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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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Small Experiments, Often

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This post first appeared in the WSJ Accelerators series titled The $100,000 Experiment in response to the question “When should you make a substantive change to one or more parts of your business model?”

During the past few years, the word “pivot” has become one of the most overused words with regard to startups. For some, it means a tiny incremental change in the business. For others, it means killing off whatever path you are on and rebooting the business, creating something entirely different. For others, it means everything in between.

A long time ago, I realized that every successful business was a continuous process of small experiments that operated in the context of a long-term vision. When an experiment worked, you did more of it. When it didn’t, you ended it and moved on.

The magnitude of these experiments are dependent on the stage and resources of the company. If you are a three person startup with very little money in the bank, your experiments are tiny ones. As you get bigger and have more success, your experiments can get larger.

I was once on the board of a company that was cash-flow positive early in its life. The entrepreneur decided to raise more money, even though he didn’t need to. I was perplexed and asked him why he was raising the amount of money he had decided to raise. His answer was that when he had no cash in the bank, he was willing to run $1,000 experiments. When the company was cash-flow positive, he was comfortable running $10,000 experiments. He now wanted to feel comfortable running $100,000 experiments, and this financing enabled him to do this. If he ran a $100,000 experiment and it failed, it wouldn’t tank the business.

When an experiment works, do more of it. So the $10,000 experiment that pays for itself in three days by generating $4,000 of gross margin on a daily basis is worth doubling down on and running at the $20,000 level. If this generates $8,000 of gross margin on a daily basis, double down again.

But if the first $10,000 experiment generates nothing, study the data that results from it. Make sure you measure your experiment. Create a hypothesis about what a successful outcome would be. Try to control as many variables as you can while you are testing something new, so you understand what is actually going on. If you find yourself devolving into a qualitative discussion about all elements of the experiment, you won’t learn much.

If your successful experiments are pushing you in a direction that is different from your long-term vision, or from the existing core business you are running, step back and think hard about what you are learning. Are your experiments conclusive enough to cause you to change your strategy? Do they reveal surface problems in your existing business or strong suggestions about better approaches?

If your successful experiments are doing this, then consider a serious shift in your business. But in the absence of this data, be very careful about defaulting into a mode of constantly and aggressively yanking on the steering wheel of your business. Instead, do small experiments, often.

If you want another perspective on this, go read the WSJ Accelerator article by David Cohen (TechStars CEO) titled Use Your Head, But Trust Your Gut.

Give Before You Get

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This first appeared in my LinkedIn Today column titled Give Before You Get. I post unique content on LinkedIn a few times a month (I ultimately reblog it here) but if you want to get it when I first publish it and you are a LinkedIn member, simply follow me on LinkedIn.

As 2013 begins, I encourage you to adopt one of my deeply held beliefs, that of “give before you get.”

I’ve lived my adult working life – first as an entrepreneur, next as an angel investor, and now as a venture capitalist and a writer – using this credo. It’s a core tenant of the Boulder Startup Community, which I discuss extensively in Startup Communities: How To Build an Entrepreneur Ecosystem in Your City. And it’s at the heart of how I live my personal life and is part of the glue that holds together the awesome relationship I have with my wife Amy Batchelor.

In order to give before you get, adopt a philosophy of helping others without an expectation of what you are going to get back. It’s not altruistic – you do expect to get things in return – but you don’t set up the relationship to be a transactional one.

In a business context, my favorite example of this is the difference between a mentor and an advisor. The word “mentor” has become very popular and trendy recently, yet few people really understand what it means, and many mentors are actually advisors. To understand the difference, here’s an example. An advisor says “I’ll help you with your company if you give me 1% of the equity” or “I’d be happy to spend up to a day a month advising you if you give me a retainer of $3,000.” A mentor says, simply, “how can I help?”

As a partner at Foundry Group, I interact with hundreds of entrepreneurs each week. I’m an investor in a few of their companies, but many of the people I intersect with are entrepreneurs whose company I’m not currently invested in. While a few of these companies are potential investments, the vast majority of them are companies I won’t end up being an investor in. Yet I try to be helpful to everyone who crosses my path, even if it’s an answer to a simple question, feedback on their product, or simply a response to their email that what they are working on isn’t something I’d be interested in investing in. Sure, I’m not perfect at this, but the number of entrepreneurs who have helped me in some unexpected way because of my approach to them dwarfs the energy I’ve “given.”

I believe that I’m playing a very long term game in business, and that my actions today will impact me in 20+ years. I feel the same way about my non-work life. My goal is to life as happy an existence on this planet as I can and, by giving before I get, I maximize my chance of this.

As you begin 2013, consider adopting a give before you get approach. It might surprise you what you’ll get!

Angry, Hostile, and Bitter Is Not A Winning Strategy

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We are sandwiched between Thanksgiving and Christmas in a country that is recovering emotionally from two disasters named Sandy – one natural (Hurricane Sandy) and one man-made (Sandy Hook). Our politicians in Washington are playing a zero-sum game around the Fiscal Cliff. The CEO of the NRA just held a press conference and said “we should be able to afford to put a police officer in every school” and he called on Congress “to appropriate whatever is necessary to put armed police officers in every school in this nation.”

I get 500 emails a day – sometimes more. Many of them are from people I don’t know looking for advice and funding – I try to respond to them all. Every single day at least one of them goes off the rails as a result of my simple and direct feedback, often that I’m not interested in what they are doing. Here’s an example from a few minutes ago.

well if you ever come across investors who give a fuck the business plan is there online, recently updated this morning.

