Leveraging the success of that forum, SXSW has created the Startup Village this year.  The 4th floor of the Hilton will be converted to startup mecca.  I thought the “Lean Startup SXSW” track might have gone away in favor of this modified (and bigger billing) approach.  Apparently not so.  Today SXSW.com announces that they’re bringing Lean Startup SXSW back – and some of the chief instigators are involved again – Eric Ries, Dave McClure, Steve Blank, 500 Startups, et al:

The Lean Startup SXSW will take place on Saturday, March 10th from 9:30am – 6:00pm at the Downtown Hilton (across from the Convention Center), and the most up-to-date agenda can be found here.

So, more central location, same Saturday location in the schedule (good call).  The agenda already has enough speakers identified for me to plan my Saturday schedule.

Once again, good evidence of how SXSW adapts and co-opts good ideas from the outside.  Congrats to the organizers, I’m looking forward to it.

Related posts:

1. SXSW 2011 day 2. The Lean Startup Phenomenon
2. Lean Startup SXSW: Introduction
3. What BPM Can Learn from the Lean Startup

Ben Horowitz’ post on Management Debt is a good read, but one thing that separates it from technical debt or process debt is that it seems to my own naivete that it almost never pays to pick up the management debt if you can avoid it, as described by Ben:

Like technical debt, management debt is incurred when you make an expedient, short-term management decision with an expensive, long-term consequence. Also like technical debt, the trade-off sometimes makes sense, but often does not. More importantly, if you incur the management debt without accounting for it, then you will eventually go management bankrupt.

He gives three tough examples – two in a box, overcompensation, and no feedback loop.

In the end, it comes down to leadership even more than management.  In each of his scenarios, good leadership cuts through the problems or is willing to pay the debt now rather than later.

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One Entrepreneur.com, they’ve run an expert from his book “Mark Cuban’s 12 Rules for Startups” that really hits the spot for us at BP3.  A couple of highlights for us:

1. “Don’t start a company unless it’s an obsession and something you love” – well, I’d have softened this a bit- either starting a company, or what the company is focused on, needs to be an obsession and something you love.  You need one or the other. Preferably both, but one or the other are mandatory.  When Lance and I started BP3, we were passionate about BPM and convinced we needed to start a company to achieve our vision around BPM services delivery.  But it started with passion on the subject matter for us. That said, it wasn’t the first time for either of us to venture off on our own and attempt to start something, and we’d both worked for other people’s startups.
2. “If you have an exit strategy, it’s not an obsession.” Very true.  Another bad sign: you have hobbies.  When you’re starting up, if you’re passionate about the startup and the subject matter, where is the time for hobbies? Many founders are like Lance and I – married with kids.  There’s no time for hobbies for the time being.
3. “Hire people who you think will love working there.”  Right.  If they think BPM is boring, we don’t hire them!
4. “Sales Cure All.”  Absolutely.  Almost any problem your company has can be fixed if you sell more (or more profitably) so that you have the funds to invest in fixing the problem.
5. “Know your core competencies and  focus on being great at them.”  - If you’re doing a services startup, this is a must.  Time is really precious, focus is really precious.
6. “An espresso machine?”  I think coffee is critical – for me even if it isn’t for everyone else!  But we also dig the free sodas.  And there’s a deli on the first floor.  And a small gym. It matters.

There’s more in the article, worth reading.

Related posts:

1. Love Mark Suster’s Blog on Crappy Little Services Companies
2. Is BPM Common Sense?
3. Mark Little on jBPM 4 Support

Of course the knee-jerk reaction from most people is that government cannot help in such situations without screwing things up… but then you see things like this:

63 scientists and engineers in 21 teams made 2,000 customer calls in 8 weeks, turning laboratory ideas into formidable startups. 19 of the 21 teams are moving forward in commercializing their technology.

That’s a great result from what they set out to tackle.  And of course there are no guarantees that these ideas will work – odds are most of the 19 proceeding will fail. But if the NSF can get scientists thinking about commercializing the tech they produce, the economy (and the US) will benefit as a result.

And keep in mind Steve Blank’s “Secret history of Silicon Valley”:

The Scientists, the NSF and the teaching team were all going to go where no one had before.

Given that Silicon Valley had started with scientists and engineers not MBA’s, I thought this was a bet worth making.

Pretty cool.  But the crazy thing is that they’re going to keep going – doing cohorts of 25 going forward.  Have to applaud this program for trying to get the most out of government R&D dollars – and hopefully spawning some startups in the process.  Just another interesting test case for the “process” of teaching entrepreneurship (and as he put it, applying the scientific method to developing a business).

