Archive for 'Startups'
Don’t waste your money doing an MBA.
Get an internship instead.
Wanna be an entrepreneur? It takes more than just passion and desire. You need real skills to succeed, but where do you get them? A surprising number of people think that they should do an MBA. I don’t blame them. After all, universities invest a significant amount of effort convincing potential students that getting an MBA is a good idea. The cruel reality, though, is that MBA programs tend to be terrible at teaching entrepreneurship and, in particular, tech entrepreneurship. They are slow, expensive, include too much theory and not enough practice, and, more importantly, they are taught by people that have not been entrepreneurs themselves. Fortunately, there is a better alternative: Internships at tech startups. Here is why:
MBAs are about enterprise-level management while internships can be about entrepreneurship. The skills required to manage and be part of a 5,000 person company are different than the skills required to start and grow a company. In fact, enterprise-level management techniques may negatively affect the chances of success of your future startups. For example, using balance scorecards and KPIs may be great for companies in advanced stages of growth, but they are an overkill for startups at the MVP stage.
Internships provide more hands-on knowledge than MBAs. While an MBA program will teach you a lot of theory, an internship will allow you to learn [a fraction of] that theory put to practice, plus many more techniques that are not taught in MBAs.
Internships are faster than MBAs. An MBA program lasts between one and two years. In contrast, you can do two or four internships in just one year. Don’t have a year? No problem. If you’re a fast learner, interning for six months may be enough.
Internships are less expensive than MBAs. Top MBA programs cost more than $100,000, not including living expenses. Internships cost 0. In fact, if you’re lucky, you may get a paid internship. This means that instead of you paying to learn, you’ll get paid to learn!
Assuming you want to do an internship already, these are some factors to keep in mind:
Intern at a startup with a team of less than 50 people. In a team of less than 50 you’re likely to interact with the founders and managers making important decisions. You’ll learn a lot from them. Also, you’re likely to get exposure to many different areas of the business. In larger teams, you are likely to interact with low-level managers that joined the company later in the game and are not likely to be too entrepreneurial. Also, you may have to focus in just one area of the business, missing out on the big picture.
Intern at a startup that is making money and growing. When revenue and growth are achieved, you have a company with a real business model. You want to learn how they got there. Don’t join a startup without a business model, a startup that is not making money, or a startup that is not growing, even if they have raised capital. Such companies may only teach you how to raise capital to subsidize the operation of a company, which is not sustainable. In fact, I recommend giving higher priority to bootstrapped companies.
Intern at a startup that is located in a tech innovation hub. You’ll be able to attend plenty of networking events and meetups. The people you’ll meet may change your life. I’ve met most of my co-founders at networking events. If in the US, I suggest startups in the Bay Area, New York City, and Boston. After all, it’s not only what you know, but who you know.
Visas are not necessarily an issue. Depending on your nationality and the country of the startup, it may be technically illegal for you to work there. Fortunately, some startups won’t care. Give the company the option to get paid in your country of origin as if you were an overseas contractor.
If possible, join a startup founded by a serial entrepreneur. Serial entrepreneurs, specially successful ones, have “been there and done that” several times. They are the equivalent of teachers with PhDs. These companies are more likely to follow successful, structured techniques that you will find useful in your future endeavors.
Target startups that don’t offer internships. Although some startups proactively look for interns, some don’t have the time do so. Find startups that you like and cold-email their founders. Messages like “Hey Joe. I’m willing to work for you for free just to learn from your wisdom” are very likely to grab the attention of the recipient. Even if only 10% of them reply, that’s still a good conversion rate!
A final word: Getting an MBA is a good way of telling others that you like to follow the crowd.
Tech entrepreneurship is about innovation. Innovation means disruption. Innovation is doing things that others don’t dare to do.
Founder and CEO of Bunny Inc. (VoiceBunny, Voice123, BunnyCast) and Torrenegra Labs. Techie, activist, investor, offroader.
Last year we established a residency program to encourage the worlds DOER’S to succeed with their projects they would like to launch from our bay area location.
A total of 5 DOER’s or “startups” will receive free full-time resident access to a Citizen Space for three months valued at $425 per month. The Citizen-in-Residence can take advantage of both the physical spaces & the communal resources.
