Startups The Most Important Tech Job that Doesn’t Exist Published 2 months ago on February 14, 2018 By The Asian Entrepreneur Authors & Contributors Share Tweet Yesterday I asked a prominent VC a question: “Why is it that, despite the fact that so many successful startup ideas come from academic research, on the investment side there doesn’t seem to be anyone vetting companies on the basis of whether or not what they’re doing is consistent with the relevant research and best practices from academia?” His response was that, unlike with startups in other sectors (e.g. biotech, cleantech, etc.), most tech startups don’t come out of academia, but rather are created to fill an unmet need in the marketplace. And that neither he nor many of his colleagues spent much time talking with academics for this reason. This seems to be the standard thinking across the industry right now. But despite having nothing but respect for this investor, I think the party line here is unequivocally wrong. Let’s start with the notion that most tech startups don’t come out of academia. While this may be true if you consider only the one-sentence pitch, once you look at the actual design and implementation choices these startups are making there is typically quite a lot to work with. For example, there is a startup I recently looked at that works to match mentors with mentees. Though one might not be aware of it, there is actually a wealth of research into best practices: What factors should be used when matching mentors with mentees? How should the relationship between the mentor and mentee be structured? What kind of training, if any, should be given to the participants? That’s not to say that a startup that’s doing something outside the research, or even contraindicated by the research, is in any way suspect. But it does raise some questions: Does the startup have a good reason for what they’re doing? Are they aware of the relevant research? Is there something they know that we don’t? If the entrepreneurs have good answers to these questions then it’s all the more reason to take them seriously. But if they don’t then this should raise a few red flags. And it’s not only niche startups in wonky areas where this is an issue. For example, I rarely post to Facebook anymore, but people who follow me can still get a good idea of what I’m up to. Why? Because Facebook leverages the idea of behavioral residue to figure out what I’m doing (and let my friends know) without me having to explicitly post updates. It does this by using both interior behavioral residue, e.g. what I’m reading and clicking on within the site, and exterior behavioral residue, e.g. photos of me taken outside of Facebook. To understand why leveraging behavioral residue is so important for social networks, consider that of people who visit the typical website only about 10% will make an account. Of those about 10% will make at least one content contribution, and of those about 10% will become core contributors. So if you consider your typical user with a couple hundred friends, this translates into seeing content from only a tiny handful of other people on a regular basis. In contrast with Facebook, one of the reason why FourSquare has yet to succeed is due to significant problems with their initial design decisions: The only content on the site comes from users who manually check into locations and post updates. This means that of my 150 or so friends, I’m only seeing what one or two of them are actually doing, so what’s the value? The heavy use of extrinsic motivation (e.g. badges) has been shown time and again that extrinsic motivation undermines intrinsic motivation. The latter especially is a good example of why investing on traction alone is problematic: many startups that leverage extrinsic rewards are able to get a good amount of initial traction, but almost none of them are able to retain users or cross the chasm into the mainstream. Why isn’t it anyone’s job to know this, even though the research is readily available for any who wants to read it? And why is it so hard to go to any major startup event without seeing VCs showering money on these sorts of startups that are so contraindicated by the research that they have almost no realistic chance of succeeding? This same critique of investors applies equally to the startups themselves. You probably wouldn’t hire an attorney who wasn’t willing to familiarize himself with the relevant case law before going to court. So why is it that the vast majority of people hired as community managers and growth marketers have never read Robert Kraut? And the vast majority of people hired to create mobile apps have never heard of Mizuko Ito? A lot of people associate the word design with fonts, colors, and graphics, but what the word actually means is fate — in the most existential sense of the word. That is, good design literally makes it inevitable that the user will take certain actions and have certain subjective experiences. While good UX and graphic design are essential, they’re only valuable to the extent that the person doing them knows how to create an authentic connection with the users and elicit