Hacking The Core – my new book on startup innovation

Hacking The Core – my new book on startup innovation

Here’s the intro on iBooks, Amazon and other online sites for my new book, released in April 2017.

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Hacking The Core explains entrepreneurship in the tech startup world in a refreshing way. Pulling no punches, the author draws from 2 decades of experience as a startup CEO, strategist, M&A consultant and investor.

The book explains how to tap into the creativity and innovation that we all have hidden inside of us and how to apply it to launching and growing a startup business. It looks at all areas of a business launch to uncover areas of innovation, differentiation, design thinking.

Hacking The Core is based on principles of common sense, honesty vs. “fake it ’til you make it” and humility in success. It will show you how to lead instead of follow trends, how to create true disruption in and market segment.

There are several personal anecdotes from the author and explanations of his own motivations and mentors in his long startup business path.

Available on iTunes/iBooks

 

 

About the author

Tom Nora is an entrepreneur, startup CEO, blogger and business mentor. He has led and mentored over 2 dozen venture-backed technology companies, 5 of them as President and CEO. He has extensive experience in funding, mergers, acquisitions and IPOs.

In 2011 Tom launched The Scalable Startup in Santa Monica, California to help tech startups launch and  grow by providing mentoring, funding, community and strategy consulting. The same year Tom also started publishing the popular blog The Startup CEO.

In 2014 he decided to write a series of books on the startup world and his experiences. This was in response to the continuous requests for help he receives from early stage entrepreneurs and future entrepreneurs. Hacking The Core is the first of these books to be published, focusing on innovation and originality.

Tom is also a lifelong fine art photographer and oil painter.

Available on iTunes/iBooks

 

 

“ Amazing. Tom rocks ”  — JOHN HENRY, IBM CORP.

 

Caveat Emptor – look out Seed Investors for the $0 return startup.

Caveat Emptor – look out Seed Investors for the $0 return startup.

By most measures, we are in crazy times right now in the tech startup world. We have thousands of new companies every week, hundreds of funding rounds over $100 million every month, and so many $1 billion exits or calculations that we’re getting used to them. A $1 billion valuation used to be a big deal for a web based company that wasn’t one of the top few.

Everyone thought Facebook was nuts when they walked away from such a deal. But now the funding seems to be flowing everywhere, at many levels, and that almost anyone who starts a startup will be successful, will be “big”. Unfortunately, this is very far from the actual truth; we just don’t hear about the 95% that fail and lose all of whatever money is invested.

The frenzy at these higher levels, and the continuous stories of first time entrepreneurs in their early 20s who magically start these amazing companies is creating a demand at the bottom of the funding market, like the pyramid schemes in Southern California in 980 (see below). Look out for this trend, put your wallet away.

Unsophisticated investors, which means family, friends, co-workers, etc. or also called triple-F – friends, family and fools, who have a few thousand dollars they would like to put into the startup “market” are the fuel at the bottom of the market that get things started. It can be anywhere from $5,000 up to $500,000. They help to make ideas into reality, hoping for the higher returns of the early investors. You’ll see many dentists, doctors, parents, Hollywood actors in the crowd. They have a lower probability of return, as expected, but now are losing their money at higher rates than ever before. We don’t hear about this much because they’re embarrassed; who wants to talk about it and admit that they made such a mistake?

This market is reminiscent of the rampant pyramid schemes in the 1970s. Here’s a description from Time Magazine June 16, 1980 issue:

For $1,000 each, 32 newcomers buy slots on the bottom row of a pyramid-shaped roster. Each new player pays half of his $1,000 to the person at the pinnacle, who ends up with $16,000. The new player also pays his remaining $500 to the person directly above him on the next tier, which contains 16 people. Since each person on that tier gets paid by two of the newcomers, he ends up with $1,000, thus recouping his original investment. As more people buy in, the players move up the chart. In time, theoretically, each person reaches the top—and $16,000.

Amazing, huh? The only problem was that the need for newcomers increases exponentially, thus the name pyramid. You needed 32 new people every night, and as the word spread new groups popped up everywhere in L.A. It fizzled out within a couple of weeks, but went on for years in other parts of the country.

Skip to 2013…

Two years ago in the California startup world there was a lot of buzz, or anti-buzz, about the impending pop of the current hyperactive tech market and unsophisticated spending of . The concerns took many forms, one of which was named “Series A Crunch”, another was the gratuitous use of the word “bubble”. Series A is the second round, the one after the seed or other small amount of ignition money. It’s the round that graduates of accelerators seek. It’s also “professional money”, not triple-f.

