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From Startup to Scaleup - Sam Altman and Reid Hoffman at The Scaleup Offsite

From Startup to Scaleup - Sam Altman and Reid Hoffman at The Scaleup Offsite | Pitch it! | Scoop.it
Sam Altman sits down with Reid Hoffman to talk about the key changes founders should think about as they transition from a startup to a scaleup.

This conversation took place at The Scaleup Offsite, a private CEO gathering hosted by Y Combinator Continuity and Greylock Partners in April 2017.

 

Click image or title to see the video.

 

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Via Jonathon Shore
Marc Kneepkens's insight:

Very interesting talk by Reid Hoffman and Sam Altman.

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Stop Confusing Small Businesses and Startups

Stop Confusing Small Businesses and Startups | Pitch it! | Scoop.it
Small businesses and startups often get lumped together but they're different ventures with vastly different goals, and that means they need different things to thrive.

The words “startup” and “small business” seem interchangeable enough – startups often start out small, after all – except they’re not.

And the differences have major implications for the best approach to helping San Diego startups thrive.

Many small business owners start a company with the help of a bank loan or their own money and are immediately focused on sustainability. They hire a handful of employees and want to quickly be viable enough to pay their bills.

Startups tend to follow a different path. They start small but they’re bent on explosive growth. An entrepreneur has an idea she hopes will make a massive impact, seeks out multiple investors and potentially, millions of dollars in profits. The payoff may be years away. For most, it never comes.

“When the startup is in that small phase they’re still not structured or acting like or financed like a small business,” said Brant Cooper, an Encinitas-based startup connoisseur who co-wrote the New York Times bestseller “The Lean Entrepreneur.”

Their eye is on an eventual stock market launch instead of simply staying local like most small businesses.

Still, misunderstandings abound. Even publications that are presumably experts on business can amplify the confusion.

Take a March Forbes ranking. San Diego ranked No. 1 on the magazine’s list of best places to launch a startup. The metrics behind that ranking – and the article itself – only referred to small businesses, though. San Diego boosters who touted the first-place finish described the city as the best place to open a startup or a small business. Or both.

Mayor Kevin Faulconer used the terms interchangeably in a press release:

“It’s no secret to San Diego’s entrepreneurs and startup community that San Diego is a great place to start a business. This is just a reminder that we need to continue to foster a fertile environment for small businesses to grow.”

But a fertile environment for small businesses isn’t necessarily a fertile environment for startups.

Startups have a host of concerns that don’t match most small businesses’ needs. They start with an innovative idea and may want office space or guidance from others as they develop it. They need outside capital, a concept that many startup founders have said is a particular challenge here.

Most local government programs aren’t geared toward helping them get these things.

Cities including San Diego have long catered their loan programs, seminars and other offerings toward small businesses.  There are also industry groups that can offer advice to small businesses.

Then there’s the issue of speed. Businesses often bemoan waiting games when it comes to government but startups are intent on growing at a much swifter clip than most companies.

So many small business programs that might be helpful to startups just don’t move fast enough, startup evangelist and consultant Gabriela Dow said.

Startups burn through cash quickly and may need funding or additional office space in an instant. Government entities generally can’t offer that.

“A lot of the programs take too long and the startups just can’t wait that long,” Dow said.

They can work sometimes.

Carlsbad has touted early success with its Bio, Tech and Beyond incubator, a city-owned building outfitted with lab equipment and machinery that’s hosting local startups.

And in 2008, Barrio Logan startup New Leaf Biofuel received a $590,000 loan from the San Diego Regional Revolving Loan Fund, which is supported by funds from the federal government as well as San Diego and Chula Vista.

Deputy Chief Operating Officer David Graham, who oversees San Diego’s economic development department, argued the city has more to offer startups than entrepreneurs realize.

“In many cases, these folks never engaged with the city and never realized there would be something we could help with,” he said.

Much of the city’s startup work thus far has focused on collaboration with other groups. For example, it’s offered grant funding to a few, including EvoNexus, an incubator that offers free rent space for young startups.

Graham said Faulconer wants to step up those efforts. His administration signed onto a White House-promoted Mayors Makers Challenge and is organizing a committee to promote manufacturing entrepreneurship. They’re also directly asking the tech startup crowd how they can help.

The No. 1 takeaway from those conversations? Incentives are nice but promotion is more important, at least for now.

A mayor’s office spokesman said Faulconer will soon announce initiatives to spotlight San Diego innovators and help them grow.

Yashar Ahmadpour, CEO of scheduling app startup CrowdClock, is one of the entrepreneurs offering input to the mayor’s office. He’s also one of a handful of CEOs behind localstartups.co, a group that aims to foster greater connectivity and awareness about the local startup scene.

He’s convinced city politicians’ bullhorns could be key.

Greater public awareness of San Diego’s startup scene could not only attract new companies but also discourage talent coming out of UC San Diego and other local universities from bolting to the Bay Area, he said.  It could also mean greater investment in San Diego startups.

