Mike Smith

Here I've compiled a bunch of things I wish I knew before starting a business. 

Legal

Difference between LLC, S, C, and B entity structures and why Delaware C is most attractive to Venture

http://www.startuplawblog.com/choice-of-entity/

The components of (and importance of) a founders agreement

http://strtp.com/

http://foundrs.com/

economics

who owns what percentage

how does selling ownership work

control

who makes decisions in major domains

who can fire whom

what happens if someone leaves the company

People

How to hire, manage and fire

Startup CEO

How to interview users

http://www.howtostartastartup.co/lecture-16-run-user-interview-emmett-shear/

How to manage employees and give critical feedback

https://hbr.org/2011/08/three-questions-for-effective-feedback

Tech

Build a tech company without a tech founder is moronic in most cases

How to build a wireframe

http://www.mockflow.com/

Basic understanding of development languages

http://youtu.be/BYk2GaEz7UA

How to work with a Development agency

Costs of developing apps and websites

http://www.kinvey.com/app-cost-estimator

Money

Your first investors will most likely be your family and friends.

http://siliconhillslawyer.com/2014/10/01/taking-non-accredited-money-startups/

VC Terms

Venture Deals

Information rights,

pro-rata rights

Unless you've been living under a rock you know that Snapchat launched Snapcash in the middle of last week. I've had some time to play around with the functionality so here's a review:

CONCEPT

According to Snapchat Snapcash "set out to make payments faster and more fun". The beauty here is the entire backend is handled by Square. 

EXPERIENCE

When you login to the new snapchat you are immediately prompted to agree to the new terms of service. Before you have time to worry about trusting your debit card information to a company that is barely 3 years old you are taken to a delightful screen that ensures you that Square is handling the entire transaction. On your first transaction you are hit with a pop-up that makes you confirm you want to send money.  After you  send funds a log is left in your chat with a mini-receipt of sorts. The problem is this receipt only exists for a moment in time. If you leave the conversation and then return there is no long of your funds being sent. I sent $1 to a few friends to test out the service and was concerned when my bank did not show the credit as fast as the debit. 

VORP (VALUE OVER REPLACEMENT PLAYER):

Snapchat's long standing value is its ephemerality. The ability to send a disappearing picture was one of the key attributes that drew millions of predominately teenagers to the service. The non permanent nature of snapchat doesn't particularly transfer well to payments. When I send funds to a friend or a business I want a receipt of it. I want to know that the funds were received. Snapchat provides a receipt and log but its buried under its menu. 

Snapcash also isn't a true P2P payment provider as it doesn't hold a balance. When I send money via Venmo or bank transfer it is often predicated on a balance. You have no snapcash balance everything exists through square. Square handles everything including support which engenders trust for the end user.  

FUTURE

Snapchat's made a huge move with Snapcash. It is the first step towards monetization for one of Silicon Valley's brightest starts. Getting the debit cards of snapchat users is HUGE. Personally I doubt we will see the explosion of Peer to Peer transactions with snapcash. Everyone I send snapchats to is inherently someone I am close with and I probably have their phone number. If I need to send them money Snapchat is the last place I will look. I do see a major opportunity in Snapcash commerce and I see it playing out in one of three ways:

1) straight commerce: Brand X says send us $Y and we'll give you Z. I think this would work really well with music or media. 

2) exclusivity: This idea was stolen from a friend and I think there is something to it. Brand X says send us some snapcash and we will send you something exclusive or limited. 

