Paul Wallbank – Brilliant Communications

Tag: startups

  • When should a founder step down from their business?

    When should a founder step down from their business?

    Earlier this month, Sydney video streaming company Viocorp changed leadership with founder Ian Gardiner stepping down as CEO.

    For Gardiner, the decision was tough and in a blog post he described how the company was founded and grew and why it was time to step away. That decision though was not without some pain.

    I have nurtured and loved this little startup as it has grown up like one of my children.

    And like my children it can occasionally be frustrating, difficult and highly erratic and unpredictable. But most of the time it is fantastic and hugely rewarding. And I love it with a passion that is hard to describe.”

    However children one day grow up and leave home. Viocorp is not a start-up any more. It is a serious business with massive potential. And I feel that my skills as a product innovator and fire-starter are not the ones that Viocorp needs for this next stage of our journey.

    I spoke to Ian Gardiner in a noisy Sydney Cafe in February for the Decoding The New Economy YouTube channel shortly after he’d made the decision to step down as CEO where he elaborated on the reasons for the change.

    “I ended up getting further and further away from the stuff I’m actually good at,” he said. “You end up as the founder and entrepreneur in a place that is not good for anyone.”

    “As a result of that the business doesn’t go in the direction you want.”

    The right manager for the job

    Gardiner’s decision illustrates an important truth about business; different management skills are needed at different stages of development.

    A good example of this was with the corporate slashers of the 1980s – CEOs like GE’s Jack Welsh and ‘Chainsaw Jack’ Dunlap here in Australia were the right men to shake moribund organisations. A decade later both were out of favour as the needs of the business world and their companies had moved on.

    Similarly the skills that are needed to found and grow a startup are very different to those required to steer a more mature business. This is why Facebook’s experiment with retaining founder Mark Zuckerberg as CEO of a hundred billion dollar company is so fascinating.

    With Viocorp, Ian Gardiner and his investors have made a very mature decision about where they see the future of the business, as the now retired CEO told me earlier this week: “The punchline is that I’m happy about it, and very excited about the future of Viocorp.

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  • Fred Wilson on the future of Venture Capital

    Fred Wilson on the future of Venture Capital

    Business Insider has a wide ranging  interview with prominent New York VC Fred Wilson on investment, tech and business succession planning.

    I can’t help but think reading it though that Wilson’s career was a product of the times and his successors might find the economic environment very different.

    The current Silicon Valley business model, which Wilson successful applied to the New York business scene, may be just another transition effect that made plenty of money for those involved at the the time but is just an historical oddity in the long run.

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  • Counting the cost of investors

    Counting the cost of investors

    Israeli tech startup Waze was always an interesting business; the idea of combining crowdsourcing and social media to provide traffic reports was fascinating concept that seemed to work well.

    When Google bought the company two years ago, it was seen as one of the success stories for Israel’s vibrant tech startup scene, but a LinkedIn post by Waze’s founder Noam Bardin suggests the acquisition was not what the founders wanted.

    One of Waze’s mistakes was the valuation of its A round which significantly diluted the founders. Perhaps, had we held control of the company, as the Founders of Facebook, Google, Oracle or Microsoft had, Waze might still be an independent company today.

    Not being an independent company is also a weakness for Waze, as Google have shown in the past they are ruthless in shutting down businesses they’ve acquired and there’s no guarantee that Bardin’s creation won’t meet the same fate.

    Google though are not alone in this, Yahoo! is notorious for neglecting companies they’ve acquired and today Microsoft announced it’s closing the Farecast travel price prediction service it bought for $115 million six years ago.

    Oren Etzioni who founded Farecast in 2004 isn’t happy about this according to Geekwire, however that’s the downside of selling your baby to another business – its destiny is now in the buyer’s hands and their vision may not be the same as the founders’.

    A good example of a company controlling its destiny is Atlassian, the Australian founded collaboration tool service, which the Wall Street Journal describes as being “one of the world’s most valuable venture-backed companies.”

    In many respects Atlassian is the opposite of the Silicon Valley business model with an emphasis on engineering and product development over sales and marketing. Atlassian’s founders aren’t focused on hyping the business with the aim of selling to a deep pocketed greater fool.

    For founders, the tricky balance in raising enough money to achieve their objectives while not giving away a controlling interest. Get it wrong and a founder ends up being forced into a course of action they didn’t want to do, as Noam Bardin found.

    Bardin’s post on the Israeli business community and startup scene is an interesting perspective into the strengths and weaknesses of the country’s entrepreneurial culture, much of which would be familiar to many outside of Silicon Valley.

    One big lesson though for founders, Israeli or otherwise, is don’t give away too much equity too early, or the investors make take you to places you didn’t want to got to.

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  • Furthering the startup conceit

    Furthering the startup conceit

    I’ve ranted before about the romantic views corporate executives have about the lives of startup founders.

    “News Corp today has the energy and sensibility of a start-up,” Lachlan is quoted in the company’s media announcement.

    Let’s see how that goes.

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  • Kickstarter and ownership

    Kickstarter and ownership

    The purchase of virtual reality headset designer Oculus by Facebook has raised some interesting questions about crowdfunding sites.

    As the Wall Street Journal reports, many of those who contributed to the Kickstarter campaign that Oculus ran now feel betrayed by the company selling out to the social media giant.

    Founder Palmer Luckey explained the companies sale to the WSJ as a quest for more funds; “a lot of people don’t understand how much money it takes to build things — especially to build hardware.”

    Crowdfunding is tough

    That ties into what founders have told Decoding the New Economy about crowdfunding startups; it’s tough and it easy to underestimate the capital required to launch a project.

    Ninja Blocks’ Daniel Friedman told Decoding the New Economy last February that the main thing the company had learned from its successful Kickstarter campaign is that crowdfunding is a good way to raise funds for specific projects but a lousy way to fund a business.

    Moore’s Cloud wasn’t as successful as Ninja Blocks and in his Decoding the New Economy interview, founder Mark Pesce described how he’d “rather eat bullets” than crowdfund a hardware startup again.

    Startups are always hard, but it’s difficult not see how the high moral purpose often citing from Kickstarter project founders clashes with the ruthless moneymaking of Silicon Valley.

    Discrediting crowdfunding

    The criticism of Oculus also illustrates how crowdfunding lies between traditional investment and sales; those contributing to crowdfunding projects are true believers, not just customers and certainly not investors in a legal sense.

    In recent times Kickstarter has been discouraging hardware startups from using their service; mainly because of the high risk of failure and disaffected contributors. The unhappiness with Oculus vindicates that move.

    Oculus’ sale to Facebook may make many Kickstarter contributors doubly wary of Silicon Valley style startups trying to raise funds through crowdsourcing campaigns.

    Lords of the Digital Manor

    Looking at Oculus’ move, it’s hard not to conclude we’re seeing another cynical version of the Lords of the Digital Manor business model where enthusiasts are exploited by entrepreneurs looking for the big Silicon Valley pay off.

    For Kickstarter and the other crowdfunding platforms, this is a problem as cynicism about the motives of those posting projects is probably a greater risk than the fear of being ripped off.

    It may well be that Oculus marks a big change in the types of projects that get successfully funded, certainly the next hot hardware startup that tries crowdfunding is going to find things much harder.

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