How much does it cost to build an awesome tech startup now? That is a key question for StartFast as we increase our investment amount in our chosen companies for 2014 to up to $100,000.* A recent blog estimates the price tag to design and develop exact replicas of some of the hottest products out there today (e.g. Instagram, Uber, Facebook, Pinterest, Shopify) as low as $50,000. Startup founders earning "sweat equity" can bootstrap their ideas into reality for much less. StartFast's increased investment gives the startup the additional money needed to build an audience of thousands of users, not just the application itself. Using the lean startup approach, each company builds a prototype of their product, inexpensively and quickly tests the market response to it and experiments until they get a clearly positive response from the market. This approach gives the startup and its investors evidence of success before making larger bets.Increasing the amount of StartFast's initial investment accomplishes three things:
- We attract the best companies. We have a world-class program, world-class mentors (many in common with TechStars including Brad Feld), and a hands-on managing team with more success and experience than almost any other accelerator in the world. We believe that offering more money will further increase our success rate.
- Startups get a meaningful capital infusion. Even if a startup already has a product, revenues and has raised some capital, $75,000 might enable a key hire, fund an online advertising campaign or enable a pivot. Combined with the mentor connections, coaching, and access to follow-on capital, StartFast is now even more of a win.
- StartFast companies have more chances to succeed. With more cash, each startup can test a greater number of iterations of product, market and business model to find a successful combination before running out of money. $75,000 might fund 10-15 or more product/market experiments, greatlyincreasing the chances of a startup finding a way to win.
Is our investment enough by itself to build a startup from idea to awesome? No. It certainly takes more than that. StartFast is prepared to lead follow-on financing rounds for some of our companies. Our initial investment is enough to prove that your team has what it takes and that there is a large market that cares enough about what you're doing. Follow-on investment is not guaranteed, but if you do prove that you have something meaningful, we'll put more money behind you and invite our investor friends and extended network to join us in providing the next round of capital (as we're doing for SwipeToSpin).We love startups and entrepreneurs and we are truly grateful to be able to devote ourselves to helping them succeed in the grandest scale possible thanks to the steadfast support of our sponsors and investors. Thanks to them, the deal just got a little sweeter and the chances of getting to awesome have improved.* StartFast provides teams with up to $100,000 in capital on entrepreneur-friendly investment terms. $25,000 is in the form of a Common Stock investment, while additional amounts are made available on a convertible note basis. We guide, teach, coach, cheer-lead and lead by example. Program participants are surrounded by world-class mentors and gain significant introductions to prospective customers and investors.
Every startup accelerator program has a theme. All accelerators introduce companies to mentors. Many focus on raising capital, teaching companies how to pitch, how to prepare for due diligence and introducing them to investors. Other accelerators focus on a specific vertical (e.g. energy, healthcare) or technology (e.g. cloud, Kinect). StartFast's theme is, "Build a great company."Our thesis is that if you build a great company, investment will be attracted and success will result. A great company is built on the foundation of a great team of entrepreneurs. Each person is born with a certain amount of innate talent, but the traits, skills, habits, thought forms and capabilities of great entrepreneurs can be acquired. Some can be taught, while other capabilities are acquired through experience, hard work and repetition. Our mentors are people to emulate. Our Enterpreneurs in Residence (EIRs) and our Managing Directors (MDs) train and guide founders along a rather steep learning curve. Time is very short (only 3 months in the program), but much can be accomplished in this time with an intensity of focus.The process begins with retraining - pointing out blind spots, cognitive errors and bad habits. We give a lot of tasks (e.g. growth hacking experiments) to begin building good habits and thought forms from the ground up. We are here to instill a bias toward data over opinion, a bias for experimentation over analysis paralysis, a bias for transparency and truth over cleverness and glibness. The process is not easy and has no guarantee of success. But our intention is that each founder and each team, through much experimentation, will acquire a methodology for evidence-based decision-making. Armed with this methodology, each team will develop confidence and a bias toward action (doing more faster). Through repetition and experience, discernment and understanding blossom. And once the entrepreneur learns to pass their understanding on to others, the beginnings of leadership have been forged.
