I was going to write a long post (and now that I have started writing, I will probably end up being long-winded) about how, as an entrepreneur, you have to cut through the positive feedback to truly get the important data points.

But I kinda covered it. Dontcha love it?

This past week I have had several conversations with various entrepreneurs about how things were going with their startups.

“We got so much great feedback! Everyone loved it!” exclaimed the founder.

“Really? When have you ever had someone tell you to your face that your product sucks?”

“You do it all the time.”

“Yeah, but Im a dick.”

I hate when entrepreneurs go to events where they demo their product. Or even SXSW where they are meeting people in a party situation and showing what they are working on.

Because everyone lies.

Think about it. They are going to either know you for :60 seconds and have no desire for that interaction to include you thinking they are mean, or you will run into them a hundred more times, and who wants to make those interactions uncomfortable?

The world is full of false positivity, especially the supportive kind, that in truth, is just the opposite.

It all started with our moms.

“Don’t say anything if you can’t say something nice.”

Damn it, mom.

I pride myself on being honest. The other day a friend said to me, “Micah, thats a kind thing to say.”

“Its not kind. Its honest. Sometimes, honesty is also kind.”

As an entrepreneur, critically listen to everything that is told to you. Look for commonalities and contradictions as data points. The commonalities show how most people see your product, and the contradictions show potential UI issues.

And, more importantly, don’t listen to people give you design feedback. Its pretty and its ugly are subjective. And if design, at its core, is all about usability, spend effort on understanding people’s ability to do, understand and act and less about how much the like your fonts and color schemes.

Which brings us to investors. Investors, as a rule, hate to say no. And even when they do, its with minimal data points. Treat it as just that. A no. Move on. Seriously. Shush. Don’t say it. No, if X was different, they would have said yes. Whats the X? Don’t know? Move on.

Entrepreneurship is changing how we do business and engage with people, but the fundamental need to be liked hasn’t changed.

Help me be a better entrepreneur, and solve big problems with interesting solutions.

You can keep your I love yous and false positivity.

you didnt just say that did you?

Actually, I did. And I hear it from entrepreneurs at least twice a week.

But its not true.

Over the past couple of weeks, along with reading two great articles on venture: Francisco Dao over on PandoDaily talking about the talent economy and Joe Stump’s great post on whether you should raise money or not, I have had no less than 6 conversations with various entrepreneurs whose companies are in the process of raising money.

Its easy to view VCs as opportunistic, money driven old white men who see the vast amount of product and company ideas coming out of the brains of nubile hackers and hustlers as fertile ground. They trade money for equity. As soon as the going gets tough, they focus on the companies in their portfolio that are doing well, they invest only in companies that are talked about on Techcrunch, blah blah blah.

Is that true? For some, yes. Does it make VCs dicks? no.

Its important that as an entrepreneur if you decide to raise money (and I counsel most founders to not raise money for as long as they can) that you understand the dynamic of how venture works. Francisco says it best:

In Silicon Valley, we take venture capital for granted but few people realize what a fundamental shift it represented in the relationship between capital and labor. Since the dawn of capitalism and the industrial revolution, the balance of power has overwhelmingly favored those who controlled the capital. Labor, and all talent associated with it, was beholden to those who owned the factories. The introduction of venture capital essentially reversed these roles with capital now chasing talent. It is difficult to understate what a dramatic change this was. Instead of capital (the means of production) acquiring talent, Silicon Valley runs on the basis of talent acquiring capital.

As the talent, you hold the power. Initially, the only power the VC wields is saving you from living in a box and stealing wifi from the Starbucks on the corner, and by selling a piece of your business to venture firm, you are required to do only one thing: build your business as fast and as big as you can, so that in some reasonable time frame (say, around 5 years), you can experience a liquidity event that makes the initial investment worthwhile for the VC.

And thats when the perception of the VC as a dick arises. Now, the VC’s job is to get you to not think small. To provide insight, connections, and even direction, to push you to grow your company fast. (This is sometimes the same deal with angels, but most often not).

Now, many VCs reading this post, will start disagreeing with that point, while many entrepreneurs will agree.

Its this fundamental disconnect in perception that is the primary reason for friction between VCs and entrepreneurs, even in a successful business.

Brad Feld, a VC, who’s method I believe in, was quoted in a Boston Globe article about Google Ventures:

“VCs love to talk about the ‘value they add’ while trying to exercise control over companies from the top down…’’

Do I believe that VCs are dicks? That their goals are not in-line with the goals of the founders?

No.

I believe that its imperative for the entrepreneur to understand the dynamics of the VC/CEO relationship and define it early on in the lifecycle of the business. Its your business after all. You hire everyone — including your investors — so have the same high bar for everyone involved in the business.

For young entrepreneurs, there are three distinct moments of joy when starting a company: 1) getting other people to believe in your vision and come work with you; 2) getting people to give you money; 3) your first user.

In each case ill-defined communication interaction will make you believe this:

1) your employees are dicks;

2) your investors are dicks;

3) your users are dicks.

When, in truth, you are the dick.

Understand and own every stage of your business and the people the business engages. It may not guarantee success, but it will remove you as the reason for its failure.

Its in the DNA of the Hustler to work towards getting a ‘yes.’ Its what drives them. Getting users, investors, partners and the like to say yes to their vision and passion is the penultimate effort for a Hustler.

For most, it creates the appearance of a lack of focus (for some) and a complete lack of focus (for others).

This is the primary rub between Hackers and Hustlers and the #1 reason that founders divorce. Hackers demand focus. Hustlers demand ‘yeses,’ which, by definition, require a high level of flexibility which leads to a lack of focus.

I am a Hustler. Yes, a Hustler with a capital H. And because of that, my #1 fault is my apparent inability to realize when I am being unfocused.

I love the word yes. Who doesnt?

