The “Pre” Startup is adding air to the bubble

by | Dec 15, 2011 | Angel Investor, early stage, founder, Launch, Scalability, startup, startup CEO, venture

There seems to be a lot of this going around these days – the “I’m just about to start a startup” category of entrepreneurs, or “I just started a startup” when they haven’t. It’s also become the new euphemism for unemployed.

Here are the justifications and logic process for so many claiming they have a startup before they really do, and in many cases actually getting some funding:

  • people feel like they might as well start their own business since nobody is hiring
  • funding is more prevalent than ever for early early  (read “ideas”) stage companies
  • the barriers are now very low for actually forming a business, as is the cost
  • micro funding ($25K)
  • no formal certification or education required
  • many new angels spawning from Google, Facebook, etc. millionaires
  • angel investors are supporting these early unqualified launches; many are F&F/parents who believe in the dream
  • amazing shining examples of success and IPOs, even though they a 1 in a thousand
  • it sounds cool, or used to before everyone started doing it
  • many people never before involved in startups want in

There will be significant fallout from this no doubt, but no one knows when.

Not that there’s anything wrong with many new businesses per say – here are some good results of such a rush

  • some of these will be the next homeruns (and base hits) in the startup world
  • lots of jobs being created, even if short term
  • first time startupers will get invaluable experience, whether they succeed or fail
  • many more people are learning software development

However, the fallout from all this will set us back a few years again …

  • many misled, unsophisticated angels will get burned and sour to good investments (not sophisticated angels, they know the risk)
  • whenever investors jump in late (now) many bad things happen
  • innovation is heavily suffering right now – almost anything is a business model
  • when many vaporware and vapor-businesses crash or fade away they leave damage, possibly fueling the recession (remember 1999-2000? 2008?)
…but will take us back to a more solid footing.

The American Dream of entrepreneurship is one I hold dear, but to apply it to a technology based startup requires a few basic principles – a real business model, hard work, technical excellence, outside expertise, sustainability, market focus, strategy, and more hard work. Eventually it also needs revenue growth and profits.

Hang on tight the roller coaster is taking a dip soon, I predict by mid 2012. It will shake out many people into the streets wondering what the hell happened.  @tomnora

Are You a CEO?

by | Nov 14, 2011 | Business Development, CEO Succession, early stage, founder, Launch, Revenue Growth, Scalability, startup, startup CEO

Are You a CEO? Is Your Boss a CEO? Are They The Right CEO for Your Company?

There are those who work as the CEO and those that don’t. The trick is in knowing which one you are.

Are you a CEO? Are you the right CEO for your company? This seems like a silly question at first, but one of the most important for a startup foundation team. In most one-person startups by default the founder is CEO; it’s difficult to resist the temptation of the title. But not all founders do this.

If the CEO not the optimal choice  but doesn’t want to admit it, beware, your startup could become an exercise in ego instead of a successful growth/job machine. There’s no formula or perfect background for the “perfect” CEO, and there are many degrees of success; in the end the proof is in the pudding. No one would have guessed Gates or Zuck would have been so successful, but they made it happen. Jerry Yang had many of the right ingredients, but somehow can’t make it as Yahoos CEO. Terry Semel was a great studio head but not a tech CEO. Meg Whitman got slammed trying to run for governor but she was and is a great CEO.

I see many non-CEOs trying to be one in my consulting work. This problem has to be fixed early in the life of a company once it becomes “real”. The first momentum a company has must be nutured like water in the desert;

The purpose if creating a startup is to create something that didn’t exist before – something out of nothing, and thereby create wealth, new money that can be distributed within and outside the company. Even in a non-profit this is true. That goal doesn’t work with the wrong leader at the top. How do you know? Usually you’ll feel it, from the people inside and outside the company. I often play “Shadow CEO” for early stage CEOs, which bridges the gap in experience for many leaders who lack experience but have the skillset. The difficulty comes when the current CEO just isn’t right to scale the business but wants to hang in, often for some very good reasons, but still the wrong choice.

It takes courage to remove yourself as a CEO, but I’ve seen and assisted in the process a dozen times to goos results. Please contact me if you know of any of these situations; they (usually) fascinate me.