David Cohen

Since falling in love with Inbox Zero and really Getting Things Done lately while working only four hours a week (hahahaha! - not!), I find that I now have another new methodology for taking back my work time. I’m calling it Calendar Zero.

I’ve picked one and a half days a week and declared them meeting free zones. One is a full day and the other is a morning. I’m not going to schedule meetings during those times unless it’s one I really need to do and the only possibility is to do it on that day. For example, if someone is in town just for one day and we really need to meet, then we will.

I found that I wasn’t getting enough dedicated blocks of time to myself to process my to do list. I was recently offered a “secret hiding spot” to work from once in a while and have started to take advantage of it. This is a place where I can be productive away from my normal “office life”. But it’s not at home - I’ve learned from experience that I don’t get as much done at home. Too many distractions.

Today is my first full day of Calendar Zero. I’ll let you know how it’s going once I get some more experience.

Tomorrow is a more typical day. I have 8 meetings planned. I’ll be meeting 3 new people, having a second meeting with one more person, helping a college group led by someone I know, and getting updates or doing business development with the balance. Total planned meeting time is over six hours of my day. This is not at all unusual. So I’m fighting back against my calendar. I’ll now fill up some days efficiently like this, using the old trick of scheduling only half hour meetings unless absolutely necessary. I’ll jam email and to do list processing into the cracks and crevices of those days. But then I’ll block off my Calendar Zero time for my own focused time to crank through my to do list and work on strategic stuff.

I’m already getting that nice Inbox Zero “ahhhhh” feeling again.

David Cohen

Here’s the second of my series of posts on my top twelve startup tips from TechStars this summer. It’s about finding and engaging great mentors.

Most first-time entrepreneurs that I know only seek out mentors for their companies when they decide they want funding. They do it because they have to, as part of the process of attempting to raise money. To further the process, they begin to listen to and react to the thoughts of investors as a way of gaining favor. I think that this is very much the wrong way to think about mentorship.

Great mentors need to be weaved into the fabric of any startup from the beginning. Most people already have one or two mentors in their lives. Many don’t even know who their mentors are or have been until they reflect upon this for a moment. Often, I think that’s a good sign and indicates a positive mentoring relationship. For many, it’s their fathers, their best friends, a past boss, or perhaps a college professor. Stop for a moment and ponder the impact that these people have had on your life so far.

You need that same kind of impact on your business. It should be obvious.

How do you find potentially great mentors?

First, you make it a priority. Think about your own network. Who has vastly more life or startup experience than you do? Start there.

If you need to extend the net, the next step is to work your network. Start learning about local companies that you respect and consider seeking out their founders or key executives. A neat way of approaching them initially is to explain that you admire the business that they started, and would love to hear the story of how it was built in hopes of making your own startup successful. Do your research - know the basics of the story and prepare some questions in advance. Often founders of successful companies are actively engaged in the startup community anyway, and love thinking about other startups and meeting energetic founders that remind them of a younger version of themselves. Don’t just pick a mentor because of how they look on paper. Read their blog if they have one, and study the things they’ve done in their lives and in their careers. A great mentor for you is not necessarily a great mentor for everyone.

What makes a great mentor?

Ultimately, great mentors see something in you, and help you reach your potential. They don’t always do this with direct advice. Often, they do it with introductions, resources, or through the process of thinking out loud with you. Your best mentors will become friends and permanent fixtures in your life.

Approaching potential mentors

People make the natural but routinely incorrect assumption that great mentors would simply be too busy to help them. Ask anyone who has sought meetings with successful entrepreneurs in Colorado - I think you’ll find that when you approach people in our community you’ll find an amazing number of open doors. Most people just never knock on them out of fear of rejection. This is very silly. Imagine how good it must feel to be asked for advice from a smart, dedicated, and motivated founder like you. Keep in mind that you have something to give back too.

Engaging potential mentors

There is one final trick to getting the most from relationships with mentors. It’s not enough to find great mentors, ask a few questions, and move on. You have to engage them. By definition, they’re not a mentor until they’re actively engaged.

This sounds simple, but almost everyone screws it up. Engagement is not accomplishing by sending an occasional email updating the person on what you’re doing or the major news every once in a while. It’s not built by offering to take someone to lunch. It’s built over a long period of time with small, regular, interesting, and thought-provoking communication. In my opinion, the best way to do this early on is by email as it maximally respects the time of the mentor that you are engaging.