specific emotional and social outcomes. So why are we hiring designers mainly on their Photoshop skills and maybe knowing a few tricks for optimizing conversions on landing pages? What a waste. Of all the social sciences, the following seem to be disproportionately valuable in terms of creating and evaluating startups: Psychology / Social Psychology Internet Psychology / Computer Mediated Communication Cognitive Development / Early Childhood Education Organizational Behavior Sociology Education Research Behavioral Economics And yet not only is no one hiring for this, but having expertise in these areas likely won’t even get you so much as a nominal bonus. I realize that traction and team will always be the two biggest factors in determining which startups get funded, but have we really become so myopic as to place zero value on knowing whether or not a startup is congruent or contraindicated by the last 80+ years of research? So should you invest in (or work for) the startup that sends text messages to people reminding them to take their medicine? How about the one that lets you hire temp laborers using cell phones? Or the app for club owners that purports to increase the amount of money spent on drinks? In each of these cases there is a wealth of relevant literature that can be used to help figure out whether or not the founders have done their homework and how likely they are to succeed. And it seems like if you don’t have someone whose willing to invest a few hours to read the literature then you’re playing with a significant handicap. Investors often wait months before investing in order to let a little more information surface, during which time the valuation can (and often does) increase by literally millions. Given that the cost of doing the extra research for each deal would be nominal in the grand scheme of things, and given the fact that this research can benefit not only the investors but also the portfolio companies themselves, does it really make sense to be so confident that there’s nothing of value here? What makes the web special is that it’s not just a technology or a place, but a set of values. That’s what we were all originally so excited about. But as startups become more and more prosaic, these values are largely becoming lost. As Howard Rheingold once said, “The ‘killer app’ of tomorrow won’t be software or hardware devices, but the social practices they make possible.” You can’t step in the same river twice, but I think there’s something to be said for startups that make possible truly novel and valuable social practices, and for creating a larger ecosystem that enables them. ___________________________________________________________________ About the Author This article was written by Alex Krupp. see more. Related Topics:EducationentrepreneurseventfeaturedFoundersgrowthinvestinginvestmentinvestorinvestorsmementormobile appsstartupstartupssucceedtechtechnologyvaluationvalue Continue Reading You may like Jason Feng, Co-Founder of Pillpresso Will Financial Liberalisation Trigger a Crisis in China? Georges Tchokoua Women on Top in Tech – Chrissa McFarlane, Founder and CEO of Patientory Why Angel Investors are Shaking Up the Global Startup Scene Emmanuelle Norchet Entrepreneurship Why Angel Investors are Shaking Up the Global Startup Scene Published 3 days ago on April 24, 2018 By The Asian Entrepreneur Authors & Contributors Candace Johnson is someone who has made a global impact on our modern international telecom and broadcast business. She co-initiated the foundation of SES-Astra and SES Global, which today owns a fleet of 54 satellites and broadcasts 6500 TV channels. And she founded the world’s first Internet-based online service, Europe Online, making it into one of the first broadband Internet services. But it was in her role as president of EBAN, the European trade association of several hundred business angels, which brought her to Eindhoven’s High Tech Campus recently. She explains why angel investors are making a difference to the global start-up scene and explodes several myths that surrounds the way they do business. She spoke with StartupDelta’s Jonathan Marks. Building the match between angel investors and hardware startups “People often think that angel investors are people who do investments around the corner, locally, or in services like e-commerce. To be frank, when the HTCE management told me that they were focussing on the hardware side of things, I was thrilled.” “What I’m trying to do as President of EBAN, and having incubated MBAN (MENA Business Angels Network) and ABAN (African Business Angels Network) under my presidency, is to extend the scope of angel investments. The vast majority of angels are already tech savvy. But we need to educate our successful angel investors to invest more in hardware and infrastructure. We also need to help start-ups develop a pitch that speaks to the interests of angels, so they can get funding for their initiative.” “We run the EBAN Training Institute with the goal of raising standards. We’re seeing more and more that the best angel investors are serial entrepreneurs. They bring their trusted network, expertise and