austinpreneur

Austin Startup Digest - January 23, 2012

This week's update is written by Damon Clinkscales.

This week, I'll be at Apple iOS 5 Tech Talk on Monday, which is going to be a full overview of iOS 5 directly from Apple engineers at the Austin Convention Center.  Stoked about it! It's awesome to see that Austin is the kind of place that Apple wants to hit on their geek road show.

On Tuesday evening, I'll be at Buffalo Billiards for Austin on Rails. If you're interested in learning more about Rails or meeting the community, you are welcome to come out. Speaking of the Austin Rails community...we have recently achieved a major accomplishment! Ruby Central has selected Austin to be the site of RailsConf 2012!  RailsConf is the primary national gathering where the best Rails developers in the world get together to hack, build community, and share knowledge. Over 1300 attendees are expected.  

The event will take place downtown at the Hilton on April 23-25.  We are organizing several community efforts around the conference, such as Ignite RailsConf, Kids Ruby Day, Talk-To-A-Local, Stay-With-A-Local, and BohConf (an annual unconference timed to coincide with RailsConf).  Austin's selection is an acknowledgment of the incredible Rails community we've built here over the past 6 years and we couldn't be more proud and excited about the event.

A few quick notes about SXSW Interactive, which is coming up fast (March 9-13)...This is the first year that the organizers are hosting a dedicated space (Startup Village) for startup folks to find each other while they are in town for the conference. On Friday, March 9, Startup Austin (part of the national Startup America partnership) is officially launching at SXSW Interactive. Finally, Eric Ries and 500 Startups are back again this year, delivering a day-long Lean Startup Track on Saturday!  You don't want to miss this.

You also won't want to miss the ATX Startup Crawl on Thursday, March 8. After arriving in Austin and picking up their badges, SXSW Interactive attendees can hop on a shuttle tour of a dozen simultaneous parties happening at startups downtown. Last year we had 20 startups and 2,000 attendees. This year promises to be bigger and better.

By the way, if you are interested in digging deeper into actionable startup metrics (so you know you are tracking the right things), Ash Maurya is offering Early Bird pricing ($99) for his workshop if you sign up today.

Did you know that Austin has more than 2,500 entrepreneurs on this list? Please help spread the word by forwarding this email to a friend or sending out a tweet about the Austin StartupDigest!

What's Going on in the Austin Startup Community

Austin on Rails (AoR)

Tuesday, 1/24 from 7:00-9:00pm (doors open at 6:30pm)

Buffalo Billiards – 201 East 6th Street – Upstairs

Talks this month about background processing and how to efficiently store high fidelity event histories. Great community.

Austin Web Python User Group (AWPUG)

Thursday, 1/26 from 7:00-9:00pm

Texas Tribune – 823 Congress Ave

Craig and Kenneth from Heroku are visiting Austin, talking PaaS and horizontal scaling. Sounds awesome!

Twilio Training Workshop

Friday, 1/27 from 1:00-5:00pm

HubAustin  – 4930 S. Congress Ave

Learn how to build SMS & Voice Apps with Twilio! For free!

Top Upcoming Startup Events

February 3 - Actionable Metrics Masterclass (Ash Maurya)

February 15 - Mongo Day Austin

February 18 - API Hackday

March 8 - ATX Startup Crawl

March 10 - The Lean Startup Track at SXSW (Eric Ries & 500 Startups) 

March 14 - Austin Startup Bus

March 30 - Austin Startup Weekend

 

 

Austin Startup Digest January 16, 2012

 

This is a copy of the Austin Startup Digest. Subscribe to get this in your Inbox every Monday morning. If you have news or events that the Austin startup community would want to hear about, please submit it here.

I was excited to announce this week that my startup OtherInbox has been acquired by a company from New York called Return Path. This is a great thing for my team, my investors, and for me. I hope it's a great thing for Austin too. I'm staying on as CEO of OIB and we are planning to double the size of our Austin office in 2012. 

This week I also met some incredible entrepreneurs at office hours. Tom Giesberg came in and showed me a tablet to help people communicate who are in a hospital bed and can't talk. Stacy Zoern of Community Cars told me about her inexpensive electric cars designed for use by someone in a wheel chair. Last week Stephen Straus showed me these magnets that had magical properties that I wouldn't have believed if I hadn't seen them with my own eyes.

This week is the first class of 1 Semester Startup at the University of Texas. We're looking for experienced entrepreneurs, engineers, marketers, lawyers, and other skills to be mentors for the students. If you're interested in volunteering 1 hour per week please reply to this email.

SXSW ramp up is in full swing. I'm planning on doing another Austin Startup Crawl, attending Startup America, lots of mentoring sessions, a co-founder meetup, organizing a panel about elevator pitches, and hanging with Startup Bus. I hope to see you there!

One of the most common requests I get is for help finding a co-founder. Don't miss the Co-founders Meetup this week. This is one of your best opportunities to meet other entrepreneurs to work with.

Did you attend the Web Developer Lunch or the PHP Meetup last week? If so, reply to this email and let me know how it went.

Did you know that Austin has more than 2,500 entrepreneurs on the list? Please help spread the word by sending out a tweet about the Austin StartupDigest today!

What's going on this week?

Javascript Meetup

When: Tuesday, 1/17 from 7:30-9:00pm

Where: Frog design – 101 West 6th Street – 2nd Floor

This month we have a special guest flying in from New York City – the CTO and co-founder of Nodejitsu, Paolo Fragemeni.  Paolo, a solid computer programmer and veteran hacker has written loads of node.js code including the a significant portion dedicated to the node.js framework, Flatiron. Node.js.  What is it?!!  How does it work?!! 

Twilio Training

When: Tuesday 1/17 1pm

Where: HubAustin 4930 S. Congress Ave  Ste 307 

The focus for this free workshop will be to get an overview of the basic features and functionality of the Twilio platform; send, receive, and respond SMS messages; place, receive, and respond to phone calls; and use Twilio Client to use your browser to place and receive phone calls. 

Drupal User Group

When: Wednesday, 1/18 at 7:00 PM

Where: Cospace, 911 W Anderson Lane #203

This month we'll be hearing from Michael Trevino, who will discuss the recent relaunch of the UT System websites (in Drupal of course).

Austin.rb

When: Tuesday 1/17 from 7:30-9:30

Where: Cospace, 911 W Anderson Lane #203

Matthew Swain give us an introduction to keeping our environment dependencies managed using Ruby with Chef. After the presentation we'll be pairing off to work through a brand newcode kata. Be sure to bring your laptop!

Co-Founders Wanted

When: Thursday 1/19 at 6:30pm

This meetup is back with its regular format: 10 speaking slots available (3 minutes each) for startups looking for co-founders or looking to hire developers/designers. Find a startup to join here!

CodeWorks Austin

When: Thursday 1/19 at 9am

Where: Norris Conference Center 2525 West Anderson Lane 

CodeWorks ’11 is a one day, single-track conference created specifically for PHP developers. Join local developers for a full day of learning and networking as php|architect continues the tradition of bringing the conference experience to you. No airport security lines, no bad hotel food and you get to sleep in your own bed.

Top Upcoming Events

1/23/2012 Apple Tech Talk

2/15/2012 Mongo Day Austin

3/10/2012 SXSW Interactive

3/14/2012 Austin Startup Bus

3/30/2012 Austin Startup Weekend 

 

9 Tips for Raising Startup Funds on @AngelList (via @Mashable)

AngelList is an online community that matches startups with investors to streamline the fundraising process.

I’ve personally raised $1 million from AngelList for my startup, and have helped dozens of other startups raise $3 million more. I’ve referred more than 20 startups to AngelList, vouched for a dozen other investors and am ranked as one of the top connectors on the site.

Try a similar strategy by adhering to the following steps...

Read the rest on Mashable

Prioritize shit people will pay for

I found a note on my desktop from a conversation I had with Jonathan Davis to help him figure out development priorities for his recruiting platform. It's pretty simple, but I think this framework applies to many startups. 

