Voices: 15 steps to starting your own electronic-kit business is an interesting article. This engineer started her own successful electronics-kit business. Limor Fried has made Adafruit Industries into a successful electronics-kit business. You can too. Based on her own experience, she offers 15 practical steps for engineers who dream of starting their own kit business.
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Tomi Engdahl says:
Prove Your Design; Prove Your Market; Earn Six-Digits of Cash
http://hackaday.com/2015/03/25/best-product/
Let’s talk about the newest part of this year’s Hackaday Prize: Best Product. In addition to all of the other prizes offered, the Best Product Prize will award $100,000 to one entry which is designed for manufacturing and embodies the core of this year’s theme. What exactly does that mean? It boils down to one hundred grand to jumpstart your product launch. Let’s take a closer look at why we added this prize and the specifics of entry.
What about the other 90%
You have a working prototype and you’re one step away from making your first million, right? That is almost always a fallacy. One major hurdle is the engineering needed to take a working prototype to the factory line — that can be nine-tenths of the work. Designing for production is a story that we want to tell.
Proving Your Market
Before you take the risk you want to make sure there is a customer base out there who want to buy your hardware. We’ve noticed that Crowd Funding platforms are a growing avenue for market research. It has become something of a pre-order system, but it also means that all decisions are somewhat locked in before going into production. We see the Best Product prize as a way to prove the market, not just for the winner but surely for all of the ten finalists as well. Still want to go the crowd funding route afterwards? Fine
Tomi Engdahl says:
Jordan Crook / TechCrunch:
Smart home security device Canary, which started on Indiegogo, is now available at Best Buy, Amazon, and other major retailers for $249
Indiegogo Darling Canary Hits Best Buy For $249
http://techcrunch.com/2015/03/25/indiegogo-darling-canary-hits-best-buy-for-249/
Canary, the all-in-one smart home monitoring system that launched on Indiegogo in summer of 2013, is today available in retail locations for the first time.
This is a relatively big deal considering just how few crowd-funded hardware products ever make it out of the lab and into a retail location. It took Canary, complete with Indiegogo and venture funding, more than 18 months to get in front of in-store customers. But today is the day.
Retail distribution partners include Amazon, Best Buy, Home Depot and Verizon Wireless, and the company said in a release today that it has plans to expand internationally later this year.
Canary is a home monitoring system that’s about the size of a 24-ounce beer can, but packed with all kinds of useful sensors, microphones, cameras, etc. to keep an eye on the home. The Canary pairs with your smartphone in the form of an app and gives users a look at all the motion in their apartment (the motion detector activates the camera) or a live view of what’s going on at that exact minute.
Tomi Engdahl says:
Jacob Kastrenakes / The Verge:
Kickstarter now lets funded campaigns customize their project pages
http://www.theverge.com/2015/3/25/8287977/kickstarter-redesign-funded-projects-spotlight
Kickstarter is all about helping projects get off the ground, but today it’s starting to give them a little bit more help once they’ve succeeded. It’s launching a new page design for successfully funded projects that’ll allow those projects to better promote themselves, surface news updates, and direct visitors to a more current website — such as a store where they can make a purchase.
This is a small change, but it could be meaningful for funded projects. Pebble, for instance, completed its first Kickstarter nearly three years ago: that project page is still among the top results while searching for Pebble on Google, even though it now has a store selling the Pebble and a second Kickstarter campaign for a new model. Being able to redirect visitors to that store or second campaign could hold interest and ultimately drive sales.
Kickstarter is calling the new page layout a “Spotlight” page.
Tomi Engdahl says:
“What is more important than your idea? More important than your startup? More important than you? You got it – your customer.”
The customer, post #3 of “Startup Briefs”
http://newventurist.com/2015/03/the-customer-post-3-of-startup-briefs/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+newventurist%2Frss+%28New+Venturist%29
What is more important than your idea? More important than your startup? More important than you? You got it – your customer.
Most first-time entrepreneurs don’t focus early enough on their customers: who they are, what their needs are, and why will they buy your product or service. It sounds so obvious, but you’d be surprised at how many millions of dollars get spent, as Eric Ries says, “building products that nobody wants.”
It’s an easy mistake to make when you think about it. Everyone tells you to “focus like a laser” to “build a prototype,” to get your product “working” before you approach customers. After all, doesn’t marketing to your customers happen AFTER you have built a product? How do you approach potential customers when you don’t have anything to show?
How should the first-time entrepreneur ensure that he/she doesn’t fall into the “ignore my customer” trap? A few simple rules
Tomi Engdahl says:
Wall Street Journal:
Andy Rubin’s hardware incubator Playground Global raises $48M from Google, HP, Foxconn, others, and will provide support in exchange for equity, not capital — Android Creator Andy Rubin Launching Playground Global — Firm to provide support, advice to tech startups making devices
Android Creator Andy Rubin Launching Playground Global
Firm to provide support, advice to tech startups making devices
http://www.wsj.com/article_email/android-creator-andy-rubin-launching-playground-global-1428353398-lMyQjAxMTE1MjA0NjMwNTYxWj
Playground also plans to help entrepreneurs with distribution, manufacturing, financing and ways to integrate their devices with remote computing resources known as the cloud.
This approach is common in Silicon Valley and is known as an incubator or accelerator. Mr. Rubin described Playground as a “studio,” where inventors, tinkerers and entrepreneurs can focus on building new gadgets and not worry about other aspects of running a business.
“Our aim is to free the creators to create,” he said in an interview. “By bringing these partners to the table we can remove many of the roadblocks of bringing a great idea to market.”
Others, including PCH International and Dragon Innovation, offer to connect startups with a similar suite of resources.
Playground, PCH and Dragon highlight renewed interest by Silicon Valley in hardware startups. Plummeting prices of microchips, sensors and other components make it easier for a small company to design devices and have them made quickly and cheaply by others. The spread of wireless Internet access and the rise of cloud computing allows these devices to be controlled remotely in more useful ways.
Other investors in Playground include Redpoint Ventures, a venture-capital firm with a history of working with Mr. Rubin, China’s Tencent Holdings Ltd. and Seagate Technology PLC.
Tomi Engdahl says:
Bijan Sabet:
Companies that need time and patience to mature may miss their chance in today’s environment of huge growth rounds
Opportunities lost in a sea of growth rounds
http://bijansabet.com/post/115666889763/opportunities-lost-in-a-sea-of-growth-rounds
These days in startup land we see an enormous number of startups being seed financed by angel investors, seed funds, venture capitalists, hedge funds and celebrities.
This trend has been happening for many years now and has simply continued. More seed capital isn’t necessarily a bad thing and generally I’m happy about that.
The interim stage between the seed round and the growth round is happening at an accelerated and compressed pace.
But the thing I’m most concerned about are the startups that won’t get their next round done just because they aren’t on a rocket ship.
Some companies take time and patience.
Tomi Engdahl says:
eBay Sales Patterns Show That the Maker Movement is Still Growing (Video)
http://build.slashdot.org/story/15/04/08/1939233/ebay-sales-patterns-show-that-the-maker-movement-is-still-growing-video
Meet Aron Hsaio. He works for Terapeak, a company that tracks sales through online venues such as eBay and Amazon in order to help merchants decide what to sell — and how. The five ‘maker’ categories Terapeak tracks (drones, robotics, Arduino, Raspberry Pi and 3D printing) outsold Star Trek-related merchandise by a huge amount, namely $33 million to $4.3 million, during a recent 90 day study period.
Drones are the hottest hobbyist thing going right now, Aron says, but all five of the hobbyist/tinkerer’ categories Terapeak tracks are growing steadily at a rate of up to 70% year over year, with drones leading the way and robotics trailing (but still growing). It’s good to see people taking an interest in making things for themselves.
