The Blog of Burgher Jon

In a previous post, I went on a bit of a rant about the reduction of the unit of work that people are expected to provide their employers.  I included the chart above and discussed how there’s been a steady (and increasingly rapid) movement from the 1920s-1970s mentality of agreeing to work for a firm for a lifetime to the recent trend in hiring subcontractors for months or even weeks.  I mentioned in that post that the legal community needs to evolve with the business community to continue this progression.  At the time I called out healthcare reform as a major necessity in this space; people need to be able to change jobs easier.

Yesterday on Pittsblog, Mike Madison raised another potential legal road block to a world where employees float effortlessly between companies as their skills and expertise are required; non-compete clauses.  Mike’s point is that the Pittsburgh small business lobby should begin arguing for a law change (similar to one in California) making non-competes not enforceable.  Mike argues that intellectual property and trade secrets could still be protected under other legislation.  I’m inclined to agree and I think this type of movement will be critical for an effective market economy in the 21^st century.  Why shouldn’t the Pittsburgh/PA community be a leader in this space?

For the details read his Pittsblog post and for even more details read his post on his law blog.

There is a concept in business known as golden handcuffs.  It’s used by companies in industries with high-turnover to retain employees.  These companies offer their employees stock options that don’t vest for years, retention bonuses that they have to return if they leave, or retirement programs that get larger year by year.  When most people refer to golden handcuffs, this is what they mean.  What I mean by the term is something similar, but something pretty peculiar to entrepreneurs.

I don’t (nearly) know everyone who reads this blog personally, but I’ll bet more then a few are like me.  You dig the concept of being your own boss someday.  You have an idea or two floating around in your head and some loose concept of when you might want to start your own thing.  If you’re like me though, you already have an exciting job, an interesting one, and (most relevant to this post) a lucrative one.  You drive a nice car that isn’t fully paid for.  You have a nice house or condo that you treasure dearly.  You rarely drink PBR or IC Light at the bar anymore, and never Olde German.  Then one day it occurs to you, “I should start my own thing.” and you can’t.  You have a few weeks to two months of run rate in the bank, but that’s it.  That’s the golden handcuffs you don’t notice until they’re tight, the golden handcuffs of modern American society.

Want to be an entrepreneur tomorrow?  Start looking at ways to wiggle your wrists out of those golden hand cuffs today.  It’s something I’m starting to do now, and I’ve found it quite liberating.  I don’t know what my next step will be, hell I don’t even have any idea when I’ll make it.  While it wouldn’t surprise me to be still kicking ass for Adaptivity in 3 years, it would also be nice to know I’m still there because I want to be, not because of these silly hand cuffs.

If a man has good corn or wood, or boards, or pigs, to sell, or can make better chairs or knives, crucibles or church organs, than anybody else, you will find a broad hard-beaten road to his house, though it be in the woods.
Ralph Waldo Emmerson

The quote above is frequently misrepresented as, “Build a better mousetrap, and the world will beat a path to your door.” This quote is responsible for much of what is wrong with entrepreneurship today.  People think they have to have a novel idea to become an entrepreneur and its just not true.  Bill Gates was at least third in coming up with Windows.  Facebook started after Myspace.  IBM didn’t build the first computer.  Google came after Yahoo.  In fact, of those four examples it was only Google that substantially improved on the product to beat their competition.  The others had a team that better understood their customers and could match their price points, feature lists and practical applications of the technology.  Sure, all four had talented technical staffs too, but it was not the idea or even the intellectual property that separated them.

The word entrepreneur is descended from the same Latin family as enterprise, basically meaning “together grasping”.  If you’re an entrepreneur sitting on a golden egg of an idea, you’re making a big mistake.  Even if you’re lucky enough to get a small advantage from being the first to launch, it won’t last.  Your company will suffer from you trying to “grasp” individually.  Without a team, someone else will build a better product, or even just market a comparable one more effectively, and you won’t be the market leader in a couple years.

So, what to do?  Make friends, become a member of the entrepreneurial community in your city (hopefully Pittsburgh).  Seek out mentors, investors and co-founders that can increase your chances of success.  Spread your idea to as many potential customers as you can think of and see what they think.  Great companies aren’t built by inventors, they are built by entrepreneurs who “grasp together” for a common vision, even if the vision isn’t particularly unique.

The venture capital business is contracting. There are less VC funds than there were a few years ago. And there will be fewer in a few more years. And the birthrate of web startups is expanding. That is the challenge we all face.

