Thoughts on Current State of Entrepreneurship at Penn State

Posted: June 15th, 2010 | Author: | Filed under: posts | Tags: , , , | 12 Comments »

Recently, an alum interested in supporting entrepreneurship at Penn State asked me for my thoughts on the current state of support for student entrepreneurs. Given my involvement with the Lion Launch Pad, an accelerator for students at Penn State that I co-founded, this is a topic that I have a strong interest in.

I have a much longer post on ideas to help support student entrepreneurs that I’m working on, but for today, I’m just going to stick to the current state.

I wrote a summary of the various groups, individuals, and programs at Penn State that I was aware of, which are involved in supporting student entrepreneurship in various ways. That document is embedded below.

If you’re an entrepreneur at Penn State, or even just someone interested in entrepreneurship, I would be very interested in your feedback and thoughts on the programs listed, along with my thoughts.

From the document:

Key Strengths:

  • There are a number of programs on and around Penn State’s campus that are dedicated to helping students explore and succeed in entrepreneurship. These include both academic and business resources. If students know where to look, there is generally something that can help get them moving in the right direction.
  • Penn State has both a history of entrepreneurial success and some recent entrepreneurship success stories. This is in addition to a fantastic resource in its alumni base, spread out across all areas of business.
  • The past several years have seen huge growth in programs for supporting early- stage entrepreneurs. No longer is there a gaping void between idea and venture capital funding. Entrepreneurs have a number of programs beyond Penn State to turn to and benefit from.

Key Opportunities:

  • Despite the large number of available programs, unfortunately, the entrepreneurship landscape is heavily fragmented and resources are not integrated. Consequently, students interested in entrepreneurship use their time looking for the necessary resources rather than taking advantage of them.
  • There is an issue of general awareness. Without high profile recent wins, there is a limited number of students who consider entrepreneurship as a viable career path or application of their ideas/creativity. Furthermore, students are seldom aware of academic entrepreneurship programs beyond their college/major.
  • The third section of this document provides a highlights of the recent growth in external programs for early-stage entrepreneurs – there is a large opportunity to align with these programs and incorporate their best practices.
  • Penn State’s alumni base is a tremendous resource, yet, unfortunately, it is difficult to access and leverage. There is an opportunity to structure this resource more effectively, thus benefiting all Penn State entrepreneurs.

Existing Programs

For details about the existing programs, along with some thoughts as far as how to improve upon the current state, please read the full document and leave your thoughts and reactions in the comments!

You can download the document in PDF format.


Can We All Succeed?

Posted: May 17th, 2010 | Author: | Filed under: posts | Tags: , , , , | 7 Comments »
There's more than one route to success

The list of startup accelerators I’ve been cataloging has grown larger than I expected. We’re now up to 93 programs, in many corners of the world.

I think it’s fantastic that there are many people working to encourage entrepreneurship. It’s wonderful for the aspiring entrepreneurs and an extremely positive development for the innovation that drives our economy.

There’s another aspect to this growth that I’ve been discussing with several accelerator alumni and other entrepreneurs recently, though. That is: I wonder, though, if aspiring entrepreneurs are getting the right message about what ‘success’ is, as people rush to inspire and motivate these business moguls of tomorrow.

There seems to be an unstated message that success for entrepreneurs in today’s world is to raise a six figure VC round and scale your business to millions and millions of users. Funding = validation and its build a massively scalable business or fail fast. As a culture, we’re captivated by the outlier success stories – it clouds our visions. Really difficult challenges become simplified in our minds to make the impossible seem within reach. Things like: “After all, it’s only a matter of fine tuning your user acquisition formula and then just dumping gallons of virality fuel on the fire…” (Simple, right? — Because money burns really well!)

Seeking validation from investors by way of filling the bank account with other peoples’ money becomes the goal. Right from the get-go, entrepreneurs are planning how they can go from 0 to 1,000,000 rather than 0 to 1,000. My friend, DJ Stephan, Chief Marketing Officer for Notehall.com, likes to say “It’s like setting off to build the next Empire State Building when you haven’t even even looked at the construction plans for a one-story house.”

Now, to be fair, no entrepreneurship professor, speaker or mentor I know or have heard of has ever stood up and defined success like that. But just look at the headlines that are being featured. These are the role models that entrepreneurs are watching.

$2m to Newsy in series A round. $3.6m to HelloWallet in series A round. $6m to WordStream in series B round. $7m to Critero in series C round. $23m to Invidi in series D round. And that was just in one week.

