"Support Entrepreneurs" commands Jeff the Great

Since starting my company and volunteering for Portland Startup Weekend, I have had the opportunity to be around hundreds, if not thousands, of both budding and experienced entrepreneurs. During casual conversation and formal presentations, entrepreneurs regularly share with others what they are building.  They say "I'm building an Instagram for pet photos" or "My company brings together artists and art collectors," sometimes even "I'm making the next Facebook."

One of my biggest pet peeves is when a person listening to a new business idea says "but someone has already built that!" At a recent Startup Weekend, one of the participants was excitedly pitching their new product to an official mentor who responded by saying "Company XYZ has already built that" before walking away and writing off the entrepreneur and their abilities.

Doing this is one of the most naive and unhelpful things you can say to an entrepreneur, and I am asking you to stop. Now.

Thank god Larry and Sergey didn't listen to the naysayers that likely said "but Yahoo already does that" upon hearing about Google. Thankfully, Apple didn't look at Blackberry and say "Well, someone has already made a smartphone, so we don't have to." There are 1 billion people around the world that wouldn't be connecting with friends, family, and strangers online if Mark Zuckerberg decided that the world didn't need Facebook because MySpace already existed.

Simply the existence of a product or service means nothing. Is it the best it can be? Does it serve all potential customers? These high level questions lead us into more detailed ones. Is it priced right? Do consumers want more....or less? Does it serve all the consumers it could?

Additionally, the entrepreneur you are talking to probably already knows about XYZ company that you so quickly jump to say has already built what they just pitched. You aren't telling them anything they don't already know. If someone said they wanted to start a new car company, do you think you'd need to tell them that Ford already exists?

So here is what I want you to do, here are the helpful things you can say. First, be honest and don't grin fuck them (tell them what you really think). Instead of saying that a competitor exists, approach the topic from another angle by saying "so how are you going to differentiate your product from company XYZ?" Ask what company XYZ has done right, and what company XYZ has done wrong. Ask what consumers in the industry as asking for, and ask how the entrepreneur will deliver it.

Simply stating that a competitor exists is an insult to the entrepreneurs intelligence and shows your inability to have an intelligent business conversation. However, if you approach the conversation as I have suggested above, you'll not only look more intelligent yourself, you'll be providing value to the entrepreneur through your questions. You'll give them a chance to show that they have researched the competition and that they have thought about how they'll effectively compete.

Jeff the Great Points Out the Obvious

Was thinking about the presidential election we just wrapped up and how we've become a country of red and blue states. I realized that, like most republicans, Romney got his votes in the south and midwest. Then, I started wondering how the economies of those states looked. The results were not surprising, but still eye-opening.

Of the 10 states with the lowest GDP per capita, 8 of them voted Republican in the 2012 presidential campaign. Similarly, of the 10 highest GDP per capita states, 8 of them voted Democratic.

Interpret how you please, but to me it says that GOP policies do not work for the average American. Furthermore, it appears that voters in the poorest states tend to vote against their own interests. Here is the data:

State	2010 GDP per capita	2012 Blue/Red
Mississippi	$32,967	Red
Idaho	$34,250	Red
West Virginia	$35,053	Red
South Carolina	$35,717	Red
New Mexico	$35,952	Blue
Alabama	$36,333	Red
Arkansas	$36,483	Red
Montana	$37,200	Red
Kentucky	$37,535	Red
Michigan	$37,616	Blue
Tennessee	$39,730	Red
Florida	$40,106	Blue
Maine	$40,923	Blue
Missouri	$41,117	Red
Indiana	$41,169	Red
Georgia	$41,711	Red
Utah	$41,750	Red
Ohio	$42,035	Blue
Oklahoma	$42,237	Red
North Carolina	$42,884	Red
Vermont	$44,000	Blue
Wisconsin	$44,105	Blue
Kansas	$44,310	Red
Oregon	$44,447	Blue
Rhode Island	$45,000	Blue
Pennsylvania	$45,323	Blue
Texas	$45,940	Red
Nevada	$47,222	Blue
New Hampshire	$47,385	Blue
Louisiana	$47,467	Red
North Dakota	$47,714	Red
Iowa	$49,067	Blue
Hawaii	$49,214	Blue
Nebraska	$49,778	Red
South Dakota	$49,875	Red
Illinois	$50,328	Blue
Minnesota	$50,396	Blue
Maryland	$51,724	Blue
California	$51,914	Blue
Colorado	$51,940	Blue
Washington	$52,403	Blue
Virginia	$53,463	Blue
New Jersey	$56,477	Blue
New York	$57,423	Blue
Massachusetts	$58,108	Blue
Wyoming	$63,667	Red
Connecticut	$64,833	Blue
Alaska	$65,143	Red
Delaware	$69,667	Blue
D. C.	$174,500	Blue