Related posts:

1. Steve Blank: Entrepreneurship is an Art not a Job
2. People, Staffing, and Steve Blank’s SuperMac Series
3. Steve Blank SXSWi: New Rules for the New Bubble

• Just today, OtherInbox announced it is selling to ReturnPath for an undisclosed amount.  Based on the smiles from the OtherInbox team, this was a good sale, at a good time, for the team.  Looks like a great fit with the parent company. It marks another success for Joshua Baer, who (along with a few others) has really re-energized the startup scene in Austin.  Interestingly, part of the value ReturnPath perceived in the deal was getting a good footprint in Austin, TX:

“The decision to acquire OtherInbox was based on its technology and its broad customer base, but separately we’ve been talking about where we might expand operations, and Austin was on that list,” Forman said. “The cost of living, the tech scene and the talent pool were very attractive to us. The opportunity to get that as part of the bargain with OtherInbox is awesome.”

• Socialware just landed an investment from the CrunchFund.  I’ve known Chad Bockius since ’99 and I’m impressed at how he’s been able to get visibility for the company with investors outside of Austin (note that Austin Ventures is also an investor in the company, however).
• The Austin office rental market is tightening up.  This trend has been going on for some time.  Locally, in our office building, this is noticed as I have to drive one extra floor up in the parking garage to get parking these days.  There just isn’t any vacancy.  Prices are moving more gradually but they are starting to move.  I saw a lot of growing firms in Austin reach for bigger space in 2011, with designs on growing headcount, and a belief in the stability of their businesses.
• There are IPOs on tap for Austin as well.  Bazaarvoice is the most likely candidate with a strong growth track record and a strong product offering.  Chuy’s, a Tex-Mex restaurant chain based in Austin is also planning to go public to fuel expansion (if a location comes your way, two recommendations:  DO order the “macho burrito”, and DO order the tres leches for dessert – but find a friend to share it with).  3 other companies are up to bat this year, having already filed for an IPO.
• All of this really has me looking forward to the Angelou Economic Forecast.  I took a look back at my notes from last year, and it looks like he pretty well nailed the economic forecast for Austin and Texas.  Not only does AngelouEconomics provide some of the best economic development consulting, it is also a local Austin startup-made-good story itself.  Quite a local success story.

Here’s to 2012!

Related posts:

1. Congratulations to OtherInbox
2. Seven Austin IPOs this Year?
3. Jobs and the Economy

“There isn’t a shortage of developers and designers. There’s a surplus of founders.”

He makes a compelling argument as to the “why” :

The cost of starting a company has collapsed. It’s now just (minimal) salaries. For entrepreneurs, desks are free, hosting is free, marketing is online, and company setup is cheap.

Raising the first $25K for product development is easy – join an incubator. Raising the next $100K is easy – investors are following the incubators with automatic notes. Building a product and launching a product are easy – develop on Open Source Stacks, host on Amazon, launch on Facebook, Android or iOS, get your early traction.*

Getting real traction is hard. Raising millions of dollars is hard. Building a sustainable, long-term company is hard.

Basically, he makes the point that if you’re pre-traction, you have to expect to give up a lot more equity to grow your company than if you’ve already got traction.  In the microcosm of the overall market that I see, in professional services, you could easily argue the surplus of founders argument. If you consider all the individual contractors as “founders” that haven’t gotten traction yet.

We’ve always felt that it was important to hire people who valued being part of a team, and building something bigger than themselves.  Being part of a team enables us all to execute at a higher level for ourselves and our customers. It makes it easier to take a vacation and still sleep well at night.  It makes it easier to get health insurance.  It is a long list of benefits to being part of a firm.  Including, building value that is sustainable even after the point when you’re ready to move on to another phase in your life. For builders, this is an attractive proposition.

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• Formula 1 is back on track.  There’s some debate, locally, about the value this has for Austin’s economy, but it is clearly a net-positive for the next 10 years.  Perhaps not coincidentally, a couple of new hotels are scheduled to be built downtown over the next couple of years.
• The Samsung plant in Austin is producing the A5 chip for Apple.  This was a massive investment from Samsung in local infrastructure ($3.6B).  Those of us following the news in Austin a few years ago probably recall what a close decision this was for Samsung.  It was the biggest investment in chip manufacturing capacity since the heydey of silicon in Austin.  These days, Austin is more of a hotbed of design than manufacturing.    As I understand it, Austin is Samsung’s second largest infrastructure investment – and the largest outside of South Korea.  People often forget how much is manufactured in the US in general – but this kind of high-tech component is particularly unusual to be manufactured onshore.
• Austin is attracting more early stage investments than other parts of Texas. $280M in Austin alone last quarter.  Fifty Austin companies received funding.  This reminds me of the 90′s in Austin.  There have always been complaints about it being much harder to raise money in Austin than in the Valley, and perhaps it is.  But it clearly is easier in Austin than it is in many other parts of the country.
• It looks like the “best performing cities” are moving to Texas…
• The unemployment rate nationally recently dropped to 8.6%.  But in Texas?  8.1% (down .3%).  A half-point better than the country as a whole. Austin, however, is a full point lower still, at 7.1% – 1.5 points lower than the national average.

