Archive for the ‘Observations’ Category

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Too Small To Fail

Posted: by chrisshipley on March 25th, 2010 | 1 Comment »

Categorized: Chris Shipley, Entrepreneurship, Observations, Startups

Now that health insurance reform is out of the way (sort of), our employees in Washington (that is, Congressional reps and Senators) will surely turn their attention (if not their bipartisan cooperation) to economic stimulus and finance industry reform (get ready for Obstructionist Politics: Round 2).

Among the bits of joy in the financial reform bill proposed by the Senate Banking Committee are new guidelines for individual investors and the startups they support, guidelines that significantly and negatively impact the seed funding ecosystem.

The proposed legislation doubles the measure of net worth or income  required for an individual angel investor to be accredited, and nascent companies would be required to climb a mountain of paperwork with the Securities and Exchange Commission then wait up to 120 days for the SEC to review it.

These proposed rule changes throw sand into the gears of entrepreneurship and for what purpose?  If capital is not already difficult to come by for startups, this financial reform would effectively evaporate the pool of angel investment.  And while the SEC plods its way through filing reviews, time will be killing young businesses.

There are enough laws, regulations, and daily shenanigans to demonstrate that Congress hasn’t a clue about entrepreneurship.

So let’s be clear: entrepreneurship is, and always has been, the driver of the  economy.  Risk-taking individuals start new businesses, hire employees, create opportunities and build wealth that is often re-invested in local communities. Rather than imposing new regulation that makes these companies stillborn, Congress should be removing obstacles to capital.

Instead, Congress focuses on mega-banks and Fortune 500 companies, unwilling to let these leviathans of business falter.  They need to shift their attention and their policy initiatives to the Fortune 500,000 companies that are too small to be allowed to fail.  These companies employ more than 100 million people in the U.S. and earn upwards of $22T in revenue each year. Numbers, by the way, that stack up very favorably against the Fortune 500′s worldwide performance data of 24M employees and $9T in revenue).

We rarely use the Guidewire Group pulpit to incite political action, but if you’ve ever cared about an entrepreneur or imagine you might one day start a company of your own, now is the time to reach out to your elected officials and demand these onerous “reforms” be removed from the forthcoming legislation.

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Be the Peloton: My TEDxAustin Talk

Posted: by chrisshipley on February 26th, 2010 | No Comments »

Categorized: Business Models, Chris Shipley, Entrepreneurship, Observations

Several days later and I’m still reacting to the amazing day that was TEDxAustin.  In a day jammed with wonderful ideas, insightful speakers, engaged audience, and some stunning performances, I had the privilege of sharing one of my ideas within the event’s banner “Play Big.”

Being the contrarian I am, of course, my talk centered on the idea of remaining small.  Here’s my case:

Consider the sumo wrestler.  He’s one big boy.  Professional sumo wrestlers – of which there are 700 in Japan’s traditional training centers, or heyas - weigh in from 250 to 500 pounds.  They are very competitive in a decidedly individual competition, and while they are strong and quick in short bursts, they can be cumbersome and slow outside the ring.  Maybe most importantly, they are bound by centuries of tradition.

Now, consider the peloton.  A compact team of athletes, the peloton leverages the strength of individual members to deliver benefit to the whole.  By working together, an well-architected peloton can reduce wind drag by as much as 40% to operate with greater efficiency and greater speed.  Throughout a race, the peloton can react to changing conditions and proactively seize new opportunity.  In a word, pelotons are entreprenurial.

In the world of business, the sumo is a big company, which is resource rich, with strong brand power and great global reach.  With a rich legacy in the market, big companies – like tradition-bound sumo wrestlers – are well rooted, and while that provides great stability, it can also make change difficult for the big company.

The peloton, as you might have now guessed, is a small business.   They may well be resource constrained, but they tend to be on a first-name basis with their customers.  Small businesses have a strong connection to their local community, and yet they often play in global markets. With fewer and thinner layers of decision making, small businesses are adaptive.  They can be risk takers.  And often because of their constrained resource and their close ties with customers, small businesses must be incredibly innovative to serve their markets.

As entrepreneurs, we aspire to be big businesses.  That, after all, is what investors look for and what the public markets reward.  The Fortune 500, we often assume, are the drivers of the global economy.  In 2006, the Fortune 500 had aggregated revenues of more than $9 trillion, with profits of $610B.  With nearly 25 million employees world wide, the Fortune 500 earns $368,000 per worker.  In big energy, that number can reach as high as $1m per worker and in the retail sector it drops to about $200,000 per employee. If the Fortune 500 were a country, it would be the second largest economy in the world.