Jeff the Great Condemns the Youth of the Nation

When I was a kid, I worked hard and played hard. I wasn't more than 8 years old when I started my first entrepreneurial venture: selling beverages to golfers as they crossed the street from one hole to the next. When I wasn't hustling to make my own money, I was active doing things like skateboarding or riding my bike miles and miles on any given day.

It seems things are different for kids these days. I say that because of two very different, but eye-opening things I have noticed lately.

The first example comes from the fact that I am so incredibly busy these days, the last thing I want to do during one of my few weekend hours at home is mow the lawn. So I figured I'd hire a neighborhood kid to do it. Certainly, in my neighborhood full of kids, one of them has started a lawn mowing business. Right? Nope, I can't find a single kid doing anything to make money by working for themselves.

The second thing I noticed is the proliferation of motorized scooters. Kids of all ages are zipping around the sidewalks and streets on electric motor powered scooters. I no longer see them riding bikes, skateboarding, or even pushing an original Razer scooter. Nope, these lazy slackers are letting a motor do all the work while they stand on the board, with a spoiled grin on their face.

I know I sound like an incredibly old, grumpy man, but what has happened to the youth of our nation?

Jeff the Great Defines "Startup"

**WARNING: I am about to sound like an elitist, entitled asshole.**

When people ask me what I do for a living, I frequently say that I am the founder of a software startup. Sometimes, people respond by telling me that they are also into startups. They have a food truck, a house cleaning service, etc, etc. With all due respect, those are not startups!

Eric Ries wrote the best definition of a startup that I've ever seen, in his book The Lean Startup:

A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty.

Awesome, right? I love it because it is so simple and short, yet it covers the key areas. Human. New. Uncertainty. So why isn't a cupcake shop or a bar a startup?

For starters, these are not new services. There is no question that most markets demand a bar. People have been buying and eating cupcakes for years. For the most part, nothing new has been created here. Sure, there may be a new way of delivering these products or a slightly different value prop, but in the end the product is essentially the same.

Which brings us to the next point: there is not extreme uncertainty. Sure, there may be some uncertainty but proper research and planning around starting your cupcake shop or neighborhood bar can reduce the uncertainty to minimal levels. It's relatively easy to figure out how many bars or cupcake shops a community can support, based on population. There are known, best practices that can be followed. Heck, with all the information available to use via technology and the web, it's probably never been less risky to start a small business!

I'd like to add one additional piece of analysis to Eric's definition. Based on the two points I make above, I'd also so that a startup is a business unable to attract bank loans or other sources of traditional debt financing. If a Starbucks executive left to start their own neighborhood coffee shop, there is little doubt that with a proper business plan, he or she would be able to obtain a small business loan from a local bank. There is little uncertainty in this venture. Little risk.

So what are these businesses called, if not startups? Small businesses. They are wonderful and critical to most economies. I take nothing away from the founders of small businesses. The successful ones are smart, adventurous people. Their businesses just aren't startups, and that is okay.

