Create a productive and inspiring space for high-quality, early-stage internet entrepreneurs to share knowledge, resources, and support.
Most internet startups share the same early tasks: refining a business plan, developing a scalable infrastructure, creating a marketing strategy, vetting vendors, recruiting employees, courting investors, and managing logistics like legal, accounting, and operations.
Thousands of startups have repeated these tasks, often without benefiting from the mistakes and lessons of others. While advisers and venture capitalists can help with high-level decisions, we have found that sharp entrepreneurs facing the same daily decisions are often most informed on the many low-level decisions that shape execution. We want to maximize this benefit of shared experience, resources, and support with smart and driven peers.
Mistakes to avoid
Despite the theoretical cost- and knowledge-sharing benefits of incubators, they have an unimpressive history in the valley and typically make one or more of the following mistakes:
- Equity-for-space: the incubator host often takes an equity percentage, spurning some high-quality startups to whom shared space is not worth the trade-off.
- Passionless founders: some incubators brainstorm ideas and spin their execution off to an external team, which usually have insufficient passion.
- VC or corporate oversight: VCs and especially corporations can have insufficient operating experience to competently guide (or leave alone) budding startups. Further, the VC/corp’s immediate goals can cause conflicts
- Lack of focus: some incubators accept startups across all industries, such as biotech and internet, reducing the relevance of sharing.
- Too much distraction: some incubators throw several startups into a small space to the point of sharing rooms and tables. This distraction can impede execution and lead to more of a fraternity than a productive office.
- Too little sharing: on the opposite extreme, many incubators have no process for knowledge-sharing; they are simply office parks of individual startups.
- Charging for profit: some incubators charge premiums for the benefit of plug-and-play space. While this is a reasonable business, it does not maximize the quality of potential tenants.
- No marketing: despite numerous incubators, few do consistent marketing and none are recognized as a leader that attracts top talent.
- Low standards: landlords typically only vet startups for credit and personal fit, not entrepreneurial experience or business plan. Thus, most importantly, incubators fail because their overall proposition does not sufficiently attract the highest caliber entrepreneurs.
To this end, we will build a start-up co-op with the following features:
- No equity cost: tenants will only pay monthly rents (or possibly no rent if sponsors are secured).
- No corporate or VC oversight: all involved parties will be entrepreneurs. Beyond being a good tenant, no startup’s decision will be beholden to a co-op authority.
- Internet focus: we will focus exclusively on internet startups. This is where the co-op founders share the deepest expertise and the plurality of valley startups deal.
- Limited distractions: each startup will have a semi-private space with barriers to retain focus. Guidelines will restrict interruptions between startups during work hours.
- Cross-pollinating: to encourage brainstorming and build relationships, all tenants will be under one roof, share a comfortable leisure space, informally share meals, and be invited to weekly social events.
- Not-for-profit: the co-op will aim to nurture its individual for-profit companies, not make money itself.
- Quick up-time: spaces will be plug-and-play: furnished, wired, priced full-service, ready-to-go.
- Bay area marketing: the co-op will hold monthly entrepreneurial events to raise awareness and attract top talent. These events may include mixers, industry speakers, and workshops on how to build a successful internet startup.
- Highly-selective screening: we will set a high bar for admission. Ideal candidates will have entrepreneurial experience and join the co-op with a high-quality team and idea ready to develop. New tenants will need to be approved by all but one of the co-op committee’s members.
Our goal is to maximize the success of our entrepreneurs and become the premier Bay Area location for launching an internet company.
If we succeed in recruiting top talent, the co-op may be an attractive sponsorship opportunity for service firms. Firms that offer venture capital, legal, web design and development, IT, accounting, banking, space brokering, and other services derive much of their deal flow through networking and relationships. These firms are incentivized to find high-quality, funded or likely-to-be-funded entrepreneurs, especially firms that take on deferred fees or equity stakes.
For access to our screened teams, invites to exclusive mixers, speaking event opportunities, and association with our unique brand, these firms may be willing to sponsor rent for the co-op. Many of these firms regularly spend $5-25k for one-off, low-ROI sponsorships at events and conferences. Investing a comparable amount in high-value, long-term relationships may be a wiser investment. Free rent in a corporate-quality space would differentiate us from other incubators and greatly enhance the co-op’s appeal to entrepreneurs, thus attracting further sponsor interest and creating a virtuous cycle.
Disclaimer: We are not a social network, a feedreader, a news aggregator, or a video site. We don’t create mashups or solutions in search of problems; we appreciate technical trickery, but we admire simple solutions to problems that matter.
We are an innovative startup in an $8 billion market ready for disruption. Our approach solves two key market problems with a novel approach praised by several industry experts and venture capitalists. It isn’t a complex idea; it’s actually simple, which we humbly think is the reason it will work.
We also have the ingredients of a stellar business: defensible and sustainable competitive advantages, a proven revenue model, network effects, and a low cost structure in an industry plagued by high burn rates. If we are successful, our product will have synergies with over a dozen large companies in three different areas, but most importantly, we can reach profitability and sustainability alone.