What should I build?

1. Shit people will pay for
2. Shit you create because you'll lose paying customers
3. Shit that people MIGHT pay for someday
4. You think it's cool

In practice, you hardly ever get to work on priorities 3 and 4 - that's just the way it goes. This priority framework is to help you say no to those distractions.

The car of my childhood dreams - Porsche 911 Carrera (993)

Ever since I was a little kid, the Porsche 911 has been my dream car. I remember the Porsche calendar I had on my wall in high school - I kept it on the month with the red 959. I'm pretty sure this is the exact picture that was on my wall.

I was in high school in the 90's and just as I was graduating they released the 993 model of the 911 which was produced primarily in 1994-1998. This model is generally recognized as the classic Porsche and the pinacle of the line. It was the last of the air-cooled engines, being replaced with a water-cooled engine in the 996 model that just didn't sound or act the same (the current 997 model sounds more like the 993, even though its still water-cooled). It's also generally accepted as the most beautiful Porsche model they have produced. This is the kind of car you'd expect James Bond to pull up in.

Ever since high school, I swore that the first car I bought would that Porsche 993. Technically it was - I bought a Jeep Wrangler right out of college but that's a Jeep, not a car, right? Then the next vehicle I bought was this beautiful 1996 Porsche 911 Carrera in Polar Silver with black leather interior. 

I spent a few months searching around online to find this car. I wanted to find a 993 with low miles that only had one or two owners and was meticulously cared for. I finally found one with 40,000 miles and a single previous owner that was at a car dealership in San Antonio. It was the same car I had dreamed of for a decade.

Polar Silver is an amazing color. It's a light silver with a bit of a blue tint. They don't make it anymore, instead switching to Artic Silver which is more of a white base. 

I loved this car and was very particular about who I let work on it. When I first bought the car I had it serviced by David Wostarek at Northwest Imports on Pond Springs Road. They handle lots of older Porsches and were really great to work with. Then I moved to West Lake and found David Moore at Moore Speed. He focuses on Porsche and Ferrari race cars and besides his expert attention I loved getting to walk through his shop and look at whatever amazing cars were in there at the time. I took it to Roger Beasely Porsche a few times as well, Tim and his team over there are always amazing to work with.

I remember driving the car home for the first time and just being amazed by its acceleration and handling. It's a magnicifent piece of German engineering that has been refined over the course of decades. It sounds great too... the 993's air-cooled flat-6 makes a low growl that is very distinctive.

Over the years I have owned 4 different Porsches and while they were all incredible, the 993 will always be my first love. I also owned a 1970 911 Targa, a 2006 911 4S Cabriolet, and a 2006 Cayenne Turbo S. It was really cool being able to compare the evolution of the 911 from 1970 to 1996 to 2006.

One of the coolest, easiest modifications you can make to a 993 is to rotate the tachometer 90 degrees counter-clockwise. This moves the redline from the far right to the top and just looks wicked cool. With a 911, you always want to keep the RPM's above 2,500 and generally drive in the 4,000-6,000 range so this arrangement makes more sense to me. You know without looking at the numbers that the limit is when the line is vertical at the 12 o'clock position.

One thing that's unusual about the 911 is that the engine is in the tail of the vehicle behind the rear wheels. The bonnet (trunk) of the 911 is located up front in the hood. This moves the center of gravity to the back and creates a unique driving dynamic. It puts a lot of weight on the rear-drive wheels which is good, and if you're an experienced driver you use the engine weight to "drift" around corners at high speed. You have to be extra careful though, because if you break into a turn it's very easy to go into a flat spin as the front stops and back keeps going. 

This happened to me once soon after I got the car. I was coming up to a light that was red and then it went green as I pulled up so I never came to a complete stop. There was a lot of sand on the road and as I went around the corner I sped up and then slowed down and combined with the sand it was the perfect condition to push me into a spin. I rotated 540 degrees (almost 2 full circles) before coming to a stop on the side of the road. I was very fortunate that I didn't run into anything and the car wasn't damaged. Now I'm always concious of my speed going into turns and try to make sure to break when the car is moving straight forward.

Once you get used to it, the rear engine weight is one of the factors that makes the Porsche so fun to drive.

I didn't take it to the track often, but I was able to get it down to Harris Hill Road a few times. It's a gentleman's track down in San Marcos that I just love. This track isn't about racing competitively - it's a place for people with great cars to take them out on the track and stretch their legs. The 911 was made for the track. It loves to be driven. In fact before deciding to sell it I was going to just keep it as a track car but that turned out to be unrealistic because I don't have time to go to the track these days.

Somehow I was able to request custom plates for the car that were simply "993". I loved passing other 911's just to show it off. It was the kind of thing that only made sense if you were really into Porsches. Almost a secret code - if someone made a comment about the license plate then I knew they "got it".

The 0-60 on this car is about 5 seconds. 15 years later its still one of the faster cars on the road.

I think the top speed I got it to was 145. I won't tell you where. But it handled it great and seemed very happy at that speed. 

One of the best drives I ever had with this car was a trip that my friend Rick Westervelt organized. He has a white 993 and our friend Michael Vivio has a red one. One Sunday morning we drove out towards Fredericksburg and just tore up the countryside. It was a total blast.

I'm sad to say that I'm going to sell the car I swore I never would sell. It's the last Porsche I have left, but I'm sure it won't be the last one that I own. Right now with little kids I just don't get the opportunity to drive it enough and need the garage space. If you know anyone who would be interested in an amazing car that was truly loved and cared for meticulously, please send them to http://bit.ly/josh911

How I got started in email

I'm often asked, "Why email?" The focus of my career has been email and I'm now the CEO of my third email company. 

I could tell you why email is great and why it's here to stay.

I could tell you how email drives most of the traffic to social.

I could tell you why there is still so much opportunity for innovation.

The truth is that I'm an email geek because I got into the beta program.

Back in 1995 I was a freshman in college at Carnegie Mellon majoring in Computer Science. It was an incredible time. I felt like the commercial Internet was being created all around me (funny, that feeling has not diminished over the past 15 years).

I had a PowerMac 7100 with 16 MB of RAM, a 250 GB hard drive, and a 17" monitor. It was a badass machine. There was ethernet in my dorm room connected to a high speed network - unlike anything I had ever experienced at home on dialup.

I had no software.

Open source was still immature. Linux and Apache were powerful but there wasn't that much else that was easy to use or reliable. This was before the days of free, web-based services. I was a college kid with no cash and so that meant I had no software to run on my badass hardware.

Beta programs were the answer. I couldn't afford to buy any software, but if I could get into the beta program I could get access to it for free.

This was back before the days of free betas. Netscape's web browser was the first big free beta program. The idea of an "open beta" was novel. Most beta programs were closed, invitation-only affairs. You filled out an application form and signed an intimidating NDA. Only a certain number of participants were accepted.

I applied for every beta program I could get my hands on.

In 1995 the web was hot. The coolest program was a web server, and the coolest web server was WebSTAR on the Mac (formerly known as MacHTTPD by Chuck Shotton). It was made by a cool little company in Berkeley called StarNine Technologies. I applied for the WebSTAR beta program so I could start writing CGI scripts.

Right next to the signup form for the WebSTAR beta program was another form for the ListSTAR beta program. I didn't really know what it was, but it sounded similar and asked the same questions so I filled out that form as well.

I was rejected for the WebSTAR beta program. After all, everyone wanted to beta test WebSTAR and what did I, some measly college kid, have to offer?

But I was accepted for the ListSTAR beta program. Hurray! Now I had to figure out what it was and how I could use it. It turns out that it was a graphical flowchart user interface to a Majordomo or Listserv style mailing list functionality.

I started playing around with it and participating in their own online mailing list forum. I answered questions for other users. Soon I was hired by StarNine as an intern and then I started doing consulting and customization work on the side. I would find new consulting clients by answering people's questions on the forums.

