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9/26/2009

What makes a conference useful for entrepreneurs?

12_bill_warner

In February of 2008, Tom Hopcroft, Heather Johnson, James Gesweiler and I started working on a new conference design focused on helping early stage entrepreneurs find people who can help them grow, and help them create great businesses.

We set out some ambitious goals:

1. A conference that could help a large number of entrepreneurs.

2. A conference that would bring out the helping spirit in the community.

3. A conference that would be fun and different.

4. A conference that would, in fact, help foster new businesses.

We quickly realized that the old designs just wouldn’t work. MassTLC already had a “pitch session” conference where potential investors are invited to hear early stage folks make their pitch. But this “pitching” model sets up a dynamic that isn’t really that useful. We want to help people at a much earlier stage — when they are working on the idea and need help.

And the old model of the podium-based conference where you line up speakers in advance isn’t great for the entrepreneurs either. They don’t need lectures. They need down-to-earth input from people who get what they are doing.

As we started hashing out some new ways to do this, an entrepreneur I had been working with, Andrew Borg, mentioned that he went to an amazing conference — an unconference in NYC, and it was run by Kaliya Hamlin. We quickly connected with Kaliya and then the design work took on a whole new flavor. With every new idea, Kaliya was able to instantly say if it would work or not. Or how to modify the idea. She just knows how people behave in groups, and she knows all kinds of new ways to help people come together.

So the idea was formed, and the name was picked; MassTLC Innovation 2008 unConference. I had never heard of an unconference, even though the approach has been around for decades. The idea is amazingly simple. Gather people together and offer multiple places for meetings to take place. Then, in a structured way, have people propose their topics and put them all on a giant “agenda wall”. Then people pick what sessions to go to. The ethos is that everything flows. If you don’t like a session, leave and go to a different one. The idea is that everyone is where they want to be, learning what they want to learn.

Unconferences are unique in that they need very little upfront work. You just need a venue. Then post the conference, and whoever comes creates the event.

However, for our event, we decided that we must build on a central core that is based on the mission of helping entrepreneurs find new helpers for their idea. So I began to think: “What kind of help was most useful to me in the very early days of Avid?” These four jumped to mind:

1. Early on, when I was 19, I was building a mechanical, relay-based “whistle” system to help my hospital roommate, Tom Wade, who was a quadriplegic, control his phone, lights, TV, etc even though he couldn’t move his arms or legs. Later I was introduced to a man named John Beall, who knew how to use digital logic chips, and insisted that I learn it, immediately. He showed me how, and that changed my career, yielded a working Whistle System (and a 1980 patent) and led to my transfer to MIT. (I wrote an article about John Beall in Mass High Tech)

2. Later, when I came up with the idea for the Avid editing system, I was able to get my initial idea vetted by people who understood the problem and could help create the system. Eric Peters, who later became Avid’s CTO, is a key example.

3. Just a month after starting the company, I presented to the MIT Startup Forum dinner meeting. This group convinced me that I should not bootstrap the business and should get venture capital.

4. In February of 1988, Bill Kaiser of Greylock was the first and only VC we talked to, and he later invested.

These four events represent four kinds of helping that were crucial to me. First, John Beall helped me get on the right technology path. Second, Eric Peters helped me create the product I wanted to build. Third, the MIT Startup Forum helped me choose a good path to grow the company, and fourth, Bill Kaiser became a lead investor who put his energy, intelligence, and his time behind building a great company. The investment was $500K so it was almost like having an angel investor that led to venture.

So this led to the question: How could one design a conference that makes it easy for entrepreneurs to find the kind of help that I found useful when starting Avid?

I always tell entrepreneurs to figure out the straightest path to just where they want to go, so I figured I’d try it here. I sent letters to a whole ton of people who I thought could provide the same kind of help that I got in my early days. I told them my story, and asked them to volunteer a day for early stage folks. The response was amazing. Everyone said “yes.”

So the conference began in a different way than most. Instead of accomplished people being pursued as speakers for a quiet audience, this conference began with a roster of volunteers, experts in their field, who are ready to say “How can I help?”

Only then did we set out to find entrepreneurs who needed the help. Last year, we had 60 volunteer experts and 60 entrepreneurs. This formed the core of the conference, and served to attract the rest of the attendees.

The event itself was amazing. The agenda creation happened so quickly that by the time I put up my own session, the wall was full and we needed to add another venue. (in an unconference, there’s always room for more). Michael Greeley told us it was like “lightning in a bottle.” See the event on video here. (3 minutes)

What excites me the most is that the central goal was met. So many entrepreneurs did find people to help them. And funny thing…so did I. One of my passions is hand-pedaled cycles, and I found a great designer, Alan Ball, to help on that project. Mechanical design buffs will enjoy this blog about the “Morphing Handcycle.”