experience to the table.” “Money is important too, but it is not at the top of the list. Business angel investors are high net worth individuals who usually provide smaller amounts of finance (€25,000 to €500,000) at an earlier stage than many venture capital funds are able to invest. They are increasingly investing alongside seed venture capital funds.” Angels are more important than most people know “We follow the guidelines and standards developed by the European Venture Capital Association. For over seven years, during the depths of the financial crisis in 2008 until the recent recovery started, it was the angel investors who took over the role of early stage financing. More than €7.5 billion are being invested annually in Europe, with a sustained growth in recent years. Of that €5.5 billion comes from angels. In fact we have had to professionalize our profession to meet the demand of the growth in this early stage ecosystem.” We always have an exit strategy “Angel investors can only continue to invest if they have exits. I hear many people talk about investing. Only a few discuss exits. I want to change that. I also stress that proven entrepreneurial success is essential in order to become a member of our association. We need to ensure that useful “lessons learned” are shared with the start-ups. They are always based on hands-on real-world experience. We have no time for people who are using new blood to try and correct mistakes they made in their own failed companies.” “EBAN was started in 1999 together with the European commission. For the first ten years, I think people were too focussed on the investing part. Now we need to focus on exits and returns on investment. Without returns, business angels are out of business. And remember there is only a short window of opportunity during which start-ups can scale-up to becoming global success stories”. “Our feeling is that you should not make an investment in a company unless you can see the path for the exit. The exit may be a trade sale, an IPO, etc. The exit also does not have to be 100 %. It does, however, have to bring you a return on your investment so that you can continue to invest. This approach helps you focus on building great companies. There’s always competition in healthy markets, so no-one can afford to waste time. We’re not a charity; we’re doing this because we love building and financing global success stories. We’re therefore looking for companies with a real marketable product, not a prototype or a collection of well-presented ideas.” Is there specific advice you can share with high-tech startups? “In the last few years we’ve seen the rise of the accelerators alongside incubators. They have helped raise standards because a good idea needs to be validated by the market before it is the basis for a high-growth company.” “As investors, we always need to see a start-up demonstrate that they have first clients and initial revenues. We’re not saying that they have had to scale or show market traction. But if we are going to put in our personal money, then we expect the founder to be resourceful enough to work out the first product, to have found the first clients and show us evidence of the first revenues.” “The incubators who help get an idea into reality and the accelerators have been good at making startups better prepared for angel investment, offering the right coaching to turn an idea into a validated business. That means angel investors are better able to select the growth companies and focus on making a good return on their investment.” Hanneke Stegweg “We recognise that young companies need to present their business proposition to the angels attending our annual conference. So we’ve created ways that teams get immediate, honest feedback on the quality of their business presentation. We have one full day of preparation and coaching followed by a Global Investment Forum. The best go on to pitch to the entire network. This year, the “company to watch” category was won by Hanneke Stegweg, who is the Dutch CEO of the iLost company. Together with Neelie Kroes, I am keen to see more women founders lead entrepreneurial teams.” What needs to change for things to move faster? “We held this year’s EBAN congress in Eindhoven at the recommendation of several members. They all work in the innovation and financing of innovation field. But this region also came up in our discussions with StartupDelta. We have worked closely with Neelie Kroes when she was with the European Commission.” “We were tipped off to the High Tech Campus specifically by our Russian members: the Russian Business Angels and the Skolkovo Foundation who are building the Skolkovo science park just outside Moscow.” “And last, but not least, I know Eindhoven from my work in telecommunications and broadcasting hardware field. We often came here to work with Philips on the establishment of the DVD and MPEG-4 standards.” “During our visit to the Brainport area it was clear that there is more than enough money in the region and a healthy appetite to invest in innovation. But there are some caveats that we feel need to be addressed.” “Frankly, I think we are rather tired of