Category Archives: Other

The most compelling reason why you should join an accelerator

Over the last 10 years there has been a dramatic growth in accelerators. While incubators such as ideaLab (Bill Gross, Los Angeles, 1990’s) had existed during the previous bubble, the absolute number of new age accelerators has gone from zero to over 300 in the US alone and from 0 to over 1000 worldwide. At the same time while, the number of early stage (less than $2 Million and company < 2 years old) deals have gone up significantly as well.

Growth in Seed Round Financing
Growth in Seed Round Financing

The chart above from Benedict Evans shows the growth in seed rounds, which indicates that the number of early rounds have increased relative to $3-6 Million rounds.

At the same time, the average amount of money invested in early stage rounds is going down. That makes sense since it is cheaper to build an early stage company and “try to find a product market fit”

Size of Early Stage Rounds
Size of Early Stage Rounds

There are 2 charts missing from this deck. First, how many of these early stage deals are going through accelerators and what is the size of the deal for companies going through accelerators versus those that are not.

Fortunately, thanks to folks like CB Insights and Mattermark, we do have access to that data. I will upload the charts in a few hours / tomorrow since I am running late to my meeting this morning.

1. Accelerator funded companies make up 13% of the total number of seed funded companies, and have been steadily rising. Obviously from zero in 2005 to 13% of total seed funded deals in 2015.

2. Accelerator funded companies raise 20% more in the seed round than non-accelerator companies.

Finally anecdotal data from Microsoft accelerator companies over the last few years alone, I can infer that accelerator companies have 25% better survival rate than those that did not go to an accelerator after the first 2 years.

How did we get this information?

We got over 250 applicants in the first cohort (Sep 2012), 450+ in the second (Mar 2013), over 600 in the third (Aug 2013) and over 1000 in the fourth (Feb 2014) in India alone. Of these, we picked 10 in the first, 12 in the second, 13 and 15 in the third and fourth cohorts.

We then tracked the remaining companies. Of them 5, 3, 11 and 13 got into other accelerator programs such as GSF, Tlabs and Kyron.

Of the remaining startups, 31%, 14%, 22% and 12% have shutdown. That compares to 20%, 10%, 22% and 0% so far.

So, if you are part of an accelerator program, you are likely to get more money, survive for longer and likely to get funding versus not.

Those are the biggest reasons to join an accelerator.

Is it easier to spot winners or to weed out middlers during the selection process for a startup accelerator?

The last 10 years have seen a rebirth of startup accelerators, which has resulted in many more startups getting funded by early stage companies who are startups themselves. Startups helping other startups is a very interesting phenomenon, but that is a topic for another post.

I would segment startups into the top 10, the next 25 and the remaining 965. The top 10 take between 1% and 3% of applicants. The next 25 take between 2 to 10% and the last 965 take what they can get. Of course many startups go from one accelerator to another, with some going to 4 accelerators before their seed funding.

Over the last 3 years I have seen our accelerators accept anywhere from 3% to about 8% of applicants depending on location.

Of the over 500 applicants in the most recent cohort at Seattle, we selected 2.6% into the program and interviewed about 8%.

So the question that comes up often is how easy or hard is the selection process.

We (like most others) will read 100% of the applicants, but give a more serious look to those that are recommended by our trusted partners. Getting a introduction from partners ensures that we will not only look at the application, but also shortlist for a second review.

Typically 2-3 folks review the applicants in the first pass and if most applicants get an average of 4 out of 5, then we will interview them.

There are many many criteria our reviewers look for including market, problem and founder’s background.

What I have found is that it is much easier to reject 80% of the applicants than to pick the ones to shortlist.

Looking back at the data to understand the ones we missed, which turned out to be great early successes, in the 8 cohorts I have reviewed, we have missed between 9 and 12.

What are the 3 most mistakes people make in the application process?

1. Estimating a very small or incorrect market. Most accelerator programs are looking to fund companies that will become large. Many entrepreneurs underestimate the market size, which puts them in the “interesting” but not “viable for the accelerator”.

2. Positioning the startup in the summary, especially for consumer startups. Usually we get between 5-10 companies in the same “market” in any given cohort. For example, travel planning was pretty “hot” in 2012, service marketplaces were frequent in 2013, etc. The difference between the startups was marginal in terms of the market, but most of the companies were positioning themselves as a social network first, which by default caused us to weed them out.

