# Tuesday, May 19, 2015

Everyone is talking about replicating and building the “next Silicon Valley” with the rise of Silicon “roundabouts” and Silicon “beaches” in several locations around the world.  While this is going on very few people are talking about how Silicon Valley is evolving: specifically that Sand Hill Road is now the Wall Street of the West Coast. 

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The rise of the “Uber” Round

More and more tech startups are raising hundreds of millions or even billions of dollars in later stage “uber” rounds. (I call these the “uber” rounds as a play on the German for “super” or after the company Uber that has raised well over $4 billion in Venture Capital.) As of this writing, Lyft has just closed a $680 Series E. According to Crunchbase, Lyft is one of 20 startups that have raised $1B or more in venture funding in the past 5 years.

Companies are going public later and later, a trend started by Facebook; instead of rushing to an IPO, companies are staying private longer and are taking more and more uber rounds. (Some people think that these companies should be going public as the investing public can’t participate in the later stage growth, allowing the rich to get richer.) The average amount of money that companies have raised before going public has been going up, more than double since the 2008 downturn.

What is Going On?

Most pundits think that companies are staying private longer to avoid the hassle and expense of going public as well as regulations like Sarbanes-Oxley. While those are all reasons to stay private, the real reason is that Silicon Valley VCs on Sand Hill Road have evolved to grow larger and focus on late stage massive growth. 

Typically an IPO is for massive growth. A company will get to a certain stage of maturity and then raise anywhere from $300m to over a $100b at an IPO. The IPO accomplishes a few things: allows early investors and employees to “cash out” and sell their shares to the public as well as provide much needed capital for massive growth. 

Today companies are delaying the IPO and raising the growth capital with their uber rounds. On the surface this looks crazy. But in reality, it is genius. 

Lean Startup and Uber Rounds

Let’s take a made up startup LeanCo as an example. Assume LeanCo already took a Series A ($8m) and Series B ($30m). Now they are kicking butt and are growing at the same rate as the other high performing startups. Say they have well over $250m in sales, expanding market share, healthy margins, and are expanding internationally. This is the textbook case for an IPO.

What would happen is that LeanCo would go to a big Wall Street bank and raise approximately $5-$10+ billion in an IPO. After all the costs and fees and the Wall Street bank’s cut, the company would have a lump sum of money, let’s just say $5b. Now the company has the war chest it needs in order to grow. Typically LeanCo will acquire smaller rivals, enter new markets, and build out new products and services. 

Instead, the LeanCos are choosing to raise billions for growth before an IPO. Instead of raising $5b in an early IPO, they are raising $2-5b privately before a much later IPO (at a much higher valuation.) They are raising the money $400 or more at a time. Here lies the genius of this approach: LeanCo only raises what it needs, when it needs it in a private (closed) market that will provide a higher valuation than a public one. There are also other benefits to staying private during the growth stage, like not disclosing your financial health and spending to competitors. 

For the investors, this is actually a much more conservative approach. By only giving LeanCo the money when it is needed and doing it incrementally, LeanCo has to operate in iterative cycles similar to the Lean Startup and Agile Development. For example, if investors provided LeanCo with $5b in one lump sum, LeanCo may spend it unwisely feeling that they have a lot of capital on hand. If investors give LeanCo $400m or so at a time, LeanCo will have to take an incremental approach. If LeanCo were to go under after an IPO, investors would lose all of the $5b. If LeanCo were to fail after raising “only” $2b, investors lose far less money. 

The Post-IPO World

The VCs on Sand Hill Road in Menlo Park have changed the game. I remember in the .com bubble, the largest Venture Fund was $1b and the largest deal was around $75m. Now the VC funds on Sand Hill Road are all well over a few billon each and think nothing of leading a $500m round. 

Eventually the startup companies are going public, however, that is only because at some point they have to in order for the VC investors to sell their positions and the employees to cash in their stock options. I’m sure that over time, Sand Hill Road will evolve past the IPO, where companies stay private forever and large East Coast financial institutions buy back those positions from the VCs and earn returns via dividends, etc. You are already starting to see the signs of this when large pension and investment banks such as Fidelity, T. Rowe Price, and Goldman Sachs are part of the last round of financing for companies like Lyft, Box, and Uber. In the future, you won’t be able to buy shares in a Facebook individually, but you will buy shares in a Fidelity “Silicon Valley" Mutual Fund. Silicon Valley is disrupting Wall Street. 

What Does this Mean for Startups in Silicon Valley

We all know that New York City and Wall Street is the IPO center of the world. Did a startup have a competitive advantage by being located in New York? As a native New Yorker who built three startups in New York City, I can confidently say no. Mark Zuckerberg proved that when he showed up to his Wall Street pre-IPO meetings in his hoodie. When your company is ready and has the right numbers, the Wall Street Investment Banks will work with you, no matter where you are.

What about tech startups located in Menlo Park, Palo Alto, or Mountain View, close to Sand Hill Road? (Sticking to the geographical description of Silicon Valley.) Same thing, when your company is large enough to take the uber rounds, it does’t matter if you live in Menlo Park or Montana, or Mongolia, the VCs on Sand Hill Road in Menlo Park will work with you. You are already seeing this with startups being located in the City of San Francisco and not down south in Silicon Valley. The larger established companies such as Facebook (Menlo Park), Tesla (Palo Alto), Google (Mountain View), etc are down in Silicon Valley, but the young, early stage startups are up in San Francisco. This means San Fransisco is about the startups and Silicon Valley is about the money.

San Francisco is the new Silicon Valley. Silicon Valley is the new Wall Street. 

posted on Tuesday, May 19, 2015 5:11:38 AM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Sunday, May 10, 2015

I’m super lucky to be from New York City and have lived in both Europe and Asia before settling down in Silicon Valley two years ago. I’ve also been lucky to work at a startup in Eastern Europe that grew to be so successful that many of my former co-workers there have become either Angel investors in the region or left to do their own startups. Of course, Fresco Capital is geographically diverse with 2/3 of the partners overseas. Because of this I get to meet a large amount of startups from outside of Silicon Valley, particularly from overseas. 

Typically when they come to Silicon Valley for the first time, I am their first visit. (Honored!) That said, they all ask me the exact same question: “Steve, we are about to raise our Seed round of $1m, can you introduce us to some investors that will put our round together?"

This is when I have to give the founder “The Talk."

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The Talk(TM)

I say that raising a $1m Seed round in Silicon Valley is easy, just go to a Starbucks in Palo Alto and trip a few people and when they fall down, $100k will fall out of their hoodie. Aim for someone with a Facebook or Google hoodie and maybe $200k will fall out. While this is a (slight) exaggeration, the point is that most seed rounds that are not lead by an institutional investor are pieced together by wealthy Angel investors usually $200K or so at a time. While a foreign startup has the potential to meet Silicon Valley Angel investors on a two week visit, typically, you raise this money via a personal network. (Your’s or your advisor’s.)  If you are not from the Valley, you won’t have this network and would need to stay and network for months and months, burning cash and wasting time (that should be used to build your startup).

I Know Nobody in the Valley, What Should I Do?

I always suggest to non-local entrepreneurs to go raise their seed round locally in their home market where they have a network of potential investors. It will be easier and faster than trying to raise money in the Valley where you don’t know anyone. You can then come to the Valley for your Series A from a  position of strenght after you have nailed your business model. 

This presents a problem insofar of the level of sophistication of the investors in your home market. While I agree that most markets are not nearly as sophisticated as Silicon Valley, there are “Valley” type investors in all markets these days, you just have to go find them. The easiest way: build an awesome business. I was talking with by buddy Pascal the other day about valuations in Europe compared to the Valley. Startups outside of the Valley tend to have less of the valuation inflation that the Valley startups do. If you build a sustainable, repeatable, scalable business with funding in your local market at a competitive valuation, when you come the Valley later on to raise a Series A, you will find it easy to raise money!

Good luck. :) 

posted on Sunday, May 10, 2015 1:51:36 AM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Friday, May 01, 2015

In my role at Fresco Capital and as an advisor to several startups, I’ve seen it all with founders: disputes over shares, disputes over money, disputes over a new laptop, founders break up, a founder falling ill, founders get married, founders get divorced, founders get into physical arguments. Often this leads to one founder completely disengaged from the business and still holding a significant amount of equity or even a board seat. We’ve seen this at large companies such as Microsoft and more recently at ZipCar. Typically you need this equity to hire executives or attract investors. Worse, if the company is being acquired, you now have one founder who can hold up the deal if they are on the board and disengaged. That of course is a problem, but one that can be solved with a dynamic founder agreement. 

 

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Founder Troubles 

Most founders settle the division of equity question with a static founders agreement. It usually goes something like this: 

Founder 1: 50%, vested over 4 years, 1 year cliff 

Founder 2: 50%, vested over 4 years, 1 year cliff

This solves a lot of problems, such as if a founder leaves after two years, they will still have 25% of the company but give up the second half of their equity. What happens if one founder is not “pulling their own weight” or contributing enough to earn the vesting (in the other founder’s eyes) but did not leave the company? What happens if they have to leave due to illness or personal emergency? What happens if there is misaligned expectations as what skills a founder brings and what role a founder will play?

I’ve seen this happen at one of my own startups. One of our founders was a lawyer and at the time we sold the company, he could not represent us due to it being a clear conflict of interest. While the legal fees were not all that bad (maybe $50k), to this day, almost ten years later, my other co-founders are still mad at the lawyer co-founder. This was clearly misaligned expectations.

This is what Norm Wasserman calls the Founder’s Dilemma, or the unexpected consequences of not spelling out the roles and expectations of the founders early on combined with the unintended complications of a founder leaving early or disengaging. He suggests a dynamic founders agreement.

The Dynamic Founders Agreement

The dynamic founders agreement is a way to mitigate the risk of an underperforming founder by changing the equity based on pre-set parameters. For example say I am starting a company with my friend Sam. Sam and I agree to a 50-50 split with Sam being the “business guy” and me being the “tech guy". The assumption is that I will be the coder of V1 and lead the development team after we get funding. But what if I need to leave the company due to family emergency? What about if I decide that I don’t want to code anymore, before we can afford to hire a developer? What if I only give 30 hours a week and consult on the side? 

A dynamic founders agreement is a big IF THEN ELSE statement that spells all of this out. IF Steve works as expected, his equity is 50%, if Steve has to leave the company, if he becomes disengaged, here is the pre-negotiated equity and if we have to buy Steve out, here are the terms. For example:

IF:

Steve works full time as CTO performing all the coding and technical duties of V1, his equity is 50%, vested over 4 years, 1 year cliff.

ELSEIF:

Steve works part time, is disengaged, or we need to hire developers sooner than expected, his vested equity is reduced by half and he forfeits his unvested equity. Loses board seat. 

ENDIF:

If Steve has to leave the company because he needs a job or a family emergency:  if Steve built V1 then the buyout is a one time payout of $50,000 USD cash or 2% vested equity, if Steve did not build V1, the buyout is 0.5% vested equity. Loses board seat. 

 

Having a dynamic founders agreement won’t solve all of your problems, however, it will make the the process of removing a founder much less stressful. Sure some of the language in the dynamic founders agreement will be subject to interpretation, but the “spirit of the agreement” is much easier to follow or even if you have to litigate, more robust.  If you never need to use the dynamic founders agreement, but built one anyway, it will force a frank and open conversation about roles and commitment among the founders. This only strengthens the relationship between founders, increasing the chances of success. 

 

posted on Friday, May 01, 2015 1:59:24 PM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Sunday, April 26, 2015

All startup teams need help. The good news is that there is no shortage of “startup mentors” out there. The bad news is that there is no shortage of “startup mentors” out there. How you recruit and work with your advisors is critical as the right advisors managed properly can really have a powerful impact on your business.

Advisor

 

 

 

 

 

 

 

Many startups that I work with like to build as impressive a list of advisors as they can. When talking with founders about advisors, I usually focus on two things:

  • Making sure the advisors augment the skills lacking in the current team
  • Formalize the relationship with the advisor and compensate them according to an objective standard

The Team’s Needs

Look at the needs of your business over the next six months to a year and then look at the skills of your team. You will have a lot of gaps. Start to think how an advisor can fill some of those gaps. Some teams will need help figuring out BizDev or do pricing of their products. Some will need help with higher level technology decisions-or someone to interview a CTO candidate/co-founder. Some teams have all the necessary parts but lack a little “gray hair” or folks with the battle scars of doing business a long time. Some teams lack the network to raise money and some teams lack domain experience. (Which I question why are you in that business in the first place.) 

