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Go Where They’re Not; The Cantrepreneur.

startup, startup CEO
 (Photo by Wil Stewart on Unsplash)

 

Im my book HACKING THE CORE, I write about using Creativity and Innovation to help startup founders achieve that elusive goal – sustainable business growth, along with a few other things like profitability, a fun place to work, personal fulfillment.

That’s an oversimplification, but the idea is to expand your horizons, “think different” to enhance your chances for success as well as personal fulfillment along the way.

Innovate. Be creative. Discover something no one else has. Go where they’re not.

The book also talks about Wantrepreneurs and Cantrepreneurs. In my consulting work I can identify these types of people. They’re usually struggling, losing their company, walking backward towards the edge of a cliff, failing daily. Yet they’re unwilling to change their thinking.

Creativity and innovation don’t actually make sense to them in a practical application because it threatens their status quo. Deep down, change is bad to them.

Their brains are wired to do things their way – no matter what. Usually their way is to mimic someone else’s or their own successful tactics from the past. Crazy, right?

Every entrepreneur wants to innovate but some just can’t. Even in the face of doom and bankruptcy they can’t change. Another type of cantrepreneur.

They ask for help but only to help them do things their old way, and not to bring new innovation to the problem.

Why? Because that’s a threat to their self image, their power, their reputation as being the authority. Their position as the boss.

There are other people who are totally open to change, reinvention, pivoting, innovating, threatening their own beliefs, listening to others. These are the real entrepreneurs. They’re happy to be wrong. They have much better odds for success.

Which one are you?

Buy book HACKING THE CORE on iTunes/iBooks.

Only $3.99 for the next 30 days.

noraHacking The Core Tom

Hacking The Core

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You Need a BoD Now

Angel Investor, CEO Succession, early stage, SaaS

How to design a board of directors

By Tom Nora

There was an article recently in VentureBeat about how much control the startup CEO founder has over his/her board of directors. Unfortunately, this actually isn’t true in most cases, especially for first time founders, for many reasons.

Many factors come into play in early board formation including the founder’s goals, investors, cofounders, early appointees, family, friends. A well designed board can be the critical driving force in making a startup successful; while the wrong board can create disagreements, misdirection, angry members, awkward board dismissals, power struggles and can actually bring a company down.

First time founders usually aren’t sure how to populate the board, and first money from FFF (friends, family, fools) blinds them a bit to their best instincts.

Typical Pre-Funded Board

Here is the typical order of board formation before any professional funding comes in:

1. Founder/CEO

2. at least one Co-Founder

3. FFF

then maybe…

3. a “grown up” – former boss, relative, early (non-professional) investor

4. industry luminary

This is the group that must help grow the company properly, attract professional funding and make industrial strength business decisions. Most of this 1.0 group don’t have much experience, i.e. what it means to be on a board, how to optimize it, what the points of leverage are, what a natural disagreement is vs. a problem of discord. Usually the group is not experienced or cognizant enough to optimize this asset early on.

A Better Way

Here I’ll lay out some key steps to making this organization an asset rather than one with little to negative value.

Step 1 – The Founding Team
It’s fine to have the founder and maybe one cofounder on the board; after all that’s all you have to draw from. The key to success here is to STUDY the topic, learn everything you can, follow proper board.

Also, internally you can determine if and when you actually have something worthy of funding – you must have a real business that is operating – product(s), spreadsheets, a team, Revenues?; asking outsiders to get involved too early can be the kiss of death. I see this happen a lot.

Step 2 – Get Outside Help
In any startup ecosystem these days there are many people who have an interest in your business. The word “Startup” now gets their attention. Among these people are professionals that can get involved as a board member, but how do you do it? Which ones should be advisors instead? Are there consultants that help with this? If you’re near Stanford or in San Francisco, every other person you meet almost seems appropriate, but don’t be fooled. You want people who are qualified but also who come to you via an organic process – you read about them, stumble upon them, meet them.

Listen to these signals. For example, in Los Angeles right now the problem is that a majority of those you meet fall below the level of “qualified” – they’re out there networking but have never sat on a real board or led a startup. Keep asking around and you’ll find the right people. And remember, make sure you have a real company first.