I remember being asked in a startup panel I was on by the moderator “What do you think of the Series A crunch?”. I replied, “Do you know what a Series A Crunch is?” She tried to explain but didn’t in fact know what it was. That was a sign to me of startup overhype, everybody mimicking each others phrase of the week.

Fast forward to today, 2015, when we’ve been in a possible “end of the boom” for over 3 years. We’ve been hearing the word bubble for that long, people trying to predict a crash, mostly out of envy for not being able to harvest any cash from this current crazy market. Seed funding is at an all time high rate and it has that scary phenomenon of feeding on itself.

There are a number of articles floating around again about the lack of Series A money in the market, which is usually required to take a company to ROI.

At the same time people are bragging about how easy it is to raise seed funding of up to $1 million. Almost anyone with a web based working “app” or mobile app can get funding. No business plan, no ROI. Sometimes you’ll need to show traffic/traction/conversion, but not usually. There are plenty of triple-F investors anxious to empty their 401K or add another mortgage, take a “risk”, for the chance at those 8 to 9 figure exits they keep hearing about.

This is also reminiscent of the late 90s when unsophisticated investors lost billions diving into the dot com boom just before it crashed fairly rapidly. The difference is now it’s not crashing so visibly. There are admittedly many more successful growth startups on the Internet than ever, the second renaissance of the web, but the statistics for success are much worse than ever.

If you look at CrunchBase, almost every day you’ll see a new funding of over $100 million. Almost every day. That’s enticing to a potential angel. You’ll also see several others from $10 to 50 million. This has become the holy grail for that 401K earning slow interest.

But here’s the problem. Most of these investments will return $0. Not 80% or 50%, zero. In this flurry of amazing new Internet startups, a higher percentage are failing after the seed round than ever before, probably close to 99% vs about 85% 20 years ago. That means almost every unsophisticated angel investor is losing their savings and adding new debt to their life.

Why will so many people lose their money and why is no one talking about it? Here are the reasons:

  • It’s very easy now “look real”, i.e to create and deploy an Internet and/or mobile app live on the web or a phone. I get pitched one every day.
  • We’re still in a terrible job market, no matter what the official statistics say. I’ve met more broke unemployed professionals in Beverly Hills and Santa Monica in the past 3 years than ever in my life. They have nothing to lose. Why not start  company.
  • The Triple F effect. Friends, Families and Fools. Those are the people who will give you funding based on no actual research or due diligence.
  • Erosion of true self analysis. One very critical part of succeeding in a business is being able to critique yourself as a business. As part of the new startup world people are avoiding this process. It’s become a casualty of “fail fast” and pivot and other buzzwords.

The bottom line is that people with no experience or particular expertise in almost anything will most likely fail. So get some expertise involved before you go get that wire transfer of $100,00 for the son or friend or co-worker you want to help.

t [at] tomnora dot com

The life of a Startup CEO – 3 full Time Jobs.

The life of a Startup CEO – 3 full Time Jobs.

This post has been one of my most popular on Quora. I originally wrote it in late 2012 when asked the question – What does it feel like to be a start-up mentor? (link to original post). In it I discuss the 3 full time jobs a real startup CEO has. If you read carefully I didn’t even actually answer the question properly, but I did touch on a few truths. 

One of the points of this is to realize that maybe yu shouldn’t try to be a startup ceo; most fail at it and are miserable. They Zalsohave a lot of fear that they can’t discuss with anybody – not their team not their investors, not their spouse, not the Board of Directors. All of those people have to be held at a bit of a distance. That’s often where I come in…

Enjoy…

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As a Startup Mentor to over 20 companies over 20 years, plus a few currently, I think the first question is what is the CEO going through? (See below) As thementor you need to empathize, coach, help, counsel and help the CEO develop the business.

What is the startup CEO going through?

Being the CEO of a startup is crazy, fun, very hard work, inclusive, humbling and of course can be quite rewarding. Weekends are meaningless. There is a continuous decision stream where each decision informs the next. Your mind is thinking 24 hours a day, even when you sleep.

When you’re the CEO of a startup, a real startup with product and some cash in the bank and/or revenue, there are 3 FULL TIME JOBS.

1. Raising Money – you are constantly doing this, preparing for this and thinking about this, whether it’s pre-seed, seed funding, debt, revenue, partnerships, IPO or other.