One day, one of my consulting clients asked me if I would run their mailing list on my server for a monthly fee, instead of paying me as a consultant to fix his server when it broke or needed changes. That was the beginning of my SaaS email hosting business, SKYLIST. At the beginning it was mostly forums and groups and then around 2002 in started transitioning to email marketing.

Fast forward 10 years and my license plate says EMAIL.

You will get the behaviors you tolerate

 

One of my favorite Capital Factory mentors is Mike Trafton from Blue Fish Development. He's thought a lot about company culture and has some great stories to share.

A Capital Factory founder asked how to motivate their team to stay up to date with inputting customer interview data. I liked his response and wanted to share it with you.

You will get the behaviors you tolerate. 

Every company is different, and each company has its own culture - its own set of rules, whether written or unwritten. As a leader, it's your job to define what these rules are for your company. Most people call them the company's core values. In this case, I would say the core value in question is accountability - doing what you say you are going to do.

As a manager, it's your job to make sure your employees are aligned to the company values. There are ways to do this during the interview process, but once they are hired, it comes down to reinforcement. You get the behaviors you tolerate. If you want people to do what they say they are going to do, you can't tolerate it when they don't. You need to have a short conversation as soon as you learn they haven't done what they agreed to.

Here are the words you can use:

"I fear we may have a problem, and I need to talk to you about it. I see that you didn't get your interview notes submitted. These notes are important to me, and they are necessary for the company, and I need you to do them on time. But I'm more concerned about a larger issue. I'm counting on you to do what you say you are going to. The company is moving too fast for me to follow up behind you and make sure you are doing what we agreed to. I need to be able to count on you, and if I can't, then it's not going to work out. " 

Mike Trafton

 

How do you hold your team members accountable? Leave a comment and share the tricks that work for you.

My new business card... is an email

I recently ran out of business cards and decided not to purchase any more. 

I'm sick of carrying cards around. I'm sick of running out. I'm sick of getting home from a conference with a stack of cards that I have to sort through and somehow digitize.

I actually had a pretty good system. I would take notes on the card about when and where I met someone. I'd also add any specific followup items. I would send all of my business cards to Shoeboxed and they scan them for me. After that I throw them into a 1 gallon plastic bag that currently holds every card I've ever received (just barely).

I wanted something better. Something that didn't cost money or create clutter. And of course I'm anti-paper so anything that eliminates the paper trail is a bonus for me.

I considered the various digital business card apps. But in the end, I just settled on a simple email template that I set up in Tout (one of my recent investments). 

Why email? Everyone has it. It's the default way I want to communicate with someone that I meet. Nobody has to install anything and there is nothing to explain. I just tap the Tout app on my phone, select the template, and hand them the phone to ask them to type in their email address. If I'm at my computer it is a similar process, but I can also customize the email before I send it.

Tout sends them a template email with my background and contact info. It even has a vcard attached so they can easily add me to their address book.

Here is my default template.

Howdy {first_name},

It was a pleasure meeting you at {x}. I am the Founder of OtherInbox – the cure for email overload. With almost a million signups we are one of the most successful email applications. Without you doing anything differently, our Automatic Organizer will scan your email and file shopping and social networking emails into folders so they don't clutter up your Inbox. We also make it easy to stop unwanted emails by simply placing them in the Unsubscribe folder.
http://www.otherinbox.com

I've been involved with email my entire career. I founded SKYLIST in 1996 in his college dormitory as a one of the first email marketing companies. In 2004, I created UnsubCentral to help email marketing companies comply with regulatory requirements. With customers like Disney, Microsoft and Nascar, both companies became top ranked solutions in their respective categories before they were purchased by Datran Media. I studied Computer Science at Carnegie Mellon University and live in Austin, TX with my wife Amy and two children (number three due in August).

I also am an active angel investor and advisor to early stage startups. I brought together 20 others like me to form the Capital Factory early stage accelerator in Austin to mentor and invest in tech startups. Each summer we select 5 companies and work with them to accelerate their business towards profitability or their first round of funding.
http://www.capitalfactory.com 

This fall, I'll be joining with Bob Metcalfe and John Butler to teach a startup class at the University of Texas at Austin. We will be selecting teams of entrepreneurial undergraduate students from all departments to help them start their own company while still in school. 
http://www.1semesterstartup.com 

I've attached a vCard file with all of my contact information. You should be able to double click it to import into your address book.

Here is the most important stuff:
Email: josh@xxxxxx.com
Phone: (512) XXX-XXXX
Twitter: joshuabaer

I look forward to getting to know you better. Please reply with your phone number and any other information you would like to provide.

~Josh

What would you include in your intro email? 

What other digital business card solutions do you use? 

Let me know in the comments!

What would it take to make Austin 'the next Silicon Valley'?

I'd like to share my viewpoint on the recent Statesman article, What would it take to make Austin 'the next Silicon Valley'?

While I don't think that Austin wants to become Silicon Valley any more than Texas wants to become California, I think that we can learn from Silicon Valley to continue attracting great innovators and entrepreneurs to Austin.

Steve Blank commented that one of the most important aspects of Silicon Valley that differentiates it from the rest of the world is that failure is a badge of experience, not a badge of shame. Austin needs to be a safe environment for entrepreneurs to try out new ideas, to experiment, and to fail.  

Part of that is attitude and culture, but a big part is access to early stage capital and collaborative working spaces where entrepreneurs can meet each other, incubate ideas and inspire each other. We are very fortunate to have spaces such as Conjunctured, Cospace and Tech Ranch and communities like Bootstrap Austin. Still, we would benefit from a larger, central community meeting space and coworking facility. We need the Startup District that John Erik Metcalfe and Ceasar Torres started promoting a few years ago.

Capital Factory is one piece of the puzzle. We provide a small amount of capital and lots of mentorship to 5 select startups each year. More than half of the 15 companies in our portfolio are from outside of Austin and come here to participate in our summer program. Half of those stayed here after the program ended because they find the environment so friendly to entrepreneurs. We need to expand the number of companies so that we can have a bigger impact.

One obvious way reach more entrepreneurs is through the University of Texas. Inspired by the success of Capital Factory and the encouragement of Dr. Bruce Porter in the UT Computer Science department, I'll be joining with John Butler and Bob Metcalfe to teach and undergraduate entrepreneurship class at UT called 1 Semester Startup. I hope that through this class we can identify promising young entrepreneurs at UT, accelerate them down the path of success and keep them here in Austin.

Communities like Angel List are helping Austin by connecting our entrepreneurs with early stage investors from Silicon Valley and around the world. There are more than 100 Austin startups listed and more than 300 investors "watching" the Austin market (most of them NOT from Austin).

First time entrepreneurs need inspiration from successful entrepreneurs. They need role models to look up to and get advice from. Bazaarvoice, HomeAway, Spiceworks and Rackspace are all helping to fill this void. Let's not forget the massive Trilogy Alumni network that are driving many of the top companies in Austin right now. We need more visible leaders in the entrepreneurship community like Andrew Busey, Brett Hurt, Jack McDonald, Kip McClanahan, Bryan Menell, Bob Metcalfe and John Price.

I actually think most of the right things are happening. I've been here for more than 10 years and Austin has only become more attractive to startups and entrepreneurs. We are one of the top cities in the world attracting young smart entrepreneurs, college grads, and young professionals.

We are attracting startups like Gowalla and others that are moving to Austin from elsewhere in Texas and around the country. Austin is a great place to launch a startup because it is a market full of early adopters. I am contacted at least once a month by a startup who is looking for advice about moving here.

What do we need to do? We need to keep Austin attractive to young, smart people and innovative startups. We need to continue growing the early stage venture community and our connections to outside capital. We need to identify our Startup District (East side?) and achieve critical mass. We need to embrace failure. We need to keep being Austin. 

What do you think we should be doing to promote entrepreneurship and startups in Austin? Leave a comment below.

Austinpreneur's Guide to SXSW 2011

If you're an entrepreneur coming to Austin for SXSW 2011, here are the events you won't want to miss!