Contact me if you have a going company and this is a hole for you, I’m one of the people I mention above who can help. But not if you just have an idea, or are thinking about starting a company, those are a dime a dozen.

Pinterest gets into the ad “Real Estate” Business

AdTech, CEO Succession, photography, PHP, Scalability, startup, startup CEO, Tom Nora

Pinterest as we know it could be a thing of the past. Beginning January 1, 2015, Pinterest will start putting ads on its site. Real ads in the form of promoted pins. I have mixed feelings about this – I respect their right to do this and I’m happy for them to be able to get a piece of the enormous revenue stream that Google and Facebook dominate, but it will also take away the purity of Pinterest and lessen the experience a bit.

Overall, I say congratulations, you’ve earned it, Pinterest! They will now move up the food chain significantly as Fortune 500 companies can develop more formal relationships with them and build “serious” ad campaigns. All other ad industry professionals and component niches will also take a big step closer to Pinterest. This is like opening up a whole new giant beautiful piece of the web to advertisers.

But there is a cost to this for users. Pinterest is one of my favorite places to go on the Internet, one of my favorite apps. It’s an oasis in the ad strewn desert of social media. There are many indirect ads there already, especially clothing sold by affiliates, but not very intrusive to the experience.

Pinterest is a constant river of pictures, and mostly very high quality pictures, undistracted by ad text or flashing lights. It’s a respite from the rest of the web, with its rectangular boxes of advertising or the sidebar of Google ads – the high value real estate of the web that is rented to the highest bidder.

As a major fan of photography and imagery I like to go over to Pinterest to get away from all that. It’s almost like a relaxation lounge on the web. I’ve slowly built and curated my collection of pins over the past 3 years, with a bit of an eye towards social validation, but mostly to see cool photos. I’ve been pleasantly surprised thousands of times by images I’ve seen. How many products can claim that?

One of the best parts of Pinterest is that it’s participatory, a gamification of looking at photos (and memes and infographics). As you browse build and organize your collection and it shows running totals of several statistics. And there’s minimal social interaction, almost like a library where people tend to be quiet and leave each other alone. A relaxing experience. I even have a board called zen relaxation that I can go to for quiet inspiration.

Pinterest no doubt developed one of the most fascinating products of the last decade, almost as powerful as Google, facebook, and Twitter. It’s addictive, stimulating and makes you smile. Hopefully that won’t change but it could.

The best part of the product is its design. Pinterest pioneered a new type of web page, now referred by everyone as a “Pinterest style”. It’s hard to remember now, but 3 years ago it was revolutionary. That single innovation was more influential than almost anything prior on the web.

Pinterest will do this with a lot of style – use a native ad approach with the Promoted Pin, but it could change them if they’re not careful. They are playing with the big boys now. Giants corporations will have a more formal dedicated part of their ad budget and marketing team focused on Pinterest, like they do now with Google ads and Facebook. Giant corporations will want to “help” Pinterest figure out how to change. Giant corporations will want to acquire Pinterest.  Let’s hope they keep their independence as long as possible.

Billions of dollars will be diverted from other ad channels to Pinterest. It could easily tarnish the brand. The fact that they have waited this long to monetize in this way and have built such great brand equity is quite encouraging.

It will also be a great opportunity for advertisers of all sizes, even the little guys. Buying real estate on Pinterest? Awesome!

No matter what happens, I’ll always be a big Pinterest supporter (is there a name for that? Pinterevist?) I hope they don’t hire a thousand lawyers or get acquired, but I trust them to handle this change with the same style they apply to everything.

@tomnora

The Greenshoe = how to repay all those that helped along the way.

Angel Investor, early stage, founder, Hawaii, Revenue Growth, Scalability, startup, startup CEO, Tom Nora, venture

How is it that so many people associated with startups reap the financial benefits, yet others just as close get no financial upside This is a source of frustration among many people in the startup sphere. Imagine if you’re in Silicon Valley right now with no equity in a tech startup, but associated with several people getting six figure “bonuses” because they somehow wound up with some stock in one.

The free parties (or not free) and swag and great stories and boat rides in the bay are nice. Sometimes you’ll even score an iPad or Apple TV, but it’s not the same as being one of the insiders.

Often as startups grow and maneuver their way through the jungle of success or failure, they have a lot of help from those around them.

