General wisdom among tech entrepreneurs is that the ideal number of co-founders is two or three. There is a good reason for it – an analysis of a dataset of 100,000 startups by Startup Genome shows that solo founders take 3.6x longer to reach the scale stage, compared to a founding team of two. However, taking a co-founder on board brings its own risks. Here’s a short guide to picking the right person. 1. Find someone with a complementary skillset According to serial tech entrepreneur and Stanford lecturer, Steve Blank, startups are inherently chaotic, and finding a product/market fit in that chaos requires a team with a combination of skills. The skills you need depend on the industry you’re in but, in general, co-founders should have complementary skills. In mobile and web startups, that usually means great technology skills, great business and marketing skills, great UX design and product skills. Most people are good at one or two of these, but it’s very rare to find someone competent in all areas. 2. Find someone who shares your vision and values Co-founder disputes are very common and are a frequent cause of startup failure. A lot of these disputes stem from founders having different ideas about how to run the company and where it should go. One thing is to put your vision and priorities on paper; another is to live it day by day, especially when your original idea proves wrong and you need to change direction. Likewise, the values you live by will plant a seed for what becomes a company culture. The reality is that co-founders will have different values but, together as team, you have to define a common value system. Having done so will likely play an important role in taking your startup forward. 3. Find someone with grit Once you have an idea, you need to be able to pursue it, even in the face of adversity, if you want your startup to succeed. Frankly, entrepreneurship is extremely challenging, and to persist through those challenges, you need grit. Professor Carol Dweck, of the Stanford Department of Psychology, has done extensive research on the subject of grit, which she defines as ”the disposition to pursue very long-term goals with passion and perseverance, stamina and ability to win things over the long-term and work very hard at it”. According to her research, the key to grit is having the right mindset. Dweck observed two different mindsets among people: Fixed mindset: A belief that you either are talented or not. Failure is proof of your inability. Intelligence and talent are just fixed traits. Growth mindset: A belief that abilities are developed. Setbacks and criticism are a sign that you need to improve. You learn and grow yourself and think long-term. People with a growth mindset are more resilient to challenges related to their abilities and performance than those with a fixed mindset. 4. Find someone who stands out Founder personalities are important and often popularised. Many companies end up looking like founder cults – Steve Jobs is a great example. Peter Thiel, investor and founder of two billion-dollar companies (PayPal, Palantir), believes there is a connection between being a founder and having extreme traits. According to him, the key to PayPal’s success was the eccentricity of all founders: “Four of them were born outside of the United States. Five of them were 23 or younger. Four of them built bombs when they were in high school. Two of these bomb-makers did so in communist countries: Max in the Soviet Union, Yu Pan in China. This was not what people normally did in those countries at that time.” According to his observations, if all traits distributed in the population were aggregated on a normal distribution chart with extreme traits on the right and left side of it, you will find most founders on both ends of the curve, rarely in the middle of it. True or not, entrepreneurs like Richard Branson, Bill Gates, Warren Buffett or Larry Ellison certainly add a little substance to this. 5. Find someone with whom you have a history of working together In the case of startup ‘unicorns’: 90% co-founding teams of $1 billion+ startups comprise people who have years of history together, either from school or work; 60% have co-founders who worked together; and 46% who went to school together. Further findings reveal that teams that worked together have driven more value per company than those who went to school together. Only four teams of co-founders didn’t have common work or school experience, but all had a common thread. Two were known and introduced by the investors at founding/funding; one team were friends in the local tech scene; and one team met while working on similar ideas. The take-away? The most successful co-founder teams are the ones where the people have known each other in other contexts, prior to the company at hand. Sources: TechCrunch, Peter Thiel’s CS183: Startup – Class 18 Notes, Stanford University. This piece originally appeared on Appster’s blog.
“It was one of the worst experiences of my life": Four things Vend founder Vaughan Rowsell learnt from a “lousy” startup experience4:27AM | Tuesday, 7 April
Vend founder Vaughan Rowsell knows all too well the ups and downs of working in a startup. Prior to founding Vend, a point-of-sale software provider that raised $22 million in capital last year, in a round led by PayPal co-founder Peter Thiel, Rowsell was chief technology officer at online travel startup Vianet. Rowsell says Vianet was “Airbnb, before there was Airbnb”. It allowed users to rent out any form of accommodation “whether it’s a spare room in a house, a boat, or a hotel”. Vianet would eventually be acquired by Trade Me, one of the startup’s largest customers. And while an acquisition might look at first glance like a win for the startup’s founders – that wasn’t the case. “We made a host of mistakes in that business, basically burnt a lot of cash,” Rowsell told a Startup Grind Melbourne event recently. Unfortunately, those mistakes happened at the wrong time and money dried up just as the global financial crisis hit. “Every investor on the plant started stuffing their cash under their mattresses,” Rowsell says. “It was difficult to get much funding, so we had to have a fire sale. Trade Me was one of our best customers and we were powering all of their online booking services. So that sounds like it was great. But actually it was pretty lousy; the founders didn’t see much, or anything out of it. “We learnt a truckload, but it was one of the worst experiences of my life.” Here’s some advice Rowsell has for startup founders: 1. Be prepared for anything “Always have multiple plans. More often than not you’re in growth mode, you’re growing the business or investing in the business faster than revenue growth is catching up. We’re just going to go hard, grow grow grow, raise more money as we go to fund the growth. But you should always have a plan B. Because at some point you may not be able to raise that money. “It might be to slow down growth to get yourself into a cash flow positive position. Plan C might be selling part of the business. You need to have all of those plans and keep constantly monitoring them to make sure they’re all achievable.” 2. Trust your team “Trust people and they will trust you. Be OK with not knowing everything. Very quickly early on you’ll realise that you’re starting to max out all the stuff you know. And as your business grows, you’ll find there’s layers on top of what you know, that you don’t know, and you’re going to have to figure it out really quick. “You’re going to have to learn fast and learn to trust people. Bring people on board and hand over more and more stuff to people that are smarter than you and be OK with that.” 3. Be open and transparent “Be transparent and open with your team. Because being in a startup is tough. If you try and keep secrets from everyone it just creates this atmosphere of mistrust. You want to have that trust because you’ll have good times and bad times. So when you’re standing up in front of them, doing some hard stuff, they trust that you’re being open and honest with them about everything.” 4. Don’t spend money you don’t have “If you’re talking to investors, remember, you don’t have the money until you’ve got the money in the bank. So don’t start spending the money until one – they’ve signed a term sheet and two – there’s cash in the bank.” Follow StartupSmart on Facebook, Twitter, and LinkedIn. Buy tickets to the 2015 StartupSmart Awards.
