LSQHA Blog Reviews

Have you ever found yourself ignoring the directions of your car's GPS in order to get somewhere faster or more efficiently than it can calculate? Me too. Chances are when leaving point A, you plugged in the address of point B, and a route was calculated on how to get from one to the other. The problem is, things come up on the route from point A to point B that may cause you to divert from your path such as construction, road closures, traffic, side trips you need to make or neighborhoods you may choose to avoid driving straight through. Sponsor Startups make similar diversions, but the directions they are straying from are those of a product roadmap. Roadmaps are projected out for months, if not years, to give a company a strategy to most effectively grow their product. But just as there are reasons we ignore our GPS, there are reasons for startups to alter their roadmap. Spark Capital partner Bijan Sabet has worked with dozens of startups on project roadmaps, and recently he wrote about the importance of driving off course when necessary. Sabet recalls and example of this from his experience working with Boxee's Avner Ronen . "I remember our first board [meeting], Avner shared a product plan for the next twelve months. Then, before the very next board meeting he shipped a bunch of new things that weren't on the roadmap," writes Sabet. "He would see opportunities in the market, listen to his users and then create and launch. And that approach paid off and continues to pay off." If startups come up with a product roadmap and proceed to put their heads in the sand while they follow it unwaveringly, they will more than likely fail. So much is learned from testing products and receiving feedback that being unwilling to change the plan is a death sentence. This quality is so important for entrepreneurs that Sabet says he looks for it specifically when investigating possible investments. "I'm more interested in learning if the founders have the talent and desire to move, innovate and create quickly," he says. The lesson here seems obvious, but there have been cases where startups are devoted to their roadmaps and revenue projects to a point where it affects the success of the company. Like some driving directions, there is no most optimal route for every startup to succeed, so the willingness to turn left when your GPS says right is an important decision to know how to make as an entreprneur. Photos by Flickr users Marcin Wichary and sporst . Discuss

Excerpt from:
Why Startups Need to Know When to Ignore Their GPS

Devver , maker of developer coding tools and TechStars 2008 graduate, announced last Monday that it would be shutting down after being active for nearly two years. News of a startup closing up shop is never a fun thing to hear about, but fortunately many lessons can be gleaned from the experiences of the entrepreneurs. Today, co-founder Ben Brinckerhoff provided just such lessons with an insightful blog on the Devver journey and why he and co-founder Dan Mayer are choosing to move on. Sponsor An unfortunate truth about startup culture is that a lot of the most valuable lessons are learned when entrepreneurs fail to heed them. Some notice their mistakes early on and can pivot their products and business toward a more successful future, but sometimes they don't realize their mistakes until its too late and there is nothing that can be done. This was the case with Brinckerhoff, Mayer and their startup, Devver, which they say failed to focus enough on one of the most important parts of building a startup: customer development. As Brinckerhoff points out in Monday's blog post, the company assumed they had found their minimum viable product (MVP), and as a result focused more on product development than listening to customers' needs. "You can teach a hacker business, but you can't make him or her get excited about it, which means it may not get the time or attention it deserves." - Ben Brinckerhoff "Our mistake at that point was to go 'heads down' and focus on building the accelerator while minimizing our contact with users and customers (after all, we knew how great it was and time spent talking to customers was time we could be hacking!)," writes Brinckerhoff. "We should have [been] asking, 'Is there an even simpler version of this product that we can deliver sooner to learn more about pricing, market size, and technical challenges?'." Both Brinckerhoff and his co-founder are "technical founders," which means their specialities are on the development side, not the business side. The only other person the pair hired to help out, a fellow software developer, also fits into the technical side of the startup. Brinckerhoff says this may have been one of the hurdles that led to the downfall of the company. "Looking back, it would have been to our advantage to have a third founder who really loved the business aspect of running a startup," writes Brinckerhoff. "Having solely technical founders is non-optimal. You can teach a hacker business, but you can't make him or her get excited about it, which means it may not get the time or attention it deserves." Brinckerhoff also adds that having a split team located in different states contributed to the company's struggles, but it seems to me it was more of a hassle than a reason for failure. Split teams are actually growing in popularity and probability for success, as we discussed earlier in the year with companies like Blank Label and chocri . Devver undoubtedly had issues with its split setup, but its likely that it didn't contribute toward its closing as significantly as the other errors. Regardless of this issue, its clear that the Devver team learned and shared some valuable lessons about the importance of customer development. As Steve Blank noted during his presentation at last week's Startup Lessons Learned conference, startups shouldn't be too eager to product management before customer development. Devver may have jumped the gun a bit in terms of over developing their product, so learn from their mistake and remember to develop your customers before throwing the kitchen sink at them. Discuss

