What makes a good startup?

19 05 2012

After my stint on Radio New Zealand Saturday Morning with Kim Hill this morning, I was asked to provide a list of the attributes of what I consider to be a good startup.

You can listen to or download the audio:

Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.

Here’s my shopping list of criteria for good startups:

1.  Market
a)   Global
b)   Clearly articulated market problem description
c)   Significant addressable market size
d)   Clearly identified market need (for the problem that is being solved)

2.  Team
a)  Has both sales and engineering
b)  Domain experience
c)  Clean capital structure (if any)
d)  Track record that demonstrates achievement and integrity
e)  Vision
f)  Passion
g)  2-3 People
h)  Pragmatic approach
i)   Articulate
j)   Coachable

3.  Product
a)   Web and/or mobile based
b)   Scalable
c)   Addresses significant pain
d)   Disruptive
e)   Simple
f)   Feeble competition
g)  Sound business model
h)  Capable of generating revenue quickly
i)   Can exploit network effect
j)   Novel and/or Freedom to Operate

Thanks to the RNZ team for a great on-air experience!

Keen to take your own idea for a spin?  Come along to Startup Weekend in Auckland (15-17 June) or Wellington (27-29 July) – I’ll be there facilitating, and you’ll meet some great people to collaborate with!




My advice to budding entrepreneurs

24 10 2010

A couple of months ago, the great people from MyFirstCompany.co.nz interviewed me to collect my sage advice for budding entrepreneurs.

Here is what I told them:

What is WebFund all about?


What’s the difference between a good idea and a good business idea?


What should I think about before approaching an investor?


How important is scalability for a business idea?


Are investors looking for individuals or teams?


You really need a team around you, and there’s no shame in sales!


How do I find the right business partners?


Start small, and talk to potential investors as early as possible.


What are investors looking for?


How do I test out my business idea? What if I fail?




Team MusicHy.pe

11 02 2010

Left to right: Thomas Schickedanz, Hannah Schickedanz, Mike Penhall, Dave Moskovitz, Nick Rowney, Stefan Korn, Jeff Mitchell, Annabel Youens




Recycled wisdom – on empathy and success in business

9 09 2009

In my work at WebFund, we regularly have young entrepreneurs approach us with interesting ideas, but a distinct lack of maturity.  Vivek Wadhwa recenty wrote on TechCrunch that “when it comes to startups, old guys rule”.

Ill be 50 next year, and it’s getting ever harder to argue that I’m not becoming an old guy of some description.  No matter.  George Bernard Shaw observed that youth is wasted on the young, and there’s no doubt he was already an old guy by that stage.

On my last day of employment as Technical Director at The Web Limited in 2002, I gathered the team and tried to impart what I’d learned about business in the previous seven years.

I thought it was worth revisiting in light of Wadhwa’s old guy remark, in the hope that my comments, though somewhat didactic, might be able to confer some vicarious wisdom and maturity on the reader.

Empathy is the key to success. It took me a very long time in life to realise that everything we do is all about relationships, and a relationship without empathy is hollow… While this is especially true in business, it is also true in every other sphere. As an example, if you’re a programmer, you’re all the more powerful if you can empathise with your client, with the programmer who wrote the method you’re trying to get to work properly, with future programmers who will have to maintain your code, with the project manager, and a really good programmer will be able to empathise with the code itself (“If I were the regular expression parser, how would I want to handle this string?”)

Do not fear the unknown. Pull yourself out of your comfort zone. Set ridiculous goals for yourself, and visualise the future in your ideal state – you’ll be surprised what you can actually accomplish.

Nurture your own weird ideas. They could be important or even valuable next year. In the words of Hunter Thompson, “When the going gets weird, the weird turn pro.”

Be broadminded. Listen to everyone, try to empathise with them, and understand their point of view. Do not be too quick to judge, for some of the best ideas are the weirdest at first glance.

Keep it simple. You should be able to explain anything in a couple of sentences, or draw the diagram on an A4 page. Things that are too complicated tend to break and are difficult to maintain. A Ferrari breaks down more often, and is much more expensive to fix than a skateboard. Don’t confuse being complex with being complicated.

Make yourself understood. When you’re writing code, anyone, even a non-programmer, should be able to understand what it does, and how it does it, at some level. The key to this is good structure, descriptive naming, and the right comments. 99.9% of the time, maintainability is much more important than performance. If it’s getting too complicated, refactor it. If it’s too complex, rethink your approach.

Make time for distractions. Many of the world’s great discoveries, including America, X-rays, penicillin and post-it notes, were serendipitous in their nature – they happened unexpectedly as a by-product of other, less successful undertakings. In the words of Louis Pasteur, “Chance favours the prepared mind”. If you don’t let yourself be distracted occasionally, you’ll miss out on the biggest opportunities.

Constantly sniff for the winds of change, for if you’re unprepared, they can come through like a southerly. Don’t be complacent, or you’ll be consigned to the scrap heap of people who got too comfortable and woke up one morning to find themselves unemployable – I have a number of colleagues from my mainframe days who suffered this fate. Ask yourself: will my plan withstand the next set of changes? Expect things to be totally different one day, which will likely arrive sooner than you think.

Plan for contingencies. There is always a Plan B (sorry, Andy Grove!) In the rules of the universe, the default Plan B is abject failure. Make sure you have something slightly more explicit and favourable as your plan B.

Most truly great things require a lot of effort, often in unexpected ways. No pain, no gain. You have to give a little to get a little. The corollary to this is that you have to give a lot to get a lot. Be generous. Generosity is in your enlightened self-interest.

It is certainly true that 95% of the effort goes into 5% of the outcome, but it’s the last 5% – good or bad – that they’ll remember you for. Prioritise your efforts accordingly. It may be built like a brick shithouse, but if you didn’t have time to put on the final coat of paint, they will be left with a lingering dissatisfaction.

Know when to yelp for help – your team is right here and right behind you, and they empathise with you. They will help you, and they will expect the same from you. If you don’t understand something the first time, ask patiently for it to be explained again.

Keep positive – things are seldom as bad as they seem. But when they get to be as bad as they seem, they’ll probably become worse than they seem. Even then, in the words of Charles Beard, “When it gets dark enough, you can see the stars.” These moments offer unparalleled opportunity for personal growth.

Always attribute credit where credit is due. It costs nothing. Few things more distasteful than people masquerading other people’s ideas as their own. In academia, plagiarism is the worst sin.

I recommend parenting as excellent training for business. You learn how to motivate the unwilling, the importance of unconditional love, multitasking, balancing conflicting goals, teamwork, leadership, how to be comfortable with your own hypocrisies … and the list goes on. My brief career as a Playcentre dad taught me more than I’ll ever want to know about the politics of small organisations run by people with too much time on their hands.