Category: Community

The debate about building a technology startup in Silicon Valley vs other places has gone on for years, and will continue indefinitely. Inevitably, when reading TechCrunch and following the startup world, the fact that the majority of high-profile startups and venture money are in Silicon Valley makes entrepreneurs think “what if I lived there?” I’ll admit, it has gone through my mind many times.

For me, when I read about the next company that got funded with a billion dollar valuation, I like to remind myself that I actively chose the lifestyle vs location trade-off for me and my family. Growing up in Florida, and having the majority of my family and wife’s family in the Southeast, we value being close to family. Another major factor is the quality of life for the money. Atlanta is one of the few really large cities where real estate has stayed affordable along with the other amenities expected in a metropolitan area of more than five million people.

The next time you think about how the grass is greener in a different city for startups, ask yourself about the lifestyle vs location trade-off and paint a clearer picture for yourself.

What else? What do you think of the lifestyle vs location startup trade-off?

In late 2009 we were actively talking with VCs about raising money as the business had just hit an inflection point and we saw tremendous opportunity. During the proverbial Sand Hill Rd trip we met with quite a few VCs and gave them our pitch. After meeting with about 30 VCs over the period of two months we were asked to do a full partner presentation to six of them (that’s usually the last stage before a term sheet). We were back out in California for one of these full partner pitches, gave our pitch, and were in Q&A mode when a common question came up:

VC: So, what part of North Carolina are you in?

Me: Hmm, we’re actually in Atlanta, Georgia.

VC: Ah, sorry. So, do you have engineers in Silicon Valley, Boston, or off-shore?

Me: No. We do all our engineering in-house in Atlanta.

VC: Where do you find engineers in Atlanta?

Me: Georgia Tech

VC: You hire GA Tech employees without startup experience?

Me: No, there are tons of startups in Atlanta that have Georgia Tech graduates. We look for smart people who get things done, regardless of school, but Georgia Tech grads comprise the majority of our engineering team.

The VC was genuinely asking the question and wasn’t trying to be arrogant. I proceeded to explain that Georgia Tech is the largest engineering school in the country and one of the top academically. Because I’m such a proponent of core product engineering being an in-house function, I need to be in a city with great engineering talent. If Georgia Tech wasn’t in Atlanta I wouldn’t be either.

@stammy inspired today’s post with his tweet:

http://twitter.com/#!/Stammy/status/69912461033213952

Once you’ve been fairly active in the tech startup scene for a few years the number of external requests for your time will grow, especially as you help more and more people. Of course, time is your most precious resource. I emailed a high quality introduction to a friend about an entrepreneur that was moving to his city and my friend promptly emailed back that he’s not taking any intros until he launches his startup (which was in stealth mode, which is another story). There’s nothing wrong with that approach as it shows priorities.

Here’s how I handle external requests for my time:

• As a general rule, I only do one morning and one evening event per week (I get lots of requests to attend local events).
• Panels or speaking engagements are usually accepted as long as I don’t have to travel and they are about entrepreneurship or technology.
• Entrepreneurs asking for help I’m happy to spend 10 minutes on the phone as long as they have a warm introduction. 10 minutes truly is enough time to see if I can help or offer advice, and I’m happy to talk longer if I can add value (50% of the time it is all of 10 minutes and done because their time is as valuable as mine and I have nothing to offer).
• Entrepreneurs that have been qualified by a much smaller group of people I’ll meet in person at my office or over breakfast/lunch upon initial intro.

This system is by no means comprehensive but works well for me to keep a balance between my own entrepreneurial pursuits and giving back to other entrepreneurs and the community.

What else? How do you handle external requests for your time?

This week Georgia Tech announced their awesome new Y Combinator clone called Flashpoint. I first learned about the idea two months ago when I had lunch with Merrick Furst at my weekly spot (Houston’s across from Lenox Mall). Merrick described the next generation entrepreneurial environment as a Y Combinator-like program running right on Georgia Tech’s campus for people inside and outside the community. There’s no better education for an entrepreneurially-minded person to learn about building a startup than to actually roll up their sleeves and start building. Georgia Tech now has that.

Two and half years ago myself and a group of local entrepreneurs started a Y Combinator clone for Atlanta called Shotput Ventures. Our goal was and is to help improve Atlanta’s startup community through mentorship and seed funding. We’ve invested in nine startups already and have money to invest in several more. Go ahead, learn about applying to Shotput.