In exchange, they work on a project of their choosing that help the “COWORKING” community at large, documenting their progress through our social presences on Facebook, Twitter, and YouTube. At the end of the residency, Citizens-in-Residence do a presentation to members of the space about their project.
Accepted Applicants will be announced one week prior to the residency start date. The first residency will start March 3, 2014 and the application process begins Tuesday, January 28, 2014.
We are seeking support from your company to help us make this program a success. If your company or you personally would like to sponsor this program, please email us: email@example.com
Written By: Alexander Torrenegra
Instead of earning equity from the businesses they accelerate, accelerators could earn royalties from the revenues of such businesses. This could enable accelerators to help entrepreneurs grow and bootstrap their business instead of forcing them to raise capital.
My wife and I co-founded the Voice123 brand ten years ago. Today, it’s a successful business with 30 employees. Its success didn’t depend on angels, accelerators, or venture capitalists (VCs). In fact, had we listened to any of them, Voice123 would not exist today. There are thousands, maybe millions, of entrepreneurs like us out there. The current model made popular by Silicon Valley is suffocating many of them and killing startups that could also become successful. This article explains how and offers an alternative.
The current Silicon Valley model has one major flaw – it creates an ecosystem that asks entrepreneurs to shoot for the moon rather than build a sustainable business. VCs won’t waste time working with companies that are likely to sell for less than $50 million (I don’t blame them as their business model needs such scale). Angels and accelerators exist because VCs exist. They work as a bridge between the startup and the VC. Although some angels prefer capital efficient businesses that don’t need much VC to avoid dilution, many angels won’t invest in startups that aren’t likely to scale to the $50 million valuation level because they’re afraid VCs won’t invest. Given that most accelerators follow the angel/VC/exit model too and measure their success based on the level of funding startups get, many entrepreneurs with great ideas and companies are being told to pivot to try “bigger ideas”. In fact, they don’t even consider bootstrapping, which actually works! Unfortunately, forcing first-time entrepreneurs to “dream big” and execute on $50 million ideas is no different than asking a first-time driver to compete in a Formula 1 race. It is very risky, to say the least. The concept of “Go Big or Go Home” may work for some, but it should not be a rigid mantra, especially in emerging economies.
I (and many of my colleagues) am fatigued from “demo days,” that, judging by recent trends, should be renamed “PowerPoint Days,” where panelists, primarily made up of investors, tell entrepreneurs that their companies are “not good enough” simply because their firms wouldn’t invest in them. I’m tired of VCs dismissing entrepreneurs because their startup is a “lifestyle business” (as if being a VC isn’t a lifestyle business!). I don’t want to continue seeing emerging economies trying and failing to copy the Silicon Valley model, teaching entrepreneurs how to raise angel capital when there are still few successful exits, if any (I’m looking at you, Colombia).
This should change. Entrepreneurs with good ideas, even if they are “not-so-big” ideas, should feel comfortable building “not-so-big” companies. This is especially relevant for first time entrepreneurs. It’s okay to build a bootstrapped company that “only” sells $1m per year and grows 20% year-to-year. Sure, no VC will get rich with them, but the founders will be happy and they can have a significant social impact.
Can angels and accelerators help? Unfortunately, their current business model depends on VCs. If a company they fund is not backed by a VC, it’s going to be very unlikely for the angel and/or the accelerator to get their money back. The solution? There could be many, but the one I’ve been thinking about for a few weeks:convertible royalties.
When an accelerator or an angel invests in a company (whether it’s cash or, more importantly, mentoring), they could start getting a small part of the company’s revenue as a royalty. Of course, the revenue may be insignificant initially, but after a couple of years and some growth, the revenue may be high enough to justify the original investment. As with convertible notes, convertible royalties could become equity upon the occurrence of certain performance or time-based milestones. For example, hitting a certain level of aggregate sales, receiving a certain amount of funding, or getting acquired.
I’m calling it convertible royalties because of its similarities with convertible notes. Unlike convertible notes, though, the business model of accelerators and angels wouldn’t depend on the company getting acquired to be viable. In fact, convertible royalties may open the door for accelerators to promote bootstrapping. The convertible royalties idea may allow accelerators and angels to invest in companies that nowadays are not even considered for acceleration: bootstrapped companies, companies that don’t need additional capital, service companies, non-for-profits, etc. It may even allow services like Kickstarter and Indiegogo to start offering some kind of return to crowdfunders. I dream of the day when accelerators stop forcing entrepreneurs to improve their pitch for investors, and instead help them improve their pitch for clients and sell more.