Understanding & Discernment
Confidence & Bias to Action
Data / Evidence
In every area of human endeavor, the winners are not just those with innate talent. Hard work is the perennial differentiator. When two companies compete teamwork wins out over individual greatness. We work closely with our founders, introduce them to world-class mentors to give them examples of great entrepreneurs to emulate. Mentors also point out flaws in business models, product plans and go-to-market strategies. Certainly, this input can save founders a lot of time, keeping them from going down blind alleys. But the larger goal is always to teach the founders how to think - how to identify issues and resolve them quickly. How to discern what to work hard at - picking the right tasks in the right order. How to work together as a team.We've embarked upon this journey once again. The size of investment rounds and eventual exits may be how we keep score, but our means of getting there matter just as much to us. Our mission, to build great companies.
Closing Tivity Down: A Hard Appraisal
Jason Scherr was the CEO of Tivity, a StartFast 2012 team. When Jason announced he was closing down Tivity and joining the leadership team at Echolocation, we asked him for his reflections and key lesson learned. Here are his thoughts.1) Make sure your team is as invested in your company as you are. For me, it was really hard to be part of a team where the equity stakes were equal but the level of commitment to the business was not. Side projects and second jobs are early indicators that the person you are working with may not be the right choice. It’s irritatingly frustrating to put your heart and soul into something while those around you have one foot in another door. Avoid this situation at all costs while building your executive team.2) Along with team commitment, team quality is of the utmost importance. I've been with Echo for two months now and I already see a difference in execution based solely on our team’s differing backgrounds. I am in charge of business development and customer acquisition efforts, Rocky is in charge of design, and Brian is in charge of programming. This allows us all to move forward in different directions and, most importantly, come back to each other with new, executable information. And don't settle when it comes to whom you hire. You may not have a lot of money, but it'll cost you more than money if you hire the wrong people just to get things done quickly. You get what you pay for.3) Speaking of money, budgeting is beyond crucial. The only thing you have less of than time is money. We were fortunate enough to have some money, but didn’t budget properly. Getting an extra 5 - 10k every time you are low on money is much worse than getting 30k upfront. Know your expenses, what you are paying for and the length of your runway. If your team is really into what you are doing, ask them to take a pay cut in exchange for equity long before you have to. Even if they say no, you'll get a better idea of their commitment to the company and you'll still have money to pay them up until your runway ends.4) Ideas are worth shit. Don't be afraid to tell anybody anything. It's all about execution.5) Meet with as many people as possible that use your product, would use your product, or understand your product. Your goal is to learn as much as you can in the shortest period of time. “Start Fast” and build something better. You need to find your niche as quickly as possible, and that doesn't come from sitting behind a computer all day. Get on the phone and on the street. Last week I met with someone out on the other end of Brooklyn because he was using the Echo app to promote his business. We met with him, grabbed lunch, and then got some of the most valuable feedback we've ever received. Check out my depiction of the experience here blog.echolocation.com.6) Test every single idea you have. Write everything you think down and then do you best to execute. Connect and follow-up with every mentor possible, and if they don't answer, email them a second, third and fourth time. Chances are they are just busy and don't hate you that much. Out of everyone I've met through StartFast, 98% have gotten back to me and only 1 or 2 have actually told me they are no longer available for contact.7) If you're not learning you're standing still, and if you're standing still you’re doomed. Any feedback is good feedback. If you aren't making decisions everyday about how to improve or build your business, than you aren't building your business.8) A crappy product can get you feedback, but a crappy team cannot. If you see habits or problems delaying your output, nip them in the bud before it's too late (i.e., you run out of money). Odds are you are going to fail, and the faster you fail the more time you can spend on future failures…;-)9) Having a business model is not an option or something that you will fall in to overnight. Build toward a business model. Make money in any way possible and then try to replicate that model. Investors LOVE recurring revenue, no matter how small the amount.10) People (mentors especially) are often willing to help, especially while you’re part of the StartFast program. Don’t be afraid to take people up on their offers, and let them know where their advice got you. Showing a pattern of execution is half the battle while you’re looking to raise money. As Yogi Berra put it best, “90% of the game is half-mental”.You can follow Jason on Twitter (@thescherrthing).
