Ideas that stuck with me – 2017

What ideas struck you in 2017? You know, the ones that stayed with you…the ones you were still thinking of when you woke in the morning. Here are a few that stayed with me, in no particular order:

Divorce your good business instincts from your bad ideas. If you’re a good entrepreneur, you can assume your instinct is right 95% of the time, and your ideas might be right 25% of the time.
Mark Pincus – Zynga

I like to think I have good instincts, but often have found it hard to reconcile myself to my occasional business failure. I really like the distinction between instinct and ideas.

A youtube channel is the new paper route
Reed Hastings – Netflix

My friends and I often reminisce about our early jobs and lament the lack of part time and entry level positions available to our teenage kids. I think we often have a biased and limited view of what meaningful early employment looks like.

Be proud of your choices, be grateful for your gifts
Jeff Bezos – Amazon

There is a really unhealthy sense of entitlement that comes with everything the tech culture has achieved. It’s important to have a little humility and perspective when your chance gifts of zip code and IQ have so much to do with success, and increasingly drive income inequality.

You could never convince a monkey to give you a banana by promising him limitless bananas after death in monkey heaven.
Yuval Noah Harari – Author of Sapiens: A Brief History of Humankind

The most impactful idea I’ve been exposed to this year is that we humans are separated from other species primarily by our ability to organize in huge numbers through establishing vast fictions. Religion, governments, and laws that guide commerce are just stories we tell each other and more importantly believe enough to dictate our behavior. Capitalism, socialism, objectivism, libertarianism, and all the religions are just evolving fictions competing in their own process of natural selection.

I’d love to hear what you found impactful over the last crazy year?

Uber-ize My Life

I’m sure you heard someone exclaim last week, “How can Uber is worth $18B?” Those that follow me on Twitter (@chrislogan) know I’m be pretty obsessed with Uber. It’s a great example of distributing William Gibson’s uneven future. It combines many elements into a seamless experience that greatly improves the lives of everyone that uses it.

Uber has a brilliant value proposition – give me a car right now, right here, to go where I need to go.

And it solves so many problems, so gracefully, that most customers forget they were problems: Safety, cleanliness, comfort, promptness, uncertainty of schedule and delay, parking, traffic and directions, uncertainty of fares, integrity of the driver, method of payment.

In solving these problems, Uber improves the quality of life for the customer. But better yet, it also improves the community in which it operates. Among other benefits, it decreases congestion, decreases air pollution, increases tourist revenues, and makes it easier to do business.

It provides all these benefits by leveraging capabilities that have only been available for a few years. It leverages a smart phones many magical abilities: local computing power, high-resolution display, geo-location, cell communication and data networking. It adds massive amounts of cloud data: maps and traffic. And, marries it to powerful applications and integrations: an app that tracks, rates and ranks usage and routes for user accounts and driver accounts. It uses databases of participating vehicles and drivers, and integrates into payment systems that tie to virtually every credit card and financial account on the planet.

This is innovation on par with Amazon’s disruption of retail commerce. Books were only the beginning with Amazon. Similarly, Black car services are only the beginning with Uber. It’s a platform that can support an on demand usage model across dozens of our daily activities. Imagine the next time you needed to …(fill in the blank)… you just tap your phone and it’s made available to you.

In 2004, Amazon was worth $18B. For the last 10 years there’s been a steady chorus of naysayers complaining that there wasn’t enough value, or profit, or growth to justify the price. Amazon today is $150B and still growing at clip that is the envy of all of Wall Street. Uber is the next Amazon.

I look forward to the Uberization of my life. Imagine when healthcare is Uberized. Today, when I am sick and at my least mobile, I have to figure out who to see, make appointments, wait in rooms of sick people, to be shuffled between providers who don’t share my information, take repeated tests and have competing diagnoses and prescriptions. In an Uber health system, the system would know who I was, where I was, what was wrong, route me (or better yet my medications) in the most efficient manner and be sure I was dealing with the right provider for the right things at the right time. Like Uber today the result would improve my life, and it would benefit everyone. The system would cost less, be able to see more people, and have better out comes.

When people complain that we have a device in our hands that gives us access to all information and knowledge…and we use it to watch cats and send selfies, I point to Uber.

Jim Collins on Startup Communities

I watched this very powerful talk between Jim Collins and Brad Feld. It’s well worth the 45 min. Lots of food for thought. Most interesting to me:

  • “Who-s” drive startup communities not initiatives.
  • Return on luck – everyone get luck, good and bad, what is important is what you do with the luck you get.
  • You approach life as either a series of transactions or a series of relationships.
  • Doer-ocracy vs meritocracy – meritocracy maintains the status quo through an establishment evaluating acts, where a doer-ocracy disrupts the status quo through the networked interactions increasing doer nodes.

Startup Phenomenon | Brad Feld talks with Jim Collins from 23rd Studios on Vimeo.

The 5 Traits of a Born Entrepreneur

Like every investor, I think a lot about how to evaluate opportunities. For me, it’s all about the founder. But what makes someone worthy of an investment? Why should I think an individual can succeed? I look for someone who has an abundance of five traits: intelligence, drive, sense of mission, appetite for risk, and optimism.

He has to be wicked smart. Smart enough to see what others miss. Many successful endeavors just need business school smarts: like tracking demographics and identifying when to open a franchise or new small business. Owners of Dry Cleaners for instance have a higher percentage of millionaires than any other business. But starting a high growth tech startup needs additional smarts. An ability to “see around corners” is required for creating something that hasn’t existed before and represents a large new market. It’s not something that is taught. Predicting the future and developing an intuition for “what can be” is a rare intelligence. An innate ability honed over time.