Impressive.  But let’s consider the other 29,599,500 businesses in America, business employing fewer than 500 people.  Most of these are sole proprietorship; only some 5.7M businesses have employees, but among them they employ nearly 115M workers and generate $22 trillion (yep, that’s more than 2x the Fortune 500 in the U.S. alone.) .  If you’re doing the math, that’s about $192,000 per employee.

We tend to think of big business at the head of the long tail of business.  I’d argue we turn that graph on its side.  The size of the ecosystem swirling around small business and the economic value created by it outstrips the Fortune 500.   In the U.S. alone, small business accounts for nearly half of the GDP.  Worldwide, small businesses in aggregate must certainly stand and the largest global economic force.

The entrepreneurs who start small businesses are arguably the most innovative.  Think of the market-changing, market-making innovations of the last 10 years.  Software as a Service, smart phones, eCommerce platforms and businesses, fundamental Web technologies and security systems, digital media and the DVR.  These, among many others, were developed not in big companies (in fact, many big companies failed to deliver products in these categories), but by small entrepreneurial businesses.

The irony is that the very thing that makes a big business “successful” is that thing that often prevents them from furthering their success.  Big businesses lumber under the weight of  their size, unable to move fast enough on their own.  That’s the good news for startups who become targets of acquisition, as big business consumer young companies like so many calories in order to fuel their innovation engine.

But what if there were a different model?  What if we rewarded companies not for getting big, but for being efficient engines of innovation, employment, and value creation?  Imagine for a moment the rise of the Fortune 500,000, those top small businesses that outperform the markets by performing well together, much like a peloton.

Individually, each small corporation is strong, highly adaptable, capital efficient, and profitable.  These strong businesses remain agile, able to pounce on new opportunities and deliver results without wading through layers of decision making and corporate process.

Best of all, they can easily partner with other strong small enterprises to tackle a market or create one.  Each small enterprise brings its unique and highly-tuned capability to the partnership.  At the risk of mixing my metaphors,  each small enterprise is a free atom that can bond with other organizations in a precise formula to attack a business opportunity.  They can decouple and re-attach to other organizations when new opportunities arise.

Collectively, they can be stronger and more competitive against lumbering large organizations than they ever could be on their own.  And, collectively, they can react more quickly and be more responsive to a changing market environment than large companies can.

With specialization to deliver expertise and collaboration to deliver complete market value, the peloton model of business will drive innovation and create economic value.

Whether today’s capital markets can be as reactive to this coming business change is an entirely different matter.

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Color Me Confused

Posted: by carlacthompson on January 8th, 2010 | 3 Comments »

Categorized: Carla Thompson, Observations

Mine was beige, with flowers.  Which, as the evening wore on, proved to be one of the more boring updates. (I especially loved the person who asked, “Why is everyone posting synonyms for tan in their status?”) But what occurred on Facebook last night and this morning was, in my opinion, pretty amazing. A meme took hold in a matter of minutes and, perhaps most impressive, had no explanation directly attached to it. You had to Google it or scan comments in your friends’ posts to find out what the hell was going on. But the number of people participating was overwhelming, nonetheless.

What also took mere minutes was the indignant faction who were either annoyed, offended, or downright angry. While watching the BCS game (which is an entirely separate argument we won’t discuss), I found myself in a heated debate with a friend as to the effectiveness/harm of posting your bra color for breast cancer awareness. Her key point was that “hollow gestures threaten to undermine substantive action” and she circled back to her favorite rant topic: the aligning of twitterers with the Iranian democracy revolt last summer. I disagree strongly; people turning their avatars green has no effect – negative or positive – on Iranians’ fight for democracy, just as typing the word “beige” next to my name on Facebook isn’t going to set breast cancer research back 10 years.

What it does do however is a couple of other important things. It serves a very real sociological need for affiliation. Humans define themselves, at least partially, by their causes. “I’m against Prop 8; therefore I am liberal and open-minded.” “I’m a member of the NRA; therefore I am conservative and like to kill things.” (Sorry. I’m only human.) So when you glom onto to one of these silly online memes – and yes, they are mostly silly – people feel they’re defining themselves a little bit.

The second point is one that’s much more salient. Last night’s bra-color game was a hint of what is possible when you combine social causes with social networks. Even those who were offended as hell have to admit: we’re talking about breast cancer now. Yes, of course, we were talking about it before. On occasion. In October when every household object on the market is tinted pink. But it did in fact, achieve precisely what it set out to do – raise awareness. The Huffington Post wasn’t focusing on the anger and raw emotion of a breast cancer survivor last week. The rage that cancer engenders was not getting ink in the Washington Post. And the Komen fan page on Facebook, for whatever good it does, had far less fans yesterday morning. Now the efficacy of ‘awareness’ is most definitely up for debate. But if one little meme involving a color can take hold that quickly, and make that much of a splash in less than 12 hours, what’s going to happen when someone – and I’m betting it will be a political candidate – figures out how to really utilize our personal networks?

