Over the past 20 years I’ve helped launch a few businesses, I ran a statewide tech organization, I’ve visited way too many co-working spaces and incubators and I started a couple Midwest accelerators.
But last week I saw something new and exciting. It’s a place called Galvanize and I think you’ll be hearing a lot about it. Galvanize is just a year and a half old but already has four locations: two in Denver, one in Boulder, one in San Francisco and others on the way.
A constant theme in the startup world over the past decade is community. Outside of Silicon Valley the question is “Are there better ways to create connections between innovators, researchers, inventors and the people, companies and investors that can bring new ideas to market?”
The reason this question is less important in Silicon Valley is because the Bay Area is so packed with innovators, investors, and commercializers.
This issue of connecting innovators, investors, and commercializers has everything to do with resources and proximity. Places like Detroit and Cleveland face lots of challenges: resources (risk investors and population) and proximity (places where talent and resources interact daily). Places like Boulder and Denver face challenges too (for example there aren’t as many risk investors as the Bay Area) and up until recently there haven’t been places where talent and investors collided often — but there is a growing population (which is key).
Galvanize is one of the important new places where investors, entrepreneurs, engineers, and innovators collide daily in Denver.
Galvanize’s first location was the architecturally interesting historic Rocky Mountain Bank Note building in Denver. As part of its business model Galvanize rents space at affordable rates to innovative startups. It’s also got a sweet cafe and bar, fresh and vibrant design and there are events scheduled throughout the week. It also has something called gSchool — an innovative 8-week or 6-month coding program that teaches people how to program cool stuff.
But you can find a lot of these things in other places too right? What makes Galvanize special?
Here’s why it seems like Galvanize and its team are money…
1. Vision: Go talk to Galvanize founder Jim Deters and you’ll find someone with a burning mission and sense of urgency to make resources available to innovators. You can’t fake that kind of passion. It’s infectious and you need it to sustain a culture that attracts real innovators. Jim and his team also clearly understand real estate and the role of design in building a vibrant community and culture. And it’s not just a cool building and some orange paint and wood paneling that makes Galvanize a place that people want to hang. There’s a “no douchebag” culture. Seriously there’s a work hard, work smart, but be humble and generous vibe that’s part of the Galvanize experience and it’s pretty cool.
2. Got Forth and Multiply: The whole idea of linking cities together in a network of communities is genius. The most vibrant startup communities in the world know how to leverage and export influence. It’s not about hunkering down and desperately holding onto what’s mine. As the Red Hot Chili Peppers say “Give it Away Give it Away Give it Away Give it Away Now!” Communities that build ties with other communities gain access to investors, subject matter experts, customers and engineers. Thriving cities and their leaders understand this. Others will fall behind.
3. They Pony Up: Galvanize has created a substantial fund to invest in breakout startups that are part of their growing community.
4. Results! It takes me six months to decide what kind of car to buy. In just a year and a half Jim and his team have raised a fund, built out four killer locations, created a first-of-its-kind coding curriculum, developed relationships with Google and other top flight partners, and on and on.
Note: I’m not an investor or otherwise affiliated with Galvanize — just an observer and fan.
Check it out: http://galvanize.it/
First time founders don’t buy this BS…
One of our fast growing startups is raising a $1MM+ round and recently came to me with more silly misinformation from a junior VC associate.
The associate told the founders “If it’s such a great deal why doesn’t your current investor (us) just take the whole thing?” The founders replied that we’d already invested in two sizable pre-seed rounds and were looking to add other capable investors.
It’s called “syndication”.
The concept is that multiple venture capital firms or angel investors make investments in a startup simultaneously. It’s very common and upwards of 70% of deals are syndicated.
There are three non-mutually exclusive reasons why syndicates exist…
The first is the constrained capital hypothesis. It assumes that VC firms supply important human and financial capital and that both are constrained within a VC firm. Therefore syndication increases the availability of money and talent available to help a new business.
The second reason that syndicates exist is known as the certification hypothesis. It’s basically the concept of “safety in numbers” where presumably a crowd of investors can exhibit better judgement than a lone investor.
The third reason that syndicates exist is known as reciprocity. Put another way, the wedding guest that gives the nicest gifts gets invited to the nicest weddings. Or VC’s that share good deals get access to other good deals. It’s a core strategy behind venture investing — which is to optimize returns through improved dealflow and a portfolio of investments.
Now there are PLENTY of great reasons for investors not to invest in a particular startup including this one.
But if you’re a first time founder don’t accept this sort of garbage about “If it’s such a good deal why doesn’t your current investor just take the whole thing”. That’s junk.
Most importantly it does a huge disservice to you as an entrepreneur and doesn’t help you LEARN what, if anything, you need to improve or fix about your business or investment proposal.
There’s a lot of room for improvement in toys for kids. I went to buy my 7 year old son a gift for the last night of Chanukah. First I thought I’d get him an Xbox. Then I thought maybe he’s too young to get addicted to idiotic video games. Maybe I can delay that. So I thought I’d get him a fly fishing rod for our move to Colorado. But that would be a lousy Chanukah present. So I went to the toy store and there were quite a few interesting board games, a lot of craft kits for girls, a lot of play toys for kids younger than 5, but not much for boys or curious kids older than 5. I looked at a few snap together electronic kits but the kinds of circuits you can create didn’t seem all that exciting considering he can jump online and play exciting flash games — or program a virtual circuit that will do amazing things. Ended up getting a race car track, wind up speed car thing. What’s been your experience? Any luck finding challenging, educational toys for kids? Or have these taken a backseat to computers altogether?