So, if you are an entrepreneur you should be very focused on either getting to profitability or getting a VC firm or two with deep pockets into your company (or both). If you are a seed investor, don’t go quite so fast. Reserve some funds for follow on investments. And help your portfolio companies get to profitability or get a VC firm or two with deep pockets into your company.

I think this expanding birthrate is a great thing. Entrepreneurship is alive and well all around the world. Smart and scrappy entrepreneurs are imaging new products and services and building them. But we all should be careful to think about how we are going to fund all of this company creation. Not just the first part of it, but all of it.

The above passage is from Fred Wilson’s blog post on AVC yesterday.  The post, which is well worth the read, is about a new breed of web startups.  They primarily fund themselves mostly and achieve profitability quickly.  They require a different sort of funding then the traditional giant VCs that look at multi-round, 5-10 year paths to profitability.  Fred’s not talking about anything new, this trend has been extremely evident since late last year and well documented in many other places.

What might be a relatively new thought, is how this can impact the balance of power between technology scenes.  If we (the Pittsburgh Technology Scene) play our cards right, this is a giant opportunity.  It is no secret that Pittsburgh’s lack of a Sand Hill Row (a large set of serious, big, deep pocketed VCs) is one of the glaring negatives of starting a company in Pittsburgh.  However, if the trend towards smaller, more self-sufficient startups continues that may become less and less of a penalty.  In fact if Pittsburgh can mature more incubators (like AlphaLab), the presence of VCs may begin to actually weigh down the technology scenes that are saturated with them (Silicon Valley and to a lesser extent, NYC).

Sauerkraut is a versatile food; it tops off hot dogs well, It’s also great served alongside sausages, you can even use it in some recipes like pierogis.  Using it in cake though?  That’s what the recipe above suggests (here is the full recipe).  It even has Sauerkraut icing on it.  It’s too bad my birthday is still 10 months away.

Now on to the real purpose of Sauerkraut Sundays… As I go through the week, I use Twitter to send out little updates and links.  I realize that I do this quite a bit and that not all of you use Twitter, so with that in mind I’d like to take Sunday to do sort of a week in review.  I’ve selected the most useful of my tweets from the last week and placed them in to the categories that I use in this blog.

Business

• Reed Smith growing huge, takes on Chuck Greenberg (http://bit.ly/bOqiWm ) and Gary Walker ( http://bit.ly/d6ohmP )

Local Politics

• Mike on Pittsblog: Governments should think of themselves as non-profits trying to do things to justify their funding. http://bit.ly/cfax4Q

Me (Mostly pics from vacation this week)

• Worst corn hole set ever, best venue though.http://twitpic.com/2gz0xp
• I know PIT is great, but can you top this business center at Pellston Regional? http://twitpic.com/2h4kct
• Anybody have 120k I can borrow? http://twitpic.com/2g7teb
• My uncle’s ’65 Riva Super Florida. He has wanted that boat since he was 12. http://twitpic.com/2fpip7
• My office for the next week. http://twitpic.com/2f5qb2

Personal Technology

• 34% of iPhone users say they’re waiting to upgrade until the iPhone moves to a “another” carrier. http://tcrn.ch/bHhFvK

Pittsburgh

• Pittsburgh adds an Arena football league team. http://bit.ly/9W7IRl
• New US News & WR University Rankings: CMU at 23, PSU 47, Pitt 64, Duquesne 120 http://bit.ly/9c7528
• Pittsburgh makes Huffington Post’s Most Underrated Cities List.http://huff.to/chavBV

Social Media

• FlowTown updates the social media map. http://bit.ly/9hDRfq

Sports

• FanHouse post: Pirates Sign 16-Year Old Mexican Pitcher Luis Heredia for $2.6 million: by Pat LackeyFiled unde… http://bit.ly/9Esbuo

Startups

• CloudCrowd’s VP of Marketing stopped by to comment on yesterday’s blog post. http://bit.ly/bhCCJL
• Post-Gazette Tech Beat Writter @erichschwartzel looks at the odd names of the Burgh’s tech firms. http://bit.ly/bqDtNn
• MBVC’s @aveeck recaps the summer of deals in Pittsburgh!http://bit.ly/aswVMK

Unsolicited Advice

• RT @BusinessTalk: The secret of success is making your vocation your vacation. Mark Twain #quote
• In software development you either find ways to celebrate incremental success or you find suicide.

Other (Mostly Humorous/Interesting Comments from the Week)

• Great Tweet, Gold Star RT @thesulk: Twitter has really put me in touch with my First Grade desire for gold stars.
• RT @kcrussell: I think you forgot a ‘f’ CNN.http://bit.ly/axA0NO