2. Managing and Properly Growing The Business – this includes several things, depending on the size of the enterprise: managing employees, administration, hiring, firing, leases, expenses, unhappy employees, fixing other problems, etc.

This piece is what often kills an otherwise great business, which justifys the case for less is more when it comes to employees and infrastructure.

3. Selling – The CEO of a startup must ABS, always be selling. You start every day working this, just like #1 above, they’re closely related. Using the CEO to close sales no matter what size the business is, is vital to success.

This piece emphasizes the importance of having an awesome, mature VP of Sales, if you can afford it; it takes a lot of pressure off and frees up the time of the CEO.

So the job of the mentor is to make sure everything progresses forward and your protege is staying out of the ditches. It requires strong mutual trust but if you have that, it can be a rewarding win-win experience.

Contact me if you’re dead serious and I can help you. The Startup CEO by Tom Nora

Online Review Management – A Synopsis of my project with a review management startup.

Online Review Management – A Synopsis of my project with a review management startup.

I recently completed a short term project with ReviewInc (RI), an online review management platform for businesses to mange and enhance their review process. RI is a small Los Angeles are company that’s been in business for about 3 years with a couple of major pivots under their belt.

My role was to analyze all aspects of the company and then find their unique opportunities to “take it to the next level”. It opened my eyes to the fascinating ( never thought I’d say that about reviews) details of this market segment and its ubiquity in all important Online Marketing.

RI primarily needs to accelerate revenue growth and market share in order to build new products, increase salaries to market rate and defend their position against a large number of competitors. I found several areas of excellence as well as several more that need enhancement. In the 90 period of my consulting they made many positive changes in a short time period with their minimal budget.

> The Larger Market:

The Online Review infrastructure industry is highly under exposed in the overall Internet marketing world. When most people think of reviews, they think of negative reviews people write when they’re unhappy about their service at a restaurant or tire dealership. Even expert Internet marketers are pretty unaware of the market and its details. Until recently I was fairly unaware of this market, more focused on social, dat analytics, seo, superior web development, content management and CMS design as my priorities for Online Marketing projects and conversion. But now I realize “the review piece” should be considered in any Online Marketing strategy and execution. It’s content, social, seo enhancing and is impacting a vast majority of online purchasing.

Yelp pioneered 2.0 of this industry over 10 years ago and should be given credit for that. Now the market is estimated at over $10 billion revenue per year, probably a lot more if you include all the sub-markets and service agencies using it for their business development and product lines. It’s a lot more than restaurant reviews.

Online review management systems are an established part of the web for both consumer and B2B. In the consumer markets, 86% of all customers rely on online reviews when they buy something, and 72% of all people say online reviews are their top reason for choosing a local business. For B2B, online reviews and testimonials and becoming a requirement in healthcare, automotive, government and other industries. And there’s a ton of overlap, making the line pretty fuzzy.

No matter the segment, reviews directly impact sales, market position and business health. Yelp is the giant in the industry at a $4 billion market cap, but there are over 1,000 other review companies in all segments of business and consumer markets.  Other heavy hitters are Trip Advisor, Glassdoor, Angie’s List, Edmunds.com, NewEgg.com, La Fourchette, Menu Pages, Doctor.com, Best Buy, Michelin, Cityvox Avvo, IMDB, Call a Plumber, Brad’s Deals, HotFrog Gayot.com, Rotten Tomatoes, Ripoff Report and Zagat.

It is a quickly evolving market that will continuously challenge current players, as Yelp has seen as it has lost almost 50% of its market value in the past 12 months.

> Market Segments:

Online Reviews, Review Management, Restaurant Reviews, Employer Reviews, Movie Reviews, Social Analytics, Reputation Management, Customer Service Feedback, Review Aggregation.

> Company Summary:

Saas Product launched, several Fortune 1000 customers, currently growing. Self funded to date, 10-20 employees.

> The Bottom Line:

ReviewInc. is doing a lot of things right in product innovation R&D efficiency and anticipating user needs. They will have to continue to innovate and adapt to the market and win big deals to grow to a sufficient size to be a factor in this market; they have many direct competitors. They need to be sufficiently afraid of this ruthless market and use it for motivation. As Andy Grove says “Only the paranoid survive.”

If RI wants to grow faster they will need to take the company through the chasm and make critical changes to their management team, product line and UX. Not all companies want this; they would prefer to fly under the radar, so 2015 will determine which path RI takes.