Tomi Engdahl says:
Nick Statt / CNET:
Growth of hardware accelerators and consultants in last two years making hardware startups easier
For hardware startups, it’s getting less hard
http://www.cnet.com/news/for-hardware-startups-its-getting-less-hard/
The secrets to making and selling consumer electronics are spilling — on purpose — and that’s helping hardware startups succeed.
When most people think of a Silicon Valley startup trying to make a hardware product — a real, physical object instead of just an app or a website — a crowdfunding campaign on Kickstarter for some new gizmo might be the first scenario that comes to mind.
That’s not always a good thing.
For years, hardware startups throughout the tech industry struggled in part because the industry shoehorned them into a one-size-fits-all business model. The hardest hurdle was often the first: Any company hoping to manufacture hardware had to be well known, established and have a lot of money.
That’s no longer the case today. In the past two years, hardware experts, ranging from accelerators to supply chain experts and consultants, have come out of the woodwork. And they’re all focused on helping small companies bring their gadgets to store shelves.
“The flexibility is amazing,” said David Austin, who heads up PCH Access, a startup-focused arm of design and manufacturing firm PCH International. “In today’s world, startups can create extremely beautiful products that are highly capable.”
Hardware horror stories
It wasn’t always this way. A common refrain within the tech industry is “hardware is hard” — and for good reason. A few high-profile companies have failed in the past several years, in part because they weren’t able to navigate the complex world of manufacturing and supply chain management.
“With software, you can push out a new update,” said Scott Miller, CEO of Dragon Innovation, which helps companies, including Pebble, manage and scale their manufacturing. “With hardware, because you actually have atoms and they don’t change quickly, when you ship it, it has to perform and not burn down somebody’s house.” That means it takes time to make sure everything works.
It still ain’t easy
While a growing army of consultants, along with affordable software, rapid-prototyping tools and other technologies, have made it simpler to create hardware products, it’s still not easy to bring a device from a sketch on a notepad to a customer’s front door.
Experts say part of the reason is that startups often forget that it’s difficult to mass manufacture in a timely and inexpensive manner. And manufacturing, while improved from 10 years ago, hasn’t undergone the rapid evolution that prototyping has.
“It’s relatively easy to make one of something,” said Robert Brunner, CEO of design firm Ammunition and the former head of industrial design at Apple. What’s Brunner’s common refrain to clients he doesn’t think are ready? “You have a fantastic idea, but that’s just the beginning.”
“You can build this amazing prototype that works and demonstrates a product and everyone gets excited — that’s about 10 percent,” he said. The rest requires refinement to a very high degree, because small imperfections made during mass manufacturing can ultimately ruin the device.
“The way I look at it is there’s expertise, and you have to have it in-house or buy it.”
David Austin, vice president of PCH Access
Take Drop, a startup that makes a $100 iPad-connected kitchen scale and software app so even inexperienced cooks can pull off complex baking and cooking.
The company was founded by two Irish designers in 2012, but instead of launching on Kickstarter, the team refined its prototype and eventually joined PCH’s Highway1 accelerator in 2013. From there, it was able to set a timeline, launch its product, take preorders and eventually meet its deadlines.
Now you can buy the Drop scale in Apple Stores around the country or from the iPhone maker’s website.
“That tells you what a startup can do,” Austin said, “with the tools right now.”
Tomi Engdahl says:
Measuring the health of a start-up through the lens of online marketing
http://thenextweb.com/market-intelligence/2015/04/08/measuring-the-health-of-a-start-up-through-the-lens-of-online-marketing/
Tomi Engdahl says:
The Real Reason Open Source Startups Fail
http://techcrunch.com/2015/04/12/the-real-reason-open-source-startups-fail/?ncid=rss&cps=gravity_1462_3978066030093187523#.b5imzi:ltOn
The recent news around Nebula shutting its doors has stirred speculation that OpenStack startups are struggling because of the state of the OpenStack market. There is even a piece claiming that the OpenStack dream is on “life support.”
This couldn’t be further from the truth. The reality is that winning in open source requires a playbook that is drastically different from one that most VCs investing in technology today are used to.
“We raised money and it’s all about building product for us now,” he said. “We have this deal to do an OpenStack deployment for Internap – do you have people to subcontract for us?”
Where did Cloudscaling and Nebula miss the mark? They used the wrong playbook. A typical IP-based company playbook goes something like this:
A product wizard creates a differentiated technology;
The founders and the sales team sell a handful of deals to show proof points;
The company is sold for several hundred million to someone with existing distribution channels; or
A number of major growth rounds are raised to build out distribution channels in order to IPO
This playbook works for innovation markets. The VCs are buying into partial ownership of the differentiated technology and monetize on the leverage when the technology is in demand.
Open source ecosystem markets behave differently and therefore require a very different playbook. There, the differentiation is not in the technology you build; it is in the process and expertise that you slowly amass over an extended period of time. All of the successful entrants (Red Hat, Cloudera or Hortonworks, etc) have followed the same playbook. It works like this:
Start selling services engagements around the ecosystem and build customer intelligence;
Invest heavily to build influence in the respective upstream communities by contributing directly to the code base you’re betting your business on (In OpenStack, it’s easy to see who is and who is not contributing on Stackalytics.);
Start offering training;
Add commercial packaging of the technology;
Optional: Build value-added components above and around the technology.
Building an open-source company requires operational excellence and staying power, not just genius hackers with a vision of taking down VMware. Startups and VCs that run the company by the innovation playbook fail, while those that focus on expertise first — and thus the open source playbook — do well. This is what we are witnessing in the OpenStack space.
Tomi Engdahl says:
Tap Tap Tech – Episode 2 – The Maker Movement
http://www.eeweb.com/company-blog/onlinecomponentscom/tap-tap-tech-episode-2-the-maker-movement/
Hey there, Josh here for OnlineComponents.com, this is Tap Tap Tech. Today, we’re going to discuss the Maker Movement, otherwise known as The Coolest Thing in Technology ever. Just like the garage computer explosion of the 70’s through the 80’s, which brought us such things as Apple, pong, Bill Gate’s hair, and the proliferation of personal computers, the maker movement is the new garage hardware explosion. While Making is strongly associated with electronics, it really is more a matter of scale, particularly small scale. Making is about individual Do-It-Yourselfers being able to design and create with tools that were, as of a decade or two ago, only available to large, cash-rich corporations. CAD tools, CNC mills, 3D printers, low-quantity PCB manufacturing, open hardware such as Arduinos and similar inexpensive development boards – all items that have made it easier and relatively cheap to make whatever we imagine.
For individuals, maker tools can change how someone views their home or their hobbies. If you want to make a little custom widget that holds your favorite bluetooth speakers onto your bike frame, you can quickly design it, print or make it, and then use it – almost immediately and perfect for your application.
I imagine there are many Makers out there who would love to be the next Lady Ada or even Nathan Seidle. Upcoming Maker inspired companies aren’t just the fulfillment of personal dreams, they’re making a serious impact on our economy. On Kickstarter alone, there has been over one point three billion dollars pledged to successful projects and the money pouring in has been increasing wildly since 2009.
Tomi Engdahl says:
Group financing is an excellent way to secure funding for innovative projects. Campaigns also show relentlessly, whether the idea desirable. Sometimes ideas like hotcakes.
According to studies, campaigns throughput rate varies even between services. Others will be able to boast over 80 per cent success rate. In other projects fail more than half.
The most penetrating studies suggest that 15 000 – $ 30 000 projects applying for funding.