Guest post by StartFast Entrepreneur-In-Residence, Kyle Blumin. Follow Kyle on Twitter (@kyleblumin).A funny thing happens when you start a company. All of a sudden everyone and their mother has an opinion as to what you're up to. Everyone from family and friends to advisers and mentors love to bestow their best advice or critique on to you. Your investors won't be shy either. If you let it, this can become cumbersome at best or in some cases debilitating at worst. While they all have great intentions, it is up to you to determine how best to utilize or discard their advice.When starting a company, getting lots of input at the front end of the process can actually help you find the right thing to focus on. In fact, getting more input and learning to sort through it is good up front. Mentor input is feedback that needs to be accepted or rejected based on data. Once you have an executable, market validated strategy laid out, not losing your focus is critical for success. As your company matures, staying on task will be one of your biggest challenges. Your behavior and the actions you take will ultimately lead to your success or failure. You can control a lot about your own behavior. However, there's even more that you can't control about what can impact your business. Ultimately that's why what you focus on is so important.Take the case of Carl Richards. Carl was a financial adviser at Merrill Lynch that ultimately lost his home to foreclosure during the housing run-up and subsequent collapse. While he didn’t create a start-up, his behavior is analogous to my point. The most obvious and easiest decisions can be derailed by losing focus - a financial adviser isn't supposed to lose his house to foreclosure. So how could that possibly happen? Quite frankly, he lost focus by letting the environment around him impact his decisions without focusing on the underlying data. Based upon pure data, he knew that the housing valuations were bogus, yet his behavior got the best of him. It is a refreshingly honest story that you can read about here.There are multiple mission critical decisions that need to be made on a daily basis in the life of a start-up as well as a maturing company. Some decisions need to be made in concert with executing your strategy and others need to be made in order to put out that day's fire. Both of which are important and both can either lever your success or end in dire consequences. Life and death situations happen every day in start-ups and early stage business. Losing focus is not an option - it will kill your venture.Someone once said to me that, "if you live like nobody will, eventually you can live like nobody can." When I was building my companies or executing on strategies to turn them around, I always had options to spend time and energy doing things that seemed like a lot more fun away from the office. I also had options to focus on issues that either weren’t part of the strategy or weren't based on data. I stayed the course with the strategic process and put those non-business related opportunities on the back burner. Sacrifice is part of the game in building your company. It's pretty easy to be taken off course because your buddies are going to Vegas for the week or there are rumors within the marketplace aboutFocusing on driving your business related to data, things that matter and what you can control will go a long way towards driving your success. It’s easier than you think if you refuse to give in to the pressures that are not driven by data. One day that focus will pay off for you. The more you concentrate on it, the easier it is over time. It becomes akin to muscle memory. It should become your best friend.Just keep in mind that the trip to Vegas will be a lot more fun after you’ve succeeded!
