What does it take to be a successful startup??

Some VCs (in silicone valley) said that they receive thousands of business plan daily. Some say that only 1 in 10 startups make it.

What makes a startup tick really intrigue me. I think it's the combination of team (not just founder!), product execution, market potential, timing and luck.

But this Startup Genome Report has compiled a study of 650+ web startups and analyzed the common characteristics of startups and trends among the startups that may imply to the general. I must say that I'm already agreeing to most of the key findings here:

1. Founders that learn are more successful: Startups that have helpful mentors, track metrics effectively, and learn from startup thought leaders raise 7x more money and have 3.5x better user growth.

2. Startups that pivot once or twice times raise 2.5x more money, have 3.6x better user growth, and are 52% less likely to scale prematurely than startups that pivot more than 2 times or not at all.

3. Many investors invest 2-3x more capital than necessary in startups that haven't reached problem solution fit yet. They also over-invest in solo founders and founding teams without technical cofounders despite indicators that show that these teams have a much lower probability of success.

4. Investors who provide hands-on help have little or no effect on the company's operational performance. But the right mentors significantly influence a company’s performance and ability to raise money. (However, this does not mean that investors don’t have a significant effect on valuations and M&A)

5. Solo founders take 3.6x longer to reach scale stage compared to a founding team of 2 and they are 2.3x less likely to pivot.

6. Business-heavy founding teams are 6.2x more likely to successfully scale with sales driven startups than with product centric startups.

7. Technical-heavy founding teams are 3.3x more likely to successfully scale with product-centric startups with no network effects than with product-centric startups that have network effects.

8. Balanced teams with one technical founder and one business founder raise 30% more money, have 2.9x more user growth and are 19% less likely to scale prematurely than technical or business-heavy founding teams.

9. Most successful founders are driven by impact rather than experience or money.

10. Founders overestimate the value of IP before product market fit by 255%.

11. Startups need 2-3 times longer to validate their market than most founders expect. This underestimation creates the pressure to scale prematurely.

12. Startups that haven't raised money over-estimate their market size by 100x and often misinterpret their market as new.

13. Premature scaling is the most common reason for startups to perform worse. They tend to lose the battle early on by getting ahead of themselves.

14. B2C vs. B2B is not a meaningful segmentation of Internet startups anymore because the Internet has changed the rules of business. We found 4 different major groups of startups that all have very different behavior regarding customer acquisition, time, product, market and team.

At least I'm glad that 1, 2, 6, 8 and 9 are true :p

Cant wait to read the whole report! Thank God it's free This is what I wrote in the field 'Why are you interested to read the report?':

Because I'm startup founder too and I want to know the characteristics of successful startups.
Thank you for the report!

Cap table

A prospect investor ask for a Capital Table / Capital Management Plan. So I googled for Capital Management Plan (cos it sounds more descriptive) but pretty surprised that I got very little sample of CMP, especially those related to fundraising from VCs / Start-ups fundraising tools. The ones I found are mostly about budget request descriptions for school facilities improvement. A bit weird but I worked on it anyway. I love playing with numbers and excel.

So I spent almost few days of work breaking down Urbanesia 2 year financial strategic plan. I was pretty happy with the result. Till just now. I just talked to one of my mentors explaining our progress in fundraising and prospect investors. I showed him the email of the investor who requested for the Capital Table / Capital Management Plan and wanted to get his opinion about my hardwork CPM. But when he saw the list he said, 'Oh they're asking for a Cap table!'

Turns out I have been working on the wrong Capital Table! (but i'll share this with them anyway since it gives a good view of what we're going to do with the money once we get them - I loved working on it, so fun imagining having lots of money! haha ^_^)

I googled Cap Table and there are so many resources talking about them. Like what I originally expected!
This is one of the description I get:
A capitalization (cap) table lists who owns what in a startup. It lists the company’s shareholders and their shares. by Venture Hacks

You can download one of the samples here.

Hope this will help you in fundraising!

Selina & Urbanesia (+Tista) on media

Was using this new search engine in Indonesia called caripi (http://www.googlid.com/)

Searched for Urbanesia and found this article on Penn-Olson by Willis Wee, interviewing me about Urbanesia

http://www.penn-olson.com/2011/02/23/urbanesia/
http://www.penn-olson.com/2011/03/02/urbanesia-indonesia-tech-start-up-scene/

That same article made it's way to Young UpStarts and Good News From Indonesia

Thank you for posting us on your media ^_^

How to unleash Innovation

Martin Zwilling summarized the book “Look at More: A Proven Approach to Innovation, Growth, and Change” by Andy Stefanovich down to 5 key principles in fostering creativity in an environment:

• Mood. Inspiration and creativity requires the right context of attitudes, feelings, and emotions. Every business leader who wants innovation must constantly monitor and set the proper mood for the environment. You can set the right mood by purposefully disrupting the status quo, initiating change, asking provocative questions, and listening.

