Lunch Links - April 3rd, 2014

Major Moves

Spotted @SoFi in Midtown Manhattan! Awesome startup that refinances student loans via alumni networks. pic.twitter.com/xQxCImV4va
— Matt Nicholas (@MattAtMich) January 20, 2014

SoFi, the San Francisco-based startup that favorably refinances student loans through the university's own alumni network, has raised $80M in Series C funding, led by Discovery Capital Management.

Imgur, the image-hosting platform based in San Francisco, raised $40M in Series A funding in a round led by Andreessen Horowitz and joined by social link-sharing site Reddit.  This round comes two months after Imgur debuted an analytics platform for pro users and advertisers.

Fonemine, a Bay-area startup that develops enterprise mobility software, has raised $4.5M in Series B funding led by Ann Arbor-based Michigan eLab.

Personal Blogs

In an older post, Jason Goldberg, founder of designer sales site Fab, lists off 5 things that most young people don't yet know.

1. It’s better to do one thing exceptionally well than to do many things really good.  

News flash: Specialists get farther than generalists. If you want to rise to the top, own something. Be known for something. Have your one thing that you are simply the best at. And own it with pride. 

In my career I’ve found that people who have unique talents tend to rise to the top because they offer that unique something that others dont. Now, that unique talent can also be something broad like being a general, or being the the guy whose best at code reviews. My point is that you’ve got to be really good at something, not just kinda good at a lot of things.

2. It's okay to say I don't know.   

The young person who pretends that he or she knows all the answers comes across as sneaky and hard to believe. The young person who says I don’t know and then who comes back with smart well though-out answers, earns respect and trust.

3. People will do great things for you because they want to, not because they have to.  

People will do things for you because they have to, but they’ll only do great things for you because they want to. That means you need to spend as much time getting your colleagues to like working with you as you do getting them to respect your work. 

Just because you are smart will not always mean that you are effective. If you want others to want to do amazing things for you / with you, you need to inspire them and ingratiate yourself to them. 

Fred Wilson of Union Square Ventures ponders what it would be like to move from blogging to tweeting, and not just as an April Fools joke.

Tweeting is easier than blogging. It was that single insight that led me to email Evan Williams back in the spring/summer of 2007 and ask him if he’d allow USV to invest in Twitter. Thankfully he responded to that email and Ev and Jack did allow us to do that.

I had been blogging for almost four years at that point and was completely sold on the huge benefits that come from publicly sharing your insights, opinions, and decisions. I would advocate blogging to everyone. And folks would try it. And that vast majority of them (way greater than 90%) would not be able to sustain it. So when tweeting showed up, I thought “well this has most of the benefits of blogging but is at least 10x easier”. And then I wrote the email. Most good investment decisions are not more complicated than that.

Entrepreneur-turned-VC Mark Suster says hard deadlines help prevent your software development from becoming a broad research project.

There’s a healthy balance between allowing a design team to dream up functional requirements, talk with customers, analyze competitors and for technical projects – research the latest cool-kid tools to play with.

Design with no constraints becomes a research project.

You see there is a creative tension along the spectrum of  time and scope. If you pull too hard at the scope end of the chain your time drifts. If you pull hard at the time end of the spectrum you end up shipping inferior product. As obvious as it seems I assure you that many projects I’m involved with don’t sit down and have hard enough conversations about the need to hit time-based deadlines – so dates slip.

7 Lessons Learned from Working in Venture Capital

RPM Ventures' front page features a toy idea taking off.

This summer, I've had the fortune of interning as a Venture Capital analyst for RPM Ventures, a seed-stage Great Lakes venture fund that combines Silicon Valley startup culture with a Midwest work ethic.  On my last day of the internship, I've had some time to reflect on a few quick lessons I've learned.

1. It's about the entrepreneur.

Solving the business problem equation isn't the real challenge. Winners are the ones that can solve the people equation too. #leadership
— Marc Weiser (@greatlakesvc) May 13, 2013

This is one of the four core values that RPM Ventures espouses.  A solid leadership team is the driving force behind any venture, and is the first thing that VCs look at when evaluating a pitch.  You may have the greatest idea to start a business, but so may many others.  Your team is unique, and the individual chemistry and experience inherent in the team can be found only in one place.

