Lean Startup Geek Smackdown In DC — TECH cocktail

Dave McClure and Eric Ries at the Lean Geek Smackdown in D.C.

Last night, I attended the DC Lean Startup Circle in Arlington, Virginia, hosted by Kevin Dewalt and Ken Yarmosh, featuring a couple of industry heavy weights, Dave McClure and Eric Ries, talking about everything “Lean Startup.” The group was in town for the Startup Visa Act which we covered previously. The duo spoke for a bit and then answered some questions from local entrepreneur about the lean startup mantra. I had always thought that lean startup = bootstrapping. I was way definitely mistaken.  Lean Startup encompasses some great principles that Eric, who writes a blog called Startup Lessons Learned, was able to really break “lean startup” down for the audience and give some real world examples to further solidify the principles.  In a nutshell, there are three principles that define lean startup:

  1. How to measure progress
  2. What’s the cycle time of having the idea and validating it
  3. Minimize cycle time

Good video of Eric Ries and Dave McClure at a meetup in DC discussing Lean Startup.

Subscriptions are the New BLACK. (+ why Facebook, Google, & Apple will own your wallet by 2015) – Master of 500 Hats

I’m on a redeye to NYC, supposed to be working on a presentation i’m giving in a few hours… but fuck it, i can’t get this outta my head, so here we go.

(note: extremely raw, uneven, long, 1st draft publish & shoot; will revise l8r) 


ASSERTION #1: The default startup business model from 2000-2009 was based on growth (aka acquisition) and CPM- or CPC-advertising 


ASSERTION #2: The default startup business model for 2010 & beyond will be subscriptions and transactions (e-commerce, digital goods).

This rant from Dave McClure has some useful insights. Just as a head’s up, the post has some colorful language, and I’m not just talking about font colors.

Show Me the Money: Follow-Up from the Venture Forum at Cyberport in November

Show Me the Money


Aydin Senkut  

Aydin Senkut, Founder and President of Felicis Ventures

 

San Francisco-based entrepreneur Justin Kan came up with a business idea three years ago to produce his own reality television show online. He pitched the plan to a potential angel investor: Aydin Senkut, founder and President of San Francisco-based Felicis Ventures. 

As Mr Senkut recalls it, the idea, and the young entrepreneur himself, made a strong impression on him. “I was impressed with the team’s dedication. Justin actually showed up with a camera attached to his head. That caught my attention. Here he was, willing to broadcast his life 24/7, which included a police visit to his home after someone made a prank call on him. I did, however, ask him to stop recording during the meeting,” he adds. 

“Justin actually showed up with a camera

attached to his head. That caught my attention”
 

Mr Senkut ended up investing US$200,000 in Justin.tv. “I did not want to invest in another YouTube. But everyone dreams of being on TV one day, and Justin.tv allows them to do that.” 

Since its inception in 2006, the venture has evolved into an interactive live video site that lets anyone broadcast and watch live video, with chat, for free.

“Our feedback for the original plan was good,” says Mr Kan. “They said the product was cool, but that we [as characters in the reality show] were not that interesting.” Based on that, Mr Kan, along with his founding partners realised “we were on to something, but needed to refine the product.” 

Justin.tv now boasts 31 million users each month, broadcasting 40,000 programmes daily, with users creating content and broadcasting it live on justin.tv. 

Start-up Mecca

  Experts discuss finding the perfect angel investor at the Cyberport Venture Capital Forum
 

Experts discuss finding the perfect angel investor at the Cyberport Venture Capital Forum

Mr Kan and angel investor Mr Senkut shared their experience at the Cyberport Venture Capital Forum in Hong Kong last month. The event, in its sixth year, promotes Hong Kong’s potential as a breeding ground for creative industry start-ups. The focus of this year’s event was “start-up Mecca” Silicon Valley, which is seen as a possible model for Hong Kong to emulate. 

Mr Senkut, who was Google’s first Product Manager, is upbeat about the potential for angel investing in Hong Kong. He says one of the strengths of Google – one that he has also seen in Hong Kong – is the quality of talent from diverse backgrounds that it attracts from around the world. But he notes that building Asia’s Silicon Valley will take time. “Silicon Valley started in the 1960s. It took six generations to build it to the current supply of investors. There’s no magic silver bullet. [For Hong Kong,] Cyberport and angel investment companies such as Dark Horse will lead the way.” 