3) charity: The thing we always said about Centscere was that it's impossible to talk bad about a company that tries to be charitable. So as great (or terrible) as Centscere's value proposition was we always had "we're doing something good for the world". That's why I believe a brand could get a nice moment if they did something charitable with snapcash. You could do commerce with it. Ex. Have you ever been to Wendy's and they give you a coupon booklet for a donation to their charity? Or when a non-profit gives you address labels in exchange for your donation. It's the same thing but this time through a digital medium. So the question becomes how do you accomplish it. There has to be some sort of exchange to a) entice donors to give and b) to loop in a brand. They'd give up some very cheap asset for this (a coupon for a frosty in the example above) and get to be seen as giving back and being innovative. So then the final question is what charity does the money go towards. Well you (or the partner) could just pick it. Or you could let the audience pick it with an incentive. Pick a few charities and whichever one earns the most donations gets a matching prize. 

I had the good fortune of attending Y Combinator's Startup School last week. Startup School is an afternoon event where notable founders, investors and entrepreneurs  share practical advice from their own experience. Learn how they got started, what went wrong, what surprised them, and what happened as their companies grew". Really a tremendous event all around. Thought this would be a good place to share my notes from the event. 

[Note: you will see that my note taking declined towards the end of the talks. This is certainly not indicative of a less compelling talk, more so just tired fingers"

Shana Fisher - Highline Venture Partners

"I don't like when people are raising money for raising. I like when they are raising to get it done by any means"

"it's really important to not duplicate skills and some people are better to be single founders and you should structure the company around your own skills"

"4 years ago I would have said launch quickly. Today I would say take as much time as you can to build a perfect product and then launch"

 "when you are talking to investors remember it's very personal. It may be that your idea is so new that nobody can evaluate it and that's where really amazing stuff happens"

"Patterns can trap you into wanting to see the and thing you've seen before.

"Most people who start startups don't know how to manage people."

checkout the Scarf method, which is a neurological approach to managing people

"Equinox is the time between when it's acceptable to not make money and when you do. If you control the money you control your destiny"

Fred Wilson  - Union Square Ventures

"When you are starting a company you are focused on one thing and generally know it better than the investor"

"X for Y can be a great way to describe what you are doing but it can also trivialize what you are doing" 

"Seed investors are really good at connecting to the potential of the team and the potential of the idea"

Building a business is like climbing a set of stairs. First step is building product. Series A is for expanding the product and team.

"Too little money will kill you. Too much money will kill you. The right amount of money will focus you and optimize the things you need to do"

"Maybe seed and series A have been underpriced for 20 years"

The entrepreneur is somewhat paying for the companies in the rest of the portfolio that will fail . So if startup failures are going down thanks to things like  y combinator it makes it better for everyone 

Zach Sims - Codecademy

"Nobody on the internet knows you are 13 and in your parents house"

"It's much easier to build for yourself"

"Optimize everything you do for learning"

"Nobody knows what they're doing but you don't know until you try"

"It pays to be a cockroach to not quit. To stay alive and not die"

Kathryn Minshew - The Daily Muse

"There is this problem of looking at people 2-3 years ahead of where you are"

"Startups are an evolution from suck to suck-less"

"Ask for word of mouth and make it insanely easy"

seek out like-minded groups 

content = your new BFF

become your own PR machine 

Final thoughts 

honor your word , not just your contracts 

Done is better than perfect 

Be insanely persistent and insanely polite too 

Find people who share your values , ignoring this rule can ruin your life 

Build an amazing tram and go to bat for them whenever possible 

Do not believe the hype 

Apoorva Mehta - Instacart

Raised over 55M and doing 100s of thousands of dollars per day 

The reason to start a company should never be to start a company. It should be to solve a problem you really care about 

"YC encourages founders to do things at the start of the company that don't scale"

Instacart had to buy one of every single product at Trader Joes to add a store to their platform 

David Lee - SV Angel 

What Ron and SV angel look for in a company 

"The single most important trait a founder can have is the ability to express his or her vision"

Good listeners - strong willed but flexible 

"Value add is the most important thing to focus on when evaluating investors"

"If you focus on what the investor's value add is then the equity and control conversation just flows from there"

"Never forget your reputation is your biggest asset" 

Over communicate with all food chain. Team and investors and customers 

Chase Adam - Watsi

"Anyone who I tell my specific idea to has to sign an NDA" 

I have heard this phrase a few times over the past few weeks and it is ALWAYS concerning. Those who know me know that my modus operandi is to de-risk everything. NDAs are an extension of risk averse behavior but in my (humble) opinion they are almost always a step too far. 