You need to find advisors who can augment your team with skills, experience, and connections. If you are all PhDs in astrophysics and are building a related startup, you don’t need the head of your University’s Physics department or even a Nobel winning Physics on your advisory team. You will need some people with business and fundraising experience. Also, don’t try to go get famous people to be an advisor; I know that Mark Zuckerberg is not meeting with you monthly and won’t add much value except for the coolness factor. 

The good news is that there are a ton of people out there willing to give you advice. The challenge is keeping the advisors engaged.

The Dreaded Conversation: How to Formalize and Compensate an Advisor 

Your advisors mean well and want to help, but they are busy people. You need to set the expectations up front as to what kind of advice you need and how often you will be asking for it. If you don’t have this conversation with your advisor, you run the risk of some very misaligned expectations, leading to a bad experience for both sides. Typically for companies that I advise, we usually have a call once month or every six weeks. But when something comes up that I am uniquely qualified for, the frequency is higher. 

You also need to formalize your relationship with you advisors! This is important for several reasons, but the first is legal liability. If overnight your company is worth billions and your advisors have been informally advising you without a contract, they may think that they are due a large stake in your company and sue. Another reason to formalize your advisor’s relationships is that by formalizing it, they will take the relationship more seriously. So many companies ask me to advise them, but the ones I say yes to and have a formal agreement with, I feel more obligated to make the time for. An easy way to lock down an advisor is to use one of the standard Advisor Contracts. I have used this one several times

Lastly, you need to compensate the advisors in order to keep them engaged. If your advisors want a huge chunk of your company or a salary or stipend, they are not the advisors for you. Use the following matrix to determine how much to compensate the advisor with. First determine what stage your company is at: idea, startup, or growth. Idea is usually pre-seed, startup is usually Seed stage, and Growth is typically a Series A or later. (I explain the stages of funding here.) This is important due to the amount of risk your advisor is taking. Then determine what kind of advisor you are signing up: Standard, Strategic, or Expert. I know that these are kind of vague, but they usually line up pretty easily. Make a proposal and then use the equity number in the box. This should be a standard and non-negotiable. If the advisor tries to negotiate away from these numbers, don’t have them as an advisor. They should not be in it for the money/equity, the compensation is more of a “nice to have.” They should be advising you because they want to.

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Lastly, have a vesting schedule and a way to easily remove the advisor. Typically you have an advisor for a year or two, depending on the need of your team. For example, if you lack a technical team at the idea stage and engage with an advisor who is very technical and expected to help you recruit and hire an CTO within a year, you probably only need to sign that advisor up for a year or two. Then make room for other advisors in other domain areas. 

Advisory Board vs Board of Directors 

What is the relationship between a Board of Directors (BOD) and your advisors? Nothing. More importantly,  your board members are responsible for the governance of the company and legally liable for its execution, while your advisors are responsible for nothing and legally liable for nothing. Your directors have high engagement, often meeting in person several times a year. Your advisors are less engaged and often engaged via email and Skype. 

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Communication 

You should update your advisors (and investors) with a bi-weekly or monthly email: explain the good, the bad, the ugly since the last email communication. At the end of the email put in the ask, or what you want your advirosrs to pay attention to or what you need from them. While your advisors may only skim over the updates as they come in, at your next call, the advisors can review those emails before the call and make the call more efficient. You won’t have to spend the first 10 minutes of the call updating the advisor on what happened over the past month. I love getting these emails, it shows me that the companies that I advise are organized and understand proper time management. 

 My Experiences Advising 

I’ve advised many companies over the years. I’ve been asked by many more than I’ve said yes to, I only say yes to companies that I can add value, are in an exciting space, and the founders are awesome people to work with. (Now that I am an investor, I say no to almost 100% of the asks to prevent a signaling issue. I did, however, recently agree to become an advisor to a company where my skills made me uniquely qualified to help.)

What was my experience like? Some companies rarely contacted me. Some contacted me randomly, usually when they needed some specific advice. Other’s scheduled a regular phone call. I’ve done it all: lots of general strategy, accelerator application advice, fundraising tips, team compensation, interviewing CTO candidates, make introductions, M&A advice, and sitting in-between founder breakups. 

Some of my companies have had exits, sometimes the money from my shares was great; one exit was small and paid for an awesome dinner and night out with the team. One company I advise recently shut down and I helped the founder find a new gig. All my experiences were worth the time I put in and lots of fun.

Lastly, I learned a lot advising, as much as I taught the founders! 

posted on Sunday, April 26, 2015 3:22:48 PM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Sunday, April 19, 2015

Only five years ago, getting into and completing an accelerator program was something special. That was when there were only a handful of Accelerators worldwide and the program, mentorship, and opportunity for follow on funding was huge. Today there are literally thousands of accelerators out there, diluting your experience, unless you go to one of only a handful of programs. Today going through an accelerator does not distinguish your startup. I mentor at a bunch of accelerators and have seen a disturbing trend: A lot of startups are going to multiple accelerators! This is a very bad idea. 

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Accelerator Hopping

I’ve seen several startups “accelerator hop” or join multiple accelerators. The top reason I have been seeing is that a startup has gone through a regional accelerator in their home country and then wants to use an American accelerator to “enter the US market.” For example, let’s say you are startup CoolCo from Poland and you go through the PNA or Polish National Accelerator. You’ve given up 6% for somewhere between $20k and $75k. After a few months at PNA you “graduate” at Demo Day with some initial traction and a small amount of revenue, but don’t necessarily have much opportunity to raise money in Poland. You know that your core customers are in the United States, so you need to enter the US market. PNA does its best to introduce you to some mentors and connections in the US, but you are pretty much on your own. So you decide to go to another accelerator, in the US, in order to enter the US market.

The problem with this model is two fold. The first is that you get diminishing returns going through a second accelerator. You already spent the time working on the “product market fit” working with mentors and learning the “lean startup.” You should be an expert by now. :) All those mentor meetings, Friday check-ins, demo day pitch practice, will be educational, but a distraction. That is time you could be actually working on your startup, specifically hustling to enter the US market! Ironically joining an American accelerator will slow down your US entry! In addition, the accelerator in the US, while located in the US, is not going to help you break into the US market, just like being an exchange student in Italy won’t make you an Italian citizen. US accelerators do not focus on US market entry, so you are better off hustling and entering the US market on your own.

The second problem comes down to economics. Your second accelerator will take another 6% stake for somewhere between $20k and $75k. So you will have raised approximately $100k for somewhere between 10-12% of your company. Your next step is to try and raise a Seed round and now your have given up too much equity in order to get the seed round. 

Another reason I am seeing in the accelerator hopping phenomena is funding. Some startups join one accelerator, can’t raise a seed round after Demo Day, and then join another accelerator, hoping that the second accelerator will introduce them to more investors. They fall in the same equity trap as CoolCo above. The problem is that no accelerator is going to magically change your chances of raising money in three months, only traction and customers will do that. You are better off not wasting the time in another program and spending all of your energy getting customers. Paying customers leads to investment, not multiple accelerators. 

The Middle Ground

I understand that once you have graduated an accelerator your startup may not be ready for a seed round. In addition, you miss the focus and push that an accelerator gave you. One possible compromise is to join an incubator program. Incubators usually provide space, business services, and a very light mentorship program without taking any equity. They are typically run by government development funds or other non-profit programs and last between six months and a year. A handful of incubators will also provide access to some non-equity grant money. Incubators are not perfect, but can give you the final push your startup needs before doing a seed round without diluting your equity or wasting your time. 

Either way, don’t delay and go out and hustle!

 

posted on Sunday, April 19, 2015 1:54:38 PM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Saturday, April 11, 2015

A lot of people misuse the term “MVP” or Minimum Viable Product. To be clear an MVP is not a beta, not a prototype, but rather an experiment designed to test your value proposition’s assumptions by measuring a behavior and learning from the results. 

Behavior Testing

 

 

 

 

 

 

 

 

 

 

Back in the day, Dropbox did an MVP as just a video and Buffer was just a landing page. Both were experiments to determine if Dropbox or Buffer should even exist. Instead of guessing and building prototypes, they build the simplest of things in order to measure a user’s behavior. Today startups are building functional prototypes and calling them MVPs. They are better off building something they can learn from. Typically the first MVP doesn’t even have to be anything on a device or computer. For example, I once advised a new travel startup that wanted to give you one click access to a daily itinerary based on a map. They assumed that people wanted a map with pin points on it and times to follow. I told them to go to tourist spots and give people real maps with real pin points circled and an analog itinerary to follow. That was an MVP, it was an experiment (map) that measured (how many as a percent of total) a user behavior (did they use the map or not). Let’s take a look at how to build a better MVP.

Getting Started: Customer Segment and Value Proposition 

The whole idea of an MVP is to measure an actual result against your expected result to prove or disprove your assumption. In order to do that you need data. The first place to start is to think about is your customer segment; you have to know who your target customers are going to be. Without knowing your exact segment (22-34 year old professional, urban women, single, living alone, earning over $75k), you won’t be able get the correct pool of users to test on.

After you define your customer segment, you define your value proposition. Too many people think that their value proposition is just the solution to the problem they are solving. That is incorrect: your value proposition is the delta between the current solution or workaround to the problem people are currently using and your solution. You measure your value proposition in terms of how much better your solution is compared to the solutions that exist today.

Let’s say you are solving a problem for buying movie tickets. Several solutions already exist; there are lots of web sites, apps, etc. Maybe your solution involves buying the tickets via SMS. Regardless, you have to think about what the alternatives to your solution are and compare them against that. One is simply buying the ticket at the box office. Here your alternative has value, but not tremendous value. Alternatively, let’s say you are developing a life saving cancer drug. The alternative without your solution could be death. In this case your solution would be incredibly valuable.

The Assumptions That Fuel Your Value Proposition

Underpinning your value proposition are your core assumptions. These are the things that would compel someone to buy your product or service. The job of the MVP is to test those underlying assumptions. The only way to successfully test those assumptions is by making a prediction of the result and comparing the behaviors that you measured up against your predictions. Your predictions should be based in fact, facts that would determine if you have a viable business or not. If you don’t make a prediction, then you will not have a way to determine success or failure of the MVP test. 

Let’s say you are building a landing page, Buffer style. Your MVP will be to measure how many people give you their email address after your landing page described your product. You will have to drive traffic to your landing page, most likely by taking out some Facebook or Google AdWords ads. You want to measure the conversion rate of people who clicked on the ad (since you pay for click) to providing their email addresses. For example, if 100 people clicked on the ad and came to your page, but only 4 provided their email address, your conversion rate is 4%. (Not bad actually in e-commerce.) 

Should 4% be your target? No. You need to determine your prediction based on facts and your business model. Let’s say you estimate spending $100 on Google AdWords to drive traffic to your MVP.  If you have a conversion rate of 4%, it will then cost you $25 to acquire each customer. $25 is your CAC or customer acquisition cost. You need to estimate what your Customer Lifetime Value (CLV), or the amount of profit you expect to get out of each customer over the course of their relationship with you, is. At this stage it will be fairly inaccurate, but you need to ground your assumption in reality. (Future MVPs can test pricing.) Let’s say you make the CLV to be $21, based on a lot of factors in your business model. (I talk more about your CLV and CVC here.) 

With a a CLV of $21 and a CAC of $25, you will lose $4 on each new customer you acquire. Or CLV ($21) - CAC ($25) = -$4. 

For your MVP test, you will need a higher conversion rate/lower CAC rate in order to make a profit. For the first MVP test make a prediction that the conversion rate will be 5%, bringing your CAC down to $20. Or CLV ($21) - CAC ($20) = $1. 

Interpreting The Results

Now with your assumptions based in some business reality, it is time to run the test. Typically the results are one of the three following numbers (remember you are aiming for 5% conversion):

  • 0.021%
  • 4.28%
  • 17%
Let’s take 0.021%. This is an absolute failure, you can safely assume that your assumption is invalidated. Safest thing to do is declare the assumption invalid and go back to your value proposition and rethink it. If you have other assumptions associated with your value proposition, you can do some more MVP tests to determine if the entire value proposition is invalid or not. Chances are you will have to iterate your idea and value proposition some more.
 
What to do if you are at 4.28%. Technically it is invalid since you need 5% conversion rate in order to make any money. Should you just give up and go home? No. You should try some new UX and new design or different language and run the test again. Don’t run the test without changing anything! If your future tests with minor changes are at or over 5%, then you can declare your assumptions valid and move on to test the next one.  
 
