The World of Startups Outside Silicon Valley by Francine Hardaway
August 29, 2008
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Last night, when I saw Barack Obama accept the nomination, I cried. I wanted my father to be there to see this. He was the one who taught me a black person was my equal, and the person who taught me a woman could be anything. He put his money where his mouth was, doing legal work that paved the way for black entertainers to live in the hotels they performed in when in Las Vegas. That took guts; at the time Vegas was run by the mob. He was also the person who sent me all the way through school to get a Ph.D. even though he wanted me to be a lawyer. He didn't care if I never got married, as long as I was a professional.
As a result, I am the girl from Hope! I always think anything can happen (and to me, it often does.)
But until recently, I was despondent about the direction of the country and worried about how little power I (or anyone like me) had to do anything about the two issues that really bug me: the economy and the war. All this other stuff, it's commentary. The war takes our young people and makes us look stupid globally, forces us into maneuvers like torture and wiretapping, and strains our resources.
Not that we don't need to protect the country. It's just that we need a paradigm shift in how to do it.
And the economy? Well, for me that encompasses all of every day life: gas prices, cost of food, health care, outsourcing, insourcing...everything everyday people worry about, one paycheck away from poverty.
I am a firm believer in the power of entrepreneurship. I have been an entrepreneur for forty years, and I'm still engaged. I take a broad view of entrepreneurship -- anyone who assumes responsibility for his own economic survival, whether by starting a business, helping one grow, or taking responsibility for his/her own employability is entrepreneurial to me. That's how I've learned to view it from my travels in India, China, Malaysia, Africa.
I'm not a Republican or a Democrat, so don't fall back on stereotypes. And I'm not a liberal or a conservative. I'm an independent and I take it issue by issue, election by election.
But I cried last night, and this morning I laughed. I laughed because John McCain, whatever else I think of him, has continued changing the game. Maybe he had to do it, but he did it. Maybe it wasn't the right woman, but it acknowledged the sea change happening in our country.
America will never be the same after this election, and that makes me very happy. In a lot of ways, we can no longer afford to be the same.
Happy Holiday!
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August 23, 2008
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How does Generation Y look at the world? Um, you will probably be surprised, especially if you are an employer, an educator, or an entrepreneur.
Yesterday I had the unique opportunity to share a podium with Mark Bao, a 16-year-old high school student entrepreneur who has already developed and sold three Facebook applications. There are 50 years of history between us.
The dialogue was extraordinary, and not by design. When I asked him the question about what he expected to do with his life, he never even mentioned a job. I had to explain to him what was meant by a job back in the day: an alarm going off at 6 AM, a shower, a commute to a building with cubicles...He couldn't even conceptualize it.
And if you look at the conversation, you wil also see that school is also useless to him in any of the conventional ways. He's not getting information from school: he's waiting through high school to get to college to make connections.:-) What does that tell you?
I'm honored to have met him, and my faith in entrepreneurship for the future generations is only strengthened by him. If you are even thinking about your future, I suggest you watch the video.
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August 10, 2008
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From time to time, I get calls from consultants doing feasibility studies for economic development directors about incubator projects in and around Phoenix, where I live in the winter. I get these calls because I've worked among startup entrepreneurs for twenty-five years, including a stint on the advisory board of the Arizona Technology Incubator, a project that failed in the late 80s or early 90s after not producing very many successful graduates.
Being associated with that incubator, belonging to NBIA, and watching the startup environment in Silicon Vally during the summers has taught me many things that I try to share with the consultants who call me, but I am never telling them what they want to hear, because they only want to hear that an incubator in their city will produce entrepreneurial companies that create jobs. They want to build or lease a building, move a bunch of startup companies in with a bunch of services, and hope for magic.
They're dreaming. Think about the origin of the incubator. It's a place for the sick babies. The healthy ones are born and go out into the world. And so should the companies. The consultants and the economic development people who hire them think they can suppport the incubator through rent. But the incubator is an expensive machine, and the babies can't support it -- if they could, they wouldn't need it.
Why don't we need a physical incubator?
First of all, most companies can be started today at home, because they don't require an assembly line or a fab. (Biotech companies may be the exception to this rule, but they can start at universities). Both HP and Google, very different kinds of companies, started in garages. The space was FREE. You are dreaming if you think startups would or should pay for space, no matter how "flexible" or inexpensive.
