This is the third year for Demo Day, and the third year I was fortunate enough to be in Austin and able to take time out from BPM to attend.? Josh Baer's signature event has been refined each year.? Two keynotes book-ended the startup pitches - Bob Metcalfe, now of UT; and Brian Sharples, CEO of HomeAway.
Bob's keynote was an exercise in entertainment and information.? He cautioned the audience not to buy into the two extremes of startup mythos: Luck on one extreme, and virtue on the other.? The truth is that you have to be ready - ready to deal with uncertainty that will be there, and ready to take advantage of opportunities that present themselves (and often, later, look like luck).
Bob refers to the complex "ecosystem" around startups as an ecology - because a system sounds like something designed by man.? However, an ecology is something that comes into being, unplanned, through the independent actions of a larger number of people.
A few minutes into his talk, he dedicated it to the consummate entrepreneur - Steve Jobs - and followed up with an interesting story about how he turned down a job at Apple... only to have Steve Jobs help him make the connections he needed to make to get 3com off the ground!
Bob's list of five things you have to be good at to be successful at scaling your startup:
- Energy - keeping healthy: "Don't buy into the bullsh** that you need to kill yourself.? Figure out when you need to get up and go to bed 8 hours before that!"
- Writing: you're going to need to do a lot of this.
- Speaking:? you're going to need to persuade others to your cause.? You need to give a lot of talks to practice and hone your skills.
- Selling:? you may hate the idea of selling, but you have to understand it and be good at it for your company to succeed.
- Planning:? you need to have a plan.? You can't change your plan or pivot if you didn't have a plan in the first place.
Bob's story was that after doing an inventory of Austin's startup ecosystem, he saw a need to improve the University of Texas' association with startups.? As he pointed out, surprisingly, Austin has a better reputation for startups and innovation than UT itself.? Bob is energizing professors at UT about startups, but his new class, 1 semester startup, is also inspiring students.
It was a compelling kick-off to the morning.
The five companies presenting gave some great pitches.? The hard work preparing these presentations really paid off.? Stacey Higganbotham on GigaOm had great coverage of the 5 startups:
I was struck by how product-oriented these startups were, and how all of them had paying customers. I also thought these companies didn?t really spend a lot of time on their ?big vision? as some Bay Area startups tend to do. Maybe it?s Austin?s general orientation toward the enterprise market, where products talk, and big vision may get you financing but few customers, or perhaps it?s just the way these startups think.
The article goes into detail about each startup as well.? My personal favorite presentation was HelpJuice's Emril Hajric - his style was perfect for a technical founder presentation - honest and rough around the edges.? But he also had a great value pitch to make for his product, which helps spruce up FAQ's and customer service. Another startup, SwimTopia, was anchored by the former CTO of Frog Design - Mason Hale.? The maturity of the companies presenting was impressive.
Even BusinessInsider had modest coverage of the event, but the local journalists did a more thorough job of it.? Lori Hawkins of the Statesman also covered the event:
The companies made eight-minute presentations to a crowd of 300 people ? mostly entrepreneurs and investors ? at the University of Texas AT&T Executive Education and Conference Center. Later in the day, another 15 Austin startups made three-minute pitches to the audience.
Brian Sharples, CEO of HomeAway
After the pitches, Brian Sharples of HomeAway gave another keynote.? He basically explained how HomeAway happened - with some background about his life experiences that allowed him to seize the opportunities as they arose, and to do the risk planning to avoid some previous failures. He had some interesting advice that I jotted down as notes, paraphrasing:
- Look intensely at competition. Be curious. Call anyone you can find to learn about the business you're entering. Try to figure out who has tried this and failed. And figure out why?
- Business is about game theory. You have to plan for the fact that those other companies will react. it is such a fast follow environment. Groupon was a great example of the fast followers being really crazy right now. Airbnb is another good example.? (In my opinion, one of the really smart things HomeAway did was raise a truckload of money, early, which discouraged some of the fast followers when the recession was in full swing).
- Hard to get a big team, so make it a good one.? "The team at HomeAway saved the company."
- Have a profit model. The figure it out later model- "It ain't reality". You have to have a business that makes money. HomeAway has been 30% free cash flow since early on (I think I'm quoting that right).
- Really want to pick investors rather than the other way around - and profit or free cash flow is what allows you to do that.
- Do what it takes to get there- to get the funding you need. Don't hoard equity if it costs you the capital you need to execute your strategy.
- Shhhhhh! Everyone likes press and PR, but keep quiet until you're ready for competition.? If you're a PR machine but you're not ready to beat the competition, you're just inviting competition.? (Note: this is not the same as stealth mode).
It was a really entertaining talk - but you had to pay attention to pick out the bits you could use to improve your own startup.
The afternoon fast-pitches were actually pretty good.? I've seen these kinds of pitches before and been disappointed - these were actually quite good, and entertaining.? A couple of these fast-pitches clearly have real traction and real customers already. I didn't take notes during this section, however, I just enjoyed listening.
John Price, CEO of Vast, gave a pitch for Austin startups recruiting more people to the Austin area - which ties into previous posts on this blog-? as well as for Startup America.? I loved his comment that Austin startups need to get better at using one of our "unfair advantages" - SXSW-interactive.? 22,000 badge holders hit the conference in 2011, and it is a once-a-year opportunity to recruit talent to Austin.? Or, from the Austin Chamber of Commerce point of view, to recruit startups to Austin.? We could write an entire blog post just about that.? I'll just take a moment to hit on a theme I'm stuck on:? it is time for software companies to invest in people.? That means challenging them with opportunities they're not prepared for - that stretch them.? If they don't have the opportunity to fail, it isn't an opportunity at all.? But it also means investing in their success - with your time, energy, knowledge, and experience.
The event wrapped up with networking and a tour of local Austin startups (The ATX Startup Crawl).?
The biggest takeaway for me is that Josh and the other contributors and participants in Capital Factory are on their way to building on the virtuous cycle in Austin.? I saw a lot of startup CEOs and entrepreneurs in attendance, as well as investors.? Not everyone at the event has "skin in the game" but they're still engaged, interested, offering free advice, and making connections.? I definitely left full of positive energy for Austin and for our mission at BP3.
My thanks to everyone involved in Capital Factory for a great contribution to Austin - and thanks to Red Velvet Events for putting on a great event!