I did clicked your link, it’s just internet plays, you can’t swing a cat without hitting an investor investing there. Like I said if that meant anything there would be no talks of a fiscal cliff. We been investing in the internet for decades and worst for it.

If you in a hole you stop digging but if you are an internet investor you invest in an app that digs a bigger hole.

Brad you live in the same country I do, so where ever you are on the socioeconomic ladder, you in the same fucking hole. Except you investing in shovels and telling me you an expert in that. Oy vey.

This was in response to me passing because the business was something outside software / Internet and I stated that it was outside my area of expertise and pointed the person at our themes.

If this was a once in a while thing I wouldn’t call it out. But it happens every single day. I suppose if I ignored all the random emails I got, this wouldn’t happen, but then I’d be “one of those VCs that isn’t responsive.”

Fortunately this is 1 out of 500. The vast majority of stuff I get from people I don’t know is positive. The ad hominem attacks I get – either from people I don’t know or people I try to be responsive are part of the drill. But every time I’m on the receiving end of one, I think to myself “that’s not a winning strategy.”

Everyone is allowed to feel how they want to feel. But recognize that if you are an entrepreneur, trying to create a business, raise money from investors, sell products to customers, and hire employees, that angry, hostile, and bitter is not a winning strategy. And – if it hasn’t been working for you, maybe try something different in 2013.

New Online Courses From Sympoz On Starting A Company

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Along with my partner Jason Mendelson and our friends Brad Bernthal (University of Colorado Law School) and Mike Platt (partner at Cooley LLP) we have launched a series of courses in conjunction with our portfolio company Sympoz on starting a company. This is a bidirectional experiment for us – we are helping Sympoz launch their new set of programs for startups and entrepreneurs while continuing to experiment with new forms of media around education on a topic we know well.

My class, How To Light a Spark & Set Your Startup on Fire, is FREE for a limited time. It’s aimed at someone either thinking about starting a business, or just getting going. It’s a casual format – these should be easy, inspiring lessons – each of the three segments is about 30 minutes long Following is the outline of the content.

  1. Identifying the Right Idea: Is It a Relevant Idea? Does It Solve a Specific Problem? Is It A New Idea? Reduce Unnecessary Complexity! Are Your Great?
  2. Identifying the Right Idea for You: Are You Obsessed? What Do You Know? Are You an Infection Machine? Are You Consumed?
  3. Picking the Right Time to Start: If Not Now, When? Risk vs. Reward. The Idea Is the Easy Part! Resources for Startups.

Jason, BradB, and Mike’s class is a subset of the class that Jason and BradB teach at the CU Boulder Law School which has consistently been one of the most popular law and business school classes around startups, raising money, and venture capital. In the Sympoz course, The Nuts and Bolts of Starting a Company, they build on our book Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist to help you turn your idea into a company, who and how to partner with, how to raise money, and what to do with it when you get it. There’s plenty of practical advice for interacting with VCs during the financing process along with lots of tips about what can kill your startup before you get it off the ground. The four hour course costs $29.99.

Sympoz classes are perfect for busy people; you can watch the professionally produced, HD videos anytime, anywhere on the planet, from any Internet-connected device, as often as you want. The Sympoz learning platform seamlessly blends discussions into the class experience, enabling you to ask questions of, and participate in conversations with your class community, including your instructors.

Join us in class - and give us feedback on what you think about it.

Standing Ovation Before The Speaker Begins

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A few weeks ago at Thinc Iowa I noticed the tradition they had of giving a standing ovation to the speaker when the speaker took the stage. I had never seen that before and thought it was awesome. Speakers also got a standing ovation after their talk. As someone who does a lot of public talks, the first sixty seconds of warming up a room are often awkward (even if well executed) and the standing ovation at the beginning eliminated all of this for me.

I just spent an awesome day at the EO Entrepreneurs Masters Program 20th Anniversary. This program started out as Birthing of Giants 20 years ago and had a profound impact on me when I was 25 years old and running Feld Technologies. We were 12 people at the time and were just at the $1 million annual revenue minimum for applying. It was the first time I had really found my peer group and it helped me understand the value of peers and mentoring at a very young age. It also resulted in me getting involved in Young Entrepreneurs Organization, starting the Boston and Colorado chapters, and serving on the YEO board for several years. As icing on the cake, I met Verne Harnish, who became a good friend, was the only person I knew when Amy and I moved to Boulder, and has continued to have an amazing impact on a huge number of entrepreneurs over the 20 years since I first met him.

I was on a panel with a few of my colleagues from that first Birthing of Giants class that graduated in 1992. The room was full of warmth and there was no awkwardness, plus I was the last person on the panel to talk. Our assignment from Verne was to discuss several profound life moments and try to work the notion of “a billion” into the examples as one of the themes of this year’s class was “a billion.” The audience of 500 was engaged for our entire panel (which is a big deal for anyone who has ever sat on a panel as they can be soul crushing experiences to sit and watch people disconnect in the audience – well – reconnect with their iPhones – while disconnecting from the panel.

We got a standing ovation and the end which caused me to flash back to the Thinc Iowa event and made me wonder why the tradition of giving a standing ovation at the beginning hasn’t taken off. I hope Eric Norlin incorporates it for Defrag and Blur – it so changes the ton of the transition from speaker to speaker in a powerful and positive way.

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