• Mindset. This is the intellectual foundation of creativity, the baseline capacity each of us has for getting inspired, staying inspired, and thinking differently. Four thinking disciplines which produce a creative, inspired mindset include changing your perspective, taking risks, finding your passion, and challenging assumptions to embrace ambiguity.

• Mechanisms. These are the tools and processes of creativity that help you engineer inspiration into the way you work and empower your organization to embrace the kind of behavior that fosters innovation. Four key steps include building a context, generating ideas, filtering ideas, and building a blueprint for implementing the best ideas.

• Measurement. Even creativity needs guidance and critical feedback on the qualitative and quantitative performance of individuals and organizations. Measurements send a strong signal of what is important and where people should focus their passion and energy. In addition to measuring results, you need to measure mood, mindset, and the mechanisms above.

• Momentum. This is accomplished by the active championing and celebrating of inspiration and creativity that foster a self-reinforcing cycle for increasing innovation. Momentum is an organizational priority for inspired leaders who have a clear understanding of the other four M’s.

I want to keep these key points because it's not only about unleashing creativity but also keeping the creativity implementable. Maybe that's the difference between a creativity and innovation?

http://blogs.forbes.com/martinzwilling/2011/05/15/innovation-takes-real-effort-even-for-startups/

How to be a bad Founder and a Good Leader

I just can't get enough of this Martin Zwillings. This is his other posts I like:

Nine bad behaviors of struggling Start-up Founders

1. Failure to build trust and integrity. Poor executives often fail to build trust initially, or they erode trust during daily interactions and operations. Without trust, there can be little cooperation between team members. This results in little risk taking, diminished confidence among employees, and a loss of communication throughout the company.
2. Focus on things that don’t really matter. Executives who struggle spend too much time focused on things that don’t really matter. If it doesn’t fit into one of the Four Fundamentals: growing revenue, getting new customers, keeping the customers they already have, or eliminating costs, they should rethink what they are doing.
3. Shirk accountability and role model. Founders need to realize their behavior is in a “fishbowl” and thereby highly visible for the team to see and imitate. What the founder says and does in stressful situations sends a signal to imitate that behavior, even when they are not under stress. Poor performers thrive in an unaccountable work climate.
4. Fail to consistently reinforce what’s important. Managers often stress a particular message or a program for a couple of weeks, and then assume everyone gets it. When they change their message too often, team members become confused about what’s important. People perform best when what they hear is consistent and frequent.
5. Over-rely on consensus decisions. Some founders go too far to become consensus builders. This takes too much time in our super-competitive environment, and the result of a total buy-in is usually a watered-down version of the original decision or action they intended. Informed decision-making is not the same as consensus decision-making.
6. High priority on being popular. The first priority of a founder is to deliver results, rather than building friendships. Happy team members don’t necessarily bring you stellar results, although stellar results almost always bring you a happy team. Good managers don’t worry about shaking up the status quo, and realize that change is never initially popular.
7. Get caught up in their self-importance. Many founders fail because they get caught up in the “aura” of their position, and seek recognition and glamour for themselves. They love to give speeches to groups and in places that don’t really matter. These people seldom see what is causing their own demise in their attention to “all-about-me.”
8. Put their heads in the sand. Many founders struggle because they only want to hear good news. Team members quickly learn to report positives, while hiding problems. As a result, productivity suffers, employee morale decreases, and targeted results are missed. Encourage open, honest, direct, and specific communication always.
9. Fix problems, not causes. Don’t fix a problem without addressing the reason the problem occurred. The most common excuses given include lack of time to immediately address the cause, lack of resources to address the cause, or problem is outside of their control. Good managers always find the means to fix the cause

http://blogs.forbes.com/martinzwilling/2011/04/04/nine-bad-behaviors-of-struggling-startup-founders/

Nine habits that make contagious Start-up Leaders

1. Spotlight leadership acts of others. This is the habit of focusing attention, directly or indirectly, on leadership efforts and accomplishments of another team member or group. For managers and non-contagious leaders (contained leaders), the spotlight seems to always be on themselves.
2. Cultivate positive character qualities. Contagious leaders have a habit of highlighting effective choices about “how” things were accomplished, and not just “what” was accomplished. It’s not just about the numbers, but how character played a role, and who made the right decisions along the way.
3. Provide in-depth recognition. Don’t just articulate specific actions that deserve praise. Contagious leaders tell Harry why and how he did a good job, whereas managers and contained leaders just say “Good job, Harry.”
4. Emphasize strengths, leading to greatness. Conventional managers focus on people’s shortcomings and point them out as often as possible. Contagious leaders nurture the habit of recognizing others strengths, and help them extrapolate these to greatness.
5. Communicate often and effectively. The habit of constantly exchanging information, thoughts and feelings openly and honestly builds morale, enhances productivity, and fosters contagious leadership. Too many managers “tell ‘em only what they need to know and not a moment before they need to know it.”
6. Provide an unobstructed vision. Contagious leaders foster the habit of focusing actions on a clear and sensory-rich picture of the desired result. Managers tend to have only a vague picture of where the company is going, so they are unable to share a coherent vision with others.
7. Really touch people’s lives. Nurture the habit of truly knowing your most valuable asset – people. Managers avoid any real, deep involvement. Most don’t know if the people reporting to them are married or single, or anything about them. Contagious leaders know their people personally and do things for them, not because it’s good for business, but because they truly care.
8. Passionately support your people. Managers are always controlled, rather than being fully committed and willing to take a risk. Contagious leaders are quick to support their team, and always stick up for them, even in the face of adversity.
9. Mentor a permission mentality. Contagious leaders mentor their team to always assume they have permission to do things their way. They try to extend the concept of contagious leadership, rather than constrain it. Managers want a staff of imitators and followers. They want people to do what they want, and to do it their way.

