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IS A STARTUP INCUBATOR ACCELERATOR FOR YOU? Some lessons from serial entrepreneurs

The latest startup fad is about "accelerators".

The last generation was dubbed "incubators". The lessons about them, from serial entrepreneurs, is worth thinking about before you choose to go that route for your first enterprise.

The current rush to try using a startup accelerator is well documented.Try reading about it in this Wall Street Journal report: "Start-Ups Crowd Accelerators".

So is an accelerator right for you?

Here are some things to ponder that serial entrepreneurs have learned about startup accelerators:

• They sound great to first-time entrepreneurs. What could be better? Great people instantly welcome you, offer free advice and quick access to real cash. Compared with going it alone, living on your savings for months before getting real money from angels or venture capitalists, that is very attractive. Yet there are some sobering realities to ponder before leaping into an accelerator.
• Their money is expensive. For $12,000 you would be charged 5% to 10% of your startup. That could be worth $2 million of you sell out later for, say $20 million. If you had kept that yourself, it would have gone to you, or you could have used it to attract needed employees.
• The great helpers are busy doing other things. Helpers in accelerators are mostly people wishing they could join the next Facebook. Or they are in the business of selling services such as legal and accounting help. Few have the deep experience the first-timers is eagerly seeking. If you are willing to settle for that level of basic business assistance, then you'll find it at the accelerator. It can be helpful, but it is not from the amazingly talented people pool that you might be expecting to pick from.
• The cash is a drop in the bucket. Your startup can not do much with $10 to $20 thousand of cash. Good technical people are able to find good jobs paying good salaries. Ditto with marketing and business development people. They are looking for full salaries that will use up your accelerator cash in one month.
• You still have the heavy lifting to do. After your initial idea gets scrubbed, worked over, and modified, you still have the hard work to do yourself. It is up to you to execute your first idea and begin the process of transforming it into something very valuable to end users and customers. Your accelerator advisors will be busy with a dozen or so other startups. It is up to you to find the missing people, recruit them (with no money for salaries), and get them working for you. Same goes for developing the product/service, preparing the marketing and so on.
• Other solutions can be free. Advisors and mentors are available who do not work in an accelerator. They include experienced people from the venture community: serial entrepreneurs, lawyers, angel investors, accountants, human resource recruiters, and venture capitalists. I've seen such people welcomed by first-timer entrepreneurs and seen them receive outstanding advice (and they get an offer to return for more) at no cost (stock or cash). Why? Because each knows what it is like to be a first-timer, is willing to contribute advice (as they sought in the beginning) and want to not miss a great idea for a great startup.
• Other solutions can be more useful. Try considering some of these and compare them with an accelerator:
  • Early contact with angel investors often opens a link between first-timer and a very experienced business person. That can lead to a small seed round of financing, with more to follow.
  • Starting with an "advisory meeting" with a great venture capitalist can cement a relationship that leads to a business plan that wealthy private business people finance (often in large public corporations that the venture capitalist financed years earlier).
  • Classes in entreprenership can be found in nearly every school. Taught by experienced people, they cover the basics in depth of what you need to be successful. The cost of the courses are very low and rich in content. Some are online and self-paced.
  • And you can simply spend three months doing "informational interviews" with CEOs and core team members of startups. You'll be amazed at how much you learn listening to them over a cup of coffee or lunch. A few have written books.
  • The nice thing about all of these is that you have not spent any cash or given away any shares.

BOTTOM LINE: "What is my alternative?" is the first question a serial entrepreneur asks him or herself when thinking about doing the next startup. Accelerators have their place in the startup world, but are not the be-all for everyone. To move from idea to clever plan that has a chance to contruct an unfair competitive advantage you'll need a lot more help than can come from an accelerator. Serial entreprenurs know that. So try contacting a few and give your alternatives consideration as you plan your next step.

I wish you The Best on your Adventure!

STARTUP COMPANY CULTURES: Central to becoming the Gorilla of your market

Every great startup -- the ones that become the Gorilla of their jungle -- have CEOs who are passionate about "company culture".

Company culture is so important to serial entrepreneurs that they would rather skip hiring a skilled person if that individual did not fit the company culture.

The startup veterans have learned life is too short to try to do a startup with a lot of people who fight the company culture day after day after day. Every Monday becomes a day to dread and Friday cannot come too soon.