Often many these people don’t have any equity or upside from their advise or moral support or money lending, or even the spare couch they let you sleep on when you were in their town.

If the startup actually makes it to an IPO, there is actually something you can do.

It’s called the “Greenshoe”. You have to be very careful about this, you can’t imply or promise anything in advance, and it only works when the company goes public, but the Greenshoe is an amazing award for those involved that don’t have equity.

The Greenshoe is an over-allotment of stock options, up to 15% of the total offering at time of IPO. You can offer these options to virtually anyone, friends, family, people who helped your company. Since they’re options, acquirers only exercise if the stock goes up, and have no downside risk or capital outlay.

Upon the IPO event, the option owner can gain the upside if the stock goes up over the initial offering price and essentially collect that difference.

I’ve used it a few times when I was lucky enough to be able to offer it to friends and family. Strangely enough, some people have declined, because they’re not sure it’s legal; they’ve never heard of it. Others have bought themselves a new Lexus with it.

Here’s more info on wikipedia:

Greenshoe

The Greenshoe should provide motivation for all of us in the startup world to try to continuously build our company steadily, continuously and profitably and to know that you can make many peoples lives a little bit better by sharing the wealth. The rewards are pretty amazing.

Contact me at

 #Web #Development #Digital #Strategy #Art| tomnora.com

Nasty Gal hits the wall? An E-Commerce Follow Up…

AdTech, startup CEO

As many of you know, I’ve been a big fan of the company Nasty Gal for a lot of reasons:

  • an L.A. story
  • Outsider non-techy female makes good
  • They’re Profitable!!
  • They have (had?) the chance to help define the next gen of startups

However, they seem to be in the predicament that many successful startups fall into. They may not want to be called a start up, but they are, because they never made it past PHASE 1 successfully into PHASE 2…

see Nasty Gal Lays Off Up To 10 Percent Of Its Workforce

  • PHASE 1 – Amazing idea or business model, luck, funding, hyper-growth, parties, t-shirts
  • PHASE 2 – Long term business success, sustainable, agile, adaptable business model, ability to survive major downturns, extremely happy employees.

Nasty Gal did many things right, I won’t list them all here. But they also failed in many ways already, and I won’t list all those here (I get paid to do that). I’ll sum it up with one word – Arrogance. I understand their feeling of invincibility; I’ve been there. What the arrogance did was cause them to not open their minds to the experts, not know how to let go of credit for success, not know whom to trust. I know this because I know several trustworthy experts who offered to help Nasty Gal repeatedly over the past 3 years, all rebuffed without even a response in most cases.

Nasty Gal didn’t realize the game gets tougher as time goes on and revenue goes up, unless you’re part of the Silicon Valley/Stanford/San Francisco in crowd, which they’re not. Marc Andreesen ain’t gonna save them, unless he can take over control and put a professional team in there. Continuous steady growth is one of the hardest things to achieve in business. It’s complex, chess not checkers.

Nasty Gal didn’t try hard enough to expand their popularity beyond the “cool people” that got them to $200 million, and they spent too much money on other things. Expanding and reforming your audiences is critical in continuing growth. Look at Facebook, Apple Amazon and others who successfully survived and grew for over a decade – they look much different than they once did.

So now what?

One of the things that can save a company when it goes into a bit of a tailspin is to lean on your employees loyalty to their management and love for your brand, because they’ve been treated well and respected as equal human beings no matter what their title is. The importance of this can’t be underestimated, as your employees tell everyone they know either good things or bad things about their employer. It looks like Nasty Gal will have trouble with that also. If you believe their glassdoor scores and reviews and “word on the street” in L.A., they are on their way back down the bell curve.

The bottom line value for any  company is their list of intrinsic value assets. For an e-commerce company selling trendy clothes online, assets have to come from many things other than the products, mostly from PEOPLE and the way they feel about the company and brand – employees, partners, consultants, vendors – but especially your lowest level employees. Don’t make your employees resent you, make them feel like your success is their success.

@tomnora

The Other Amazon Deal this week. Drupal founder attracts over $100 Million in 3 months.