Hackers.

Yes means work. Yes means shifting priorities. Yes means roadmap adjustments. Yes means late nights and frustration. Yes means a loss of faith.

I hate the word no. Passionately hate it. It doesn’t compute. How can we become a better company because people are saying no. When I raised my Series A, 37 potential investors said no.

That’s more than enough no to last me a lifetime.

No.

About eight months ago, I realized this very dynamic. To help a Hacker be successful, they need the space to focus on problems and solutions, and to do that, everything that is not core to that mission has to be thrown away.

The Hustler has to learn to say no, and by doing that gives the Hacker the ability to build awesome things, because they arent spending time in meetings or thinking about how to “just make it work,” or make “that deal that is going to make the company” work.

They are just building.

Eight months ago, I started to force myself to say No multiple times per day. I started with my dogs. And, yes, those punks didnt listen, but at least I learned I could say the word and not feel bad.

Then I took our product roadmap, and every time an idea or potential deal was brought to the table, I weighed it against that roadmap, and as a default, I said No.

No. Not right now. And the quality of our product and the speed at which it was developed – and more importantly, the ease at which its selling – has accelerated.

The power of no.

Saying no for the Hustler is a learned skill. It seems like a simple thing, but its really the antithesis of a Hustler’s core value.

Does that mean a Hacker should learn to say yes?

No.

“Hey you! If you are an accredited investor, show you love a member of 500startups by investing a small amount. Trust me even $5 or $10k can make a huge difference and you should do it.”

After reading what Dave has said in person many, many times, I smiled and went back to watching Glee. (Ricky Martin was on! That man has amazing teeth.)

Over the course of the next several hours, there was quite a debate about if it was right to expect mentors to invest in the member companies of the accelerators in which they are mentoring.

I remember a conversation I had with David Cohen of Techstars. He asked me, as a mentor, what did I expect in return. I said, a nice meal where I learned more about how the program was doing, and what the incoming class looked like. Quizzically, he asked if I expected equity in the companies in which I mentored.

“Expect? No. If the founder believes I have value to provide past Techstars, then I am happy to discuss it with them.” I replied.

There is a fine line in the world of accelerators, and part of the problem lies in how people define the roles of folks circling about, and part of the problem lies in the motivations of those same folks.

So, before we dive into that, lets pretend to be legal-like, and lay down some definitions.

Company: a company that is a member of the current class of an accelerator. Specifically, they have given up some amount of equity in return for some amount of cash and access to the program and network provided by the accelerator.

Mentor: a person who provides time, expertise and connections to a Company and is pre-selected and filtered by the accelerator. Generally, there is no remuneration by the accelerator for providing these services to its member Companies.

Advisor: a person who provides, time, expertise and connections to a startup (who may or may not be a Company) and is NOT pre-selected and filtered by the accelerator. Usually there is a form of payment in terms of equity or cash.

Investor: a person or institution that provides cash in return for equity in a startup.

Usually the progression of roles are that someone is a Mentor to a company, then becomes an Advisor or Investor, but that is not required or (usually) expected.

An Investor can (sometimes) serve as an Advisor, but usually once money enters the mix has very different goals than a Mentor and/or Advisor who is not an Investor.

Sigh. See the confusion?

Companies that enter accelerators do it for two reasons: raising money and building a network. Yes, there are immediate benefits to the insane amount of time spent working accelerating your business; and the mentorship is great in terms of getting feedback and direction (although “mentor whiplash” is real, and I have seen many founder get crushed by it.)

Companies select mentors often based on the ability of that mentor to help the startup achieve their goal of raising money or building a network. Therefore, its often easiest if the mentor invests money (creating a positive signal given their closeness to the project), and convinces their network to also invest. (The “hot” startups often don’t need mentors to invest, and often, unfortunately, are dicks about creating space in their rounds or bringing mentors on as advisors because they are drunk with attention.)

Long winded…but that should put us on the same footing.

So, here is the question. Should mentors feel a requirement to invest?

I strongly believe that if people become mentors because they are interested in increasing deal flow and perhaps “getting in early” on a promising Company, then those people are dicks, and should not be part of the accelerator ecosystem as Mentors (as Advisors or Investors, sure…)

If an accelerator is too heavy handed with their expectation that mentors become investors, then, frankly, that accelerator is scummy. At best. (To be fair, this was not what Dave was doing. He was being very passionate about two things he is fanatical about: the companies he invests in, and the importance of angel investing to a startup ecosystem.)

Every time I get asked to be a mentor for a program, they ask if I expect something. I always say the same thing: “I expect the companies that take full advantage of the program to achieve their goals more readily than those that come in with messed up expectations. Im happy if the companies I work with crush it. And if all I get out of that is a “hey dude, thanks” email, Im cool with that.”

I’m also very particular about the startups and founders I get passionate about, because I want them to succeed and will do whatever I can to help that happen. This is not unique to me, in fact, most of the mentors that I meet that completely blow me away have similar goals in mind.

As a mentor should I invest in the companies I mentor?

Yes. I should.

[side note: One shouldn't/can't invest in a ventured backed company -- one that issues shares -- unless you are "accredited," or in rare cases "sophisticated." Accredited means you have a net worth over $1mm and sophisticated is that you don't have a net worth of more than $1mm, but you understand all the risks, etc. If you are a company that is accepting investments from unaccredited, non sophisticated investors, you are creating a potentially huge problem later down the line in due diligence for a merger, acquisition or IPO.]

It is really that simple. Folks that want to become mentors do it because they want to see the companies succeed, and one way to help the company succeed is by investing in them.

What if that amount is nominal? $5k, $10k?

Its still meaningful in both signaling other investors that the company is worthy of larger investment, and shows the founder that you weren’t just spending time out of obligation, but out of excitement and support.