Flashpoint is great for the Atlanta startup community and Georgia Tech — I can’t wait to get involved as a mentor and I’m confident it will be successful. Sign up online to be notified when Flashpoint starts accepting applications.

The TiE VISTA Conference wrapped up today with day two being as excellent as day one. Tim Draper of DFJ kicked off the morning but the real highlight for me was Dharmesh Shah’s keynote at the end of the day. Dharmesh covered many different topics in his keynote and it’s scary how much I agree with him and how I’ve written short blog posts about many of his points.

Here are a few bullets from Dharmesh’s slides:

• Starting is more important than the idea
• Write a blog, not a business plan
• Stealth mode is for fighter jets, not startups
• A sub-optimal price today beats a perfect price tomorrow
• Sales velocity, acquisition cost, lifetime value – improving one often degrades another (the only thing that improves all three is the customer experience)
• Transparency trump secrecy
• The path of truth and justice is often paved with profit

If you don’t follow Dharmesh on Twitter, do so now @dharmesh.

Again, congratulations to TiE for putting on a great event.
What else? What did you enjoy about the TiE event?

Today I had the opportunity to attend the TiE VISTA 2011 Conference in Atlanta. TiE, if you don’t know, is one of the best entrepreneurial groups originally focused on Indian entrepreneurs but since expanded to all entrepreneurs. Day one of the conference was a keynote speech followed by a collection of panel discussions culminating in a night Gala with awards. Everything was well executed.

Pete Kight, founder of multi-billion dollar CheckFree corp, was the morning keynote. He shared several thoughts and insights:

• The equivalent amount of information created in the world from the dawn of man to 2000 is now created every 48 hours.
• The highest form of personalized service is where no human interaction is necessary (think self-service web and mobile apps).
• Industries with idle equipment times and inferior logistics are ripe for technology-based middleman applications (think limo service that doesn’t own any limos but contracts on-demand with other limo companies).
• Betamax was superior to VHS in every technical way but VHS won because the consortium of companies behind it gave away all the necessary recording equipment and rights to making the tapes for five years to a dozen porn companies. They did this knowing people would prefer watching porn from the comfort of their home as opposed to being seen at a theater.
• When he started the first electronic check company in his grandmother’s basement in 1981 everyone thought he was crazy in that no one would trust electronic payments. Now it is the most pervasive form of payment.
• Smart phones are going to be the new credit card.

The TiE community did a great job putting on the conference and Gala and I’m looking forward to day two tomorrow.

Day two, much like day one at SEVC 2011, proved to be very worthwhile. The morning was composed of a keynote followed by two panel discussions. After the lunch keynote from the GM of the Atlanta Falcons, Thomas Dimitroff, the rest of the day was spent hearing (and giving) startup pitches.

Here are some notes from the second day of the conference:

• One i-banker from the first panel said that SaaS companies really start to see economies of scale at $20 million in revenue
• The same i-banker said that the strategic multiples for $20+ million revenue companies has been 7-10 times revenue over the past 18 months
• The majority of presenting companies violently violated the 10/20/30 rule of PowerPoint
• 1/4 of the presenting companies didn’t get to their value proposition within the first two minutes of their pitch, and many went over their allotted eight minutes
• My favorite startup and pitch was from Spoonflower – design and print your own fabric

Overall, SEVC was a great event.

Today I attended the Southeastern Venture Conference for the first time and came away impressed. The program, now in its fifth year, brings together investors from around the country with startups from the Southeast. Each year it rotates to a different city and this year it’s at the Ritz Carlton in Buckhead. Here are a few notes from the conference:

• Several VCs expressed their opinion that there’s a bubble in the market with the valuations for Facebook, Twitter, and Groupon causing startups that don’t have as high a profile to have unrealistic valuation expectations
• The increased activity from angels and super angels, especially in the Valley, is viewed as a blip on the radar compared to the the dot com days because of the small amounts being invested
• There’s a good mix of companies from North Carolina, South Carolina, Georgia, and Florida (not much from the other Southeastern states)
• IT and healthcare represent the majority of the presenting companies

The SEVC conference is well done and does a great job bringing investors and entrepreneurs together.