Angel Investor, Drupal, founder, PHP, Revenue Growth, SaaS, Scalability, startup, startup CEO, venture

As further market proof of the power of Drupal in the enterprise,  Acquia has received about $100 million in funding in the past 3 months, which puts its valuation at over $1 billion.

http://j.mp/nora-acquia

There’s a lot of buzz about the Amazon acquisition of TWITCH this week. As a personal friend of the original investor, I’m very happy for this transaction – after 7 years of work, repositioning, and sticking to it their vision has paid off. But that’s a different article…

Less prominent in the news, but possibly more important, is Amazon’s investment in ACQUIA.  Acquia, Inc. is the for-profit company founded by Dries Buytaert, the inventor of Drupal, to support his open source project. Drupal was launched in 2001, and Acquia started in 2007. When Open Source software projects are launched, the progenitors often start a for-profit sister company to garner some income from training, support and consulting. Because they are open source. the original products can’t generate revenue, so when these OS projects occassionally blow up into phenomenons like Drupal and WordPress have over the past few years, it’s gratifying but also quite frustrating to watch others derive so much value from your baby while you toil away to lead its growth with no financial return. Plus, there are tons of expenses like servers, bandwidth, office space, travel and the time of many professionals.

Red Hat was one of the first of these types of companies bridging open source with big finance, leveraging Linux support into a profitable business, also leveraging the enterprise. They kind of invented this business model. Sun Microsystems and others almost made it happen, but they were only semi-free. Google has optimized this open source to freemium model in almost all of its products.

But Drupal has succeeded way beyond it’s original expectations. It was originally started as a college dorm project, where many of the best products on the web seem to hatch. It gained recognition during the 2004 presidential campaign when Howard Dean’s IT director decided to use it as a platform for community and campaigning. After that it quickly gained credibility and spread throughout government, and corporate America.

Drupal is now driving some of the largest and most critical websites in the world, including The White House, The Oscars, Twitter, Mercedes Benz, Warner Music Group, The Louvre Museum, The City of Los Angeles and Stanford University. Over its 13 year life the web has vastly changed from primarily static pages to dynamic database driven automated (“rendered”) web page serving, which Drupal excels at. The average website size has also greatly increased, aided by automated rendering systems like Drupal and others. The term Content Management System has become mainstream in everything from the Fortune 500 to small businesses.

Some of Drupal’s success has come from luck, but most of it has been because of strategy and excellent timing. Dries has carefully pushed the technology not to the bleeding edge, but towards the modern edge where enterprises are comfortable. He and his team have avoided many temptations to try new fads, make big changes and try to grow faster. Currently they face enormous pressure to innovate faster, and are responding with Drupal 8, which will incorporate many new modern web architectures previously not part of the Drupal platform.

Acquia has been critical in supporting, guiding, enhancing and positioning Drupal for the past 7 years. It was a startup that launched with funding from day one and has never looked back.

Amazon’s motivation in buying into Acquia is a bit more self serving. Acuia provides premium, high security, supported hosting to it’s customers, which all runs on top of Amazon AWS. Amazon can see that some of AWS most robust and challenging work comes from Acquia with Drupal. For example, Acquia runs its Drupal infrastructure on more than 8,000 AWS instances and serves more than 27 billion hits a month (or 333TB of bandwidth). Amazon has a strategic value beyond many other companies or VCs in their investment.

What will come next? Will Amazon try to acquire all of Acquia before the inevitable IPO? I think we can bet on that.

This is a very contemplative time for Buytaert – he has fierily protected Drupal’s independence and strategic positioning, taking risks but protecting his large customers from drama, can he keep Amazon and Bezos at bay? I have no doubt he will, for he is a true “Startup CEO”, even though his title is CTO at Acquia.

@tomnora

more info on the funding round from @thewhir   http://j.mp/nora-acquia

 

“Creativity takes courage.” Learning from Matisse

Business Development, CEO Succession, early stage, founder, Revenue Growth, Scalability, startup, Tom Nora, venture

“Creativity takes courage.” –Henri Matisse

This is one of my favorite quotes about innovation, by an innovator who is still revered 100 years later; it’s the first thing you’ll see if you go to my personal website http://tomnora.com/ . Matisse was an amazing innovator, and his innovation and originality

Innovation, Originality, Creativity – why are these things so important in the tech startup world? And what do they have to do with art or painting?