A great example

I want to give you a great example of how to do this. David and Heather Duey get this. They have emailed me dozens of times over the course of the last 9 months asking questions about their startup, Georneys. I’m connected to them only in a couple of ways. First, they’re from Tallahassee, Florida and I grew up in Florida and am a big Seminoles fan (yes, let the mockery begin). Heather and David knew that from reading my personal blog. Second, they’re doing a startup, and I love startups. That’s it - I had never even met them until after a remote mentoring relationship had developed. They first contacted me after applying for TechStars. When they didn’t get in this summer, they continued the dialog. They frequently emailed me with well thought out questions that allowed me to spend just a few minutes to get them some feedback on their business. Over time, they began to email me more complex or deep questions about their business. Now they’re coming to Defrag and planning to move to Boulder to be in a more entrepreneurial community. I know them personally now - and I like speaking to them about their business. They probably don’t know it, but there’s two way learning going on. For example, I’m a regular reader of both of their blogs and through them I’ve come to better understand some of the trials and tribulations of co-founding a company with a spouse (not that I plan to try that!).

Building the relationship

Once you have established a relationship, the key becomes regular engagement. While keeping the early relationship low-impact on the person you are getting guidance from is important, you can certainly step it up over time. The ideal scenario is to involve them directly in the strategy associated with the development of your business, your product, or you as a person. For example, you can engage the mentor by soliciting direct feedback on an early prototype of your product. Even if you get a trickle of feedback from them, you have the key ingredients of engagement. Think about their points, make at least one change or improvement that you agree with (there must be one!), and reply with an email succinctly detailing what you’ve done about each point. It’s OK (probably even good) to disagree with some of the points when appropriate - just efficiently explain why. In your response email, it’s key to ask them to give you more feedback now that you have made those changes. Keep the loop going in this way and you’ll develop a positive conversation with the mentor, improve the product, and build a relationship. This mentor will begin to associate you as with the concepts of strong follow up, willingness to be coached, logic and critical thinking, and most of all forward motion. What I’m describing is a process that allows you to build a remote mentoring relationship that is low impact for the mentor, but that ultimate leads you (if you’re good) to a point where asking for a meeting will likely result in success. From there, you can really get to know the person and continue this positive feedback loop.

Mentorship evolved

Brad Feld (who is certainly one of my mentors) wrote a terrific post about mentorship some time ago that has a special spot in the quick-access RAM of my brain. He said:

“…one thing stands out: the rare, but brilliant moment when the relationship shifts, the distinction between mentor and mentee dissolves, and you become “co-mentors”. Even if you aren’t “peers,” the learning becomes bi-directional. Everyone in a mentoring relationship should strive for this equilibrium, because it is here where the greatest learning occurs.”

I have some mentors that I’ve reached this stage with. David Brown was my co-founder at my first company, and was always someone that I consistently learned from. I think our relationship has reached equilibrium, and I hope that he learns as much from my knowledge and experience as I do from his. I haven’t worked with him on a daily basis in years now, but we still bounce important things off each other on a regular basis. We’re working in different worlds now, but are fascinated by what goes on in each.

The fruits of meaningful engagement with great mentors

At TechStars, when I look back at the companies who are seeing early success I see high levels of mentor engagement in all cases. They didn’t just take meetings with the mentors that we dropped in their laps. They engaged many of them that they respected in ongoing, meaningful, and independent conversation. They took advice for what it’s meant to be - something to think about. They reacted to the advice not just in the pursuit of pleasing the mentor, but in the pursuit of building value while being intellectually honest with themselves. They communicated regularly and effectively with their chosen mentors, involving them in the hard thinking that was necessary to build their companies. They regularly solicited feedback as they built their product, incorporating some of it and continuing the positive feedback loop with their mentors. They gave their mentors positive experiences with their passion, ability, product, and company on a very regular basis. The result was predictable. Those mentors were among the first to stick their hands up to participate in funding the company and continuing to stay active with it.

Summary

Great founders intuitively understand the importance and role of mentors. They seek them out for the right reasons and engage them on an ongoing basis. I think the presence of great mentors who are actively engaged (not just listing their names on the advisory board) around an early stage company is a strong indicator of future success.

David Cohen

The theme of the event I spoke at last week was angel investing - east meets west. It was an interesting format. About 250 people from 15 or so New England angel groups were represented there, as well as speakers from “out west.”