But here is where it gets tricky…investors should not mentor. Mentors should invest. When being a mentor, the values and goals of the mentor mentality should supersede the goals and desires of the investor. Take off your investor hat when determining which companies to work with, and equally important, companies take off your “I need investment” hat when selecting mentors.

One of the things I like about 500startups being a fund and accelerator with a really blurry line between the two is that all the companies that are in the accelerator start on equal footing. Some of the other accelerators that have a fund associated (loosely or otherwise) create a different dynamic because of it. I also like that the “Sith Lord” of 500startups is so passionate about getting all of his companies funding.

What I don’t like is that the basic premise of the accelerator and the mentor/advisor/investor has gotten so screwed up that in the end, the companies are hurt by their inexperience with dealing with each type. It is imperative for the accelerator to educate their companies on the roles and expectations of mentors, advisors and investors, and for mentors to mentor, advisors to advise and investors to invest. The clearer the role definitions the more value the company gets from the accelerator and the startup ecosystem is continually improved.

Wait, no I shouldn’t.

Entrepreneurs are the most hopeful people on the planet. They all start something with the hope that it will be “the next Facebook” or will be as important as Netscape, or maybe will become a billion dollar company with minimal social value like Groupon.

We believe in ourselves so much, that when someone else doesn’t believe in us, we are flabbergasted.

So entrepreneurs apologize. They apologize for broken code; they apologize for bad UI; they apologize for getting funded (or not). They apologize for screwing users (accidentally) and then for being slow to correct it.

Stop apologizing; start being honest.

We color numbers, and listen to investors way too much.

Entrepreneurs are pussies.

Its the same with products and features. Time and time again, I will talk with an entrepreneur about his product, and he will continue to extoll how awesome a feature or product is.

“How many people are using it?”

“Well, we are in beta, so not many, but its going to be huge!”

“You’ve been in beta for a year. How many people are using it?”

“Have you seen how well designed it is! Apple will totally feature our app because of its design!”

“Stop being a pussy. Kill the stupid feature.”

We hang on to things too long, we continue to employ folks that add no value, or worse are roadblocks because we don’t want to fire someone who has done so much for the company.

Entrepreneurs confuse activity for achievement. Working hard is not working well. We drink tons of Red Bull, stay up late, write missives on our blogs (wait…I resemble that remark!) or develop a cool side project that kinda is something that we might use at some point in the future.

Just stop it.

Its your company. Its your time, and future, and blood, sweat and tears. Its time for you, as an entrepreneur to stop apologizing for the short comings of your product (which may appear as shit taking about other startups. Yeah, I know, and you know that your “critique” of other startups is only a defensive mechanism to make you feel better about your companies short comings.)

Own it. Your company is your company. Not your investors, or friends, or users or Techcrunch’s.

Own your decisions. They are your’s to make. Make them and live with the consequences.

Own your future. Find what makes your business tick and focus on that and only that. Everything else is distraction.

And, most importantly, stop being a pussy.

Fuck yes.

(Just making sure…)

The past few weeks have been really interesting at Graphicly. We have achieved product/market fit, our new product launch has been overwhelming, and there is a clear direction and focus in the company. Revenue is doubling week over week, and our internal mantra has gotten equally clear.

“You are either building, selling or leaving.”

So much has be made of “vanity metrics” and our apparent love affair with them. As entrepreneurs, we are told by the media, investors, and other entrepreneurs that whats cool isn’t $1 million but $1 billion. That Instagram is AMAZING and their 15million plus users are the reason why.

How can we not buy into the importance of vanity metrics, when it seems that the ONLY THING THAT PEOPLE CARE ABOUT is vanity metrics?

Fuck it.

For a company to be successful there are literally only two functions the company has to perfect. Building and Selling. Thats it. Metrics and analytics are only the score card, the reporting mechanism to determine if what you are building will sell, and what you are selling is worth building.

Last rant on this point: Find a metric that is truly indicative of what makes your business go. It may be a vanity metric like page views, or something more interesting like reads/user, photo filters per session, or times my mom shares my baby pictures on Facebook. Find it and love it. Throw out all other charts and graphs. Put ONE FUCKING SLIDE in your board deck/presentation and tell your shareholders if that number is going up or down and why. Any other metric just makes it easier for your investors and employees to tell their friends why the company they are a part of is cool in a dumbed down fashion so others can understand. But DONT CARE about those numbers.

Care ONLY about the metric that proves that you are building something worth selling, and selling something worth building.

Now, about sales.

Both Brad and Mark have written about Grinfucking. Its an epidemic. No one wants to be the bad guy. The working stiff dreams of being involved in that super cool startup with the sick lounge. When he gets pitched by that startup founder in the flannel shirt and Warby Parker glasses, Toms shoes and Charity:Water rubber bracelet on a cool new technology and he doesn’t understand it, then he is full of FEAR THAT HE IS AN IDIOT.

Which makes the awful, awful truth that the prospect will never say no.

Your goal as an untested, unknown founder, who has a product to sell that NO ONE CARES about is to find what about your product makes your users lives better. Read that again. Thats not a feature. Thats not a price. Thats a feeling. Better is a feeling. Sell the feeling.

For enterprise its 99% of the time that you are making your prospect look good to his/her boss. Thats it. Focus on that.

For consumer its 99% of the ego or time. People want to be part of something amazing, or want something to help them become amazing. At Graphicly, we consider our “Content Empowerment Platform” an easy button for authors and publishers. They want their stories seen. We make it so. Its amazing and it helps each one of them show the world how amazing they are. It makes their lives better. It makes them happy. (I hope.)

Instagram makes people happy. Its not the number of users, but the amount of engagement that is what makes them awesome.

Stop getting excited by the “maybes” and “lets have another meeting” responses you get to your product. IT MEANS YOUR PRODUCT SUCKS.

