Archives for the month of: June, 2011

Collaboration is for corporates - this seems to be a common view amongst early stage entrepreneurs.  However, I would argue that collaboration is vitally important to startups.  Firstly though, what does it really mean?  It is all about working constructively with people to achieve a joint objective.

Startup founders are often strong individuals, highly driven to succeed and very protective of their ideas.  This sometimes leads to a ‘go it alone’ approach.  However,  recent research suggests that this is a highly limiting strategy.  Startups with a team of more than one have a 3.6 times probability of receiving funding and those with good mentors have a 7 times chance of success.

I would advise to any aspiring startup founder to find a business partner as soon as possible.  This is easier said than done!  The problem is how to find the right person.  Networking is essential. But it is not just about finding a co-founder. It all about growing a team around you.  The team can be employees but it can also consist of advisors, investors, suppliers and other interested parties. In fact, startup success is almost always determined by the quality of the participants and the connections that are established with the broader eco-system.  The ‘idea’ is important but secondary, especially in techmedia companies where iteration is almost a given.

We have created www.dreamstake.net as a place to find the resources that you need.  You can do much of this free of charge, by connecting on-line and getting to know the other DreamStake entrepreneurs. Beyond this, you can come to our regular events and meet potential collaborators face-to-face. We are even running a number of specific collaboration events over the next month.

As well as the free of charge activities you can join our collaborative workspaces.  Club Workspace is a partnership between The Workspace Group and DreamStake. The two spaces, one at Clerkenwell, the other in Bermondsey, near London Bridge,  are amazing places to get connected.  We are located in the spaces and will ensure that you make the contacts you need to launch and grow your business.

Here are my tips for startup collaboration;

  • work out the gaps in your capability and decide how to acquire it
  • network on-line and at events where you will meet the right contacts
  • be prepared to give before you ask for help.  What goes around comes around
  • join a collaborative workspace
  • get the message out there using social media.  Don’t be afraid to ask for help
  • Use resources such as DreamStake and the British Library
  • be prepared to financially reward contributions by others

Please reach out to us on www.dreamstake.net.  We are creating the most vibrant online/offline collaborative environment for early stage startups.

There are a number of significant emerging trends that are changing the startup landscape;

The mass appeal of entrepreneurial activity

It has become sexy to be an entrepreneur. Entrepreneurs are seen to be modern day heroes. Movies are made about them. The the media (especially internet) showcases new ventures from across the world. This will encourage more people to get involved, whether as founders, team members or investors. The era of the major corporate has passed. Young people are more self expressive and want to have more control over their lives. The balance of risk/reward has shifted in favour of entrepreneurialism.

Mass participation in early stage startups

It will become much easier to get involved in very early stage startups.  Firstly, set-up costs are reducing rapidly.  The average cost of setting up an internet based business is now $50K.  Technology costs are reducing rapidly. Social media is also having a major impact on marketing costs. However, it is not just becoming easier to be a founder. It is also easier to become an investor or a team member.  Technology is opening the possibility of crowd funding and crowd sourcing.   Very early stage venture activity is moving quickly to a more participatory model. The internet will only accelerate this.

Traditional VCs no longer have a place in very early stage techmedia funding

For quite a while VCs have been talking about moving from early stage to later stage investment.  The fact is they have little choice.  The average investment size is too small to manage and they have no value add to bring to the party.  Early stage investment is essentially a lottery and corporate governance rules do not support the level of risk taking required.

The gamification and filmification of early stage startup activity

As traditional funding mechanisms are breaking down early stage startup activity starts to resemble the entertainment sector. Startups have to sell themselves in world where video is rapidly replacing the written word.  Business plans are becoming irrelevant as a means of pitching an idea.  Paul Graham at Y-combinator puts little emphasis on the business plan, rather focusing on the qualities of the pitching team.  Entrepreneurs will be increasingly asked to pitch by video, either by posting online or in realtime over Skype. Presentation skills will replace writing skills.

Early stage activity is increasingly being developed through game type mechanisms.  These include, accelerators, startup weekends, bootcamps, on-line pitching and matching.  These promote collaboration, introduce mentors and generally showcase talent to potential investors and team members.

Protection of IP is a waste of time in many cases

Early stage techmedia ventures need to validate their business model very early in the cycle.  Concepts are tested and prototypes produced in the first few months of the life of the new business.  It is important to fail fast or pivot fast.   In such a scenario, the protection of IP, beyond simple copyright protection is futile.  The product has either changed or the entrepreneur has moved on to other things.  It is more important to move to scaling the product quickly, before others can grab market share.  This can only be achieved by creating awareness.

Connectivity will be everything

Quality of team is by far the biggest determinant of success.  The most successful formula for team building is still to work with people you already know.  However, social networking is opening up the circle of collaborators that most people now have access to.  This will facilitate the possibility to create super-teams comprising the most appropriate talent wherever in the world it resides. The internet is rapidly increasing the options for co-working across borders.  Skype and other collaboration tools make this easy.

What does this all mean?

Entrepreneurs and investors have been slow to recognise exactly how the world is changing around them. There is an over-emphasise on impressing traditional investors and an under-emphasis on building out the business quickly.  An understanding of the dynamics of the industry will help entrepreneurs.  These tips are aimed at very early stage entrepreneurs;

- Have a very clear vision of what you are aiming to achieve

- Select one or more co-founder that supports your vision and fills in gaps in your capability

- Validate your proposition very early on, but do not attempt to scale until you have a market opportunity

- Focus on clearly communicating your vision, take feedback well.

- Do not obsess about IP issues unless you have something protectable

- Do not spend time trying to impress investors who are inappropriate to your needs

- Change course when needed or fail fast and try again.

Note the emphasis on team building, communication, time to market, validation, etc and lack of focus on producing detailed business plans and obsessing with IP protection.  In other words BECOME AN ENTREPRENEUR and enjoy the journey.

Check out www.dreamstake.net