3. Not explaining the background and experience of the founders in the way that explains why they are best suited to execute the opportunity. I have seen many young founders look at building an enterprise SaaS product after they found it hard to get traction for their “consumer” app. That usually means a pivot after they got very little traction, so it raises red flags.

A comprehensive list of Augmented Reality and Virtual Reality glass products

I was doing some research on AR / VR and here’s a short list of some available and some preview products (glasses) in the AR / VR space. I will be posting a longer entry with reviews of the products I have tried and the use cases. This is a post to gauge the interest on these products.

  1. Meta 1 Spaceglass
  2. Magic Leap
  3. Atheer Labs
  4. Sulon Cortex
  5. Epson Moverio
  6. Vuzix M 100
  7. Google Glass
  8. ODG
  9. Microsoft Hololens
  10. Optinvent ORA-S
  11. Technical Illusions Cast AR
  12. Laster SeeThru
  13. Laforge Shima
  14. GlassUP
  15. Sony Smart Eye Glass
  16. Oculus Rift

How the AAP (Aam Aadmi Party) victory is like the launch of the iPhone

If you are not into politics in India, you can skip this post.

In 2007, Symbian was the dominant operating system among “smartphones”. There was another popular mobile OS – Blackberry. Then Steve Jobs introduced the iPhone. The key feature was it was a “touch phone” and provided the power of the Internet in your pocket.

Then came the Android OS. I personally believe the Android OS was a copy of the iOS. Google did to Apple, what Microsoft did to Apple 30 years ago, but with a key difference – they made it (the OS) free.

Now, the similarities are eerie.

Congress is the Symbian phone. AAP is the iPhone and BJP is Blackberry. It is likely, that BJP or some other party could be Android. They can pick up the best pieces of the AAP and work at scale.

I really doubt that Congress will become the Android phone. They will likely continue to be Symbian or morph into the Windows phone (good for most parts, but with little market share).

The difference between Novice, Amateur and Professional #Entrepreneurs (Setting expectations)

I get a lot of forward looking plans and projections for revenue, expenses and hiring from many entrepreneurs. I wanted to highlight a key, but subtle difference that I see between entrepreneurs. I can state it quite simply as follows:

Novices set expectations high, and deliver low. They are the ones I see trying to go from investor pitch to investor pitch defending their “industry standard” growth rate, even though they expected higher.

Amateurs under promise and over deliver. They are the ones I hear always complain about valuations. They fail to realize that the “professional” entrepreneur friend they have is growing at an insane rate, but they choose to only compare “valuations” and dilution.

Professionals over commit and outperform.They are the ones that get the best valuations and are diluting very little. They push their entire team to crush already high expectations.

They dont heed the “research” that says that it does not pay to over deliver. They crush their metrics on all accounts and deliver growth that’s off the charts.

Be a professional if you want investors to chase you. Set the bar high for your metrics and push to overachieve them.

A contrarian view : Is weight loss a sprint or a marathon? Weight loss is a #sprint to start

There are two types of weight-loss theories in the world.

The first kind believe that weight-loss project is very defined and is for a fixed period of time. They are called “Sprint“.

The second kind believe that weight-loss project is an ongoing labor of love and is a “life-time choice”. They call the project a “Marathon“.

I think of weight-loss as a Sprints“. I dont think there’s anything wrong with sprints at all contrary to popular belief. You know the goal, it is short, you can visualize it and you can see yourself winning.

The other kind involves a lifestyle change or a “Marathon” weight-loss project.

Understanding that it is the “Sprint” type you like will help you understand if you will be successful in your goal or if you may be destined to achieve moderate success or failure to reach your original objectives.

Weight loss is a sprint to start. 

You need to have a deadline.

It is the new year resolution, a wedding, a reunion or a doctor’s annual checkup that triggers this project. Some people think of weight loss as a long term goal. I disagree though since I believe there’s no long term without a short term.

If there’s no forcing function, then 99% of people dont achieve success in their project.

There are those that argue that living healthy is a lifestyle choice and you need to be constantly working at it. They consider weight loss as a “Marathon” project. Here’s the thing: most people wont be motivated enough when they know that there in it for the “long haul”.

Research backs me up on that.

Start and finish “Sprint” weight-loss projects have a greater chance of success.

The problem with the marathon approach is that your mind tends to groan and creak at the dramatic change it needs to undertake in a short period of time. I know there are ways for you to “ease” into a marathon by training your mind and your body to help lose weight, but I have tried 5-7 weight loss projects and coached other folks on losing weight as well.