I see two outcomes of most NDA requests:

1) You lose partners:

NDAs are often broadly written and preclude the signor from working in an adjacent area. Let's use my favorite fake startup: Facebook for cats. I am wild about my facebook for cats idea and I want to get it built. I head to a development shop and ask them to sign an NDA. The problem is by signing this NDA the firm is probably barred from working on anything related to facebook or cats even if they are not competitive. So by signing my NDA (before I have even paid a dollar) the development firm is leaving money on the table. 

The same is true of investors. At any one point an investor can be looking at a variety of opportunities. Signing an NDA could put these investment opportunities in jeopardy. 

2) You look stupid:

By asking for a non-disclosure agreement you are in no uncertain terms saying "I don't trust you with my idea so much so that I need to able to sue you". This is just a horrible way to start a relationship with a partner, investor or even a friend. 

NDAs are also a terrible way to spend your time. If execution is everything than an NDA is precisely nothing. It is exactly the thing that distracts you from building. Walking in with an idea and an NDA to a meeting makes you look terrible. 

Solution: The FrieNDA. Its a pretty straightforward principle: talk to people you trust. You will get great advice (probably for free) without a mountain of legal garbage.  These people will in turn connect you with people they trust and your "proprietary info" will be safe. 

Came across this info graphic in an Inc.com article and noticed a few things:

Industrial / Energy saw the biggest decline of the "big 10"

Software continues its meteoric rise with an addition of nearly $2.4B

Networking & equipment doubled in size in one year

There is a fascinating theory in economics called The Tragedy of the Commons . It destroys shared resources around the globe and probably has frustrated you a time or two. Think of the coworker who leaves a dirty microwave or the family member who drinks the last glass of milk and you will see the tragedy at work. A more grave example is industrial polluters who do not clean up their messes. Some argue that the absence of a spotlight changes how people behave. 

When we move into the digital realm the commons become even more tragic. Over the first two decades of the Internet's life we saw seen millions of malicious attacks that take advantage of the community focus of the web. 

Third parties like payment processors and marketplaces are usually needed to verify,  authenticate, moderate transactions across the web. Bitcoin's eliminates this need for a third party via distributed ledger systems. This turns turns the entire community into a spotlight. Each and every action is logged with all participants. This is quite simply revolutionary and has a multitude of applications. Companies that can use Bitcoin and crypto-currencies to eliminate the tragedy will win in the long run. 

There has been a lot of talk lately on the future of Twitter so it seemed an appropriate time to weigh in as it is one of our favorite websites and investments. 

From a consumer perspective  the beauty of twitter is it's simplicity. It is truly a social network for all. No matter what your interests are there is something for you on twitter. 140 characters can be manifested in thousands of use cases. It allows for both one to one communication and one to many which creates millions of fascinating conversations. 

From a business perspective twitter sells the best advertisements in the game right now. Their promoted posts are approximately 6-7% effective which is quite literally hundreds of time more effective than banner ads. Believe it or not you are more likely to survive a plane crash than to click on a banner ad. Why are these advertisements so fantastic? because they are tailored to your interests.

Ex. You follow Pepsi, you follow Coke so you might be receptive to an advertisement about RC Cola. 

Ex. You follow Chipotle, you follow Moe's so you might be receptive to an advertisement from Taco Bell. 

The beauty of these interests is that they are know as evergreen or durable interests meaning you will probably be interested in them for years to come. 