Let’s look at 17%. Woo-hoo, your assumptions are more than valid, you blew away your predictions. Verify that your test was fair and then declare your assumption valid and move on to test the next assumption. 
 
Thats all there is to it!  Only by clearly defining what success is and basing those numbers in a business reality is an MVP useful. Anything else is just a beta. 
 
 
 
posted on Saturday, April 11, 2015 8:27:51 PM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Friday, March 13, 2015

Yesterday I was in a discussion on Twitter with Semil Shah and Marc Andreessen about the value of a pitch deck. Marc thinks that the pitch deck has to be well polished and Semil and I think that a bad pitch deck with an awesome presentation by a passionate founder is ok for a seed round. 

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That was the critical differentiator:  the round. If you look at the conversation, Marc and I are in agreement on the need for a quality deck, we just disagree on the stage. This got me to thinking of the main difference between raising a Seed round and a Series A round.

As several Fresco Capital portfolio companies are currently raising a Series A or have just completed one, the difference between Seed and Series A is fresh on my mind (hence why I felt bold enough to challenge an icon like Marc yesterday..)

If you remember from my previous post, typically when you are raising a Seed round you don’t have your product-market fit figured out, nor do you have the exact facets of your business model ironed out. You typically figure this out during your Seed round and execute on your business model in a Series A.

Raising a Series A round is very different than raising a Seed round. Seed is about finding a business model, Series A is about executing that business model at scale. Marc is correct and you need polished deck for the Series A,  however, you also need to demonstrate two other important things in order to get funding: you need a repeatable business that scales. 

Repeatable Business

In order to demonstrate a repeatable business, you will have to show that you have customers, users, etc, coming back for more. You want to keep the customers you win engaged rather than churn them out.  Measuring engagement is not going to be the same for each business, but you need to figure out what it means for your business. Typically it has to with the Customer Lifetime Value and how many customers your business can support. 

If you are building a consumer app similar to Instagram for example, you have to demonstrate the engagement of the users you have posted XX photos per week. How many comments they leave, etc.  If you are building an e-commerse mobile app, it may be defined by the transactions performed each month, a game can measure how often they play and level up, or in a B2B service, how often certain tasks are performed. Even in the Seed stage, you should be able to determine this number, even if you have to do small tests and experiments to do so.

Scalable Business

Having a repeatable business is not good enough, you also need a scalable business. I’m not talking about the techie versions of scalability where your app and site perform the same under load as they do under normal conditions, but rather the business model. Typically this has to do with customer acquisition costs. Specifically, you need to work through this formula: CLV - CAC = $some really big number

Where CLV is your Customer Lifetime Value or the amount of profit each customer brings to your business over the course of their entire experience with you. This is difficult to calculate at an early stage (as you hope to have customers for 10+ years and you may only be in business for a year), but with enough cohort analysis and other data analysis, you should get a good feel for this number by now. 

CAC is the Cost of Customer Acquisition. This is how much it costs you to get a person through the funnel and convert to actually buy something. This number may be easy to calculate if you get 100% of your customers from marketing campaigns, take the total cost of the marketing campaign divided by the number of people who converted into customers. (For example if you spent $100 on AdWords and 4 customers converted, your CAC would be $25.)

Let’s look at how important this formula is:

CLV ($45) - CAC ($45.01) = -$.01

Here you are losing one cent on each customer and will eventually go out of business. Not good, not even the best deck can save you here.

CLV ($1) - CAC ($0.99) = $0.01

Here you are earning one cent on each customer and will eventually build a profitable business. The difference of just two cents can make or break your business! 

Now in reality, I’d like to see something like this:

CLV ($6) - CAC ($1) = $5

Meaning, for every $1 you put into your customer acquisition/marketing campaign, $5 comes out. Very scalable. If you are raising a Series A of $5m and in your deck you show this formula and say that $2m of the $5m is earmarked for customer acquisition, the investor knows that $10 should come out. Assuming that your formula is correct. (Actually as an investor, I would expect you to focus like a laser beam on the funnel optimization and get that CAC down while simultaneously increasing the CLV.)

As you move your business out of the seed stage and onto a Series A, make sure you make Marc happy and have an awesome deck. In addition, if you want his (or my) money,  demonstrate that you have a repeatable business that scales.

posted on Friday, March 13, 2015 6:39:20 PM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Thursday, March 05, 2015

If you have ever seen me speak at an Accelerator or startup event, I usually refer back to my experiences raising capital for my past startups. I’ve had experience raising money in four distinct eras: the “dot com era” circa 1999, the post dot com crash circa 2002, the post Google IPO-pre-Lehman collapse era (2006-2008), and the more current (post-Lehman) environment. While many of the rules of fundraising are the same, the stages, amounts, and terms have drastically changed over the years. Living and investing in Silicon Valley, I have observed the new pattern of fundraising, broken down to four stages.

fundraising stages

The four stages are:

  • Acceerator Round/Initial Capital
  • Seed
  • Series A
  • Series n

 

While there are all kinds of startups out there from pure software to BioTech to hardware, I’ll use the example of a typical software startup in the example below. The rounds and rules hold true in board strokes for most startups, but the dollars and sources may very. 

Accelerator Round/Initial Capital/Friends and Family ~$100,000 USD

This is the round where you move from idea to prototype, possibly to a first version you let people play with. Lots of experimentation, MVPs, and customer discovery. You use this round to get a sense of a “product-market fit” but not necessarily a business model. Typically you have two or three founders working on sweat equity and some money borrowed from friends and family. This is the stage to go through an accelerator or have a single angel investor. The average size of this round is about $100,000 USD, excluding the value of the sweat equity. Once you have demonstrated the ability to execute and launch a functional prototype and can extrapolate the results, you are ready for a seed round. 

*Note that if you are a hardware startup, your Kickstarter campaign, would typically come into play here. 

Seed Round ~$1-1.5m USD

This is the round where you obtain “product-market fit” and find your business model. You develop and release your product and start to measure the results. Your customers may not pay you a lot at this point, but you have built an audience or customer base. This is the round where you bring on your first non-founder hire and move out of the garage, typically to a co-work space. The range of this round is between $1m to $1.5 USD structured as a convertible note. The typical scenario is that you have 3-4 investors, one lead at half the round at $750k and the other 3 investors in at $200k - $300k each. It is important to have a lead that is capable of investing in your next round, possibly leading that round as well. As general advice, beware of an AngelList syndicate as your lead during this round, a lot of the time that syndicate is only good for the amount of the syndicate in your seed round and not capable to lead the Series A. 

Series A ~$3-7m USD

This is the round where you execute on your business plan and scale. You have paying customers, you know where to find them, and you just need to accelerate the process of on-boarding them. Typically with a Series A, you don’t need the money as you can grow organically, however, you raise a Series A in order to grow faster. Typically you use a portion of the funds raised for customer acquisition as well as some new hires in both sales and marketing roles. The range of this round is typically between $3m-$8m USD with some if not all of your seed investors participating. Sometime about now you think about moving out of that co-work space and into your own office. 

Series N… $25m-$1b USD

After a Series A, typically the later rounds (Series B, C, n…) are for massive growth. I like to use the analogy for a Series B as “rocket fuel.” For example, you found your product market fit in your seed round, you developed and executed on your business plan in your A, and you have a repeatable business that scales. You’re making money and have a great team. You know where your customers are and how to get them to give you money. If you grow out of revenues, you are going to get to the target (say 30% market share or $150m in revenues), but it will take you a long time organically, say 3-5 years. This is the airplane taking off and going fast, but hovering above the tree line. With a Series B, it is like poring afterburner rocket fuel on to your airplane and the goal is to get to the target in 1-2 years, not 3-5. Later rounds continue this trend and are also used for acquisitions to speed up the process as well as provide some capital to enter foreign markets. 

 

While this is not the exact path that your startup will take, it is the “textbook" course a startup will take. Use this information as a guide and as with everything in this business, your milage may vary

posted on Thursday, March 05, 2015 5:54:17 PM (Eastern Standard Time, UTC-05:00)  #    Comments [0] Trackback
# Monday, February 23, 2015

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Over the past few years I’ve had the opportunity to work with hundreds of early stage companies looking for funding. They all seem to approach fundraising the same way: make a big list of investors, ping their network for warm intros, and take every meeting with any VC that replies. Unfortunately this is not an efficient way of doing things.
 
Instead, I advise startups to filter the list of potential investors by three critical criteria and only meet with an investor that matches all three. If an investor meets only one or two of the criteria, you are wasting your (but potentially not the investor’s) time. So what are these three criteria?
 
Size of Check
Perhaps the most important criteria, and also the most overlooked by a founder, is the typical size of check written by the investor. For example, let’s say your startup is looking to raise a seed round of a $1.5m convertable note. The typical scenario is that you have 3-4 investors, one lead at half the round at $750k and the other 3 investors in at $200k - $300k each. If this is the amount of money you are looking for, don’t seek out Angels who are only going to put in $25k-50k at a time or don’t seek out VCs that typically invest $25m or $75m in a round. The size of the check that they typically write won’t match up with what you are looking for. 
 
Domain
Another common mistake is to hit up an investor who matches your check size, but doesn’t invest in your domain space. For example, let’s say you are a hard core B2B business and you approach an investor who only invests in consumer mobile apps, looking for the next Instagram. Big waste of time. What if you just finished your Kickstarter campaign on the next awesome IoT breakthrough and you approach an investor who has never made a hardware investment before. If they were even willing to invest, why would you want their money, they have no expertise in hardware? Instead filter only investors who actively invest in the space that you are in. They will add the most value since they understand your domain. In addition, they will have the most patience since by definition they are a believer in your space.
 
Location
Location is often is overlooked as a third matching criteria. I don’t mean your physical location, which is important to some investors-particually in Silicon Valley or a government backed fund, but rather the location of your target market and customers. If you are a startup targeting the Indian market, find an investor that is comfortable with that market and has an expertise there. You don’t necessarily have to find an Indian investor, but one where you are located that understands the Indian market and is not frightened by it and can connect you with the local ecosystem. 
 
After you have applied your three criteria filters to your list of investors, now it is time to reach out and get those warm intros. Only then will the meeting be productive. Often times I get pushback from founders saying that they are meeting with Investor XYZ that meets two of the three criteria. I tell them that the investor is wasting your time. What they are doing is taking the meeting to learn about your domain or target market without having to invest. For example if Investor XYZ never invested in Africa and your target market is Africa, they may take the meeting to see what is going on in Africa and report back to their partners. For them a one hour meeting in their office hearing your pitch is a worthwhile use of their time to get educated for free.
 
Same if an investor typically writes larger checks, say $25-50m average, but also has a new “seed” fund. Avoid those investors at the early stage. You get very little synergy from the brand name and will never meet the famous partners. In addition, if it really is a seed fund and there is no avenue for follow on pro-rata, you are back to square one when you are pitching the “main” fund. Also, in some instances the “seed” fund at a larger fund is typically the “B” team-young partners recently hired who are thrown into the seed fund without any real influence at the senior partner level. 
posted on Monday, February 23, 2015 2:29:15 PM (Eastern Standard Time, UTC-05:00)  #    Comments [0] Trackback
# Monday, January 05, 2015

Twenty years ago I quit the only “real” job that I ever had and started my first business. It was a pretty modest five person software development shop writing database driven applications and charging by the hour. My first exposure to Venture Capital and the high tech startup ecosystem was a few years later when the .COM era was in full swing. My consulting company wrote a ton of software for startups in exchange for equity. Then one offered to hire us full time; we accepted and I became CTO and my team of developers came with me. Then I flew out to Silicon Valley to raise Venture Capital on Sand Hill Road: Something I did not know anything about, but found exciting.


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We raised the money, built a business, and I never looked back. The startup I joined didn’t go public as we had planned, but we did eventually have the “exit”. It was 2002 and I had my first taste of the entrepreneurship bug. Over the next thirteen years I got to be the co-founder or very early employee of four more venture backed startups, all lucky enough to have an exit as well.


Over the past few years I had the opportunity to be part of the entrepreneur support system by doing a few angel investments of my own, sitting on some startup boards, mentoring startups at various accelerators, and co-founding and running an accelerator. It felt good to help entrepreneurs. As Telerik’s acquisition started to move from a discussion to a reality, I started to think about what would come next for me. As I talked with my friends and colleagues, they all gave me the similar advice: Jump right into another startup. Apparently they all think that I’m good at it. I started to think about what kind of startups I can start or join.

