Computer Guy

Computer Guy
Sunset at DoubleM Systems (, Del Mar, California

Wednesday, July 27, 2011

The Benefits of a Board of Advisors

There's an article in Entrepreneur magazine online with the title "The Benefits of Bringing In an Advisory Board" and you can read it here.  Although it is a rather skimpy article, and doesn't go into much detail about all the benefits, the point can not be made too many times: if you are serious about your business, then start Now to build a Board of Advisors.  

I know from personal experience that it makes all the difference in the world to run your business in a professional manner.  Unfortunately, most business founders allow themselves to be so distracted by day-to-day issues that they don't give adequate attention to building the structural foundations of the business.  

The Board of Advisors is THE best foundation for a serious (non-lifestyle) business.  Begin it Now!

Thursday, July 7, 2011

Startup Genome Report - Summary of Findings

You really should download the complete report and get on the list for updates, but for the time-challenged entrepreneur (who isn't?) here are a few of the more important findings of the study:

1. Founders that learn are more successful: Startups that have helpful mentors, track metrics effectively, and learn from startup thought leaders raise 7x more money and have 3.5x better user growth.

2. Startups that pivot once or twice times raise 2.5x more money, have 3.6x better user growth, and are 52% less likely to scale prematurely than startups that pivot more than 2 times or not at all.

3. Many investors invest 2-3x more capital than necessary in startups that haven’t reached problem solution fit yet. They also over-invest in solo founders
and founding teams without technical cofounders despite indicators that show that these teams have a much lower probability of success.

4. Investors who provide hands-on help have little or no effect on the company's operational performance.  But the right mentors significantly influence a company’s performance and ability to raise money. (However, this does not mean that investors don’t have a significant effect on valuations and M and A)

5. Solo founders take 3.6x longer to reach scale stage  compared to a founding team of 2 and they are 2.3x less likely to pivot.

6. Business-heavy founding teams are 6.2x more likely to successfully scale with sales driven startups than with product centric startups.

7. Technical-heavy founding teams are 3.3x more likely to successfully scale with product-centric startups with no network effects than with product-centric startups that have network effects.

8. Balanced teams with one technical founder and one business founder raise 30% more money, have 2.9x more user growth and are 19% less likely to scale prematurely than technical or business-heavy founding teams.

9. Most successful founders are driven by impact rather than experience or money.

10. Founders overestimate the value of IP before product market fit by 255%.

11. Startups need 2-3 times longer to validate their market than most founders expect.  This underestimation  creates  the  pressure  to  scale

12. Startups that haven’t raised money over-estimate their market size by 100x and often misinterpret their market as new.

13. Premature scaling is the most common reason for startups to perform worse. They tend to lose the battle early on by getting ahead of themselves.

14. B2C vs. B2B is not a meaningful segmentation of Internet startups anymore because the Internet has changed the rules of business. We found 4 different major groups of startups that all have very different behavior regarding customer acquisition, time, product, market and team.

The Startup Genome Report

A new framework for understanding why startups succeed.

This report reveals in-depth research about what makes Silicon Valley startups successful. The report is a 50 page analysis based on data from 650+ web startups. The report was coauthored by Berkeley & Stanford faculty members. Other contributors include Steve Blank, the Sandbox Network, and 10 accelerators from around the globe.  The goal of the report is to lay the foundation for a new framework for assessing startups more effectively by measuring the thresholds and milestones of development that Internet startups move through.

This report is the Startup Genome Project’s first step toward cracking the innovation code of Silicon Valley and spreading it to the rest of the world.

Download your (free) copy of the Genome Startup Report here.