Second, the services incubators used to provide--expensive telephone systems, Internet access, secretaries, conference rooms -- are now readily available either on the web as free services, or at coffee shops. Or they can be outsourced. Even large companies are working in virtual distributed teams.
Third, the services entrepreneurs REALLY need, like good attorneys, financial analysts, and marketing strategists, are never willing to hang around in an incubator. They have their own practices, and the entrepreneur should be willing to go to THEM.
Fourth, most entrepreneurs really need to raise money. The bureaucrats who run incubators seldom have those connections. You have to get out into the world to make them.
So what really is necessary to accelerate startups? Mostly things that are virtual, rather than physical. The entrepreneur needs mentors, or people to bounce ideas off. That's why co-working, an informal free space in which people gather to share resources, has become popular. It's now a nationwide movement.
What else is necessary? Good advice. This comes from experienced attorneys, accountants, and people who have been there before. Also, a good team. This comes from a network.
And a nestegg or a home equity line to seed fund your startup, because I don't really know anyone who gets money anymore based on just an idea, even in Nirvana (the Bay Area). Except if they are chosen by YCombinator and Techstars, both of which are FUNDS, not incubators.
So forget about your incubator spaces, and think about aggregating the virtual services entrepreneurs need rather than the physical spaces. An incubator is not a real estate play.
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July 30, 2008
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I'm gearing up for our fall FastTrac Growth Venture programs, so I'm thinking consecutive thoughts again about the issues confronting entrepreneurs and startups.
When I get back to Phoenix in a month I know I will be asked to sit
down with people who have great ideas, and some who have products.
However, few of them will actually have a viable business, much less a
company.
So it's time to go over those differences again, this time using a
Phoenix company, Cartfly, as an example. Cartfly is going through some
big changes (most of which are still in stealth mode and can't yet be
talked about), so I will probably have to roll around to them again in
a month or so to give an update. But it has been around for two years,
so let's just "use" them.
The company started as UStrive, which was (and is) an application
development lab. It quickly developed one application it really liked,
a simple online store for merchants.
So the guys, Josh and Bob, had an idea. And the idea became a product.
The product is easy to use and free, so a lot of small merchants have
adopted it. And because there's also a business model, which means a way to get paid and make money, Cartfly.com is a business.
Social networking is getting bigger, so Cartfly developed a "widget"
that allows its merchants to share their stores on MySpace and
Facebook. This is good for bands, and many bands use it. But social
shopping is a quickly-changing space. People are trying to decide how
to monetize social networks, and how to sell to all the people on them.
Going forward, Cartfly will change.
That's the part now in stealth mode. Cartfly has had a new idea, which they have developed into a new product, that has the potential of taking the company into a bigger (much bigger) business.
And this is how they become a real company. A
company doesn't have just one idea or one product, or even one business
if it wants to compete and survive. It's the old example of the
railroads, who didn't realize they were in the transportation business.
To grow, a company also takes on people beyond the founders. In fact, for a company
to have long-term potential, it has to grow past the founders, as Intel
has, or Microsoft. And as Apple and Yahoo are on the way to either
doing or not doing:-)
Cartfly, in the next couple of months, will morph in one fell swoop
from a small business into a bigger company. Stay tuned. ??I will let
you know when I can talk about it in more detail. :-)
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July 30, 2008
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I'm gearing up for our fall FastTrac Growth Venture programs, so I'm thinking consecutive thoughts again about the issues confronting entrepreneurs and startups.
When I get back to Phoenix in a month I know I will be asked to sit
down with people who have great ideas, and some who have products.
However, few of them will actually have a viable business, much less a
company.
So it's time to go over those differences again, this time using a
Phoenix company, Cartfly, as an example. Cartfly is going through some
big changes (most of which are still in stealth mode and can't yet be
talked about), so I will probably have to roll around to them again in
a month or so to give an update. But it has been around for two years,
so let's just "use" them.
The company started as UStrive, which was (and is) an application
development lab. It quickly developed one application it really liked,
a simple online store for merchants.
So the guys, Josh and Bob, had an idea. And the idea became a product.
The product is easy to use and free, so a lot of small merchants have
adopted it. And because there's also a business model, which means a way to get paid and make money, Cartfly.com is a business.
