GigaOM » Eric Ries

Advice from Mark Cuban at $10,000 an hour: $1.6M in seed funding for Clarity

Eliza Kern — Tue, 04 Dec 2012 17:00:09 +0000

Investors and entrepreneurs frequently talk about the power of Silicon Valley to launch and transform companies, but it’s always been a challenge for companies outside the Valley to network and grow with their California counterparts. Enter Clarity, the company that launched in May to connect startup companies with advisors who can charge for their services, including Silicon Valley names like Mark Cuban or Dave McClure. Clarity plans to announce a $1.6 million round of seed funding Tuesday and an expanded set of products to connect more entrepreneurs with advisors.

The idea behind clarity is simple: “If you’re at a conference and threw a rock, you’d probably hit 15 amazing advisors, but if you’re in the Midwest, that might not be the case,” explained founder Dan Martell. ”Airbnb has done it for housing apartments, and the App Store has done it for games and products, and we want to do it for advice.”

Clarity allows anyone to set their hourly rates for giving advice, and allows entrepreneurs to make inquiries on anything from marketing to engineering to growth. Beginning Tuesday, entrepreneurs will also be able to post on the problems they’re facing, and get advice on who would be best to answer their questions, if they don’t have a particular person in mind.

Ryan Kim explained how Clarity functions when the company launched in May:

The way it works is that users sign up with their Facebook account and find experts on various topic pages. Or a new user can just submit a question and Clarity will suggest relevant advisors. When they’re ready to reach out, users explain the reason for their call in the web app and Clarity then connects the call to an advisor, whose number is kept private. The advisor, who can see the reason for the call as it comes in, can choose to take the call or add the person to a call back list. Or they can offer a scheduling widget so users can slot themselves into open blocks of time.

Martell said the product has been successful and profitable so far, and the seed funding will allow them to keep growing while adding new services. He said Clarity has grown from about 1,200 advisors at launch to about 7,000 right now, and facilitated 12,000 phone calls from people in over 47 countries. Advisors can choose to offer advice for free (about 50 percent do this) or take compensation for their time. Of those who take compensation, about 30 percent have chosen to donate their profits to charity, an option which means Clarity takes a smaller transaction fee (4 percent instead of 15 percent.) Users can leave reviews and ratings for advisors, giving some quality control to the system, and meaning people who give poor advice might not get repeat customers.

Martell said the average advisor charges $250 an hour for his or her services, although startup celebrities sometimes charge more if they’re getting mobbed by entrepreneurs and need to decrease demand. For instance, Mark Cuban charges $10,000 an hour, and Eric Ries charges about $1,000 an hour — prices Martell says some people are certainly willing to pay.

“The coolest thing is I think we’ve started building a community of entrepreneurs and investors,” he said, noting that about 98 percent of calls occur between two people who’ve never met before, and especially with foreign entrepreneurs. It can be a great way for a Canadian startup, for instance, to find people in Canada who are willing to give advice on growth in that particular area.

Investors in the new seed round include Baseline Ventures, Freestyle Capital, Mark Cuban, Real Ventures, Version One Ventures, 500 Startups, Venture 51, Ariel Poler, Howard Lindzon, Gerry Pond and Haroon Mokhtarzada.

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Hardware is hard — but accelerators can make it easier

Jon Bradford and Alexandra Deschamps-Sonsino — Sun, 04 Nov 2012 11:00:27 +0000

We all know that the costs of starting a web service are dramatically lower than ever before: it’s simpler and easier and faster to deploy. At the same time, services can be distributed through readily available channels such as social networks, search and app stores – all of which can be measured.

The rise of open source, cloud computing and the newly created distribution channels has also dramatically changed how solutions and businesses are created – known as “lean methodology” – and has been embodied by The Four Steps to the Epiphany by Steve Blank and The Lean Startup by Eric Ries.

In a similar manner, the costs associated with startups that include a hardware component are also going through a rapid decline.

And at the same time as these cost reductions, Kickstarter has created a marketplace for the crowd funding of hardware projects. More importantly, it has created a framework for startups to essentially run “smoke tests” — as advocated by Ries — to ascertain whether there is demand for a product or service, as well as the price points that the market might accept.

So why does hardware or Internet of Things need an accelerator?

While many of the conditions are highly conducive to support the rise of Maker communities, it’s still a relatively immature ecosystem. Much of the activity and noise is focused on just hacking around rather than having a commercial focus. It’s a good thing and encourages innovation, but tapping into this high energy Maker culture with a guiding hand from experienced mentors has the potential of spawning new ideas – the black swans for the next generation of entrepreneurs.

More interestingly, this emerging market is also attracting some extremely smart entrepreneurs who avoid the trends and fashions of others and like to play on the edges. The technical complexities associated with hardware – the things that make it hard – immediately limits participation to only the brightest engineers.