He needs fire in his belly: an irrational drive. Creating something out of nothing is fundamentally an irrational act. If it were rational, like the dry cleaner, an existing business or MBA would already have seen it and done it. Doing something fundamentally different in a way that can make a lot of money, involves extraordinary effort: identifying market opportunities; developing offers; executing a plan; convincing people to help; raising capital; attracting partners; and selling early adopter customers. But most importantly it involves hearing “no” over and over again in all its forms. Continuing the effort requires entrepreneurial drive. Plus, success depends on distinguishing the nay saying from meaningful feedback. Someone who merely thinks he has a good idea isn’t showing the drive. They need to be so obsessed with an idea that they can’t sleep at night. Drive is hearing “no” for the n’th time and still not sleeping at night.

To create something from nothing requires missionary zeal. It requires translating intuition into a positive world changing vision. And the belief that no one else can make it happen. A successful entrepreneur convinces everyone that it’s worth their time and money to join him because it will benefit them and improve the world. Like the Dry Cleaner, there are a lot easier ways to make money than a tech startup. But those on a mission change the world.

It’s cliché that entrepreneurs are risk takers. Making something from nothing involves taking an unquantifiable risk. Successful entrepreneurs thrive on the risk of a startup. Proving the naysayers wrong gratifies them. It seems to them to be riskier not to pursue their venture and be haunted by “what if”. Quantifying and mitigating risk can be learned. But, I’m convinced an appetite for risk is innate.

A startup is built on upside. It has a mission to improve things. Entrepreneurs bet on themselves and bet on the future. They have to be eternal optimists. If they aren’t optimists they may as well go into dry cleaning and hope for spills and stains. The direction for a startup entrepreneur always has to be up and to the right.

A successful entrepreneur needs an abundance of all these traits. Having some but not others can be disastrous. Wicked smart driven people without mission or optimism are competitive assholes who just need to be the smartest in the room. Those without an appetite for risk will never manage to build anything substantial. Mission and optimism without the smarts and drive yields the dreamers that never get anywhere.

These characteristics combine as entrepreneurial passion. Bijan Sabet and Union Square states this well in his litmus test for an investment. “I try to picture myself working at the company. Can I imagine working for the founders every single day.” You know when you see a successful entrepreneur, because you want to be around them. You want to be around the people around them. The combination of these traits is contagious and magnetic. The combination builds successful disruptive companies.

Learning from MJ

This week I stumbled on this quote:

“I’ve missed more than 9000 shots in my career. I’ve lost almost 300 games. 26 times I have been trusted to take the game winning shot and have missed. I’ve failed over and over and over again in my life. And that is why I succeed.” – Michael Jordan

And this video:

Michael Jordan top 50 plays

I’m old enough to remember seeing a good deal of what is in the video live. Truly inspiring.

Taking Stock

I left my operating position in SweetSpot Diabetes Care a few months ago making this a natural time for reflection. I’m struck by how the arc of SweetSpot mirrors that of the Portland tech scene. We sold the company to Dexcom, Inc. (NASDAQ: DXCM) just over a year ago.  Dexcom has continued to invest in Portland, signing a long term lease and tripling the SweetSpot staff.

This is a great outcome for SweetSpot; its employees, investors and shareholders. We were one of several tech companies to sell in 2012, a sign that the Portland tech ecosystem has reached another level of maturity. We now need to move to the next level – a plethora of growth companies, big exits, IPOs, easier access to capital and, most importantly, local venture capital.

I moved to Portland in late 2005, but it wasn’t until 2008 that I stopped joining the flock flying south for weekdays. In 2008, it was clear Portland had the potential for a great Tech startup environment. Most notably we had an enviable influx of over educated young people. Driven by the quality of life, Portland had a burgeoning creative class, increasing ethnic diversity and growth in multiple industry segments. Most of all, Portland was, and still is, the most affordable West Coast metro. But it hadn’t seen significant Tech success since Techtronics spun out the Silicon Forest companies.

Many of us were frustrated with how hard it was to get a Tech company started, let alone built to scale. Everyone seemed to have a side project and limitless enthusiasm. Un-conferences and Legion-of-Tech events filled the calendar, but real startups were rare and funding was non-existant. SweetSpot was Adam Greene’s side project in 2009. When I joined Adam, we converted to a C Corp. But, beyond friends and family, we had to go to the Bay Area for Seed funding. We pushed hard to change things in Portland.

We pressured then Mayor Sam Adams to make money available for startups, an effort that lead to the Portland Seed Fund. Wieden and Kennedy took advantage of the excess tech talent by starting The Portland Incubator Experiment (PIE).  This provided a catalyst for startups, accelerators, incubators, and angel funding.

We now have a dozen active accelerators and incubators. These, plus independent entrepreneurs, are minting scores of viable startups every year. SweetSpot was part of over $400m in tech exits in 2012, up from less than $100m only two years earlier. We sold SweetSpot because Dexcom was a perfect match for us. Partly though, we sold because of the difficulty in raising venture capital.

There has been over $200m in venture capital invested in a half dozen Portland growth companies that are achieving significant scale. Silicon Valley is the source of virtually all this money. These investors (including Foundry, First Round, True, Sequoia, Kleiner Perkins, among others) are confident they can make significant money in Portland.

Now we’re poised to take the ecosystem to the next level. Some of these growth companies will see big exits and perhaps an IPO. It’s getting easier to get venture money, but 503 still doesn’t even show up in the nations top 25 venture capital area codes. Portland is the poster child for the Series A crunch with more than a 100 startups chasing virtually nonexistant early stage VC. Portland Tech companies will create massive amounts of wealth in the next 10 years. It’s an opportunity which needs better access to capital and that should include local money.