Beware of those who say they help entrepreneurs

I recently attended one of the most shameful events I’ve been to in a long time. Being and entrepreneur myself and collaborating in so many ways (Tetuan Valley, Okuri Ventures, Sandbox, Startup Digest) with other entrepreneurs around the world, I was excited to attend the opening of the MIT Enterprise Forum chapter in Spain. Nothing could have prepared me to the disastrous event I was about to attend. So many people share my views, but no one wants to write them down, so here there are:

I got to the event just in time, just to realize that something was extremely wrong, the president of the MIT Spanish chapter was reading the presentation speech. Having been to so many events and talks, I can tell you, that’s never a good sign. As it happens, it wasn’t, things got much worse as time went by. A round table of “experts” talking about how Spain should help entrepreneurs just made my day. The amount of incoherent ideas, half truths, PR bullshit and just plain ignorant talk was overwealming. I just have to feel sorry for one of the speakers which is a friend and by the look of his face you could see he was as shamed as we were.

Anyhow, one of they things I realized is how dangerous these people can be. There we were, a room packed with people, everyone listening. The problem was, except for our friend, none of the speakers had real entrepreneur experience. Maybe it’s me, being an engineer turns you into a meritocratic person by default, nevertheless, I’ve always thought that if you want to fix a something, first you need to know where the problem is. In my eyes, that was the biggest problem, none of them knew anything about where that laid. Now, it wouldn’t be a problem if these people were regular folks, but they weren’t. They were smart and powerful people. They run big VCs (or so they call themselves in Spain), entrepreneur programs, consulting firms, etc.

What baffled me was that they hadn’t a clue about entrepreneurship, startups or their suffering. Even among them, they couldn’t agree as to what was best for entrepreneurs. The amazing thing was that, from the amount of suits I counted in the room, the percentage of entrepreneurs attending the talk was below 1%. So, in the end, you had, a packed room of non entrepreneurs, listening to a bunch of people talking about a topic that they had absolutely no idea.

This is the thing, a banker that creates a startup competition thinks that gives him uber knowledge on their problems. Truth is, the banker never gets to talk with the entrepreneurs. Not the ones attending his program, not the ones elsewhere. An MBA person, with expertise in finance and buyout operations, that has being doing buyouts and M&A for large (> 100) corporations during the past 6 years thinks he knows entrepreneurs. But I wonder if he’s ever seen a startup with less than 3 people or even talks with entrepreneurs. I’m sorry but working with a corporation has absolutely nothing to do with bootstraping a company in the turmoil of a worldwide economic recession. A doctor working at a hospital has even less idea of what’s in an entrepreneur’s mind. Yes, he opened several new facilities within the hospital, but excuse me if that’s even remotely similar to trying to raise capital for a crazy risky idea. Then we have the typical VC profile. X years in a consulting firm doing private equity and M&A operations. Yes, you meet so many entrepreneurs doing that… and of course, regular VC has so many real interactions with entrepreneurs I just can’t imagine why I’m even writing this (for the record, there is sarcasm here). An finally, but not least, you have the MIT Enterprise Forum chairman. First of all, how can you even speak of funding in Spain when you’ve never started a company in Spain. It just amazes me how easy it is for him to repeat what others say with absolutely a complete ignorance of a countries specific problems. But most importantly, how is it possible that being an entrepreneurs himself, he allows this mummers farce to go on. Shame on him and shame on the MIT.

If MIT thinks that having such a sorry lot talk shit about how to help entrepreneurs, giving a talk with NO Q&A and call it “Forum” and most interestingly, stressing the importance of doing networking, but kicking everyone out to the street after the talk is done, then that’s the reason why most real entrepreneurs end up in California an desert Massachusets.

So, people, please, be critic, and be careful with those that preach that they are champions of the entrepreneur cause when in reality they’re far detached from their real day to day world.

Oh, by the way, I would link to their webpage but they’ve run out of quota: “This account has been suspended. Either the domain has been overused, or the reseller ran out of resources.”

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Why do we need things like LeWeb?

This post appeared verbatim as a guest post on the LeWeb blog.