So it appears to be a good time to be bullish on Austin.  But if you’re just now noticing, you’re late to the party.  All through the downturn, it seemed clear to those of us who live here that Austin was building up, slow and steady, a diverse and growing economy.  I’m looking forward to going to the Angelou Economic Summit in January – there are typically some key insights into how the local economy has been performing, and this year should be particularly interesting.

Related posts:

1. How to Make Austin the Next Silicon Valley?
2. More Money Raised in Austin
3. Austin Entrepreneurship gets another Voice

The Genome Report is 68 pages of great reading.  Lots of details go into the general conclusions that you see in the info graphic.  It is included at the bottom of this post as well.  Interestingly, they go even farther than just producing a report. There’s an a survey you can fill out, the startup compass, which will help determine how your startup compares to other startups they did their research on for the Genome project.  I went partway through this survey myself, but at some point it becomes apparent that it is not really a good match for services businesses, it is really about product businesses.  And that’s fine – it is still far and away the most interesting pattern-matching tool I’ve seen for startups.

And the key finding seems to be exactly what Austin Startup focused on:

One of the big findings amongst the data was that almost 7 out of 10 companies failed due to premature scaling or inconsistency. Peeling back the data, the lessons seem really simple: don’t act like a big company.

Fascinating stuff… or scary stuff, if you’re running against the statistics they’ve collected… The statistics definitely back the idea of the lean startup.

(Side note for BPM practitioners… how can we apply this kind of data and thinking to our own BPM efforts as we grow them from projects to programs and beyond?)

Startup Genome Report 01

Related posts:

1. Startup Austin
2. Lean Startup SXSW: Introduction
3. Austin Chamber of Commerce backing a Startup District

BlackLocus, a technology company founded in 2009 by three Carnegie Mellon University students, is making Austin its headquarters to take advantage of the area’s cloud computing talent pool.

The company, which sells Web software that helps e-commerce companies price their products, raised $2.5 million from Silverton Partners of Austin and DFJ Mercury of Houston in July.

Since then, BlackLocus has built out its senior management team and is working to double its 15-person workforce over the next two quarters.

AustinStartup has a more personal touch to their coverage:

“We are excited to join the high tech community in Austin,” said Rodrigo Carvalho, co-founder and CEO of Black Locus.  “We have been graciously welcomed. The technology companies here and the people behind them want to see others succeed. Everyone has been so helpful. It comes down to the networking, the resources and the top tier talent. Austin was our top pick. “

They also covered a couple of the recent team additions, which happen to include my friend Rob Taylor, previously of TrueCar, and Trebor Carpentor, previously of Lombardi, of all places.  It is a small world.

Related posts:

1. Austin is a Great Place to Start Your Company
2. Austin Business Journal: BP3 is #11 in the Austin Fast 50 Under $10M
3. Good News, Bad News for Austin Employment

At this point Jobs got real close to Ellison and said, “Larry, this is why it’s really important that I’m your friend. You don’t need any more money.”

Ellison agreed with that general sentiment, but thought it was stupid that some “fund manager at Fidelity” would make more money on Apple’s success than he or Jobs.

Jobs responded by saying, “I think if I went back to Apple and didn’t own any of Apple, and you didn’t own any of Apple, I’d have the moral high ground.”

Ellison’s response: “Steve, that’s really expensive real estate, this moral high ground.”

Ellison is so right. That moral high ground is really expensive real estate.  And it is much more expensive real estate for people like Larry and Steve than it has ever been for someone like me.

So the question: is that expensive real estate really worth it?

We know the answer is supposed to be yes, but so often we see people make decisions that yield that moral high ground.  We might face that temptation ourselves. Just remember that holding the moral high ground isn’t something you start doing after you’ve made your millions (because, for most people who do this, there are always more millions to chase… and then billions).  The moral high ground is something you start doing today, if you weren’t doing it yesterday.  It is something you build up piece by piece, day by day, until it has real value. That value is in reputation, trust, personal relationships, business relationships.

In my experience, in the long run, the moral high ground is worth it.  If you stick to it, you’ll find that while some of your friends and colleagues end up with more money in the short term, or even in the long term, you’ll end up with the friends.  The lifelong friends.  And if you’re in Steve’s rarefied air you end up with not only friends and loyal executives, but admirers far and wide.

That moral high ground gives you the moral authority to lead more effectively.  In an information economy, that’s important.  Your talent can walk out the door any time.  And while the economy may not be good, the job market for high tech workers is quite good.

I’ve never regretted holding that expensive real estate.  No question, the really expensive real estate is still worth it. I hope Larry went ahead and bought a few Apple shares while he was at it, though.

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