@cschultz

A natural and good tendency for entrepreneurs is to "do what you know." It helps if you actually have the problem you are solving because it brings you deep insight into the pain of the problem.  Many founding stories begin with the ah-ha moment when the founder kept bumping into the problem she would ultimately build a company to solve.  The problem with solving our own problems is it limits your context to what you know and experience every day.  And that leads to the abundance of "white people problems" being solved by startups right now.  It's not that the problems aren't real, it's just that most people have much bigger problems than how quickly they can get a healthy glucose-free meal delivered to their doorstep with a few touches of an app.  Naturally, solving a problem you don't have will involve additional risk, because you'll have to learn to empathize with it, rather than truly feeling the pain. But I'd argue that you'll also unearth markets that software has yet to eat and people who will adopt quickly because they don't have an abundance of choice in solutions to their problems.  To get the ball rolling, here are some places I believe are fertile ground for startups: 

Tech-enabling traditional industries - focus on older industries that are major economic drivers in your part of the world where you can build an unfair advantage

The blue collar workforce - people who sit at computers all day already have a ton of companies building tools for them, but the smartphone is penetrating has penetrated the service economy opening up new business models and creating opportunities

The emerging independence of the labor force - the on-demand economy is only possible because of the risk-shift that companies are taking advantage of with a independent contractor workforce.  In the same way co-working spaces, freelancing tools, and entrepreneurial education have helped knowledge workers move from corporate jobs to freelancing jobs, there is opportunity in the shift of the skilled and unskilled labor markets moving from corporate employment to independent contractors.

I had dinner w. Brendan Baker last night and he told me of a strategy he has with new hires.

When a new employee first starts, have them keep notes on what doesn't make sense to them in your company.  Processes, things you do, why you do them.

Don't have them share it with you right away, stow it away because some things may become evident as they learn the business.

After 6 months, review their initial reactions to your business, perhaps 20% of the feedback will be insightful and worth acting upon. 

I've had a lot of people sending me this article from Sunday's NYTimes. They are connecting it to Niko Niko, which is awesome.

Our mission is to help companies understand how their most important asset, their people, feel about work.   In the year that we've been talking to companies across the world, its remarkable to see the difference been companies that "get it" and those that don't.

I've had CEO's who've said to me "why would I care how an employee is feeling - they are getting paid, right?"

This attitude won't cut it in a world where talent is scarce and its easy to work from anywhere and work for anyone. 

This is a great article to understand what it takes to create a fulfilling workplace.  And if you're working somewhere that's not fulfilling, fix it or find another job.

In the startup world, I've come across two distinct archetypes of people:

people focused on creating value

people focused on extracting value

These types of actors can be anyone involved in a company, founders, employees, consultants and investors.  Simply put, some people are there for the love of the game, because they want to build something amazing and create a business.  Some people are along for the ride, trying to figure out how they can cash in on the business.

I believe you can break down investors into these two buckets as well. While all investment requires financial acumen and a focus on generating returns, our investment approach at Voodoo is driven by being engineers, not financiers.  

While capital is fuel, you can fill up at a lot of gas stations. That's why we help to build the engine.

We provide software development through Flatstack and customer development through Voodoo:Growth to accelerate the early stages of a company's needs: building product and acquiring customers.  

Me: "So how are things going?" Dan: "It's really hard right now."

Entrepreneurs have all been told "do what you love." Intended to inspire, its easy to dismiss. Here's my take: do what you love, because when it gets hard you'll be willing to persevere.

Dan Parham is a great example. As hard as it is, he said to me "turns out I really love selling to our customers. We've build these really great tools on Neighborland that can help them solve their problems." Dan founded Neighborland because he cares deeply about civic engagement, thoughtful urban planning, and activating neighbors to engage in their communities. It's really hard and he loves what he's doing.

Patrick Comer sent me an email this week with a screen shot of his initial outreach to me.  What a difference six years makes.  Its a great reminder to me of why I enjoy being open and meeting people... you never know where it's going to lead.  

So glad to have you as a friend, mentor, partner-in-crime, and Voodoo portfolio company, Patrick.  You are simultaneously disrupting both market research and New Orleans tech.