Ruprecht von Buttlar, who leads the nonprofit Connect’s Springboard program for science and technology companies, said the latter need is most dire.

“We need to find a way to showcase our technology in a way that makes Bay Area investors look to San Diego for possible investments,” von Buttlar said.

The mayor might help, von Buttlar suggested, by hosting a large-scale innovation trade show to draw attention from out-of-town funders.

He thinks the city should fund a staffer who acts as a go-to for startups, similar to the city’s small business ambassador. That person could help the city strategize and identify which startups merit city investment as well as answer questions about city resources or incentives.

Of course, opinions vary on how much government should wade in. Some startup founders say they’d prefer the city and state government to stay out of their business altogether.

Others like Ahmadpour want city leaders to better understand their unique needs so they can adapt programs, incentives and promotional campaigns to specifically boost local startups. They’ve also rallied behind a proposal to convert the old Central Library into a startup incubator.

And they point to moves in New York and elsewhere to roll out the red carpet for startups.

New York state, for example, kicked off a program that allows startups and more traditional companies to avoid taxes for up to a decade if they settle in certain zones. San Francisco Mayor Ed Lee debuted a high-profile entrepreneurship-in-residence program that aims to have city workers and startups team to improve city services.

Up to this point, Ahmadpour said, the city hasn’t necessarily hampered San Diego startups but it also hasn’t tailored its economic development approach to help them.

“They’re not in our way but they also haven’t been making things easier,” Ahmadpour said.



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Marc Kneepkens's insight:

It's good to see an article that spells out the exact difference between startups and small businesess. Even though all the hype these days goes to startups, most new businesses starting up are simply 'small businesses'.

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Three Colossal Mistakes Founders Make When Pitching Investors

Three Colossal Mistakes Founders Make When Pitching Investors | Pitch it! | Scoop.it
For founders, every idea seems like the next big thing. Now, imagine sitting on the investor side of the table.

Tell me if this sounds familiar: you start a company, build a product, and try to sell it to some customers, only to find out that you need more money. You need to hire more staff; perhaps you can’t afford to build the product the way that you originally imagined; or maybe, you are just simply running out of money.

I have launched a few companies and found myself in that exact situation: i.e., needing investors. If you need to raise money to keep going, you can’t afford to make a mistake — but many entrepreneurs do anyway. Before you get started, here is a list of the 3 biggest mistakes I made when first pitching to venture capitalists (VCs) or angel investors:

To read the full article, click on the title or image.



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Marc Kneepkens's insight:

Think like VC's if you want money from them.  This article sure makes this point. Entrepreneurs have no idea what they are getting into presenting their 'fantastic business' to a VC company. Great article, highly recommended.

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Startup Growth: Grow Fast or Die Slow

Startup Growth: Grow Fast or Die Slow | Pitch it! | Scoop.it
Startup growth should be the primary for all companies looking to stay alive, and recent research from McKinsey & Company backs up this argument.

“A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of “exit.” The only essential thing is growth. Everything else we associate with startups follows from growth.” – Paul Graham

According to Y Combinator cofounder and partner Paul Graham, the single most essential trait about being a startup is its capacity for rapid growth. That’s it: startup growth – that is the only thing that entitles a company to being labeled a “startup”. In April of this year, McKinsey & Company released its findings on software and online-services companies from the likes of Adobe, Salesforce.com, Google, and Facebook, which further conveyed the innate growth trait of startups and why it’s necessary for companies to grow fast or face complete death. The research was compiled by analyzing life cycles of approximately 3,000 software and online-services companies from around the world between 1980 and 2012 (essentially spanning the period of time between the nascency of the initial tech boom of the 1980s to today’s era of tech startups), as well as surveying more than 70 company executives.

In McKinsey’s research, there were three primary findings: 1) growth matters more than margins, 2) sustaining high growth is difficult, and 3) sustained growth is possibly only when certain factors are secured. For startups wanting to become billion-dollar companies, startup growth is the one thing on which they need to focus. Why? Because higher growth yields greater returns to shareholders. Additionally, high growth predicts long-term success. In the study, companies with growth rates greater than 60 percent upon reaching $100 million in revenues – which McKinsey refers to as “supergrowers” – were eight times more likely to reach $1 billion in revenues than those whose growth was less than 20 percent.

This article includes 2 videos. Click on the image above, then scroll down in the article.


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Marc Kneepkens's insight:

Startups are all about growth. Starting a company does not make you a 'startup'.

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10 Tips for Getting into Our Next Accelerator Batch

10 Tips for Getting into Our Next Accelerator Batch | Pitch it! | Scoop.it

We’re currently accepting applications for our next Mountain View Accelerator class. You can apply here.

We’re kicking off our second batch of companies in the shiny new 500 Startups San Francisco accelerator program, otherwise known as 500 Del Norte. We’d like to take this opportunity to tell you a bit about  what we’re looking for and how we select companies.

We started with over thousands of applications for 28 slots. While we’re much more concerned with quality than quantity, if you’re applying to a competitive accelerator you should understand that you will be one of many applications.