 

Then one day this past summer, I went up to San Francisco and had breakfast with a partner at SOS Ventures, then met up for lunch with Peter Thiel and a bunch of the 20 under 20 fellows (I’m a mentor there), then made it back down to Palo Alto and had dinner with a friend who is a partner at a fund on Sand Hill Road. The next day it hit me, I literally had breakfast, lunch, and dinner with a different VC. I decided then that I had to change my seat at the table so to speak and move from being an entrepreneur to an investor. The experiences that I had over the past 20 years of being an entrepreneur could be put to use over a larger surface area than just one startup.

 

I couldn’t go work for just any old VC, I needed to find a fund that had the same values as me: Entrepreneur friendly, international and diverse. I also needed the fund to a bit of a startup itself: I like to build things. Lastly, I needed to really like the people I would be partners with. After I thought about it in those terms, it was obvious to me that joining Fresco Capital was the right choice for me.

 

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I’m happy to announce that starting on Monday January 19th, I’ll be officially joining Tytus andAllison as part of the Fresco Capital team. I’ll be involved in all aspects of investment and operations with a specific focus on enterprise and IoT. Being based in Silicon Valley with two partners in Hong Kong reminds me of my last gig. I guess old habits die hard…


posted on Monday, January 05, 2015 12:45:16 PM (Eastern Standard Time, UTC-05:00)  #    Comments [0] Trackback
# Monday, October 07, 2013

MACH5

After running two successful batches of the mobile focused AcceleratorHK in Hong Kong, Telerik is announcing the Mach5 Accelerator in Silicon Valley. Mach5 will focus on startups doing HTML5 Web or Mobile development using our HTML5 framework, KendoUI.

The accelerator will be located in our office on University Avenue in Palo Alto, the heart of Silicon Valley. We’ll run from January 6th until April 11th, 2014. Applications are open until November 22nd for the first batch: apply here.

The batch will be small, only three teams, but the benefits are huge. Besides office space, you’ll have a great 14 week program complete with Silicon Valley mentors, up to $25k USD investment (in exchange for 4%-6% equity), and a customer development and MVP boot-camp.

Telerik resources are at your disposal too. In addition to the mentors from Silicon Valley, Telerik will provide a senior developer from our Professional Services team onsite for a few weeks of the program to help the teams get started. In addition to the techie help, our demand generation, community, and “growth hacker” experts will provide assistance to the teams. While you are in the Valley for the program, tap into our Silicon Valley staff’s vast network. Lastly, our Video Production team will assist with some high quality videos for the teams to use in their marketing and fund raising campaigns.

The best applicants are two person startups with one techie and one business person doing HTML5 development willing to relocate to Silicon Valley for 14 weeks and work on the startup full time. Applications are open until November 22nd for the first batch: apply here.

posted on Monday, October 07, 2013 10:34:24 AM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Tuesday, September 03, 2013

In case you missed AcceleratorHK Demo Day 2, the videos are now live. The entire video roll is here (about 1 hour) and the individual team links are below the break. Enjoy!

Individual team videos:

Verybite

Gyaan Tel

DooD!

Sofly

iceVault

Captain Planner

posted on Tuesday, September 03, 2013 4:42:25 AM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Tuesday, August 13, 2013

Last night in Hong Kong was the cohort #2 Demo Day! Over 150 people braved severe Typhoon Utor to make their way to The Good Lab for Demo Day 2. We squeezed about 120 into the main theatre and about 30 or so in the live streaming in the kitchen area of the Good Lab.

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The teams were hard at work but we all gathered at show time and did a shot of Port compliments of the Portuguese team. I tried to say something motivation and semimetal, but all I could say over and over was “I’m proud of you guys.”

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After a brief intro by Tony at the Good Lab and a photo slide show, I did a brief introduction. I fooled the audience into thinking that I made a typo on a slide with the wrong date, I had August 13 2012 on the first slide since one year ago to the date I began the Accelerator journey when my board approved the project. Quite fitting to have our second demo day on the one year anniversary.

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The teams did amazing! Here is the rundown:

  • Verybite: healthy home cooked food delivery service
  • Gyaan Tel: mobile data analytics for emerging market retailers
  • dood! Our 100% local HK team with a photo sharing app that turns your photos into gifts
  • SoFly: second screen and TV show tracking
  • iceVault: offline storage for your online assets. Starting with Bitcoin.
  • Captain Planner: online travel at the click of a button (really.)

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After the presentations we had a networking event and each team had their booths set up. Despite the looming T8 typhoon, I had to kick people out of the Good Lab after two and a half hours.

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Of course we had the all-important after party in LKF. By now the Typhoon had hit in full T8 force, at one point we took to dancing in the streets in the typhoon’s monsoon rain.

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Stay tuned for the videos and interviews to be posted here in a few weeks.

My journey at AcceleratorHK ends here. I’ll be moving to Palo Alto and running an accelerator this fall in Silicon Valley. Stay tuned as Paul and I figure out how to make cohort #3 of AcceleratorHK!

posted on Tuesday, August 13, 2013 11:36:37 PM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Sunday, August 11, 2013

We have just completed the final week of AccleratorHK, the hardest week of them all. Last week was the week where the teams had to run their businesses, review and sign all of the investment paperwork from Telerik, and prep for Demo Day!

For prepping, we have two mentors come in this week and work with the teams. In addition we had three members of the past cohort come in and work on the presentations. Finally we had our last Friday check-in where I got to weigh in for probably the last time on the presentations. All in all, that was at least six practice runs with structured feedback. The teams are ready for Tuesday.

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Later in the week we had the Demo Day film team arrive and Gerard filmed each team’s interview. These interviews will be used by each team as they leave AcceleratorHK and take their businesses to the next level.

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Lastly, we had Charlie Sheng from TechNode some in and interview all six teams for two stories, one that will be a write-up for startupshk and one for a story about Demo Day, AcceleratorHK, and the startup ecosystem for TechNode. Stay tuned…

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posted on Sunday, August 11, 2013 4:53:20 AM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Saturday, August 03, 2013

This was the last “normal” week at AcceleratorHK, normal being that we have our scheduled program 1:1 meetings, mentor visits, Friday check-in, and other activities. The following week will be the final week to prep for Demo Day, which is on August 13th.

One more team released an MVP! Icevault, Offline storage for Online currencies. You can easily sign up: a bitcoin address will be generated for you right away - and the private key securely saved offline and encrypted for you.

We had a great mentor come in and visit us. Michele Leroux Bustamante came in and spent about an hour and half with each team over two days, plus sat in on the Friday check-in and provided valuable feedback to the teams on their presentations.

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Michele had her original flights rescheduled due to a foul up in San Francisco so she extended her trip until Saturday and we all got to spend a little more time with her. That means she got to get down as the teams blew off some steam in LFK on Friday night. Smile

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This coming week is the last week of the program! We will have five different people come in to spend time with the teams practicing their Demo Day presentations, all while trying to continue to build their products! It is crunch time to say the least.

See you all at Demo Day on August 13th!

posted on Saturday, August 03, 2013 11:33:25 PM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Saturday, July 27, 2013

As the program is driving to the Demo Day finish line, we had an action packed week at AcceleratorHK! All six teams have an MVP that is up and running. You can check out three of them here:

We also had Hristo Neychev come in and spend a few days mentoring with the teams. Hristo works at Telerik as the PM for Icenium and has a lot of mentoring experience with startups at Launchub, an accelerator in Bulgaria. He spend an hour or two with each team as well as extra time doing customer development of his own with the teams and other companies in Hong Kong using Icenium. Hristo also mentors teams on startup presentations, so he worked with each team on their presentations for 30 on Friday before Prototype Day.

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On Friday we had our second (and last) “Prototype Day” when the teams make their Demo Day presentations to a group of mentors and have live Q&A on their business model. This is different from each of the Friday check-ins that we do when the teams may present on what they have done the prior week or practice their investor or potential customer pitch that they may be doing that week. We had five awesome mentors come on in to listen to the presentations and provide feedback:

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The teams made pretty solid presentations and got a lot of feedback. Demo Day is only 2 weeks away and the teams should all be ready! Unfortunately Friday was Paul’s last day at AcceleratorHK. Sad smile After Prototype Day we went out for a few drinks to wish Paul well in his new life in LA.

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Demo Day is August 13th, register here! See you all there…

posted on Saturday, July 27, 2013 9:58:39 PM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Saturday, July 20, 2013

We had another action-packed week at AcceleratorHK this week. Early in the week one team released their PhoneGap based cross-platform MVP and they win the award for being the first team to have an app on my phone.

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Another team had their MVP launched this week as well, we are starting to really move along now.

Next we had mentor and angel investor James Giancotti come in and spend a lot of time with the teams. James has a large amount of experience advising early stage startups and was very helpful with the teams who are looking for funding (just about all of them Smile.)

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The Portuguese teams re-emerged from their near two week long code-fest to come by the Good Lab and, well, code.

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Paul did a going away farewell address to the entire Hong Kong Startup community. It was a complete sellout (standing room only!) and a great time.

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Members of cohort #1 and several mentors showed up and also got their tee-shirts. Smile

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Paul also got several Hong Kong startups to commit to launch date, revenue, and other key deliverables in front of the entire community. Nothing like peer pressure!

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Lastly, we had a rooftop party at IFC for Paul’s sendoff. I used DooD!’s MVP to have some fun:

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This week we have a week long mentor visit, two more MVPs to play with, and Prototype Day #2! Stay tuned….

posted on Saturday, July 20, 2013 8:06:36 PM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Sunday, July 14, 2013

AcceleratorHK is moving right along. We are just over 4 week away from Demo Day! The teams are hard at work with their MVP, prototypes, and betas.

This week we had William Liang: co-founder at Grabbit and Professor of Entrepreneurship at Poly U, come in and spend 30 minutes with each team mentoring. William always has great insights and this visit was no different than his visits to the past cohort and bootcamps.

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It was also a great week insofar as our long awaited tee-shirts have arrived! We had some AcceleratorHK branded “I go both ways” tee shirts as well as the Icenium logo shirt.

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I ordered 100 of each shirt, so of course we have extra for our mentors, as well as for our past graduates, as shown here.

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We are sure to have some left over at Demo Day if you come early. Smile

This week is a busy week with mentor visits and session by Paul about the Hong Kong startup ecosystem. We will also announce the logistical details for Demo Day later this week. Stay tuned!

posted on Sunday, July 14, 2013 4:29:47 AM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Monday, July 08, 2013

Last Friday a team representing the startup community of Hong Kong went to the appWorks Demo Day in Taipei, Taiwan.

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appWorks is a venture firm that also has an incubator program of six months where 24 teams start out and get free co-work space and mentors. At the end of the six month period, there is a demo day. For this batch (Batch #6), twenty teams each did a five minute pitch in front of almost 700 people.

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The teams had a range from offline retail of organic dog food, urban street tee-shirts, women's health, politics, bio hacking, customized baseball gloves, and much more. The first team to go (urban street tee-shirts) started with a break dance. What a way to start a Demo Day!

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As opposed to traditional accelerator demo days, which tend to have more early stage companies, this demo day had quite a few teams with a lot of traction. In addition, the investment climate in Taiwan is only strong for hardware, so the teams tend to go for things that have revenue as soon as possible. You can see the investment climate’s effect on the startup ecosystem, very few taxi and other “instagram” mass consumer style apps, but rather more practical, more local, and less “big swing” companies.  It was a great event to watch.

After the Demo Day, the HK team went to Taipei 101, the second tallest (for now!) building in the world and got some dinner.

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We met up with the Cubieboard guys (similar to raspberry pi) and I became the first paying customer of their second generation board. I realized they were not kidding when they took photos of my money and sent it to their investor. This is a great device, duel core computer the size of an old PCIMCA card complete with an SD card, USB ports, Ethernet jack, infrared sensor, all for <$60 USD.

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Then we headed over to appWorks offices where the HK teams pitched the Taiwan teams and some other Taiwan teams that did not participate in Demo Day did the same. It was all done over beer and pizza, the fuel of startups.

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The co-working space is open only to the incubator startups and there is an additional floor where the graduates can rent out at below market rates.