Social networking is getting bigger, so Cartfly developed a "widget"
that allows its merchants to share their stores on MySpace and
Facebook. This is good for bands, and many bands use it. But social
shopping is a quickly-changing space. People are trying to decide how
to monetize social networks, and how to sell to all the people on them.
Going forward, Cartfly will change.
That's the part now in stealth mode. Cartfly has had a new idea, which they have developed into a new product, that has the potential of taking the company into a bigger (much bigger) business.
And this is how they become a real company. A
company doesn't have just one idea or one product, or even one business
if it wants to compete and survive. It's the old example of the
railroads, who didn't realize they were in the transportation business.
To grow, a company also takes on people beyond the founders. In fact, for a company
to have long-term potential, it has to grow past the founders, as Intel
has, or Microsoft. And as Apple and Yahoo are on the way to either
doing or not doing:-)
Cartfly, in the next couple of months, will morph in one fell swoop
from a small business into a bigger company. Stay tuned. ??I will let
you know when I can talk about it in more detail. :-)
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July 24, 2008
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I've been known before to throw a grenade into the middle of a room I think is dreaming. So it was no surprise to me that I opened my mouth to make a comment at this morning's AlwaysOn panel on the two-year forecast for IPOs and mergers/acquisitions. On the panel were VCs, bankers, and investment bankers.
They basically said the time horizon for IPOs was about three years, and that companies who go public have to be a lot bigger, which means the VCs have to fund them for a lot longer. So if you take VC money, you should take it from a fund with enough dry powder to power your growth for the next three years.
What's amazing is that this doesn't seem to be a problem for Silicon Valley VCs, most of whom have large funds. But they sre investing larger dollars later, so they are closest to the exit. It's like people who sit on the aisle in the back of the movies in case there's a fire. Protecting themselves and their investors.
But who is going to sit in the front? Who is going to fund the earllier stage companies? Give the $3m to $8m rounds? More and more, that seems like syndicates of angels.
One of the comments from the panel was that there's TOO MUCH MONEY, which leads to "bad behavior" because the VCs are addicted to the feeds they get from managing that money. A startup without a huge war chest, even if it has a great solution for a huge problem, can't survive against a dramatically overfunded company in the same space.
So the audience was pissed, and one guy got up and said there were 1000 small companies in Silicon Valley that would go bankrupt in the next year in this new environment. That led to talking about structural problems in both investment banking and the VC system.
That's when I decided to voice my (probably unwelcome) opinion. As usual, I got up and said, "I am from Arizona and every year I say the same thing. There's a sense of entitlement to money up here. In Arizona we learn that to build a company, you have to go out and get a few customers. And after that, the investment will probably come."
Bootstrapping. Almost unheard of in Silicon Valley. But isn't that the way most companies are built?
A lot of people came up to me aftwards and thanked me for making it real.
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July 19, 2008
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My first job right out of college was at J Walter Thompson Company in
New York. I had an Ivy League degree and I was hired as...a typist. I
spent the day putting carbon paper in documents, throwing them out and
starting them over, and polishing my nails. I handed a guy his coat
and hat. I was one of the women in Mad Men. The only woman in a
position of power in the agency, an account executive, worked on Singer
Sewing Machines, Maxwell House Coffee, and Preparation H. She was such
a nervious wreck that she had to wear gloves all day to cover the rash
on her hands (eczema). She smoked and drank like a fish. Fresh from the
rarified atmosphere of Cornell, I thought all this was disgusting.
Which is why I quit my "glamour job" after six months and went back to
school to get a Ph.D. Unaware of the discrimination on college
campuses, I thought that was a place I could be known for my
intelligence, and not for my ass.
That wasn't really true either, so I decided to forget about
discrimination and forge ahead. I ended up starting my own business.
I had to do it, because no one was hiring women to be anything I wanted to be (CEO, etc.)
Ironically,, I think I succeeded because I did not drink at lunch, all
the men did, and I was sharper in the afternoons. I also capitalized on
being a woman. I presented myself as one of their daughters. I was
careful to admire them. I allowed myself to be "mentored" by people who
didn't know one tenth of what I did. I did what it took. I buried fear, anger, anxiety, and depression.
When I saw Mad Men, I knew someone was finally telling my story.