Source: http://www.etn.fi/index.php?option=com_content&view=article&id=2757:joskus-joukkorahoitus-onnistuu-pikavauhtia&catid=13&Itemid=101
Tomi Engdahl says:
The Lessons Google Ventures Learned From Secret
http://bits.blogs.nytimes.com/2015/05/05/the-lessons-google-ventures-learned-from-secret/?_r=0
For many in Silicon Valley, the rapid rise and precipitous fall of Secret, the prominent start-up that recently closed its doors, will most likely serve as a cautionary tale of how not to run a company.
For Google Ventures, one of Secret’s earliest backers, it will also be a reminder of the type of company not to invest in.
The product of two former Google employees, David Byttow and Chrys Bader, Secret attracted intense media interest early in its life. The app let users anonymously share “secrets” to their network of close friends and friends of friends, an activity that quickly caught on among founders, investors and the media of Silicon Valley.
“We told them they didn’t need the money. And raising that much money that soon, it was going to be impossible to meet the expectations in the future.”
Downloads of Secret declined over 2014
Secret redesigned its entire app to look like a near-perfect clone of Yik Yak, a competing service, but traffic did not improve. Many employees, including Mr. Bader, left the company.
Last week, Mr. Byttow said he was shutting down his company, and would return the remainder of the money to the venture capital firms.
More broadly, Mr. Maris said that the founders’ eagerness to capitalize on their buzz revealed characters that were distinctly not Google-y.
“could have let the clock run out and lost all the money, but they didn’t”
Tomi Engdahl says:
How 3-D Printing Is Saving the Italian Artisan
Italy’s craftsmen turn to a new tool in their competition with cheap products from China
http://www.bloomberg.com/news/features/2015-05-05/how-3-d-printing-is-saving-the-italian-artisan
In the 1960s, farmers in the region began setting up small family-owned businesses, each specializing in just one small part of a finished product. Within a generation, many of these companies became world leaders in their respective fields, and small Italian cities thrived as manufacturing hubs. The town of Montebelluna, north of Venice, once produced about three-quarters of the world’s ski boots, with different companies specializing in buckles, plastic shells, and foam linings. About 70 percent of Europe’s chairs were designed and manufactured by the 1,200 small outfits centered around Manzano, near Italy’s eastern border with Slovenia—with each part of the production process handled by a different highly specialized company.
Like much of the rest of the country, however, the region has fallen on hard times. Italy’s craftsmen have been undermined by competition from China and other parts of Asia.
A few years ago, in an effort to diversify his company’s offerings, Pomini teamed up with Selvaggia Armani, an artist and designer. The two began working on a series of lamps designed by Armani and manufactured to order on Pomini’s 3D printers.
The project was a surprising success: Pomini now works with more than a dozen designers; he introduced 3Dprinted jewelry in 2012. “This is the beauty of this technology,” says Armani, 47. “You can build things that are impossible.”
Techniques such as the 3D printing used by Pomini and Armani have helped turn northeastern Italy into an unlikely hothouse of innovation. Last year growth in the region was positive for the first time since 2007, at 0.5 percent. Exports rose by 3.5 percent in 2014 and are expected to keep climbing.
Zago and Cinti still use the old Heidelberg presses, but they’ve integrated them into a manufacturing process that includes modern marketing, design, and computer-controlled production. “What the printers of Verona never understood is that in this world, it is no longer enough to work hard,” Cinti says. “You have to understand the new market, the new dynamic.”
New production processes are not the only technologies leveling the playing field for Italy’s small-scale producers. The connecting power of the Internet opens the possibility for small manufacturers to rapidly find new markets, even as Italian demand remains low.
Recently, Segalin introduced a decidedly more modern technology, at a cost of €15,000: laser foot scanners. Using them, Segalin can create a 3D computer model of a customer’s foot, providing him with exact measurements to work from.
Back in Trento, Pomini recently introduced customizable sunglasses, round frames with interchangeable accessories that can be clipped on and off.
Tomi Engdahl says:
Arik Hesseldahl / Re/code:
How are there so many unicorns? Survey of 37 unicorns by Silicon Valley legal firm shows liquidation preferences protecting investors in 100% of funding deals
Here’s One Thing All the Billion-Dollar Unicorns Have in Common
http://recode.net/2015/05/10/heres-one-thing-all-the-billion-dollar-unicorns-have-in-common/
They’re called unicorns — young companies valued at $1 billion or more — because at one point they were rare. Now, they’re much less so.
What’s going on here? How can so many startups achieve the coveted billion-dollar valuation status so readily when investors are supposed to be, by nature, conservative and inherently suspicious of risk? And, of course, is this kind of investing nuts?
A survey out Friday from the Silicon Valley law firm Fenwick and West gives us a pretty good clue. The firm advises a lot of these companies on its funding arrangements with investors — which are generally kept secret — and so it has a solid view into the makings of a unicorn. Fenwick analyzed 37 investments in privately held companies valued at $1 billion or more during the 12 months ended March 31.
It turns out that for companies of a certain size, it’s not that hard to get to unicorn status, provided they’re willing to give their investors a lot of assurances that essentially cover their potential losses. The one thing common in every one of these funding deals, the firm says, that in every case — all 37 of them — investors demanded a “liquidation preference.”
The phrase refers to language often found in an investment contract — and typical to most VC investments — that gives certain investors the right to get paid first ahead of other parties — such as founders or management — in the event the company is sold.
What that ultimately means is that the investors are taking on a very little risk when investing in unicorns, because they stand almost no risk of losing their money if the company goes south.
Of course, making these investments is a gamble that over time that investors make to get more money back, either by way of a public offering or selling at a higher price.
How to Build a Unicorn From Scratch – and Walk Away with Nothing.
http://heidiroizen.tumblr.com/post/118473647305/how-to-build-a-unicorn-from-scratch-and-walk
This is a grim fairy tale about a mythical company and its mythical founder.
And yet entrepreneurs – often with the encouragement of their stakeholders – optimize for the wrong things when they negotiate their financings.
This is my attempt to paint you a picture of why this is such a bad idea. The situation I present is fake, but the outcome is remarkably similar to those I’ve witnessed. Don’t let this happen to you.
Richard is thrilled with the valuation and the fresh capital for only 20% dilution. The prior investor, Peter, is stoked that he is getting his $1 million investment converted into roughly 20% of this super hot company, and now with the validation of an external term sheet he can mark his position up to $10 million, a 10X!
With the $10 million, Richard rents space in SoMa on a seven-year lease, hires lots more people, and within a few months he is able to roll out the minimally viable product to test the market. Awash in the buzz of his fundraise, a feature in Re/code, and some early user traction, Pied Piper is perceived as the emerging leader in a nascent, winner-take-all market. While they are not yet monetizing their users, the adoption metrics are off the charts.
Richard fantasizes about being named a member of the Unicorn Club by the press. His employees calculate the huge paper gains on their options – they will all be instant millionaires
The original investor, Peter, has achieved legendary status – his $1 million has turned into approximately $200 million on paper.
The ads start running, but the conversion rate is low.
Pied Piper is forced to run the whole campaign, blowing through all $200 million. The good news: They increased their user base by 10x. The bad news: The resulting business model
Support costs skyrocket.
Word about the poor conversion leaks out. The advertising stops when the money runs out. Growth slows to a trickle when the advertising stops.
The board is now super unhappy about the massive miscalculation of support costs, awful user conversion, gargantuan ad overspend, the lack of growth the company is experiencing, and the departure of a few key employees who’ve seen this movie before and have done the ‘overhang math’.
The company is not profitable and the current investors are tapped out. “Let’s extend the runway using debt,” says BTV.
Time ticks by while the company plods forward with very slow growth. Market pressures force them to lower prices, pushing profitability off. A few key developers leave.
Terms matter
Liquidation preferences, participation, ratchets – even the very term preferred shares (they are called ‘preferred’ for a reason) are things every entrepreneur needs to understand. Most terms are there because venture capitalists have created them, and they have created them because over time they have learned that terms are valuable ways to recover capital in downside outcomes and improve their share of the returns in moderate outcomes – which more than half the deals they do in normal markets will turn out to be.