Being an entrepreneur you soon learn that people like us are rare. It’s hard to find them among the usual population, specially cause we account for a very small percentage of it. Nevertheless, this percentage of entrepreneurs slightly varies from country to country. US for example has a very high percentage of entrepreneurs if you compare it with my home country Spain, who has close to none.

Because it’s hard to find us, we tend to move around a great deal, or at least we try. In the US though, this concept of moving around is something natural. Most Americans move at least 3 times among different cities and many professionals go back and forth between both coasts regularly. For most of them, this is something, not only natural, but essential. It’s something we, in Europe, aren’t used at all. Most Europeans only travel either during Holidays or for a business trip. Even in those cases, most of us bring our country culture with us. That is, there are still very real frontiers in peoples minds across Europe, even though from multiple angles (law, economy, etc.), Europe is finally one. Still, old habits die hard.

In my experience, most cases of cultural blindness are prompt from a lack of travelling. Even though most EU countries are very close (much closer than San Francisco from New York City for example), people see travelling there like an ordeal, like something close to an adventure.

So, why are things like LeWeb so important? Basically, LeWeb brings together not only Europeans, but plenty of other people from other countries like the US, China, Argentina, etc. During 2 days you can encounter with people from hundreds of different countries, people who share, in most cases, your same interests. But this is nothing new, international conferences have existed for ages. What it’s new for me is that now, thanks to plenty of social media tools, we are able to maintain those worldwide connections alive, even years after the conference took place. What I’m seeing is a convergence of entrepreneurs in Europe. I feel myself close to my European peers now, than what I felt 3 years ago.

Finally, the Internet is breaking the cultural barriers and history heritage that for so long has separated people in Europe. Finally, different cultures are working together to keep those links alive. Finally, we are starting to be one, and not many.

For all that, for that incredible experience, for enabling Europeans spread their love all over the world, thank you LeWeb, thank you Loic and Geraldine and thank you all, citizens of the world, that by coming together are enabling an incredible world flattening experience.

LeWeb and Paris

Last week I had the change to attend, for the first time, to LeWeb conference in Paris. LeWeb, organized by French entrepreneur Loïc Le Meur and his wife Geraldine, has become one of the most important Web conferences in Europe in past years.

This is the second time I attend a European conference, being FOWA @ London, the previous one and I have to confess that the feeling was different this time. When I went to FOWA I was impressed. There were some amazing keynotes and I got to know plenty of people. It really gave me a taste of what was out there in terms of tech startups. It actually put my feet on the ground and reset many of my expectations with my own tech startup.

LeWeb was quite different, the keynotes where stellar, even more that the ones at FOWA, nevertheless, my experience was distinct. A year has passed, I’ve met plenty of new friends, most of them working in tech startups and my own perception of the tech startup world is much more advanced now that my company is starting to operate with beta users. As a side note, it’s also true that once you are in this particular industry, you start to demystify many of the key players an so, talks that a while back seemed amazing to me, no longer have that effect.

So, this time, it wasn’t about getting a grasp of the market, but it was more about getting in contact with possible clients and partners. To that extend I succeeded in meeting very interesting persons and had an amazing time hanging with many European startups.

The keynotes were different from the ones at FOWA. The ones at FOWA had, in general, a high degree of technical content. The ones at LeWeb where much more business oriented and some of them where very inspiring. All in all, I think I like the LeWeb formula the most. Being a tech geek as I am, there is a problem with tech keynotes. Working all day as a developer, you really don’t want to listen to more developers talking about the same stuff you do at work. On the other side, some of them that might seem like amazing talks, become CEOs and CTOs PR talks. I don’t really get it, if you are doing a tech talk, give it, but don’t put a cool title for your keynote and then talk about what your company does and how well are you growing.