Because I’ve argued enough this week, I’ll let my friend have the last word. Kind of.

If tech and social media wants to be taken seriously as a potential cure for that ill, action has to make a leap from status updates to the real world.

I couldn’t agree more. She goes on to posit, though, that online actions make people feel they’ve done their part and therefore won’t contribute more substantive action in the real world. Perhaps, with some people, yes. But I can pretty much guarantee those folks weren’t going to contribute much to begin with.

If there’s one thing I’ve learned in emerging technology, it’s that you can’t start at the top. You lay the groundwork at the very bottom and hope that subsequent companies and technologies will build on it in your wake. No, we didn’t cure breast cancer last night. But I’m certainly willing to keep playing these little games until we do.

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10 Stupid Things Entrepreneurs Do To Mess Up Their Businesses

Posted: by chrisshipley on December 20th, 2009 | 8 Comments »

Categorized: Chris Shipley, Entrepreneurship, Observations, Startups

In October, I spoke at Startup Camp Montreal5 about the 10 Stupid Things Entrepreneurs Do to Mess Up Their Businesses, and alluded to that talk again recently at the Forum for Entrepreneurs and Executives conference on entrepreneurship.  It came up in conversation again on Friday so it seems high time I actually post the notes from the talk on our blog.

I hope by pointing out common blunders, I can help entrepreneurs avoid a few of the dumb mistakes that (almost) every startup makes.  I also hope that some of you who have tripped into these potholes of entrepreneurship might come forward as case studies for a collection of essays that I’m compiling.  If you have a story that serves as object lesson to fellow entrepreneurs, I’d love to talk to you about it.  I promise to protect identities (where necessary and/or requested) and to be gentle with you.  The goal of the book is to help new entrepreneurs learn from those who have gone before.   If you’re interested in sharing a story, contact me via email.

Now, on to the list of 10 Stupid Things Entrepreneurs Do To Mess up Their Businesses*

1.  Think Like a Guppy

Okay, so you’re a small company.  Maybe it’s just you and a couple of co-founders. Hell, maybe it really is just you. That’s cause to be judicious with your resources, but it’s no reason to whine.

Somehow in the past few years, it’s become popular to put startups in some sort of protected charitable class.  You’re not a charity, you’re a business and if you want to be a big business, you have to think like one.  Manage your resources, posture, negotiate,  demand performance, deal.

You’re not a little fish; you’re a whale that has a long way to grow. Think like a small business and you’ll stay a small business. Think like a big business and you are more likely to become one.

2. Confuse Vision and Focus

Any business worth doing starts with a big, clear vision, that usually has something to do with owning a market, solving a giant problem, saving the world, or simply total world domination.

Still, there is a giant difference between vision and focus.  Vision is the audacious objective, the big game of entrepreneurship. It is what the business looks like when you’ve achieved your goals.

Focus is how you get there.

Focus is critical because it provides the actionable steps to make a vision a reality.  Focus prevents companies from running off course, or worse, chasing after the shiny objects that pose as opportunity. As importantly, focus provides a measure of progress and keeps ambitious entrepreneurs from becoming overwhelmed by their big vision.

Smart entrepreneurs dream big, but focus tightly. You can eat an elephant, but you have to do it one day at a time.

3.  Confuse activity for focus

There are no idle entrepreneurs.  Indeed, time is the enemy of startups, and every founder is busy, busy, busy building the business.  Or so it seems.

Lots of activity doesn’t necessarily mean lots of progress. If you’re unfocused and doing the wrong things, you can be mighty busy doing little of value.   When you’re lost, don’t just drive faster.  Stop.  Breathe. Assess. Focus.  And maybe even ask for directions.

4. Fall in Love with Technology

Of course you love your technology; every entrepreneur does.  It’s the product, after all, that people will buy. So you give it all your attention, defend it when criticized, convince your self that your baby can’t be ugly.

While dedication to technical excellence is admirable, in  a startup it’s the wrong target for your affection.  Instead, fall in love with your customers. They will tell you what to make.

5.  Focus on Fund Raising Instead of Building a Business

I know.  You need capital to build your company and venture capital is the fastest path to cash in the bank.  Or it used to be.

