State of Startups 2016

First Round Capital just released its State of Startups 2016.  It is chock full of interesting stuff!  No need for me to recap it here.  Just view it for yourself.  Here is the link.  Thanks!

PS:  2 prominent team members at First Round Capital are Cornellians (Bill Trenchard and Howard Morgan)!

Make a Donation to UVC

Warning:  this is a non-profit fund raising email!

I am on the board of Upstate Venture Connect (UVC).   UVC is a non-profit focused on helping build the upstate NY startup community.  Among other things, UVC (i) connects people via events and newsletters, (ii) helps groups create seed/angel funds, which then invest in NYS companies, and (iii) maintains an ecosystem map and calendar.

As you plan your year end giving, please consider UVC.  It is worth the support.  All donations are fully tax deductible.

I have set up a simple way to give via GiveGab (yes, GiveGab is a CVF portfolio company).  Here is the link.   Thanks in advance!

Upstate Venture CEO Survey

I am on the board of a non-profit called Upstate Venture Connect.  Nasir Ali, a good friend of mine, heads the organization.  Here is a guest post from Nasir sharing summary findings from a recently completely survey of upstate NY CEOs.  Enjoy!

Seeds of Growth are All Around Us

This year’s Global Entrepreneurship Week follows an election season where economic anxiety weighed heavily on American voters.  Nearly a decade of research from the Kauffman Foundation and other sources has confirmed that young, high-growth businesses create almost all the net new jobs. While Upstate NY leaders were busy trying to save (or attract) industrial era giants, a new generation of world-beating founders grew up in our midst, then left to launch companies like Android, airbnb, Priceline, Nvidia, etc. in more startup friendly communities.

As the head of Upstate Venture Connect (uvc.org), I am committed to building Upstate NY’s startup ecosystem. I meet incredibly talented and ambitious founders in every part of Upstate, proof that our region continues to produce high growth entrepreneurs. Yet, these emerging companies are still invisible in their home communities and business leaders and policymakers miss their economic impact.

This fall, UVC commissioned Rochester based Center for Governmental Research to conduct the first ever Upstate Venture CEO Survey. We wanted to hear from high growth founders and, in one month, 115 CEOs responded. Half of the companies were less than 6 years old and nearly all (90%) were targeting national/global customers. Below are three key findings from the survey and their implications for UVC and other Upstate NY ecosystem builders.

High growth companies are everywhere and disrupting everything.  The 115 respondents fall into 47 different industry codes. Our future is not going to be a single cluster per city, but a super-regional community that values and encourages out of the box thinking and a fast growth orientation. Emerging founders today often have peers that are a few highway exits away instead of being across the street.

High-paying jobs are available, especially for college graduates. Seventy-five percent of companies paid workers more than $40,000 on average. Forty percent reported an average payroll of more than $75,000/year. Three out of four companies said that 80% of their staff holds college degrees.

The economic impact is significant and growing: Taken together, the firms account for 4,700 direct jobs (70% in NY) and 4,400 additional jobs creating more than $450 million in annual wages for NYS. When asked for five year projections, the CEOs collectively are planning to add 9,600 direct jobs. If these jobs are in NYS, there could be as many as 12,800 new jobs created with $1.4 billion in payroll.

The data clearly shows that the seeds of growth are all around us. That is why UVC is doubling down on its efforts to raise awareness of the intrepid founders creating a path to the future. In the year to come, we will be highlighting the most exciting companies in each Upstate community via our online Ecosystem Map, Events Calendar, UNY Pulse e-newsletter and blog/social media activity. We will also continue to work with leaders in each community to form new angel investment funds, accelerate the growth of existing businesses, and showcase entrepreneurial career opportunities for ambitious and talented college grads.

To see how you can play a role in building Upstate NY’s new economy, please visit http://uvc.org and join our growing network of startup founders and supporters today. The full survey report and summary data can be viewed and downloaded at http://uvc.org/upstate-venture-ceo-report/.

Team, Team, Team

You all likely know that most VCs consider the management team to be the top measure of potential success of the venture.  This post is not about that point, at least not directly.

I want to instead focus on the importance of the entire team (not just management) and the importance of making sure that the team can play together.   I am going to use my past weekend’s soccer experience as an analogy.