There is nothing inherently evil about terms, they are a negotiation and part of standard procedure for high risk investing. But, for you the entrepreneur to be surprised after the fact about what the terms entitle the venture firm to is just bad business – on your part.
Tomi Engdahl says:
Tomorrow’s Advance Man
Marc Andreessen’s plan to win the future.
http://www.newyorker.com/magazine/2015/05/18/tomorrows-advance-man?currentPage=all
Venture capitalists with a knack for the 1,000x know that true innovations don’t follow a pattern. The future is always stranger than we expect: mobile phones and the Internet, not flying cars. Doug Leone, one of the leaders of Sequoia Capital Partners, by consensus Silicon Valley’s top firm, said, “The biggest outcomes come when you break your previous mental model. The black-swan events of the past forty years—the PC, the router, the Internet, the iPhone—nobody had theses around those. So what’s useful to us is having Dumbo ears.” A great V.C. keeps his ears pricked for a disturbing story with the elements of a fairy tale. This tale begins in another age (which happens to be the future), and features a lowborn hero who knows a secret from his hardscrabble experience. The hero encounters royalty (the V.C.s) who test him, and he harnesses magic (technology) to prevail. The tale ends in heaping treasure chests for all, borne home on the unicorn’s back.
At pitch meetings, Andreessen is relatively measured: he reserves his passion for the deal review afterward, when the firm decides whether to invest. That’s where he asks questions that oblige his partners to envision a new world. For the ride-sharing service Lyft: “Don’t think about how big the taxi market is. What if people no longer owned cars?”
Andreessen is tomorrow’s advance man, routinely laying out “what will happen in the next ten, twenty, thirty years,” as if he were glancing at his Google calendar.
Doshi’s board, reported that the entrepreneur had e-mailed to say that he’d love for his company to be valued at a billion dollars—an assessment that would set the price for the portion of it that a16z might now buy. However, Doshi would sell the firm ten per cent of his company for eighty million, suggesting a valuation of eight hundred million dollars. Andreessen said, “The dogs are fucking jumping through the screen door to eat the dog food. And he hasn’t done any marketing yet. And he’s profitable!”
Horowitz exclaimed, “How old is he, twenty-four? God damn it, let’s give him all our money!” A16z provided Doshi all his B-round funding—sixty-five million dollars—for a further 7.5 per cent of the company, which was thus valued at eight hundred and sixty-five million dollars.
Venture firms rarely do an entire follow-on round themselves, for fear of losing sight of a company’s true market value; as Andreessen put it, “You can be thinking your shit smells like ice cream.”
Tomi Engdahl says:
Field Trip! Hackaday Visits Adafruit Industries
http://hackaday.com/2015/05/08/field-trip-hackaday-visits-adafruit-industries/
If you’ve seen any of the photos or videos of Adafruit’s offices, you know what to expect – a large, open space broken by the columns keeping the building’s 10 stories upright. It’s the perfect blank canvas upon which to build a company.
Throughout the tour, [Phil] made it clear that he views his job as a simple one: Do everything possible to allow [Limor] to crank out designs. [Phil] keeps the business running so she can keep on engineering open source hardware. [Phil’s] touches shine through though, in the product logos, and the characters which appear in Adafriut’s Circuit Playground.
Next up on our tour was the wearables department, domain of the one and only Becky Stern.
“Ask An Engineer” studio
One of the largest live hacker/maker shows on the internet streams from a MacBook Air and a couple of cameras.
We slowly made our way over to the manufacturing side of the floor, dominated by Adafruit’s two Samsung pick and place (PnP) machines. PnP’s are something of a holy grail in the electronics world. They have to be precise, they have to be fast, and they are freaking mesmerizing to watch.
Our tour finally had come around to [Limor’s] desk. [Limor “LadyAda” Fried] needs no introduction. She’s been at the forefront of the maker movement for over a decade.
Tomi Engdahl says:
Sukhinder Singh Cassidy / Re/code:
Survey of 100 women tech entrepreneurs shows 84% not from STEM background, 67% perceived bias in workplace, mentorship from men key for most, more
Tech Women Choose Possibility
http://recode.net/2015/05/13/tech-women-choose-possibility/
Through the survey, we are able to identify some other notable trends in our paths as women toward tech entrepreneurship:
While we acknowledge the importance of STEM, it is very possible for women who do not hail from STEM to start tech.
The “entrepreneur gene” seems to run in our families, also. About 54 percent of us are the children of entrepreneurs, and from an early age were exposed to the concept of owning our own business.
While both parents served almost equally as role models, our fathers’ vocation was more often associated with professions like “entrepreneurship,” “CEO,” and “engineering” than our mothers’. The most cited profession among our moms was “teacher.”
Men have played an important role as professional mentors for most of us. Some 37 percent of us would cite our biggest professional mentor as male, while 16 percent would cite women, and 47 percent would credit both genders equally.
Almost half of us — 43 percent — have had children while running our companies
Tomi Engdahl says:
Smart Cities Show Progress at Events
http://www.eetimes.com/document.asp?doc_id=1326607&
Teams from as many as 40 smart city projects worldwide will gather in June to share their experiences at an event outside Washington DC. It’s the kind of cross-fertilization that will be key for the next phase of development of smart cities, said an Internet of Things pioneer helping organize the event.
“Smart cities have been worked on for a long time, especially in Europe where they have been investing money for 10-15 years, but it’s very fragmented into one-off projects primarily focused on research and pilots,” said Sokwoo Rhee, the associate director of the cyber-physical systems program at the U.S. National Institute of Science and Technology.
“I want to push it to the next level of something more sustainable from a business perspective and replicable from a technology perspective, so we’re trying to share best practices, hoping standards or frameworks could come out of it,” said Rhee who founded Millennial Networks, one of the early IoT startups.
Tomi Engdahl says:
The world top-level career made the Finnish boss says: These are the head of seven rule
The world, he made a career Mårten Mickos now shares management theories young growth entrepreneurs. To this end, he founded the school of herring.
The CEO should not say something like “I plan to give up”, even if the situation would be uncomfortable.
You do not give up. You collect yourself together and head forward, they said.
Mårten Mickos, 52, is one of the world’s premier career which performed the Finnish business leaders. MySQL in addition, he has led a number of other growth companies. Recently Mickos has worked with a giant Hewlett-Packard’s business director.
He is taking now to share their own experiences and teachings for young entrepreneurs in the form of an online video. Mickos has set up a School of Herring Management blog named (schoolofherring.com). Online is free of charge, and has no curriculum.
“A friend of mine advised that do not write a book, today’s deal is a video blog,”
He has been working across the globe to follow best principles of Finnish management: candor, authenticity, equality.
Now, Mickos says, what are the seven most important digital age boss rule.
1 Learn how to lead yourself
“When everyone is doing it, there will be a positive spiral. Then the senior management does not have to be Jesus.” Self-management is not easy.
2 Treat everyone equally
This is the basic idea of modern management: all people are equal, says Mickos.
3 When you rely on, it begins to produce
A good boss final test is when he leaves the organization.
“If an organization takes its previous leader is successful.”
4 Set a common goal
Management keeps focus on how motivated employees provide supermotivoituneiksi, says Mickos. Then productivity can multiply. This requires objectives, other than the numbers.
“The numbers are needed, but many inspired by something wider.”
Therefore, the “revolutionize database market” is a better strategy than “strive for a hundred million in annual sales.”
5 Reward your feedback
“We humans are very simple. We do more with what we get awards,” Mickos said.
The Director must communicate to subordinates, that has been noticed to have increased their responsibility in.