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It was a great trip and we hope that by mixing the Taiwan and Hong Kong startup ecosystems we’ll open new markets for each other.

posted on Monday, July 08, 2013 6:51:01 AM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Sunday, July 07, 2013

Last week was our mid-program week of no program activities, just “get the hack out of the building” and do customer development. One team took that literally and traveled to India to test their app with their target customer base. They also had time to take in the Taj this weekend. Smile

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Another team is working on some pretty bleeding edge stuff so they decided to take over the inactive local meetup dedicated to the topic and hold an event. There was a great turnout with lively debate and lots of customer development.

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Lastly, while we had no mentors and meetings planned this week, we did have one optional mentor visit Saturday with Paul Harris, an American based in Manila, who has been working and developing deep relationships with a large number of Philippine based startups from idea to mentorship and funding. Since it was a low key week, Paul held court at one of our local bars and the teams came in and bought him beer and spend 30 or so minutes with him each. Then the rugby came on TV and that was the end of any business talk (it is a British bar…)

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All the other teams were hard at work, but Friday we had a BBQ to Celebrate the 4th of July. (Yes we celebrated it on the 5th, kicked off the weekend!)

Unfortunately I missed the BBQ as I was speaking at the Scrum Gathering Shanghai on Friday.

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Back to the normal program this week!

posted on Sunday, July 07, 2013 6:02:04 AM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Sunday, June 30, 2013

Can’t believe that we are halfway done! That means we are halfway to Demo Day! We are ready to announce that Demo Day is scheduled for August 13th at 6:30pm at The Good Lab’s main theatre. Mark your calendar.

Everyone recovered from our field trip on Saturday to Shenzhen, and had a great week at AcceleratorHK. We started off the week strong with a mentor visit from Jochen Kleef on Monday. Jochen has extensive experience in China and of course customer development and has always been a great supporter of the entrepreneurship ecosystem here in Hong Kong. Jochen held a round table discussion where he talked with the teams about his experience as well as had a Q&A. Then he met with the teams individually.

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We also had our last round of Pecha Kuchas on Tuesday. We had some great talks about life growing up in Indonesia, Malaysia, Indian mythology, and many  more. I did a pecha kucha on trekking to Everest Base Camp.

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One of the teams released a public MVP and some others are pretty close. Other teams were out speaking to potential customers and partners. Very good discipline in going out and doing customer development.

We changed up our Friday check-in a little bit. First the elevator pitches were only given 20 seconds, instead of the usual 1 minute limit. For the 5 minute presentation, we made a big deal on changing the presentations up so we had the teams submit the slides early. But we fooled them and had them do this week’s presentation with a white board, no slides, no projector. The results were pretty awesome.

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This week is “customer validation” week where we have no scheduled check-ins, 1:1s, or mentor meetings. Just the teams working hard on “getting out of the building” to talk with customers.

posted on Sunday, June 30, 2013 10:00:06 PM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Sunday, June 23, 2013

The intensity at AcceleratorHK is cranking up. This week was action packed and eventful. On Wednesday we had a trip to visit the offices of Hong Kong startup Frenzoo. At Frenzoo, founder Simon Newstead walked the teams through the early days at Frenzoo, its customer development process, and what it was like being in an accelerator himself. It was great going to visit a living, breathing startup in Hong Kong and “get out of the building.”

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On Thursday, we had Roland Yi, director & General Counsel at Gilkron Limited as well as a law professor at HKU, come in and spend time with us on intellectual property (IP) rights and laws. We talked about patents (avoid!) and trade secrets, copy rights, and trademarks. Very informative stuff for the teams.

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On Thursday night we had a rooftop pool party to wish one of the team members well as he is headed back to the US.

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On Friday night I did a presentation about raising money for startups. We covered angel investment, stock options, vesting,  dilution, valuation, venture capital, liquidation preferences, and lots more. This session was open to the public and despite being on a Friday night, we had a great crowd (and lots of beer.) Of course it was a PowerPoint-less presentation!

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On Saturday we had a big day. We got up early and traveled to Shenzhen, China and visited the component markets in Huaqiangbei. These are the component markets for the global supply chain and they are something to be seen.

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Here is a photo of some of the teams inside of SEG Plaza, one of the most famous of the component markets.

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After a few hours at the component markets and adjacent consumer electronics markets (lots of phone cases, batteries, chargers, bluetooth speakers were acquired…), we headed to an evening of teambuilding with the staff of Social Agent, who’s founder, Mike Michelini is a mentor at AcceleratorHK. We went bowling, played pool, and ping pong with the staff and had a great group dinner and drinks before heading home to Hong Kong.

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A great week and more to come next week. Stay tuned…

posted on Sunday, June 23, 2013 4:55:15 AM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Sunday, June 16, 2013

It is hard to imagine that we have already passed the one month point! After five full weeks at AcceleratorHK, most of cohort 2 is starting to move past customer interviews and into serious MVPs. Paul and I keep reminding the teams that they are still testing assumptions with the MVPs and not building “beta” releases for “feedback.” (The classic mistake that leads down the road to tradition product development.)

On Friday we had our first “Prototype Day” or when the teams make their Demo Day presentations to a group of mentors and have live Q&A on their business model. This is different from each of the Friday check-ins that we do when the teams may present on what they have done the prior week or practice their investor or potential customer pitch that they may be doing that week. While Demo Day is a full two months away, we want to get everyone started and get feedback on their business from more folks than just the cohort and Paul and myself. During the course of the program we have two Prototype Days, usually around the end of the first month and at the end of the second month. (Prototype Day #2 is July 26th.)

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We had four rock star mentors show up:

The six teams made their presentations and the mentors gave them tons of feedback. The mentors really challenged the teams to think through their models and underlying value prop. The most surprising thing to the teams was that they had the “curse of knowledge” since sometimes the mentors had no idea what the team’s value proposition was all about. Some mentors even provided feedback on the team’s logos. Smile It was great for Paul and myself to take a week off from providing all the constructive criticism.

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The teams soaked up the feedback and after a few hours of presentations and Q&A, most of us went to the local Japanese place for lunch.

After Prototype Day, we had a scheduled rooftop party, however, it had to be postponed due to rain. Instead Team Portugal and I went to a MVP dinner and got to play with an “Appcessory” or rather a device that turns your iPhone into a pinball machine.

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We have a big week coming up, two mentor visits, the last public class for the “Early Venture Survival Series”, and of course all the regular 1:1s and check-ins! Stay tuned…

posted on Sunday, June 16, 2013 7:23:42 AM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Saturday, June 08, 2013

We are four weeks in and the teams are progressing nicely. We had another week focused on Customer Discovery where the teams have been talking to a lot of potential customers and continuing to refine their segments. MVPs are getting built and several teams are moving into Customer Validation. One team flew to India to meet with potential customers for a few days and also dropped in on Telerik India!

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We had two mentors come in this week, one was a talk by a local entrepreneur who decided to walk away from his business after his partner and investor changed the terms and would not negotiate. His only course of action was to walk away from the business and the story was very powerful. We also had Steven Kopec from Turner Broadcasting Asia come in and work with the teams 1:1.

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We also had the third installment of Paul and Steve’s “Early Stage Venture Survival” talk at the Good Lab, which was open to the public. Paul spoke for two hours on the value of metrics to a startup. (And how to avoid vanity metrics.)

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We also did our first batch of Pecha Kuchas, one team member even did one on Austrian Economics. Smile Paul has also started to pronounce Pecha Kuchas properly, giving up his futile attempt to change the native Japanese pronunciation of the word.

On Friday we did our weekly check-in and changed it up by having people do an elevator pitch for a team that they were not a member of!

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After our checkin we went to a BBQ hosted by one of the teams on the rooftop of one of our mentors.

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Next week we start to take a look at the MVPs, and we have some mentors coming in for the +30. Prototype Day presentations. (Can you believe that we are at this a month already?!?!) Stay tuned…

posted on Saturday, June 08, 2013 5:49:44 AM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Saturday, June 01, 2013

Another great week for the teams at AcceleratorHK. This week at the 1:1’s Paul and I started to push for the teams to build MVPs around a core assumption or two. We also brought in technical mentor and Telerik customer advocate, Dhananjay Kumar (DJ), to talk about hybrid apps and also give an overview of Icenium and Everlive for the technical co-founders. DJ stayed a few days and worked 1:1 with several of the teams. (A team from cohort #1 even came up to visit DJ as well..)

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We also had some agile training with a session I delivered at The Good Lab. I talked how rule #2 of the “Customer Development Manifesto” by Steve Blank is to pair agile development with customer development. I told lots of stories how I screwed things up when I did my startups. That seemed to work well. Smile

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We then went on a field trip to visit Makible, a Hong Kong startup that is building the Makibox, the world most affordable ($200 USD) 3-D printer. I bought a Makibox for the cohort to play with and we should have a beta version to play with in a week or two.

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We also had a great round table with Makible’s founder Jon Buford about startups, funding, and early revenue.

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From there we had the first outing to Happy Valley Racetrack!

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While we had some doubters in the house (Team Portugal), most of the cohort followed my winning strategy on horse betting. As usual I walked away a winner. Smile 

It was a super hot and sticky night in Hong Kong but we were able to have a ton of fun. Two of the local HK guys in the cohort had their first Happy Valley visit, it takes an Accelerator to get them to Happy Valley!

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The next day, the teams wanted to relax somewhat and they took advantage of the Good Lab’s awesome bean bag area. Looking at the guys in this photo you can tell that we are in a mobile accelerator!

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As usual we had our founder talks and Friday Check-In. We also finished the week with a Friday afternoon mentor visit from Mike Michelini who worked with the teams on their social media strategies.

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We have another action packed week up ahead, stay tuned!

posted on Saturday, June 01, 2013 6:34:15 AM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Sunday, May 26, 2013

This week was “Get the Hell Out of the Building” week with a focus on Customer Development. Most teams went out and started to talk to potential customers about their offerings. We had a mentor, Joel Semeniuk, come in and spend all week with the teams to work on customer development and their business model canvas. He spent a few hours with each team working on how they can go out and do customer development.

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In addition angel investor Tytus Michalski came in to mentor the teams this week as well.

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After hours we had a social event on Thursday. The entire cohort attended the launch party of a cohort #1 team, SurroundApp. Earlier in the day, some teams got to meet with Remi Caron, a mentor, but also the CTO of SurroundApp.

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This was a lot of fun because most of cohort #1 was in attendance. When the drinking went late into the night, the cohort #1 folks started to warn cohort #2 of what happens when you come unprepared for the Friday Check in the next day. In addition as the night progressed (and the beers flowed) we had everyone come up and do their elevator pitch, even the guys from cohort #1. Always be prepared!

The team from Portugal, started to mingle with the locals. Smile 

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On Friday we had our first “Friday Check In”. At this meeting we have each team do an elevator pitch and we all evaluate it as well as give pointers. The group took the constructive criticism very well. We also did a “scrum” where each team spoke about the week behind and the week ahead as well as committed to the dates of their weekly mentor email.

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Lastly, each team did their 10/20/30 pitches. Yes, we do them starting on Week #2! (Now you will appreciate how much work goes into demo day!) We had two mentors in the room (Joel and Marcel) giving feedback as well as Paul and myself (and the other cohort members.)

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This week we have a technical mentor coming in, a field trip visit to Makible (a HK startup building the Makibox, a $200 3-D printer), as well as some agile training (which is open to the public). The week will continue to focus on customer discovery and validation. Stay tuned…

posted on Sunday, May 26, 2013 4:13:47 AM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Thursday, May 16, 2013

I can’t believe that after the months of the planning and reviewing of applications the Accelerator has already started up again. I also can’t believe that week 1 is already over! The next 13 weeks are going to just fly by.

We have a total of six teams doing cross platform mobile development. The teams are working in the following spaces:

  • Media/Second Screen Applications
  • Micropayments
  • Travel
  • Logistics
  • Social Media
  • Virtual Currency

Week one was great, we had orientation and discovered we have team members from four continents and born in the following countries: Argentina, France, Portugal, Malaysia, Indonesia, USA, UK, China, Canada, HK, and Russia.

After Paul’s overview of customer development, we broke up the teams into four groups and gave them a startup weekend style assignment to work on a business model and customer development exercise in the following four categories:  mobile health, language learning, dating, and fashion. We split up each team so no co-founders are on the same team. After two days or so of doing customer development we had the teams come in and make a presentation in front of a panel of judges (made up of four mentors of the program.) One team had projection problems so we made them “be agile” and present without slides. Smile

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The winning team won an expensive bottle of Sake and chocolate. (The only judging criteria was which team did the most customer development.) I kind of guilted the winning team to share the spoils with everyone. Smile

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After the mini-startup weekend/customer development exercise, Paul hosted a customer development seminar at the Good Lab. This was open to the public and some members of the previous cohort came by for the seminar as well.

