Discussion about Entrepreneur Commons on Social Edge (Skoll Foundation) is now live - please comment

The discussion regarding the Entrepreneur Commons as a new way to fund social entrepreneurs is now live on Social Edge (a program of the Skoll Foundation).


Feel free to go there and add your comments to the discussion.
And feel free to forward to anybody who could be interested :-)

How much of a Buddhist do you have to be to use Twitter?

From what I see, there are 2 ways to look at Twitter:
- an instant messenger for exhibitionists
- a tool to add another layer of randomness into your life

Now who would want to use this? Are you an exhibitionist? some people are... Or are you so bored, stuck and so lazy to work on it that randomness seems to be a nice way out?
Or could there be something else?

One interesting point to me clearly is the issue of randomness. And since I am a fan of management by statistics (and you should too if you have read "Out of the crisis" from Deming ), I am wondering whether it can be the base for a new system.

If you have read "The Secret", you will know that the world is like a big open catalog, and all you have to do is ask and you will get what you want out of it. Start putting yourself in the mood for getting it and it will come. Or if you are a Buddhist, you will know that the reality of life is that it is so complex that the world around you that you believe you are influencing is really out of your control, and therefore the best you can do is work on freeing yourself from the stress of it to be in the "Now" as good and as serene as can be, and good thing will come out of it, if not in this life certainly in the next one or the one after (I apologize for this shortcut description, but this is good enough for the point I am coming up to - if you want to know more, I recommend reading "The Monk and the Philosopher", a great read on the matter)

So now and given that we have no control (and twitter, and the web in general with its information overflow is what we are getting), but that even with things beyond our control we can get what we want, would it be possible that twitter is actually a great tool? Should we embrace chaos? As I am on Twitter (http://twitter.com/mdangear), and knowing I cannot read it all, should I spend the time even looking? What's in for me?

One interesting option is that chaos is the system in itself, and therefore when using Twitter I am just formalizing what happens in the real world anyway, similar to LinkedIn formalizing relationships that were established through networking before, and making an existing mechanism more fluid and more efficient.
If this is the case, all I have to do is follow as many people as possible, and hope that many will follow me. And then I will keep throwing tweet-bottles in the ocean, trusting that the ocean will throw back answers when I need it. Statistically the system could work given enough users... or not ?
How does it work for you?

It's 1995 again

It feels right just like if we were in 1995 at the edge of a new feast: I see web2.0 technologies being adopted by more and more companies, and people are starting to understand that it can bring hyperproductivity to the business. Platform architecture is getting organized, the discussions at Google I/O are a clear indication that there is hope in this area.
If anything the current slowdown creates opportunities: if web2.0 in the enterprise helps productivity, there is a real incentive for companies to seriously look into it.
We may have to wait until after the elections to see the real momentum, but time is ripe for startups now. It should be fun in the coming months...

The reality of fundraising

If you are considering trying to raise funds from investors (angels or professional investors), you should consider the following:

There are 2 types of investors really:

- the ones who know you (friends and family), and

- the ones who do not know you (angels, VCs, etc...)

Getting money from people you know will be the result of the history they have with you. They will be able to trust you as an entrepreneur and trust that if they like the plan you have you will be able to execute on it. I call it "opportunistic fundraising" and this is always worth considering this kind of investment money.

Talking to the other group is doing active selling, except that you are selling to investors instead of selling to customers. There are many issues related to selling to investors: - Investors have no pressing need to buy. They have a limited amount of money to spend, and you are just one among many presenting to them, so while you could be the hot project, the next guy could be that too. And time is on their side, because the more they wait, the more you will need the money and the better the deal potentially. This means your sales cycle is going to be very long, and while you are spending time trying to sell to investors, you are not selling to customers and therefore you are not helping the business itself.

- Investors are not customers, so the story you are building to please them may not be the right story for the market. I see many entrepreneurs try to fit their strategy within the perceived expectation of investors, with buzz words, the hockey stick, the minimum 50M revenue within a few years, and inflated funding requirement to be able to get into the VC framework. So selling to investors sometimes contributes to corrupting the initial plan, which is a good way to get into failure.

- Ultimately, having sold to investors may feel good as it can be perceived as a validation, except that this is not a validation from the market, and therefore does not guarantee success at all. All it does is make it more comfortable for everybody while waiting for more customers. But if the plan you have sold to investors does not work, you will be help responsible for the failure, which mean adjusting the plan later on will be costly to you as the entrepreneur, if not deadly. More difficult than adjusting your plan when you are in charge...

So I believe the best way to raise money is to go to friends and family, and then figure out how you can start generating cash from the little you were able to get there. The good news is that if you look at the top 500 companies of Inc magazine (companies doing between 7x growth for 3 years and 30x growth for 3 years), the average starting capital is 75k, and only 8% ever raised more than 1M. So even with a little you still have a chance to fit within that group of hot companies. This clearly beats have one chance in a 100 to be picked by a VC, only to be told then that you have one chance in 10 to really make it big.