Thursday

• 4:00pm-10:00pm ATX Startup Crawl
• 6:00pm-8:00pm Austin Tech Happy Hour

Friday

• 5:00pm-7:00pm Entrepreneur's Lounge at Fogo (invite only)
• 5:00pm Bootstrap Meetup 
• 6:00pm-10:00pm Ignite SXSW
• 6:00pm-9:00pm Mixergy SXSW Live Bonanza

Saturday

• Lean Startup SXSW
• 11:00am Jason Cohen - A Bootstrapped Geek Sifts Through the Bullshit
• 1:30pm Austin Ventures Party (invite only)
• 3:30pm Joshua Baer - 5 Secrets to a Killer Elevator Pitch
• 5:00pm-7:00pm Entrepreneur's Lounge at Fogo (invite only)
• 6:00pm-9:00pm Austin on Rails Party
• 6:00pm-9:00pm Wordpress Party
• 9:00pm 500 Startups Afterparty (invite only)

Sunday

• 10:00am Capital Factory Office Hours
• 12:00pm Inbox Love Lunch (invite only)
• 5:00pm-7:00pm Entrepreneur's Lounge at Fogo (invite only)
• 5:30pm Data Cluster Party
• 8:00pm Capital Factory Dinner (invite only)
• 8:00pm-11:00pm Tech Cocktail

Monday

• 10:30am Accelerator
• 5:00pm-6:00pm Trilogy Alumni Happy Hour
• 5:00pm-7:00pm Entrepreneur's Lounge at Fogo (invite only)
• 6:30pm-8:30pm StartupBus Finals
• 9:00pm Startup Digest / Kauffman Foundation Party (invite only)

Tuesday

• 10:30am Accelerator Finals
• 3:00pm IronGeek Competition
• 5:00pm-7:00pm Entrepreneur's Lounge at Fogo (invite only)

Everything starts with the ATX Startup Crawl on Thursday the 10th at 4:00pm. 

After you check-in on Thursday hop on the Smiley Shuttle and catch a ride to 20 Austin tech startups within a 1 mile radius. Visit Capital Thought, Gowalla, Infochimps, OtherInbox, PeopleAdmin, Tabbed Out and a dozen other startups. Each one will have beer, games, music and more waiting for you. Most startups are clustered so that you can visit 2 or 3 at each stop. More than 1,000 people have RSVP'd so we know this is going to be a blast!

Friday night lets Ignite SXSW!

In this Ignite we’ll ask 16 experts in their fields to look ahead 10 years and help us understand how our every day lives will be affected by advances in technology and society. This will be an official SXSW event promoted in the booklet and directory. Anyone with a SXSW badge can attend without a ticket but we still would appreciate if you would register so we can plan better. There are a limited number of tickets for sale to friends of Ignite who will not have SXSW badges. We’re psyched that Dorkbot will be joining us for the event and setting up around the perimeter of the Music Hall.  

Saturday you don't want to miss Jason Cohen's talk Saturday at 11:00am in Salon AB:

A Bootstrapped Geek Sifts Through the Bullshit

After starting four companies, I've found that some widely accepted advice lead me to failure while trusting my (inexperienced) gut lead to success. So many business philosophies profess they're the One True Way, yet different business face different hurdles. With stories, six actionable lessons, and a workshopping of 37signals' philosophy, you'll learn when to follow the rules and when to go your own way.

Saturday at 3:30pm please attend my interactive talk in Salon AB:

5 Secrets to a Killer Elevator Pitch

Everyone in a startup should be able to give the "elevator pitch", even the programmers! Having the right pitch can help you land a big customer, catch an investor's interest, or just explain what you do to your mom. Learn about the 5 secrets to a killer pitch from an expert speaker who has pitched at TechCrunch50, SXSW Accelerator, Ignite, DEMO, and many other competitions. This is not for beginners! These investors have seen thousands of pitches and invested in hundreds of companies. Come to this presentation after you’ve already given your pitch a 100 times and are really ready to take it to the next level. First I’ll spend 20 minutes talking about the 5 secrets and show some killer examples. Then the panel of investors will take five volunteers from the audience and work with them to improve their 2 minute pitch. Come prepared! And just to eat my own dog food, here is a 5 minute elevator pitch for this presentation!

I need 5 volunteers to come up on stage and pitch their company, and then receive some feedback from myself and other mentors. Please email me or reach out on Twitter if you're interested in being one of the companies.

Lean Startup SXSW

If you're not planting at the Convention Center for the day, it might be worth the trip up to the AT&T Executive Center at UT for Lean Startup SXSW. Many of my favorite speakers will be on stage including Eric Ries, Dave McClure, Hiten Shah, Ash Maurya, Jason Cohen and Steve Blank. I'm sure this will be an incredible event and full of quality people.

Capital Factory

Applications are being accepted for our third summer program with Capital Factory 2011! Partner with 20 successful entrepreneurs to be your mentors, plus get $20,000 in cash, free office space, legal services and more. Now is the time to meet with mentors, ask questions, and get feedback. Sunday morning we're holding Capital Factory Office Hours from 10am-noon at the Convention Center and its open to anyone who wants to stop by. Location will be announced on Twitter so follow @CapitalFactory.

Inbox Love

I'll be making sweet Inbox Love for lunch at a special email lunch I'm putting together with Jared Goralnick and 500 Startups. Inbox Love is focused on email as a platform - it's not about email marketing, spam or security. I'm looking forward to seeing many of the connections I met at the Inbox Love conference in Mountain View last month in a casual setting. Thanks to Port 25 for sponsoring! If you would like to attend please email me or reach out on Twitter for more info.

StartupBus Finals

FIVE buses full of 40 strangers are converging on Austin from around the country. On the way here, they are forming teams and building startups in a StartupWeekend fashion. They will arrive on Thursday for the ATX Startup Crawl and then have the weekend to try and get some initial traction with their product. On Monday evening, we'll be having finals to choose the best companies from all of the buses. You don't want to miss this event.

IronGeek

On Tuesday come see me compete in the DAS IronGeek competition. I'll be typing Dvorak, assembling computers, and other feats of geekiness. Come cheer me on, I need your support!

Entrepreneur's Lounge

Hanging out at Fogo next to the convention center is now a tradition for SXSW entrepreneurs. Also known as the "Meat Up" because its held at a Brazilian restaurant. Go up on the rooftop deck, enjoy some drinks and snacks, and meet up with other entrepreneurs and investors.

What other entrepreneur events are YOU looking forward to? Please leave a comment.

Motivate angel investors to close by the end of the year with the Small Business Jobs Act

If you are raising money for your startup, here is some leverage you may be able to use to close your deal. The Small Business Jobs Act says that you can avoid capital gains tax on money invested in startups before the end of the year.

Here is the fine print:

• must not be a corporate investor
• to be qualified as a small business the company must be a C corp with less than $50 million in assets.
• stock must be purchase between Feb 17, 2009 and January 1, 2011 
• investor must hold the stock for at least five years

One key piece of leverage for an entrepreneur raising money is to have a "significant event" that forces investors to shit or get off the pot. This might be just the piece of encouragement you need.

You can download a summary of the act here.

What other ways have you found helpful in motivating angel investors to close?

Thanks to Mason Arnold for reminding me that the deadline was coming up.

The OtherInbox Pivot - Defender to Organizer

 

Recently OtherInbox announced Defender 2.0, the next evolution of the product we launched at TechCrunch 50 in September, 2008. The new version is much better than the original, but it is also very different. Getting there involved killing some sacred cows and making a company "pivot" from one focus to another.

It was a difficult decision and probably took longer that it should have. I hope that by telling this story our customers can better understand the choices that were made and other entrepreneurs can make better decisions for their own companies.

The Idea

It all started with a"big idea". The cure for email overload. We were going to make email work better. Empower consumers. Make marketing efficient. Expose spammers.