Some are experimenting with related concepts. Adobe Capital, a social venture fund in Mexico, uses subordinated debt that is repaid by collecting a percentage of sales. Some call this model “revenue capital”. Nevertheless, many entrepreneurs don’t need venture capital. They need education, mentoring, connections, and strategy.
Of course, the convertible royalty model won’t be perfect and may not work for every situation. For example, the royalties may need to be different for different companies depending on their business model. Royalty payments may need to be postponed initially to allow all company revenues to be reinvested into the growth of the business. Also, if royalties do get paid out, the equity or the potential conversion to equity, may need to be reduced so that the entrepreneur doesn’t need to “pay twice”.
What do you think? What drawbacks do you think the model could have? If you’re an entrepreneur would you be willing to pay 0.5% in royalties instead of giving the traditional 5% equity to accelerators? If you’re an accelerator, would you consider using the model? Will it work in emerging economies? Will it work in Silicon Valley? Should the convertible royalty agreement have a deadline? Will this model encourage accelerators to push entrepreneurs to increase sales in the short term while sacrificing long-term strategy? Let’s start a conversation.
P.S. Wondering what makes me a qualified person to talk about this topic? To be honest, I don’t know if I’m experienced or articulate enough. Some may call me ignorant or wishful. They may be right. Nevertheless, here’s a little about me: I started my first business in Colombia when I was 14 and bootstrapped it to 25 employees. I moved to the US in 1998 and since, I’ve co-founded multiple companies here, including an incubator. We bootstrapped some of them. We raised angel capital for some. We raised venture capital for some. Some failed; some are successful. I’ve invested as an angel in several startups, as well. I’m co-founder of HubBog, the largest campus for startups in Bogotá, as well as co-founder of the two largest tech meetups of Latin America. I mentor many startups through several accelerators. I am the CEO of Bunny Inc (owner of Voice123, VoiceBunny, and BunnyCast), a successful bootstrapped company with 35 team members in Bogotá and San Francisco that is doubling sales this year. I never had an eight-digit exit, yet I am a happy entrepreneur.
Thanks to Leonardo Suárez, Shaun Young, Patrick McGinnis, Dan Gertsacov, Dan Green, and Tara Tyler for reading and commenting on drafts of this article.
Since taking over Citizen Space in 2011 I have been on a mission to secure some perks for our members that will make Citizen Space membership not just a great place to work, but a great “network” to be connected to!
Today we are happy to announce that starting on International Coworking Day all members who travel to NYC will have a place to work while on the road thanks to our pals @Fueled Collective NYC, and any Fueled Collective member now has a place to call home away from home in SOMA.
Citizen Full, and Citizen Lite members will enjoy $25 a month in Task Rabbit credits. This is great for simple tasks to help you on your path link laundry services, grocery shopping, and even data entry.
All Citizen Space members already enjoy a rate for rooms at the W in San Francisco of $259, and $299. This rate is last room availability. Guest room rates are subject to our state tax of 15.62 %. The W Hotel average regular non member rates range is $549.00 – $579.00. Preferred rates are applicable to single or double occupancy and will be confirmed based on the specific room inventory available at the time a reservation is made. Call our member services desks for more info at 415-501-9155
Please drop in all week for free day passes , and come celebrate 7 years of coworking this Friday all day!
“A Nicer Place to Work”
This code camp though is not a “one day and your done” code camp. On the contrary, this FREE code camp is unique in that is it lasts ALL WEEKEND. That’s right; you have 2 days to make it out to this FREE event. The Silicon Valley Code Camp will be held this Saturday, October 3rd, 2009 and this Sunday October 4th, 2009 at Foothill College in Los Altos, CA.
There is slated to be 150 sessions at this year’s code camp covering over 75+ topics. Add to that there are already over 1,200 people registered for this year’s code camp. So if you live or will be in the Silicon Valley area and are interested in networking with other developers and learning new skills (and in this tough economy, who isn’t?), then you should make it out to the Silicon Valley Code Camp.
For more information, please visit: http://www.siliconvalley-codecamp.com