The best approach to losing weight is to have a clear deadline and a measurable weight you want to hit. Then you can optimize around muscle-building, etc. Those are good to have. If your must have is weight loss, I’d highly recommend you optimize for it and think of your project as a “Sprint.

So what happens after you hit the “Sprint” finish? My goal was to lose 50 Lbs in 25 weeks. Now, my “short term” next sprint is to hit my FFM (Fat free mass) towards an athlete’s level. Right now I am at 15% FFM and I want to get to 12%. The best athlete’s in the wold at at between 8% and 10%.

The thing is that’s my next sprint. Then I’ll get a new sprint. Each sprint for me lasts 6 months. Some may call this a marathon comprised of multiple sprints and that I am splitting hair, but I think there’s more to this than just long term life-style changing vs. short-term motivating project.

I am curious to know how many of you have a weight-loss goal this year in 2015 and how are you viewing your project.

I’d highly recommend you sprint your way to that goal.

What kind of a foodie are you? Know yourself before you start a diet

I am a visual foodie.

Yes, I know that food’s more about taste for some people and for others it is about smell, but I am absolutely in the visual bucket. If it looks good, but does not taste great (as in not perfect, with extra salt or the texture is too grainy, coarse, slimy, etc.) I’d eat it.

I am not much into taste is what I figured out early on. I can make out if the food’s got a lot of something – like chilies, salt, pepper, etc. but I dont care too much (within reason) about taste. I was told food was a blessing, so you’d better eat, say your prayers and move on.

I know a few friends who are very much into food that smells good. Which is why they have a tough time going near a Starbucks or a Subway and not ordering something to drink or eat, even if they just had a meal.

The first part of trying to get to your correct weight is to make sure you understand what type of foodie are you. If you are more visual then try to look for ways to avoid being in front of food a lot, or viewing Food TV or watching others order food at the cafeteria. Stick to the same 3-4 things to “condition” your brain to love only those visual cues.

The second typecasting of the type of foodie are you is to put yourself into the 3 buckets of “Thrill seeking foodie”, or “Comfort food foodie” or “Constant cravings foodie”. These are my own categorizations so they are by no means scientific. I think, most people who love food, would fall into one of these three buckets.

The “Thrill seeking foodie” looks for new things to eat or experiments with new types of cuisine all the time. They seek new dishes and viands constantly. They are your friends who are the first to scout the new restaurant in your neighborhood. They always know what to order in the new place you have been to. They have tried multiple “alternatives” and “substitutes” in each recipe and they buy the gourmet foods all the time.

The “Comfort food foodie” prefers the tried and tested, because it reminds them of a time and place they loved. They are your friends who order the same pasta or “palak paneer” or “sambar rice” at every restaurant they go to. They would tell you about the best place to eat their favorite food, and would always order their favorite dish the first time they visit a new restaurant to “compare” it to what they make at home or what their mom made.

The “Constant craving foodie” always has cravings for anything food related. I fall into this bucket. I can eat any time. Rarely am I “too full that I could not eat a morsel”. That’s because I have a very diverse interest in food and I am willing to try anything once and see if I like it. This type of person likes particular foods, but has a soft corner for certain flavors, textures and spices. For e.g. I have a soft spot for lemon. Put lemon in anything and I am a sucker for it. Similarly I love crunchy or hard textures in my food compared to soft. Even in rice and bread.

If you want to lose weight, the one thing you have to do is control your portion sizes more than your diet.

Here is the unfortunate part of weight loss.

If you stick to your calorie intake regardless of the type of food, you’d still lose weight.

You’d be not very healthy, but you’d lose weight.

That means that if you only ate cookies, candy and junk food daily, but were under your calorie requirement for the day, you’ll still lose weight. As I said, you’d be very unhealthy very soon, but you’ll lose weight fast.

In the weight loss department, one calorie is one calorie. Whether it comes from fat, carbohydrates, proteins, sugar, etc. does not matter. Any calorie is a calorie.

Visual foodies who constantly crave food, have the worst of all worlds. If they see something good that looks appealing, then they have to try it.

Here’s the problem with “trying it”. I was coached by my mom to “never waste any food” at all. That meant I always ate everything on my plate, even if I was full.

My stomach obviously said “no more”, but my eyes were like “that needs to be finished”.