This is a guest post by StartFast Entrepreneur in Residence Kyle Blumin. Follow Kyle on Twitter (@kyleblumin)A friend of mine invited me to go see the Sundance Film Festival premier of the Steve Jobs biopic. I couldn't pass up the offer and I'm glad I didn't. It was a great movie that made every cell in my body vibrate. The film did a fantastic job of communicating the intense journey called building a company. It delivers an important message to entrepreneurs that you are not alone in all of the agony and thrill. We all go through it. When you attempt to do something great or build a company that solves a serious societal problem you will encounter great obstacles. But as Steve Jobs said in the movie, "those that have the audacity to think they can change the world are the ones that usually do." Just think, Steve Jobs was wandering aimlessly around India after he dropped out of college. He was dead broke and nearly died. And then...My earlier blog post referenced why I joined StartFast. For years I watched my home town of Syracuse, NY decline into a beaten and battered place. It had no soul. It had little, if any, positive vibe. The population was a negative, downtrodden majority. They complained about everything and blamed everyone else for the problems around them. I had heard it all. Everyone seemed to have an answer for why things were the way they were. The region had a real identity crisis. It was the loss of manufacturing jobs. It was the weather. After all, who wants to live in a place where it snows? Oh, I don't know...had anyone ever heard of Boston, Chicago, Denver or Salt Lake City? It was the government, it was the taxes, it was, it was, it was... The region had become its own worst enemy. No matter where I went or who I talked to, they always asked me why I stayed in the area. To tell you the truth, it was at my wife's request that we stayed in Syracuse. These days, I'm really glad I listened to her.When Ashton Kutcher offered up the line about audacity in the movie, it hit me like a ton of bricks. I had never been able communicate my frustration with the reaction many had to my declared career path. "Why don't you study harder and get a good job? Why don't you conform and just be like everyone else? Why can't you sit still? You're just going to blow it. Who wants those kind of headaches? Why do you (have the audacity to) think you can do what you're trying to do (when all the rest of us decided to be miserable and settled because that's what we're supposed to do)?" As one of my StartFast team members said, I was a unicorn to most everyone I came across.And then something changed. Something REALLY changed. Guess what changed? The people, and a new frame of mind came with them. It is the people that are changing our region. More and more people around me are thinking differently about what is possible. Some are of a younger generation, some are transplants into the community and many have been waiting for the pendulum to swing and are now getting on board. The physical landscape is changing for the better with a renewed focus on a livable downtown, but more importantly, the intellectual capital of the region is transforming as well. Not only do we have more change agents in the community, but students across the region are also expressing their desire to stay after graduation and build companies. Just imagine what that looks like 5 years down the road!During a Q&A session, the director of the movie was quick to point out that Sillicon Valley was anything but a sexy place in the early to mid 1970's. It had very few big names and nothing close to the notoriety of New York or L.A. Sound familar? What it had was terrific intellectual capital and collaboration. Sound familiar? It also had those that were willing to risk and believe in unseasoned entrepreneurs. Those that were successful in past ventures or careers provided guidance and mentorship that went along with the risk capital. Sound familiar? There are now angel funds in existence or starting up in Albany, Syracuse, Rochester and Buffalo. Accelerator programs are now operating in Syracuse, Rochester and Buffalo. In addition, Upstate New York expats are moving back to start companies and attracting talented founders and employees from outside the region.Entrepreneurial leaders in our region not only have the audacity to think that we can change the region, they are actually doing something about it. People like Martin Babinec of Upstate Venture Connect, my colleagues at Startfast, Chancellor Nancy Cantor of Syracuse University, Rob Simpson and Mitchell Patterson at CenterState CEO, John Liddy at the Syracuse Tech Garden, Mac Cummings and Pat Danial of Terakeet, Eric Hinman and his partners at Rounded Development, members of the Seed Capital Fund of Central New York, Chris Fowler of SyracuseFirst and many others. If I haven't mentioned you, I'm sorry. You know who you are and I can't thank you enough. The great news is that there are more and more of us every day and the transformational energy continues to build.If you have the audacity to think that you can change the region and the world, come join us and be part of an economic and social revolution. Don't let anyone tell you that you couldn't be the next Steve Jobs. So if you're currently wandering aimlessly around India, we'd love to have you right here in Central New York. Unicorns...come make your mark!