But it’s not all a bed of roses. It has been previously highlighted that technology projects have one of the lowest success rates among all Kickstarter categories, with only 29% percent being successful. Only fashion projects do worse. In addition, not every project goes well. Delays occur, especially with more complex projects. Some teams over stretch themselves and fail to deal with many aspects of the delivery that are new to them. Even Kickstarter has been forced to admit that “it’s not uncommon for things to take longer than expected.”

And this is where accelerators can help to nurture and support the best and the brightest in this emerging Maker community. As entrepreneurs with domain experience and expertise, mentors can provide first hand knowledge in managing the complexities associated with designing, prototyping, building and the manufacturing of physical devices — which reduces the operational and investment risks of projects.

There are other ways that an accelerator can help, too.

Being a hardware entrepreneur is also a very lonely existence, unlike our more popular and mainstream web service cousins. The peer to peer learning and cohort effect of getting the best and brightest entrepreneurs in the same sector working alongside each other cannot be underestimated, both during the program and in the future.

Finally, there are real practical differences between hardware and software which make being part of a dedicated accelerator even more valuable.

Hardware development has specific resource requirements that include access to a workshop space that with, say, 2D laser cutters, 3D printers, CNC routers and so on as well as support from industrial designers and engineers. Any of these individual resources might be prohibitively expensive or difficult to source, but within the framework of an accelerator their shared cost and accessibility can be invaluable.

Hardware is hard. But that’s what makes it fun and highly investable – given the right resources, environment and support structures. Why shouldn’t the Internet of Things have a dedicated acceleration program?

Jon Bradford is the CEO and co-founder of Springboard, which launched its SpringboardIoT accelerator this week. Alexandra Deschamps-Sonsino is the founder of Good Night Lamp, a new Internet of Things startup.

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Former Odeo architect sells Uruguay dev shop to “Lean Startup” firm

Katie Fehrenbacher — Thu, 06 Sep 2012 01:01:36 +0000

Evan Henshaw-Plath is one of those entrepreneurs who’s surprisingly under the radar in comparison to the integral role he’s played in the development of some key web tools — he was the first employee and lead architect of Odeo, which later became Twitter, and was the architect of Yahoo Brickhouse’s Fire Eagle location platform. But perhaps he won’t be undercover for much longer: Henshaw-Plath has sold his 20-person Uruguay-based Ruby on Rails development shop, called Cubox, to New Context, the lean software consultancy that includes Eric Ries as a partner.

The companies didn’t announce terms of the deal, but Henshaw-Plath will become CTO of New Context. New Context is a subsidiary of Digital Garage, the Japanese internet and media company that was an early investor in Twitter and Path. Digital Garage launched New Context just a few months ago.

Henshaw-Plath tells me in an interview that New Context was interested in Cubox because it was looking for an agile development shop focused on working with lean startup clients. It wanted a shop with an ability to do test-driven development, focus on short release cycles, and contribute to open source. The idea is to be able to offer “customer development as a service” — an emerging trend in the development world.

Development as a service could actually have a large effect on startups and Silicon Valley — picture what cloud computing has done for startup web architecture, but apply it to a startup’s business, design and development. Henshaw-Plath says “we realized that building a startup isn’t just about creating it’s code, you need to have a better process around building the business. The concept of a lean startup is that way of doing it.”

Henshaw-Plath actually isn’t so under-the-radar if you hang in the right circles. He’s got a bit of a cult following. He’s an uber nice guy — always trying to help people out, one friend told me — and a geek’s geek. He met up with Digital Garage in Japan during one of Dave McClure’s Geeks on a Plane trips, and I met Henshaw-Plath on the Geeks on a Plane trip to Latin America (and was super bummed that I missed his Uruguay tour). Now within the Lean Startup environment, he’ll also be using his growing influence to help create conferences and give talks.

Now, you’re probably thinking, “Wait, there’s a hot development market in Uruguay?”. Yep. And although it might seem like an unusual place to run a dev shop, it’s actually got a lot of strong resources for a budding development community. The country has provided free laptops for every school child, offers free broadband for everyone, and provides tax breaks to encourage the development of the software industry. It’s also on a similar time zone as the United States, so a U.S. firm working with Uruguay-based developers faces less early-morning or late-night Skype calls, compared to working with a shop in India or Eastern Europe. The country also has a high quality of life, a low crime rate, and transparent business climate — you know, all that good stuff for encouraging business climates.

Henshaw-Plath moved to Uruguay a few years ago with his wife (who’s from Uruguay) as a change of pace from the Valley. After freelancing and opening up a co-working space in the country, he says he “fell into running a consulting company,” and founded Cubox in 2008. He’s been splitting his time between Uruguay and Portland ever since, but will probably spend more time on the west coast as CTO of New Context.

