reecepacheco

UPDATE: The New York Times is in on the discussion too…

The Cape Wind Project is a proposed wind farm off of Cape Cod, MA that will generate about 75% of the average electricity demand for Cape Cod, Matha’s Vineyard and Nantucket.  It would be the first of its kind.

It is steeped in controversy - as many locals (including renowned politicians who ‘support the environment’) want the benefits of renewable electricity, but they don’t want giant wind turbines ‘in their backyard.’

While I think the project management and some of their choices thus far are not stellar, I am generally for renewable energy and I’d rather lose a little bit of ocean real estate to ensure that my grandkids will have an ocean to swim in years from now.

That being said, I am awed - but not surprised - that the latest ploy to stop Cape Wind is an effort to protect the ocean region on behalf of the Native Americans.  They are, of course, happy to have more protected land under their jurisdiction - maybe they can build a floating casino!

My gripe here, is that Native Americans, allegedly in touch with Mother Earth and all her ailments, are against a renewable energy source.

“The Wampanoag tribes of Aquinnah and Mashpee have said for several years that the Cape Wind project would disturb their spiritual sun greetings and submerged ancestral burying grounds in Nantucket Sound.”

OK… I get it.  Millions of years ago the ocean wasn’t so high and they’ve got some long-lost cousins down there, but are they really laying claim here?

It just doesn’t add up to me.  Someone, somewhere, has to make a sacrifice in order for us to make change in the world for the better.  In this case, it’s going to be the Native Americans, the residents of the Cape & Islands and the few gulls who fly into the turbines… but it’s all for the betterment of our future.  (And we’ve got a gull problem anyway).

Decision looms for Cape Wind; Nantucket Sound eligible for National Historic Register -The Green Blog - A Boston Globe blog on living Green in Boston

Solid, timely advice from @bijan.

@bijan:

This time of year, many venture backed startups have created or are putting together their operating plan for 2010.

Few suggestions for early stage/pre revenue companies:

0. Keep it simple.

1. Start with the ending. What do you want to accomplish by the end of next year and why?

2. Set quarterly objectives

Quarterly objectives help your board identify what’s going well and not well at the company. Are the goals realistic? Are we understaffed? Do we have the right people in the company? Does the company execute well? Is the product on track?

Some early stage companies are hesitant to create quarterly objectives. I know it can be challenging for a few reasons: (a) some entrepreneurs are worried that they will look bad if they miss their objectives and (b) startups have to be flexible at times and priorities may need to change

Here’s how to deal with these concerns. First, take the time to pick your investors wisely. The best ones will help you and your company be successful. The worst investors suffer absentee landlord syndrome which is a nightmare.

It’s also essential to have an open communication style and culture amongst your board members. Don’t wait until the board meeting to propose a big change in the plan or priorities. Early stage investors and board members understand that things will change. That’s part of the deal so don’t sweat it.

3. Operating Budget

For early stage/pre revenue companies, i suggest that you operate the business assuming you are going to miss your 2010 revenue forecast entirely or significantly. You can always spend more if revenue (or user engagement) grows nicely. But cutting is painful at best.

4. Fund raising

If you need to raise additional capital in 2010, assume you will need 4-5 months to raise money. Clearly there are exceptions but for most companies that is the general rule. Get some feedback from your existing investors what they want to see to support the next round.

I like @bijan’s line of thinking here.  Sure, it’s nice to think about the end goal, but you need to get in the game first.  To use another war reference, this one from WWII - ‘We can’t save Paris if we don’t take Normandy first.’

The point is, unless you create something of value, there is no exit.

P.S. - I believe that WWII reference is from Crossing the Chasm.  @JoeYevoli will back me up.

bijan:

When I meet an entrepreneur for the first time I like having a conversation about the idea or see the product (or prototype) in action or even a “chalk talk” for those of us that are more visually inclined.

I’m generally not a fan of slides, especially if it’s an early stage company.

But if the founder wants to use slides then I usually go along. Founders should use whatever tools they feel most comfortable.

The one thing I am allergic to is when a founder includes a slide that says “Exit Strategy” and then has a few bullets that says “IPO or sell company to company a, b or c.”

Oy.

An early stage company should be thinking about how to create something great and how they want to get there. How to build value. Not think about exits.

Now most VCs that I know feel the same way about that dreaded slide. But there is a topic where I’ve seen disagreement amongst successful VCs related to the concept of exits when considering an early stage investment. Some VCs will think about who might be the potential buyers of the company.