So today I found a real example for you to think about from the Lessons Learned column in Business Investors Daily, Monday, April 30, 2012. A serial entrepreneur says it like it is, in this, his story:

 EXAMPLE

A Tech Entrepreneur Hires People Who Fit The Culture

By MOREY STETTNER Posted 04/27/2012 03:39 PM ET

Entrepreneurs often dream of building a business and selling it for a fortune. Tony Hsieh lived the dream, but it didn't unfold as planned.

Within a year after graduating Harvard in 1995, he co-founded a Web advertising firm called LinkExchange. With Hsieh as chief executive, the startup grew quickly and attracted a large following. In 1998, Microsoft bought LinkExchange for $265 million.

"The real reason we sold the company, which most people don't know, is it was not a fun place to work anymore," said Hsieh, now chief executive of Zappos.com, an online retailer based in Henderson, Nev. "The company culture went downhill. I dreaded getting out of bed to go to my own company."

An early investor in Zappos.com, Hsieh joined the fledgling firm in 2000 as co-CEO. After nearly a decade of fast growth, Hsieh and his team sold the company to Amazon.com (AMZN) for about $1.2 billion.

Unlike his earlier experience selling LinkExchange, Hsieh pursued the Amazon deal with an eye toward preserving the vibrant culture that he and his colleagues had worked to create. The culture remains intact post-acquisition.

Reflecting on his LinkExchange experience, Hsieh admits that he overlooked the importance of fostering esprit de corps as the startup rapidly hit its stride. Managers recruited candidates with technical qualifications but who lacked the right "fun" personality.

"The culture was great at first when we hired friends and friends of friends," recalled Hsieh, author of "Delivering Happiness." "But once we exceeded 15 or 20 people and we had to hire people through resumes and interviews, things changed."

Newcomers didn't necessarily share the same attitudes as the core group who launched the company. Morale started to suffer.

"I should have been more careful about company culture and made sure everyone understood it can go away at the drop of a hat," Hsieh said. "It's easy to take for granted, but over time there's death by 1,000 paper cuts."

At Zappos.com, Hsieh vowed not to repeat his mistake. He says that maintaining the right culture "is the No. 1 priority of the company," and he hires people who embody the organization's values.

Candidates undergo two sets of interviews: one with a manager who assesses their technical prowess and one with a human-resources representative who evaluates cultural fit. Zappos.com has about 4,700 employees. In 2011, the firm hired approximately 1% of its 25,000 job applicants, Hsieh says.

"As long as we hire people whose personal values match our corporate values, you don't need to tell them how to behave," Hsieh added. "They can just be themselves."

BOTTOM LINE: Founder CEOs who want to build great startups will spend huge efforts to build great company cultures. Serial entrepreneurs make that one of their top priorities. They will not hire people who don't fit the company culture, regardless of how smart and talented the candidate is. When you live by that policy, your startup will grow with extra strength, speed and efficiency. Life will be worth living, not hellish. It is part of what makes serial entrepreneurs so successful, it is key to their building an unfair competitive advantage. Learn that and your startup will increase its likelihood of joining their successes.

I wish you The Best on your Adventure!

SPONTANEOUS STARTUPS (PART 3): Pivot - Iterate - Spin - Loop whatever you call it, just "Be First to Get it Right"

I've been fascinated with the buzz around the "pivot" word.

It has captured a lot of attention and stimulated much discussion. Even the Wall Street Journal writes about it.

The word means to do something, to take an action (that's a verb). Action is good, that's what "execution of your plan" requires.

Others use words like "iterante" or "spin" or "loop". To me, they are all about the same action.

Yet I find little discussion about "What is the objective of pivoting a startup?" The purpose for doing something should be part of the action. So just what is the objective for pivoting a startup?

I suggest you'll find the Prime Objective (for pivoting a startup) is this: "Be First To Get It Right".

All the pivoting in the world is useless unless you end up in a strong competitive position. The best position is to emerge from all the dizzying pivoting and arrive at one point: Be First To Get It Right.

Facebook, Zynga, Starbucks, Qualcom and Chipotle are some examples whose founders pivoted and became First To Get It Right.

Arivving at that position opens the door to the Prime Goal: Become the Gorilla of a New Space within 5 Years of Launch. When you attain that Prime Goal, you have succeeded with your startup. Everything that follows is easy.

BOTTOM LINE: The Prime Objective of pivoting is Be First To Get It Right. The Prime Goal of pivoting is to Become the Gorilla of a New Space within 5 Years of Launch. That is what all the commotion is about. It is central to building an unfair competitive advantage. You can do it.

I wish you The Best on your Adventure!