The concept was based on a technique that I had developed in college and that my co-founder Mike Subelsky was using as well. We were both geeks and the idea was geeky, but we were going to make it so easy that anyone could do it.

At the time we called the product OtherInbox but now we refer to the initial product as Defender. At signup you receive a subdomain based off your username - username.oib.com. You "defend" your email by giving each website a different email address at that subdomain. Amazon gets amazon@username.oib.com and Facebook gets facebook@username.oib.com. You can just make up email addresses on the the fly without setting them up beforehand. We provided our own web page for checking email that displayed a separate folder for each email address you created. It is faster to process your email when it is pre-sorted. If anyone sells your email address to spammers it is immediately obvious because it keeps going to the same folder and then can easily be blocked with a single click.

It was very clever. On the occasion that you block a sender it feels quite rewarding and powerful. Giving out an OtherInbox email address to a store clerk often produces interesting responses that make you feel "in the know".

We worked on it in stealth for about a year before launching it into beta at TechCrunch50 in 2008. Thousands of people signed up from the initial press, but the product wasn't viral and we were not spending any money on advertising so the growth was slow. We were positioned against Gmail as the alternative solution and many people would respond that, "I don't have a spam problem" or "I can't believe it will be better than Gmail".

Most of the users who took the time to sign up and give it a try were very happy. They felt empowered and enlightened. They raved about it to their friends, wrote blog posts, and talked about it on Twitter. There just weren't enough of them! We weren't seeing the kind of adoption that we had hoped for. Certainly not enough to make our business model work.

As Josh Kopelman pointed out to me at the time, there were a lot of "speed bumps" in the way of becoming a Defender user. You had to:

• start over with a new email address
• learn a new way to give out your email address
• check your email in a new place
• invest hours of time in switching to the new system
• wait weeks before really seeing the benefit of your effort
• targeted at power users

As much as it was cool to block senders who spammed you, it didn't really happen very often for most users. In fact, very few users had ever clicked the block button. The idea of having a folder for each sender worked well with dozens of senders but broke down over time as you accumulated hundreds or even thousands of senders.

We racked our brains about how to make it easier.

We came up with a sophisticated "import wizard" to get you started. It would connect to your existing email account and suck in all of the email that you SHOULD have given out an OtherInbox Defender address for (the stuff that's not from real people) and organize it into folders. Then we were going to write a screen-scraping system to change your password for you automatically at all of the different sites. Besides being a maintenance nightmare, this would have required you entering your password for every website you have a subscription at into one of our forms - something that I'm sure not many people would feel comfortable doing.

We build the first part of the import wizard that sucked in your email messages from Gmail and right about that time we started talking to Yahoo! about how we could adapt Defender for Yahoo! Mail. Hence our second product, Organizer, was born.

The Pivot

Where Defender worked off the address it was delivered TO, Organizer worked off the address it was sent FROM - that way users don't have to do anything different. Yahoo! doesn't support nested folders so the idea of creating a folder for each sender was impractical and we wanted to try and keep the user experience inside of Yahoo! Mail as much as possible. To simplify things, we decided to categorize each sender and only create a folder for each category. This way each user would have 5-10 OIB folders instead of 50-100 or more.

The Organizer product really took off at Yahoo! Mail. In less than a year we signed up more than 500,000 Yahoo users with very high retention rates. Something was working! We created a Gmail version of the Organizer and it fit in great with the IMAP/OAuth/OpenID model that evolved with the Google Apps Marketplace.

The positioning of Organizer resonates with a wide range of users. It's not for spam, it's for emails you asked for such as Amazon receipts and Facebook notifications. It doesn't replace your existing email account, it makes it even better.

Everywhere Defender had a problem, Organizer addressed it:

• you keep using the same email address
• you don't change the way you give out email addresses
• you keep checking email the same way
• it only takes 60 seconds to sign up
• there is no training or setup required
• your instant gratification is that your inbox immediately gets smaller
• targeted at the everyday email user

At first, we thought of Organizer as an inferior version of Defender. Soon we realized that Organizer was actually better than Defender for for most people. We found that most people don't have spam problem - the spam filter at Gmail and Yahoo is good enough. Most people do have an email overload problem - they get too much email they actually check the box and ask for. Most people do not want to invest time in improving their email or learning to do something different. Organizer helps anyone who gets too much email without them having to do anything different - the magic combination!

We had to pivot and focus our attention on Organizer, even though Defender was our first love.

It took too long

Nobody wanted to hear this. I certainly didn't want to admit that the "great idea" we started with was not going to be successful. We probably should have began this process six months earlier than we did but it was hard to swallow.

That put us in a situation where we had more than 500,000 users signed up for Organizer and less than 20,000 for Defender. Only about 1000 were paying $20/year.  Yet Defender was about half of our code base and 80% of our customer support issues. It was hard to put many resources into improving Defender because 95% of our users were using Organizer. Yet everyone on the team believes in Defender and uses it ourselves. It hurt the morale of the entire team to see a product stagnate from lack of attention. We needed a way to combine our resources so that all of the effort we put into the product can be benefit both Defender and Organizer users and so that we could deliver a more reliable service.

There was a lot of duplicate code:

• web UI
• imap
• mail receiving
• rss
• message display

None of these items are competitive advantages for us. We're never going to make a better, more reliable IMAP server than Gmail and it wouldn't add much value if we did. If we could find a way to use Gmail or other email services for these common tasks and add our value on the Organizer and other unique services it would be a big win for everyone.

We debated it and debated it. Emotions were high. Making big changes to Defender felt like quitting or admitting defeat. We didn't want to let down our first users, the early adopters who believed in us from the beginning. We hated seeing Defender stagnate from lack of resources and wanted to give them the new features we had developed in Organizer.

Which leads us to Defender 2.0. We came up with a way that I believe gets the best of both worlds. You can still give out multiple email addresses and block certain senders if needed. But you also get the benefits of great search and other features from Gmail. Defender 2.0 is designed to work with Organizer, so that users also receive all of features of that product as well.

Defender 2.0 on Gmail brings:

• search
• a single OIB label to view all mail at once
• custom filters
• send message attachments
• view all message attachments
• modify forwarded messages
• more reliable IMAP
• more reliable RSS
• and much more

I've been using it myself for six months and would never go back. I still give out a different email address to every website that I register with. I love being able to use Gmail search and to have OtherInbox as an additional email account on my iPhone. It is faster and more reliable than before.

There were some sacrifices though. I really like the sender view of the original Defender and Gmails filtering options aren't as robust as I would like. If I want to send email from amazon@yourname.oib.com extra work is required to verify that email address.

Some of our most loyal users got really pissed off! They felt let down. Both free users and paid users alike complained that they were going to miss aspects of Defender 1.0 or that copying their emails over IMAP was tedious and hard. This was very hard on our team as well. We wanted every user to see this is as an improvement. We wanted everyone to be happy. We will refund the payments of paid users who aren't 100% satisfied with Defender 2.0 but getting a refund isn't going to make anyone feel better about it.

Lessons Learned

It's hard to admit that something isn't working. It usually takes too long. But when you finally do it, a great weight is lifted.

When have you admitted that it wasn't working? Please share your examples in the comments. 

 

Breakthrough Austin / RISE Mentoring for 9th Graders

This weekend I was excited to participate as a mentor for 9th grade students in Breakthrough Austin. The whole thing was organized in partnership with RISE Austin. The students came up with business ideas and we helped them to think it through and come up with a pitch. Ruben Cantu was there along with 10 other mentors. At previous sessions, Bjorn Billhardt and Marc Yagjian also mentored.

One of the students named Ben spoke to the group about his experience creating, promoting, and selling his own hip-hop music. He played some of his music too! Ben exemplified many of the traits I look for in an entrepreneur that I would invest in:

• passion about the problem he's solving
• resourcefulness in bootstrapping the early stages
• innovative ideas

Mentors were paired with a group of 4-5 students. The students had started on the business idea at a previous session that I did not attend and were now finishing up the plan and working on their pitch.