Budgets, approvals, etc are all excuses as to why they don’t want to buy, but don’t want to say no.

If it takes more than a simple presentation of your value to a prospect to get to a verbal yes, YOUR PRODUCT SUCKS. (Ok, maybe you SUCK as a salesperson. But sales isn’t hard if you are a founder. You are just making it hard.)

Get to an answer.

Build, Sell or Leave. It IS THAT EASY.

Finally, about revenue.

In todays funding climate, if you are not thinking about your business in terms of speed to self-sustaining revenue, you are a moron. Seed rounds are, and will continue to be, relatively easy to raise (sub $1mm). Series A investors are now looking for real businesses with real potential. Call it a crunch, call it Jennifer, doesn’t FUCKING MATTER if you don’t have a real business, because you will be called DEAD.

Have a real path to revenue. Test that path immediately. Ensure that its a real path, with the real ability to simplify sales, and go that way. You never want to get in the car, see the path you need to travel, press on the gas and find the tank empty without a gas station in sight.

Just Fucking sell. Your company depends on it.

“Excited to turn the Doomsday Clock back a minute?”

The Doomsday Clock was invented in 1947 during the Cold War. Set at seven minutes to midnight, it represented how close the world was to global thermonuclear war.

Seven minutes in 1943. A high of 5 minutes in 1984. A low of 17 minutes in 1991. Currently, as of 2010, we are at 6 minutes.

A cold, numeric, non-emotional reminder that as a world we are always that close to complete and total destruction.

(whew. thats pretty emo.)

So many of the founders that I work with and speak to see the financing event as the penultimate indication of success. Its nothing more than the purchase of a lottery ticket (perhaps with a bit of inside knowledge).

Investment lets us turn that Doomsday Clock back a minute. It gives us the time needed to build a business.

The truth is that all startups are dying the moment they are birthed, and its our responsibility to do whatever in our power we can to keep them alive for just another day.

If I have learned anything in the decades I have been involved with startups is that you should apply a Doomsday Clock to everything. Products, people, partners, business plans. Everything. Nothing should be spared; everything should move that Doomsday Clock back a minute.

Imagine if before you signed a partnership deal; started building a product; hired a person, you simply said: “The Doomsday Clock hits midnight if X happens. As long as this partner, person, product doesn’t do that, its a benefit to the company. Push the minute in the wrong direction, and make a change.

Is that evil? Kinda mean? Maybe, but your world, your startup is hurtling towards total global thermonuclear destruction. Perhaps you should do everything you can to stop that.  Maybe.

Even on the grandest stage, time is the greatest gift you can give.

Six minutes to midnight.

Perhaps you should stop caring about raising money, and find new ways to turn that hand back. Understanding and treating fund raising as a distraction as to what is important is the first step.

Build a sustainable business. Or…

Boom.

Storytelling resonates with me more strongly than any other single sociological/community building concept.

Think about it. The first written communication was a story.

Pictures of deers and hunters with oversized spears (even then, we men exaggerated), running through trees and mountains.

We learn about our world through stories.

Stories are told each night on the news, and people make trillions and trillions of dollars, if the stories are told in just the right way.

I saw the movie Hugo this afternoon, and it was really a story about telling stories. It was about the heartbreak felt by a man, who no longer felt his stories were being heard, yet they were captured in the dreams of a young boy who struggled to find his place in a world that didn’t want him.

Story telling is an art. Its an amazing talent when its coupled with the desire to provide value, real value through the tale itself.

Yet, stories have a dark side, and not just around the campfire, but when we believe that the story is more important than the truth.

The world has been lying to us about what its like to be an entrepreneur.

What do you mean that Zuckerberg and friends worked 24 hours a day for months and months in a smelly small space filled with nothing but nerds? Where was JUSTIN TIMBERLAKE DAMMIT!

We have decoupled the story teller from the story, and apply value to each separately.

I see it happen all the time with entrepreneurs, who believe in “what a founder is” and how “an entrepreneur should act,” that they forget their primary purpose is to build a company and make decisions regardless of the prettiness of the action (or reaction), but based in the righteousness of the conclusion.

Raising money is not the story. It is a step.

Getting press is not the story. It is a step.

You are not the story. You are the shoulders on which your startup should stand for all to see.

Take a moment and think to yourself, what is the story you are telling? What do your employees, investors, customers think of your story?

If your story is not telling the world that your company is 1) adding enormous value; or 2) that it has a deep belief in its mission, then perhaps you are telling the wrong story.

And, most importantly, if you are letting others (including the tech press) dictate what your story should be, you are fucked.

The story of your company should capture the dreams of your users, employees and investors, and I can guarantee that none of them are dreaming about you.

When I was a kid living in Mountain View (532 Thompson Avenue!) a rather large, but old tree fell down in our backyard during a storm.

“Geez, Dad, how are you going to get rid of that tree?”

“Remember that bike you wanted, Micah?”

“Of course”

Ive been wanting a multiple gear bike for months, constantly annoying my parents with pictures, magazine articles, strategic walks through the mall, basically anything I could do to get them to take a gawd damn hint.

“Then you’ll be getting rid of the tree.”

My grandmother was visiting from Albion, Michigan, and I turned to her and used the biggest “woah is me” look I could muster.

“Don’t worry about it, Micah,” she assured me in that special Grandmother way, and headed out of the house with my mom.

A couple of hours later, my grandmother returned, and I bounced up from the couch.

“Hey Grandma!”

“Here, Micah, I got you a gift!”

My excitement quickly waned as she pulled a bow saw out of a bag.

“With this, you will make quick work of that tree.”

With that stupid, gigantic tree sitting between me and the bike that I was destined to ride, I hung my head and walked into the backyard, and for the next three weeks cut branches into three foot logs with a bow saw from Sears. Finally, my dad brought out his chain saw and cut up the rest of the tree (lesson I learned? Those with the right tools for the job like to give those without “life lessons.”)