While few VCs will openly admit that they have much worry, truth is that the venture capital industry is in upheaval.  The perfect storm of the residual dot-com mega-funds, cash-efficient business creation models of the Web 2.0 cycle, and a global economic meltdown leave most funds with capital they can’t invest, capital calls they can’t make, or new funds they can’t raise. VCs are trying to re-engineer (and, in many instances, simply save) their businesses.  And while they may be saying something different, they really aren’t spending as much time thinking about how to invest in yours.

But even in the best of times, the best way to raise capital to build your business is to build and sell products and services that people want to buy.  In fact, nothing catches the interest of VCs like money coming into the company.

Consider that raising venture capital is a time-consuming activity.  Consider how you might otherwise use your time.  Developing a product?  Talking to customers?  Building strong channel partners?  Then consider this: what brings more value to your company: building PowerPoint presentations for Sand Hill Road or building your company?

6. Fail To Measure

Young companies run fast, but not every startup is clear on where they’re going or what it will look like when they arrive.  No doubt there will be plenty of turns along the way, but if you don’t lay down some milestones, you’ll have no way of knowing whether you’re on track or on time.

Companies of all sizes do what they measure, so measure what matters.  Determine by what metrics you will evaluate your progress and by which you will be evaluated by others.  Whether its development deadlines, page views, sign ups, downloads, or whatever – figure out what measurable metrics demonstrate growth and potential for your business.

Include in your metrics the sub-measures that affect the whole.  For example, if the measure is a sales goal, also measure marketing and development activity that contributes to achieving that goal.  That way, you have a clearer view sooner of what is going right, and possibly wrong.

Communicate those metrics to your team so they understand what they are and why they are important.  Then measure and report in meaningful and actionable increments.

7.  Ignore Yellow Lights

Optimism is a critical requirement for entrepreneurs. You have to believe that you can do the impossible while constrained in every possible way.

Still, your optimism can not be allowed to trump your reality.

That’s why metrics and measurement are so important to young companies.   It’s important to set those milestones while everything remains possible and reason rules your business planning.

As you march on, you’ll no doubt miss a milestone or fall short of some measure.  Pay attention. Take time to analyze the shortfall, learn from it and make course corrections as needed.

And, most importantly, listen for that little voice that urges you to press on even when all the warning signs point to another course of action.  Listen for it, not to it.

8. Hire Good People

Smart founders hire great people. Period.

You’ve got more work than you can do alone, your small team can’t move fast enough, and you’ve got the resources to bring in more people.  Hiring fast may seem like the answer.  It rarely is.

As much as founders need people to help build the business, people can be a time sink for founders.  The wrong person in the wrong job will bury you in management hassles, and they can do more to destroy team morale than a weeks of all-nighters.

As counter intuitive as it may seem, it is far better to take time to fill a position with the absolute best hire, than to burn time managing your way out of a bad hire.

9. Neglect the Details

An entrepreneur I know calls the details of budgeting and bookkeeping, employee contracts, stock agreements, and the myriad other details of business life “administrivia.”  It’s a fun word, but there is nothing trivial about business management.

In the earliest days, when you’re working on handshakes and shoestrings, there’s little need for over the top business administration, but that doesn’t obviate the need for some reasonable care.  That care (or lack thereof) will set the tone for your business as it grows.

A little time and a few dollars spent with a bookkeeper and lawyer in your earliest days will save a lot more time and money later when you need clean books and protected IP to make your case to investors, customers, and partners.   Forensic accounting and documentation is very expensive.  You can pay me now, or pay me a lot more later.

10. Lose Site of Your Values

Every company has a culture.  It’s either accidental or deliberate.

An accidental culture grows as people come on to the team, decisions are made, customs established, crises arise, pressures build and release, new challenges and opportunities preset themselves.  How founders act as the business unfolds sets the tone and establishes precedent.  Precedent, re-enacted time and again, grows into corporate culture.

In my experience, most accidental cultures are toxic, not unlike mold growing in a refrigerator; all the best ingredients are there, but having gone ignored or uncared for, they go to waste.

Deliberate cultures aren’t necessarily complex and they don’t require management consultants or self-help books.  They simply require awareness.  What do you believe and value?  If this company is your legacy, how do you want to be known?  How do you want your company to be perceived by its employees, customers, and community?

Let the awareness of and commitment to those values drive your business dealings and decisions. Be consistent with your values, make them part of the company, and demand that those around you do the same.

* with apologies to Dr. Laura Schlessinger for riffing on her popular book titles.


You’re not a little fish; you’re a whale that’s not yet gotten big.