Building a so-called “lifestyle business” is a dirty word, apparently. (So much so that Josh Kopelman put out a call for a new term.) I’ll use sustainable business.

I get it. Building a business that doesn’t sell for hundreds of millions of dollars to Google isn’t as sexy as one that does. It isn’t the splashy news that TechCrunch wants to feature. It isn’t as cool a story to tell your friends.

Is that ok?

A sustainable business that brings in more modest revenue is still a driver of innovation and economic development. It still can beget the entrepreneur life-changing money. Perhaps more importantly, it gives them experience and a success to someday parlay into another venture. It keeps them in the entrepreneurship game, rather than putting it all on the line, burning out, and not giving it another go.

And the probability of success is higher. It is likely easier to figure out how to create a useful business for your 40,000 fellow students than 400,000,000 Facebook users. And once you figure out how to make modest money from one market, it doesn’t necessitate putting all your chips on the table to see if you can turn on virality faucet.

It’s not that it’s wrong to aim for the stars. But after evaluating that option and finding that it might not be fully baked, it should be ok to aim for something more reasonable and to have that success celebrated.

There are only 600-some venture capital deals per year in the US.1 Assume that a percentage of this activity is series B/C/D financing, leaving only a portion of these deals for seed-stage / series A investments. Let’s assume 50% are seed/series A, to be generous — so, 300 VC deals for new ventures. Now, I realize that not all of the 93 accelerators on the list are in the US nor are all companies in the accelerators VC-fundable and not all of these VC deals go to accelerator-launched startups, but if they were, that would be ~3.22 deals per program. Assume each program has ~10 startups. So, on average, that’s 7 startups that aren’t getting funded, per program. The real number is actually much, much bigger. Are these entrepreneurs just going to give up and go home? If they define success as raising money, they might as well. Even if you include angel deals, there is not enough dealflow for each company to define success as finding follow-on funding.

Sometimes I feel like with the age of tech startup businesses, the focus is exclusively on building a product that people want. Entrepreneurs forget first and foremost that they are setting out to build a business. As in something that generates money. With not enough “Other Peoples’ Money” to go around, some of these companies are going to have to push the envelope and actually create businesses that generate revenue from day one.

Fortunately, there is more than one way to build a company than to focus on raising VC funding. Let your startup evolve and see where it goes. If VC funding is the right way to go, great. But just because you don’t build a company that fits with the pattern VCs are funding, it doesn’t make you any less of an entrepreneur. Let’s make sure we define success appropriately.

Entrepreneurs know in the back of their heads that raising funding is unlikely. Still, the temptation is there to keep telling yourself that the metrics don’t apply to you. With the number of accelerated companies seeking follow-on funding, the writing is becoming more plain on the wall. If entrepreneurs knew up front that building a VC-funded rocket ship wasn’t feasible, would they still think it was worth the long hours, the lack of pay, the risk, to build a successful business that is a bit smaller? Enough to get started?

I hope so. And I hope that the mentors in the 93 startup accelerators around our world are conveying that message. The message that explosive growth powered by VC rocket-fuel or smoldering ruin aren’t the only two options in entrepreneurship. After all, we can’t all be in the first group – another direction is perfectly ok, too.

  1. Number of software-only VC deals in 2009 based on the PwC MoneyTree Q4/full-year report was 619.

Three Decisions Every Founder Needs to Nail for Success

Posted: April 26th, 2010 | Author: | Filed under: posts | Tags: , , | 2 Comments »

My recent post mentioned that I spoke to a class of aspiring high school entrepreneurs, via a program called Startup Afterschool, earlier this month. Phin Barnes, Principal at First Round Capital, also spoke to the students to give them a perspective on his experience as an entrepreneur and now on the other side of the table as an investor.

Phin talked about a number of topics, including what it was like to be one of the early employees at AND1 and how his video game startup, responDESIGN, was able to do a deal with McDonalds. One of his comments really stood out.

Phin talked about the founding of responDESIGN, the successes and challenges that they had, and the three decisions that every entrepreneur needs to get right to be successful. Those are:

  1. Team
  2. Idea
  3. Investors

That is, it’s really hard to be successful if you’re missing one of the key legs to the stool.