One thing that I heard repeatedly today from the better angel groups (east and west) is that every single deal that is presented to their group is sponsored by one of their members. That member introduces the deal before the pitch. I got to see 3 “quick pitch” deals today and they were all high in quality. They were effectively introduced by the sponsor angel. If the deals weren’t good, that angel would look bad for bringing the deal to the group. Social pressure was at work naturally and effectively because of this simple rule. No screening committees, application fees, etc. Just go impress a member angel. We should be able to learn from these best practices in Colorado, but we haven’t. Both Kieretsu and CTEK require applications, payment of fees, and artificial screening processes. Just make them get to and impress an active angel who is a respected member of the group. Much cheaper, no fees required, and good dealflow. If they can’t find and impress just one angel enough to get there, there’s a 99% chance they shouldn’t be there anyway. I continue to hope we see this sort of model adopted with Colorado’s angel groups. It’s certainly the way many of the very high quality angel deals get done outside of those groups already.

I especially enjoyed the presentation today by Luis Villalobos who founded the Tech Coast Angels (California) and is now a managing partner at Angel Venture Partners. Luis has directly invested in about 60 companies as an angel, so he has quite a bit of experience. So I listened very carefully.

Luis said that “The role of angels is to transform promising opportunities into terrific investments.” He continued on to say “Rarely will angels find a funding-ready deal.”

I’m an entrepreneur too, and at first I found that a bit offensive. As I thought about it, I realized that he’s of course correct. Experienced, extremely high quality entrepreneurs have plenty of funding available to them already. Strong entrepreneurs with current traction and measurable success in their businesses do too - they can pick their angels or VCs, assuming it’s a deal an angel would be interested in anyway. So really what remains are companies that don’t have great progress yet and/or are run by less experienced entrepreneurs. And as we know, they’re not going to have it exactly right.

So, Luis concludes, it’s the job of the angel investor to help the company to tweak (in the best case) their plans appropriately. That is the magic, and that is why the only angel investor who is worth a crap is one who has experience not just investing, but in building companies that work.

On another topic, Luis warned angels not to use “milestones” too aggressively in deal structures. He says that the team will manage toward the milestones, right or wrong, because that’s where the incentives are. And as we also know, most startups start out doing stuff that is wrong. It logically follows that the milestones are probably wrong too, even when written by the “all knowing” investor. Guess what, the investors are probably wrong too. The smart ones just realize that over-managing with specific up-front long term milestones are likely to lead the entrepreneurs down the wrong “planned” path.

Luis was also suggesting a new way of thinking about angel deals. Rather than committing to participation in a round at a particular pre-money valuation as is commonly done, he was talking about about the benefits of offering to buy something specific and immutable such as “25% of the company for $500k.” Luis was explaining situations in which angels could commit $250k in capital at a 1.5M pre-money valuation, only to have no real argument for stopping the company from raising significantly more money, and effectively being “committed” to participating with an over-funded company and taking front-end quasi-dilution. In deals I’ve been around, there is usually an upper limit to how much money is being raised in the term sheet, which prevents this sort of thing, so I’m not sure I agree that there is a real problem. To be fair, I don’t think Luis does either - I think he was just wondering aloud why seed round angel terms sheets aren’t more straightforward. Seems to be a theme lately.

Good stuff.

David Cohen

Perhaps this will be the most bizarre post you have ever read on this blog. If so, you have not been a subscriber for long.

I love meeting people. Especially entrepreneurs, investors, or anyone with interests in common with me.

However, I would like to state three facts about myself for the record. The next time someone asks me to have lunch of coffee with them, I plan to use this link. Believe me, it will be soon.

The first fact is that I am an introvert. This will help my case as I give you the next two facts.

Fact #2: I don’t drink coffee. I gave up all caffeinated drinks about 15 years ago. I sleep really well now, thank you. There are lots of strangers in coffee shops. That appeals to lots of people, but not really to introverts. My favorite coffee shop is whichever one is closest to me. That’s because I wouldn’t be going to one, except that others like to go to them and I’m happy to be accommodating rather than make a big deal about having to get up and walk to one.

Finally, fact #3: I don’t like to eat meals alone with people that I don’t know, and so I never do. This too is because I am an introvert. As such, I imagine long periods of boredom and awkwardness during a proposed meal such as this. By meal, I mean lunch, breakfast, and yes, even dinner.

These are just simple facts about myself that I know. Now you know them too.

If you got this link in an email with a subject along the lines of “RE: Coffee or lunch?” then I apologize in advance for sounding like an ass. It’s really not my intention.

David Cohen

At the invitation of Don Dodge, I just spoke to 200 angel investors at the Northeast Angel Capital Conference. It was very well run, and the other speakers were great (not sure about me). They gave me a few ideas for future blog posts. I also met some awesome folks there.