Interesting presentation on Social Web need for normalization

Via my friend's blog: Miguel Membrado at Kimind

Entrepreneur Commons: short video presentation

Vator TV has opened a "Newsroom" where anybody can upload video to discuss about "Trends & News", "Lessons Learned", or present Interviews.
I am exploring this new channel as a way to share some of the experience I have accumulated on entrepreneurship.
Here is a first post explaining what the issue I see with equity at the seed financing stage, and how the Entrepreneur Commons fund can change the current dynamics.

Entrepreneur Commons discussion on OnTheCommons.org

http://onthecommons.org/content.php?id=2082

Testing IntenseDebate

I ran into IntenseDebate.com, which allows me to track comments, including comments I make on other blogs on which IntenseDebate is installed. Pretty cool service...

Entrepreneur Commons discussion on Social Edge

The Entrepreneur Commons will be the subject of a discussion on Social Edge (http://www.socialedge.org/ - a program of the Skoll Foundation) during the week of 7/29. The discussion was announced this week in the Social Edge newsletter as a coming discussion under the title "New Model for Angel Investment". Looking forward to an interesting debate...

How to change the world

Ever wondered what you could do to change the world?
Just decide, say it publicly, and things will start to happen.

This is the theory behind a lot of the recent (and not so recent) ideas that float around, things you can find in the self help book like "A New Earth" from Eckart Tolle, or "The Secret" from Rhonda Byrne, and concepts behind boudhism. The idea is that you have to ask, and start living according to this goal that you are trying to reach, and things will naturally start happening. A lot of this makes sense when you start thinking about it: you are what you do and things happen because of who you are. And it all starts with the story you tell to yourself and to others.

And now there is a chance to experiment with the concept as a way to improve the world we live in:
It is happening at http://www.neo.org : you can change the world by committing to some action in whatever area you choose to focus on. Then you can invite your friends, to let them know about your goal, so that they can be aware of it, and eventually help you achieve it. And then, because all this is happening in public, you will also naturally feel committed to making progress, and this public declaration you have made will help you keep focus during the good days and the bad days along the journey.

This type of website, trying to channel the individual energy into larger bigger world changing projects, is not new. I have seen several instance of similar concept.
But so far nothing that was so simple yet potentially so powerful: it is not voting for an idea somebody else had, or signing a petition, or subscribing to a newsletter, or sponsoring through donation, or pledging time as a volunteer like the many things I have seen before. It is a personal commitment to action. No need to state anything specific if you do not have a plan, but you need to define a mission for yourself, and then see how it feels.

There is an interesting parallel with the dynamics that can be observed in the Open Source movement, where developers commit to work on resolving an issue, and then their work becomes public as part of the open source process. The incentive in that case is to make the best possible work, because it is a showcase for what you can do, and nobody likes to look like a fool in public.

Will it be like Open Source, where a large crowd of remotely connected people with no formal organization (at least not in the sense of an institution that owns the work in itself) can accomplish something very complex and requiring a lot of resources of all kind?

Could this be a recipe for "Open Government"?

Will leaders emerge from this process?

I find the idea interesting, and since I am by nature a naive optimist, I want to believe that it will actually help make a difference.
Give it a try and let me know how it works for you :-)

"Strategy and the Internet" revisited - PPT

"Strategy and the Internet" revisited - Powerpoint Presentation

I have reworked my previous post into a PPT...

View the full size version from the SlideShare website

| View | Upload your own

$20B crumbs

You think $20B is a lot of money. Think again.

$20B is the amount that VCs invest every year.

But where does the money come from?
The reality is that VC funds get their money from Limited Partners, for whom VC investment is considered "alternative investment". This means that it represents a very small fraction of their own portfolio. Something that they do not spend as much of their attention on.

And where does this lead us?
More and more people (including partners in VC funds) agree that something is broken with the VC model. But nobody is doing anything about it:
- The Limited Partners are happy with the people they work with, they have invested their money but even more important they have invested their trust in them. So if anything can be done, they trust that these partners will work on the issue to fix.
- And then the VCs do their best, they apply their expertise, they keep feeding the system with startups that they think will make a difference, and their view of fixing anything is to do more of same except better. Maybe they will widen the scope of their investment, or maybe get into other types of investments so that they can follow the startups throughout their lifecycle. But the one thing they will not do is question too far the system that feeds them, specially when it works good enough that they can make a good living out of it (who would do any different really?).

So in the end, the VC model, however broken people will agree it is, is here to stay for some time, and until somebody decides to deal with the crumbs.

What is interesting is that $20B is also the amount that Angels invest every year of smaller size deal. And again, where does the money come from?
Angel money is the "mad money", the spare change angels invest in startups so that they stay involve with innovation and entrepreneurship (the passion, the energy) while not having to do the hard work. A very precious help for entrepreneurs, but is it money well spent the way it is done today? I have discussed this in a previous post, and entrepreneurs are not getting as much help as they could hope from there either.

This is the challenge for the Entrepreneur Commons (tm), trying to find the Limited Partner or the Foundation that will decide to deal with these $20B crumbs...
If you are or know one of these, please contact me.