“Some people think that the prize should be monetary. Even better prize is the superior attention.”
6 The bad news is good news
The manager must have a solid self-confidence. If it falters, subordinates do not want to tell you held in the boss bad news.
“Therefore, bad news is good news is such an important principle.”
7 It all depends on communication
Finally, the digital time director of the most important subjects.
“Leaders should communicate. It is a central part of management. It must not be delegated. It does not have to be beautiful and wonderful, it has to be genuine.”
“The organization needs the presence of the director.”
Good leaders do not create followers. They create more leaders, Mickos says.
Source: http://www.hs.fi/ura/a1431657962611
Tomi Engdahl says:
10 Arduino-based projects on Kickstarter
http://www.edn.com/design/diy/4439431/10-Arduino-based-crowd-funded-projects-that-deserve-a-look?_mc=NL_EDN_EDT_EDN_funfriday_20150515&cid=NL_EDN_EDT_EDN_funfriday_20150515&elq=6a8fef8e70b1463f90f9c12061d7f140&elqCampaignId=23017&elqaid=25917&elqat=1&elqTrackId=186ac0293d384f65be4ca880ab9f8051
The Arduino development board has grown in popularity over the last few years and has spawned a myriad of interesting projects
Tomi Engdahl says:
Wearables Pocket IoT Crowdfunding
http://www.eetimes.com/document.asp?doc_id=1326652&
Incubator Wearable World hosted an event to showcase the intersection of crowdsourced startups and big-name tech giants scrambling for position in this emerging sector of the Internet of Things.
Hardware startups want to build lean, Indiegogo CEO and co-founder Slava Rubin told attendees, and those startups often use crowdfunding as a way to augment their staff. Recently, venture capital firms have taken to crowdfunding platforms as a way to determine whether a startup has truly developed a product that fits a market, he said.
The result may be a more robust climate for startups, as well as a wider variety of devices offered by major vendors.
Tomi Engdahl says:
Tech Bubble? What Tech Bubble?
http://tech.slashdot.org/story/15/05/25/0048234/tech-bubble-what-tech-bubble
Conor Dougherty writes in the NYT that the tech industry’s venture capitalists — the financiers who bet on companies when they are little more than an idea — are going out of their way to avoid the one word that could describe what is happening around them: Bubble. “I guess it is a scary word because in some sense no one wants it to stop,” says Tomasz Tunguz. “And so if you utter it, do you pop it?”
Today, there are 107 unicorns and while nobody doubts that many of tech’s unicorns are indeed real businesses, valuations are inflating, leading some people to worry that investment decisions are being guided by something venture capitalists call FOMO — the fear of missing out.
With interest rates at historic lows, excess capital causes investment bubbles. The result is too much money chasing too few great deals
Tomi Engdahl says:
The Joyless World of Data-Driven Startups
https://medium.com/backchannel/the-joyless-world-of-data-driven-startups-b6f475f11f5f
Everyone tells early-stage startups to use data
for big strategic decisions. But does that really
work, and whatever happened to vision?
Tomi Engdahl says:
How Startup Valuation Works – Measuring a Company’s Potential
http://fundersandfounders.com/how-startup-valuation-works/
How startup valuation works
http://visual.ly/how-startup-valuation-works-%E2%80%93-way-measure-company%E2%80%99s-potential
Tomi Engdahl says:
You’re Never Too Old To Start A New Venture, Look At These Famous Entrepreneurs
http://digitalsynopsis.com/inspiration/never-too-late-start-venture/
The current lot of 20-something CEOs are ruining it for people like us who are facing a mid-life crisis. This infographic gets back at those young pricks and proves why it’s never to late to start your own venture.
Tomi Engdahl says:
How Funding Works – Splitting The Equity Pie With Investors
http://fundersandfounders.com/how-funding-works-splitting-equity/
How Funding In Startup Works.. A journey from Idea to IPO..
https://wantrepreneurship.wordpress.com/2015/04/18/how-funding-in-startup-works-a-journey-from-idea-to-ipo/
Tomi Engdahl says:
William Alden / BuzzFeed:
Leaked presentation details plans for $100M hardware startup fund Formation 8 is raising
Inside Formation 8’s Secret Strategy To Invest In Hardware
http://www.buzzfeed.com/williamalden/inside-formation-8s-secret-strategy-to-invest-in-hardware#.jujYPBGaw
The venture capital firm Formation 8 wants to raise $100 million to invest in hardware makers. BuzzFeed News obtained a confidential slide presentation about the new fund.
Drones. Robots. Wearable devices. Internet-connected household appliances.
These technologies are making the partners of venture capital firm Formation 8 — including Joe Lonsdale, a co-founder of data mining giant Palantir — see dollar signs.
Formation 8 disclosed last week that it is seeking to raise up to $100 million for a fund focused exclusively on hardware. It has expanded on this new strategy in a confidential slide presentation for investors that was obtained by BuzzFeed News and is published in full below.
The fund, which Formation 8 calls the “world’s first” dedicated to backing hardware makers, plans to make early-stage investments in startups in the United States, Israel and Asia, according to the presentation. Its focus will be the “connected world and the Internet of Things,” including 3D printing, semiconductors, autos and domestic gadgets.
Formation 8 wants investors to think its hardware strategy is a contrarian play. The presentation claims that there are more than 300 startup incubators focused on software, but only 5 focused on hardware.
Flextronics itself is an investor in the Formation 8 hardware fund, according to a person briefed on the matter.
Tomi Engdahl says:
UPDATED: Scampaign Alert: Beware of Crowdfunders Re-Labeling Already Made Products
http://www.crowdfundinsider.com/2015/05/68552-scampaign-alert-beware-of-crowdfunders-re-labeling-already-made-products/
Recently we have had discussions with several people about a problematic issue with rewards based crowdfunding. Some campaign creators may be finding products on Alibaba, repackaging them and launching crowdfunding campaigns posing as new creations. Is this illegal? Probably not. Is it wrong. Yes – definitely.
This is an area that all backers and platforms need to take a closer look at.
Crowdfunding is NOT a store. It is always buyer beware. Every backer must perform their own due-diligence prior to putting money into a project that may not end up being what it appears to be.
As for crowdfunding platforms, hopefully they will update their review process to eliminate crappy campaigns that are little more than a marketing effort and a new package. That is simply wrong.
Tomi Engdahl says:
VCs, Startups Hail Intel Diversity Fund
$125M marked for female/minority startups
http://www.eetimes.com/document.asp?doc_id=1326826&
Intel Capital’s decision to create a $125 million fund for startups led by women and minorities was hailed as a small but significant step for a high tech investment sector that still largely ignores diversity.
The Intel Capital Diversity Fund will be invested over five years as part of a broad $300 million initiative. The effort includes plans by 2020 for a U.S. workforce at Intel that mirrors the national population. To qualify for the fund, a startup needs to have a founder or at least three executives reporting to a CEO who are female or members of a minority.
“The idea is the larger the diverse footprint in the executive staff, the larger the diversity will be in the employee base,” said Lisa Lambert, a 20-year Intel veteran who manages the fund.
“There’s a lack of female VCs and entrepreneurs — women need mentors and role models,”
“To get girls into STEM, they need to be inspired to be in computer science and want to create hardware,” said Morin, a former employee of Apple and Google whose new startup aims to create a community for female Makers. “There are problems in every aspect of these [diverse startup] companies,” she said.
Only 15 percent of U.S. venture-funded companies have a woman on the executive team, and only three percent of venture capital goes to companies with a female CEO, according to a Babson College study. Another survey noted only one percent of Silicon Valley venture funds go to companies founded by an African American or Latino.