When you think about it, it’s really an elegant way of looking at things. Sure there are lots of other things that need to go well for a company to make the long transformation from concept to sustainable venture. However, if you don’t have these three things in place, that transformation is nearly impossible. Furthermore, once you have these three things in place, they’re also extremely difficult to change. The general idea is more or less locked in, though it will evolve. You can make changes to your team, but having too much instability among the founders and early employees is certainly not a good sign. As for investors, there’s no undo button for your funding deal.

So, the lesson was, choose wisely. Good words of wisdom. Thanks, Phin!

(I’d argue that advisors or mentors are really quite critical, too, as utilized correctly, they can keep you from stumbling into walls you didn’t see were there and they can help open doors that are otherwise shut to you. However, in Phin’s model, we can lump those into team – three key points sounds better than four. :) )


More startup accelerators – the list of programs grows from 77 to 93

Posted: April 19th, 2010 | Author: | Filed under: posts | Tags: , , , | 4 Comments »

It’s been a busy month or so in the accelerator space – there are quite a few new accelerators that I’ve come across to add to the master list since it was last updated. The list pre-update was 77 programs long; with this update there are now 93 on the list.

First, some noteworthy accelerator news:

  • Lots of rumblings around BootupLabs in Vancouver. Check out the detailed post here.
  • A new seed investment model came on the scene: Right Side Capital, apparently coming in the 2nd half of 2010, the program will be making 100 – 200 investments annually. Not only is the volume a differentiator, but the fund will also be providing support through an advisory board, a model necessitated by the large number of startups that will be passing through the program. TechCrunch provided this: “Kevin Dick says that they will set up educational sessions and events for portfolio companies, but will not be able to provide significant one-to-one mentoring for early-stage companies.” So, how much of an accelerator versus an investment engine Right Side Capital will be remains to be seen. More in this blog post.
  • Launchbox Digital is opening an office in the RTP area. Based on other articles, it seems that what’s happening is the existing Triangle Startup Factory is being “folded into” Launchbox Digital’s program in RTP and the founder of Triangle Startup Factory, Chris Heivly, will run the RTP branch. Is this be the first merger of accelerator programs? Is this a space that we’ll see further consolidation in?
  • IBM is launching its own startup accelerator, IBM Smartcamp, to help the tech giant partner with startups development the technology critical for IBM’s ‘smarter planet’ initiative. A specific post about this here.
  • Some details emerged on the Start VI program from Belfast. First, the meaning of the ‘six’ in the name: “…that ‘SIX’ “š… it’s six companies, for six months at 6%.” Also, the program will be virtual: “StartVI is also virtual. (Another play on ‘VI’=Virtual Incubator). … meeting, conferencing, mentoring, presenting, discussing, deciding can all be achieved without face-to-face contact. That’s not to say there won’t be any in-person contact-just that lacking it won’t stop progress. Eliminating the tyranny of time and distance-shifts enables StartVI to bring mentors and advisors from around the world to bear on StartVI companies. A small, but enthusiastic group of successful entrepreneurs and executives from Silicon Valley have already offered their time to support this effort.” It will be interesting to hear what entrepreneurs participating in the program think of this model.
  • Interestingly, a program has been launched that falls into both the Social Entrepreneurship and University-Affiliated categories – and it’s based in one of my favorite places, Bar Harbor, ME! The College of the Atlantic recently announced its new Sustainable Ventures Incubator
  • And the launch of another program in Utah (two are being added to the list this month): Startup Utah — an interesting sidetone, though – either they’re confused about the location they’re running the program at or either they copied the app form from TechRanch or they’re running Startup Utah from Austin? Not sure, but their application form mentions Austin, TX: Application Form Here
  • The Houston Chronicle reported that an accelerator program may be launching in the city in time for the summer.
  • New possible accelerator coming in Montreal, Canada – FounderFuel Ventures
  • Not an addition per se, but some accelerator news: The Difference Engine is following its teams and compiling a video series similar to TechStars.TV about the process. Watch it here: http://thedifferenceengine.eu/tv/

Now for the programs being added:

Seed-Stage Accelerators


Startups – what’s the risk for aspiring entrepreneurs

Posted: March 1st, 2010 | Author: | Filed under: posts | Tags: , | 1 Comment »

This is another post in a series from my recent talk about entrepreneurship. Originally presented at Drexel, I extended this for recent presentations at Penn State. The topic of risk is one that aspiring entrepreneurs often bring up, especially as they weigh job offers from companies versus doing something on their own.


Aren’t startups risky? Sameer Guglani, Founding Partner of Morpheus Venture Partners, recently wrote an interesting post on this and I’ve expanded on some of his points as I’ve discussed this with aspiring entrepreneurs recently.