EIR Guest Post: Find a Way
This is a guest post by StartFast EIR Kyle Blumin (@kyleblumin)Hi, my name is Kyle, and I"m addicted to skiing. Somehow I"ve managed to weave skiing into my personal and professional life. I rolled into Park City, Utah today after driving a little over 2000 miles from Syracuse, New York. Many of you reading this must be wondering what would possess me to do such a thing considering the Wright brothers invented flying a long time ago. The simple answer is - my dog. My wife and I were never thrilled with the concept of putting him on a plane. So, yours truly drew the short straw. At least that"s what I thought when I contemplated repeating what has become an annual trip to Mecca. My trip would prove otherwise.As mile after mile rolled by I couldn"t help but think how incredible it is that everything I was seeing was created in about 200 years. Low and slow gives you a completely different perspective than peanuts and soda or the smelly guy that just won"t shut up. The thought crossed my mind that I was traveling in a car at 75 miles per hour with heat, heated seats, anti-lock brakes and air bags. The temperature in Wyoming was -20 degrees and the wind was blowing at 35 miles per hour. I couldn"t imagine what it was like for the early pioneers of this country in the face of weather like that without any modern amenities. Imagine traveling by foot or horse across undeveloped land with no map and no real understanding as to what your fate truly was to be. No cars, no fast food, no cell phone, no government, no nothin". Just try to imagine that - let it sink in. Some died along the way in horrific events. But some actually found a way to survive and made it. It had to have taken an unwavering mental acuity and stubbornness to make it. Because of that mental fortitude and ability to survive, others thrived and this country was built.When you drive 2000 miles, you have a lot of time to think. You also have a lot of time to listen to music that you"re thankful nobody else knows you"re listening to (come on, you know you"ve done that). As I thought about all that has been created in a fairly short period of time, it amazed me even more to think about what has developed over the last 30 years. The personal computer, email, cell phone, mobile device, internet and social media have all developed since the 80"s. The mass commercialization of all of this has really only come to be within the last 20 years. The proliferation of technology that allows for intricate communication to occur in seconds over a distance that took me days to drive was developed in less than 10% of the history of this country. Amazing.I used to use the saying, "none of this matters in 100 years anyways". Over time I"ve come to realize that nothing could be farther from the truth. Without the pioneers, none of this would have taken place. If not for the pioneers, you and I wouldn"t be living the lives we"re living. "Entrepreneur" is just an eloquent way of describing a pioneer. Entrepreneurs also travel across undeveloped land with no map and no real understanding as to what their fate truly is to be. They too have unwavering mental acuity and stubbornness to make it. My hat is tipped to those that find a way to lay railroad tracks across massive stretches of land risking life and capital or to those that develop social networks used by billions of people. While different, they are similar in that they overcame massive hurdles to succeed.I"m privileged to be working with the next generation of pioneers at StartFast. I can"t wait to see the next 10 years of development all around us. Pioneer on, find a way....and pray for snow!
New Strategy for a New Era
2012 was a year of many firsts for StartFast and also one of great changes in the landscape for early stage investors and accelerator programs. We look forward to 2013 with great anticipation and are making several improvements to this summer"s program with the twin goals of bringing faster returns to investors and greater value to founders.
- EIRs: We have instituted an Entrepreneur in Residence (EIR) program so that StartFast teams have the ability to work closely with experienced entrepreneurs who can play a key role as a virtual member of the startup team. StartFast EIRs are exited serial entrepreneurs and investors who will grow the StartFast network"s reach, help recruit great companies, identify new mentors/investors and work with the selected companies to more quickly meet their goals and investors’ expectations. Our first two EIRs, Kyle Blumin and Jeremy Schwimmer, are already active in identifying, screening, and recruiting startups. Additional EIRs will be announced in the coming weeks.