Wise words of guidance my good friend Paul Singh gave me in a phone call last week.  Excited to reveal the ambition of Disruption Corp today, and proud to have invested in them a year ago.  Voodoo Ventures portfolio companies swing for the fences. Always.  

We wrapped New Orleans Entrepreneur Week last week, and the "entrepreneurial season" has come to a close.  Now that the spotlight has faded, founders are thinking about what's next.  

I'm going to share some blunt advice based on my experience with 3 years of Launch Pad classes.  Ask founders who have been through our program - the work is just starting.  And its up to you to determine where you'll be next NOEW. 

Do Something, Anything - NOEW is over, you stepped off the stage and it hit you. Now what? You've been on mentorship overload for the last few months, and now you've got no-one around.  The heat you have from NOEW has a half-life of a few weeks, so quit basking and get to work.  A year from now are you going to be looking for a j-o-b or are you going to have paying customers, employees and a growing company?  Focus on things in your control and do something. 

Go Headsdown - You nailed it on your pitch and you're feeling the mo', but in the back of your mind you feel a little hollow. You're out over your skis right now and expectations are high. Take the time you need to go headsdown and execute.  Build product, talk to customers, whatever it is that you need to be doing, but go headsdown and refocus on doing the hard work.  The spotlight will be there when you get back, just make sure you've made something happen because next time you pitch, people are expecting major progress. 

Level Up - You've made it to the show. The chip on your shoulder isn't doing you any favors. It's time to be a leader. You're building a company and your team is going to be a reflection of you. Create the right culture in your company. Don't be an asshole, treat people with respect, you're going to need the support of everyone who is rooting for you.  Level up, you're in the big leagues now and you're the CEO. Act like it. 

Stop 'Trepping and Get to Work - NOEW is over.  Being an entrepreneur is not your job, building a company is. Build your personal brand as a captain of the industry you are in, not as startup dude.  Idea Village and Entrepreneur Magazine are in the entrepreneurship industry, so let them talk 'Treps, you should be talking about your company and the problems you solve for your customers.  Communicate on social media with your customers, not your fanboys. 

If any of the thoughts above resonate with you, take them to heart.  But trust your own gut and chart your own course, these are just nuggets based on my experience.  In fact, these are point of advice I've received personally in my career.  I need to continue to Be Bold in everything I do.

Now what?

I love to fly fish.  There is nothing like the serenity of standing in the river, cold water rushing by that makes me feel at one with nature. 

One moment you are in flow with your casting, and then suddenly...

Strike! 

You see the trout rise and take the fly.  

Most fish lost in fly-fishing are lost either at the moment you strike or when you attempt to land them.  Striking a fish means tightening the line by raising your rod tip.

Striking with a fly rod should be a firm, immediate reaction to a fish that has visibly taken your fly

(Orvis)

Immediacy matters.  The most important thing is that you react.

The same goes for Customers.  

We had a potential customer yesterday who was really digging into Niko Niko.  He submitted 2 support tickets and tweeted at us, all over the course of 8 hours.   He was all over us, and he wanted to use our product. 

Max had a great conversation with him today, but the customer had to do everything he could to get our attention.  It felt like we were following up within reasonable timing, but it's a reminder to us that when you have a potential customer on the hook, you must set the hook - they might be interested right now, but 100 things could happen if it takes 8 hours to get back to them.  They could Google the 8 different alternatives to your product or service.  They could have meetings this afternoon and realize it wasn't a priority and not get back to it.

When a customer bites, set the hook.

Here are some ways I've instituted setting the hook in my businesses over the years.  They may or may not apply to you, but think about how immediacy matters for your customers.

When we got a Flatstack lead through the website, we got a text message and would instantly call the lead if they left a number. This always produced a "WOW" effect - "I'm on your website right now, they'd say, I have a few questions..."

We often put Olark forms on our sites.  It's a super low commitment way to feel a potential customer to "nibble" - they may have a question or be a bit confused about what you offer. Great for customer development and to turn that nibble into a bite.

We use Tout to send personal emails to everyone who signs up for Niko Niko offering a free 30 min consultation with Max, our CEO.  Not just an autoresponder, but something  personalized from our Max.  They have taken the fly, and a personal immediate follow up goes a long way to ensuring they have a great initial customer experience.