Continue reading here:
Learning From Failure: One Startup's Story of What Went Wrong

Index Ventures , one of Europe's largest and most prominent venture capital firms, has just recently announced the creation of Index Seed , a program through which they plan to invest more heavily in seed-stage startups throughout Europe, Israel and the Unites States. The formation of such a fund is just what the doctor ordered for young companies in Europe, as they have been largely underfunded in recent years. Sponsor Index plans to add more seed-level companies to its investment history, which already includes startups like Skype , MySQL and MOO . According to a blog post yesterday by London-based Index partner Saul Klein, the firm will set aside an allotment of funds to be specifically used to provide financing for roughly 20 seed-level investments over the next two years, a significant step up from the approximately 40 such deals made in the firm's 15-year history. "We love to work with other seed investors and believe that the combination of a great team of investors to compliment a great team of founders is a vital ingredient in successful seed investments," writes Klein. "We have seen time and again how important it is for founders to have not just relevant investors at the seed stage but investors who are accessible, honest and engaged." Index is also creating a dedicated team to handle Index Seed, of which will include Saul Klein, his father Robin Klein, and Index partners Danny Rimer, Neil Rimer and Mike Volpi. The firm will also be increasing its partnership with early-stage investors The Accelerator Group (TAG), founded by Saul and Robin Klein, in order to provide multiple avenues of investment for young startups. Saul Klein says that Index Seed is a reaction the rapidly growing number of opportunities for new companies to get off the ground. With open source software, a calendar full of networking events, and hundreds of VC bloggers providing free advice daily, starting a company has never been easier. "We are only just starting to be able to appreciate the incredible leverage startups can gain from emerging platforms for both distribution and monetization & payment," writes Klein. "But let's not kid ourselves, its still super difficult to be an entrepreneur even though costs have plummeted and the opportunities have only increased." Index Seed, he says, will help startups take advantage of these new opportunities. "We have seen time and again how important it is for founders to have not just relevant investors at the seed stage but investors who are accessible, honest and engaged." - Saul Klein Europe is a quickly growing region of the world where startups and venture capitalists are beginning to take hold, but there have been significant hurdles in the way of breakout success. Chief among these has been the area's penchant for funding business with proven business models and clear paths to success, but startups, in many cases, don't have these advantages. This has created a dearth of VC funding for early-stage companies in the area; European investors are simply less risk-averse than their American counterparts, especially those in Silicon Valley. Startups, forced to find their early-stage funding somewhere, have been leaving Europe in order to participate in American incubators, and to seek funding from American investors. Some progress has been made, however, especially with the help of European incubators like Seedcamp , and other seed funds such as Team Europe Ventures . The addition of Index Ventures into the early-stage funding scene is an important step for European entrepreneurship. The more organizations like Index Seed pop up around Europe, the more likely it is that innovative entrepreneurs will remain in the area, instead of flocking to America for a better shot at funding. Photo by Joi Ito . Discuss