http://blogs.forbes.com/martinzwilling/2011/03/17/nine-habits-that-make-contagious-startup-leaders/

Business Plan Don'ts!

Wow. It's been a while since I wrote my last post. Well to be honest I'm that good at writing :p
But there are many things I found in the internet I thought worth keeping and sharing to people who has the same mission as me: to be a kick-ass entrepreneur!

Well this morning I got a link about innovation and startups on Forbes blog. Turns out they have so many great stuff there!

This is one of my fave: Ten top investor turnoffs around business plans by Marty Zwilling
And very applicable to where I am now since I'm trying to raise money for Urbanesia and just planning to submit my business plan to Global Entrepreurship Program Indonesia hosted by Mekar.biz (More info go to http://gepi.mekar.biz)

The summary is here:

1. Tease or spam the investor.
2. Send the plan without a summary.
   
3. No plan in the Business Plan.
   
4. Embarrass your English teacher.
   
5. Fill the text with acronyms.
   
6. The base plan is a book.
   
7. It’s all in an appendix.
8. Don’t be negative.
9. Prototypes and demos attached.
   
10. Letters from your friends.
    

http://blogs.forbes.com/martinzwilling/2011/02/04/ten-top-investor-turnoffs-around-business-plans/

Citysearch and Twitter Collaboration

Hmmm... I wonder if we could implement the same thing on Urbanesia.com

Citysearch and Twitter Team Up to Offer Business Tools

By CLAIRE CAIN MILLER

A new partnership between Citysearch and Twitter offers some clues about what Twitter’s long-awaited paid accounts for businesses might look like.

Citysearch announced on Monday that it will provide the businesses on its site a few tools to help them make use of Twitter — and said that more tools would be coming soon, including some that sound a lot like what Twitter has repeatedly said it will offer businesses for a fee.

Businesses will be able to write tweets from their Citysearch page and create a Twitter account from Citysearch’s Web site, the first time it has been possible to sign up for Twitter without going to Twitter.com.

“We’re excited about it because it’s a step to demystify Twitter, to help small businesses get on from a site they’re comfortable with,” said Kara Nortman, senior vice president of publishing at Citysearch. Many of the types of businesses that appear on Citysearch have been using Twitter as a marketing tool.

Citysearch will also incorporate tweets about a business into its profile page, so people reading about a restaurant, for example, will be able to see what people have recently tweeted about it. Though people can review businesses on Citysearch, they generally do not do so as actively as they do on Yelp, Citysearch’s competitor, so this will be a way to bring more of the customer’s perspective onto Citysearch.

Citysearch wants to become a directory of social media listings, Ms. Nortman said, so that any time someone is looking for a business’s Twitter or Facebook page, for example, they can find it on Citysearch. That will also be useful on Citysearch’s mobile application, because people who want to tweet about a restaurant or bar while they are out can easily find the Twitter name of the business.

Perhaps more intriguing, Ms. Nortman said that Citysearch’s new offerings are the first step in a plan to offer small businesses a bunch of information to help them “understand when and how and where their business is being talked about across the Web.” This will include analysis of what people are saying and whether the sentiments are positive or negative.

That matches up with what Twitter’s co-founders have said Twitter will eventually do, and Ms. Nortman confirmed that the two companies have discussed doing this together. “Our conversations have involved that as a next stage in the partnership,” she said. “They’ll be offering corporate services through their partners.”

Evan Williams, Twitter’s co-founder and chief executive, recently told me something similar, although he suggested that any partnerships wouldn’t be exclusive.

So far, when Twitter has released a new feature, like location-aware tweets or Lists, it has made the technology available to all third-party developers building Twitter applications through the API.

When Twitter unveils commercial accounts, it will do the same thing, Mr. Williams said.

“We don’t plan to do everything, and we plan to offer an API for everything we do,” he said. “It’s the same thing with anything commercial –- it will be a platform for other people to build upon and make money as well.”

Citysearch announcement on its blog