So the best way for me to avoid eating things that I “loved” but knew were going to be bad in the long run was to eliminate them completely.

If, however you are a “thrill seeking foodie” who cares more about taste, than how the food looks, you can possibly “sample” many foods, without having to eat a lot of it.

If you are a “comfort food foodie”, then finding substitutes for the high calorie items with same tastes but lower calories might help.

If you are a person who cares a lot about smell, then just walking though the food aisle, smelling the “high calorie food that you love” but substituting it by eating the low calorie foods that are healthy for you will help.

Bottom line, you will have to adopt the strategy that works best for you depending on your archetype.

16 proxy signals that a contrarian uses to tell if the valley is in a “bubble”

I am only posting this half in jest. Someone out to track these metrics to see if the bay area is really in a bubble.

1. Cost per hour you have to pay nannies to baby sit your dog (baby siting kids is such a dot com bubble era style relic). We all know that when there’s a bubble, the first thing folks do is to stop working “from home” and instead go into work. That means you need a dog sitter (Sorry, the hipsters call them nannies).

2. Traffic via cams: You can see real time traffic at 40 locations in the bay area and if you can see a car for more than 3 browser refreshes in 2 minutes, you know there’s a jam (or a bubble, but I am not judging)

3. Restaurant reservations: On average it takes 7 minutes and 4 calls by our admin to get a reservation in the bay area on Wednesdays for table for a team of folks for lunch on Friday. If however it is a bubble, it takes over 21 minutes and 15 text messages, 2 smoke alarms and then a give-up and zerocater.

4. Cost of an SF airbnb rental: This is an easy one, with prices going from $189 to $279 (what,that’s more than the Residence Inn, but hey you are couchsurfing), it is easy to tell when the bubble hits.That’s when prices go from inane to insane.

5. Sales of khaki pants (preferred choice of MBA graduates). the bay area has 43 GAP stores which sell khaki pants. If you visit at least 15 of them and find out that > 60% of them are out of size M pants which have a waist size of 30 – 34, then you have a bubble.

6. Average # of people waiting in line for a Starbucks. Snaking beyond a block is just ridiculous. Enough said. Or give up on Starbucks and head to Contraband coffee.

7. Length of time that new office leases are signed up for. The usual was 2 years during sign up. The dot com bubble took that to 10 years and I think we are near 10 year leases now.

8. % over the listing price that homes get bid in Palo Alto, Los Altos and even the lame homes in Almaden and Burlingame. (No offence to those cities, but really). If the bid is over 25% of the listing price and inching to 30% you have a pop.

9. Average time a local Realtor responds to your email. Most Realtors respond in less than 2 hours. During 2008 the time reduced to minutes. It is now creeping up to 1 hour again.

10. # of times you get rejected by “holiday” party venues because they are “booked” for all days in December until 2025.

11. # of holiday parties you get invited to: Your spouse has a party, you have a party and your friends invite you to their startup party because, well, just because. No, really, its because they can. So the party venues have a field time.

12. # of facebook pictures from friends of friends of holiday party pictures that clearly should not be on facebook.

13. Average amount of time it takes by car to go from 2000’s on Sand Hill road to 3000s. The signals on the cross street from 280 are sensor driven, so more than 3 minutes, means its champagne time!

14. # of notebooks (Macbook Air is now the preferred choice) open at the top restaurants for breakfast

15. # of holiday parties held in January because all the venues for holiday parties are booked in Nov and Dec.

16. Amount of time it takes for the discussion at any party you end up at “I have angel funded this startup” (meaning, they are using my basement or garage).

The only one thing you need to do to lose weight

I lost about 50 pounds over 25 weeks last year (2014). There were 3 things I did – a) Track what I ate with MyFitnessPal, b) Started walking, then running about 13 miles daily, tracking on FitBit and c) Fasting every Thursday.

Since I am data junkie, I kept trying to optimize all these 3 aspects of my weight loss.

If there’s one thing you must do to reduce weight it is this – eat less.

Much, much less, than you even think you need.

I had a nutritionist and my podiatrist who helped me throughout this process. I went from eating about 2200 -2300 calories a day to 1500 calories a day or less.

I found that even if you don’t workout or fast, if you eat less, you will lose weight.

If you want to lose weight and be healthy, then workout daily.

If you want to lose weight and do it quickly (about 2 pounds per week), then add the fasting.