Reactions to AlphaLab Demo Day

Written on October 14th, 2009 | Short URL: http://abcjr.me/1w

Instead of a summary of each company (Alan Veeck ( @aveeck ) at Meakem Becker Venture Capital and author of Pittsburgh Ventures blog did a fantastic live blog roundup of the companies here), I’d like to toss out some gut reactions to the companies, presentations and the feel of the environment overall.

• In monitoring local media, it seems like there has been a lot of funding activity in the region recently, from early stage angel investments to larger acquisitions of Pittsburgh-based startups. That feeling of optimism was present at the event today as well, and from the folks I was able to speak with, there might be more good news coming down the pike.
• It was great to hear about some of the success stories coming out of AlphaLab. One of my personal favorites is a company called The Resumator, led by Don Charlton ( @TheResumator). They’ve gotten some serious press and some seed funding post-AlphaLab, which is helping them to expand their feature set.
• Social is everywhere. Absolutely everywhere. It’s hard not to get sick of hearing about it, but it really doesn’t make it any less important. I’m reminded of when everyone was talking about the internet being game-changer in the late 90′s-to-early-’00s — while it was so annoying to hear, the folks saying it were absolutely right.
• The actual design of the various PowerPoint presentations was pretty good. I know it sounds superficial, but a stylish presentation makes a company look much more “together”. Great job, everyone.
• Loved the presentation by Nick Pinkston, CEO of CloudFab ( @cloudfab). I continue to believe that storytelling and metaphor are the best way to connect with an audience, and I think Nick did a very good job of doing just that. Speaking with him afterward (both about his company and about using his technology to develop some components for a project on which I’m working), it was evident that he sees this as a product customization revolution rather than simply a sourcing opportunity. I love the vision.
• Fooala has developed a site called CollegeBite ( @collegebite), a very cool open ordering platform that enables restaurants to create/expand an online presence using mobile and the web. One of the things I loved about it is that I’ve already used the site! While the presentation was a bit difficult to follow at times, I did find the team to be very, very strong. Finally, they’re classic Gen Yers –  smart, mobile, experienced, passionate, hungry and making a difference. Two of the guys are from Duke, one of whom met one of the CMU founders while in Sydney, Australia. What a story.
• Brian at NavPrescience has a compelling pitch — a software package that is integrated into GPS functionality that learns your driving habits and adjusts routing and point-of-interest suggestions accordingly. One of my favorite lines of the day was Brian’s deadpan delivery of “[GPS] devices are pretty stupid”, referring to the dictionary definition of  “slow to learn and understand”. As a recent owner of a BlackBerry Tour with GPS capability, I’ve found how dead wrong TeleNav can be with even the simplest of directions (he cited that only 35% of GPS routes are actually ‘fastest’, confirming my experience). Brian’s use of a scenario in his presentation (there’s that storytelling again) was very engaging. Things that I disliked are mostly brand-oriented — I’m not a fan of the name (I keep wanting to say NavPresence and the word ‘prescience’ is a bit SATish) and the logo is a rough (use of Verdana, complicated design and the invocation of magic when the system is built on three years of solid R&D at CMU). I know that the company isn’t looking to sell to consumers, but it’s still something that could be improved.

While it’s a tough time for everyone in this economy, I’m really optimistic about the entrepreneurial community here in Pittsburgh. Being named the second-best place to start a small business in the U.S. doesn’t hurt, either. All-in-all, I have to commend AlphaLab Class #3 on a job well done.

Posted in Entrepreneurship, Generations, Storytelling | Permalink | No Comments |

Pittsburgh Named Second-Best Place to Launch a Small Business

Written on October 13th, 2009 | Short URL: http://abcjr.me/1z

This is just great news for the region. The more people realize how economically viable this region is for small businesses, the more robust the entrepreneurial community will be. While the challenges this region faces are pretty well documented, this type of press is really important.

http://money.cnn.com/smallbusiness/best_places_launch/2009/snapshot/258.html

Update: For those who don’t want to click through…

Greater Pittsburgh is home to a workforce with hard-won manufacturing skills from the city’s steelmaking past. Need machinists? They’re here — and that’s a draw for small businesses.

The region combines that talent pool with a mix of highly educated students from the University of Pittsburgh, Carnegie-Mellon University and Duquesne University. Those institutions helped make Pittsburgh a leader in robotics, healthcare, and artificial intelligence. Locals cite the city’s culture as one of its biggest selling points: There are tight-knit neighborhoods, many built around eastern European communities that prize a strong work ethic.

Most of the city’s small businesses are family-owned concerns that have morphed to serve new markets. Resources like the Institute for Entrepreneurial Excellence help both startups and generations-old companies get the skills they need. Pittsburgh’s location on major North-South and East-West interstates connects companies with distant markets and suppliers.

State taxes aren’t low, and the recession-fueled tax shortfall hurts: The state may have to take over Pittsburgh’s pension system. But small businesses say the local workforce is resilient, and with valuable, transferrable skills.

Posted in Entrepreneurship | Permalink | No Comments |

To Offshore Or Not To Offshore…

Written on October 12th, 2009 | Short URL: http://abcjr.me/1u

I was discussing with a couple of folks who work with entrepreneurs and startup companies a rough design and production plan my team was planning to use in a venture we’re in the process of launching. One of the strengths of our plan, I said, was the use offshore design and production, which will allow us to sell our product at a beyond-competitive price (more than half than our next competitor). One of the people with whom I was having lunch turned to me and asked, “do you really feel comfortable with using foreign labor?” He was making a significant point with a simple question. I justified the decision, saying that I knew the people involved in managing the manufacturing facility and was aware that each employee was paid well, was provided with health care for themselves and their families, worked reasonable schedules, and worked in a safe environment. However, no matter how well the employees are treated, the fact remains that production isn’t happening in the U.S.