So now that I have professed my love for Twitter its time to add value and plan for the future. Here are three things I want for twitter

Wall to wall: Facebook does a great job of cataloging your relationship with someone via their wall to wall feature (or "see friendship" for the newbies). Twitter does not do this at all. Adding a feature like this would increase the utility of the platform for all. With this feature tweeters could gain insight on their relationship with their followers.

Twitter does its best work in the first five minutes after a disaster, and its worst in the twelve hours after that.

— Matt Roller (@rolldiggity)

April 15, 2013

Editable tweets: The simplicity of the RT is equally responsible for its downfall. I find something interesting and I have the ability to retweet it without evaluating its veracity. Once a few followers grab hold of it the tweet can go global. News changes rapidly and Twitter needs to give followers tools to update the info they put into the world to stay relevant as an veritable information source. 

Altitude: Trending topics have put a never before seen pulse on global conversations. At any moment in time we can see who is talking about what and where. Prior to twitter this was only available in silos. The problem today is we have no context. Perhaps people are tweeting about a #hashtag i've created but how big is my conversation compared to my competitors? How high up is my conversation versus theirs? How engaged are my followers compared to theirs? Creating a measure of altitude would also ad tremendous value and a big of game mechanics to twitter's ad products. 

The Internet of the future will look very different from how we enjoy it today. A driving force of this will be the recent explosion of social technologies. Just look at how someone just 5 years younger than you uses social technology. Then look at how your parents use these same resources and you will see social is here to stay.  We are fortunate to live at the dawn of the "social era".  

As with with everything else in life there are only two ways to monetize the social web of tomorrow:

Help us become more social

In only a few years we have gone from sharing friendships to sharing thoughts, pictures, steps and even beers. It is almost a certainty that these technologies will grow stronger, faster, smarter in the coming years. The real question is whether or not we chose to adopt them. Perhaps we will live in a world where sharing is the norm and truly frictionless.

Help us become less social

Privacy and anonymity are all the rage on the Internet these days. Whether it is disappearing video or sharing secrets we now have the ability to leave our identities at the door. Perhaps the future is a more personal internet. 

The current answer is to become selectively social. Despite its often lamented efforts with G+ Google gets how it should work. G+ is brilliant. Having the ability to categorize people into circles is ideal. The problem is nobody likes the task of putting people into buckets, we want it done for us. 

Adam Smith will tell you that specialization is key to national prosperity. I believe that this will apply to the internet as well. We are already seeing the start of  it with the Saas Revolution : niche products for niche industries. The really winners of the future will create products that appeal to a niche instead of everybody. 

It is simply amazing that the consumer Internet is not yet 20 years old .It has not graduated college and it cannot legally buy a beer.  It has not decided what it wants to do with the rest of its life. 

Unless you are living under a rock you probably heard that the Snapchat founding team just turned down a $3 billion dollar offer from Facebook.

Everyone seems to have an opinion on how stupid this decision was, even Barstool sports covered it.

Let’s back up to late June 2013 when Snapchat raised a $60 million dollar round. Part of this round included two $10 million dollar checks to the founders of Snapchat.

Now in a world of trillion dollar markets and billion dollar valuations; 10 million per person is peanuts. But step outside of the valley and we realize that 10 million is “set for life” money. 10 million dollars in a CD gets you ~100,000 per year for nothing. Again, set for life.

Founders have the responsibility to act in the best interest of their company, not themselves. Again, the best interest of the company, not themselves.

So the founding team is sitting in a spot where their business has soared to unimaginable heights (somehow without earning a dollar) and they are asked to give up control of their baby for $3 billion dollars.

Had the liquidity not been present I would have understood the buyout.

I will be the first to admit that I can get frustrated pretty easily.

A few months ago I'd be quick to to tell you I hated the guy who cut me off in traffic or that I hated the cashier who gave me attitude at the grocery store. 

Louis C.K. (one of my favorite comedians) has a great bit about how we "immediately jump to the top shelf" with our words and I couldn't agree more. So many times I jump right to hate when its far from appropriate.  