My group was planning a company to create customized bathrooms with televisions and interned in the shower, colored lighting in the shower head, music, and fragrances. They came up with a plan to partner with contractors and building supply companies to reach their customers and listed out all of the different expenses they would have.

I was very disappointed that I had to leave early and couldn't see all of the final pitches. One that I did get to see was extremely well done, with one person playing a guitar and 2 others role-playing a mini commercial for the product.

Breakthrough Austin is an incredible program started by my neighbor Jessica D'Arcy. It has all of the characteristics of a philanthropy that I like to support:

• helps kids
• makes a measurable impact
• extremely cash efficient
• encourages entrepreneurship

Breakthrough works with students who don't have any family members that have graduated from college, starting in 6th grade and standing by their side until they receive their college diploma. The've been at it for long enough that the results are starting to come in - and they are very impressive.

I'm always blown away by the Breakthrough students that I meet. They are confident and full of energy. They are warm and easy to connect with. There are a lot of smiles.

After attending my first Breakthrough event I knew I had to get involved and since then am proud to support them both financially and with my time. Please consider getting involved!

Austin Startup Digest Event Submission

I recently started curating the Austin Startup Digest, a weekly email list of the upcoming startup events in town. I assemble everything I can find, but I need your help making sure that its got all of the best events listed.

For a short link to this form, use http://bit.ly/austinstartupdigest

The penny gap between founders

For a founder, it's common to start by splitting things 50/50 (or 33/33/33, depending on the number of founders). This makes sense if two people think up an idea together, are both committing to it full time, neither one is taking a salary, and they both can contribute in a significant way to the business.

There are a lot of reasons why you might not split it 50/50. 

• If one founder is much more seasoned than the other founder. ie. If I've sold 5 companies and you're right out of college, you should expect less than 5% of the company even if we're both founders.
• If one person is taking a small salary and the other isn't
• If one person is putting in cash and the other isn't (it's usually better to handle that separately as an investment or convertible note)
• If one person has been working on the company for a year or two already and the other is just starting
• Many more - every situation is different

In the end, the actual number you come up with is fairly arbitrary. It's whatever you can agree to. Some people just go 50/50 and others come up with a justification for some other number. 

Kind of like Josh Kopelman's "penny gap", there is a huge difference between 50/50 and one partner with 50.1% and the other with 49.9%. One clearly says, "We're partners" and the other clearly says "I'm in charge." Actual control is probably not directly tied to the way the founders split the stock, so its more emotional than practical. But that doesn't make it any less significant. The decision you make here will set the tone for your entire relationship.

How I use iPhoto to publish to Facebook

I have a pretty good routine down now for uploading and sharing my photos and videos on my Mac and in the cloud. Good because I'm able to do it frequently (a few times a week) and don't spend too much time on it (usually about 15 minutes). This system is actually based on a similar method for managing music songs and playlists that I use for iTunes.

I manage them in iPhoto, edit them in iMovie, and share them online via Facebook, Flickr and YouTube and also through devices such as my iPhone, screensavers and digital picture frames. I'm able to upload a lot of content with minimal time.

Here is what I do after returning from a trip or event where I took pictures and video.

First, I organize the photos:

1. Connect USB cable to camera, videocamera, and iPhone. iPhoto automatically launches and goes directly to the Import screen.
2. Click Import in iPhoto to copy photos from camera to computer
3. Hygiene - delete bad photos and duplicate photos in iPhoto
4. Tagging - Add tags to photos in iPhoto
5. Ratings - Rate all photos 3 stars in iPhoto
6. Ratings - Upgrade individual photos to 4 or 5 stars in iPhoto
7. Events - Break into Events if needed and name events in iPhoto
8. Smart Albums - Update MobileMe galleries by dragging and dropping new photos from Smart Albums in iPhoto

Next, I publish them to various physical devices and online:

1. Screensaver on my computer
2. iPhone Photo Albums
3. Digital Picture Frames
4. Facebook Photos - Publish new photos to Facebook from iPhoto, then update permissions from Facebook website
5. Flickr Photos - Publish new photos to Flickr if appropriate
6. iMovie Editing - Edit videos in iMovie if necessary (usually not)
7. Facebook Video - Drag videos to the desktop and then upload individually to Facebook and YouTube

Usually this entire process takes about 15 minutes. If its after a big trip with 1000 photos and a bunch of video then maybe an hour or two.

Do I have to use a Mac?

This is one of those places where the Mac really shines. No one has made it so simple to manage your photos, videos and music and the software is all completely free with every Mac. Everything is integrated and mostly automatic. You plug in the camera and it launches iPhoto and goes right to the Import screen. My screensaver automatically gets the latest pictures and so does my iPhone when it syncs. Everything is automatic. Everything is easy.

Tagging

I'm pretty religious about tagging my photos and videos. I have about 20 tags that I use to keep things straight. Most photos get 2 or 3 tags.

A few tags may eventually be replaced by iPhoto facial recognition - I've played with it a bunch but I haven't integrated it into my process yet. I also need to work geolocation tagging into this process.

The most common tags that I use now are:

• Family Members *
• Josh *
• Baer **
• Family **
• Friends **
• Business
• OtherInbox
• Capital Factory
• Ignite Austin
• Home 
• Holiday
• Travel
• Cars
• Dogs
• Documents (pictures of awards, certificates, etc.)

* could be replaced by facial recognition
** could be replaced by facial recognition if it had groups

I can use the same criteria to do one-off searches and I have found it to be very easy to find specific pictures I'm looking for. Usually I can just narrow it down to 2 or 3 tags and then scan chronologically to find it.

Ratings

iPhoto has a five star rating system. My default rating is 3 stars. After deleting bad photos that are out of focus and duplicate shots, I "select all" and set the ratings to 3 stars. Then I look through them for any that I want to upgrade to 4 stars or 5 stars.

• 5 stars - the very best pictures
• 4 stars - better than average, but not the very best
• 3 stars - default rating for pictures that are worth keeping
• 2 stars - below average, but kept for completeness (usually pictures from an event)
• 1 star - never show in albums, probably some special case, not usually normal pictures

By rating every photo, I can create Smart Albums (below) that contain my "best" pictures from the past few months. Or I can combine with Tags to search for the "best pictures of Cars".

 

 
 

Smart Albums

Smart Albums are like "saved searches." I combine Tagging and Ratings to create Smart Albums that update their content automatically. I then connect these Smart Albums to screensavers, my iPhone, and the albums that I publish to Facebook.

My most frequently used Smart Albums are:

• Kids Best - tagged Kids and rated 5 stars
• Kids Recent - taken in the past 3 months, tagged Kids and rated 3, 4 or 5 stars
• 3 Months Best - taken in the past 3 months and rated 4 or 5 stars
• 3 Months Recent - taken in the past 3 months and rated 3, 4 or 5 stars
• Family Best - tagged Family and rated 4 or 5 stars
• Travel Best - tagged Travel and rated 5 stars
• Amy & Josh - tagged Amy and Josh and rated 5 stars

How do I decide how many stars? Mostly be trial an error. I start with 4 and 5 stars and if that is too many then I just go with 5 stars. If its not enough then I go to 3, 4 and 5 stars.

 

 

iMovie Editing

iMovie is a simple video editing application that comes pre-installed on most Macs. It's really easy to make professional looking videos with it. You can easily cut and paste clips together, overlay slides from a presentation, add titles and effects, and more.

It is integrated with iPhoto - so as long as I upload my photos and movies into iPhoto (which is what happens by default when I plug a camera into my Mac) then iMovie can automatically see all of those media assets and I can drag and drop them into movies I'm editing.

Facebook

For photos, I usually let iPhoto organize them into Events and end up wanting to publish Events as Albums on Facebook. After all of the hygiene, tagging, and rating, I'm usually left with exactly the group of photos I might want to share. So I just name the Event the same name I would want the Album to be named in Facebook and then click the Facebook icon in the bottom right of the iPhoto window.