In contrast, LeWeb had very refreshing talks that touched very dear subjects to me, inspiration, neuroscience and music. Funny enough the keynotes I liked the most were the ones that had nothing to do with technology or big tech companies. The most amazing presentations, in my humble opinion, were these ones (in no particular order):

• David Weinberger
• Itay Talgam, Conductor
• Linda Avey, Co-Founder, 23AndMe, Inc.
• Helen Fisher, Visiting Research Professor, Rutgers University
• Paulo Coelho, Author
• Introduction with Morten Lund – Chief Ideologist, Lund XY Global Ventures
• Robin Good, New Media Innovator, Explorer, Independent Publisher,
Master New Media
• Chris Anderson – Curator, TED
• Joichi Ito, CEO, Creative Commons

I specially loved Chris Anderson’s talk which nearly got me crying. I also had the joy of talking with him for a few seconds after his talk (thank you Luis Rull for pushing me to approach him) and managed to give him my business card, which, of course, he won’t read. But anyway, it made me immensely happy to talk with him as it’s one of the persons I have a deep respect for. You can find most of the keynotes in ustream, so check some of them out, they are worth it.

Finally and as a side note, I had the impression the organization was, ironicaly, quite disorganized, which lead to a chain of problems which bugged everyone during the conference. You could reduce them to cold, lack of food and lack of Wifi. Three things which are indispensable in any conference and all of them failed the first day. I hope next year the organization pulls their act together and get those issues fixed as the rest of the conference was a blast.

I’ll be going to the Lift Conference in February 2009 with my friends from Sandbox Network, so if you plan to attend don’t hesitate on dropping me an email.

The curse of the short term vision

One of the biggest problems I’m encountering over an over again is the lack of vision of most people. Then I realized it’s not really a lack of vision, it’s just that people make decisions only based on short term information.

I’m sorry guys, but I believe that’s one of the worst curse our society suffers. The typical conversation goes like this: “Yeah, it’s a great idea/project/company but, how are you going to make money in 1 year?” or “ohh, yeah that’s a great idea, but it won’t work now, you need the next generation to do that”. Few things work on the short term and, of those that work, most of them are bad for some other reason. Just take a look at the recent financial meltdown, greed and short term vision brought all markets to their knees.

I guess it’s easier to take decisions based on the current state of affairs, you have fresh data and choices “seem” clearer. Nevertheless this is just an illusion, because data is fresh, the moment you take it into account it’s already outdated and worthless. Doing plans or strategies based only on current data is pretty myopic and dangerous as you don’t know if the next curve is right ahead of you. Not only you don’t know if the curve is ahead you, but even worse, you don’t even know what will you do if you reach it.

For example, some days ago I was looking at a bunch of graphs from one of the biggest financial company in the world and I realized something. Most graphs and charts always show an exponential or linear growth rate of something. Paradoxically that stroke me as a lack of mid and long term vision. Expecting something to behave in the same way forever is just the simplest thing to do. Granted that no one knows exactly when things are going to flip, but anticipating things is a must if you want to survive. Those analysts just do the easiest thing, because growth has been positive in the past years, this will be the case for the next 10 years and if things start to go downhill we’ll just reissue a new report adjusting it. Is that vision or laziness? Is that what you pay an analyst for? Again, you can make mistakes, it’s normal you don’t know the exact date and time of when something important is going to happen, but you should at least expect downturns down the way.

There are plenty of examples of this behavior and I really suffer from it. Why is it so hard for people to think about the future and not just the present. Why do people, even if they grasp the value of something, keep reverting to the short term solution? Another example: “Oh, I want a house, I know mortgages are madness right now, but I really want the house so I’ll buy it, I know I can rent something and that would be the wisest thing to do, but I really need to own that home!”. Couple of months later we all know how things have ended…

I wonder how can we make people start thinking about things in the mid or long term. Anyone knows a secret formula for this? We should teach this mental gym at school. I think this is how things work now:

1. Q: What would you do to solve this problem?
   A: solution 1
2. Q: Will solution 1 work in the future? (More than 6 months)
   A: hmmm, how do you expect me to know that? Solution 1 works now doesn’t it? Then let’s stick to it.

And this is how they should work:

1. Q: What would you do to solve this problem?
   A: solution 1
2. Q: Will solution 1 work in the future? (More than 6 months)
   A1: hmmm, well I have no clue, I’ll research future patterns and then I’ll try to give an estimate guess.
   A2: hmmm, yes, analyzing all the data we have from current trends we can do an estimate guess that this solution will hold in the future.