I have the opportunity to visit many secondary and tertiary startup markets in my travels, meaning not Silicon Valley or New York, and one of the things that always strikes me is the lack of originality in almost every company pitch I see or hear.

I can see that the entrepreneurs I meet are sincere, have usually put a ton of work and pride ion their invention or product. Often they have put a fair amount of personal or family capital into the venture (these days that’s usually their parents money).

The major flaws in their planning process are denial and ego fortification – they don’t do enough homework to see how many are already doing something similar because they don’t really want to know; and they highly overrate themselves as amazing entrepreneurs.  This is a bad combination for success, but I see it daily.

I get it; I know it’s more difficult than ever to build a real career and easier than ever to start a company. But the very core of creating an interesting and new business should be the concept of originality. Some originality, enough to be different, unique, without being too weird.

Real originality comes from within, because it is inspired, comes from adrenaline and emotion, not from a spreadsheet or desire to merely make money. Finding the mid point between originality and capitalism is what I define as business innovation.

There’s nothing new under the sun, so you must critically modify, hack, or turn sideways existing systems with a truly new vision. Instead of just copying or slightly modifying something you see, try to take it a few steps further.

One of the quite innovative methods Matisse and his peers used was finding inspiration from other skills they already knew, leveraging their expertise as craftsmen. Matisse was a draftsman, a printmaker and a sculptor, and you can see these influences in his paintings.

Part of the magic of great business innovations is knowing which rules to break. Matisse broke some of the rules, but kept many intact. The rules about the way business processes flow are too often just accepted, but if you can analyze them, find an achilles heel, then innovate a better answer. Get rid of the obsolete rules without breaking the good ones, and great things will happen. It’s about where to hack and where not to.

I went to a pitch fest in one of those secondary markets the other day. Most of the presentations were weak delivery, boring, been done before and uninspiring. But there was one that was pretty amazing, by an 18 year old who had become deaf at 12. He has developed an exercise system for handicapped people; you tell by his excitement and thought process that he was inspired, and created true innovation. He wasn’t polluted by how corporations work or the rules of business – he was still in high school.

Another Matisse quote is There are always flowers for those who want to see them.” Look carefully, take the extra time and find the uniqueness in any idea you want to realize – it’s there.  Find me on twitter at @tomnora

 

What to See in Silicon Valley – Tech and non-Tech

AdTech, early stage, founder, Tom Nora

Let’s start with the Non-Tech – Here’s a small piece I just wrote on the subject of how to visit the Bay Area and not be totally focused on techno-nerd things:

You should also expand your horizons beyond the techy stuff. I’ve worked and lived in Silicon Valley off and on for over 30 years (really!) and always enjoy the escapes from my techno-binary lifestyle there.

In fact, if you’re not so one dimensional and career/money/technology focused, you’ll probably have a better chance of meeting the right people.

I’m not disagreeing with the other lists here, especially Scoble’s list is very good and you should do all those. But here are a few of my favorites…

NON-TECHY EXPERIENCES:

>> Go to downtown Los Gatos and walk Main Street and University Ave, it has a very non-techy feel to it. Then sit in the Los Gatos Coffee Roasting Company for a bit.

>> Sit in the Rodin Sculpture Garden on Stanford Campus.

>> Drive the hills between Silicon Valley and the coast, go to the Half Moon Bay for dinner on the pier.

>> Drive up Sand Hill Road, slowly, and take it all in. This is the origin of most of the biggest VC deals in history.

>> Hit some dive bars in SF, there are too many to even list. SF is becoming more techy, but there are still many places where you can forget you’re in the center of techdom.

>> Walk the Golden Gate bridge.

Since SV is so tech focused, it’s actually a pleasant surprise when you find non-tech things to do there. If you do some of the above, I guarantee your trip to Silicon Valley will be much better.

For the technical visit list, my favorite was assembled by Steve Blank…

A Visitors Guide to Silicon Valley | Steve Blank.