This year, for MassTLC Innovation 2009, we’re building on the same theme. We have an expanded venue, so we can handle even more people. Now we have over 75 volunteer experts, and we are finalizing the list of entrepreneurs. That same great dynamic is at the center of this event. Talented people asking, “How Can I Help?”

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9/15/2009

What are the basic but critical factors for being successful in entrepreneurship?

Photo of Ken Morse

We are fortunate that the basic building blocks for starting great new companies are all available in Massachusetts. It is even better that there is broad support from both business and government leaders to enhance the Massachusetts’ entrepreneurial ecosystem by making MassChallenge and other key initiatives successes so they can further strengthen this already formidable ecosystem.

But what do you need to have as an entrepreneur to succeed?

  • You have to have a team. Companies buy from teams and people invest in teams, not lone wolves.
  • Your team must have technology at all levels of the supply chain to achieve a sustainable competitive advantage.
  • There must be a clear, salable value proposition. As charming as you entrepreneurs may be, people will not buy from you unless your product makes money for them as customers; clients pursue their own financial self-interest. This is particularly important as you go global with your enterprise; you have to have a market that is large and that has customers who are likely to buy, and pay you money. This will only work if you have a clear value proposition.

 

Best Source of Funding for Startups
What is the single best source of funding for your new business? Should it come from venture capital? Maybe, but probably not at first.

 

The single best source of funding is almost always a customer.
Why? What is good about customers as a source of funding?

  • Customers are demanding.
  • Customers force you to build what they want, not a “science project.”
  • Your customers keep your company alive.
  • Customers keep you focused and if they like your product, they buy more.
    Customer money is the cheapest, most productive form of capital.

How much of the company do you own after you get money from your customers? Do you still have 100%? Yes. And is that a good thing? Well, it certainly is not a bad thing. At the Venture Capital Conference at MIT a few years ago, the keynote speaker was a guy who said, “For goodness’ sake, don’t take VC.”

Whomever you invite to help your company, be it government agencies, venture capitalists, or friends and family, they should have an extensive Rolodex. They better have relationships and a productive network. They better be keenly interested in helping you recruit the best possible people and put in place what it takes to build your enterprise. Everyone that is involved with the company has to help you build it.

The Need for Practical Experience to Complement Top-notch Academics
We are in an interesting situation because our universities teach you how to think, but do not always teach you how to get things done. You need to get real world experience in order to be more effective in building your businesses. In the post-bubble era, a line of Bull and a PowerPoint presentation is not enough to get a company going. You need to have good people, in a team, who know something and have actually done something.

What is the right kind of practical experience to get as a young, aspiring entrepreneur? We just heard that the way to start your business is by getting early customers, so a good practical experience is sales. You have to experience hunting for customers. As you make your decisions about where to work before you launch your own business, I urge you to give serious consideration to getting as close as you can to the intake valve of the companies that you are involved with, and work hard to make customers successful with your solutions.

Characteristics of a quality entrepreneur

  • Integrity is probably the most important thing. Without it, nobody’s going to join your company. Integrity at all levels of management is critical, particularly in start-ups. Nobody is going to quit a good paying job to join you in a frozen garage, unless they trust you completely. Companies are not going to buy from you – a small, poorly funded company – unless they are sure they can count on you. Integrity is the foundation for any start- up, and only then can you see the other characteristics coming in, such as leadership and quick clock speed.
  • Most entrepreneurs are itchy to move forward; they are biased toward action.
  • The best entrepreneurs are people who are extremely ambitious, but have low ego. This is because ego gets in the way of listening.

Ultimately, you need an “A” team, you need to know your market, and you better have a value proposition that is compelling, quantifiable, provable, easy to reference, and easy to explain. It should be simple for potential customers to make the decision to buy from you.

Technology is only part of the picture: Sales is Key

We surveyed literally hundreds of CEOs of start-up companies, and they all said that sales is harder than technology. Technology is a part of the picture, but only a part.

How many of you can think of examples of outstanding companies with amazing technology that were handily defeated by firms with inferior technologies, but better sales forces?

There is VHS vs. Betamax, Oracle vs. Sybase, Microsoft vs. Apple, and many more. The key point is that the sales and the distribution model can trump technology every time.

I suggest that you name your first 10 customers in your business plans. There is no better way to show that you know what you are doing than to say “These are the 10 customers that are going to buy.” You have to say, “the Vice President of Engineering is going to buy this software”, and you also have to include the buyer’s first name, middle initial, last name, title, e-mail address, and cell phone number. It is good even to know what he/she eats for breakfast! If you do not know these things about your early, lead customers, you are not ready to start a business.