 

 

If you want to share your photos with Everyone or with Just Friends, its easy. You just click go and you're done. I think that somehow it even matches up the facial recognition and will automatically tag photos with your friends.

If you want to share the album privately on Facebook with only certain people, it gets a little tricky. iPhoto only gives you the option to share your album with Everyone, Friends of Friends, or Just Friends. Most of the photos that I share are only shared with certain Facebook Friend Lists and not with Everyone. So I have to publish from iPhoto to Just Friends and then immediately go to the web page and reset the privacy controls from the web after the first photo is uploaded. Even still, I've had a few times where some friends on Facebook have seen pictures (I know because they commented on them) that they weren't supposed to see (fortunately nothing embarrassing, just cute family pictures).

 

 

This only works for uploading photos to your own personal account. Once they are in your account, you can easily post them to a Facebook event. However, if you want to post pictures to a Facebook Page for your company, you need to export the photos to a folder and then use the Facebook photo upload process from the web page.

For videos, it's similar to Facebook pages. You have to upload the video files directly using the Facebook web page. I usually end up dragging and dropping the video from iPhoto onto the desktop so that its easy to find when I'm uploading it to Facebook.

Flickr

I don't really publish many photos to Flickr but it works with iPhoto a lot like Facebook.

YouTube

Publishing movies isn't quite as simple with YouTube. The maximum time is 10 minutes, so long movies require extra editing to chop them up into 10 minute chunks and upload them each separately. This is a big pain in the ass and is making me seriously consider switching the bulk of my video to Vimeo because it has fewer limitations.

iPhone

My iPhone automatically syncs the Smart Albums to my iPhone, so it always has the best and most recent pictures on it. You configure that from within iTunes.

Screensavers

You can choose a Smart Album as a screensaver on a Mac, so I usually have the "3 Months Best" album with the Ken Burns effect on my screen. Its counter-intuitive to me at first, but I find that I prefer seeing the most recent pictures all the time, not the best old ones over and over.

Just go to the Screen Saver in the System Preferences and your iPhoto Albums and Events will appear in the list. Sometimes it takes a minute for them to appear.

 

 

Digital Picture Frames

I have a Philips digital picture frame on my desk. Unfortunately the only way to transfer pictures is by connecting it to a computer via USB or using SD memory cards. This means manually dragging and dropping images from iPhoto to the SD card and physically moving around the cards or cables every time you want to sync them. I'd really like to find a good digital picture frame that would stream the photos off of iPhoto (the problem with Facebook is that the pictures are so low quality).

What about you?

How do you manage your photos? Any tips on how to make my process smoother or more automated? Have you worked facial recognition and geo-location into your process? Please comment.

@TexasVentures gets executive director

Tonight I attended a Texas Ventures panel discussion talking about the future of the Texas entrepreneurial economy. It was well attended with more than 100 students and many other members of the entrepreneurial community. 

As usual, Austin Ventures was a headline sponsor. As the 800 lb gorilla in town, sometimes they get a bad rap. After all - it would make sense to assume that they have said "No" to a lot more people than they have said "Yes" to. But if you are trying to do something to support entrepreneurs, Austin, or world catastrophes like Haiti, Austin Ventures is the first one to step up and write a check to help out. They have supported projects I care about personally such as Ignite Austin, Capital Factory, and Austin City Limits.

Texas Ventures has gotten more juice in the past few months, bringing on a full time executive director Scott Kammerman. I'm not quite sure what to expect over the next year but I think its got to be a good thing that there is more focus and experience on their team. The University of Texas undergrads and computer science department seems strangely disconnected from the rest of the booming entrepreneurial scene in Austin. I hope Scott and Texas Ventures can help to bridge that gap.

Tom Serres from Piryx talked to the group about the value of mentorship. The panel focused on the future of the entrepreneurial economy in Texas. The panel was not surprisingly bullish. Here are some of my tweets during the panel:

• John Henry McDonald: risk will migrate to the areas with the least government regulation 
• Colin Pope: Austin strengths - entrepreneurial spirit, high quality of life, great labor pool, networking & support systems 
• Mike Dodd from Austin Ventures: it's a hard time to raise money, but good time to hire employees, get office space, use cloud 

You can see pictures from the event here.

Overall I was impressed with the event and hope this is just the start of much more to come from Texas Ventures in 2010. I hope we can find ways for Capital Factory to work more closely with Texas Ventures to bring in speakers, provide mentoring, and connect with student entrepreneurs who might apply for the Capital Factory summer program.

Listening but not paying attention

I've been presenting a talk titled, "Complainers into Champions" lately that gives examples of why many companies can benefit from using social media to engage with customers and talk about their problems in public. I'm usually pushing companies to engage more, listen more, respond more.

However, I recently had a personal experience where a company was listening to social media, but wasn't really paying attention - and it cost them. A tweet that I sent was taken out of context and a big company spent hundreds, if not thousands of dollars investigating it. Bryan Menell also talked about my experience on the Dachis Group Blog.

It all started with a phone call to my cell phone. This was strange to begin with, because I use Google Voice and I don't give out my cell phone number to anyone. I was immediately suspicious and figured that it was some kind of strange solicitation. Here my best recollection of the conversation:

Caller: "Is this Joshua Baer?"

Me: "Who's calling?"

Caller: "Enrico XXXX"

Me: "Who are you with?"

Caller: "Bose Security"

Me: "What's this regarding?"

Caller: "It's a personal matter."

Me: "You're going to have to give me more information than that."

Caller: "Is this Josh? It's regarding your business selling stolen Bose headphones."

Me: "This is Josh. I'm not sure what you're referring to. What makes you think that?"

Caller: "I'm looking at a Twitter message that says, 'joshuabaer @jotto I've actually got a side business moving hot bose headphones'. Did you send that?"

 

Me: "I didn't say that. It must be some kind of mistake... Oh wait a minute. I think this was part of a joke. I was selling some used headphones on Facebook and my friend said that as a joke. I think if you look at the tweets before and after that it will be pretty obvious that its a joke."

Me: "Look, I'm a big fan of your products and just got the latest version. I was selling two old pair."

Caller: "Do you know where you purchased the two headphones?"

Me: "Not really, it was a long time ago. I probably bought them directly from you, or maybe from Amazon. Come to think of it one of them was my wife's so I have no idea where she purchased it."

Caller: "Are you sure?"

Me: "No, I just told you I'm not really sure because it was a long time ago. I was really just selling my used ones on Facebook."

Caller: "I know, we bought a pair from you."

Me: (laughing) "Are you serious? That's hilarious! So you know it wasn't stolen then."

Caller: "Well we can't verify that. I need to know where you purchased them." 

Me: "Look, I wish you the best and must admit that I'm kind of impressed that you're paying attention to Twitter, but this is a waste of your time."

Caller: "Well we're going to continue to investigate this. Is this the best number to reach you at if I have further questions?"

Then we exchanged contact info.

So basically, Bose Security was watching Twitter and took this one tweet out of context. They spent at least $165 so far (that's how much they paid me when they bought the headphones) and have spent many hours researching it, tracking down my number, calling me, etc.

If they had looked at my Twitter page and just seen the tweets sent around the same time, I think they should have been able to tell it was a joke.

 

How much did this cost Bose? At least $165. Assuming that they spend a few hours researching it, we're probably looking at hundreds of dollars if not more! 

Here is the original Facebook post in the marketplace:

 

Mission: Austinpreneur on assignment in Puerto Rico

    

Earlier this month I was fortunate and flattered to be invited to keynote the Puerto Rico Venture Forum in San Juan, Puerto Rico. This was my first trip to Puerto Rico but it definitely won't be my last. My wife Amy came along for the trip and we got to spend a day exploring through the forts of Old San Juan. It was such an easy trip - no passport, everyone speaks English, and they use dollars for money. Gowalla was already there too - most of the places I visited were already listed and one of the old forts even has a custom stamp! On our next trip we want to explore the bio-illuminescent algae, caves, mountains, beaches.