I organized and played on an Over 40 soccer team this past weekend in a small tournament in Ithaca.   There was no Over 50 bracket or I would have played in that!   So, there were 4 total teams in the Over 40 bracket.  Two teams from Ithaca (one of which was mine) and then one team from Vermont and one from Binghamton.  You are going to have to trust me that no matter how in good shape you might be, playing 4 soccer games in one weekend when you are over 40 means that you can barely walk come Monday.  Advil turns into candy.

When organizing the team, I managed to get this one guy who is an exceptional player – better than anyone else on the team.   I will call him Jim for purposes of this post.  On Saturday, we tied both of our games (against Vermont and Binghamton).  The catch was that Jim could not play on Sunday.  I knew this going in.  And to make things even more interesting, Vermont outplayed us and we literally tied the score on a questionable call that resulted in us getting a penalty kick, which Jim converted.   Time ran out and we tied 2-2.  Vermont team was pissed, but that is soccer.   We knew that the top 2 teams in the group would play for the championship Sunday afternoon.

Well, you guessed it…..the top 2 teams were mine and Vermont.  Vermont wanted revenge, clearly.  We were without Jim.  I was a bit concerned.  But we ended up playing exceptionally well – better without Jim!  We won 2-0.  It was kind of unbelievable.

Relating back to startups – it is not good to rely on one person.  Not the CEO, not the head of engineering, not the head of sales.  You get the point.  Playing together as a team is the path to the best results.  CEOs who don’t realize this will often get fired or just fail.  I think one of the primary roles of the CEO is to make sure that the team dynamics are as good as possible and get the entire company pulling in the same direction.  This is not to say that there cannot be stars on the team, but it is WAY better if the stars end up rotating around.  The larger the group of people that feel like they contributed to a win, the better off the company will perform.  And the successes will keep coming.

My entire Over 40 soccer team all felt that they contributed – we only had one sub for our last game so that is an understatement.  Team play captured the championship.  Make it happen!

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If it smells bad, it probably is

We all live in a world of conflicts.  I am particularly sensitive about conflicts due to the roles I have at Cayuga Venture Fund and Cornell.  I think that everyone should conduct business in a way that will not provide fodder for an unsavory newspaper article.  All the recent press about Theranos is a great example of this.  Regardless of your views on situations like Theranos, it is likely that some of what you might read in the newspaper is true.

You might call me naive, but my approach to competing accounts of juicy situations is that there is probably some truth in both sides.  This applies to all sorts of situations, be it feuding companies or feuding people.

So, this morning my wife forwarded me an article on Hampton Creek, “Hampton Creek Ran Undercover Project to Buy Up Its Own Vegan Mayo”.  Now, my wife loves Hampton Creek Mayo, but even this one caught her attention enough to forward to me.  Furthermore, the company’s CEO is a Cornellian (yes, I knew him when he was a student).  The article claims that Hampton Creek had a systematic program of having its employees and contractors literally buy lots of product off store shelves thereby inflating velocities (i.e., how fast a store sells a given product typically measured in units/cases per week) and effectively overstating sales.  Hampton Creek has raised millions and millions of dollars from VCs and wealthy investors……and this is not the type of press that any investor wants to see.

Without saying much more, this type of practice would and should produce a media frenzy.  I am picturing myself in the management meeting when this idea first came up. “Hey, let’s buy up lots of product under the guise of quality control.”  Kind of ridiculous.  Ok, not “kind of”, just ridiculous.  Note:  for all I know, the company’s board of directors approved the plan.  I have no idea.

And I have no clue as to the merits of the press’s coverage or the company’s position.  I have only read one article on this.  The lesson though is simple:  if some plan or proposed action leaves a bad taste in your mouth then don’t do it.  Chances are it will back fire.  Said another way, if something smells like rotten mayo, then don’t eat it.

I believe that being transparent and dealing with people who are transparent is a proven road to overall success and achievement.  Sometimes I am overly direct and have been criticized for it.  Yet, trust is a fundamental pillar of relationships.  If you sense any pang of distrust in someone you are dealing with then trust your own instincts.

In the meantime, go buy some mayo!