Getting Credibility
When you are starting a company, you need a certain credibility to help you get your first customers. But how do you get this credibility when you are young and possibly just out of school? It is a very good idea to have advisers who have done it several times before. Probably they will have grey hair (or no hair).

Conclusion
The critical success factors are:

  • You must believe that startups can succeed, despite all the obstacles, and friends who tell you it’s a crazy idea.
  • You have to be willing to be unconventional.
  • You got to be a workaholic maniac who wants to do something that will change the world. If that is your goal, many of you will be successful.

Kenneth P. Morse is a serial entrepreneur and the Founding Managing Director of the MIT Entrepreneurship Center. Ken played a key role in launching several high-tech startups, including 3Com Corporation, Aspen Technology, an expert systems company, and a biotech firm. Ken’s batting average is 0.833: five of his start-ups went public or were successfully merged; one was a complete disaster. At the MIT Entrepreneurship Center for the last 13 years, Ken and his team were responsible for inspiring, training, and coaching new generations of entrepreneurs from all parts of MIT. He holds the Chair in Entrepreneurship, Innovation, and Competitiveness at Delft University of Technology.

Ken is currently working on a book, tentatively titled “Making It Happen Globally.” Each chapter profiles a brave entrepreneur, far from Silicon Valley or Rt.128, who pursued an opportunity and built a great company.

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9/1/2009

(Check out Michael’s other blog postings here: On the Flying Bridge)

What are the limiting reagents for launching successful startups in Massachusetts right now, and what initiatives exist to help fill those gaps?

Photo of Michael Greeley

The economic crisis has forced all of us to look at creative ways to get the “company creation” process re-started. As has been widely reported funding activity is way down, entrepreneurs have never been this stonewalled while trying to raise capital, and VC returns are languishing. At Governor Patrick’s prompting a group of senior executives across many of the local IT sectors were convened – the IT Collaborative – earlier this year to better understand what is happening and suggest possible activities to begin to pull us out of this hole.

One issue we identified as a significant issue is the lack of compelling mentorship in the region. Building companies demands great passion, vision and intelligence; it also helps to have done it before. First-time entrepreneurs proceed on a “random walk” to refine their business plans and raise capital; arguably a very inefficient process at best. Many VC firms engage early to provide feedback and advice but that is still not completely adequate and frankly it is not a very deep engagement. What the marketplace really needs is senior successful serial entrepreneurs to give back, that is serve on the boards of the next generation of entrepreneurs’ boards, open up their rolodexes, share the war stories of what worked and what didn’t work. This mentorship is difficult to find.

It is those observations which led me to launch the "12 by 12" program with Andy Ory, founder and CEO of Acme Packets in Burlington. (Andy and I co-chair the Entrepreneurship Committee for the IT Collaborative). In essence we are recruiting 12 senior executives in town and are pairing them up with 12 senior General Partners at leading local venture capital firms – and together that pair will commit to work with a next generation entrepreneur by providing guidance and seed capital. The goal of the program will be to launch 12 new companies over the next 12 months. In fact we expect to announce the first company early this fall and have another right behind it ready to go. Stay tuned for more details…we will announce the list of 12 CEO’s shortly.

And this is why I am excited to support MassChallenge, who will provide a great pipeline of young entrepreneurial talent to the "12 by 12" program as well as provide intensive mentoring and support. To his great credit, Secretary of Economic Development for the Commonwealth, Greg Bialecki, has provided meaningful support as well to MassChallenge which will continue to raise the visibility of this important effort. It is going to take a number of thoughtful initiatives like MassChallenge and "12 by 12" to return the local entrepreneurial ecosystem to a place of vitality.

How will you get engaged in this effort?

Michael currently serves as Chairman of the New England Venture Capital Association where he served as President from 2005 to 2008, and was recently appointed to the board of the National Venture Capital Association and as Chair of the Entrepreneurship Committee of the Massachusetts Information Collaborative.

Michael is a General Partner at Flybridge Capital Partners focused on information technology, healthcare and medical technology investments. Michael founded IDG Ventures Atlantic in 2001 before it transitioned to Flybridge Capital Partners in 2008. Michael served on the board of International Data Group, the flagship Limited Partner for the IDG Ventures global network of funds. He also currently serves on the investment committee of the Partners Innovation Healthcare Fund, is a member of the Executive Business Advisory Council for Mass General Hospital for Children, and a trustee and on the investment committee of the Massachusetts Eye and Ear Infirmary.

Learn more about Michael at Flybridge Capital Partners.

Read Michael’s blog at On the Flying Bridge.

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