 

I want to thank Grupo Guayacan and all of the great people we met - everyone was so welcoming! Special thanks to Francisco, Bob, Eva, Joanna, Paul many others. And of course thank you to Manuel Rosso for introducing me!

The Puerto Rico Venture Forum is the culmination of the EnterPRize competition - a business plan competition that on its face looks very similar to Capital Factory. They have a longer process that starts with a business plan competition and extends over the course of a year or more. There are five finalists each year and the top 3 receive $25k, $15k, and $10k in addition to other free services and mentorship.

I was very impressed with the Puerto Rico startup scene. The community is highly educated, with expertise in biotech, aerospace, manufacturing, and more. I met a dozen young entrepreneurs and many of the elders of the community as well. The energy and enthusiasm was infectious!

The five finalists that presented were:

• Adiestrate.com - Online Learning Classes
• Edunarium - Online Learning Store
• EMM - Simulations for Unmanned Aerial Vehicles
• NanoEssentials - Nanoparticle production
• Sonar Sending Technologies - Medical device for improving catheters

Unfortunately, none of the five really got my juices flowing. All of them had interesting ideas and viable businesses, they just weren't in my areas of expertise or interest. I wish there had been an email marketing company! Still i was impressed by what I saw and wish all of the companies the best in their entrepreneurial journey.

 

 

Angel Investor Panel moderated by Frank Peters

Frank Peters of the Tech Coast Angels led a fun and informative panel of angel investors with Mic Williams of the Boston Harbor Angels and Christian Meade from a Mexican angel investor group. Here are some of the best quotes from Twitter: 

"Don't tell me what the rate of return will be, tell me who your potential acquirers are" - Frank Peters

"Investors want NO risk, high return" - Mic Williams

"Investors want to give you money once you don't need the investment anymore." - Frank Peters

"New angel investors should 'just watch' for 6 months before investing. At the start, every deal looks good!" - Frank Peters

I definitely plan on checking out the Frank Peters Show podcast about startups and angel investing.

Corporate Venture Capital with Blake Modersitski

Next we heard Blake Modersitski speak about corporate venture capital. For a while he ran the venture capital group at Novell (reporting to Eric Schmidt, who is now CEO of Google) and now he's with UV Partners. 

Blake warned to "be careful about taking a high valuation early on [from a strategic investor who might be less valuation focused], it can make it harder to raise more money later." 

He also cautioned that "if you're taking venture capital from a company, cut your business deal first because it can be harder to do it after." 

 

From Bootstrapping to Venture Capital with Brian Halligan

My favorite talk of the day was probably Brian Halligan from Hubspot. He had great content but also a fun and engaging delivery. Many of his points resonated well with the Startup Lessons portion of my keynote that followed. 

Brian presented an interesting equation to illustrate just how hard it is to get funded by a VC. Most VC's require up to 8 meetings to a termsheet, and at each step of the way it just takes one "No" to eject you out of the process. He gave most people a 50/50 shot at each step, which leads to the following formula:

    F(VC) = 1/2 x 1/2 x 1/2 x 1/2 x 1/2 x 1/2 x 1/2 x 1/2 
    F(VC) = about 1 in 200 = 1/2 of one percent

I don't think he was trying to be exact, but more just to show how the process works and how easy it is to get a "No" somewhere along the way.

Some of my favorite quotes from Brian's talk:

• "Syndication is bad for founders - it's better to make the VC's compete"
• "Build it or sell it: you only need 2 founders for your startup"
• "Series A is about founders, Series B is about market, Series C is about business model"
• "don't bootstrap by just writing checks from your bank account, instead you should invest with a convertible note" 

Keynote - Mission: Austinpreneur by Joshua Baer

My keynote was the conclusion of the event and I presented over lunch in a beautiful room overlooking the sea. I talked about my passion for entrepreneurship and the companies that I've started, described Capital Factory 2009, and shared some Startup Lessons I've learned along the way. I wasn't able to record the whole thing but I have 20 minutes that tell my story from my first dorm-room dotcom in 1999 to the founding of Capital Factory.

I'm hoping to be invited back next year. I would love to come early and help the companies to prepare their pitches.

Keep your eye on Puerto Rico

Some of the entrepreurs that I talked to said that they often are discouraged from pursuing entrepreneurship - they are told that it would be better to get a safe government job. I think they just need some success stories to point at. And with them, more successful entrepreneurs as mentors. Fortunately there seems to be a strong sense of loyalty to the homeland - many of the people I met were born in Puerto Rico, went to school or a job in the US, and then came back to Puerto Rico. And I could see that they are bringing back more and more of the entrepreneurial spirit.

Overall I was very impressed with the entrepreneurial community in Puerto Rico. It's small but passionate. It's just going to get easier and easier for startups in Puerto Rico. The same forces that made "$500,000 the new $5,000,000" will soon make $5,000 the new $500,000. As the cost of starting new companies drops capital will no longer be a limiting factor.

Here are the complete slides from my keynote:

It's evolution - physical signatures need to evolve or die

 

In general I think that physical signatures are archaic and not that meaningful. It's not impossible to forge a physical signature by hand and its even easier with computers. More and more documents are made into PDF's so you end up with digital copies of your signature being sent around in insecure emails. 

This is about evolution and survival of the fittest. Physical signatures are slow, stupid and ugly and they should get eaten by the digital signatures. 

 Here are some things to consider:

• Have you ever sent signature pages for a contract without the rest of the pages?
• Do you regularly compare (using "Find Differences" in Microsoft Word) the "final version" of a contract against the redline version to make sure its correct?
• Do you regularly initial every page of a contract, in addition to signing the signature page?
• Do you have a scanned copy of your signature that you just cut and paste onto digital contracts? 
• Do you use a convenient service like Zosh to save time executing PDF agreements by email?
• Do you always get back the countersigned document with BOTH signatures on it?

How hard would it be for someone to take your signature off of one document and cut and paste it onto another one? How hard would it be for someone to take a 10 page contract with your signature on it and swap out one of the pages in the middle with different terms.

Even worse, many people these days just sign the signature pages and send them separately from the rest of the pages. At that point, the other party can attach whatever they want to the beginning of it.

And it doesn't have to be a malicous act. What if someone just sends you the wrong final contract to sign. Would you notice? What if they send an old version by accident?

I know what you're thinking... I'm being paranoid. No one does stuff like this right? I must admit that no one has ever done anything like this to me before. However, if you put any faith in physically signing a document to begin with, I think these are all reasonable concerns. 

So here is how I sign contracts:

1. Compare the final version to the last redline that I approved to make sure I'm signing the same document I think I am.
2. Initial the bottom of every page of the document (except the signature page). If a page has blank space, initial at the end of the text not at the bottom of the page.
3. Always send the entire document, never just the signature pages. At least this way I have record of the fax or email with all of the pages together in one place so I can prove what I signed.
4. When I send my signed contract, I create a reminder to make sure I receive my countersigned copy.

EXCEPTION: If I'm working with two lawfirms (mine and the opposing counsel) and they are handling all of the paperwork then I expect them to be responsible for most of the process I outline above. In those cases I'm comfortable signing only the signature pages and putting them with the lawyers "in escrow" until we agree on the final document.

How long will it take for physical signatures to go away? They really are an archaic legacy of the pre-digital age. A signed document doesn't "prove" much it just makes us feel good. It helps to avoid confusion by making it clear what copy of the document is the final one. There are better ways to handle this today, such as digital signatures and other forms of authentication. However, they are still "geeky" tools that haven't hit the mainstream. 

Companies like EchoSign are paving the way for a more secure and more efficient way to execute documents and its slowly taking on. Recently I signed an NDA with Microsoft using a fully digital signature process and so I'm optimistic that over the next 5 to 10 years we will see most large businesses moving away from physical signatures and towards something like Echosign's model.

How do you sign contracts? Do you take any other precautions besides the ones I list here?