Link:
Index Seed: Giving Europe's Early-Stage Investments a Much Needed Boost

As an avid podcast subscriber I have dozens of audio and video programs feeding into iTunes daily, but one recent submission from the TED Talks video podcast caught my eye because of its parallels to lean startups. Tom Wujec, author and fellow at Autodesk, presented at TED 2010 back in February, and his talk, "Build a tower, build a team," is now available online. Wujec conducted a team building experiment with all types of people, from business execs to kindergartners, and the results he presented were surprising, to say the least. Sponsor The activity, known as the marshmallow challenge , was borrowed by Wujec from Peter Skillman, VP of Design at Palm . Small teams are given 18 minutes to build a free-standing structure made of dry spaghetti, one yard of string, one yard of tape and a marshmallow, which must be placed on top. The team wins by creating the tallest structure of all the groups participating. What Wujec discovered is that this simple game revealed some fascinating insights into how groups collaborate. Wujec has conducted this experiment with over 70 groups of "students and designers and architects, even the CTOs of the Fortune 50," he says. Most teams quickly break into roles and plan their structure, and then spend the remaining time building it before quickly and gingerly placing the marshmallow on top as time expires. More often than not, the structure pitifully fails as the marshmallow is added, leaving the team with a pile of spaghetti and no time to try again. "So there are a number of people who have a lot more 'uh-oh' moments than others, and among the worst are recent graduates of business school. They lie, they cheat, they get distracted, and they produce really lame structures," says Wujec. "And of course there are teams that have a lot more 'ta-da' structures, and, among the best, are recent graduates of kindergarten." "Design truly is a contact sport. It demands that we bring all of our senses to the task, and that we apply the very best of our thinking, our feeling and our doing to the challenge that we have at hand." - Tom Wujec Wujec says that business school grads are taught to seek out and execute the one correct solution their challenge, while kindergartners practice the iterative prototype and refine process, much like the methods of lean startups. The kids would build, test and repeat until they found a structure that worked, and most times, he says, they built the tallest and most interesting structures. Another interesting fact uncovered by these experiments is that incentivizing the teams didn't improve their structures, it actually made them worse. When Wujic offered the winning team a $10,000 software prize, not a single group was able to create a standing structure; however, when we returned to the same students later, they understood the need for iteration, and produced structures well above the average height. What startups can take away from the marshmallow challenge is that bigger teams and higher incentives are no substitute for having the right skills and the right process in place. Wujec found that larger teams performed increasing worse than smaller teams, and incentivizing them with a reward did not make up for the fact that they were not using the right process. As Wujec adds, every business challenge has its own "marshmallow," so consider bringing some kindergarten-minded people onto your startup team. Photo by Flickr user John-Morgan . Discuss

Go here to see the original:
Marshmallows and Spaghetti: How Kindergartners Think Like Lean Startups

Earlier this week, we reported on the fact that the first quarter of the year saw venture capitalist investments drop from the end of last year , but start at a higher rate than the beginning of 2009. In the article we mentioned the boom and bust cycle that is found in economics, which in America has been marked by the dot-com bust at the turn of the century, and the financial crisis of recent times. These two downturns are part of a cycle of ups and downs seen throughout history, but could they be getting shorter and more frequent? Sponsor Peter Bodine, managing director of Allegis Capital , recently guest blogged on Entrepreneur Corner over at VentureBeat and provides an interesting angle on the current state of venture valuations and how it could signal a quickening boom and bust cycle. As he sees it, the high prices recently placed on a few startups echoe those seen before the dot-com bust. " Blippy , only four months old, is reported to be worth about $38 million. Quora , a massive user-created question-and-answer site that is still beta-testing , was estimated at roughly $86 million in its most recent round. And the buzz is that Foursquare will be worth at least $80 million after it completes the round it's currently negotiating," writes Bodine. "There is a lesson in all this for startups. If you are demonstrating noticeable success, seek additional funding now, not later." Bodine anticipates a drop in VC funding this summer, a time he says is a common slow period for VCs, and warns that startups late to the game could "miss the action" and end up competing with more companies later in the year. The summer is a popular time for incubators, and many companies exit these programs and seek funding in the fall and winter, so Bodine suggests going after capital now if your startup has any measurable progress. VC, M&A and IPO numbers have been suffering in the last few years with the economic crisis and have been difficult to forecast. M&A numbers broke records in the first quarter of 2010, but IPOs continued their near non-existent levels. VCs raised their lowest amount of funding in an opening quarter since 1993, but invested a healthy amount . One could call this atmosphere unstable, but I'm not so sure that it will collapse again in the middle of the year. Following the dot-com bust, the VC market steadily climbed back to the levels we saw in 2007 and 2008 before the housing failure, and I wouldn't be surprised to see similar gradual growth throughout 2010. It is unlikely that the yearly figures at the end of 2010 will be impressive in comparison to earlier years, but this year should be an improvement over the lows seen more recently. There are certainly risks involved with founding a startup and seeking funding in this economy, but hey, what would startups be without taking a few calculated risks in hopes of being rewarded? Photo by Flickr user garymalkn . Discuss

See original here:
Are Windows of Opportunity Quickly Narrowing for Startups?