An important point is that decisions have to be always reevaluated, specially if they are long term minded, as new information might change the way things look like, but thinking about not only what will happen now, but in a near future will, most probably, alleviate a lot of pain.

I’m sure many readers have experienced this in one way or another? Care to share?

Image credits: www.ashesandsnow.org, pe.elmstreet-online.com

6 things you shouldn’t do when pitching a VC

Very recently I had the change to listen to several pitches presentations and I understood many of the critics VCs and Angels say about them. When you’ve listen to 3 in a row you start to see a pattern. The following are a couple of lessons I learned by doing my own pitch and listening to the rest.

1. Do NOT add a balance sheet and/or cashflow analysis slide if you haven’t been asked for. First of, the slide will probably be crowded with numbers which the VCs won’t have time to read. Secondly, balance sheets should be in the business plan so there is no need to show them in a 20min pitch. And finally, adding that information is just looking for problems. If by any chance you screw up your numbers (which you have a fat chance to) and a VC notices it you’ll won’t look good.
2. Add the amount of investment you are looking for and from whom. This was my personal bad, I forgot to add a slide with the amount I needed to start my company and what type of investors I was looking for. Theoretically you wouldn’t need to add the type of investor as if you are pitching to one, you’ve already chosen, but in my case it was an heterogeneous jury so I got asked.
3. Ugly presentation design does matter. A presentation pitch isn’t just some random slides where you show your business idea, it’s your brand. In the same way you carefully choose your cloths (or at least you should) when giving a presentation, you should carefully choose your slide design. Please, avoid using canned designs, when you listen to 10 presentations a day, trust me, you can tell when it’s canned. Avoid using ugly color combinations like blue background with yellow letters or standard MS Word titles (yeah, you know which ones I mean, the rainbow title!). And for god sakes, don’t use pixalated images.
4. Answer the question. This might seem straightforward but what I saw is that most of the time, the CEO is so nervous that when asked a question they answer something completely different with no connection what so ever with what they had been asked. This makes you look bad, makes you look as if you didn’t listen or didn’t understand the question, or both.
5. Don’t tell the story of your company. I’m sure you wrote it in the business plan, no need to add a slide about it. Investors want to hear the problem and the solution, not your fancy background which I’m sure it’s interesting, but not for a 20min pitch.
6. Do NOT show fancy market size graphs. This is something Guy Kawasaki stresses and I agree with him. All presentations tend to have a slide with a graph from _insert_your_favorite_analyst_firm_here_ with the market size which, of course, is always huge and getting bigger. Simply, don’t. Throwing some numbers isn’t bad, but please, be original and avoid the “the market is huge and growing” song. And do yourself a favor and avoid any mention to the infamous “” if you don’t have detailed information to back it up.

I have to say I learned a lot by watching a couple of pitches and I now understand why VCs say what
they say. Most presentations are identical, same structure, same market charts, same texts. Be original and listen carefully to VC questions and suggestion, it will help you get better with your
presentations, at least it worked for me.

Want to add another point? Please leave a comment! And remember, if you like this blog, subscribe to the RSS feed here.

Why well funded startups waste money?

Sometime ago I had a conversation with a friend who asked me how much money I though was needed to get my startup going. I told him I though it would take 100.000€ to bootstrap it in the US, but that  it might be less. I still remember his skeptical face. I though he was going to tell me it was way too much, but to my surprise he told me it was way too low. I realized then that there is a great gap between bootstrappers and corporate drones. Enterprise people need like 5x to 10x more cash than what a bootstrapper needs but the truth is that this is just an illusion. It’s not true you need 10x more cash, it’s just that you aren’t used to save money.

As always, nothing is black or white and there are exceptions to this, but most of the time it’s just people flushing money down the drain without any real results. I really feel it’s because the money isn’t theirs and so, they don’t feel the pain it is to earn that money. Nothing like having your own savings at stake to think twice about spending it in stupid things.

The problem isn’t that corporate guys think this way, the problem is that I’ve seen many startups behave the same and I must say, it really shocks me. Wasting money is a bad habit, specially if you
are starting up and I think most companies don’t make saving money and resources a critical part of their company’s culture. For me it’s something fundamental in an organizations culture. Everyone should think about this, even when there is plenty of money, wasting it should be avoided.

