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All tech startups need just a few ingredients to germinate: sophisticated money; first-rate technology universities; and a few template successes (a Google or a Facebook, and so on) to encourage founders to get off their duffs. Contrary to current wisdom, these ingredients exist in many communities outside of Silicon Valley –- in fact, they always have.

When you add a large and economically accessible employee base to our first three criteria, you have the recipe for successful startups. Tel Aviv is a good non-U.S. example. Israel has more PhD’s per capita than any place on Earth, plus a military that turns out gobs of advanced technology. The result: There are now more VC’s in Israel than there are rabbis.

Similarly, after World War II, oil companies in Texas needed to find new sources of petroleum, and they turned to geological survey companies for help. One of them had a little subsidiary, Texas Instruments, where the computer on the chip was eventually built. Some years later, Michael Dell arrived at a much-enhanced engineering school on the campus of the University of Texas, and the rest, as they say, is history.

I am what you might call a startup gray-beard and I’ve seen it all. Founders can sometimes get too fixed to the idea that they must be in a certain incubating environment to succeed, when really, getting out of the startup fishbowl is sometimes the best thing they could do. I often encourage startups I invest in or founders I counsel to be contrarian and start their firms outside of the Valley, or failing that, to move East while they still can.

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This week, Lookery, the ad network launched last July to serve über-cheap ads into Facebook applications, has announced a new $2.25 million round of funding. It’s a nice sum for the 14-month-old startup, which now sends Facebook some 3 billion ads a month, according to Lookery’s CEO, Scott Rafer.

But here’s what’s really interesting: Rafer and his cofounder, David Cancel, elected to raise the money almost entirely from angels, forgoing the traditional venture capital most companies would pursue at this stage. This is Lookery’s second funding event. In January, it raised a $1 million note, which converts to equity given in this deal.

The participant list is heady, including Salesforce.com founder Marc Benioff; Reed Hundt; Tickle founders James Currier and Stan Chudnovsky; and About.com’s Scott Kurnit. There are some notable VCs in the deal, too, but they’re participating individually, not with their firms: Ted Dintersmith, late of Charles River Ventures; Ravi Mhatre of Lightspeed; and Allen Morgan, of the Mayfield Fund, who is also a Lookery director.

Serial founders with good track records, Rafer (MyBlogLog) and Cancel (Compete.com) could have gone after marquee venture firms if they’d want to, but the pair has specific reasons for favoring angels. After the jump, Rafer explains why other founders ought to consider doing the same. Continue Reading

It’s not a new idea to make hay by seizing the messy business opportunities no one else wants. Innovating the distribution of a technology, rather than inventing the technology itself, isn’t novel either. This is the model that made founder Michael Dell a billionaire. Now, San Francisco-based Sungevity is taking a page from Michael Dell’s playbook in an effort to do to solar panels what Dell did to personal computers.

Solar installs are typically custom jobs — labor intensive and therefore costly. While there are rebates and tax incentives to cut the costs, the paperwork is dizzyingly complex, so consumers (and even developers) often don’t bite. Since most solar startups are focused on making the sexiest technology, Kennedy figured it was a no-brainer that Sungevity could effect more change, and make more money, by addressing the logistically painful process of selling, installing, and handling the paperwork associated with everyone else’s gear.

Michael Dell innovated the economy for PC-manufacturing by taking commodity computing components, then custom-assembling them to each buyer’s order in what we now commonly call a “just-in-time” supply chain. Similarly, Sungevity uses off-the-shelf web tools, commodity solar modules and drop-shipping to streamline a sales process for the retail solar industry that once took weeks or months. (Read more at Earth2Tech). Below, Kennedy offers a few tips for How to Spy Startup Opportunities in the Sales Cycle: Continue Reading

With the tech conference season upon us, Found|READ thought some tips for how to master conference marketing on the cheap would be useful. Today’s tips are courtesy of serial entrepreneur Pete Grillo, currently founder of iterasi, a one-and a-half-year-old startup in Portland, Ore., that has built a hosted storage service to capture and archive web pages. It’s a seemingly simple tool, but it allows you to save web pages in perpetuity — personal archives for individuals and businesses!

Iterasi had been living off angel funds since 2006, so even though Grillo’s investors might have been fine with a marketing blitz, Grillo didn’t feel like he could spend the $10,000 needed to get an iterasi booth at TechCrunch50 or sponsor a $5,000 dinner at last month’s Gnomedex. But iterasi was about to launch a new release, and Grillo recognized that an impactful marketing play would be necessary if it was to get noticed in a very noisy market.

So Grillo and his team came up with a non-traditional marketing tactic. They found an old yellow school bus with a dubious battery and an owner/driver who wanted to get to Gnomedex, too. Then they invited several bloggers, a dozen programmers and tech folks from the Portland area to ride along with them to Seattle.

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Founders are notorious for falling in love with their visions. How else could we survive 18-hour workdays or a multitude of setbacks with our optimism still intact? The problem with this is that it’s impossible to predict what the future holds. So, to be successful, you’ll have to grow comfortable with transforming that vision you’ve fallen so deeply in love with into something you may never have considered.

Becoming part of a Fortune 1000 company was never part of our vision for PartnerUp, so when Deluxe Corp. first approached us in March, we were skeptical. Deluxe’s primary business is check printing for financial institutions and small businesses. It was difficult at first to make a clear connection to PartnerUp, a four-year-old social network for entrepreneurs. But we eventually came to see that our goals were more than compatible; they amplified each other. Our acquisition was completed in July.

Knowing that you’ve built a business that another company finds enticing is an amazing feeling, and being a part of a growth strategy beyond what you originally envisioned is a privilege few entrepreneurs get to experience. While no two transactions are the same, I’ve learned some things that might make it easier for your startup to embrace an M&A deal — even if one isn’t part of your current vision. Continue Reading

If you’re a major league baseball fan, you’ve probably read “Moneyball,” the best-selling book by journalist Michael Lewis chronicling the successful statistics-driven management of Oakland Athletics General Manager, Billy Beane.

Baseball has long been a game of stats, but Beane’s philosophy gave the tradition a twist: Instead of tracking a player’s batting average or runs batted in, Beane tracked a player’s on base percentage. The unorthodox approach helped Beane build the A’s into a remarkably efficient team that has reached the American League playoffs five times in eight years with a payroll that’s consistently near the bottom third of all 30 MLB teams ($78.5 million in 2007).

Plenty of corporate executives have tried to apply Beane’s tactics to their own operations. NetSuite CEO Zach Nelson did one better: In 2007 he invited Billy Beane to join NetSuite’s board of directors.

Nelson says tracking nonstandard performance stats has helped improve the efficiency of NetSuite’s sales process. Most CEOs track their marketing spend, lead generations and closed contracts independently; NetSuite tracks which marketing plans (players) turn into leads (walk ons) and which leads convert to sales (runs). If improving your company’s sales efficiency is the aim, then “walk ons” — or how you get to the sale — is the key stat, just as in baseball. Below Nelson offers a few tips from Beane’s play book to get you started “managing by the numbers.”

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