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We also had our first mentor come in and visit us! Vinod Menon came in to speak with the teams today. As the founder of Knowledge Works, Vinod runs an Accounting as a Service (AaaS?) company and spoke about the ins and outs of incorporating in Hong Kong.

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Being a short week (Friday is a public holiday in HK-The Buddha’s Birthday!) we had our founder talks and Friday check-in on Thursday. We learned a lot about each other this week.

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We also all went to a local HK meetup, TDHK for our first social. It was suggested that we do the founder talks next week at a bar, to get better stories.

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Now time to get cranking on the projects! Stay tuned for the next update….

posted on Thursday, May 16, 2013 7:55:03 PM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Sunday, April 07, 2013

Last month, I had the honor of speaking at a TEDx event, TEDX HKUST, here in Hong Kong. This one was hosted by Hong Kong University of Science and Technology. The crowd was standing room only and packed with excited and eager students. There were 8 awe inspiring speakers, plus me. Smile The speakers were:

My talk was on innovation and how startups cause disruption. After describing how much the economics of startups has changed, I encouraged those willing to start a business to give a try. I focused on how the culture in Hong Kong is a banker’s culture and how the Tiger Mom’s as well as HSBC need to change in order to support innovation and entrepreneurship.

posted on Sunday, April 07, 2013 10:45:44 AM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Thursday, April 04, 2013

Similar to collage application season, it is accelerator application season with many major accelerator’s deadline looming. (AcceleratorHK’s own deadline is April 15th.) Since Paul and I run two accelerators, we get bombarded with questions from people applying to accelerators with the same question: “what do you look for in an application?” Here are five things to think about.

Criteria 1: The Optimal Team Size and Dynamic

Yes, you have to be be a “rock star” or a “hacker” to succeed. That is a given, however, when I see an application with only one applicant, I usually stop reading it.  Too many times I see a tech guy who stumbled across a cool piece of IP and thinks that they can “build it and they will come.” Or a smart “business guy” who underestimates the technical aspects of the problem and thinks that they can just outsource the IT (big mistake, see my opinion here on why you need a tech cofounder.) You can’t do this alone.

The optimal team size is two, one tech guy and one business guy as equal partners. The working relationship between them should be ideal, and they should like each other and be able to joke around with each other. Lastly, and equally as important, they should be passionate about the problem space that they are in. If you don’t have two awesome cofounders that compliment each other and work well with each other, don’t even bother applying.

Criteria 2: “Fund for the Pivot”

The reason why we like good people and solid teams is that you most likely won’t be working on the same project when you leave the accelerator then what you have applied with. So don’t try to convince me that you are the next Facebook, show me your 5 year financial projections, and god forbid, your patents (immediate rejection.) The whole purpose of an accelerator is to put you through the process of customer development and have you via MVPs/prototypes and rapid iteration from feedback build something that people actually want, not what you think they want.

First you need to have smart and talented people that are open to coaching and changing their offering. Second you need them to be in a hot space with huge opportunity.  If the original idea fails, but you are in a hot space, most likely you will “pivot” into something really awesome. As Paul Grahm of Ycombinator famously says “fund for the pivot”, so sell yourself and your space, not necessarily your idea.

Criteria 3: Demonstrate That You Will Take the Program Seriously

Accelerator programs are full time, not nights and weekends. If you can’t commit 100% of your time for 14 weeks, don’t bother applying. When I see the note on an application that says only one member can come to the program full time and the other guys will “drop in from time to time”, I usually stop reading. The value of the program is the time you spend in it. I get it that you have friends, family, and other obligations, but if you wife is due to have a baby three weeks into the program, you may want to consider sitting this round out and applying next year.

Criteria 4: Rock Your Elevator Pitch

I have watched hundreds of application elevator pitch videos. You have to rock it. Again, don’t sell the startup; sell your ability to sell the startup. Show me that you can sell snow to Eskimos. Be creative. One team filmed their elevator pitch in an actual elevator! I still remember one video where one team sat at a table and introduced themselves, the coder never looked at the camera and only  looked up when called on to say “I code” and the biz dev guy said that he also did pyrotechnics (and a funny explosion animation triggered.)

Skipping the video, producing a piece of crap, or focusing just on the product is an almost automatic rejection.

Criteria 5: Demonstrate the Ability to Execute

At the end of the day, can you do the job? You have to demonstrate your ability to execute. Also make sure you are not in love with being in a startup (a vanity entrepreneur) and actually want to run this business forever. We all want to be the next Steve Jobs and Bill Gates, so remember they also stayed at their companies for 20+ years. (Steve even came back after he was kicked out.) Mark Zuckerberg has been working at Facebook for almost 10 years. Don’t do this because it’s cool, do it because you want to change the world!

posted on Thursday, April 04, 2013 9:18:49 PM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Wednesday, March 20, 2013

Back in February, Accelerator HK cohort #1 had its Demo Day. As promised, here is the entire Demo Day video where the six teams made their presentations. Enjoy.

posted on Wednesday, March 20, 2013 2:08:51 AM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Friday, March 15, 2013

Earlier this week we opened the applications for the second cohort of AcceleratorHK, a startup accelerator I co-founded here in Hong Kong. As I broadcast the information out into my network, some former colleagues who never really liked me replied back smugly: “oh you are doing an Accelerator too? I heard there is an accelerator bubble.” Even the guy who I talk to at the gym told me that there are “a million accelerators out there.” Businessweek ran a story today about how the Accelerator bubble is going to pop.

While there is a proliferation of accelerators, there is no accelerator bubble. According to Wikipedia an economic bubble is:

An economic bubble (sometimes referred to as a speculative bubble, or a market bubble..) is "trade in high volumes at prices that are considerably at variance with intrinsic values". It could also be described as a trade in products or assets with inflated values.

The .com era was a bubble. Crazed investors pumped tons of money into speculative companies and inflated their values to levels not justified by true market conditions. Ditto the US and European housing markets last decade. But accelerators? Not so much.

For starters accelerators are cheap to put together (compared to raising $100 million to start your own Venture Capital fund) and usually done with your own money. (Note, no investor money was used to start AcceleratorHK, it is 100% funded by its parent company, Telerik.) Maybe people are referring to the companies going through the accelerators, that the proliferation of accelerators is drastically raising the valuations of all those companies that go through them. The standard practice of an accelerator is to invest $15,000 for 8% of equity, making the book valuation of these early stage companies under $200,000. Far less inflationary to valuations than a “friends and family” round. Actually the proliferation of accelerators are driving down the valuations of early stage startups! Considering that all accelerators operate on the same terms, we are more of a price fixing cartel than a speculative security in a bubble.

A few weeks ago I was speaking at Hong Kong’s Barcamp on the topic of the New New Startups Economics. My thesis is that the cost of starting a new business is about 20x cheaper than it was 15 years ago. The cost of going from business plan/idea to your first paying customer is measured in the thousands of dollars, not the millions or hundreds of thousands of dollars. I argued that accelerators are starting to replace the early round of seed capital such as “friends and family”. Since it is less risky and cheaper to start a company and there are more people willing to jump in, the combination of education and capital that an accelerator brings to the table is really the superior model. We have lots of inexperienced, but passionate people out there wanting to start a business in all parts of the world. As Eric Ries says: entrepreneurship can be taught. Accelerators teach entrepreneurship by doing. The best way.

Then someone asked me if there are too many accelerators and if I see any contraction coming in the space. I said “No way! We need more, not less accelerators!” Accelerators are like startup entrepreneurship universities. The world needs more of them. More accelerators mean more startups which mean more disruptive technology.

Will some crappy accelerators start to pop up? Sure. But they won’t survive and the market will self-correct. Maybe someone should do a “Zagat for Accelerators.” Winking smile

PS, applications close on April 5th for AcceleratorHK.

posted on Friday, March 15, 2013 2:26:19 AM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Thursday, March 14, 2013

AcceleratorHK, the world’s only startup accelerator focused on cross platform mobile development with HTML5 and Phonegap, has opened its applications for cohort #2 to be based in Hong Kong. The 14 week program runs from May 13th until August 16th, with Demo Day the week of August 12th in Hong Kong.

The application is here and will remain open for three weeks, until April 5th. The short listed companies will be lined up for interviews in early April and the final selected companies will be notified by mid to late April. As explained in our “About” page, we will be making a $15,000 (USD) investment in each company in exchange for an 8% equity stake as well as be providing co-working space for the 14 weeks in Hong Kong as well as a program in Customer Development.

The best applications are teams of two co-founders, one “business” and one “technical”. The team should have an idea and be ready to do customer development on that idea-even be willing to start over if that is what the results of their customer development tells them.

Hong Kong is an awesome place to customer development and validate your mobile app. The place is mobile crazy and everyone has a smart phone.

The first cohort of AcceleratorHK graduated on February 6th at their Demo Day. Take a look at how much fun it was preparing for Demo Day. Smile

AcceleratorHK Demo Day Prep from Stephen Forte on Vimeo.

posted on Thursday, March 14, 2013 2:07:37 AM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Thursday, February 07, 2013

Last night the first AcceleratorHK cohort had its “graduation” Demo Day at the Time Warner Center in Hong Kong.

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An accelerator is meant to speed up a startup’s progress over what they would have done on their own. Studies show that accelerators double or even triple the progress you would have made on your own. The goal is that if you are in a 3-month accelerator you should accomplish what you would have done in 6-9 months. Our teams in AcceleratorHK did exactly that, working on their Business Model Canvas for weeks (specifically on their segments and value proposition) and starting to build out their offering.

After 14 weeks of the accelerator program, the teams were ready to show the world what they had accomplished last night at Demo Day. Some teams had a “demo” of their app, some were just getting started and showed off their progress and discussed next steps. This is because some teams took longer to refine their idea (perfectly ok, exactly what an accelerator is suppose to do.)

We were oversubscribed and about 175 people crowded into the Time Warner offices and we had to have an overflow room with live streaming. Paul and I kicked it off with a short introduction as to what AcceleratorHK is, how an accelerator works, and what Demo Day is all about. Then the teams started their presentations.

First up was Taxiwise with Jean-Marc Ly as the presenter. Taxiwise is an app that allows you to make advance bookings of taxis in Hong Kong. Today you can do this offline, but it is painful to deal with the dispatchers, especially if you only speak English. Their app is driver specific and it creates a great experience for the user (us riders!)

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Next up was PayAllies with Carlos Grajeda aka “Carlos 2” as the presenter. This was Carlos’ first presentation in English! PayAllies is from Mexico and is solving the unbanked problem since only 17% of Mexicans have credit cards and 34% have bank accounts. They are like a debit/gift card/Google Wallet meets the Octopus card for Latin America. PayAllies is AcceleratorHK’s first success story, immediately after graduation they are headed to the Chilean incubator, Startup Chile for six months.

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Our third presentation was SurroundApp with Jeffrey Broer as the presenter. Surround solves the problem of English speakers wanting to engage with Chinese social media (half a billion Weibo users!) What is pretty cool about SurroundApp is that they can even translate slang into its “street” or common usage.

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After that was  Dynamino Lau Kok-hwa aka “Special-K” as the presenter. Dynamino is a new marketing campaign creation app that allows people to spread their campaigns by word of mouth.  In their testing they found out that they were equally as effective as Facebook ads but 23x less expensive!

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The penultimate team was 100 Village with Nick Wang as the presenter. 100 Village is a social venture that is focused on the Reggio Emilia approach (REA) to early childhood education. Nick gave a very passionate and inspiring speech about how schools are killing our kids creativity and how something as simple as playgroups can make a huge difference with the kids’ development. 100 Village’s app is “meetup for moms” where it helps facilitate the organization of REA style playgroups.

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Last, but not least was GOnnect with Furuzonfar aka “Foobar” as the presenter. GOnnect is an app that helps you find, make, and keep connections at an event. They solve the problem of who you should talk to at an event by matching you up with someone to network with and making it easy to connect with them later on via LinkedIN or something similar. Finally we can do away with business cards!

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After the presentations, we had a reception for the audience to come and meet the teams at their booths. In order to force the audience to mingle and network with the teams, we provided cold beer at each of the teams’ table. In addition, each team had a drink and food from their home country. The teams were mobbed!

