Successful people all over the world have one thing in common - they all have good habits. Read on to learn which habits you should develop and which you should shed.
06/05/2012
06/04/2012
Are Incubators Really Necessary for Startup Success?
Twice a year, every tech website seems to devote lavish coverage to just what startups made it into Y Combinator?s latest class. It?s the tech world?s version of covering the presidential primaries: Plenty of these companies aren?t going to exist in a few years (or perhaps even in a few months), but some may go on to do great things.
For those of us actually bent on founding our own startups, the coverage creates mixed feelings. It?s great to see people actually making it. But all the press also reinforces the feeling that every startup needs to go through an incubator in order to succeed. That can be incredibly frustrating for startup entrepreneurs. Not only do we need to come up with a great idea, we have to make sure that it?s something that works for an incubator.
Guest author Thursday Bram is the editor of 21times.org, a daily email newsletter for developers and entrepreneurs who want to turn their side projects into viable businesses.
There Is Value in Incubators
Without a doubt, an incubator can help a startup get up and off the ground quickly. Ella Dyer is an alumna of Springboard Enterprises, the Startup Chicks Accelerator and Venture Atlanta. ?Winning the first annual pitch competition placed us in a four-month mentoring/coaching program where we learned, were reminded of and shared valuable insights into the making of a successful startup. Throughout the program we were able to network with proven leaders, several who have become close advisers and even investors in our company.?
Many startups point to the value of connections, just as Dyer does. Connections go beyond just getting venture capital, of course. Dyer notes, ?The Atlanta chapter of Startup Chicks is ripe with support in every category. From the start we knew who to turn to should we need assistance with spreadsheets (something covered several times throughout our first year) or tax details.? Dyer?s experience with an accelerator had other benefits: ?Sharing the launch of our first application, FashionAde, with the vast community of Startup Chicks was a bonus; we immediately had users, feedback and more assistance.? Overall, Dyer considers incubators very valuable and a key to her success.
But is an incubator actually necessary to a startup?s success?
The Counter-Argument
?Considering that incubators tend to look for very specific business models - startups that can grow quickly and offer a major return on investment - a close look at the numbers can sometimes make it hard to justify applying.?
When you?re outside looking in, an incubator seems to do certain things very well: connect you with investment capital and guide you through the process of setting up a business. For this service, most incubators take a percentage of the startup in question. There are some subtler benefits as well: When a new startup lands in one of the better-known incubators (like Y Combinator), it gets a huge amount of attention from the media, at least online. That attention may be enough to turn the tide for a new company.
But what if your startup doesn?t need the services that an incubator offers? What if you can bootstrap the startup you have in mind? For those companies, there may be little point in applying to an incubator. And, as an added bonus, you get to keep control of your entire company.
Considering that incubators tend to look for very specific business models - startups that can grow quickly and offer a major return on investment - a close look at the numbers can sometimes make it hard to justify applying. And if you?re doing something particularly new, you may not be able to get into an incubator even with a truly great idea. Incubators aren?t exactly conservative, but they do clearly prefer the types of startups that they?ve seen before.
Incubators: Nice to Have
We need to cultivate the mindset that incubators are a nice-to-have option, not a need-to-have. I?m saying that as someone who has started a business without needing (or being a good candidate for) an incubator, but who would love to go through an incubator at some point just to get the connections it offers. I see a lot of value in the process. But I also see that plenty of startups can establish themselves without that sort of assistance and go it alone.
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06/03/2012
Kayak Has Much More Than a Derailed IPO to Worry About
The decision by online travel service Kayak Software to delay its initial public offering has been blamed on Facebook's botched public offering a couple weeks ago. But while Facebook's roughly 25% plunge in share price is a great reason for skepticism in the next Internet company IPO, that's not Kayak's only problem.
The online travel market is crowded and Kayak, which launched in 2004, is battling many more competitors than just other old timers, such as Expedia and Orbitz. Newcomers like Hipmunk are giving Kayak and the others headaches by offering visitors a simpler layout that makes it easier to find the cheapest flight and hotel room.
Founded in 2010, Hipmunk surpassed 1 million monthly searches after its first year in operation and was growing roughly 15% each month, according to the San Francisco-based company. The company raised more than $4 million about a year ago in a funding round headed by Ignition Partners.
As a testimony to its better user experience, Hipmunk has made gains in the market despite its similarities to Kayak. Neither company actually sells airline tickets and makes hotel bookings, like Expedia and Priceline.com. Instead, they get a cut when their visitors book travel at the sites of airlines, hotels and other travel services. Kayak also sells ads.
This doesn't mean Hipmunk hasn't hit some bumps. The company started out only searching for flights and had to add hotel rooms after it realized airlines weren't willing to pay much for having traffic directed to their sites. As a result, hotel bookings have become the bigger revenue generator, according to the company.
Besides fighting Hipmunk, Kayak is also feeling the heat from tech giants. In 2010, Google acquired travel software company ITA Software for $700 million in order to start its own flight-search service. Microsoft is also in the game with Bing Travel, which has its own twist. Rather than just selling an airline ticket, Bing can tell the traveler the probability that fares for that trip to Paris will fall over the next week.
To Kayak's credit, the company has done well over the last year, despite the competition and being a fraction of the size of its largest rivals. The company is profitable. At the end of the first quarter, it reported a profit of $4.15 million, compared to a loss of $6.91 million during the same timeframe a year ago. Revenue rose 39% to $73.3 million. The number of travel searches rose by 45% to 310 million, according to its IPO papers.
And there's no doubt that Facebook's IPO cast a shadow over Internet company IPOs in general. The world's largest social network, with more than 900 million users, went from being the biggest technology IPO on record to the worst-performing public offering in the last decade. The fall from grace has been caused by doubts about its future ad revenue growth and mistrust in the way underwriters handled the share sale. Morgan Stanley led the Facebook IPO and was hired to lead Kayak's offering.
Kayak's IPO to raise $50 million was expected as early as last week. The company, which first filed to go public in November 2010, has denied it has delayed its IPO, saying it never set a firm date. A Kayak spokeswoman told The Wall Street Journal that the company is waiting for market conditions to improve.
So its unlikely Kayak will be the first post-Facebook tech offering and therefore a bellwether on investor appetite for Internet company IPOs. That honor may go to ServiceNow, an IT cloud-computing services company, or Palo Alto Networks, an Internet security company, according to financial news service Bloomberg. Both are also to be led by Morgan Stanley.
In the meantime, Kayak will have to continue to fight hard and prove the rivals nipping at its heels won't derail its growth.
Ed Duff traveled all over for his Memory Gun part and got gnarly.
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