Peter Bodenheimer's favorite core value at Flatstack is "Create Awesomeness" - something we work to do every day for the companies we work with, our team, and the world.

We're a lean tight-knit team here in the Voodoo Ventures family, so we don't often have openings.  But we're growing, and now's your chance to come work with us every day.

We're hiring a Sales Development Analyst for Flatstack.  The job description has the details of what the position entails.  

Your background and enthusiasm for the position is important, but critical to me is culture fit in our organization.  If you share these core values, we want to talk to you. 

We believe that Flatstack is founded on the core values we share as humans and partners in this company.  These values represent what we want this company to stand for and represent what we hold dear as a company.  Flatstack is a diverse group of talented individuals working towards a common goal, and these core values are the ties that bind us together as people and as colleagues.  

Set People up to Succeed. Believe in Them.

Great Work is a Matter of Pride

Doing > Talking

Be Curious & Never Stop Learning.

Innovate. Make mistakes. Learn.

Flatten the World & Explore it.

Communicate Transparently & Honestly.

Work Hard. Play Hard.

Win, Win, Win = Customers, Employees, Company

Create Awesomeness

We commit to make decisions and build this company in a way that is always aligned with these core values.  

Steve Schlafman shared a great deck yesterday - a primer on Raising Seed Capital.  Slide 53 contains a gem for founders.

Your objective: FOMO (fear of missing out)

Your goal throughout the process should be to create excitement, demand and scarcity for your round. Investors move in packs.

I've been on both sides of many seed financing processes, and the ability to generate FOMO is what it takes to get your round closed. 

Think of all of the other characteristics of a company prepared to raise seed as pre-requisites:

great founding team, big market, solving a real problem people actually have, early traction, clear distribution opportunities

Put yourself in the head of an investor.  The only thing that will get them to making a decision is planting that thought in the back of their head "do I want to miss this?"

Psychologically, your round must be perceived as an opportunity for the investor.  

It's all about creating a favorable power dynamic:

If an investor fears he might miss out on this opportunity, you own the power dynamic.  

If an investor knows you need her money, they will always wait for a forcing function to make a decision, they own the power dynamic.

An open letter to the city of New Orleans and the board of directors for the Louisiana Artworks

Dear Board of Directors -  On Dec 3, 2014 we will submit our proposal for the Louisiana Artworks building on behalf of Launch Pad. Our passion for this project is based on our belief that building a strong arts and entrepreneurship community will support New Orleans future prosperity and placement as a leader in all areas of the creative arts.  In 2018, New Orleans will celebrate the tricentennial of our city. Imagine what this future could look like for our city and our creative talent.  My dream is we will have built a thriving creative industry that empowers artists and creatives with business and career opportunities.

Here's what that vision can look like:

Visual artists, printmakers and artists in other mediums could thrive with access to top equipment at the Artworks building.  Iconic fashion brands and designers could modernize New Orleans traditions creating a home-grown fashion industry.  Animation and mobile game studios could be launched in Louisiana by talented artists and designers who now have access to equipment and processes to work digitally and distribute their work globally.  As manufacturing and product development returns to the United States, Louisiana could reclaim her place as a leader in brands and products in the digital age because our creators have proficiency in prototyping and product development through access to 3D printers and equipment at the Artworks maker space.  New Orleans could have a thriving music industry as learning the mechanics of licensing, publishing and distribution is something every New Orleans musician has access too. 