It was then that I decided that having other people do the work rocked, and in every business I ran afterwards, the first thing I did was hire strategically. (The best example of this? High school when I started a pool cleaning business I hired the star football and baseball players. Lets just say I had a very fine high school experience.)

Then as I started to work at larger companies I started to see a trend. Have a problem? Hire a person. Problem goes away? Fire the person. When I was at Kozmo.com, I hired 5 folks to help run our launch marketing. We killed it. Our output was 50-75x of any other city. Yet, once we smashed our goals, I was asked to lay off those 5 people.

Later, when I explored the idea of buying a bar (Running a neighborhood bar has always been a dream of mine), I was talking to someone who had 5-7 bars in the Denver area.

“People are cheap,” he said. “Food is expensive.” He explained that the number one downfall of a bar was serving food. Food goes bad. You can always hire more people.

Over time, as the businesses I built got bigger, and the need for employees grew, it became clear that it was good business practice to understand that people — “head count,” was to be viewed financially and strategically as a renewable resource.

I hate it.

Yes, finding good employees (read: productive — does culture fit really matter? yes. sort of. Have an amazing engineer that has to poop in his own house, so he won’t travel more than 3 days? Betcha make sure he is always close to his own toilet) is hard. Amazingly hard. So hard that an entire recruiting industry has grown up around solving that problem. Companies like BetterWorks exist to help solve that problem. Its a problem. I get it.

But on a balance sheet, employees are no more or less valuable than the rent you pay, and to truly be an effective leader, you have to understand and accept that.

Its why I hate employees.

Know a very common solution to extending your runway? Lay offs.

Know what most corporations do to protect themselves during bad economic times? Lay offs.

An entire industry has grown up around THAT.

By the way, the department of human resources tells you IN ITS NAME what corporations think of their people.

When we started Graphicly, I swore that we wouldn’t run the company by seeing our employees as human resources. I demanded it of myself.

And we don’t.

Have we fired / laid people off? Yes. Its a function of business optimization, and with startups, its often the by-product of pivoting. (Love to pivot? Better love to fire people too.)

We don’t have some ridiculous program or hidden insight, and, frankly, I don’t know if we even get it right.

What we have instituted is a very healthy sense of respect for and belief in each other, and a very open communication path.

Does that mean that we hang out, high five each other and discuss world affairs? Not every day… :)

It means that we respect that we each have ideas, a life, a work style, a high level of ability and an amazing focus on being productive. It means that we ask each other how things are going…and mean it. We treat our little company as a part of the large community we are fostering, and extend the same respect and open communication to that community.

For Graphicly to succeed, it can’t have employees that are building a company; We are just part of a larger community of artists and storytellers that is built on respect and communication.

I hate employees. I hate that we have to hire people who’s tenure with the company is based on the success and direction of the business. Its antiseptic and the opposite of how we as people build communities.

Graphicly stands on the edge of 2012 looking into a future that is filled with amazing tales spun with breath taking art, and as we help creators and publishers get their stories seen the world becomes just a little bit more rad.

We’re looking to build our team. Shoot me an email if you believe you have the technical, product or design skills to build and design the tools that make that world a reality and want join our effort.

tl;dr: Come build cool shit, own your own success, and make the world rad.

Before I moved back to California a few months back, I saw a therapist once a week for more than 6 years. Its a fascinating process. For me, the process went something like this:

me: So, this happened.
therapist: how did that make you feel?
me: It didn’t. It just happened.

Then I would leave and I would spend days thinking about how I actually felt. How that action/situation truly fit in my life. What I did. What I didn’t do. What happened. Why it happened. What the alternatives were. I would review, reflect, dissect, recombine, and connect. That personal cycle was mirrored professionally, where I explore and try to understand my actions and the actions of others vis-à-vis Graphicly.

For the past several months, I have not had that weekly meeting. Things still happen. I still reflect.

But, I have come to realize that being introspective causes much more difficulty than it solves.

As a person, introspection leads to overanalyzing. It adds complexity to what might be a simple situation. Is it important to understand why things happen? yes. Is it more important to accept that things happen and moving on? yes.

Professionally, introspection can be a catalyst for fear and inaction. The review of each step, forcing a complete understanding of why things happened, creates a culture of inaction. How should startups work?

ceo: So, this happened. Was is good?
team: no
ceo: ok, how do we fix it?
team: this way.
ceo: cool. do it.

I recently read that Dennis and Naveen of Foursquare have a 5 year product roadmap. Is it true? Probably. First time I met Dennis at SXSW (08?), he was talking about foursquare.

Why does that matter? Because there is no need for introspection with that type of vision. There is only a need to ask one question: “Does what we are doing NOW help us get to THEN?”

Introspection is about the past, and while its certainly important to not repeat past mistakes, the best way to ensure that doesn’t happen in hyper-accelerated startupland is to NOT DO THE SAME THING.

Its certainly ironic that I am being introspective about being introspective. But, for me, who spends a lot of time inside my own head, taking time to step outside of my own thoughts and refusing to be pulled back into the often melancholy world of reflection is extremely difficult. For me, 2012 is about action. Its about putting the act of giving more central to my core, rather than have it continue to be a hobby.

Introspection, in being an academic exercise, is the enemy of action.

Be great this year by doing great things. Its simple. No introspection needed.

Are VCs really just parasites that make money off the work of entrepreneurs? Are entrepreneurs all so desperate to take that evil, evil money?

I really struggle with this. Like brain battling for hours. 

Its no secret that I have a real interest in helping startups become successful and that one piece of that success often comes in the form of financing. 

