arsenal, should be implemented methodically and in a way that makes sense for each individual company.

Take it from someone who’s been there: once you start implementing lean principles in your own company and begin reaping the rewards, you’ll want to continue down the path toward becoming a fully lean organization.

Make lean your philosophy

The Lean Startup approach is great, but it’s also relatively new as a concept and lacks data to support its effectiveness. For this reason it has yet to produce a true juggernaut of a success story. As more and more startups using the Lean Startup approach become successful companies, the question of which organizational process is best to employ will become increasingly important. Eric Reis points the way toward embracing additional principles in “The Lean Startup:”

As a successful startup makes the transition to an established company, it will be well poised to develop the kind of culture of disciplined execution that characterizes the world’s best firms, such as Toyota.

The word “culture” is key here. Above all, lean is a philosophy wrapped around a big set of processes and tools. It’s not just a set of guidelines to optimize a company’s operation, but a way of thinking that needs to be woven into every aspect of the organization. By embracing lean principles and introducing the processes and techniques I’ve listed here, startups can ensure that they continue to deliver value and eliminate waste as they scale into viable, successful companies.

Marcio Cyrillo is head of mobile services and senior business manager at Ci&T, a software product engineering company that delivers application services using lean principles and agile methodologies. He also is a member of the Ci&T Entrepreneurship Program, from which he launched the program’s first mobile app, runens, in early 2011. As a result of his success developing runens, Cyrillo now serves as a mentor to Brazil-based Ipanema Games, a mobile gaming start-up.

[Money tree image via Shutterstock]

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

(Editor’s note: Jason L. Baptiste is the CEO and co-founder of PadPressed and co-author of the OnStartups blog. This story originally appeared at that site.)

In between the winning and being ringmaster of the year’s biggest media circus, Charlie Sheen has been spouting off a lot of one-liners that are becoming pop culture catch phrases. But mixed in are a lot of interesting quotes that can be applied to entrepreneurship. An entrepreneur, after all, often straddles a thin border between insane and brilliant.

Here are his best:

“Defeat is not an option. CBS picked a fight with a Warlock.” – Most entrepreneurs don’t end up losing because of market forces or what can be attributed to specific failures. At the end of the day, entrepreneurs fail because they decide to give up and accept defeat as an option. When starting a company, Elon Musk referred to it as the equivalent of eating glass and staring into the abyss on a daily basis.

It may be a hard road, but complete and utter defeat is NOT an option. Take a look at Airbnb. They failed to attract any attention and failed continuously for not only days, months, but actually years. Instead of accepting defeat, they persevered and kept going. Most startups don’t die due to specific circumstances, but because they commit “suicide”.

“Everyone will say: Don’t be special, be one of us! NEWSFLASH: I am special, and I will never be one of you” – No one will understand what you do. They will hear the entrepreneur word and think you are crazy or broke. To succeed, you have to ignore those that don’t understand us.

We’re a crazy breed and we’re special. If this were for everyone, then it wouldn’t be special. As an entrepreneur you have to have thick skin and trust that it will all work out. Even when it does, you will always feel as if the respect you deserve isn’t where it should be. Steve Jobs said it best with a quote that goes along the lines of “You have to be insane to do this and you have to love it. Any sane person would do what a sane person would: just quit and give up.”

Focus in on being different and drown out the noise. They will be fast to hate on you and they be move even faster to congratulate you.

“[My brain] fires in a way, not particularly from this terrestrial realm” – As an entrepreneur, you need to think at a level that is not from this world. Look back at the legendary Apple ad campaign about “Think Different”. The rest of the world happens to be a fickle bunch. On the one hand, they want to vilify you for being an entrepreneur and take you down a level or two. On the other, they want something that is outside the box and pleases them.

The only people capable of doing that are entrepreneurs. If what you’re doing is criticized as “tame”, then you are doing something very wrong. At the end of the day, you should seem as if your creation is from another planet. Your brain needs to think in a manner that is truly extra terrestrial.

“I have one speed, one gear … go!” – There is no slow down mode when it comes to entrepreneurship. You need to always be five steps ahead and pushing the red line. The main advantage of a startup is pure acceleration and speed. Accomplish something sizable and focus on what matters. Say no and cut out a lot for each version. It will let you move faster and stay in that one gear that matters: Go!

“Can’t is the cancer of happen. aka I can’t do it.” – Yoda said it best: there is no try, there is only do or do not. As an entrepreneur, whether you made something happen is a very binary answer. Either you have made it happen or you have not. By saying “I can’t do it”, you are setting yourself up for failure and almost certain death.

Take a look at the most successful companies in the technology sector and you will realize that “can’t” is not in their DNA. The best companies defy the laws of possibility and do what many would simply throw into the “can’t” category. Dream big and look for scenarios where many would say can’t and make something happen.

“I exposed them to magic. I exposed them to something they’ll never see in their boring normal lives…they’ll live with that for the rest of their lives.” – Your product needs to be the equivalent of pure and utter magic. You need to wow people, many of which you will never meet. The best products will seem like magic to most of the general population and be an escape from their normal boring lives.

It’s not about finding celebrity trends or other silly things. It’s about looking in places you would have never thought of for inspiration to make a better product and a better startup. Many of your influences will come from the startup world itself, but many will come from random offbeat sources. No matter what, just keep #winning.