Lunch Links - April 7th, 2014

Major Moves

Healbe's GoBe may fit the "if it's too good to be true, it probably is" rule of thumb.

Startup or scam?  Russia-based startup Healbe released a much-analyzed white paper to try to dispel critics who note that the technology that the startup professes to own is likely decades away from being possible.  The campaign has raised over $975,000 USD on indiegogo as of Monday.

According to the Wall Street Journal, Bay-area mobile credit card reader startup Square has secured a line of credit from a group of banks including Goldman Sachs, Morgan Stanley, JP Morgan, and Barclays.  This line gives Square borrowing access to over $100M of capital.  Square could be securing this debt financing as a precursor to an eventual IPO, after postponing it indefinitely earlier in the year.

Square makes revenue through transactions, taking a fee from the $30B in total transactions it's projecting for 2014.  Of the $1B in fees collected, roughly 75% is passed on to partnering credit card companies, leaving a projected 2014 revenue close to $250M, around double of the 2013 net revenue (around $110M).

Chinese P2P bittorrenting and licensed video-streaming startup Xunlei raised $310 million in private equity funding from Beijing-based Xiaomi, a consumer electronics company with a heavily-hyped smartphone.  Xiaomi sold 4.4M of their smartphones in China in 2013 Q2, compared with 4.3M sold by Apple.  Xunlei claims over 230 million monthly active users and 4 million paying subscribers.

Personal Blogs

Entrepreneur-turned-VC Mark Suster explains how burgeoning startups can understand the hired-hand approach of sales culture.

Sales people: 

• Are motivated by cash. Founders think in options. Don’t confuse the two. Sales people want the stuff they can spend today. 

• Are more mercenaries than missionaries. That doesn’t make them bad – it just means that they know that they are “hired guns” and they act accordingly 

• Many great ones don’t thrive in the early phase of a company where the sales is more consultative or evangelical. They like a solid product, well defined pricing, good references to sell against, a clear quota and well defined competitors. This is why I tell startups that most seasoned sales execs aren’t right for startups. 

• They are as good at selling you as they are at selling your product to customers. That means if you don’t understand the way they work you’re susceptible to being blind sided. 

Here’s what I learned in running my first startup.

Marketer Seth Godin pens a short piece on how to avoid meandering toward nowhere special.

Five behaviors that often come clumped together, each conspiring to lead you toward disappointment: 

Big dreams: The goal isn't consistent impact or meaningful work, it's a huge hit, the star turn and the ability to change the world. It wouldn't be enough to have 1000 true fans, the big dreamer wants a stadiumful in every town. 

Poor work habits: Flitting from project to project, waiting for inspiration to arrive, stalling, not taking lessons, repeating the same early steps over and over... 

Shortcut seeking: Why bother with the long route when you can find a shorter, faster path? Get-rich-quick schemes, insider access and the quest to get it right now. 

Lottery thinking: This is a variation of shortcut thinking, but it involves getting picked. One person, one organization, one Wizard of Oz who will magically make it all happen. 

Lack of self-awareness: The self-delusion that your stuff is in fact world-class, and that the critics, all of them that you've managed to interrupt, are wrong.