Category - Startups

Startups

1
The Forces Behind a Hungry M&A Market
2
Consolation Prize When You Can’t Raise Venture Capital? Financial Independence
3
Great Movies you Never Knew Were About Entrepreneurs
4
The Longevity of Icons – A Picture is Worth More Than One Word
5
The Differences Among Junior & Senior Developers & Architects
6
Podcast Interview: Bytes Over Bagels

The Forces Behind a Hungry M&A Market

The M&A and IPO markets for VC-backed companies is hot right now, and there is much attention on the huge wins like Whatsapp, King, Grubhub, and many others.

But there is also a lot of activity at the lower end of the market (exits in $12M – $30M range), and I think there are several prime forces behind these exits that we’ve experienced with some of our seed-stage deals that were sold quickly:

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Consolation Prize When You Can’t Raise Venture Capital? Financial Independence

One of the hardest things in the venture business is to turn an entrepreneur down for funding, especially one that has invested time in building a relationship.It’s not fun to be on the receiving end of a “no” either, something we are reminded of when we raise capital for our funds.
Not every company should raise venture capital. Venture capital is expensive money. It comes with high expectations that can only be met with very absurdly rapid growth. And not every company can achieve hyper growth. Another way to look at it is that venture capital funds like betting on companies attacking very large and growing markets. This allows for a very high margin of error but also means that if the company is successful, that the value of the company is unbounded. Given the risk of these companies, a big payoff is the only way to get good expected values (and positive-NPV investment outcomes) from the portfolio.

Great Movies you Never Knew Were About Entrepreneurs

Over the years I have stumbled on some documentary movies that were not overtly about entrepreneurs, but turn out to be. They are various portraits of people who have managed to channel their obsession to accomplish great things. 

  • Man on Wire. this movie is about a French tightrope walker who decided at a young age that he was going to walk on a tightrope between the twin towers in NYC knowing that he would never be given permission. The movie chronicles the multi-year preparation of the mission, including recruiting a team to implement his crazy idea. Want to know the qualities of a good entrepreneur? Watch this movie.
  • Joan Rivers: A Piece of Work. This movie made me realize that Joan Rivers is a true entrepreneur. She has worked harder in her 80s than most people work over their whole career. You also get the sense of her complete devotion to her craft. 
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The Longevity of Icons – A Picture is Worth More Than One Word

One of my biggest issues with iOS7 is that Apple is fairly inconsistent with the use of iconography vs. text. Take the email app, for example. If you swipe left in the listing view, it gives you options using text like “Trash”. But in other instances (like looking at a specific message), there is a trash can icon. Even though it didn’t need to use icons for screen real-estate purposes, iOS6 used icons more often and more consistently. Icons transcend language and makes translating an app into a different language a much easier endeavour. I have always admired LEGO instructions since they never need translation. Why can’t software be the same?
 
Icons are much more powerful than using words. Some people’s associations with icons are so strong, that even after the obsolescence of the item the icon is depicting, the icon persists. What icon do you click to save a document in Word? A diskette. When was the last time you used a 3.5″ floppy disk? My kids, the oldest of whom is 8, all know that’s what you click to save but they have never seen a diskette in their lives (and may never). 

The Differences Among Junior & Senior Developers & Architects

Last week I had a conversation with a founder about hiring development talent. It’s no secret that there is a shortage of software development talent in Chicago and throughout the country. A natural response to the constrained supply of developers is to widen your net, increase compensation and/or lower your standards. None of those are fun but it is a reality in today’s world. 
 
We talked about the pros/cons of hiring junior development talent versus senior development talent. The question posed was is it better to hire two junior developers or one senior developer? It occured to me during the talk that the essence of the difference between junior and senior developers is this: an ability to understand tradeoffs. 

Copyright © 2014 Jason Heltzer