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Monday, April 21, 2008

Tagging entrepreneurs at StartupSchool

Tagging entrepreneurs at Startup School

Startup School this weekend was by far the best entrepreneur event this year. By amount of energy floating around and amount of applause from the audience it may well surpass rock concerts in New York.

Interestingly enough it was not as much about mechanics of razing startup money or even building a viable business, but rather about common sense and a choice that entrepreneurs need to make. The choice is between going to venture capital firms in hope of building next great Googles and Facebooks with very little odds and building successful money-making companies with much bigger odds. People interested in later should checkout great speech by David Heinemeier [http://omnisio.com/startupschool08/david-heinemeier-hansson-at-startup-school-08] (creator of the Ruby on Rails framework), others may continue to read my boring notes.

Suggestions for startups to raise money

What to do:

Talk only to “good” investors

Tell existing story

Do deals in parallel

Thech founders are the key in SV

Create San Hill Buzz

Do not be distracted by fundraising process (no more than ½ person assigned to the process)

What all investors look for:

Market (big & growing fast). Startup cannot create markets. Customers with “hair on fire”. Unfair advantage.

Great Team

Great Product

Story that all investors want to hear:

Exploding market.

Best solution.

Best team.

Suggestions and observations

Get twice $$ what you think is needed

Avoid “super pro rata” in terms – makes hard to get second round

Deal making is about alternatives – more the better

Talk to CEOs of potential investors

Evl0-ery company has a rocky beginning

37 Signals

Tagging developers from Fortune 500 to fortune 5M. Different rules in that world – NO VC. No sales cycles – just solving one problem may be at little better than someone else

FriendFeed

-“listen to your users”

Amazon, Cloud computing

· AWS bandwidth passed Amazon retail bandwidth worldwide

· S3

· EC2

· SimpleDB

· SimpleQuue

· Flexible payment service

· Mechanical Turk

BlueOrigin [http://public.blueorigin.com/index.html] (Vertical takeoff and landing vehicle company funded by Jeff Bezos) as user for EC2 for computation

Google app engine. Will it be real competitor to EC2? Time will show.

“Customer focus is more important than competitive focus” – thank you, Jeff Bezos for setting right priorities for Amazon

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