The “Pre” Startup is adding air to the bubble

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?

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.

Responses: Santa Fe Friends + Cali Friends + +

Responses to my Santa Fe Friends + Cali Friends + + letter. In chronological order.
So you and Rich Murray became friends? how long did he last at NMCC?LOL
peggy
Hey Tom Baby!!! Im HERE!!!Patsy

Lets get together soon

Loved this message!
Thank you.
I have some good ones for you to meet.
Can you send more info on your social media (or otherwise) focus?
Peter

– Show quoted text –
> * **@tomnora* <http://twitter.com/tomnora>* |
> *@cowlow<http://twitter.com/cowlow>
> * | *LinkedIn <http://linkd.in/qwVquV>* *
Tom,Thanks for the thoughtful note. We miss you and look forward to seeing you soon.The NM Green Chamber of Commerce wants a ‘buy local’ app. Does such a thing already exist?Would you be interested (or know someone) in creating it? Alex works with the chamber and I know the folks involved.

Don’t get shot out there.

Joe

Sent wirelessly via BlackBerry from T-Mobile.

yeah very good friends. he runs the poker game! Not long with Jarrett. He barely remembers him.
Tom Nora ✆ to MeiMei
show details Sep 16 (3 days ago)
I missed the excitement of the real business world and the water.
I made amazing friends out there and enjoyed small town life very much, but needed to plug back in and wanted to launch a startup here.
New Mexico is a weak startup location – missing many parts and move too slowly. The best of both worlds is to have both, but I can only live in one place at a time.

Napa is probably similar to Santa Fe in many ways, I could see you living there. Hope all is well for you, have a glass of wine for me.


Tom: Congrats on your move, I wish you the best.

Enjoyed our discussions and adventures. Hope we can stay in touch and please let me know when you get back this way.

Best personal regards,

David

yeah just say when. lunches are pretty open. will you have a car?


T
Yes I’m interested, building up a strong little team here of app developers. Tell me whom to connect with. 
Also interested in Teres Kids progress. Did u guys get funding yet?

I’m sure 9/11 was a thoughtful day for you. Take care.
Tom,Wow, what a great letter, what a great way to catch us all up on your move.
As someone who still hangs on to her LA area code, I love your new city and consider it still “my city” even though after seven or eight years here,
I have to admit I’m not living there anymore.

I’m going to be out there in early October to attend Indiecade…do you have a free couch?

You should see my paintings!  I am making major progress!

I wish you all the possible best in your new environs and really do hope to stay in touch.

Note my new phone number and I cc’d you on my go-forward email address after I leave EPIC in January.

BE WELL!

Big hugs,
Stephanie


Good luck Tom, thanks for staying in touch.
Stephen Hadwin

Hi Tom. Thanks for your soulful update. Gotta get tough if you’re gonna stay in LA though! Just remember, compliment everyone on everything and you’ll fit right in. – JB

yes i’m back in the groove, moving faster, no mo “manana”, headed to Arrowhead today to catch up with OC friends.
Good luck, Tom. Let’s try to keep in touch.

I had a great weekend in San Francisco and I’m trying to figure out how to get back more often.
Need to start generating some income so I can afford a small apartment in the city.
Trying to figure out how to schedule a trip to India with my new partner in our social enterprise.
Anyway, give me a call when you get a chance. Enjoy the urban life.
Gary
Thanks for the official welcome – i’m stuck in town this weekend but could go next wkend if ur still painting. Are u painting walls or canvases?


Heather: Now that Tom is living in Los Angeles, it would be a real favor to my friend if you would drag him along to some events there so he
can get integrated into the social media and tech scene there.Stewart
wow.  Life changes, the one thing we can always count on.  Back in LA, must feel strange in some ways,
exciting in others. . . curious Tom, as we haven’t talked in awhile, what prompted the move?  And, did you rent a u-haul?
I know you like Nascar and all, drive fast and all, but somehow you and Frieda in a u-haul?  Nah. . .
I may be in LA to look at some projects there, so maybe we’ll connect.
Texas is unreal, even for me, but here I am.
Brazos y besos
Kathy


Iim at district 13 right now u gotta check it out.

Gonna miss you! I had no idea that you left to the bigger city.  I do get out there as my sister lives near you, in the West Hollywood area and my son, is enrolled at Claremont McKenna College.  

So, I’ll be sure to give a call when in the area.  Let me know when you are visiting NM and I’ll make a point of taking you for drinks.

 

Have fun and make a difference out there!   Lillian

  

Hi Tom—

Wow I had no idea you were moving!!! We are definitely going to miss seeing you and hearing about all your entrepreneurial experiences at our events.

Best of luck in California and next time you are visiting in NM let me know. J

Take care! Shandra

Absolutely.
Tom, please feel free to email or call me. Social Media Week LA is happening right now and I believe there’s some events
(looking into it). If not this week, there’s a few good events every month. Would love to connect.Heather

From: Stewart Alsop <salsop@

Realizing Your Astoundingly Great Idea… through Process and Execution.

http://sfist.com/attachments/sfist_jeremy/garage.jpg

Many dream of being the instigator or part of the “Startup Launch”: First Discussions, Initiation, Developing a business and product(s), and most of all Success. What many dreamers don’t realize is that all of these steps are the by-product of the core reason the startup is being formed – a great product or service. It’s not a TV show where Ashton Kutcher claims he’s an “Internet billionaire” and no one questions it; in the real world great startups become great companies by focusing on Execution of ideas into products and services. A startup becomes a sustainable enterprise by repeating the process over and over.

An idea in itself isn’t worth much, and this applies to the tech world more so than most other segments of industry. Because of the vast amounts of publicity lavished on Mark Zuckerberg, Steve Jobs, and the Google twins, many fashion themselves as making a few key steps and then finding themselves on the cover of Time, or at least in a million dollar home.

I often encounter people who have great tech ideas – friends, colleagues, employees, neighbors. Many are very good ideas; almost all of them drift away into the ether, unless someone else executes one of them. Then my friend will inevitably say “I had that idea! They ripped me off!” Or they tell me that I should execute their idea and then give them a percent of the “winnings”.

Ideas without execution are just talk, I’m a culprit also, for many reasons. I used to try to explain this to people when they approach about a tech idea, but it usually just bursts their bubble and they don’t quite hear the message. The act of execution tests whether the idea can become more – it causes validation, formation, proof of concept, exposes fatal flaws, creates adjustments, essentially turns it into reality or the discard pile. This process IS the company, extremely important and often misunderstood.

There are countless examples of startups that begin as one thing then morphed into something different – HP, arguably on of the first Silicon Valley garage startups, was first successful with an audio oscillator, which they built after very little planning or product thought. Their process was correct.

So your original idea is likely to change some anyway through the process. Other people will help take it over the line; welcome them. So please contact me if you’re anywhere along the startup road, and Ill try to help you turn your ideas into things that the world wants.

personal:  @tomnora

business:  @cowlow