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Carlos Rivera aka “Carlos 1” had to head back to Mexico to get his visas for Startups Chile so he could not attend, but we Skyped him in all night. Here he is talking to potential investors.

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I was surprised by the amount of investors, media, and government officials that attended. Maybe they just wanted the free vodka that Team GOnnect provided. Winking smile 

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We’ll be opening up the applications for cohort #2 in a few weeks with a start date slated for mid-May. Stay tuned if you want to apply. :)

posted on Thursday, February 07, 2013 4:22:55 AM (Eastern Standard Time, UTC-05:00)  #    Comments [0] Trackback
# Sunday, February 03, 2013

In November, six new startups entered AcceleratorHK, Hong Kong's first startup accelerator -- and the world’s only accelerator focused on hybrid mobile development. I can’t believe how fast it all went by! After 14 weeks, the AcceleratorHK cohort is graduating at Demo Day on Wednesday 06 Feb.

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The format for Demo Day will be as follows:

7pm (sharp!): Introduction by Stephen Forte and Paul Orlando, program organizers.

7:10pm: Presentations by the six startups, seven minutes each. No Q&A by the audience.

8:15pm to 9:30pm: Meet and greet each team. Each team will be in a conference room where you can go and ask questions, get a demo, and of course, get a drink! Each team will be serving a drink from their home country and AcceleratorHK is providing beer and soda in the conference rooms as well.

Please arrive early! We only have 85 seats in the main room, all late comers will have to go to the live streaming overflow rooms (we have room for 75 more people there.) Since we are being hosted by Time Warner Asia, the live streaming will be in super quality HD, CNN lent us a high tech splitter!

The location is at (MTR Quarry Bay Exit A: turn right, go up the stairs over the overpass and walk through Taikoo Place all the way to the end to Oxford House):

30/F Oxford House
979 King's Road, Taikoo Place
Quarry Bay
Hong Kong SAR China

See you Wednesday!

posted on Sunday, February 03, 2013 5:32:47 AM (Eastern Standard Time, UTC-05:00)  #    Comments [0] Trackback
# Thursday, January 31, 2013

As the AcceleratorHK cohort teams are rounding out their Demo Day presentations, I am proud to announce that Paul and I are running a new (semi) Virtual Accelerator focusing on Win8 App development.

The focus of the accelerator is early stage startups who are willing to work on their business full time.  As always our preference is for a two person (or more) team that has at least one techie and one business co-founder and is willing to work on the project full time.

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The selected company will receive a $30,000 (USD) investment (for 4%-8% equity) from Telerik and be put through a 14 week program starting with an intense week onsite in Hong Kong alongside the next AcceleratorHK cohort working on customer development. (We’ll pay your airfare and housing for the week in Hong Kong in addition to the investment.) After the week in Hong Kong the team will return home (or decide to stay in Hong Kong, but it will have to come out of the $30k Smile) and do the customer development process with guidance from the Accelerator virtually. At then end we will help you launch your product to the world and have your business take the next step.

The application is here, apply today! The deadline is March 15th. The world famous Robert Scoble is helping determine the company that is accepted.

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Update 04 Feb 2013

Originally I wrote that there was no equity taken, that was my mistake, we take between 4% and 8% equity for the $30,000 investment. Sorry for the confusion.

posted on Thursday, January 31, 2013 8:15:33 PM (Eastern Standard Time, UTC-05:00)  #    Comments [0] Trackback
# Wednesday, January 30, 2013

During the past two weeks, the AcceleratorHK cohort has been hard at work finalizing their offerings and building their Demo Day presentations. Paul and I have been meeting with some teams two or three times a day working on everything from the their MVPs to their slides and presentations.

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We had a lot of mentors come in including Tytus Michalski, Richard Campbell and Remi Caron. The mentors were helping the teams out during the “crunch time”.

During all of this excitement, we had a visit from Telerik! Three of the four co-founders of Telerik came in to visit the accelerator last week as well as a number of VPs and BizDev folks. The teams got some awesome advice from the group and one even challenged the CEO of Telerik to ping pong (and lost!)

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Lastly, the cohort and 18 people from Telerik blew off some steam at Happy Valley Racetrack for a social. I won $500! Smile

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Next week is Demo Day and the end of the formal part of the program. Stay tuned for an update on Demo Day!

posted on Wednesday, January 30, 2013 10:29:09 AM (Eastern Standard Time, UTC-05:00)  #    Comments [2] Trackback
# Saturday, January 12, 2013

After two weeks off for the holidays, the cohort at AcceleratorHK was back at work this week. We started the week off right with the 1:1 meetings. The teams are starting to spend more time building the apps and preparing for Demo Day, which is going to be held on Wednesday February 6th. Less than 4 weeks away!!

We also had a great visit by mentor Jochen Kleef. Jochen has vast experience as an entrepreneur as well as an investor so the questions asked to Jochen were vast.

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We also had a social where we went for Korean BBQ and raced the taxi team to the restaurant on an overcrowded tram.

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The tram team won. Smile 

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We rounded out the week with the first attempts at Demo Day presentations on our Friday presentation day. The teams are starting to get the format down and the message that they are trying to deliver.

I walked them through the flow of a prefect presentation for Demo Day: one that has contrasts (between what is and what could be or between good and evil, etc) as well as a clear start, middle, and finish (call to action)  with clear turning points. This is called a sparkline of a presentation. We had the whole room try to guess each presentation’s turning points as well as their call to action (last part). The presentations are getting there. Smile Stay tuned…

posted on Saturday, January 12, 2013 5:46:27 AM (Eastern Standard Time, UTC-05:00)  #    Comments [0] Trackback
# Monday, January 07, 2013

During the holidays AcceleratorHK shut down and some of the cohort went back home to visit family or just get some well deserved rest. (Others went to Macau for the New Years, enough said..) Everyone starting arriving back in Hong Kong on the 1st so we decided to stretch the legs and get some good fresh air before we went back to work hard core on Monday. A bunch of the members of the cohort went for a scenic 25km/15m hike in the Sai Kung region of Hong Kong on Saturday.

We started off with an easy 10km hike to Long Ke beach, a very secluded beach, even in the summer. The only way to get there is by boat or to hike in.

This is where we decided to start the Hong Kong chapter of the Polar Bear club. The Polar Bear club jumps into the ocean each year on January 1st, even if there is snow on the ground. Usually the water is very cold in the winter and the polar bears members are hard core. Since Hong Kong is a sub-tropical island, the outside air temperature was about 65F/18C, but we stripped down to our underwear anyway and jumped in. Yes it was cold!

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We then walked for another few hours and had some of the most amazing views that Hong Kong has to offer of the Sai Kung peninsular.

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Finally we descended onto Sai Wan beach and had a well deserved lunch. 25km of hiking makes you hungry!

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We’ll get back to Customer Development, MVPs, prototypes, raising seed capital, demo day preparation all on Monday…

posted on Monday, January 07, 2013 8:27:21 AM (Eastern Standard Time, UTC-05:00)  #    Comments [1] Trackback
# Friday, December 21, 2012

We are already at Week 7 at AcceleratorHK! The teams are hard at work building their MVPs and doing Customer Validation before we take a two week break for the holidays. All the teams are staying in Hong Kong over the holidays and are continuing to work, there are just no scheduled Accelerator programs. The clock is ticking until Demo Day on February 6th!

We started off the week right. On Monday we had a great mentor, Viresh Bhatia, come on in and spend a lot of time with each team. Viresh is an experienced entrepreneur as well as the chair of the Telerik Board of Directors. Viresh was also impressed with the mobile adoption in Hong Kong as well as Samsung’s market share in Hong Kong (specifically the popularity of the SIII and NoteII).

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We continued our 1:1s on Monday and Tuesday as most teams are now building prototypes and MVPs. Two of the teams apps are already on my phone!

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We had an additional mentor, Peter Burton, come in on Thursday. He only had a short amount of time and met briefly with a few teams and made some connections to people they all should talk with. We also convinced Peter to flash his old Samsung Galaxy S to Cyanogen Mod 10.1 and Android Jelly Bean 4.2.1. He proved his geek cred by coming in the next day with his flashed phone.

Note: A lot of the cohort members, including Paul and myself, run Cyanogen MOD. If you are in a mobile app accelerator, you may as well be flashing phones! Smile 

In addition to all of the hard work we also had a little bit of fun exploring Hong Kong cuisine. One day at lunch we got to see the Mexican team use Chinese chopsticks for the first time.

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We had a social dinner one night where we trekked over to the the other side of town and had HK clay pot rice dishes. This was a crowd pleaser. Smile

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Lastly, we had our elevator pitches and 10/20/30 presentations on Friday. We decided to have our own AcceleratorHK Christmas party complete with cookies, cake, hot wine, beer, and of course tequila.

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See you in 2 weeks!!

posted on Friday, December 21, 2012 8:04:03 AM (Eastern Standard Time, UTC-05:00)  #    Comments [0] Trackback
# Tuesday, December 18, 2012

Last week marked the halfway point in the program at AcceleratorHK. All teams have progressed nicely and most are now doing full fledged Customer Validation complete with MVPs and prototypes. I even have one Icenium built and deployed app on my phone! One team took their app public and tested their MVP at a real live event in Hong Kong.

This was a “working” week that was light on meetings and mentor visits, however, we did have two very important events this week. The first was the HK Startup Bootcamp Demo Day. Bootcamp is also run by Paul and has 7 teams that pay for startup coaching and a three month program. The program is structured very different than an accelerator, but has some similarities, the most important being Demo Day.

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The cohort got to see what a Demo Day is all about; the excitement and buzz at Demo Day was amazing. Hopefully the cohort is now less nervous. Smile

In addition to Demo Day we also had mentor Patrick Lee, the co-founder of Rotten Tomatoes, come on in and talk to the teams about building a business in Hong Kong.

CoCoon Entrepreneurial Series: Patrick Lee- Co-Founder of Rotten Tomatoes

This week is the last week before we take a Christmas break. Stay tuned for more updates..

posted on Tuesday, December 18, 2012 8:42:52 PM (Eastern Standard Time, UTC-05:00)  #    Comments [0] Trackback
# Monday, December 10, 2012

Last week was Week 5 at Accelerator HK. I can’t believe how fast it all is going, before we know it, it will be Demo Day! The teams last week worked hard at Customer Validation and have been narrowing down their segments and value propositions. They have been starting to develop MVPs of various shapes and sizes. Some of the developers have been hacking away at PhoneGap and have sent Telerik feedback on Icenium and KendoUI. We had two mentors  with specific skillsets come in to spend time with two different teams as well.

In addition to Customer Validation, we had the opportunity to attend a Pecha-kucha night in Hong Kong. We were lucky enough to have the founder of the global phenomena of Pecha-kucha nights, Mark Dytham, in town to MC. It was an interesting night complete with arguments over how to pronounce Pecha-kucha, two Macs crashing in the middle of presentations, and topped off with someone in the audience fainting. Despite all of those setbacks, the night was a great learning experience for the cohort.

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On Thursday most of the cohort was at the SME Expo in Hong Kong doing customer validation interviews and MVP inspection. After the long day at the event, we had a Hot Pot social diner.

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Friday was our typical elevator pitches, Friday check-ins, founder talks, and our very own Pecha-kucha talks. Then on Saturday we went up to Shenzhen to the massive component markets to see how hardware startups operate. Since we are a hybrid mobile accelerator, two teams bought their first Android phone at the gadget markets.

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We then chipped in and bought Paul some jeans. Next step, tee-shirts…

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We caught up with some friends in Shenzhen and the cohort went to late night Karaoke as well as some more customer validation on Weibo.

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Stay tuned for news from Week 6!

posted on Monday, December 10, 2012 12:55:20 AM (Eastern Standard Time, UTC-05:00)  #    Comments [0] Trackback
# Sunday, December 02, 2012

This past week was the 4th week of the Accelerator HK program. We are already 1/3 of the way through the program!

This week we had mentor Michael Michelini, founder of Weibo Agent come in and speak to the teams. Mike is an American living in Shenzhen, China and working on his own startup called Weibo Agent. Weibo Agent is a graduate of the accelerator Chinaccelerator in fall 2012. Mike came in and talked Social Media strategy and about his experiences in an accelerator.

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Later in the week we had Cory Kidd, co-founder of Intuitive Automata come in and speak to the teams. Cory is an American living in Hong Kong and running a startup that is building a robot to be used as a weight loss coach. It is always awesome for me to listen to Cory speak since he runs a hardware company and I think hardware is the new software.