- Rolling Admissions: StartFast is instituting a rolling admissions policy so that we incentivize early applications and also
have the opportunity to maximize the time spent with applicants prior to the start of the program. This means that startups that apply early get our attention first and as the slots get filled, later applications have a tougher time competing for the remaining slots. These extra weeks and months can be critical in helping companies reevaluate their direction, achieve better product-market fit, and even access additional investment capital. With our new EIRs on board, we have greater bandwidth and a much larger network for engaging founders early and often. Apply Now
- Additional Capital: In response to the widely publicized “A-round crunch”, we are raising additional funds from existing and new investors and sponsors. We plan on making follow-on investments in the most promising StartFast companies.
- Investor Outreach: We are growing our outreach in Boston and New York to both recruit new startups and increase opportunities for StartFast teams to present to accredited investors. In addition, in 2013 we will ask regional entrepreneurs and angels to host events in Rochester, Buffalo, Albany, Ithaca and Binghamton.
- New Guidebook: We will be publishing volume 2 of the StartFast! book series to enhance founder education. Volume 1, published in January 2012, covers lean startup principles. Volume 2, “Growth Hacking – A Practitioner’s Guide to Lean Marketing” will cover the best means to engineer rapid growth.
We’re proud of what we’re doing and excited about Upstate NY"s entrepreneurial renaissance. We don’t aspire to be Silicon Valley or Manhattan, but we are on our way to building a great entrepreneurial community and creating opportunities for value investors that are not available in more overheated markets. StartFast is tapping into the tremendous talent of our region as well as recruiting the best and brightest from around the world.
90% Failure Rate? Says Who?
This is a guest post by StartFast Entrepreneur in Residence Kyle Blumin. Follow Kyle on Twitter (@kyleblumin)It is really hard to succeed in the start-up world. 90% of new products fail (The Start-Up Owners Manual: Steve Blank, Bob Dorf). So what is it about entrepreneurs that allow us to understand this and still move forward into the land of the unknown? Stupidity...balls...greed...blind faith? Maybe or maybe not. The reality is that many entrepreneurs want to solve for a problem they see that impacts them. And so it begins... They spend tremendous effort talking about it, building the prototype, iterating, scraping together money to fund it, going into debt for it, believing in their soul that this is the next great whizbanger - and 90% of them end up in a smoldering wrecked heap on the side of the road. How could this have happened? They knew the world was ready for their beautiful and precious whizbanger. They were so sure of it they mortgaged their house, leveraged life-long friendships, borrowed from college funds, borrowed from family, borrowed from their own quality of life and burned countless hours in the whizbanger factory. Exhausting...There are multiple reasons why start-ups fail. Founders are a poor fit, the idea was bad to begin with, markets shift, investors bail, and so on and so on. I'm a big believer that a substantial amount of failed start-ups would never have started to begin with if they had just asked themselves the very fundamentally simple question, "how in the hell am I going to make money with this venture?" Or better yet, "how can I make a lot of money with this?" Keep in mind that 90% of start-ups fail. If you are going to invest your entire being into this venture and ask others to do the same and invest along with that effort, you had better be able to have a realistic potential to make it all worth it and then some. In other words, build a real business.I've had three successful exits. I am grateful for that. However, I would attribute that success to a few things. The first is luck. Don't ever let anyone tell you that luck didn't play into their success in some way. I'm not talking about lottery-winning luck - I mean the power of convergence. I believe you can make your own luck if you work hard enough and try to think a few steps ahead of where you're going. The second is being truthful with yourself. Put yourself in the shoes of your potential customers and investors. Would you write a check to yourself as an investor or customer for what it is your venture offers? If there is any doubt, you probably have some soul searching to do to figure out what holes there are in the story you are telling yourself. The last thing I would attribute my success to is being able to check my ego at the door. I often share with people that ego can cost you a fortune. Starting a company is not for those with thin skin. If you can't look at failing and being able to pivot on an idea as succeeding, this game probably isn't for you. However, if you are receptive to help from others, mentoring and constructive criticism, chances are you're one step closer to success.Are you working on the next great whizbanger? Man, I hope not...