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Stress Test, Surviving Silicon Valley

While preparing for my Keynote next Tuesday at #FSMU, I almost want to change the title to "Stress Test, Surviving Silicon Valley". Startups are hard enough without all the strange stuff Silicon Valley tosses at you. I presented to a white-shoe venture fund a couple of weeks ago. They’ve invested in several social media companies and loved what we are doing here at FohBoh. They loved our business model, how we’ve evolved a social media insights and web analytics company, our products and services we offer, our strategy, the communities we’ve built and overall direction. What they didn't like was our domain expertise. Sorry, but we have a lot of Foodservice domain experience. Silly me thought that was valuable, since we are a Foodservice social media company, and all? I am never amazed at what they’ll hurl at you.

 

NYC is way different than Sandhill Road and it shows. I'll talk a little about that next Tuesday as well. Simply, it falls into two categories: apps versus businesses, digital media versus social networking and attitude. It's really interesting how venture finance works. My background is private equity and VC's probably don’t like the fact that they are really just an asset class of private equity. It seems like just by saying that reduces their value and puts them on the defensive. But, truth be told, there can be a lot of value to having a venture capital investor, potentially. As long as they remember that they are not entrepreneurs. Why? Most VC's suck at being entrepreneurs and most don’t have experience actually starting a company unless they became a VC after the fact. Most do bring significant experience in business because they are in the game. Being on boards, participating in early-stage business matters, corporate development, access to resources (like accessing LinkedIn or even FohBoh) and may also be active in strategic planning. These all have relevance and you pay for this value add. Finding a VC match takes effort and an enormous amount of time. Basically running a start up and raising capital at the same time is an oxymoron. One will suffer. And, you have time against you.

 

Maybe this was just a tough few weeks. Summer is coming to a close; kids back at school, Labor Day and lazy days and OMG, pumpkins at Walgreens! Really? Ok, I digress. Let me get out my corporate finance calendar. Private equity shuts down between November 15th and January 15th. Interestingly, they also shut down in August. So, if you are to properly finance your company between now and then (January 2011) you really have just 57 days from #FSMU. Or, wait until March. This is the Silicon Valley Stress Test that requires tenacity, temerity and mental toughness to win.

 

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Comments

  • Thanks for the comments! Just now able to reconnect after FSMU...what a great time.

     

    Yeah, it's part of the drill, this fund raising thing. Just had a meeting with a VC Catalyst...a sort of venture coach with purportedly good contacts with the "A" Firms on Sandhill Road. It was an interesting meeting and he was brutally honest. That alone gave him creds. His big message to me was our growth vision (ruling the planet) needs to be presented before our current strategy (owning a vertical, like Foodservice social media). According to Art, we are thinking too small, after all Foodservice only has a $1.7 trillion economic impact and employes more than 1:10 people in the US...twice the size of tech. So, ok, I guess I need a shot of confidence and "focus" is less important today than say, the last VC meeting I had.

     

    Norbert, thanks for the link. Very good article on a well seasoned entrepreneur.

     

    Ivan, let me know how it goes for you!

     

    Libby, as always, you amaze me with your tenacity...a solid attribute for a successful entrepreneur.

  • I second the oxymoron, it's tough! - re. trying to balance raising funds while focusing attention on bringing in sales and revenue.  2 full time jobs.
  • Both of you (Ivan & Michael) should take a look at Rand Fishkin's recent blog post: Misadventures in VC Funding http://randfishkin.com/blog/128/misadventures-venture-capital-funding

     

    Norbert - DineMonkey.com

  • Interesting Michael.  We're actually raising money at the moment and I've been working on slide decks and pitching to crowds of VC scouts.  OK, just one crowd so far, but I feel ya.  Heading to NYC in an hour to get a fresh round of signups there and then dashing back for another round of pitches.  The whole thing feels like a major distraction to the major rollout we're releasing tomorrow that adds a gaming layer to reservations.  Now you're telling me I have 57 days left and wonder if NYC client dash is a major distraction to raising money.  It feels like juggling cats trying to keep the priorities in focus.  Good luck with yours:)
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