What really strikes me is that the same behavior can be observed on peoples lives. Plenty of people ask us how are we (me and my girlfriend) able to live the way we do. The answer is that we don’t pay for stupid things. When someone tells you that they’ve spent 600€ in a pair of shoes I just roll my eyes. And don’t get me wrong, if you can spare 600€ a buy some awesome handmade shoes, please be my guest. The problem is that 99% of the times, people just can’t afore to do that and they buy them either way, which I must say, it’s just stupid if you ask me.

Sadly the only times I see companies trying to save money is when they need to bump their profits for the next quarter. The problem with this is that it’s too late. Creating a culture takes time and you can’t just reverse crazy spending overnight. Employees should feel that if they waste resources it’s their own payroll money they are wasting. The more you save, the more you get back at the end of the month.

And yes, I know, some readers are thinking, hey but I do save and my payroll is the same, instead those greedy bosses of me are earning much more to my expenses. This is both, true and sad, that’s why new entrepreneurs should start thinking about this issues from day one. Transparency is key for this to work and the problem is that not everybody is willing to be transparent. I would love to think
that money doesn’t changes people, but it’s not true, but if you have some solid guidelines and stick
to the basics I’m sure we could do much better.

Have you seen crazy spending in your company, in your startup? Tell us about it!

Image credits: http://www.savingadvice.com

Knowing your audience

Yesterday I went, as usual, to the monthly local entrepreneur meeting in Madrid called Iniciador. Rodolfo Carpintier, Spanish business angel and CEO of the only Spanish tech incubator named Digital Asset Deployment (DAD). His keynote was brilliant, some old school tips and some real pearls of wisdom.

First tip: Are you sure you need the money? I’ve personally heard this advice many times during my latest trip to Silicon Valley and I have to say I share it 100%. Sometime entrepreneurs think that it’s all about rising VC, but not all ideas need VC. Most of them don’t. Mine neither, or so I think (yet).

Second tip: Know who your audience is. This is an old one, but still worth remembering. Don’t go and pitch a VC when what you really need is seed capital. Vice versa, don’t go to ask for seed capital if what you need is $5M to start running. This is also true for entrepreneurs looking for developers, directors, etc. I had one guy come to me yesterday asking me if I wanted to be his marketing director. I respectfully decline and the incident got me thinking. Don’t go to an entrepreneur meeting looking for that profile, it’s a waste of time. Most of the people going to those meetings are looking for the same and already have their own ideas, startups, etc.

Third tip: Have a risk plan in place before going shopping. For me this was one of the best tips. It’s most often forgotten in most business plans. You need to show that even if you fail, if all hell breaks loose, you’ll still be able to return some money to investors.

There are many more tips, but I just wanted to highlight some. And excellent book for these type of tips is The Art of Start from Guy Kawasaki (still haven’t finished it yet, but I’m enjoying it very much).

Care to share some more tips?

Completeness, a path to creativity

Here I am again, writing this post in the plane on my way back home. Many things have happen during my visit to San Francisco that have profoundly affected me in ways I can’t yet understand. Hippies, Entrepreneurs, Tech guys, PhDs, Postdocs, MBAs, Bohemians, Students… that’s what I’ve found in the Bay Area and not many people understand me when I say that I really feel at home with them.

Most of the times I talk with someone about the Bay Area and/or Silicon Valley, I get to hear the same ol’ song: “But you have Silicon Valleys elsewhere; You can go to London, there are many tech guys there; …” and they are right. Different parts of America are starting to boil with hungry entrepreneurs, from Seattle to Boston, passing through Austin. In Toronto, London, Dublin or even in Madrid, my home town, you can find people eager to start their own company.

Problem is, that it’s just that. Just people interested on technology, programming, business administration, etc. Same people with the same mono thematic interests. Rare is the case where a developer is into writing, composing or teaching (Not saying that there aren’t though, I have the great luck to know people like that, but it’s rare to find them, at least for me. Maybe I don’t look where I should, maybe it’s that).