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You May Not Need a Business Plan, But You Must Plan Your Business

Posted: by chrisshipley on December 15th, 2009 | 1 Comment »

Categorized: Chris Shipley, Entrepreneurship, Observations, Startups, Uncategorized

I admit I’m a bit behind in my reading amidst end of year planning and all this holiday hoopla, so I’m just getting around to reading Sunday’s Wall Street Journal post asking “Should Start-Up Founders Forget About Business Plans?”

The post quotes HubSpot founder and CEO Brian Halligan saying that creating a business plan is a “fool’s errand,” noting that he has raised some $30million in investment capital without a formal business plan.  He added, “No venture capitalist actually asked us for a business plan.”

There’s long been a debate about the value of a documented business plan in fundraising.  VCs might ask for one, but really (and usually said with a wink and a snicker), we all know they never actually read them. In other words, as Halligan put it, business plans are “a waste of time.”

As business professors everywhere grab their pearls at the thought, let me jump in here and say that Halligan is right – and completely wrong.

A fully-documented, prose-polished, perfect-bound business plan adds little real value to a startup company. But that’s really not the point.

A documented business plan doesn’t simply appear, created from golden cloth as if by some Rumplestilskin-like magic.  Indeed, to say that a business plan is a fool’s errand is missing entirely the nature of the errand itself.  The thinking, measuring, investigating, validating, and actual planning that enables one to write a business plan is what matters.

Halligan goes on to say that startups need only three documents with which to raise money: a PowerPoint presentation, a one-page executive summary, and a “fictitious” pro forma income statement.  All of which, he stresses, are “simple.”

Let’s assume for a moment that Halligan is right.  The subtext of his comments presented at the Puerto Rico Venture Forum, is that the venture guys are kind of superficial and so you, dear entrepreneur, can be, too. Throw together some slides, whip up a couple of paragraphs, invent some numbers. Bob’s your uncle.

I dare you to build a business on that soft foundation. While business plans find their way to the dust bin of history, business planning is critical to the formation and growth of any company.  I’m not talking about lock-yourself-in-a-room-subsist-on-pizza-and-Red-Bull-ignore-incoming-calls-figure-out-every-nuance planning. I’m talking about common sense testing of assumptions, laying out a strategy, idenfitying tactics, and understanding milestones. It shouldn’t take weeks, but it ought to take days.

Without this level of planning, you can’t articulate your business in the infamous 10-slide deck or quick and dirty executive summary.  More importantly, you can’t articulate your business to your team, your potential hires, contractors, and others who will actually help you execute on the business.

It takes time – thoughtful, focused time – to plan a business, but so much less time than tacking from one spaghetti-against-the-wall experiment to the next.

Do I read massive business plans?  No.  Do I expect the companies who seek my help to have planned? Yes!

So while Mr. Halligan may be right that no one reads a business plan, you’ll be dead in the water if you interpret his remarks to mean you needn’t plan at all.

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Bang the Drum: Social Media As Analytics

Posted: by chrisshipley on November 11th, 2009 | 3 Comments »

Categorized: Chris Shipley, Observations, Social Media

Earlier this year, at a TIEcon panel on the business of social media, I spoke about social media as an analytics machine.  Millions upon millions of people announcing what they had done, what they are doing, what they plan to do.  The Social Web is an observation tower for human behavior.

The highest tower among many is Twitter, yet when I asked Twitter’s VP of Business Operations Santosh Jayaram how many developers were working on analytics he mumbled, “We have a couple of guys looking at it.”  No doubt, Twitter has its hands full just keeping the lights on, but folks – analytics is the value of Twitter.

I’ve beaten this drum in dozens of conversations throughout the summer yet the focus always comes back to things like social graphs and crowd marketing.

Then, today, a guy with a bigger drum made a bang at Defrag. Eric Marcoullier, CEO of Gnip, Inc., has a booming voice and a big personality, and his brief talk this morning — ‘The business world doesn’t give a shit about your lifestream app” — resonated throughout the room.  Fundamentally, Eric argued, social media (for business) needs to “make the leap from marketing to business intelligence.”

Exactly.

Business is beginning to pay a lot more attention to Twitter and other social media as a megaphone and a listening post, and that’s a start.  We now have ample examples of small businesses announcing that the donuts are fresh from the oven and large companies responding to disgruntled customers to convince businesses of any size that there is something to this social media thing.

Typically and perhaps understandably, these now-enlightened companies gravitate toward selling and marketing.  Yet they are missing the big opportunity of social media by not taking the further step to understand the meaning behind the collective voice.