 

5Q03: Puneet Agarwal (True Ventures) on pitching investors, maker culture, and big trends he’s watching. — The Orchestrate.io Blog

Angel Investor, CEO Succession, early stage, founder, Hawaii, PHP, SaaS, Scalability, startup CEO, Tom Nora, venture

http://t.co/LkQ7kDluf0

via 5Q03: Puneet Agarwal (True Ventures) on pitching investors, maker culture, and big trends he\’s watching. — The Orchestrate.io Blog.

via 5Q03: Puneet Agarwal (True Ventures) on pitching investors, maker culture, and big trends he’s watching. — The Orchestrate.io Blog.

Silicon Valley Uber Alles? I think so… Some of their Secret Weapons.

Angel Investor, Business Development, CEO Succession, Drupal, early stage, founder, Hawaii, Jobs, Launch, Revenue Growth, Scalability, startup, startup CEO, Tom Nora, Uncategorized, venture

Can any other region “catch up” to Silicon Valley, or be the next Silicon Valley? Statistics show that it’s probably kind of futile to even try. Many have tried, but must be content with their small market shares. How can other regions will ever match the MACHINE: Stanford, Andreesen, Draper, Valentine, Doerr, Facebook/Apple/Google Millionaires, 4 Generation VC firms, Hardware/Software partnerships, over 100 Billon $ market cap cos.

svfundingshares

Because high tech and software industries are now being seen as lucrative, job creating, imperative and oh so sexy, many regions are trying as never before to get in on this – mobilizing their governments, old school industries, universities and grandmas to unite to be the next Silicon Valley, calling themselves Silicon- Beach, Forest, Plains, Alley, Prairie, Coast, etc. These towns are setting their expectations way too high while the real Silicon Valley giggles at the sight.

Here are some of the secret weapons that make Silicon Valley stronger than any other “region” and act as its barriers to entry:

1. Silicon – Uh, yeah, that word? It’s what started all this. Silicon Valley launched and was launched by the mainstreaming of the Silicon chip over 50 years ago, which is now part of everything. There was no other part of the planet where anything close in innovation, design manufacturing, equipment, marketing and sale of semiconductors has emanated from. This foundation still drives the area and the world, even thought it gets less attention now than the software side.

2. 100 Years of Growth – It all began with military electronics, low cost housing, lots of empty land and Stanford University. It has spread way beyond to the east bay. San Francisco, over 50 universities and trillions of dollars in revenue. The growth has had bumps but over time has increased more steadily than any other economy in history.

3. Recruitment – Most of the leaders in SV are from elsewhere because Silicon Valley aggressively acquires the best from all over the world. Why not? Via Stanford, Berkeley, Facebook, Google, recruiting Harvard and MIT undergrads, their wonderful PR machine, advertising free meals, free car washes, free dry cleaning, free day care. $150,000 salary right out of college. Unlimited vacation. Where else can you gat all this?

4. Stanford – Not sure this even needs explaining, but Stanford has been a wole new entity in the past 20 years, beyond anyones imagination in wealth creation, funding, computer science, a recruiting engine into SV then on to local companies, pride, confidence, location.

5. Money, money, money – There are so many giant sources of money in SV that it’s staggering. VCs of course, Angels, they invented the term Super Angel, San Francisco, Real Estate leverage, IPO millionaires, corporate funding, Asian and European money, and on and on.

6. Tolerance for Weak Links – Here’s one most people don’t know – most people in SV aren’t stellar; I know several weak players who fake it well and are millionaires or millionaires-to-be just because they’re in the right zip code. The public tagline is everybody has a high IQ, but in reality there are lots of dwebes running around – I know, I’ve managed plenty of them. SVs leaders smartly realize the win ratio can be pretty low if you have a few enormous winners. Most SV projects die, most SV companies die, but if you build the algorithm to plan for this you’ll put more possible winners in play. So what if a few totally unqualified employees that snuck in make a few million. Like any organization, there are several who skate by or get by on good politics. That’s OK if you plan for it, “engineer” for it.

That’s just 6, there are plenty more reasons why there will only be 1 Silicon Valley for along time to come. The best answer for any other local economy is to just make the most of who you are, embrace your own identity, partner with Silicon Valley. And don’t use the word “silicon” in your name. Take Boulder, Colorado as a model, they’ve successfully created their own very strong economy for startups. There’s a startup for every 50 or so people there. They have all the pieces and they are heavily connected to Silicon Valley without envying them.

@tomnora