After letting it rattle in my brain for the past day or so, here is what I came up with:

The true measure of the VC/entrepreneur relationship is not the money. Its not about "evil" or "desperate." Its not about being taken advantage of, or who makes the most. 

Yes money is the most obvious and optical representation of the VC/entrepreneur relationship, and there are many, many VCs that see their entrepreneurs simply as investments regardless of the lip service they provide. 

And, yes, almost always the VC makes more on a winning liquidity event than the entrepreneur. (By the way, if you say that's because the VC is taking all the risk…fuck you. The entrepreneur is the one giving up his/her life, health and often sanity to see their dream live. Yes, the VC is taking a risk, but its his fucking job. If he is good at it, he will mitigate the risk appropriately.)

If working with a VC was ONLY about the money, then every entrepreneur that I know would never take the money, unless they desperately needed it.

But, its not about the money. Yes, its about the connections, and yes its about the social capital, and yes, in many ways, its about the ego.

But thats not it either.

Its truly about advocacy. Its about having someone in your corner that cares only about your success. (Let me also be clear here too. When I say VC/Entrepreneur, I am really referring to the CEO/VC, with the expectation that the CEO is the founder. VCs tend to not talk to the whole team, just like CEOs tend to not talk to the whole partnership. This is an important distinction.)

On the entrepreneur side its about having someone that can help provide you data to help make decisions. Big decisions. Company decisions. Vision decisions. 

That's it. Its those two things: advocacy and data.

When I watch the young/first-time VCs its easy to see who will become great.

Its not that they care about entrepreneurship (I would hazard to guess that 90%+ of VCs got into the business because they believe in entrepreneurship), its that they care about entrepreneurs. Their blogs are full of information for entrepreneurs. They are accessible. They spend hours and hours with entrepreneurs — some of which they are not investors. (Its easy to see the ones that arent going to do as well – their blogs are full of bluster and they dont tire of showing how smart they are in their understanding of markets, products or companies.)

I've mentioned these guys before, but as I continue to think about what kind of VC I would be, I keep coming back to them.  Josh Felser of Freestyle Capital and Jeff Clavier of Softtech VC have both passed on me — probably more than once — but I know I could reach out to either for an introduction/conversation/whatever.

I have been really impressed watching Kent Goldman at First Round (passed), Ryan Swagar and Brandon Zeuner at Venture 51 (invested) and Jonathon Triest at Ludlow Ventures (invested) grow as investors over the last year or so. I once spent about 10 hours playing Werewolf with Dave Hornik, of August Capital and while I have never pitched him or had much opportunity to spend time with him, the value he placed on people (intelligence, truth and leadership) tells me that one day I hope to do both.

My current lead investor, Blair Garrou of DFJ Mercury and I talk probably 2-3x a week. Often not about the business, but about being a better CEO and leader. 

An entrepreneur spends an amazing amount of time learning about the market they are entering. They spend hours and hours pouring over metrics.

The best VCs have enough personal experience with enough companies to say "you guys are thinking about doing X. Here is what happened when companies A, B, C and D made the same decision." When I was at Lijit, Brad Feld of Foundry Group talked about the "one key metric" a startup should manage towards, and I watched Todd Vernon make real decisions around that metric and saw the company continue to focus and grow until they recently had a positive exit.

Its impossible to get that type of data from other CEOs, or from the market or Google Analytics.

As a entrepreneur there is nothing more important than advocacy and data. Nothing.

So are VCs evil? Do they make all their money on the backs of desperate entrepreneurs?

I wish it was an easy answer. What I do know, is that for me, the only type of VC I will ever work with is one that understands the value of advocacy and data, and believes its their responsibility to provide both, rather than just write a check.

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• Morgan: Why Entrepreneurs Should Never Meet VC's Unless They're Formally Pitching (askthevc.com)
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Yesterday, or maybe the night before, I read a post about 500startups and their approach to investing. I tweeted that it was both what I loved and disliked about the 500startups process. Dave was quick to ask me to explain further, imploring me to outline what I thought was wrong so they could work on it. (I sent him an email this morning for those keeping track).

On Tuesday, I am heading to Half Moon Bay for DFJ‘s annual CEO Summit. Its a good time, and DFJ and 500startups are as different as two funds could get.

All of this has got me thinking about what a perfect venture firm looked like. If I were to have $100mm in my pocket, and I was to build a firm from the ground up, what would it look like?

Im not sure if I am ready to completely outline that — still thinking about it, and in truth it would be stealing from Foundry Group, Union Square Ventures, First Round, Spark Capital, 500startups, Tim Draper, Chris Sacca and others — but this morning, I read this post on how Jim Harbaugh is putting Alex Smith in the best position to win.

The premise is that by simplifying the playbook, and removing “sight adjustments,” that Alex Smith has gone from a shitty QB to a decent one.

A “sight adjustment” by a receiver refers to the concept that, if a defense blitzes, the quarterback and receiver must both — on the fly and after the snap — recognize it and adjust routes accordingly.

How does that relate to venture capital?

VCs pride themselves on the ability to pattern match and through that bring additional wisdom to the startup process. In many ways, the VC acts as the coach, and the CEO as the QB. If the VC is helping develop the playbook by injecting their knowledge from other deals they have done or have knowledge of, there is an inherent risk that they are helping to create a startup that is built to succeed based on their experience, not on the skills of the CEO.

Most first-time entrepreneurs — like young NFL QBs — dont have the faith in themselves to say to their investors “I got this. Here is what I do best, and this is how we are going to build this company.” Instead, they look to carry out the playbook as dictated by their VCS — “we didnt fund you to have you save it — hire fast — move the company — whatever” and if their skill set doesnt match the “perfect” startup playbook, they are removed or diminished.