These organizations need a new set of tools and new approaches to data to gain that insight.  Fellow Defrag attendee  Nathan Gilliatt, whose practice is focused on working with corporate clients to bring them meaning to social data, described this as the need to break down the “measurement silos” to blend social media into business intelligence.

Indeed, social analytics brings a deeper understanding to customer engagement. It allows organizations to create the right product, drive the right relationships, structure a more responsive organization, and – yes – market and sell.

Most importantly, as Eric put it this morning, it allows business to “move beyond data and seek meaning.”

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The End of a Trend

Posted: by carlacthompson on November 9th, 2009 | 5 Comments »

Categorized: Carla Thompson, Observations, Social Media

I don’t like Twitter. I’ve never been coy about that. When it first launched, I thought, “You’ve got to be kidding me.” When it exploded in use, I thought, “This too shall pass.” When Ashton Kutcher sent a picture of his wife’s ass to the world, I thought, “We have reached the point of no return.”  And yet, here we still are. Oh sure, I tweet. I’m an emerging tech analyst; I have to. But I’ve never been happy about it. If Twitter disappeared tomorrow, I’d be quite content. And several events over the last week left me wondering if we are indeed watching a technology fold in on itself. Is Twitter about to jump the technological shark? Or has it already? The evidence:

1) They’re boring me. A friendlier home page. A new Retweet button. The ability to make lists. The new features rolling out of the Twitter factory recently are incremental and yawn-worthy. Take the newest update, Twitter Lists, which allows users to build dynamic lists of people, grouped however their hearts desire. My non-techie friend @poliepete said it best: “Can’t you just create groups in Tweetdeck?”  He’s got a point. There are a couple of small differences – these lists are public and other people can subscribe to them – but otherwise it seems another exercise in technosphere ego-stroking. Though Robert Scoble posits that the introduction of lists means no less than the end of numbers as we know it, my experience was anti-climatic. I cherry-picked a few people from lists created by others, but haven’t followed any list as a whole. It took me a long damn time to get my Tweetdeck right where I want it and I don’t need other people with disparate interests mucking it up. So a feature that caused a minor stir for a bit seems to have already faded. You can now group like-minded people together in Twitter. So what?

My point: Twitter isn’t exhibiting a desire to evolve. For a product that has achieved such explosive growth since its launch, it sure seems happy to rest on its laurels. It’s as if the sole difference between the first-gen iPhone and the 3GS was the ability to tag your contacts. Granted, the iPhone is about $300 more than Twitter, but free shouldn’t equal lack of innovation.

2) The kids aren’t using it. This is a point of contention among many. Depending on which survey you’re reading, Twitter use is either growing or receding among the youth of today. No one can seem to get a straight answer out of these kids. The Associated Press ran an interesting exercise in confusion a couple of weeks back, in a piece that I’m still trying to figure out. Titled, “Grudgingly, young people finally flock to Twitter,” the article states that the younger generation hates Twitter. But they use it to follow celebrities. Sometimes. Unless they don’t.

“Quite frankly, I don’t need to hear if someone stepped in dog poo on the way to class or how annoyed they are that they lost their favorite pen,” says Carolyn Wald, a University of Chicago junior who has not joined Twitter and rarely posts status updates on Facebook because “I don’t want to assume that people want to hear those things about me, either.”

I like the cut of your jib, Carolyn. Can I friend you on Facebook?

What was even more striking to me, though, was a little tweet (yes, I get the irony) sent out by my friend Laura Beck. She heads up the Porter Novelli Austin office and sent out the following last Thursday:

Btw, taught 2 mktng classes @ tx st wed, 60 kids, jr/sr, NONE use twitter, all think for us oldies. Interesting

To translate from 140-character speak, Laura taught marketing to 60 college students and not a single one of them used Twitter. I’d say sixty kids is a pretty good sampling; hell, major political decisions have been made on less.

My point: Twitter should be worried about this. They should be worried that Carolyn Wald thinks it’s only for dog-poop updates. Trusting that a technology – one that hasn’t had a major upgrade in feature-set, design or philosophy since it’s launch three and a half years ago – will somehow settle into a generation as it ages is a risky proposition.

3) The spammers are taking over. I don’t know about you but Twitter spam is starting to drive me batty. I blocked more than 50 people this past week alone, some of which sported some seriously gross profile pics. Even more fun, I attracted topic-specific spammers from certain tweets. After tweeting that I couldn’t decide between eating a cream-cheese-loaded bagel or yoga class (I never said my tweets were thought-provoking), I received a follow from “Health & Wellness” within minutes and Philadelphia Cream Cheese within the hour. It felt creepy and slightly stalker-ish. I’m in no way the first person to say this but Twitter still doesn’t seem to be listening. They must remedy the spam problem.