As we celebrate the three hundredth anniversary of New Orleans, people will see New Orleans not just as a destination for great food and jazz music, but as a modern marvel - a model city to experience leading-edge creative innovation and new trends for the arts.  New Orleans could be the best place in the world to build a career as a creative worker and artist.  We can ignite the arts community to deliver on this promise.  Five years ago, New Orleans stood at a similar crossroads.  The entrepreneurial movement was nascent, a small group of leaders met to discuss how to fuel startups in the city.  What if we had a physical hub that represented the New Orleans startup scene we asked?  Idea Village, GNO Inc, Launch Pad, Turbo Squid, Carrolton Technology and Iseatz decided to move into a building together.  Soon, the magic of community and collaboration took hold.   In the summer of 2009, Patrick Comer sat at a coworking desk at Launch Pad, putting the finishing touches on his business plan.  Today, his startup, Federated Sample is a vanguard of New Orleans tech and employs 50 people in downtown. Jen Medberry was a Teach for America teacher with an idea of how to better equip teachers with data when she visited Launch Pad for the first time for a BarCamp conference.  Today, her startup, Kickboard is the leading company in the New Orleans Education Tech movement.  Inspired by the collaboration in the tech community, Matt Candler started his education incubator, 4.0 Schools, at Launch Pad before graduating into the IP building with a country-leading education incubator.  Andrea Chen worked at Launch Pad for two years developing the plan for Propeller, the social entrepreneurship incubator that is giving rise to businesses and non-profits that help solve critical problems for our community. Entrepreneurs who started at Launch Pad are fueling the startup economy that is creating jobs and meaningful economic impact on the city of New Orleans.  Collaboration with organizations like Idea Village to provide training and access to capital to fuel the growth of these businesses.  An unorganized cohort of organizations has morphed into a clear ecosystem of partners: Launch Pad, Idea Village, GNO Inc, DDD, New Orleans Startup Fund, South Coast Angels, New Orleans BioInnovation Center all are working towards a common goal of helping entrepreneurs to launch and grow their business in New Orleans.   Taking a moment to look up reveals a simplicity to what we've been nurturing for the last five years: Give entrepreneurs a place to work collaboratively, to learn from peers and mentors. Develop a national network for capital, customers and partnerships that entrepreneurs can plug into.  Launch Pad has created a internationally recognized hub of entrepreneurship in New Orleans and this platform has launched a movement that is has real economic impact on our city. New Orleans has been a creative muse to generations of artists. Inspired here, novels have been penned, stunning works of art painted, and even America's only original art-form, Jazz, created.  While New Orleans has incubated incredible talent, too often to build a career pursuing their art has meant leaving New Orleans.  Our vision for Artworks will ignite the creative economy that in five years will establish world-class creative industries based in New Orleans, our home.

Voice your support and share your ideas on Neighborland

I recently got some feedback on Mardi Brah from a good friend of mine who works for a major gaming studio.  It reminded me of how difficult the indy app / gaming space is, and I wanted to share the feedback he gave me on Mardi Brah. 

Regarding the app, it is a tough space. The barrier to entry is low but that has just raised the bar every where else. #1 you have to make sure you have an awesome app. LOTS of iteration. When you are done with that, iterate more. Make sure it looks good and is fun to play. Several reviews say it is hard to play. You probably know this, but the rest is acquisition, retention and monetization. You HAVE to market to get users. You can buy ads on networks like Tapjoy, Fiksu, etc. Get people downloading the app, and then try to figure out how to keep them around and get them to spend money. All those do not come together, unfortunately. My last app has almost tens of million downloads, but you only make pennies per user, if you are lucky. In the short term, there are a couple things you can do. First, rate your own app. It has no ratings right now. Not very inspiring. It looks like there have been no new reviews since the last update. Re-enter your reviews whenever you update the app.  Also, look at some other app descriptions. Your description can be tightened up quite a bit. It sounds a bit like a tutorial (sell the sizzle, not the steak). If you are selling it as a work of art, at least get the name of the artist in the first line above the fold/more button.

Over the last several years, we've made a number of investments in companies through Voodoo Ventures.  We began making angel investments personally, and more recently began syndicating deals with other angels.

Today, I'm excited to announce the next chapter of investing for Voodoo Ventures.  You can now participate with Voodoo Ventures on deals we invest in through a syndicate on AngelList.  Learn more about what syndicating an investment means here. 

It's a simple process, here's how to get started:

Apply to be an accredited investor on AngelList

Back me on AngelList - you will have access to all our syndicates, you may opt-out of investing 

You'll be notified when we syndicate a new investment and have the opportunity to participate

Syndicates on AngelList finally opens up a scalable, straightforward opportunity for me to share our dealflow and investment opportunities with angels, and you can decide each time whether you want to participate.