Point-of-sale software provider Vend today announced an additional $22 million in capital funding led by PayPal co-founder and the first outside investor in Facebook, Peter Thiel of Valar Ventures, and Square Peg Capital. Vaughan Rowsell, founder and chief executive of Vend, told SmartCompany the software provider will use the new funds to expand its presence in the North American market through new partnerships, resellers, staff and customers across the continent. “We are in high growth mode and now is the time to really put the foot on the accelerator and continue our growth,” Rowsell says. “It really enables us to grow our channel, working with point-of-sale retailers in Australia and through channels like Apple, Zero and PayPal.” Launched in late 2010 in New Zealand, Vend now has offices in Australia and the United States and turned over $5 million last year. The operating system is used in over 10,000 stores in more than 100 countries but Rowsell has his sights set for further growth using the investment. “It also allows us to grow our headcount to 20 or so people on the ground in Australia, which allows us to work with much larger accounts,” he says. Rowsell says Vend was able to secure the funding from Valar Ventures and Square Peg Capital after establishing a relationship with Thiel. “We’ve been a part of the San Francisco scene for the last three years, we’ve had an office there and I’ve spent a lot of time in the Valley and it is one of the amazing things about that place that everyone is so connected,” he says. “We’ve been looking for the opportunity to work closely with [Valar Ventures] as they bring a whole lot of expertise in terms of understanding the payments space and helping us unlock the US market.” Rowsell says the size of Vend’s private capital raising “really validates the big shift in businesses moving to the cloud”. He claims there is a “resurgence” of independent retailers who have become more competitive against big chain stores by adopting cloud-based point-of-sale software. “Cloud-based retail in Australia is now going much more mainstream,” Rowsell says. Vend raised $NZ8 million ($A7.5m) in May 2013, and $NZ3 million between its first two capital rounds in 2011 and 2012. This article first appeared on SmartCompany.
PayPal co-founder Max Levchin is launching a new mobile payments start-up called Affirm, the first project to come out of Levchin’s San Francisco tech incubator.
Venture capital firms in the United States raised $20.6 billion from 182 funds in 2012, new figures show, with Australian start-ups among those that benefited from the surge in investment cash.
It appears that the ‘lean’ spirit of modern entrepreneurship has finally inspired the Australian venture capital industry to invest in early stage start-ups – a trend is set to increase due to the accelerator boom.
A venture capital firm backed by PayPal co-founder Peter Thiel has teamed up with another investor to pour US$49 million into New Zealand-founded start-up Xero, increasing the total amount raised to date by the cloud-based venture to US$67 million.
One of the big advantages of the increasing ubiquity of technology in start-up businesses is that national borders have become less of a barrier for them.
Seek co-founder Paul Bassat has flagged his intention to do private equity deals in the media and technology sectors, having already set up an early stage investment fund earlier this year.
Honesty is a virtue often underrated by start-ups seeking investment, according to local start-up ScriptRock, after it raised $1.2 million in a round led by vaunted US serial entrepreneur Peter Thiel.
Early Facebook investor Peter Thiel has used the fortune he made from Facebook’s IPO to launch a new $402 million venture capital firm, which is looking globally for potential deals.
Facebook’s much-hyped float saw its shares gain just 0.97% to end at $US38.37, but the IPO looks set to be a boon for start-ups, as the company’s cashed-up founders and early investors look to sink funds into ventures such as Quora and Crowdmob.
Start-up chief executives shouldn’t pay themselves more than $150,000, according to tech veteran Peter Thiel, prompting local businesses to highlight the benefits of being frugal.
Peter Thiel has set up a $40 million venture capital fund in partnership with the New Zealand Venture Investment Fund, which could be open to Australian start-ups prepared to relocate.
Kevin Rose had everything going for him. A strong personal brand and network, $1.7 million in funding and a team of super smart people that could probably build any consumer web/mobile concept you threw at them – and build it well.
Accountancy software company Xero has raised $15 million to fund global growth and has made its first acquisition for the year, snapping up Max Solutions in a deal worth almost $5 million.
This week’s news that Sir Richard Branson has invested in US start-up Square made headlines because, well, it’s Sir Richard Branson.
Facebook founder Mark Zuckerberg has downplayed Silicon Valley’s reputation as a destination for start-ups, describing the Californian region as “a little short-term focused”.
So much for a quiet read – sound-tracked eBooks have arrived on the market. Publishers are releasing versions of classics with orchestral scores and sound effects, such as crunching gravel.
US venture capitalist Peter Thiel has offered $100,000 to 24 young entrepreneurs providing they stay out of college for two years to further their business ideas.