The genius of what Jim Harbaugh has done is that he has removed the “complex ballet of synchronized adjustments” and replaced it by “just look[ing] for a different receiver.” Its not simplification, its the reduction of complexity. A company that I am advising, CAGE, said it perfectly in a blog post:

Too often, companies strip out features for the sake of being simple. But that’s not simple, it’s frustrating. So we spent some time carefully finding a balance between useful new features and the simplicity that has made CAGE so easy to adopt. You could say we’ve been on a mission to make every detail perfect and to limit the number of details to perfect (thank you, Jack).

The best VCs are the ones that work to put the CEO in the best position possible to succeed, not because the CEO is the best to work the playbook they devised, but because the playbook is devised to allow the CEO to succeed.

If I were to start a fund today, it would be with the philosophy of removing the need of the CEO to make sight adjustments, and providing a supportive environment to allow the perfection of the simple.

Of course, coaches often say they are “simplifying the playbook,” but Harbaugh has been able to do it coherently and in a way that actually aids his quarterback’s ability to succeed rather than simply removes options.

Related articles

• Why Jim Harbaugh Is Insane to Suggest Alex Smith Is an Elite QB (bleacherreport.com)
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• I’ve Got an Idea for a Startup: NOW WHAT? by Amit Klein (chaitanyapramod.wordpress.com)

First, let me say this: Steve Jobs was a weirdo.

And, thank god for the weirdos.

I went to Monta Loma elementary (as did Steve Jobs) and Critteden Middle (yup, Steve did too). Crittenden was such a craptastic school. They even spelled their own name wrong on our yearbooks in the sixth grade. We had gangs, not the hipper Crips and Bloods, but gangs nonetheless, and we constantly were fighting some other school to right some disrespect. No guns. Mostly chains and boards.

Good times.

There were also breakdancing battles. Boom boxes and cardboard. Call outs and head spins.

I guess we liked the battle.

I remember getting asked out by an eighth grader when I was in the sixth grade. It was for the Sadie Hawkins dance. I ran away. I wanted to fight, not go to some stupid dance, with some stupid girl. (Not my last stupid decision, let me tell you.)

My parents moved away from our house on Thompson Ave in Mountain View after my sixth grade year. We ended up in San Jose. I went to Morrill Middle and later Independence High School.

Fighting was replaced with stealing, and stealing was replaced, luckily, with sports. I lived across from Pool #3 on Capewood (my parents still do), and when I was a freshman I got a job as a lifeguard. I realized that no one was really cleaning the pool, so I asked if I could do it. Told them I had a company. It was easy, my dad was on the board.

I hired the super cool football players and baseball players, and quickly, my high school experience got better. Much better. After all, high school is always better when you hang out with cheerleaders. I played football for a year and wrestled, at least until I destroyed my shoulder, and settled into the swim team.

The swim team was great. We were all weirdos. We had Fish Hill to hang out on, and we had a crazy coach. He used to ask if I wanted to fight him. I usually declined. Coach Rutherford would remind me that he had forgotten more about fighting than I would ever know. Having served in Vietnam, I kinda believed him.

We would spend hours in and out of the pool, and learned quickly that our place on the team came from two places: our ability in the pool, and our ability to help others get better. It was a good lesson.

I loved the solitary nature of swimming. I would swim for hours lost in my own thoughts. Mostly as a challenge, Rutherford had me compete in the 500 free and 100 butterfly in meets. At the time, they were back-to-back and brutal. But, every time I got half way through the 500, I would sing Bon Jovi’s Living on a Prayer.

Still do when I am half way done.

We shaved fish in the back of our heads, and our entire bodies at big meets. The hair on my legs still hasnt grown back completely.

As a swimmer, we didnt get the level of fandom my friends on the football team did. It was ok. We were fans of each other.

It was that lesson that has stuck with me more than anything.

In today’s social technology, it has become deeply clear that this is a weirdo’s world, where the people are driving innovation more rapidly than ever before. We have learned that building companies in a vacuum creates subpar innovation. We celebrate Steve Jobs for his commitment to beauty; Shervin for his drive for access; McClure for his support of shrinking borders; Chris Sacca for his desire for goodness; Brad Feld for his belief in the importance of freedom. We look to our competitors and see friends; we revel in the growth of entrepreneurially dense centers like New York, Boulder, Beijing and Omaha.

It is almost unprecedented how our industry understands that singular success doesnt “win”. We win because it is possible to focus on the importance of true innovation and its collective effect on the world. It is seen in the explosion of open sourced software and companies like Github. We are an offer help first culture, and that mentally is finally beginning to seep into the world at large.

We are the weirdos, and we are making it a weirdo’s world.

Thank god for the weirdos.

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• Letter: Nurturing Future Geniuses (nytimes.com)

During the lunch, where I was introducing her to another entrepreneur I knew, she said, “One of the things that always surprised me about Micah is that for someone with so much passion about what he does, you are totally emotionless about the decision. He made me feel okay with saying no.”

I laughed, and replied that Im not emotional about the decision, because its not personal. Its not me that is being told yes or no, its the deal.

I mean, really, it couldnt be me, right? — Im the most persuasive person in the world!!

Many founders that I know have this belief that if they can get that potential partner, investor, reporter, employee in a room for 15 minutes, that simply by articulating their vision and displaying their passion, the prospect will jump at the opportunity to work with the startup.

And, for early on in the life of your startup, you can do just that. But there comes a moment. A deal. An engineer. An investor that says no because you and your story are just not enough.

Earlier in the week we had a board meeting in Boulder. I was there for all of 17 hours, of which 5 were spent with the board. We chatted about a lot of different subjects, from fund raising to product development to how excited we all were for The Walking Dead show. But one message kept bubbling up. “You are great Micah. Full of passion. Good at articulating it. But, you are past the point where that is enough.”

As I sat at the airport waiting for my flight I spent a lot of time thinking about just that. I have lived and died on my ability to tell a story. Ive never cared about the presentation. The numbers. The spreadsheets. I have cared only about the words and the flow of those words.