We will reach prototype within two months and generate cash flow immediately; as of today, we would have first-mover advantage. We believe in giving large responsibility to a few star recruits; we plan to hire five, work like ten, and pay like eight. We’re young enough to grant a significant equity stake, but more importantly, this is a chance to create something of real value.
Our two founders are graduates of Stanford, have experience leading VC-funded startups, and led multiple projects at PayPal and Google.
CEO: Mark Goldenson, http://www.linkedin.com/profile?viewProfile=&key=8433
CTO: Dev Nag, http://www.linkedin.com/profile?viewProfile=&key=154589
__ Founding Software Engineer __
* 2+ years experience developing robust, high-volume consumer web applications
* Proven excellence with web languages and infrastructure (LAMP)
* Proven record of quick, iterative, and modular web development in a team setting
* Strong initiative, deep attention to detail, top-notch communication skills, and a passion for creating customer value
* Live in or willing to relocate to the Northern California Bay Area
* Python experience is a strong plus
* Large scale database experience (especially MySQL) is a plus
* Experience in an early-stage internet startup
How often have you been at a mixer, conference, or social event and thought, “I know the type of people I want to meet. Where are they?”
The search for relevant people is woefully inefficient. It is essentially random; it takes several minutes for two people to cycle through social graces, backgrounds, interests, and eventually mutual needs. In a place driven to match the world’s best minds and solve inefficiencies, the most common solution to this significant problem is a plain white nametag with name/title/company.
We can do better. I wish conference organizers would offer physical tags that let participants self-describe their haves (background, skills, interests) and needs (job openings, funding requirements, partnerships). The tags could be graphical, text, and color-coded to quickly convey information. Most importantly, the tags would not be mutually exclusive; people would be encouraged to use multiple tags to convey granularity. This recognizes that no one tag can convey all potentially useful information to a room of diverse people. For instance:
Role – graphic – color
Founder – light bulb – yellow
Executive – tie – white
Software engineer – code – blue
Hardware engineer – wrench – red
Product manager – conductor – purple
Investor – dollar sign – green (of course)
Business development – handshake – brown (of course)
Need software engineer – code with question mark – blue with dots (“holes”)
Need investor – dollar sign with q-mark – green with dots
Blogger – megaphone – orange
Staff – smiley – pink
(Right now, I’d wear three tags: purple, yellow, and blue with dots.)
The type and detail of the tag taxonomy could of course change for different events. A web 2.0 conference could let participants self-tag by web application; e.g. ‘social network’, ‘newsreader’, ‘video aggregator’ (thus helping investors know who to avoid). 😉 Even non-professional events like meetups and speed dating could benefit from physical tags. Wouldn’t you want to know if that certain someone is single, straight, and likes tennis?
If anyone is organizing a social event and wants help setting up a physical tag experiment, email me at email@example.com.
P.S. Did I mention I am hiring? 🙂
If you had to choose the biggest ineffiency in the world, what would it be?
My current vote would be the poor distribution of arguably our most valuable resource: our experience.
Think of any decision you have to make soon, crucial or trivial, and there are hundreds of millions of people that have already made it. Every second, someone somewhere is choosing a soft drink, a TV show, a car, a profession, a spouse. Yet, their knowledge and opinions are mostly locked up in their heads, languishing unused and depreciating into hazy memory.
The idea of aggregating and sharing this collective intelligence is a staple of sci-fi. Futurists have long salivated at the idea of networking our individual brains into a massive neural net. Of course, neuroscience will need a bit more time to work out the kinks.
Is there a good solution in the meantime? The internet is the best yet, but most efforts to aggregate knowledge – the current buzzword is “wisdom of crowds” – have been mediocre:
Epinions: users write reviews and used to be paid for every read, but the system was gamed too much. Now there is little incentive to contribute and the content is stagnant.
Yelp: an Epinions-like site within a social network (founded by former PayPal colleagues) where users get recommendations from friends. There’s extra value in reviews from trusted sources but sadly there isn’t much content yet – most of my queries returned few reviews.
They face a double barrier: getting people to sign-up and invite friends, then getting friends to write reviews. I thought there would be a synergy there, that users would be more likely to write reviews for friends, but it so far hasn’t spurred the growth I expected. Bessemmer Ventures is still bullish.
Wikipedia: the most successful knowledge-sharing site to date. Any user can contribute and moderators control quality. However, the site is more knowledge than opinions and not geared toward buying decisions.
Why is there no solid opinion aggregator? I think no site has yet done the following:
Make feedback frictionless: it’s still too much of a pain to share opinions. Users of Epinions have to visit the site, begin rating with four text fields, sign-up with another four fields, choose two more radio buttons, then preview comments – that’s five pages and twelve decisions for one little opinion. Yelp requires even more: seven pages and seventeen decisions before I stopped counting. This causes sites to overrepresent extreme opinions that skew the results – especially negatively – because those users are willing to endure the friction.