Dark Horse

Yat Siu   
Yat Siu, founder and CEO of Hong Kong-based Outblaze

 

Dark Horse Investment was formed in Hong Kong last year by “a bunch of like-minded people, who wanted to form an angel club,” says co-founder and partner Dominic Chan. “But we didn’t have much experience, so we looked at the US for direction.” The group has since scaled the membership down to six equal partners, whose backgrounds range from venture capitalists and entrepreneurs to hedge-fund advisers and management consultants. 

The concept of angel investing, however, is still new to Hong Kong, according to Mr Chan. “It’s hard to explain to people in Hong Kong that you won’t see returns on your investment for at least five to six years, when you can just invest in the stock market.” 

The group expects to invest US$50,000 to US$1million in early-stage ventures that can potentially generate 100 times return. So far, the group has ploughed money into three projects in Asia, including meephone.com, a Hong Kong-based start-up that allows interactive learning and English teaching on the Internet. 

But unlike Mr Chan, who, as co-founder, has a direct interest in meephone.com, the primary role of most angel investors is funding. “As an investor, I’m there for advice, to help them,” Mr Senkut says. “But at the end of the day, the decision is theirs. Every start-up has its own path; being resilient and persistent is important.” 

The Big Idea

You don’t have to be an expert in the field to come up with the next big thing, according to Yat Siu, CEO of Outblaze, the first company to offer multilingual, community-oriented Internet messaging services. But he adds that if you have to think too hard on an idea, it probably won’t work. 

Mr Siu moved to Hong Kong in 1996 to set up Hong Kong Cybercity, Asia’s first free web-page and e-mail provider. The company, renamed Freenation, was later acquired by a US-based firm. 

Coming up with the next Google, or Alibaba, Mr Siu says, is the most often-tried option. But he warns, “the inspiration will be different,” because it’s driven primarily by financial results, which in turn, he says, will lead to “less innovation.” 

Failure – Very Much an Option

Dave McClure  

Failure equals experience: Silicon Valley veteran Dave McClure says 80 per cent of start-ups end
in failure

 

Experts agree that both investors and start-up entrepreneurs need to be passionate about what they do, because the failure rate is very high. “Most start ups – about 80 per cent of them – end up failing, says Dave McClure, start-up investor and advisor of Silicon Valley-based FF Angel, a seed-stage investment programme. “But failure is not a bad thing. Experience is what you gain.” 

 


Angel Investing 101

 
     
 

There’s no magic bullet for attracting investment, according to experts. Doing your homework is important. “There are no excuses, even if you think that you’re not big enough to attract funding,” says Mr Senkut, who advises entrepreneurs to think about turning a disadvantage into an advantage. Here is some other advice from start-up investors and entrepreneurs: 

  • Do your own business plan. It will make you an expert.
  • Be prepared for harsh criticism.
  • When coming up with a business idea, think for an international rather than regional market.
  • Find the human connection to make them care about your business idea when pitching your plan.
  • Make it exciting for the investor. Targeted networking is important. Do your research first, talking to those who might be interested in the sector you’re considering. Find the connection to people who would care about your business.
 

“Don’t just do it for the money,” says Mr Siu. “Passion will drive you and see you through the see-saw market.” 

Entrepreneurs tend to be younger in the US than in Hong Kong. Here, they often want to first gain work experience and connections, which, notes Mr Siu, gives a picture of a Hong Kong entrepreneur’s general appetite for risk. But, he says, the most important attribute for an entrepreneur is how often they are able to pick themselves up after failing. 

“That’s difficult to comprehend in Asia, where a culture of non-failure is prevalent,” Mr Siu says, adding that the lack of ability of Hong Kong entrepreneurs to take risks may be their biggest weakness. 

The usefulness of failure, the ability to recover and learn from it is underrated, echoes Mr Senkut. “Ideas are a dime a dozen. The difference is in the execution.” 

Related Links:
Dark Horse
Felicis Ventures
Founders to Founders
Justin.tv
meephone.com
Outblaze