Thursday, May 30, 2013

Entrepreneurial Seductions and Distractions

Speaking at events, networking, press, and fundraising can all be important parts of building your business.  However some people get overly caught up in these activities at the expense of their company's progress.  The only true long term measures of value for your company is the number of happy users you have, and how much money you (eventually) make from their use of your product.

Speaker Circuit.
Being a speaker at an event can help with recruiting, partnerships, and customer acquisition.  However it is tempting for an entrepreneur to overdo it.  You see some entrepreneurs flying to countries where their product hasn't launched to give a talk to the 20 person entrepreneurship club of a small university.  None of this helps their engineering team ship product or their sales people in selling it.

Questions to ask yourself before agreeing to a speaking event:
-What are the most important speaking events for me to be part of this year and is this one of them?
-Is the panel audience relevant to my company and if so how?  What is the goal of my being part of this panel or keynote?
-Are the other speakers and panelists of the caliber I would want my company associated with?
-Have the speaking events I have been part of in the past yielded the results I was shooting for (new customers, employee referrals, or the like)?  If not, why not?
-Is this event worth the travel time?  Do I really need to speak to the Guatemalan Council On Innovation?

VC Boondoggles.
There are some conferences that are worth attending given unique access to the caliber of the network there.  The Allen & Co conferences and Davos seem like obvious ones.  However, many VC firms have multi-day or week long conferences you can attend that may be of lower value.  These are often in cool and exotic locations (Mexico, Hawaii, Ski Trips, etc.).  Some founders will spend up to 4 weeks a year at these events.  Some are good for networking and can help the company, but again you should prioritize.  Don't go to 4 of these a year.  Choose the 1 or 2 that make the most impact if you decide to go to any at all.  And again, ask yourself how the event will help your company.  Are there specific people or relationships you can build in a targeted way so that your time away from the office is worth it?

Remember, VCs are paid to network for most of their time.  You are not a VC.  In general, some people get caught up in excessive networking...

Excessive Networking.
Networking is a crucial part of being an entrepreneur.  It is how you can learn from other people, forge ties to potential partners and customer, find people to hire etc.  While networking can be extremely valuable, take a look at your calendar.  If large blocks of time every week are taken up with meeting other entrepreneurs or random investors you are probably not being focused with your time.  Try to put networking into consolidated blocks so the switching cost is low.  Also, try to focus your networking towards things that are actually meaningful to your company.

The role of the entrepreneur can be pretty networking intensive, but you still need to prioritize and figure out what is important, and what to cut.

Press and PR.
Press can be a potent force in raising awareness of your brand and, for some types of products, acquiring users or customers.  Some entrepreneurs confuse getting press with being successful and spend time courting press over building or selling product.  Being in TechCrunch or on CNN does not mean you or your product has been successful.

Pull together a press strategy. 
-What is your objective for press?  Is it to acquire users?  Build an engineering brand for hiring?  Something else?
-What press will allow you to reach these goals?   How can you build an overall story arc for your company?
-Who is your audience and how should you reach them?

Then, compare this strategy to the press you have been courting - do these things line up?

Corporate Development. [1]
Corporate development is the part of a large company that buys other companies.  When entrepreneurs start to have M&A conversations they can get distracted and work can cease at their companies for months at a time.  Only talk to corporate development if you truly intend to sell your company.  Otherwise it can turn into a huge time suck, and you may convince yourself to sell your company for a small amount when you had no intention of doing so before.

Things a corporate development conversation is unlikely to yield:
-A partnership with the company.
-A better valuation in your next funding round.
-Life changing money.

Things a corporate development company is likely to yield:
-Months of distraction and loss of focus.
-Team confusion on your goals as a company.
-An accidental acqui-hire in which you sell your company for less then expected, to a buyer you weren't really interested in.

Unnecessary Fundraising.
Fundraising is a necessary side effect of having a company that needs capital to run or scale.  Unfortunately it typically takes a few months of concentrated effort to pull off, so is hugely distracting.  Some people seem to fundraise for no reason other then they think they should raise money, even if there is no need for it.  Or "a VC approached us, so we figured we may as well talk".  Only fundraise when you are ready to do so and it supports a plan or set of objectives for your company.  Otherwise it is a huge time sink.  Getting to meet Mike Moritz, Marc Andreessen or Reid Hoffman is pretty cool, but it does not mean your startup is succeeding.

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Notes:
[1] I will post more on corporate development shortly.

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