On one of my first major projects, I had fought for using for domestic manufacturers to produce some of our components. While the management team believed that we couldn’t get a competitive price in the U.S., I insisted that we price all of our parts domestically. The result? Most everything we priced was four-to-10 times more expensive in the U.S. than through our international suppliers. While there were arguments to be made that the savings weren’t worth the opportunity cost (time between ordering and getting the product in the door, for instance), it was almost universally impossible to make our margins work using domestic suppliers.

Since those early fights, I hadn’t really thought about domestic vs. offshore supply chain. Every project in which I’ve been involved has used an offshore provider in order to be price-competitive. I realized that I had moved on from the ‘Buy American’ value that had been passed down from my grandfather, a foreman in the famous Homestead Steel Works.

It’s not just in physical product development. At a presentation I attended at AlphaLab last year, one of the portfolio companies, a social networking web site geared toward a specific audience, openly discussed their use of Indian programmers. It struck me at the time — for a city like Pittsburgh that is so rich in IT talent, it still made sense to offshore the work.

I’m truly conflicted about this issue. On one hand, I think it’s important to support U.S. jobs in order to maintain a robust economy. On the other hand, few startups can raise the type of capital, and make workable margins, using domestic labor and suppliers. How can entrepreneurs pass on the opportunity to increase their product margins, which will make their companies more likely to be funded, financially successful, and viable? Is this an ethics issue or values issue? Do entrepreneurs really have a choice?

Posted in Entrepreneurship, Ethics, Manufacturing, Product Development | Permalink | No Comments |

Inventors Should Learn From The Green M&M

Written on October 9th, 2009 | Short URL: http://abcjr.me/1v

During the Spanish Civil War, Forrest Mars, Sr. saw some soldiers eating little chocolate pellets surrounded by a sugar shell, preventing the little pieces of chocolate from melting. He perfected the process, patented it and, along with Bruce Murrie, began production in 1941 exclusively for the military. The candy hooked thousands of GIs and the company began selling to the general public after the World War II ended, establishing M&M’s (Mars & Murrie) as one of the best-selling chocolates in history.

In nearly 70 years, the product has grown from a treat for soldiers to one of the most extended products in the world, with multiple fillings, flavors, customization options, colors and sizes that are sold in stores ranging from gas station stop-and-gos to the massive M&M’s Store on the Las Vegas strip.

What can entrepreneurs learn from Mars and Murrie? The customer’s vision (and money) drives product direction, not the entrepreneur. If Mars had stuck with his original product vision, the product would be relegated the memories of those who fought in World War II. There never would have been the addition of peanuts in 1954, peanut butter in 1990, the blue M&M in 1994 or a wall of “My Color” M&M’s anywhere. Certainly, there never would have been a customer-driven rumor that green M&M’s are an aphrodisiac, which has led to product extensions itself (bags of green M&M’s sold on Valentine’s Day, the sultry female M&M character featured in much of the company’s advertising). While there’s market research behind the moves that M&M’s makes, customer demand drives the vision of what the next M&M innovation will be.

One of the greatest challenges that inventors face is internal. Many inventors, who have invested countless hours and dollars perfecting their product, become so closely aligned to their own innovation vision that they lose sight of the customer. They restrict the vision of the market that they’re creating, which turns off potential customers, investors, champions and referrals. This eventually leads to game-changing technologies dying on the vine because the inventor thinks they’re smarter than the market.

Inventors and entrepreneurs must realize that they lose control of their product the minute they develop it. As soon it goes from concept to execution, the customer dictates whether or not the product is viable and what improvements should be made. Customers are smart. Follow their lead. And always remember that it was the customer, not the inventor, that created the green M&M.

Posted in Design, Entrepreneurship, Product Development | Permalink | No Comments |

Gen Y and the Entrepreneurial Opportunity

Written on October 6th, 2009 | Short URL: http://abcjr.me/1x

Generational issues have been a hot HR topic for years, and the urgency to develop a plan to integrate these generations is becoming even greater now that economic factors are forcing Baby Boomers to stay in the workforce longer than they anticipated. Along with this phenomenon, the workforce is integrating Gen Y workers, a group that brings a very different skill set  — and expectations — to the workplace. The anticipated workforce shortage that scared executives earlier in the decade is now simply a non-issue.

This presents an interesting challenge for Gen Y. What once appeared to be a fast-track to positions of authority as older workers retire is a now fierce competition for available jobs, a fight that pits early-career professionals with much more experienced counterparts. For Gen Yers lucky enough to have a job, the opportunity to move up and contribute to meaningful projects  (identified by Herb Sendek and Buddy Hobart in Gen Y Now to be one of the major needs of Gen Y workers) has decreased considerably.

The challenge, as Hobart and Sendek identify in the book, is leadership. Many Baby Boomer and Generation X managers have negative perceptions of Gen Y, which lead to managerial decisions that hurt everyone, i.e. the manager doesn’t get out of the employee what he or she needs and the Gen Y worker in turn doesn’t get the fulfillment/experience that they are looking for. The inevitable consequence is that the Gen Y worker “checks out” and eventually moves on. This situation is often blamed on the Gen Y worker (they’re lazy, they’re entitled, they don’t try to fit in, they’re babied, they’re spoiled, they’re not willing to ‘put in their time’) as opposed to the individuals who are leading them. For both short- and long-term results, organizations simply can’t function this way and hope to be competitive in attracting/retaining talent.

However, where larger organizations might falter in assimilating Gen Y talent, start ups and smaller entrepreneurial companies can thrive. There are several reasons:

Continue reading the post Gen Y and the Entrepreneurial Opportunity

Posted in Entrepreneurship, Generations, Leadership | Permalink | No Comments |

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