A better model would be eBay’s simple numeric system (+1 / 0 / -1) or Netflix’s one-click star system (though both still require sign-up). This reduces the system’s precision and depth, but I think the volume of opinions grow enough to justify that.
[Ed: As Chris Law writes in a comment, truly frictionless feedback would mean no change in behavior from users; feedback could be gleaned implicitly. He cites Amazon’s recommendations as an example but those are more targeted cross-selling than feedback; they are based on sales before feedback is possible (i.e. “here’s what others bought” vs. “here’s what others enjoyed)”. His company, Aggregated Knowledge, may be on to something.]
Allow time-of-trial ratings: users should be able to share opinions when they are freshest and this is often soon after a trial experience (though this may taint objectivity, especially on something complex or emotional like a car). Otherwise, opinions can be cloudy or tainted by third parties.
Kaiser Permanente gets it right with their Opinionmeter feedback kiosks. The kiosks are placed near the exits, ask two simple questions, and use an intuitive button interface.
Of course kiosks aren’t always practical. One fantastical alternative would be a credit card that allows a buyer to change the last digit at the point-of-sale to rate the purchase – e.g. 1234 1234 1234 123X, where X could be a numeric rating (1-5). This would require some safeguards to protect privacy and prevent merchant tampering, but if feasible, the system could easily aggregate a massive amount of opinions, deliver them for free to consumers, and earn nicely scalable revenue by charging businesses for advertising or in-depth consumer feedback. Of course, this system would only work for products and services tried before purchase, like restaurants.
Give compelling incentive: Epinions used to pay opinion writers by page view, but the system was gamed (I wonder if some anti-fraud PayPal folks could create a more foolproof solution). Yelp offers the fuzzy reward of helping friends, but I don’t think that’s enough. Marketing contests that reward a few users or points programs that reward heavy users may help, but an ideal solution would incentivize every opinion, especially useful ones. What if every positive review gave a 10% discount on another product from the same company, while a negative review did the same for a competing product?
These are not easy problems, but markets less juicy and more complex than aggregating opinions have been tapped. Why has this problem gone unsolved so long?
P.S. For a solid feedback system, check out Slashdot’s comment moderation. The interface could be better but the concepts are well thought-out.
American Inventor, ABC’s spin-off of American Idol for inventors, had the right ingredients: engaging personalities, emotional investment, and a core concept (evaluating ideas) that every viewing demographic can enjoy. I was skeptical of the show’s storyline potential – iterations of a product could get dull – but with Idol’s Simon Cowell producing, I hoped the show would be well-done and maybe inspire a mainsream wave of interest in inventing.
I lasted thirty minutes before I had to click off (I later endured the rest with the grace of Tivo). How could a seasoned team of producers make so many mistakes? Here’s a rundown:
(note: Make has a full recap of the show with screenshots)
1. Painfully transparent manipulation. Few things offend like blatant manipulation and Inventor unforunately nailed that cold with consistently hokey backdrop music and more crying than a Kleenex commercial. The overkill was especially strange considering Inventor’s most likely loyal audience – pragmatic, technical, and business types with low tolerance for BS. Haven’t all the incarnations of Extreme Makeover and Bachelor saturated the sap market?
2. Too little substance. As inventor judge Doug Hall said, when you have substance, sell substance. Inventor has compelling substance – inventions – which can be shown and judged quickly. Yet Inventor’s two-hour premiere featured only twenty inventions – one invention every six minutes – with more than half the time spent on the inventors themselves. The inventor’s background and motivation is important to build drama and a relationship with viewers, but more than half the show is too much for a show about ideas. Inventor should model Queer Eye, which gets this right with many snippets of funny advice, mixed frugally with dramatic segments about the advisee’s story.
3. Insight lite. The show’s biggest missed opportunity was failing to teach while entertaining. A main appeal of Queer Eye is its didactic peppering of good advice with humor. Inventor could have engaged viewers with insights in several fields (marketing, engineering, finance), but judges instead dismissed ideas with empty critiques like “I don’t see it” or “it’s not good enough”. (Businessman Peter Jones had one rare tip, noting that a consumed product generates repeated purchases.)
4. Inconsistent judging. I’m sure even hardy VCs would get a little bleary after hundreds of two-minute pitches but the judges were inconsistent. The fully-packaged snow globes were unanimously approved while the polished morality video for kids was nixed as too developed. Two contestants were openly approved not for their product but their personality, yet the most impressive inventor of the show, a charismatic and articulate 14-year-old, was voted off because his portable air conditioner for dogs was marginal.
5. Unclear criteria. The show never clearly stated how ideas would be judged. The judges occasionally said innovation and business potential were important but these were not fully explained – does innovation mean the idea can’t be on the market, can’t be previously patented, or just unknown to the judges? Does unit sales, dollar sales, or profit matter most? Do liability or barriers to entry matter? How much does presentation? This may seem nit-picky but without clear criteria, the judging seemed sloppy and random.
It’s frustrating to see a good idea executed so poorly, an all-too-familiar problem in inventing.
Hooray, my blog’s first step!