Tip 1: Apply Early

We start reviewing applications on a rolling basis as soon as the application window opens. More than half of the applications come in on the last day. If you want us to spend more time on your application, get it in early.

Tip 2: Put effort into your application and give as much detail as possible

 We don’t have the luxury of putting hours into reviewing your application. We need to see something interesting that makes us want to dig in.

We filter these applications with the help of our mentor and founder networks. Our goal is to have at least four people look at every application, ideally with expertise in the space you’re working in. We couldn’t do it without these awesome folks (Thanks 500 mentors!).

We also look extra hard at companies that are referred in by our founders and mentors. A personal recommendation from someone we trust isn’t a guarantee you’ll get an interview, but it’s pretty valuable.

Tip 3: Figure out who you know in the 500 network

Ask them if they would be comfortable recommending your company. If you don’t have this network, consider reaching out to 500 mentors who would understand your business and asking (politely) if they would give you some feedback. Don’t be a creep about it. If they dig your company, you can ask them to give us their thoughts.

Our goal is to narrow the initial applications down to about 100 companies we interview. We do these interviews over 3-4 full days. We split up into teams of two, and each company gets interviewed for 15 minutes. You’ll usually do three interviews.

We do this to avoid groupthink, and to give startups the chance to shine even if one interview doesn’t go well. Interviewers include members of the 500 Investment Team, Distribution Team, other 500 staff, and sometimes 500 mentors.

Tip 4: Come prepared.

You only have 15 minutes. You need to convey who you are, why your business is interesting, and be prepared for us to dig into everything from your unit economics  and customer acquisition strategies to long-term plans and where you met your co-founders.

Tip 4.1: Research the program.

Know what our terms are, know how we work, talk to startups who have gone through the program, and come prepared to tell us what you want from 500. It reflects poorly on you (and is bad business) to consider selling a chunk of your company to someone without understanding deeply what you’re getting in return.

Tip 5: Don’t have a script

Go into the interview with specific questions. We don’t have much time, so remember that your job is to fill in the gaps, not to hammer home what you think is important.

After interviews are complete, we schedule a half-day team meeting to come up with a batch. We start with the companies that we all agree on, either positive or negative, and thi usually gives us the first 10-15 companies. If you have a phenomenal founding team with several exits to your name, a million dollar run rate, 50% month-over-month growth, a beautiful product, and an unsexy-but-giant market – well, you’re almost certainly in. Figuring out the other companies is where the fun (and arguing) begins.

For companies that don’t have all the boxes checked, we look to each other for a champion. We believe groupthink is a big problem in venture capital, so we encourage debate and empower anyone on the team to take a controversial position.

Tip 6: Find a champion

Even if all of us don’t “get” a company, that’s OK. We all have different backgrounds and different interests. Find interviewers who are exciting about what you do, then give them the information they need to be your champion. One ‘hell yes’ usually beats out any other strong negative votes.

After hours of arguing, we end up with a list of 35-40 companies we think are really interesting. We then discuss which companies might be too early.

We believe an accelerator program should help companies refine their strategy, break through concrete bottlenecks in the business, and raise reasonable seed rounds at good valuations once they’re done with the program.

We think a lot about companies getting their money’s (equity’s) worth out of us. If a company is too early to get ready for demo day and achieve their fundraising goals, our accelerator is probably not a good fit.

We try hard to give these companies concrete feedback on what we think they should be working on – then invite them to reapply for our next batch. This isn’t BS. Timing matters with accelerators, and we want you to get the most out of ours.

Tip 7: Tell us what you’ve learned

Markets are Darwinian. The most important skill you can have is the ability to adapt quickly. Tell us what you’ve learned. What were you wrong about? What secrets have your customers told you that give you an unfair advantage? We’re suckers for quick learners.

Tip 8: Tell us how you’ll grow

Startups grow or they die. Where are you customers? How will you reach them? Tell us what you’ve done. Unscalable growth is fine (and reflects hustle), but ultimately we’ll need to see a path scalability. If you’re small you know we can help you grow, that’s really exciting.

Tip 9: Make sure we understand your traction

Traction comes in many forms, with the most obvious being revenue. However, revenue isn’t the only form. This may sound obvious, but we’re looking for people who have executed – not people who will execute some time in the future. Make sure we understand what you’ve done. This is way more important than what you think you can do.

I hope this is helpful. We’re grateful for all the amazing companies we received applications from, and look forward to having some of them in our first San Francisco accelerator. Hopefully this will help you if you choose to apply to our Spring batch in Mountain View. Applications open NOW, so apply here.

Tip 10: Do what’s right for your business.

VCs resonate with simple stories and metrics, so its natural for companies to try to play to the test. But whether you join 500 or not, success comes from being an expert in your business and doing the right thing for it and for your customers. Don’t adapt your business to our needs, but please speak slowly when explaining it. We are VCs after all.



Get your Free Business Plan Template here: http://bit.ly/1aKy7km



Via Justin Jones
Marc Kneepkens's insight:

Find out what it takes to get accepted in an accelerator. Go prepared.

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