Jeff the Great Crowns Instagram a Winner

So much to blog about these days but it took a $1 billion acquisition of a no-revenue company to get me writing this evening. Yes, I am talking about Instagram and the sale to Facebook. One billion dollars. Wow...and congrats to them! The most amazing thing to me is that they are just a 10 person company with a product used by around 30 million people. That, my friends, is a lean startup!

So here is something to think about. Facebook paid approximately $33 for every Instagram user. That got me thinking, will this number be cited in the valuation of other web/mobile companies as they raise funding or negotiate a buyout? This means if your web/mobile app has 1 million users, you could reasonably argue that your company is worth $33 million......or more if you have revenue!

That is a little far fetched but it is a great way to remind yourself how much more work you have ahead of you. Say you have 25,000 users. That is wonderful, but you have a long way to go if you want to be purchased for millions of dollars! Twenty five thousand makes you worth about $825,000 based on Facebook/Instagram math. One hundred thousand users puts you at $3.3 million. Personally, I don't want to sell my current company for less than $100 million so I better get more than 3 million users running my software. Yikes, I have a lot of work to do!

Of course, I am over-simplifying things. Revenue changes the picture drastically. I also believe that each new Instagram user was worth more than the last (a network affect, so to speak). Not to mention all the other tangible and intangibles.

I'll leave you with this final thought. Maybe $1 billion was a bargain for Facebook? They are approaching an IPO that is rumored to value the company at around $100 billion. With around 900 million users, that is $111 per user. Makes $33 per user look like chump change, doesn't it?

Jeff the Great's Top Technology Companies in Portland

The Portland Business Journal on March 9th, 2012 published a list of the Top 25 Technology Companies in the Portland area. They ranked using number of global employees but also listed the number of Portland area employees. Effectively, this is a list of the largest tech companies with a presence in Portland.

Wow, did they miss the boat. Of course the likes of Xerox and Intel made the list (#1 and #3 respectively), but the omissions and selections get more and more odd as you read down. For example, at #25 they list Infinity Internet with 27 worldwide employees, 26 in the Portland area. You mean to tell me that the 25th largest tech company in Portland only has 27 employees?

So I did some research and quickly discovered that the Portland Business Journal blatantly ignored local companies that were obvious choices for the list. They even ignored multiple companies that they wrote about in the very same March 9th issue (Fisrv, Monsoon, Axium, Symantec)!

So out of respect for the great companies that were omitted for the list, here are some that should have been mentioned. The figures in parenthesis are my estimations of local employees based on data collected from LinkedIn plus a sprinkling of my personal knowledge.

• Act-On Software (over 60)
• Avnera (about 60)
• Axium (about 80)
• CD Baby (over 200)
• Clearedge Power (more than 100)
• Digimarc (over 100)
• EasyStreet (at least 30)
• Elemental (about 60)
• Fiserv (as many as 300)
• Galois (about 35)
• iovation (over 75)
• Janrain (110)
• Jive Software (200+)
• Monsoon (about 84)
• Netflix (about 200)
• Pixelworks (about 32)
• Puppet Labs (about 40)
• Rumblefish (about 30)
• Urban Airship (about 60)
• Shopigniter (about 30)
• SolarWorld (hundreds)
• Symantec (100, even after layoffs)
• Synopsys (about 300)
• Thetus (about 50)
• ViaWest (at least 25)

This isn't even an expansive list, there are more but I had to stop researching! Even the big guys have a presence here. Microsoft has about 150 in the Portland area, and Apple has at least 175 (both retail AND engineering). Finally, I didn't even list companies with fewer than 20 employees which I stumbled upon in my research. There are easily a few dozen tech companies with 10-20 local employees.

So, Portland Business Journal, I find it hard to believe you when you say "every attempt is made to ensure the thoroughness and accuracy of the list." It is especially frustrating when the only avenue to communicate errors and omissions is to send "corrections and additions on company letterhead to..." followed by your mailing address. Company letterhead, really? Why can't I just email you a list?

-Jeff the Great