Some things you should understand:

Following me will get you access to our dealflow and reservations we make on behalf of the Voodoo Ventures syndicate, it does not indicate any commitment to invest, you'll make that decision on each deal

We will take a 15% carry and AngelList takes a 5% carry

Our minimum investment in each deal will be $2500

We will invest a minimum of $12,500 of our own money in each deal

We'll be investing in the best companies everywhere, including New Orleans.  If you just want to invest in New Orleans, you can choose to participate in those deals, if you also want access to deals outside New Orleans, you'll get it. 

Personally, I'm really excited about the world this opens up.  For years, I've had people in New Orleans say "I'm interested in investing, but I don't have time to evaluate all the dealflow, but I'm interested in investing in the deals you invest in." Previously, the only scalable way to do that was for us to raise a fund for Voodoo Ventures, which is something I haven't wanted to do, because I prefer to invest as an angel, I am an entrepreneur running other businesses, not a full time investor.  

Participating in a Voodoo Ventures syndicate allows me to share access to our dealflow and and diligence. You as an angel to make the decision invest alongside me knowing we’re in the deal.

The JOBS act legislation goes into effect today, beginning the crowdfunding era in fundraising for startups.  Beginning today, startups can publicly solicit funding from accredited investors.  There's plenty of coverage of what this means, but I'd like to share a few words of caution with the rules that are still being drawn up by the SEC.

Its important you are informed because decisions you make on how you chose to raise funding will impact your company in new ways.  A few highlights of the proposed rules that are important to understand:

Demo days and pitch events are considered general solicitation

If you generally solicit, you will have to ensure your investors are accredited - this may have the adverse impact of dampening the interest of angel investors

You need to notify the SEC 15 days before you do any general solicitation, failure to do so will result in your company being put into the "penalty box" - a 1 year ban on fundraising

If you are fund raising, please read these pieces to inform yourself:

Naval Ravikant - why you need to pay attention to general solicitation.

Angel Capital Association - New SEC Rules could kill angel investing

This struck me last week as I discussed a potential partnership.  The point of failure for the partnership was the pace at which they needed to work. Monthly meetings, conference calls, extensive report writing all designed to make the right decisions.  

That's not the way we work at Voodoo Ventures.

The old way of doing business is about doing as much work as possible to make sure you are right before you do anything.

The new way of doing business is to create a hypothesis, test it, and validate it or learn from its failure in order to iterate quickly.  

We've created processes and rhythms at Voodoo Ventures that are not focused on making decisions that are right more, but rather compressing learning cycles to increase our pace of innovation.

We don't compete on trying to be right more often. That's hard, and I'm not smart enough to try to make decisions that are right all the time.  

We compete on accelerating learning cycles so we can be wrong more and learn from it.  

Founders, if you are pitching investors pre-traction, this post is for YOU!

Over the last few months, I've met with a number of startups in New Orleans (though this applies anywhere) and they've run me through their pitch, their product, etc etc.  

My first question is: "tell me about your customers."

They then proceed to talk about lead flow, website hits, product refinements, beta launches, blog mentions, pitch events, things generally going "really well" and neglect giving an answer to the actual question.

I ask again directly: "do you have any paying customers?"

"No."

If you are a non-silicon valley startup and you are talking to institutional investors, they will be investing on evidence of traction.  Local angels will invest emotionally because they believe in you, your vision, your team, your potential.  Early-stage VC's, anyone investing someone else's money are unlikely to invest unless you have real traction.  

So, unless you are in NY or Silicon Valley, if you are pitching VC's pre-traction you are probably wasting your time. 

Redirect that time and energy to talking to customers and generating traction. 

WHAT IS TRACTION?

You will need to define traction for your startup.  Brendan Baker has written some great posts here & here.   I wrote about pitching vs communicating here.  

Ash Fontana at AngelList has solid empirical indications of what traction it takes to raise a million dollar round.

Here are thresholds that I keep in mind:

100 downloads a day (b/c 95% of apps have <100)

1,000 new users per month

10,000 revenue per month

100,000 vistors per month

1,000,000 pageviews per month (b/c this will pay a 60k salary)

Hitting any of those yet? Great! You probably can attract some real investor interest.  

Not even close? My advice: Stop pitching investors & start talking to customers.