“In general, the VC world does not have an open process — the challenge is that you have to know somebody,”
“Forty-seven percent of crowdfunding goes to women, and that says there are great companies that can be financed,”
Tomi Engdahl says:
WeWork:
Should You Invest in People or Technology? 5 Deciding Factors — People or technology? That’s a question countless business leaders have debated, and there’s really no definitive answer.
Should You Invest in People or Technology? 5 Deciding Factors
https://creator.wework.com/work/should-you-invest-in-people-or-technology-5-deciding-factors/
1. Augment your expertise. The product you make or the services you provide clearly mean enough to you—you did, after all, decide to create an entire company dedicated to them. But that doesn’t make you an expert on technology, or marketing, or human resources.
2. Streamline your process. As your company grows, it’s critical that business operations—such as payroll, insurance, and human resources—keep pace to support the business and its employees.
3. Become more efficient. The more efficient your business, the more productive your employees.
4. Cut costs. Spending money to save it may seem counterintuitive, but every successful entrepreneur will tell you this strategy works—if you invest in the right assets.
5. Improve customer service. Employees on the front lines bear the brunt of customer demands and complaints. It’s a stressful position to be in: one that relies on processes and established standards, and not to mention, a thick skin. How is your company supporting this critical function?
The reason you started your business is because you’re an expert in your field.
But that doesn’t mean you can do it all by yourself.
Tomi Engdahl says:
FTC Takes First Action Against a Fraudulent Kickstarter Campaign
http://recode.net/2015/06/11/ftc-takes-first-action-against-a-fraudulent-kickstarter-campaign/
It’s not okay to raise thousands of dollars through Kickstarter and keep the money without producing anything, the Federal Trade Commission said Thursday as it took its first consumer protection action on a crowdsourcing campaign.
The FTC case involved Erik Chevalier, an Oregon man who launched a business called The Forking Path. He launched a Kickstarter campaign in 2012 to produce a board game called “The Doom That Came to Atlantic City!” which had been designed by two prominent game artists. Chevalier promised that if he raised $35,000, backers would get rewards such as a copy of the game or pewter figures.
He ended up raising $122,000 from 1,246 backers
Despite offering updates on production of the game, Chevalier announced about 14 months later that he was cancelling the project. Despite promising to refund the money, he didn’t do so. FTC investigators found that he spent most of the money on personal expenses, including a move to Oregon.
Most of the funders were eventually offered a free copy of the game, thanks to another publisher which took over the project.
Even though crowdfunding campaigns involve some uncertainty, “consumers should able to trust [that] their money will actually be spent on the project they funded,” said Jessica Rich, the director of the FTC’s Bureau of Consumer Protection, in a statement.
The action is notable because it’s the first time the FTC had waded into the world of crowdsourcing campaigns and suggests that the agency is looking to do more to ensure that donors aren’t duped into giving money for fraudulent campaigns.
Tomi Engdahl says:
The True Cost of DIY Manufacturing
http://www.eetimes.com/author.asp?section_id=36&doc_id=1326818&
Before you decide to set up your own manufacturing capability, review its true costs.
Manufacturers of niche electronics-based products sometimes toy with the idea of bringing their manufacturing in-house. Although vertical integration, generally speaking, has gone the way of the do-do bird, cash-strapped start-ups and product mangers with low-volume product lines may sometimes feel that there aren’t manufacturers out there who will be a good fit for them. But the true costs of manufacturing are often overlooked in discussions about bringing this capability in-house.
The often-overlooked costs of setting up an internal manufacturing capability include:
Real-estate & utilities
Costs of acquisition and maintenance
Software licenses
Costs to run the equipment
Perhaps the most significant cost of bringing manufacturing in-house, however, is a loss of focus. I strongly believe that OEMs should focus on the marketing and sale of their products: staying close to customers, understanding what the market needs, and working to innovate, sell, and support products to fit those needs.
Manufacturing is an entirely unique business from the marketing and sales of products.
Tomi Engdahl says:
Hacklet 51 – Crowdfunding Projects
http://hackaday.com/2015/06/12/hacklet-51-crowdfunding-projects/
Ah crowdfunding. You might say we have a love/hate relationship with it here at Hackaday. We’ve seen some great projects funded through sites like Kickstarter, IndieGoGo, and the like. We’ve also seen projects where the creators were promising more than they could deliver. While the missed deliveries and outright scams do get a lot of press, we believe that crowdfunding in general is a viable platform for getting a project funded.
Tomi Engdahl says:
Hacklet 51 – Crowdfunding Projects
http://hackaday.com/2015/06/12/hacklet-51-crowdfunding-projects/
Ah crowdfunding. You might say we have a love/hate relationship with it here at Hackaday. We’ve seen some great projects funded through sites like Kickstarter, IndieGoGo, and the like. We’ve also seen projects where the creators were promising more than they could deliver. While the missed deliveries and outright scams do get a lot of press, we believe that crowdfunding in general is a viable platform for getting a project funded.
Closer to home, Hackaday.io hosts thousands of projects. It’s no surprise that some of these have had crowdfunding campaigns. This week’s Hacklet focuses on those projects which have taken the leap into the crowdfunding arena.
Tomi Engdahl says:
FTC announces it will go after scummy Kickstarter projects that steal backers’ money
http://www.theverge.com/2015/6/11/8765557/ftc-kickstarter-deceptive-fraud-doom-that-came-atlantic-city
The consumer protection agency wants people to feel safe giving to crowdsourcing sites
Crowdfunding platforms like Kickstarter and IndieGogo have grown rapidly over the last five years, taking in more than $1 billion in pledges for project creators. Naturally a few projects failed to deliver on their promises, despite taking people’s money. Sometimes it was the fault of honest errors, other times backers alleged creators had abused their funds. Today the FTC announced it has taken its first action against a fraudulent Kickstarter project, The Doom That Came to Atlantic City, a board game that raised $122,000 from 1,246 backers, but failed to deliver any of its rewards.
“Many consumers enjoy the opportunity to take part in the development of a product or service through crowdfunding, and they generally know there’s some uncertainty involved in helping start something new,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “But consumers should be able to trust their money will actually be spent on the project they funded.”
Tomi Engdahl says:
How to name your startup
http://thenextweb.com/entrepreneur/2015/06/14/how-to-name-your-startup/
No one knows the value of a great domain as much as a startup. That is why some of the most successful new startups shell out upwards of $500,000 for a category killer premium name. But where does that leave everyone else? According to Wakefield Research, 52 percent of people would change their name if they had a chance to.
Naming a startup is often an exercise in frustration. It is hard enough to find an acceptable name that is not already in use. But the really frustrating part comes once the team has finally agreed on a name, and then finds that someone else has already reserved the name and is not using it.
Today, you cannot have a company or product name without a corresponding URL. So, startups compromise with a less marketable – and thus cheaper – name.
Sometimes they later acquire a better domain once they gain traction and receive funding. Twitter and Foursquare did it back in the day. It’s not optimal for companies to start with their second or fifteenth name choice, yet 49 percent of small business owners are having to do so.
Many startups worry that an alternative TLD will prevent people finding them among the .com’s of the world. However this thinking is flawed as SEO does not discriminate against new TLDs.
In fact, Google, which owns some of the new TLDs, is attempting to rank new TLDs appropriately. Already some generic TLDs are ranked higher than a .com; but of course, the quality of the website content does also play into the ranking.
Tomi Engdahl says:
Etsy Launches Fund on Etsy Pilot Program to Crowdfund New Products
https://blog.etsy.com/news/2015/etsy-launches-fund-on-etsy-pilot-program-to-crowdfund-new-products/
Today, we’re launching Fund on Etsy, a crowdfunding pilot program to help Etsy sellers grow their businesses and create new products. By funding a campaign, buyers can participate in a new product’s journey from initial concept to their front door, while forging even more meaningful relationships with Etsy sellers they care about.