It’s got to a point where finding “Interesting” people is rare. As more and more people just care about money. True interesting people get diluted in a sea of “normal” people, lost, sometimes forever, out of reach for those who care to listen.

I don’t consider myself above the average. I’m an average person, not special at all, but I’m cursed with a double edge gift, and that is, curiosity. Why do I say that? Well, because curiosity can be something amazing, but at the same time is source of many frustrations. My curiosity needs to be continually fed with different things. New experiences, new fields of study, new people, new cultures, new languages, … The problem is that, feeding such a voracious gift, is very difficult and it even has it’s disadvantages. For example, such a curiosity renders any attempt to became a specialist, something pretty difficult.

Anyway, finding food for my curiosity is hard. Interesting people with interesting stories are scattered, so reaching them requires great effort and time. A time that is most precious for many of us. The Bay Area, nevertheless, works as a huge talent magnet for many persons of diverse conditions, educations, cultures and backgrounds. There isn’t, as far as I know, a place like it, in terms of interesting people. And when I speak about Interesting, I mean talented persons with a story (sometimes multiple stories) to tell. This doesn’t necessarily means that they need to have a PhD or be a graduate. Sometimes the most interesting experiences you find them in the streets from people with little or no education whatsoever. The point is that, I haven’t seen such an intellectually fertile place like the Bay Area in my whole life (Again, there are, for sure, places like this that I haven’t heard of, so please, if you know them, tell me about them!). What I discovered time ago, and well, I rediscovered during this trip, is that inspiration arises, most of the time, when interacting with these type of Interesting persons, and as like in a domino game, inspiration brings creativity.

The big problem I find with many people is that they are incomplete. Incomplete is a strong word to use, and I know that many people might disagree with me because as always, personal opinions are, well, personal and strongly subjective, so please keep that in mind. Most people are only interested on one or two things in life, being money and wealth one of the most common of them. They don’t care about their jobs, they don’t care about music, they don’t care about books, they don’t care about nature, and after all, why should they, no? What I’ve found is that, creative people that care about many things, are much more able to see the “big picture” everywhere. They are capable of building bridges in places where everyone else just sees dust. This is specially important for entrepreneurs if you ask me. Curiosity isn’t only something that allows people to see “further”, I truly think it enriches our soul and that at the end, when money and wealth don’t matter anymore, you are left alone with your experiences, your ideas and your ghosts.

Being curious about what surrounds us might be something you born with, although I sometimes think you can learn it with time, either way, just think, stop and think about what we tend to disregard on a daily basis. Meet new people, travel, experiment new things, hopefully you’ll get infected with the curiosity virus which will eventually enrich you as a person and as a professional, enabling you to foresee and envision what other can barely grasp.

Sorry for this extremely long diatribe full of my philosophic thoughts. Having recently experienced this enrichment at multiple levels, I thought it was worth trying to describe what I felt and specially WHY I feel the way I do about the Bay Area and its people. After all, there is much more than our jobs out there and it’s just ready for us to get it.

Images credits: Villa Sams

Next stop: San Francisco, CA

Many people already know about it but next Monday I’m flying to San Francisco for 10 days. I’ll be there from April 7th (plane arrives at 7:17pm) to April 17th (8am). I have several meetings during those days, even a guest lecture at UC Berkeley but my idea is to try and meet entrepreneurs, business angels, bloggers, etc that are either living there or just happened to be there 🙂

So if you are from SF or are coming to the city during those dates don’t hesitate to send me an email or a Tweet. My email is abarrera at inkzee dot com and for the twitter lovers: http://twitter.com/abarrera (by the way today I reached the 100 followers mark. Come one people, lets push it to the 150 mark!).

I’ll eventually upload some pictures of the trip and keep the blog updated. Sorry for the blackout of the last weeks, I’ve been really busy with my startup (yeah you guessed, inkzee.com) and writing down something that resembles a business plan. Oh, I’ll also be giving some demos of my startup at SF, so you should come to see it.

We’ve scheduled some meetings with the people from Hacker News in SF. Check out the details here:

http://news.ycombinator.com/item?id=144632

Dates and places: http://news.ycombinator.com/item?id=14495