Image courtesy of Robert Michael Murray.

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Pivotal Labs is said to have been sold

Om Malik — Wed, 14 Mar 2012 04:18:43 +0000

Developing story: Pivotal Labs, one of the smartest Web consulting firms, known for its pioneering work in agile development, is in talks to be acquired, according to some of my sources. The San Francisco–based company held an all-hands meeting on Monday that lasted for hours, a source tells me. Pivotal is going to stay in its current Market Street offices. The buyer is said to be a large technology company, but I am still digging more details on the buyer. So stay tuned!

Joi Ito’s Digital Garage, a Japanese incubation and investment company, snapped up Pivotal Singapore, news I had heard independently from sources. In an instant message conversation with me, Ito confirmed that the company bought Pivotal Singapore, but his group is not buying Pivotal Labs SF. Interestingly, on March 7, 2012, Digital Garage acquired New Context, a company that also lists Ian McFarland as president. McFarland was VP of technology of Pivotal Labs.

Back in 2010 here is what we wrote about Pivotal:

Pivotal Labs is a name that comes up often in regards to web startups, but it’s sort of an enigma. The company’s San Francisco office is home to the hyped-up distributed social networking effort Diaspora; its work has been credited for shaping Twitter’s development culture; and its clients include Groupon, Gowalla and Best Buy’s “Remix” API project. But what exactly does Pivotal Labs do?

Pivotal’s services are different from an incubator’s: It’s a consultancy that brings technical teams into its space to grow them, train them and help them build their products. Rather than Pivotal investing in companies, the startups and enterprise clients pay Pivotal for the service.

Pivotal has actually been around for 20 years, but in the last few years, it has created a sort of focused training program for technology startups and projects within larger companies. Say you have an idea for a company and raise funding for it. You then come to Pivotal, which takes on any developers already working on your project and hires new ones to round out the team. Your technical folks come into the Pivotal office every day at 9:00 a.m., sit down at a desk with a “Pivot” from the company’s team, and work in tandem as pair programmers for the full day until 6:00 p.m. At the end of period of about 2–7 months, you have a trained agile development team for building products with Ruby on Rails, as well as lot of progress on your product.

A few more reasons you may have heard of Pivotal: Pivotal Tracker, which the company developed to help clients plan and execute projects, is a free agile development tool that has hundreds of thousands of users.

In recent years, Pivotal has become a favorite recruiting ground for fast-growing companies. Square, for example, was one of the more desired destinations of those leaving the company.

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Why you shouldn’t launch your startup in the press

Ryan Lawler — Mon, 19 Dec 2011 22:00:19 +0000

Last week, I had the pleasure of taking part in the filming of Press:Here, NBC Bay Area’s equivalent of ‘Meet the Press’ for tech nerds. Along with NBC’s Scott McGrew and Fast Company’s Farhad Manjoo, I interviewed Engadget Editor-in-Chief Tim Stevens, TaskRabbit founder Leah Busque and Eric Ries, author of The Lean Startup.

Videos are at pressheretv.com, if you want to check them out. But there was one part of the conversation that really struck me as critical for startups and entrepreneurs looking to navigate today’s tech press. While interviewing Eric Ries, I asked how startups can navigate launching new products in what is a very crowded environment.

The answer? Don’t launch in the press.

The full answer:

“It’s really an important point. We try to teach entrepreneurs not to launch in the press, with all due respect. When you’re iterating and making mistakes and failing, you want to do that in private. You want to take advantage of the fact that you’re an obscure new startup and no one’s ever heard of you but a pathetically small number of customers. That’s actually a real asset. Take advantage of it. Do the big publicity push after you’ve already figured out how to build a sustainable business. We call it the ‘product launch’ when you put the product in front of customers — and you should do that as soon as possible — but do the marketing launch — when you’re pounding your chest and talking about how great you are — as late as possible.”

When considering this topic, I thought about all the world-changing new startups that didn’t live up to the hype — and those that saw almost immediate negative feedback from the same news outlets that agreed to cover their launches just a few hours before. Think Wolfram Alpha or Color or Cuil — all of which were supposed to revolutionize the way we did things with big funding announcements and applications but didn’t perform as well as promised. Like how Cuil couldn’t find relevant search results or how users generally had no idea what Color was for or how to use it.

Those startups launched their products before they were ready — that is, before real people had a chance to use them and before they got a chance to revise things to make them usable. Meanwhile, there have been any number of interesting products and services that launched with little fanfare but slowly found their groove as time went on. Think about Twitter, for instance, as one example of a company that took advantage of being an obscure startup and iterating before making huge announcements in the press.

The lesson here is a simple one, but one that frequently eludes entrepreneurs: Don’t launch before you’re ready. And don’t expect a lot of press to make up for a half-baked product. You only get one chance to make a first impression, after all.

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