Most, if not all, of the people I say that I hate truly mean nothing to me and its taken me until recently to realize that. So I've developed a new strategy that I'd like to share with you:

Learn to "nothing" people

I firmly believe that we as humans love to judge people in absolute terms. We want the decision to be binary and only one of two outcomes. We love to love and to some extent love to hate. We want to say that in absolute certainty an individual is our friend or our foe. It is the grey area in between good and bad that we struggle with. We want to know with full certainty that the person we are judging is playing for our team or against us; but sadly it just isn't that simple. 

So let me repeat again:

Learn to "nothing" people

"Nothing"-ing people involves attaching absolutely no value them. You do not love them, you do not hate them, they are simply there. They are simply background actors in your game of life. Your brain does not devote memory to their memories.

So take a minute and think about all those people in your life that you say that you hate, if I had to guess I'd say that a lot of these people in your life fall into this new category of nothing. You don't really hate them at all. 

What is best of all is that once you move people in your hate category to nothing; you free up space for the great things in life.  

Some readers of our blog may be familiar with the term “full stack developer”. For those who are not let us use the following definition as a jumping off point:

“Full stack generally refers to engineers doing both server side (back end) and web (Front end) work” – Robert Greene, Technical recruiter at Elasticsearch.

We could get into APIs, hosting environment and other words that I don’t understand but it makes little sense to complicate an already convoluted world. In my opinion the line between the “front” and the “back” is very simple to draw. The front end of any website, application or experience is anything and everything you can see and interact with. Conversely the back end is everything and anything you can’t see.

Google Trends shows that in the last year alone the interest for full stack developers has experienced the much sought after hockey stick growth. So it seems that an ideal developer is one who can build both the foundation and the creatives on top. It stands to reason that if they are able to build the entire project that their work will be better than chopping up the job into multiple pieces and contractors.

I propose that we take the same full stack concept and apply it to entrepreneurship. So here is my definition:

Full stack entrepreneur (noun): an entrepreneur who is focused equally on pursuing their dreams and supporting others with their personal pursuits.

The application here is fairly simple. Do you work out of a co-working space? Spend some time helping the space flourish. Perhaps you’ve received funding from a VC or private investor? Take some time to help other portfolio companies with their goals. Maybe you attribute your successes to a strong education from a leading university? Strive to create the same opportunities for those who come after you. The list can go on and on but the point is help those who support you.

This is an idea that is ingrained into the fabric of our company culture at Centscere. Our founders work extensively with organizations like RvD IDEA and The Syracuse Tech Garden to support those in our community with the pursuit of their dreams.

It should also be noted that this full stack mentality can make you feel happier than just working on your own goals. A recent Harvard study suggested that “regardless of income, those people who spent money on others reported greater happiness”.

I get the honor of playing technical support for my grandparents. It is amazing to see them experience the internet. 

My grandfather keeps reminding me that when the first computer came out is as big as his house; so it hard for him to comprehend what an iPhone can do.

Day 4:

Lerer Ventures: Which has an amazing portfolio and crazy successful founding team. 

RebelMouse: "Your social front page" essentially they aggregate your posts from different networks and put them all on to one pretty site. Then you can freeze ones that you think are important. Swag: stickers

2u (formerly 2tor): They help leading schools create online versions of their degree programs. They are different from Coursera, edX et. al in that they don't offer courses they offer entire programs. Swag: Coffee cup, pen, bag

Bit.ly: Link shortener which in turn creates a ton of "second party" analytics. So I can understand who is viewing links that I create and where the traffic is coming from. Swag: moleskine, pen, stickers

iSchool SU Alumni Event:Held at one of WeWork's many offices in Manhattan. We heard a speech from NYCEDC's entrepreneur at large Steve Rosenbaum and got to mingle with the iSchool's Board of Advisors. 

Day 5:

Breakfast with the Board of Advisors (in the JP Morgan Chase board room).