“You had a great job, earning a nice salary, working for a brand name that people recognize. You traded that in for working all these long hours on this crazy product. Are you nuts?”

The risk element is a question people like to ask about startups. Especially people considering at some level putting (sleepless) years of their life into an interesting concept for a business. And the question isn’t without its merits. Startups fail at high rates. Of those that don’t fail, few become massive homeruns.

Does this make startups risky?

We should make the distinction between risk to the business model and risk to you, the entrepreneur.

For the business model, yes, startups can be inherently risky. The business model will change multiple times. (Ours changed about once a month in 2009.) You may throw it out and start again, from scratch.

For the entrepreneur, the risk is minimal. (Of course, we are assuming that pursuing a startup will not cause you to go without water/food/shelter/etc….) More specifically, there is very little risk to the entrepreneur’s career.

Dave Troy summarizes entrepreneurship researcher Saras Sarasvathy:

“Failure increases the odds of individual success. While the success rate of a typical individual venture might be quite low, an entrepreneur that sustains a failure is more likely to succeed in later rounds. Failure teaches the entrepreneur about affordable risk, suggests boundaries for over-trust behaviors, and offers hints about how to maximize opportunity. We should never stigmatize failure, but instead understand that it is part of the effectual process.”

Ok, so now that we’ve made the distinction between risk to the business and risk to you, the entrepreneur and your career, why is this?

The answer is embedded in another question: My friend recently asked me, if I had stayed in the corporate world, how long would it have taken me to pick up all of the different skills I’ve learned in the last 10 months of Three Screen Games as my full-time position.

As I’ve been explaining it, in a corporate job, for college new hires to progress upwards and gain new skills, you need to ‘check the boxes’. That is, the process is very rigid and structured in most cases. You need to spend 1-2 years in a role, demonstrate that you’ve acquired the skill/executed it again and again and again. Then, you can move on to the next 1-2 year skill building “block”. Maybe in a few years, you’ll be given the opportunity to manage some folks. And maybe in a decade or so, you’ll have P&L authority over a group, gaining some really core business skills there. Who knows… The point is, it’s out of your control. You’re in the process, and it’s up to the HR process to tell you where you’ll go.

Hmm. So, for skills in – core technologies, leading a agile technology team, product management, vendor management, financial management, running operations for a company, legal/financial planning for a business – how long would that be? Let’s say that it’s clear the units are different – months become years for certain. Maybe never.

Bottom line: You build skills that you would have to wait years to obtain in a corporate job.

There are a couple of other nuances to this:

    First, the skills your building are cutting edge. You’re not dealing with legacy systems. Processes that don’t make sense. You’re using technologies and tools that are too new for much of the mainstream corporate world.

    Second, you’re building skillsets that are important to you, personally. This is your startup – you’ve chosen the industry, what you’re going to create. Chances are very good that it’s core to your interests and where you’re interested in going with your life. (It had better be!) At a corporation, you’re building skillets that are important to your boss. If his interests don’t align with your career direction, better add on some more years to the number we came up with above.

    Finally, the contacts that you’re building are unparalleled. You never know when your contacts and connections will pay off. The person sitting next to you in class with a cool idea might be someone you work with down the road. Maybe not on this idea, but keep in touch with these folks. You never know where life will take you. As an example, I’m working with my present co-founder because we got to know each other while at Penn State, talked about working together then (though things didn’t materialize), but we connected on LinkedIn. Then, when he left his previous startup and “end-dated” his position, I pinged him to find out what he was working on next – that’s when it started to make sense to work together.

    Everyone talks about connections in regard to finding jobs. I like how Joel Spolsky illustrates this in one of his (excellent) posts on finding developers. He writes that the best job seekers email their resumes around maybe one or two times in their entire career. Because they have the connections where if their interests/circumstances change, they know where their next step is, because of their network. When you think about how people move between jobs in today’s world, I think this is very accurate.

In Sameer’s post, he ends his thoughts with the following passage, which I think adeptly summarize the point we are both trying to make:

No opportunity comes with surety. Even an MBA from a top B-School might not get the best returns. There are lots of bright ideas which never reap fruits. What is important is that you should be able to separate failure of your idea from your personal failure. Its very clear, if you choose to become an entrepreneur for the right reasons, have the right approach and are determined to give it your best shot for 2-3 years and create value in your venture, chances of failure are near zero. You will learn so much and get to know so many people that even in case of the worst outcome, you will come out way ahead and will be a much wanted resource.