2. Ideas are cheap - action is what defines you.

@AlexOsterwalder At UofM, that is exactly what our startup courses stress. We also read the #BMGen book here! @UMCFE
— Matt Nicholas (@MattAtMich) August 15, 2013

There's a great line in Christopher Nolan's Batman Begins that goes "It's not who I am underneath, it's what I do that defines me."  In the startup world, this has been well-known for a long time.  Plenty of people come up with an idea, and like to pitch it, but don't take measurable steps towards that goal.  Ideas are cheap and plentiful, but the action behind them isn't.
In the office, I used the silly term "Do-it-iveness" to describe the entrepreneurs we listened to who have a tendency towards action.  That do-it-iveness is what makes a want-repreneur into an entrepreneur.

3. Surround yourself with people smarter than you.

Marc Weiser, one of the managing directors at RPM Venures, stressed this gem to us during a lunch meeting.  It's oft-repeated, but Marc took it one step further, saying that when he's in a board meeting of a portfolio company, he wants everyone around him to be more knowledgable in the space, more passionate about the opportunity, and more driven to lead the company's success.  A venture capitalist is all of these things as well, of course, but if the management team isn't at the forefront of these three qualities, something is not right.

4. Burn the small forest

Josh Lin, the associate director at RPM, has this saying about "burning the forest behind you".  The idea is that, when you start out attempting to add value to your venture (by pitching your idea to venture capitalists or releasing it to initial customers), things won't go perfectly right away.  In fact, it might be a complete fiasco if you find out that a major part of your venture relies on a false assumption.  This is the process of burning the forest - it's when you test out an idea by releasing it on a small group of people.  You don't want your prototype device to fail at all, but if it will, you want it to happen before a small group of co-workers, not during a meeting with a major venture capitalist.  Once you burn the small forests, and figure out how to prevent the fires of crisis, then you can move forward and have the largest forests unscathed.

5. Focus on what you value.

"A business plan is a static document & there's no such thing as a static startup" @greatlakesvc @rpmvc #entrepreneurs
— mary lemmer (@me_lem) March 29, 2013

Ventures are turbulent ships.  Core people come in or leave, ideas are constantly validated or rejected, and the entire company may pivot several times before becoming a predictable engine of growth.  You need to be flexible without losing yourself or your vision in the waters.  You can do this by distilling your company down into the major value proposition, and putting all your effort into making sure that core value is intact.  Testing whether people will buy a product through your new online site is easier than testing whether people will buy a product or recommend it to friends or click on sidebar ads or use it to sign up for newsletters.  If the value prop isn't strong enough, you have successfully rejected the proposition, and can focus on testing out a new one.

6. Take risks while you have the opportunity.

During my last week, I had the opportunity to sit down with Tony Grover, who manages RPM Ventures with Marc Weiser.  We talked a lot about the future of venture capital, Silicon Valley, the Great Lakes region, and soon-to-be Michigan Alumni (like me!).  One of the major points that stuck in my mind was his opinion that now, more than any future time in my life, is the best time for me to get involved in the startup world.  At the present, I don't have a car to pay off, no mortgage on a house, no romantic relationships tying me down to a location, just a lot of freedom and the ability to couchsurf and live out of a backpack for as long as I need (which I'm currently doing).

When life catches up to you, and you gain responsibilities for more than just your own goals (taking care of kids, paying back loans, etc), you find it difficult to take calculated risks.  It's not impossible, as Tony mentioned, but it is difficult and stressful.

Before I graduate, I want to get involved in the startup community here at Michigan.  Once I've gotten my diploma, I want to take a jump and move out to Silicon Valley or New York, and get swept up in a new venture.

7. The essential rule of thumb for startups in uncertain waters:

When in doubt, chase the dream. Thanks @me_lem for reminding us all of that.
— Marc Weiser (@greatlakesvc) May 3, 2013