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Cory also took advantage of some Hong Kong government grant money for startups and explained how to take advantage of those.

This Friday at the Friday check-in we worked on presentation skills with many presentations and demos going on. We even challenged members to deliver the 1 minute elevator pitch for other startups in the cohort! Now that most of the cohort have done the “Founder Friday” talk about themselves, Paul and I were able to give everyone feedback based on the skills we saw them demonstrate in their personal speeches.

Paul of course was dressed down again for Friday Hoodie Day (where we channel our inner Zuckerberg). Smile We will see if he buys a pair of jeans this weekend.

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Lastly, most of the cohort attended the Agile Tour Hong Kong all day seminar on Saturday. We had five speakers from around the world talking about DevOps, Scrum, Distributed teams, Agile Estimation, and TDD.

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Week 5 is also a busy week, stay tuned for more progress.

posted on Sunday, December 02, 2012 5:46:14 AM (Eastern Standard Time, UTC-05:00)  #    Comments [0] Trackback
# Tuesday, November 27, 2012

Last week was our third week at AcceleratorHK and the teams are starting to really get the hang of Customer Development, specifically Customer Discovery interviews. A lot of the teams have taken the feedback that they got on their customer discovery interviews and started to build MVPs and prototypes to do the next round of customer discovery (and some are thinking about moving to Customer Validation soon.) Even though it is early, it is exciting to see the early stage prototypes. (I can’t help the application developer inside of me.)

One team treated some of their interviewees to a Hong Kong Hot Pot dinner. What better way to get a captive audience? Smile

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We also focused on presentation skills at our Friday meeting. We had some founders give presentations about themselves and some do a Petcha-kucha.

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Lastly, we finally got our program director, Paul to loosen up and started a brand new Accelerator HK tradition, Friday Hoodie Day.

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This week is a big week with mentors coming in, demos, and more customer discovery/validation. Stay tuned.

posted on Tuesday, November 27, 2012 7:03:05 PM (Eastern Standard Time, UTC-05:00)  #    Comments [1] Trackback
# Wednesday, November 21, 2012

Last week was our second week at AcceleratorHK and things are starting to fall into a good cadence. On Monday, we had our first of the weekly 1:1 meetings and Paul and I worked directly with the teams on the issues that they face. We also had two amazing mentors come in:

First was Salim Virani, the creator of Leancamp. He talked to us about Customer Development and took a lot of time out of his vacation time in HK to spend with the teams on how to ask the right Customer Discovery and Customer Validation questions.

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Later in the week we had Mikaal Abdulla, co-founder of 8 Securities, a Hong Kong startup success story, come in and tell us the story of leaving a well paying secure job and going out and starting a new business in Hong Kong, along with the war stories of raising money and some secrets to their brilliant marketing campaigns.

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On Friday we did our first Friday all-hands meeting and was able to have an update by each team on their progress, practice their elevator pitch (next week I am going to put some of them in an actual elevator to practice), and ask the cohort for any help. We also gave out some Telerik tee-shirts. Smile We have a strict attendance policy, so one member had to phone in via Skype who was home sick. (Notice we gave him his tee-shirt anyway.)

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On Friday night we went out for some beers after a long week at the Accelerator doing Customer Development. The teams are still focusing on Customer Discovery and Customer Validation and will be in Week 3 as well. Stay tuned…

posted on Wednesday, November 21, 2012 6:50:02 AM (Eastern Standard Time, UTC-05:00)  #    Comments [0] Trackback
# Tuesday, November 13, 2012

Last week was the first week of the AcceleratorHK program. We have six teams that make up this cohort coming from: Hong Kong, Silicon Valley, Mexico, and Malaysia. The teams are just starting out but are in the following domains: social, location based, and community.

We started out with an introduction to Customer Development by program director Paul Orlando and then broke up the teams and gave them a Startup Weekend style assignment : go out and work on project for 48 hours with new teammates with a focus on Customer Development. The results were…interesting.

We had two mentors come in and work with the teams. John Bristowe came in from Australia and spoke about HTML5 and Phonegap (since we are a mobile accelerator) and then provided technical training on KendoUI and Icenium.

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Shanghai based, Spanish investor Oscar Ramos also came in and did a great mentoring talk on Visual Thinking and how to use it as a tool in your customer development process.

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We even had time to hit the racetrack at Happy Valley on Wednesday night for Oktoberfest night for a cohort social.

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On Friday we had our first check-in to see how the teams were doing and each team did their elevator pitch. (One team included their winnings at Happy Valley as their first revenue. Smile)

A great start to the Accelerator. Stay tuned for more updates.

posted on Tuesday, November 13, 2012 8:35:09 AM (Eastern Standard Time, UTC-05:00)  #    Comments [0] Trackback
# Thursday, October 11, 2012

On Tuesday night I visited and delivered a talk to the cohort at Launchub, Bulgaria’s first software startup accelerator. Launchub is financed by a seed fund made up of private and EU money. Launchub is hosted at a great co-work space, betahaus, in downtown Sofia. It was great visiting betahaus and meeting the teams. I quickly noticed that the Bulgarian accelerator is the exact opposite of AcceleratorHK; in Bulgaria, the teams are engineering heavy, while in Hong Kong, the teams are business people/designer heavy. Too bad we are too far away for a merger. Smile

I delivered a talk titled: “Lessons Learned From a Career in Startups.” I spoke about raising money, how a business partner is like a wife/husband, how to align staff’s expectations with your own, and then some general customer development (pivots, mvps, and all the current popular lingo.) My bosses at Telerik are involved in the accelerator and are mentors, so I told some jokes about them too.

At the Q&A time, Lyuben Belov, the program director, wanted me to put a team on the spot and have them do their pitch. I turned the tables on him and first asked Lyuben to pitch to me to invest in Launchub. (One of the lessons was to be ready to go now!) Lyuben did a fabulous job and then we picked one team, Useful at Night, to pitch. (It is also cool since this team also applied to the AcceleratorHK, but they are already in Launchub. I invited the team to come to HK for a week and spend time with the AcceleratorHK cohort.)

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Evelin Velev from the team did a great job with absolutely no prep time.

To round out the evening, I put one of my Telerik colleagues on the spot when asked about the future of hybrid development. Hristo Neychev is the director of BizDev for Icenium, so he best be able to do this. Smile He did not disappoint and we had fun, I was making slides on the fly for him.

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After the talk and lively Q&A session, we went to a downtown bar and had some food and drinks and talked all night long about startups, technology, and why I joined a Bulgarian Startup when I came to Telerik many years ago.

posted on Thursday, October 11, 2012 5:28:45 AM (Eastern Daylight Time, UTC-04:00)  #    Comments [1] Trackback
# Sunday, October 07, 2012

As people realize that the economics of startups have changed and more and more people are willing to jump to a startup, accelerators are popping up everywhere to support them. This includes China. Chinaccelerator based in Dalian, China, is the gold standard of accelerators in China. I am a mentor there and last week went up to Dalian for a visit. The cohort at Chinaccelerator is working out of an awesome office in Dalian with epic views of the bay.

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Chinaccelerator had me do a two hour talk to the group about my experiences in raising money over the years. I called it “Lessons Learned from Raising Venture Capital.” I went through several lessons I have learned over the years ranging from how much money to raise, how to approach investors, and how to determine valuation. We then had an awesome exchange and Q&A session.

After the talk I had one on one meetings with six of the teams and was very impressed with each of them. I suspected that all of them would be targeting the China market exclusively, however, only a handful were, the rest were global in their business plans. I left Dalian inspired by all the teams’ passion and energy.

It is great seeing accelerators pop up all over the world to support startups. This week I visit one in Sofia, Bulgaria.

posted on Sunday, October 07, 2012 9:43:27 AM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback
# Tuesday, September 25, 2012

I often get the question, “why the focus on hybrid development for your accelerator?” This question has come up more and more as Mark Zuckerberg said that Facebook’s focus on HTML5/hybrid development was a mistake.

As I argued over a year ago on this blog, it is mistake to bet exclusively on native or hybrid since some Apps will call for a native approach and some will call for a hybrid approach. Projects that need maximum performance and hardware interaction will require a native approach (medical scanning/rendering apps and some games come to mind) and projects that require larger reach and very fast time to market require a hybrid approach. Each approach has its limitations and trade offs.

If I advocate both approaches in a developer’s toolkit, why would I be starting the world’s only Hybrid Accelerator? The reason is that a startup should never, ever, go native. The very nature of a startup is that you have no money and require a super fast time to market. Just last week at a startup networking event in Hong Kong two super cool startups showed me their native apps on their iPhones. They then asked me what I thought of the app. I said: “your app sucks since over 75% of the smartphone market can’t use it, myself included as an Android user.” They countered: “we have no money, so we choose one platform to build the prototype on.”

My advice for them and most startups: For your prototype and V1 release you should go hybrid. You will have a much broader reach and won’t have to maintain two or more codebases (and double the programmer staff.) You’ll save time and money. Once your company matures and you have lots of users and the money to spend on the development, then you should consider going native if you are bumping into the limitations of hybrid development (chances are only a small percentage of apps ever will).

What about a company with 1 billion users, over $1b in profits post-IPO, and a super slow API in the first place? Yes, Mark Zuckerberg proves my point, hybrid development helped Facebook get to market fast with its hybrid mobile app. It was not a mistake for Facebook to go to market fast and cheap with a hybrid app. The mistake Zuckerberg made was not deploy some of those profits to build a better hybrid or go native years ago.

posted on Tuesday, September 25, 2012 2:07:22 AM (Eastern Daylight Time, UTC-04:00)  #    Comments [4] Trackback
# Thursday, September 13, 2012

As Paul and I are starting to review the first batch of applications to AcceleratorHK, we have stressed that you can’t apply for the accelerator program with only one founder. The optimum team make-up is two people: one “business” co-founder and one “technical” co-founder.

The most frequent question that I get from potential applicants is: “Why do I need a technical co-founder?” The question alone tells you something since it is not: “Why do I need a business guy co-founder?” This tells me that there are TONS of excited non-technical people willing to take the plunge and start a business, but not enough techies. This is a problem.

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I answer this question by saying that first you can’t do it all alone. Very few tech companies today were founded by one business guy. Second, at such an early stage (and by definition if you are applying to an accelerator you are an early stage), you will be doing a lot of Customer Development, MVPs, and “pivots.” It is critical in this early stage that your tech lead is part of the Customer Development process. If your tech lead is not a co-founder, at best, they will not understand Customer Development and want to do product development, and at worst, they will resist the process every step of the way. Only by constantly meeting with potential customers, doing Customer Development, and “having skin in the game” will a programmer be able to deliver on the vision of the company.

I’ve witnessed quite a few early stage companies enter an accelerator with a hired gun (consultant) as the “technical co-founder” in order to satisfy the two co-founder rule. The founder and the consultant have an agreement that the consultant would build the MVP and prototype and get the company to demo day in exchange for some equity. Never have I seen this work out; most have had disastrous results. In just about every case the consultant “co-founder” is in consulting mode and complains that “all those Accelerator meetings get in the way.” By forcing the startup into product development mode, the consultant negates all the benefits of the accelerator, since all accelerators are built around the Customer Development methodology. This also shows the level of disengagement, an accelerator cohort is for the entire team, not hired guns. I have seen one company recently lose their technical consultant “co-founder” halfway through the accelerator when he got a better gig. He used the first pivot as an excuse to bail. (At least he returned some of the equity.)

Usually, the non-technical founder is held hostage by the development team’s schedule and often times, the development progress is slower. Since the same level of passion is not there, the consultant just chugs along doing what he is told, leading to a misallocation of total work. You have founders working 16 hour days sleeping under their desks and the programmers pulling some overtime grumbling that they are losing money on this gig.

The only exception I have seen to this is a founder who had a team of guys in another country as full time developers lined up. He applied to an accelerator and was told he needed a technical co-founder, so he brought the lead developer to the accelerator for the duration of the program. While this worked out well, the company already had enough cash on hand to lock up the development team, so this is probably not the case for most other early stage startups.

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If you are thinking of doing a startup, remember you can’t do it alone. If you are non-technical, you can’t outsource your core intellectual property. Besides if you can’t convince a techie with a well paying and stable job to quit and work at your high risk venture for free, then well, you probably don’t have enough sales skills to convince customers to buy your revolutionary new product. Smile

posted on Thursday, September 13, 2012 9:21:32 AM (Eastern Daylight Time, UTC-04:00)  #    Comments [0] Trackback