I spent esterday at BlogHer2008, thanking the gods for the last forty years and what they've done for opportunities for women. So many women are in business now, and so many opportunities exist that didn't exist in the days of Mad Men.
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July 17, 2008
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I'm on the way to join a group of women at BlogHer2008, and among them will be Tina Tran of EmpowHer.
EmpowHer is the brainchild of my friend Michelle Robson, who realized when she had a (probably) unnecessary and traumatic hysterectomy that women didn't have adequate access to good health information directed specifically at them. After several years of doing it herself, and becoming a national health advocate on behalf of her friends, she got interested in the power of the web to deliver that kind of information.
It took her a couple of years to get EmpowHer built the way she wanted it. Fortunately, she didn't really listen to me when I kept on telling her to launch early and often, and spent the time to put the right team in place and iterate several revisions of the site.
Now it is finally available, especially the part I think is going to be the key business advantage for Michelle: the Health Events Database. Health Events will be (and already is) a comprehensive database of patient education efforts held by non-profits, hospitals, schools, and others who try to help women get the information they need.
Most of the people who hold these events have miniscule marketing budgets, so although they hold seminars, classes, and lectures, they can't reach the people who need to know about them.
Health Events will fix that, putting all the events in a single searchable database. It's having a soft launch right now, and she will probably kill me for writing about it, but hey...it's the eve of BlogHer, and it's a perfect time to do it. If you try the database and you know it's not complete, help EmpowHer complete it:-) The EmpopwHer team takes feedback well; they're a startup and on the way to being a big success.
(Disclosure: I'm on the advisory board and I'm Michelle's friend, so I'm VERY biased).
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July 9, 2008
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The Social Media Club announced today
its newly formed interim Board of Directors. The board boasts a roster
of highly-regarded industry leaders; a truly amazing group of people
that I am honored to be a part of.
As connected as we all are, it’s sometimes a challenge to get
organized amidst all of the clutter. I think it’s vital at this
juncture to have a central support network for those of us involved in
Social Media to share resources and ideas, build community and
contribute to establishing best practices and standards in the area.
The Social Media Club is a part of this support network, alongside other organizations and standards efforts including Creative Commons, Microformats, Data Portability, OpenID, the Society for New Communications Research (SNCR), the International Association for Business Communicators (IABC) and many others.
The new interim board has been charted to address several key
organizational and strategic deliverables, including development of
membership goals, acceleration of local chapter development, increase
in adoption of industry standards and implementation of a new legal
structure to enhance future growth.
The newly named/appointed members of the interim board are leading
social media analysts, bloggers and business leaders, and are as
follows:
About the Social Media Club
The Social Media Club centers on the sharing of best practices,
establishing ethics and standards, and promoting media literacy with a
focus on the emerging discipline of Social Media. The Social Media Club
brings together journalists, publishers, communication professionals,
artists, amateur media creators, citizen journalists, teachers,
students, tool makers, and other interested collaborators who create
and consume media and have an interest in seeing the industry improve
and evolve. The Social Media Club provides a forum for diverse groups
and individuals to discover, connect, share and learn about social
media and to play a role in its future evolution.
To find out more about the opportunities in social media and connect with other practitioners, visit: http://www.socialmediaclub.org
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July 5, 2008
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Web of Fate, a semantic analysis engine that
extracts meaning from historical, present and future events and draws
connections among them, launched this week. The brains behind it is young Max Yuan, an ASU student who received an Edson Entrepreneurship grant for a completely different project, and who has a head full of projects I hope he has time to complete because they all seem great to me. The most interesting of them involve cataloguing and analyzing large bodies of data to determine relationships between events and trends.
While on the face of it Web of Fate says it's a social experiment that harnesses the collective intelligence of the web to visualize and uncover hidden relationships among future events, the front end features are only there to generate
interest from the general public and provide strongly typed data for the analysis
engine.
By asking the questions "what, when, how, where"... Web of Fate is able to
build an ontology model for events. All these data points can be cross
referenced and used in an analysis process. Out of that should come better trend-spotting and mapping, more accurate predictions, and more achievable goals. Max is thinking his analysis engine ought to be useful for decision support.
This is an ambitious undertaking. In the mean time, the site will let us have some fun predicting the future, creating time capsules, and getting validation certificates showing that we have, indeed, made the predictions (just in case they turn out to be true). Web 3.0, here we come!
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