This reminded me that Colorado’s own Angel Capital Summit is coming up on November 13, and I’ve got two VIP tickets to give away. The first one is the Jim Pollock award, otherwise known as the “starving entrepreneur ticket” (college student, early stage founder, you get the idea). The second ticket is for a prospective angel investor who has never done a deal but is considering getting into angel investing and wants to learn more about it. If you fit one of these profiles would like the ticket, email me at David at Colorado Startups dot com and tell me your story.

David Cohen

I’m involved with a couple of companies in which two founders use a “co-CEO” title. This has forced me to do some thinking about whether or not this is inherently bad.

One of these companies has been working with my friend and an experienced CEO who is named Tom. Tom challenged this company with two statements, which I’ll paraphrase below.

1. “In all my interactions with your company, you (founder #1) are clearly behaving as the CEO, and you (founder #2) are clearly behaving as the CTO. Why do you resist it?”
2. “I challenge you to think of a single company with ten million dollars in sales that has two co-CEOs.”

Let’s start with the first challenge. In this particular case, Tom was dead right. One of the founders clearly behaves like the CEO. He thrives on the business issues and defers to his co-founder on the technical issues. He is the voice of the company and is perceived by the world as “in charge”, even though he works hard to present an outward image that his partner is his equal. The other founder clearly takes the lead on technology and product related issues. The other company that I’m involved with that has co-CEOs is not such a clear cut case - they’re both leading equally and neither is the CTO.

I actually don’t think that the problem is that there are two CEOs. In my opinion, this is often just a symptom of a deeper and much more important problem.

While I’m doubtful that there are any really good reasons to have co-CEOs, I’m positive that there are some bad reasons. One bad reason is the desire to make equal founders feel equally important. If the founders are not dysfunctional (in both of these cases, they’re not) then they should be able to easily work as equals and assume different outward facing titles.

In my first company, the three founders each took on the title “Partner” for the first year or so. We did this mostly to express our loyalty to each other, and to avoid the whole issue of titles. We quickly realized that David Brown was obviously best at dealing with contracts, negotiations, partnerships, and the like. Most importantly, he was naturally perceived by others as the person in charge mostly based on his personality, attitude, and assertiveness. The other two founders (Bob and I) decided not to worry about this and took on titles which matched our strengths - “VP of Business Development” and “VP of Research and Development” respectively, while David Brown became “President.” The key for us was that from the moment we made this decision about our outward facing titles and the perception we wanted to foster outside the company, nothing between us changed. We were still partners and we still discussed the smallest details of strategy, the business, or the product together. But from that day forward, we agreed that David Brown was primarily responsible for business issues, that I was primarily responsible for technology and product issues, and the Bob was primarily responsible for selling the product. As the years passed, this turned from a nearly meaningless discussion about “titles” into a functional necessity. We trusted each other to bring the big issues to each other. But most importantly, we trusted each other to start not to bring the little issues to each other, and to simply act within our areas of responsibility.

Another bad reason to use the co-CEO title is conflict avoidance. Inexperienced founders may think it’s “no big deal” and may use the co-CEO title as a way of avoiding the discussion altogether. This is clearly bad on a variety of levels.

The obvious downside of having co-CEOs is that it sends a signal to your customers, employees, and partners that there is no clear chain of command, especially in a small company. Much like children play mom against dad, you open yourself up to being played by people inside and outside of your company. If mom says no, try dad.

What’s worse, if you don’t decide who is ultimately responsible for the direction of the company it could cause a rift.

Finally, I think that having co-CEOs in an early stage company sends a signal that there may be internal struggle in general. Perception is reality, even when it’s not.

Some of the major mistakes that the co-CEOs from the movie Startup.com identified from their experience were:

• Not delegating responsibilities
• Not creating sustainable organizational structures
• Unclear communications channels between groups

Note that I’m not saying that just because there is smoke there is fire. The mere presence of co-CEOs doesn’t mean there is dysfunction. In fact, there are good answers to Tom’s second challenge. But in small early stage companies, it’s quite likely that the founders have some form of internal power struggle, a conflict avoidance problem, or have not accepted a clear chain of command and/or division of responsibilities. Any of those can lead to very real trouble if they become systemic; if not now, then as the company grows.

I was once in a meeting with a small company that refused to use any titles whosoever. It was pretty easy to tell who was in charge. The CEO is probably the one who talks first, most often, and is rarely challenged by the other people in the room. She’s the one that everyone is comfortable with and is respected enough to be the voice of the company. If you’re a co-CEO who’s not leading the business conversations, it should be telling you something.

If you have a deep trust and mutual respect with your co-founders, then it logically follows that titles shouldn’t matter to you at all. So the trick is simply to be honest with yourself, and to define and agree upon general areas of responsibility while maintaining mutual trust and respect. If you can’t do this, then give up now on being partners.