The journey of entrepreneurship is the real value add for the entrepreneur. The result is a by product.

The key thing that separates entrepreneurs from non-entrepreneurs is we just go and get stuff done. Don’t wait for permission. The risk is negligible. Just go do it. The key is to get started.


Tricks to getting involved with early stage startups

Posted: February 18th, 2010 | Author: | Filed under: posts | Tags: , , , | 1 Comment »

I enjoy speaking to aspiring entrepreneurs. Earlier this month, I spoke to a class of seniors at Drexel University about early-stage startups and entrepreneurship. This is the first post of a couple on some of the topics covered.


I’ve found that students are usually intrigued by startups. They like the idea of working for a small, dynamic company and being able to make an impact rather than lost in a corporate machine. That said, many students are intimidated by the process of starting a business and would rather join a startup that’s already up and running. This in of itself isn’t always the easiest thing. Startups have limited time and money to spend on recruiting. You’re most likely not going to find them at the career fair table next to the Fortune 500 guys. So, how do you get a position with an early-stage startup? Here are some tricks…

Social Media

There are a lot of people who talk about why social media is important. And there are a lot of people who give you weird looks when you tell them that you’re on Twitter. Ignore the latter.

Here’s my personal experience using social media with startups: I’m working for Three Screen Games because of LinkedIn. I was already connected to my co-founder via LinkedIn ““ we met at Penn State, kicked some ideas around while we were there, but didn’t end up working together then. But, when he decided to leave his former position, he updated his LinkedIn status, which showed up on the dashboard or in the weekly email alert. I was curious (his previous venture was going well), so I sent him an email to see what he was up to ““ he didn’t give me a lot of details at first, but we started exchanging a couple of emails, and sure enough, it soon made sense for us to talk about working together.

Resumes are so passive (Andrew Hyde just published a great post about this). Whereas, LinkedIn, Twitter, and blogs allow you to build a presence ““ a brand for yourself ““ and engage with people that you’re interested in networking with. They allow you to take charge of your networking.

Show Off

Hopefully, the startup that you’re interested in makes something that you like. (In fact, if it doesn’t, you should find something else!) Say you’re interested in working for FanGamb, for example…

What’s the easiest way of getting involved? Show us you really, really care. First off, use the product. Actively use it, see what works well and what doesn’t. Then, get in touch with us. Give us your suggestions. But don’t just send us a quick email that says “hey, you should add this” ““ those emails get filed. Instead, engage with us ““ make us stop and say, wow. Show us that you’ve thought this through, that you’ve considered the angles.

Then, have a plan for how you can add value to the team. We’re busy, we’re trying to make progress one day at a time, putting out fires as we go. We’re not always stopping to think ““ “hey, we could really use someone to do X.” If you come to us, have shown us that you’re really into what we’re building, and then stop us and give us a great example of how we could operate so much more efficiently with you as part of the team, 9 times of out 10, that’s going to work for most entrepreneurs.

(And that’s true of most companies, too ““ showing the value that you can deliver works in the corporate world ““ but it’s usually harder to connect to the right people.)

Charlie O’Donnell , who works for First Round Capital in NYC, has an awesome post about this topic.

Community

If you’re looking to get involved with a startup in Philadelphia, do you know about Philly Startup Leaders? In Boulder, the Boulder New Tech Meetup? In New York, the NYC Tech Meetup?

Startups are sometimes lonely. It’s usually just a few folks sitting in an office, working really hard. There are also lots of questions that entrepreneurs may not know the answers to. What do they do? They engage the local community. In Philly, it may be a little hard to see from the outside looking in, but the city has a great community for startups. As do many cities these days. The monthly meetups and get-togethers are a great venue to meet entrepreneurs and entrepreneur hopefuls that you might be able to work with.

Plus, each of these groups has an active mailing list. There are always startups looking for help, asking questions, and giving advice on the mailing list. It’s another great way to engage the community and participate. If you apply some of the principals discussed above, around personal branding and engaging with entrepreneurs about ideas for their business, I guarantee you, you’ll be making valuable connections and talking to entrepreneurs about problems that actually matter to their business in no time.


So, there are some thoughts on ways to engage early-stage startups and get involved. Feel free to reach out if you have specific questions or comments. It’s a fun topic and I’m happy to give you my thoughts.