Things people tell others to try to persuade them not to try new things…
An affordable clip-on light up meter greatly reduces household water consumption and lowers household water costs. Launched yesterday by a startup in our accelerator…
”Not everything that counts can be counted, and not everything that can be counted counts.”
~ Albert Einstein
The other day I was in a roomful of supposedly experienced business executives when one complained that she was on the board of directors of an early stage business and that, “The CEO doesn’t even understand the cost basis of his products.”
Cost basis of his products?
"That makes no sense," I thought. But I figured the executive knew something I didn’t so I googled it. Sure enough it’s nonsense. Those words don’t belong together.
That’s not the first time I’ve heard capable businesspeople torturing accounting and finance terminology. I hear it almost every day.
Cost of sales, gross margins, discounts, net profits, breakeven, and so on. There are plenty of terms to confuse. Finance and accounting concepts are already needlessly complicated. Mixing ‘em up just ain’t cool.
As with all professions, terminology has evolved to serve two purposes: to describe important ideas AND to confuse people into thinking certain ideas are more complicated and important than they really are.
When it comes to finance and accounting there are four basic types of terminology:
1. Terms describing concepts that are easy to understand and you ought to regularly apply to your business
2. Terms describing concepts that are a little more complicated but you should still understand and apply to your business
3. Terms describing concepts that are quite complicated, rarely important, and you ought to have a specialist apply to your business
4. Terms describing concepts that are just BS, unimportant and don’t add value to your business
On top of these four types it’s important to know that lots of finance and accounting terms overlap and mean exactly the same thing. For example there are at least 6 different terms that mean profit. Seriously. SIX!
Whether you’re starting or running a business, understanding how money flows — how you make it, spend it and talk about it — is super important.
But there are plenty of well-intentioned bloggers, bankers, accountants, lawyers, employees, friends and board members that will give you bad advice.
So as an entrepreneur your challenge is to slog through all this input and try to make the best decisions you can.
The key is tuning out most of the noise and just focusing daily on the basics. Things like revenue, fixed and variable costs, profit, receivables, payables, cashflow, cost of goods sold, and customer acquisition costs.
It’s easy to get overwhelmed with financial models, projections, and other forms of guesswork — especially when you have investors or others telling you that hypothetical scenarios are important. Try to stay focused on the basics and earning income asap so any hypothetical exercises will be rooted in some reality.
Above all else, listen to your inner voice and if you find yourself knee deep in complex financial concepts or exercises, take a deep breath, back up, and don’t be afraid to call BS and ask exactly how these things are supposed to help you grow your business.
I bet you more often than not, when you call BS you’ll be right.
One of the most valuable public speaking lessons I ever learned came during an afternoon of media training in San Francisco in the late ‘90’s.
The lesson is really simple but something I have to constantly remind myself to do when I’m speaking to a group: Lock my eyes on one person while I’m speaking and completely finish one thought BEFORE LOCKING MY GAZE ON ANOTHER PERSON!
Before training began I was videotaped (yes we were still using tape in the ‘90’s) presenting investor slides. Afterwards I was asked to review my performance. What I saw was interesting.
If you’d asked me to grade my performance on the presentation before watching the video I would have given myself a B grade. After watching the video it was closer to a C- or D. The problem is that I looked awfully nervous, unsure and like I was hiding something.
"No problem," said the trainer, "We see this all the time. What you need to do is force yourself to stare at someone and complete a thought before fixing your eyes on someone else."
Then she videotaped me again and my performance was, well, instantly 100% better.
It didn’t feel natural at all to fix my eyes on one person per thought but it worked like super magic.
BOTTOM LINE: If your eyes are flitting around the audience, glancing at the floor, glancing at the walls and ceiling, then skimming by some audience members mid-sentence, you will look untrustworthy and shifty.
Try it and let me know if it works for you!
Over the years I’ve had the chance to work with hundreds of businesses of all shapes and sizes and among startups one phrase stands out as a frequent response to the question, “How’s business going?”
"Business is going GREAT!"
"Couldn’t be better."
"We’re killing it."
I’m talking about very early stage startups here. Startups just getting started. Startups that typically have zero revenue and zero revenue model. Startups still finding their way.
What’s frustrating about this response — aside from being dishonest — is that it usually ends the chance to have a meaningful discussion about the status of the business and how I might be helpful.
I understand that founders are always selling themselves and the business and they need to stay positive, but over-inflating progress, especially around people that can be helpful, is a lost opportunity.
This is especially true when it comes to sales and partnerships.
Very often I hear from overconfident founders about this or that “huge deal” or “opportunity” that’s about to close. 95% of the time that “huge deal” doesn’t close and that “opportunity” turns out to be a non-value-producing relationship that never translates into revenue.
Why am I bitching about this?
Because all this overconfident rhetoric clouds reality. And in the early stages of a business, honesty and accuracy are super important. Keeping interested mentors, advisors, and other stakeholders informed about the real challenges and opportunities gives them a chance to help and to get emotionally involved in your success.
My advice is to keep deals quiet until they’re highly qualified and advanced. And if you want advice earlier on, try to undersell the upside potential and likelihood of the deal closing. Keep it simple and straightforward and be real.