Once you’ve done that, then you pick titles that accurately reflect areas of responsibility. Most successful early stage companies that I know have two or three founders using titles such as CEO, CTO, and VP of Sales/BizDev. I think there’s a reason for this. Clear signals, clear division of responsibility, and clear trust.

What do you think? How do you perceive companies with two CEOs?

David Cohen

Zwaggle is a Denver startup where parents can buy and sell used kids gear, such as strollers, sports equipment, video games, and more. The site went live in August, is free to use, and now has about 700 users and a few hundred listed items.

The company was started by Andrew Hoag and Adam Levy, who “saw first-hand the enormous cost of providing for children, and the waste of time, money, and resources along the way.” Andrew and Adam decided there must be a better way, and so they started Zwaggle.

Using Zwaggle, parents can earn “zoints” from selling used gear that their kids don’t use anymore. Then can then apply these points to purchase things that the kids do need from other members.

Since Zwaggle could be considered a vertical eBay, I wanted to know why parents couldn’t just do this there or on Craigslist. After all, there are some 600,000+ “toys” listed for sale on eBay right now - many of which are used. And thousands more are on the Denver-only craigslist toys section.

Adam said that while they could and do use those other sites currently, he thinks the points-based model of Zwaggle will be a hit and a big differentiator.

“Zwaggle takes the pain out of settling payment and negotiating shipping, which you can do right from the site, including printing pre-paid, pre-addressed shipping labels from home, and soon the ability to have a FedEx courier appear at your home to collect the item.” - Adam Levy, Founder

Of course, without attracting the listing to get significant inventory, nobody will notice. So an interesting test for Zwaggle might be to try a limited “scrape” of craigslist toys or other pertinent listings in particular geography, to see if they can turn casual sellers into repeat sellers, buyers, and traders. Word of mouth probably won’t get jump-started very easily without lots of listings. This reminds me of the strategy that Simply Hired used to become the place to go to search for job listings.

Zwaggle plans to monetize the service through affiliate partnerships and point purchases from members. With this type of business model, Zwaggle will need to drive tremendous usage to become a substantial company. The site seems to deliver what it promises, so like many consumer internet sites success or failure will likely be a function of intelligent marketing. Zwaggle hopes to attack this through smart partnerships and an aggressive referral strategy.

Interestingly, Zwaggle can also be used to donate and receive tax deductions for items. This is a nice option for parents who don’t really need new stuff, but just want to get rid of old stuff that’s lying around.

The company is currently funded by friends and family but is currently seeking angel investment.

David Cohen

This Wednesday, about 300 angel investors will be attending the Northeast Regional Angel Investor Conference, which is being held in Portsmouth, NH (about an hour outside of Boston). Since the theme is East meets West, I was invited to speak on the topic of TechStars and the mentorship driven investment model that powers it. Other presenters include Luis Villalobos (founder of California’s Tech Coast Angels and Managing Director at Angel Venture Partners), and Jeffrey Sohl, a respected expert on angel investing and the Director of the Center for Venture Research and Professor of Entrepreneurship and Decision Sciences at the Whittemore School of Business and Economics at the University of New Hampshire (whew!).

If you happen to be reading this in the northeast and would like to register for the conference, please do. If you’re going to be there, please let me know so I can be sure to say hello.

David Cohen

Well, it was kind of a Colorado-ish startup for a while there.

SocialMedia announced that it had raised 3.5M just a week or two after the order for the Boulder-based staff to move to Mill Valley came. Dennis Yu and David Henderson, among others have been relocated to California (David is commuting, and Dennis hopes to be back one day).

This continues to be an interesting war to watch.

David Cohen

• mShopper (covered previously) continues to rock and roll. Last month, they landed a deal with with Sprint/Nextel to power their shopping service. Rumor has it that tomorrow they’ll announce that they’ve also gone live on Verizon. Not too shabby - this means that on either carriers handsets, firing up “Shopping” will bring up the white-labeled mShopper system.
• Congrats to Brad Feld for winning the Rob Planchard award at the ESPRIT event. I knew Rob well, and I wish all lawyers could make dealing with the law as much fun as Rob did. Congrats to the other winners including Bill Perry and Rally as well. I’m sorry I missed it - I was in Dallas that evening.
• The talent influx to Boulder continues.
• At least half of my twitter mob appears to be heading to Boston for Startup Weekend. This is the sixth startup weekend out of 20+ that are now planned. Go Andrew, go. We’ll be watching.