Fund on Etsy is a way to expand the Etsy Economy, where creative entrepreneurs find meaningful work and thoughtful consumers discover and buy unique goods while building relationships with the people who sell to them. Over 10 years, we have learned how sellers work from beginning to end to bring products to market, and have developed products to serve their needs along the business spectrum, including tools to create and manage listings and payments, promote items, track orders and expand into new channels like wholesale. Fund on Etsy is intended to address another need — financing and product development — and fits in seamlessly with sellers’ business lifecycles.
Tomi Engdahl says:
Report: Creators of “World’s Thinnest Watch” CST-01 Botch Production; Tells Kickstarter Backers They Are Out of Luck
http://www.crowdfundinsider.com/2015/05/67095-report-creators-of-worlds-thinnest-watch-cst-01-botch-production-tells-kickstarter-backers-they-are-out-of-luck/
Way back in January 2013, Chicago-based startup Central Standard Timing launched a Kickstarter campaign for the CST-01 described as the “the world’s thinnest watch.” The cool looking mock ups, even with no production prototype, wooed many to support this project.
CST-01 2The flexible cuff watch was said to be 0.8 mm thick and using an e-ink display.
This was a big crowdfunding hit. CST-01 collected more than $1 million from about 8,000 backers. The total raised was four times its original $200,000 goal.
Jump to today and two years later there is no watch. Co-creators Dave Vondle and Jerry O’Leary of Central Standard Time recently announced that they have ran out of funds during the production portion and won’t be delivering any of the purchased watches
The Central Standard Time team produced a graph that showed what happened, along with the pass fail percentages at each production and testing stage.
As customers continue to flood the campaign’s page with accusations of Vondle and O’Leary scamming, along with refund demands (understandable), the creators shared where the funds went
Tomi Engdahl says:
When Kickstarter projects have trouble getting started
http://www.chicagobusiness.com/article/20150523/ISSUE01/305239994/when-kickstarter-projects-have-trouble-getting-started
“We know we’ve let you all down.”
So reads the May 5 Kickstarter update from a Chicago-based company called Central Standard Timing. Aiming to create the world’s thinnest watch, its founders launched a crowdfunding campaign in early 2013. CST collected $1,026,292—more than five times its goal—from 7,658 backers. The company promised each would be delivered a watch in September 2013.
So far, CST has shipped about 200 watches, with another 135 ready to go.
The founders, who did not respond to interview requests, say in their most recent update that they need another $1.2 million to fulfill all the orders, an amount they say will be nearly impossible to raise.
Central Standard Timing may be the most expensive fail on the Chicago crowdfunding scene, but it’s far from the only one. Fueled by a potent mix of creative optimism and goodwill, Kickstarter produces many entrepreneurial triumphs—but also significant disappointment when projects are delivered late or don’t match backers’ expectations.
“There’s a chasm between an idea, a design and a business which Kickstarter, Indiegogo and others really in some ways ignore,” says Michael Marasco, director of Northwestern University’s Farley Center for Entrepreneurship and Innovation. “The reality is that there are tons of patents out there, tons of designs out there that have never become products.”
“One of the mistakes we made the first time is that we didn’t see enough options” when selecting a Chinese manufacturer because “we were scared to release the design to too many people” for fear of copycats, she says. The founders also didn’t build enough of a buffer into their timeline.
Did the Creators of a $1M Kickstarter Botch Production or Blow the Cash on Mojitos?
More than two years later, backers of the CST-01 remain sans watches and answers
Read more at http://observer.com/2015/04/did-the-creators-of-a-1m-kickstarter-botch-production-or-blow-the-cash-on-mojitos/#ixzz3dsdWaRLh
Tomi Engdahl says:
Etsy doesn’t want you selling spells
http://www.engadget.com/2015/06/21/etsy-bans-spell-sales/
Etsy’s online shop is mostly known for its handmade crafts, but it has also developed a reputation among the supernatural crowd as an easy place to find spells, potions and other mysterious goods. Well, those merchants will have to find another place to hawk their wares. Etsy has quietly updated its guidelines to ban all “metaphysical” services that promise a tangible outcome, like revenge or weight loss. The company isn’t wasting much time cleaning house, either, as it’s kicking out many of these vendors with little to no warning.
Tomi Engdahl says:
GoFundMe shows users how it’s done, cashes in with $600m valuation
Convincing people to give money to other people is a lucrative business
http://www.theregister.co.uk/2015/06/25/gofundme_shows_users_how_its_done_cashes_in_on_600m_valuation/
Online hat-passer GoFundMe has sold off a controlling stake of its business to investors who value it at roughly $600m.
The Wall Street Journal cited sources familiar with the matter in reporting the donations broker had completed a round of venture capital funding that culminated with investors taking over the majority control.
The site says that it has thus far raised over $1.1bn in pledges from 13 million donors since its launch, with daily donations now averaging around $4m.
GoFundMe has not been without its share of controversial projects.
Tomi Engdahl says:
Talking Big Changes At SparkFun With Nathan Seidle
http://hackaday.com/2015/06/25/talking-big-changes-at-sparkfun-with-nathan-seidle/
Stepping Down Without Saying Goodbye
[Nate] founded Sparkfun in 2003 while still working on his Electrical Engineering degree from the University of Colorado Boulder. He cites wanting to return to his engineering roots as the reason for his title shift, which won’t happen for at least 9 or 10 months. It’s the concept of leaving the CEO position without leaving the company that raises many questions in my mind.
As founder, [Nate] is the Chairman of the Board and will retain the power to hire and fire the CEO. As he put it, that’s quite common with a lot of companies. But I believe that it’s rare for the Chairman to be coming into the office everyday in a different role.
Specifically I’ve been wondering about Contract Manufacturing with SparkFun. There are a few notable pieces of hardware that come to mind in which SparkFun is acting as a CM: the Makey Makey and the Microview.
But you should also know that they developed and produce several types of Arduino boards including the Pro, Pro Mini, Fio, and Lilypad which are produced in 1000+ quantities. That’s nothing to sneeze at, so what’s the deal with CM at SparkFun?
Turns out there is a guide for that. The gist is that SparkFun wants to sell your stuff and will act as a distributor, or as the manufacturer and point sales channel.
On the development side of things SparkFun is quite well-known for their Eagle libraries which are both extensive and well-maintained.
Tomi Engdahl says:
SEC Approves Tweeting by Startups to Test Investor Interest
http://www.bloomberg.com/news/articles/2015-06-26/sec-approves-tweeting-by-startups-to-test-investor-interest
Trying to figure out how many investors might want to fund your small business? Go ahead and tweet about it.
Startups are now able to post a Twitter message about their stock or debt offering to gauge interest among potential investors, the U.S. Securities and Exchange Commission said this week. The announcement continues the SEC’s trend of warming up to social media, which began two years ago when it approved the use of posts on Facebook and Twitter to communicate corporate announcements such as earnings.
The SEC’s latest endorsement of social media only applies to companies looking to raise as much as $50 million a year. New small-business fundraising rules were approved in March, which increased the limit for capital raised to $50 million from $5 million to enjoy the perk of fewer required disclosures.
The SEC said in April 2013 that companies could use Twitter or Facebook to make big announcements as long as investors were told in advance to look there.
Tomi Engdahl says:
How to get your weirdest ideas manufactured in the U.S.
http://money.cnn.com/video/technology/2015/06/23/upstart-30-makers-row-shirt-garment-factory.cnnmoney/index.html
Maker’s Row is a platform for connecting users with over 6,000 apparel and furniture manufacturers in the U.S.
