Cliff Notes from Founder Factory 2009

20 Nov 2009

Yesterday the Founder Factory took place at the World Cafe Live in Philadelphia. I love the venue and there were some interesting speakers and discussions. Here are the things I found most interesting from the talks:

Doug Alexander, President - Internet Capital Group

• If you have a B2B product or service, figure out which budget you come out of. Don't come out of the IT budget, which is heavily pressurized and quickly trimmed. Come out of the marketing, or COGS budget, which are generally more sacrosanct.
• Again with a B2B product or service, you want to be solving a problem that keeps a senior executive (at your target client) up at night. By inference (if it were indeed a b2b product), I declare sildenafil citrate the greatest product of all time.
• Avoid missionary selling, which is to say, avoid spending money to educate influencers in your market that they need your product or service. This missionary work usually has the effect of educating the market on behalf of your competitors as well.
• Advice to a fishbowl company: If seeking outside funding, ensure you have a concrete vision (with detail) of what success looks like for your company. Instead of relying on the potential investor to create their own vision of this scenario, paint this picture in detail and sell this vision to the investor.

Dr Jeremy Siegel, Professor - Wharton School

• While the dollar has slumped recently, it slumped after a spectacular and unnatural rise, setting it's current value still above the levels it was in 2007 (I believe, I need references, since I do not follow currencies at all). Essentially, view current value in a broader context before declaring disaster. I've had this sentiment expressed to me before about the stock market in general.
• Focusing on the deficit and foreign debt as threats to the US economy ignores far larger threats, such as social security and medicare, which represent buckets orders of magnitude larger than the deficit.

David Brussin, CEO - Monetate

• Use external QA resources. It's a triple win of fresh eyes with more perspective and no emotional ties to the product.
• Cloud, cloud, cloud. And CDN. With cloud.
• Interesting tactic: don't upgrade your software in the cloud. Deploy new infrastructure and move traffic over, your rollback being the previous setup. (IMHO this is only practical to a threshold. What happens where your 'setup' is hundreds/thousands of nodes?)
• If your product imposes management overhead on your customer, becoming "full service", ie: providing a product as well as management of the product as a combined offering, might be a solid commercial solution and an easier sell. "The work on your part will be limited to banking all this money we create for you".

The Fishbowl

In the fishbowl, three companies in various phases of development, asked a panel of experts (and the audience) for advice on certain issues.

Kendra Gaeta of Kidzillions was unfortunate enough to be the person who taught some of the speakers (and me) a valuable lesson, which is: If you cannot do your presentation without your presentation, then you might want to rethink your appearance. Nothing cooperated with her, yet she soldiered on and won the support of the audience, sans slides. It may have been better without slides. The most valuable advice I took from her feedback is while certain products may lend themselves to white-labeling, sometimes a strong brand is more valuable to the business, and should remain in tact through all markets.

Ryan Meinzer of PlaySay asked for advice, mainly on a strategy to deal with potential threat from the very large players in markets adjacent to his. The consensus among the panel seemed to (to me anyway) be that when you can profitably serve multiple smaller niches with a predictable formula, you don't need to be overly concerned about the Walmarts of your space. I appreciate the candor of an entrepreneur who tells you that a business "landed in his lap" and he ran with it. Also, there is dogfooding going on here where PlaySay evolved out of his own need to learn Japanese. There was discussion of patents, and all I could hear was Paul Graham talking about how the value of patents for a startup really is "as an element of the mating dance with acquirers". I was hoping one of the panelists would say (warning, my $0.02 ahead) that should PlaySay's immediate strategy be acquisition by one of those neighboring 800 pound gorillas, then by all means invest in those patents, which can be line items in the inventory to sell an acquirer. Alternatively, focus resources on product development.

The three guys from RevZilla have built an impressive business. They bootstrapped heavily, are passionate about their products and the space, and were seeking advice on growth. I was (pleasantly) surprised to hear a panel of VCs suggest to these guys not take take external funding, and thereby introduce a whole new set of circumstances into their business, when they have such demonstrable growth. It seems that the powersports industry suffers from a common problem (is Ludditry a word?) which is that equipment distributors and manufacturers generally will not sell to Internet-only retailers. I found this in the golf equipment industry too, when I looked into it. The Revzilla solution is an impressive looking store front/warehouse in South Philly. In general, it seemed that the advice to RevZilla was that the curve they are on seems very promising, so ride (oh no a motorcycle pun) it as 3 founders to a great life, rather than try to engineer it as 3 founders + VC money and complex priorities. This may be a serious over simplification, of course.

During the course of the day, the following diagram began to form in my mind:

At every conference I have been to, the best speakers are the ones who provide a few select nuggets of advice, for problems they assume the audience has. If, as a speaker, you need to turn around and read a bullet point off your own PowerPoint slide, then you may as well be part of the audience yourself. Also, if you are simply detailing the a story about something you have done, then a book or a blog post is a better format, since you hold a different type of attention from the audience when up on stage. It's generally not a very patient type of attention, either. Unscripted-ness, or even the illusion of it, goes a long way in winning attention. Speakers are getting better and better at this, but we are still not there. If you've ever delivered a presentation which included more than 6 PowerPoint slides, each with more than 2 bullet points per page (that group includes me, by the way), I can't recommend an evening at The Moth enough.

A big thank you to Philly Startup Leaders for doing this important work in the Philly area. I personally enjoyed the day, and took home some interesting advice and thoughts to write rambling blog posts about.