SocialStartups.com

A couple of days ago, I had a phone call with a partner of an early stage VC firm whose portfolio is filled with successful startups you've heard of. Halfway through our conversation, they told me: "We only invest in companies that believe they can be worth $1 billion dollars. If you think you'd be happy with $50-100 million, you're not the right company for us. The companies we invest in generate $100,000 per month in revenue within 6-12 months of launch, and $1 million per month in revenue by 1 year after that. How do you plan to do that?"

What?

I was shocked. I can't think of a single non-ecommerce startup that can boast $100k in monthly revenues within 6-12 months of launch AND were creating a new market. Not Google. Not Facebook. Not Twitter. Not Yahoo. Maybe Apple? Microsoft?

As Steve Blank so eloquently says, when you are creating a new market, you have no idea how long the flat part of the hockey stick really is. That's because you are creating a new product that people don't even know they want, because they've never seen anything like it before. And you are creating something based on a mountain of assumptions, because you don't know what people will want once they know they want something. 

This is all to say, choose your investors wisely. 

(NB — This partner, by the way, has never started their own company or worked at a startup.)

A couple of days ago, I had a phone call with a partner of an early stage VC firm whose portfolio is filled with successful startups you've heard of. Halfway through our conversation, they told me: "We only invest in companies that believe they can be worth $1 billion dollars. If you think you'd be happy with $50-100 million, you're not the right company for us. The companies we invest in generate $100,000 per month in revenue within 6-12 months of launch, and $1 million per month in revenue by 1 year after that. How do you plan to do that?"

What?

I was shocked. I can't think of a single non-ecommerce startup that can boast $100k in monthly revenues within 6-12 months of launch AND were creating a new market. Not Google. Not Facebook. Not Twitter. Not Yahoo. Maybe Apple? Microsoft?

As Steve Blank so eloquently says, when you are creating a new market, you have no idea how long the flat part of the hockey stick really is. That's because you are creating a new product that people don't even know they want, because they've never seen anything like it before. And you are creating something based on a mountain of assumptions, because you don't know what people will want once they know they want something. 

This is all to say, choose your investors wisely. 

(NB — This partner, by the way, has never started their own company or worked at a startup.)

For the first time since November 2008, I'm getting a paycheck today. It's not much ($930.46) and 1/5th of what I used to be paid, but I'll take it. Needless to say, I have no money left and credit card bills to pay, so it's coming at a good time.

Being an entrepreneur means sacrifice. I gave up my $3000/month beautiful Brooklyn loft for splitting a 2 bedroom with 3 people in Bayonne, NJ for $300/month. I was without health insurance for 15 months. And I can't tell you just how much I appreciate J for putting up with living in Bayonne when I know she misses NYC and hates the commute.

Being an entrepreneur means being comfortable living on the edge. Last March, when I was still in Brooklyn, I had a $3000 rent check due in 2 weeks, and I didn't have the money to pay it. And yet, you find a way. I was able to secure an investor and pay my rent on time.

Being an entrepreneur means riding a rollercoaster. One day in December, we're celebrating because an angel investor told us he wanted to put in $200,000. Over the following weeks, we agree to a price and terms, and then he pulls out. From what Chris Dixon writes, this is more common than it should be. In the end, though, I think it was the best thing that could have happened to us.

Being an entrepreneur means compromise. Having no money means you can't buy what you want, go out to eat whenever you want, travel wherever you want. But in return, you get to create something meaningful, be your own boss, and love what you do.

I wouldn't have it any other way.

Office hours reminder

Click the link above to sign up for my office hours. I usually hold them Friday afternoons. My way to give back to the community.

I've already had 5 or 6 conversations with some really great people, and another one set up for this Friday. Email / IM / Phone / In person all work. Hope to hear from you.

I attended the "Real time! Search meets Social" event / panel last night hosted by SEMPO (as part of Social Media Week). It was a more enjoyable event than the super-crowded-bars-filled-with-media-girls events I attended earlier in the week (that's a personal bias: I hate crowded spaces where I have to shout to speak with the person right next to me).

One thought I had last night was, aren't brands overinvesting in Twitter? If you think about it, the most valuable tweets fall into two categories: breaking news and links to interesting content. And the former is only valuable right now — 2 week old breaking news isn't very "breaking" anymore. So the real value comes from giving people on Twitter content worth sharing: it's word-of-mouth and it's free! Furthermore, if you look at dollars spent as a result of search versus Twitter, search is larger by orders of magnitude, so shouldn't brands be focused on creating content (including blog posts) that gets indexed by search engines and passed around on Twitter / IM / email / Facebook?

I asked this question of the people on the panel, who represented StockTwits, HootSuite, Shorty Awards, Trendrr, and Collecta, a very Twitter focused bunch (other than Collecta). I didn't get a very clear answer from any of them, but generally it seemed like they agreed with me, which is ironic considering how Twitter-centric they are. 

When brands get back to questions of ROI and metrics when investing time and resources into social media, I think we will see a resurgence in blogging and multimedia, because at the end of the day, people need something to tweet about and share. Better to be talked about, than simply talk.