Tomi Engdahl says:
Casey Johnston / Ars Technica:
While most crowdfunded hardware products ship months late due to logistics and manufacturing challenges, the instances of outright fraud are rare
Between Kickstarter’s frauds and phenoms live long-delayed projects
Despite its complications, crowdsourcing enables diverse creators, outperforms VC funding.
http://arstechnica.com/information-technology/2015/06/worth-the-wait-inside-kickstarters-world-of-delays/
Tomi Engdahl says:
Selecting Your M&A Banker
http://www.eetimes.com/author.asp?section_id=36&doc_id=1327006&
At some point in the life of a technology startup company, the CEO and the founding team will be confronted with the question of whether to sell the company or not. Hopefully, the question arises in a positive context and comes from an interested buyer driven by the opportunity to deploy the new technology to a much larger user base.
Confronted with this situation, most startups will hire a mergers and acquisitions (M&A) team to help through this process. Because M&A is a large and profitable business, there are abundant resources to draw from. These M&A teams come in a few different profiles so it is important to select the right partner.
For most entrepreneurs, the sale of their company is a once in a professional lifetime event. This is a stressful and emotional time because it sometimes feels like their “baby” –– their company –– is taken away from them. Hence, the selection process of the investment banker is important because he or she needs to be a trusted partner guiding the entrepreneur through this process.
The CEO can get recommendations on M&A advisors from his or her mentors and from the company’s board of directors. Important sources of information are CEOs of other companies in the same industry who exited recently. The company’s corporate lawyers are also a great resource to tap into: Experienced corporate lawyers have many M&A transactions under their belt and can provide feedback on potential bankers.
Let’s review the structure of the M&A engagement. Once the company has selected an advisor, the chosen investment bank will propose terms in an Engagement Letter. This engagement is exclusive, meaning that the company hires only one financial advisor and expects in return that the advisor not represent another entity that could create a conflict of interest.
Typically, the fees will include two main components.
First, there is an engagement or retainer fee that is paid up front.
The success or transaction fee is the second and more important component.
Tomi Engdahl says:
Depression: The Secret Struggle Startup Founders Won’t Talk About
http://science.slashdot.org/story/15/07/01/2113254/depression-the-secret-struggle-startup-founders-wont-talk-about
In May, Cambrian Genomics CEO Austen Heinz committed suicide. The news stunned friends and family, and sparked a conversation about the growing problem of depression among startup founders. Some estimates say 30% of startup founders suffer from depression, but many are reluctant to talk about their struggle for fear of alienating investors and employees.
There’s a dark side to startups, and it haunts 30% of the world’s most brilliant people
http://uk.businessinsider.com/austen-heinzs-suicide-and-depression-in-startups-2015-7?r=US
Tech’s dark secret
A recent study by Dr. Michael Freeman, a clinical professor at UCSF and an entrepreneur as well, was one of the first of its kind to link higher rates of mental health issues to entrepreneurship.
Of the 242 entrepreneurs surveyed, 49% reported having a mental-health condition. Depression was the No. 1 reported condition among them and was present in 30% of all entrepreneurs, followed by ADHD (29%) and anxiety problems (27%). That’s a much higher percentage than the US population at large, where only about 7% identify as depressed.
More surprising was the incidence of mental health in the families of entrepreneurs: 72% said they either had mental-health problems themselves or in their immediate family.
A founder who has no history of mental illness from a family with no history either “is the exception, not the rule,” Freeman said.
“What we do have though is access to more resources, though, and it’s a shame we don’t access them because of shame,” Huh said.
“There’s lots of people who go through depression without access to support. We are not those people. What creates that barrier to support is that notion that a CEO is a strong, tough male figure who acts masculine and doesn’t ask for help or assistance.”
The startup community has built up the great entrepreneur mythos. It’s not rags to riches, but idea to fortune, building something from a simple thought that suddenly advances society forward. There’s room on the list after Bill Gates, Elon Musk, and Mark Zuckerberg.
But most will not make it to that level of success — there’s a common Silicon Valley adage that nine out of 10 startups fail.
“I think the crazy dynamic range puts a lot of pressure on founders. People’s expectations of themselves get so high because the top is so high,” said Y Combinator’s Sam Altman. “The culture of ‘I’m crushing it, bro’ is not that helpful.”
Depression — wrongly — doesn’t seem like a natural fit for the cheery glorification of a startup life.
“We’re programmed and told over and over again that as leaders we have to be strong, we have to show no weakness,” Feld said
“It’s very risky for someone to go out and say ‘I am depressed. I’m having trouble.’”
“I think folks realize that sometimes the most talented people in the world sometimes have complications, and that it’s those qualities that also make them great,” said startup investor Jason Calacanis in an email.
Tomi Engdahl says:
Aaron Zamost / Backchannel:
Square’s head of communications describes the cyclical nature of media coverage of tech companies
What’s Your Hour in ‘Silicon Valley Time’?
https://medium.com/backchannel/how-the-tech-press-forces-a-narrative-on-companies-it-covers-5f89fdb7793e
A company’s narrative moves like a clock: it starts at midnight, ticking off the hours. The tone and sentiment about how a business is doing move from positive (sunrise, midday) to negative (dusk, darkness). And often the story returns to midnight, rebirth and a new day.
It was a passing remark, and hardly revolutionary — it closely followed the hero’s journey and other theories of storytelling. But it made a ton of sense.
Over the years, I developed the idea by filling in the times on the clock. It has helped to be in tech; startups in particular, always begin with a “founding story,” and follow a typical path through Silicon Valley Time (SVT). It’s not perfect, of course. Companies can skip an hour — or in some cases several. Others get stuck along the way, and with a stalled narrative (and broken clock) cease to be relevant.
Knowing the general time of a company has made it easier for me to see around corners and better do my job.
The tech press moves like clockwork, fitting company narratives into a predictable arc. Here’s how pros deal with it.
Birth. (No one cares.)
If you’re already making news at 12:00, you’ve probably been successful before, since the mere founding of your company is of little interest.
Shiny new toy.
It’s around 1:00 that the first real article is written about your company. With the right connections, anyone can make it to 1:00. You’ve launched your product, raised money from a few prominent investors, and your app makes for a good headline. People don’t feel strongly about you, one way or the other, but now they have heard of you, and that matters.
Up-and-comer.
Rounding 2:00 is a real accomplishment — many startups never make it this far. At 2:00, you are seeing real traction.
Industry disrupter.
Not every company spends time at 3:00. Some burn out after takeoff. Others skip to a later hour. But things get interesting at 3:00. Most importantly, mainstream business press (New York Times, Bloomberg, Wall Street Journal) start to pay attention.
Hottest company in the Valley.
At 4:00, business (and media) momentum drives your recruiting. Everyone wants to work for the next big thing, which makes your company the hottest in the Valley.
Rapid expansion and growth.
At 5:00, everything is gravy. You’re growing fast and your valuation is skyrocketing. Reports that you’re losing money? If you’re at 5:00, those reports are irrelevant.
Greatest company in the world!
Greatest company in the world?
Their product kind of sucks.
They’re never going to make any money.
FUD (fear, uncertainty, and doubt).
The company is a mess.
What are they doing with your data?
And here come the privacy issues. It’s very dark at 11:00.
Worst company in the world.
At 11:59, criticism becomes personal. You see a lot of “Boycott [your company]” stories.
12:00 SVT:
Rebirth.
Everyone loves a comeback.
“You’re never as good as everyone tells you when you win, and you’re never as bad as they say when you lose.” — Lou Holtz
Part Two: How I learned to stop worrying and love the clock
Don’t get angry.
Don’t force anything.
Be humble.
Focus on your customers and your team.
Tomi Engdahl says:
Welcome To The Unicorn Club, 2015: Learning From Billion-Dollar Companies
http://techcrunch.com/2015/07/18/welcome-to-the-unicorn-club-2015-learning-from-billion-dollar-companies/#.b5imzi:n4iY