They do this analysis upfront because most companies never go public. So they want to know if there could be multiple buyers of a company someday. If there aren’t any potential buyers then they it might impact the VCs decision.

I don’t see the world that way.

If you build a great company then you don’t have to worry about exits because you will have many options (e.g. public, get profitable & stay private, secondary offering, sell the company).

I believe there have been many exits where the actual buyer wouldn’t have been on any list at the time the initial venture investment.

This is just speculation on my part but at the time of the initial investment in the following companies who would have guessed the ultimate buyer:

-Flip Video (Cisco)

-Danger Research (Microsoft)

-Daily Candy (Comcast)

-Sling (Echostar)

The list goes on.

Yes, you can imagine the strategic rationale for those deals. But not on day 1 of the venture investment. The world just moves too fast to try and predict this stuff. And it’s not the most important question anyway.

We would all agree, the real question is whether a particular team & product can make something special.

VentureHacks is a great resource for entrepreneurs, and I check in on their posts often. Recently, VH posted “Steve Jobs does customer development: No new features.”

In the article, VH cites Jobs from a recent interview about the new iPod and the iPod Touch:

Steve Jobs: “Originally, we weren’t exactly sure how to market the Touch. Was it an iPhone without the phone? Was it a pocket computer? What happened was, what customers told us was, they started to see it as a game machine. Because a lot of the games were free on the store. Customers started to tell us, “You don’t know what you’ve got here — it’s a great game machine, with the multitouch screen, the accelerometer, and so on.”

“We started to market it that way, and it just took off. And now what we really see is it’s the lowest-cost way to the App Store, and that’s the big draw. So what we were focused on is just reducing the price to $199. We don’t need to add new stuff — we need to get the price down where everyone can afford it.”

And at the end, VH asked:
Jobs makes a second, subtler, point about customer development in the quote above. Can you find it? The best correct answer gets a shout-out in our next post.

I responded with this answer:

The subtler customer development point from Jobs is “We don’t need to add new stuff.” He realized the feature set is fine - instead of cramming in new features that most users won’t touch, Apple can instead focus on positioning the product via marketing and pricing.

Well, I was right!  In the VH follow-up post, they continue…

In Steve Jobs does customer development, I asked readers to find a customer development lesson in Steve’s interview. There were a lot of good responses that I didn’t anticipate. But Reece came closest to the answer I was looking for:

“The subtler customer development point from Jobs is ‘We don’t need to add new stuff.’ He realized the feature set is fine — instead of cramming in new features that most users won’t touch, Apple can instead focus on positioning the product via marketing and pricing.”

In other words, Apple didn’t add a camera so they could deliver on their positioning (”lowest-cost way to the App Store”), increase market share (”everyone can afford it”), and maybe even increase revenue.

I think Reece made one small, important error; so let’s pick on him for the sake of our education.

“But if we just add feature X”
Reece implies that a camera is a feature “that most users won’t touch.” But adding a camera is probably a good idea. Maybe it’s the key to selling a billion more iPods. Who knows for sure?

Go to any group meeting at any startup and you’ll hear employees arguing for their own camera: “but if we just add feature X we’ll get more customers.” That’s a reasonable hypothesis. More people might buy the product with feature X. Should you build feature X?

Not necessarily. A startup’s cash-on-hand is shrinking every day. You want to add the features that will do the most to stop your losses. You don’t execute every random idea without prioritizing it.

The optimal plan may be to slow down product development, commit more resources to customer development, and find the right positioning for your product. The lesson here:

Once you reach a certain level of product/market fit, the best plan may be to add no new features, focus on positioning, make more money, and move up the startup pyramid — even though the team has a million obviously great ideas for new features that will make a buttload of money. You can improve the business without improving the product.

I responded in my defense, explaining that I didn’t mean the camera is a feature that most users wouldn’t touch; I meant that right now the most important dial to turn is the one that makes the iPod Touch the “lowest cost way to the App-store.”  The camera may be the feature that sends the Touch over the top, but only so much as it pertains to the product’s fit as Apple develops it.

The point is, this is how we @OvertimeMedia develop HomeField.  There are a lot of options available to entrepreneurs in finding the right product/market fit for your product.  In the past year, we made a lot of changes to our feature set, but the most important change has been our price point, and we’re already seeing better adoption and word of mouth referrals because of it.

Finally, thanks to Venture Hacks for the shout out.