My point: Twitter is teetering on the edge of becoming one giant commercial. Just today, CoTweet announced a $1,500/month service for enterprises that allows major brands to store data about customer interactions on Twitter, as well as analytics that show their reach. In other words, it’s about to get much easier and more beneficial for Philly Cream Cheese to keep track of your bagel consumption.

4) So are the jerks. In an absolutely fantastic piece for TechCrunch, Paul Carr tells us the story of Tearah Moore, a soldier based at Fort Hood who tweeted during the horrific attack last week.  This being Twitter, Ms. Moore didn’t feel it necessary to censor herself and so her stream is filled with all sorts of expletives directed at the shooter. Fine whatever, be angry at the lunatic who killed your fellow soldiers. What she did feel obliged to do, however, was post a picture of a “guy who got shot in the balls.” As Carr puts it,

“Rather than offering to help the wounded, or getting the hell out of the way of those trying to do their jobs, Moore actually pointed a cell-phone at a wounded soldier, uploaded it… and added a caption. Her behavior had nothing to do with getting the word out; it wasn’t about preventing harm to others, but rather a simple case of… ‘look at me looking at this.’”

My point: Do I even need one after that? No, Twitter isn’t entirely to blame for such gross behavior. But it certainly encourages it by its very essence. And I doubt it’s going to improve. In an age when first-on-the-scene witnesses are valued and utilized by national news organizations, we’re guaranteed to see more detailed and more graphic accounts from citizen journalists.

Wrap it up already! All of this adds up to a trainwreck of a technology looming on the horizon. One abandoned by sane users and left filled with snuff films, porn stars, and marketing come-ons. While writing this, I kept trying to think of an analogous product. One that started out as a pretty good idea but quickly became glutted with crap. The obvious example is email – but it’s far too necessary. Be honest with yourself: if Twitter folded tomorrow, would you miss it? Has it really become a value-add to your workday? Or is it another stream to monitor, another to-do list, another volley of voices to hear?

There is a nugget of value at the center of Twitter that has become lost, even to the company itself. Instead of thinking up new ways for us to pat each other on the back, Twitter needs to hearken back to its days of creativity and spark and give us something useful again. Change our workday, shake up our preconceptions – just do something. Stop waiting around for someone else to do it for you.

4 Principles for Enabling Innovation

Posted: by chrisshipley on November 3rd, 2009 | No Comments »

Categorized: Chris Shipley, Observations, Startups

I started my day at SAP Labs in Palo Alto moderating a panel discussion about “Enabling Innovation: How does it happen? What’s the secret sauce?”  The room was filled with the managing directors of SAP Labs worldwide and their invited guests, the vast majority of them representing multi-billion dollar global businesses that are challenged, presumably, by the task of continual innovation.

The panel was representative of the of the Silicon Valley ecosystem:

  • Kimber Lockhart and Jeff Seibert, co-founders of Increo Solutions (the entrepreneurs)
  • Mark Radcliffe, partner at DLA Piper (the lawyer)
  • Dan Pistone, SR VP for tech banking at Bridge Bank (the banker)
  • Gamiel Gran, VP Business Development at Sierra Ventures (the VC)
  • and me (the analyst)

We started the conversation by level setting around the idea of innovation itself.  I usually argue that the word “innovation” is so easily tossed off that it has lost its meaning.  Everybody is “innovative,” even when we can’t be sure how or why.   I contend that innovation is what someone will buy.  Jeff’s definition is even better:  “delivering creativity to end users.”

As this part of the conversation unfolded, though, it became clear that innovation isn’t  a thing; it’s a process. Innovation doesn’t just happen.  It’s exercised and deliberate.  And it that regard, it also may well be a culture, a state of mind, a core value of an individual or organization.

So what marks an innovative company?  Surely, the list is longer than that which we discussed in 45 minutes this morning  (and I invite your additions to the list in the comments, please).  Our conversation kept coming back to these four ideas:

  1. Vet ideas early and often. Jeff and Kimber told the story of founding Increo as a process of testing ideas.  Did they dig the idea?  Did it resonate after the initial excitement wore off?  Did other people see value in it?  Brain storming twice a week helped the vet countless “incredibly great bad ideas.”
  2. Try something. Feedback is critical and there’s no better way to get feedback than to put something – anything – out for response. Again from the Increo founding story: “We weren’t coming up with any great ideas for a business, so we decided to just build an idea sharing site,” Jeff said.  The site morphed into an enterprise idea bank which morphed again into the Increo document collaboration platform, acquired by Box.net in August.
  3. Embrace failure, fail fast. Mark Radcliff was quick to point out that Silicon Valley is distinct from other technology ecosystems in its acceptance of failure, almost as a price of entry for innovation.  You can imagine that a roomful of corporate lieutenants would be loathe to celebrate failure with their management.  And frankly, I think “fail fast” is one of those Valley pablums that lose their meaning in bad practice.  Rather than failing fast, companies need to learn to fail smart.  They need to understand what went wrong and why, do it quickly, reset, and try again.
  4. Balance innovation and invention. As “delivered creativity,” Innovation implies an immediacy with the customer.  That’s great for solving today’s business problems, but may leave a large company like SAP flat footed in the long term if they don’t also engage in primary research on the path to invention.


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What Do Space Mountain and Entrepreneurship Have in Common?

Posted: by chrisshipley on October 30th, 2009 | No Comments »

Categorized: Chris Shipley, Entrepreneurship, Observations

A couple weeks ago, I had the pleasure to speak at Startup Camp in Montreal.  During the Q&A to an audience of mostly first-time entrepreneurs, I described entrepreneurship thusly:

Imagine you’re at Disneyland. It’s August. The California sun is hot.  You’re in line for the Space Mountain ride and you just know it’s going to be great.  You’re eating ice cream, which seems nice, but the sun is melting the ice cream faster than you can eat it and sticky, milky stuff is running down your arm and making you pretty uncomfortable.

The line moves and you go from too bright sunlight into the dark entrance of the ride.  You’re not exactly sure where you’re going, but it’s getting exciting.   You stumble along until you get used to the dark.

Then, it’s your turn. You scramble into the roller coaster and just as you expected, it’s thrilling. The anticipation of the climb, the rapid drop, another climb.   In a matter of minutes, the ride comes to an end.

You get out of the car and throw up.

The next day, you do it all over again.

That is what it feels like to be an entrepreneur.

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Just Say No: What the Venture Guys Really Mean

Posted: by chrisshipley on October 22nd, 2009 | No Comments »

Categorized: Chris Shipley, Entrepreneurship, Observations, Startups, Venture Capital

I had a delightful lunch yesterday with Howard Hartenbaum, a general partner at August Capital.  The lunch was offered as a “prize”  during Lunchster‘s  six-minute product launch at DEMOfall. I’d agreed to have lunch with whomever won the draw, even these are the sort of promises that can pretty rapidly go bad.  You have no idea who you’ll end up sitting across from, wishing that you’d suggested Taco Bell drive through as a speedy alternative to the white-linen dinning you had to endure.

When I got the email that Howard would be my lunch date, I felt like I was the winner.  I’d first met Howard as part of the team that launched Public Minds’ response aggregation system at DEMO 2001.  Since that time, he’d made the move from entrepreneur to VC and scored his “big win” – an early investment in Skype. His choice of Palo Alto’s Tamerine Restaurant only confirmed that Howard still picks winners; it’s a local favorite of mine).

Most charmingly, Howard didn’t seem to want to monopolize the conversation with shop talk.   Instead, shared restaurant tips, swapped medical mystery stories, railed on litigation-happy parasites, and concocted an elaborate story of long-suppressed love unleashed by a chance encounter courtesy of Lunchster.

Since I was pretty sure no one would believe that last yarn, I asked Howard what he didn’t like about being a VC.  “I don’t like saying no,” he responded without hesitation, adding that it’s made worse by the fact that as a VC one must “say ‘no’ 99% of the time.”

Okay, I’m a bit cynical when it comes to what venture guys say and what they do, and in my experience, most VCs don’t say no.  They say things like “I need you get more customer traction” or “this deal is too early for us but come back in six months” or “I’ll need to get my partners on board with this” or a couple dozen variations on these themes.

Howard seemed to sense what I was thinking. “Venture capitalists have two responses to entrepreneurs,” he said, “yes and everything else.”

To his great credit, Howard decided to take on “no” head on.  “In life and in work, when there is something that makes me really uncomfortable, I make a point of doing it in the hopes that I’ll become inured to it.”

So when he decides to take a pass on a company, he calls the entrepreneur directly and tells him no.  Has it gotten any easier?  “No.”

But he does it.  He does it because he respects entrepreneurs. He does it because he isn’t going to waste their time.  He does it so that entrepreneurs know the why behind the no.

A “no” is such a rarity in the venture hunt that entrepreneurs may not know how to act.  Here’s my advice:  don’t argue, don’t debate, don’t tell a guy like Howard that he’s wrong.

Listen for the no and be glad for it.  That VC is saving you time and heart ache.  Listen to it, accept it, and move on.

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