But its not enough. I looked at the deals we have lost. I looked at the investors that had passed on Graphicly. I looked at the choices we had made in the product, basically, I looked at everything.

And then I asked myself. If I had any semblance of a presentation and demo — a real presentation, with numbers and charts and shit — would it have made a difference?

Simple answer: yes.

We, as founders and CEOs must understand that people consume information in multiple ways. That most people cant take all the information and passion you are spouting and make decisions on the spot. That most people HAVE TO SELL YOU TO SOMEONE ELSE. And with just a story, it becomes an impossibility — both for potential partners and for your team.

Is the answer to just make awesome PowerPoint slides? Partly, but not completely. To be able to articulate passion; it must permeate the entire organization, so that creating decks is just one part of the solution.

The solution is that the passion should be shared by everyone in your organization, and they understand how to share that passion with the folks outside the organization in a way that makes it easy for the potential partner to sell it to their colleagues.

Here are three specific ways to make that happen:

1) create an org chart / responsibilities chart – If you dont want to build out an organizational chart (which personally if you dont its because you are a pussy. People have primary roles, why shy away from that?) build a responsibilities chart. For us, we have 6 distinct functions (product, technology, publisher/creator relations, operations, business development, other) and each has a list of responsibilities and people attached to it. In some cases there are multiple people attached to a function area — but there are never multiple people attached to a responsibility.

2) presentation (sales/pitch/etc) – build a story deck. Its not a pitch deck – although pieces of it will be. Its not a sales deck – although pieces of it will be. Its a story deck. Tell your story. Tell the story of your technology, your product, your pricing, your team, your financial model, and yes, your vision.

3) Professionalize your partner relationships - If you currently have customers, remember that there is no one better to cultivate for future revenue opportunities. Build strong, proactive, professional relationships with them based on consistency and reliability. Dont be sneaky or secretive. Be open and honest. Be forthright. Treat them as friends not as piggy banks.

Articulating passion (or as I like to call it on the streets, “Spitting Game”) comes easy for many CEO/Founders. But, like all skills, there comes a time when you cant just rely on your go to move to score.  Even Michael Jordan had to learn a fade away jump shot.

Related articles

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For me, the conversation was a similar one that has been going on for a couple of months now. Are valuations out of wack? There are rumors of early stage companies with limited traction, unproven teams and questionable markets asking (and getting) $8 – $10mm pre’s. Is it true? Probably.

Where the conversation got interesting was not around the rising or falling valuations, but the apparent belief that there are more “janky shit” (you can always tell a kid from the ’80s because he uses janky) out there, and the real difficulty isnt necessarily dealing with over-inflated premoney valuations, but finding the diamonds in the janky shit.

Here is my take on valuations. When we raised the first round at Graphicly, or as Mark Suster likes to call it a “cracker jack comic company” (what? its like movie reviews for posters, just take the good parts! — and before you go down that path, Mark is a good friend and was just giving me a hard time),  I actually asked for a lower valuation than what was originally offered.

Was I a moron?

Here is what most first-time entrepreneurs are taught:

1) Take the money. As much as you can.

2) Give away the least amount of your company as possible.

What a conundrum! On one hand, In order to raise a healthy chunk, investors have to believe that my company is worth it (even if I do a convertible note, there will be discussion around the cap — which is still based on what the investors believe your company is worth today). But, investors want a lower pre- in order to own more of the company and protect themselves in later rounds.

As a young entrepreneur what do I do? Raise my valuation as high as I can.

And recently, investors seemed to be price insensitive, so they invested at these high valuations.

But here is where it can get sticky.

Now, you got a $8mm pre and raised $1mm. sweet. You burn through that in 12 – 18 months, so 9 months out, you decide to go back out.

With a post of $9mm, you have to ask for $12mm, maybe $15mm on the low side for your Series A pre-money. After all, you want to raise ~$3mm, and still own as much of the company as possible.

Thats a tough sell. You have to have significant traction. You have to have built a real product. You have created a world that just is generally more difficult for you and your story.

And for your Series B? You want to raise $10mm? Your post on the Series A is $18mm, so now you want to have a pre-money of $25-$30mm minimum. Probably higher.

Thats just rough. Series B is the hardest round to raise. Dont make it harder on yourself.

Starting high is great on paper, but unless your company is a rocket ship and really just explodes, you are shooting yourself in the foot by getting a high valuation on your seed investment. You are creating expectations that potentially could be unrealistic. It also, by the way, usually causes the angels that came on in the seed round to be completely priced out of any subsequent round. Not that many angels will reup, but you are wiping out a good chunk of investors.

Valuations arent like batting averages in baseball. The quality of your startup is not indicative of the valuation you got. You dont get a baseball card with your logo on the front, and your pre-money on the back when the first money is wired into your account.

Build a business for the long haul. Build it to be able to weather storms, and uncertain funding environments. Focus on building value.

Yes companies A, B and C got $8mm pre-money valuations after going through accelerator X. Fuck them. Set your value against WHAT YOUR VALUE IS not against company A, B, C. Its not a competition.

Yes companies X, Y, Z got billion dollar valuations. You arent company X, Y or Z, and will probably never be them. Money will not fall out of the sky and into your bank account. Focus on value. Build for the long-term.

There will always be debates about whether the investment market is outta wack (I honestly think it is. I think you will see valuations drop as investors stop “spraying and praying” as much as they have in the past. The bigger trend is seeing money leave the US and get invested oversees.)

Set your valuation to attract real investors that can be amazingly helpful. (If I could have lowered my valuation and gotten Jeff Clavier into Graphicly, I would have done it without blinking. Unfortunately, I couldnt convince him of our future regardless of our pre-money), and most importantly,

build real value.

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