Pinterest gets into the ad “Real Estate” Business

Pinterest gets into the ad “Real Estate” Business

Pinterest as we know it could be a thing of the past. Beginning January 1, 2015, Pinterest will start putting ads on its site. Real ads in the form of promoted pins. I have mixed feelings about this – I respect their right to do this and I’m happy for them to be able to get a piece of the enormous revenue stream that Google and Facebook dominate, but it will also take away the purity of Pinterest and lessen the experience a bit.

Overall, I say congratulations, you’ve earned it, Pinterest! They will now move up the food chain significantly as Fortune 500 companies can develop more formal relationships with them and build “serious” ad campaigns. All other ad industry professionals and component niches will also take a big step closer to Pinterest. This is like opening up a whole new giant beautiful piece of the web to advertisers.

But there is a cost to this for users. Pinterest is one of my favorite places to go on the Internet, one of my favorite apps. It’s an oasis in the ad strewn desert of social media. There are many indirect ads there already, especially clothing sold by affiliates, but not very intrusive to the experience.

Pinterest is a constant river of pictures, and mostly very high quality pictures, undistracted by ad text or flashing lights. It’s a respite from the rest of the web, with its rectangular boxes of advertising or the sidebar of Google ads – the high value real estate of the web that is rented to the highest bidder.

As a major fan of photography and imagery I like to go over to Pinterest to get away from all that. It’s almost like a relaxation lounge on the web. I’ve slowly built and curated my collection of pins over the past 3 years, with a bit of an eye towards social validation, but mostly to see cool photos. I’ve been pleasantly surprised thousands of times by images I’ve seen. How many products can claim that?

One of the best parts of Pinterest is that it’s participatory, a gamification of looking at photos (and memes and infographics). As you browse build and organize your collection and it shows running totals of several statistics. And there’s minimal social interaction, almost like a library where people tend to be quiet and leave each other alone. A relaxing experience. I even have a board called zen relaxation that I can go to for quiet inspiration.

Pinterest no doubt developed one of the most fascinating products of the last decade, almost as powerful as Google, facebook, and Twitter. It’s addictive, stimulating and makes you smile. Hopefully that won’t change but it could.

The best part of the product is its design. Pinterest pioneered a new type of web page, now referred by everyone as a “Pinterest style”. It’s hard to remember now, but 3 years ago it was revolutionary. That single innovation was more influential than almost anything prior on the web.

Pinterest will do this with a lot of style – use a native ad approach with the Promoted Pin, but it could change them if they’re not careful. They are playing with the big boys now. Giants corporations will have a more formal dedicated part of their ad budget and marketing team focused on Pinterest, like they do now with Google ads and Facebook. Giant corporations will want to “help” Pinterest figure out how to change. Giant corporations will want to acquire Pinterest.  Let’s hope they keep their independence as long as possible.

Billions of dollars will be diverted from other ad channels to Pinterest. It could easily tarnish the brand. The fact that they have waited this long to monetize in this way and have built such great brand equity is quite encouraging.

It will also be a great opportunity for advertisers of all sizes, even the little guys. Buying real estate on Pinterest? Awesome!

No matter what happens, I’ll always be a big Pinterest supporter (is there a name for that? Pinterevist?) I hope they don’t hire a thousand lawyers or get acquired, but I trust them to handle this change with the same style they apply to everything.

@tomnora

The first 6 months at Envato

The first 6 months at Envato

I’ve been spending a lot of time in the WordPress as a development platform world lately, kind of a new thing for me.

I’m finding many unexpected business advantages in this world for a group of websites I am building to bootstrap a few “baby startups”.

What this has done for me is vastly increase my interest in tactical data-driven marketing on the web –– growth hacking, content management, agile iterative web development and marketing, and yes, even SEO.

The ecosystem of WordPress is actually fascinating and lots of fun, full of solo-prenuers, bootstrapers, hackers, marketers and doers. It’s a somewhat different world than the VC funded startup world that is my day job.

The link below is one of the best interviews I’ve seen, from Collis Ta’eed, a very humble and honest guy who started Envato, a marketplace for web dev themes and many other creative resources.

In a very short time he covers to first 6 months of his company, unafraid to discuss failures, missteps and instances of pure luck. This is the opposite of many startup interviews where the founder claims brilliance and a smooth path and takes credit for everything.

Very inspiring, check it out…

http://wptavern.com/ceo-and-envato-co-founder-collis-taeed-on-the-first-6-months-of-envato