the “nice-to-have” e-commerce companies. We would prefer to reinvest in world-class companies who are building something tangible, solving a real-world challenge. They need to demonstrate they can scale and become global.” “We can see that the efforts by many have helped to raise the bar in the Netherlands and that’s good news for everyone. But remember there is a difference between entrepreneurs and SME’s. Entrepreneurs are the only ones to change our world. They create large companies, worthwhile employment, and that grows into large revenues.” Failure is not an option “We should get rid of this talk of failure being an option. If you’re taking angel money, it is NOT OK to fail.” “If you take third party money, you have a responsibility as an entrepreneur to do everything you can to make a return on the investment of your business angel. The media keeps talking about friends, family and fools. But that’s nonsense! Founders, families and friends build great companies!” “I have always been a free marketer at heart. Europe and The Netherlands need to create nations of investors. I believe in the power of private sector-led investment. Government needs to follow the leads set by business angels, not the other way round. We are investing our own money and using our years of experience to scale up these companies. An entrepreneur who is not willing to work and dedicate her or his lives 24/7 to achieve the goal should look elsewhere for money!” “We’re fortunate that the EBAN network acts as a magnet for excellence. We were honoured to have the President of the European Research Council and the Head of Technology Transfer of the European Space Agency address our Congress to show us where the technology trends are going and where we should invest.” “From a venture and entrepreneurial financing perspective, we were most grateful to our colleagues from the United States who joined with our European, MENA, and African colleagues to set the bar high in creating, building and financing global success stories. Amongst those joining us in Eindhoven from the United States were the president of the Global Accelerator Network from the USA, the president emeritus of the Angel Capital Association of the USA, the President of Start-Up Angels and Board Member of Up Global from the USA. We also welcomed the President Emeritus of the Crowd funding association of the US as well as the chairman of New York Angels. And we were delighted with the presence of David S. Rose, the president of GUST.com. These are some of the world’s best experts in angel investing.” “They all said they were pleasantly surprised by the high standard of the startups that came to Eindhoven from all over the world. It was well above what they had expected. Start-ups from Africa, Middle East and Europe traditionally explain what they do, rather than explaining to investors why their idea is important. But that’s changing rapidly for the better. Entrepreneurs are also getting better at defining what they need in order to scale-up.” NEXT STEPS : It’s all about active networking “I should explain that in expanding our reach in Europe, with have formed alliances with the European Space Agency and the European Research Council. They also have their own accelerators and incubators. I think the onus is on the angel investor community to help bring this scientific community to a higher level of entrepreneurship. They need to think about the market for their inventions from the beginning. I believe we can help these organisations filter out the very best ideas and give those the attention they need to scale ideas into real businesses. There needs to be a validated market need for the technology they are developing.” “We have two main events. There is the annual EBAN congress, this year in Eindhoven and next year in Porto, Portugal. And we run the EBAN Winter University, this year running from November 17–19th in Copenhagen. We’re doing this with leading organisations active in Europe’s creative industries. And all this is in addition to individual events and competitions organised by EBAN members at a local, regional and national level. Increasingly we’re assembling cross-border syndicates, both between European countries and increasingly inter-continental networks linking Europe with innovation hubs in Africa, Middle East and North America. As companies scale and go global, it is important they have access to an international shareholder network. It’s a softer landing when they cross continents. We also believe there is a way in which we can build partnerships with techno-business parks around the globe, led by the flywheel initiatives shown by High Tech Campus Eindhoven over these very fruitful days in the Netherlands. _________________________________________________________________ About the Author This article was written by Jonathan Marks, Executive Director at Photon Delta. See more. Continue Reading Entrepreneurship Myths & Facts about Entrepreneurship Published 4 days ago on April 23, 2018 By The Asian Entrepreneur Authors & Contributors Today, there is a pervasive and nearly deafening mantra insisting that you quit your job and become an entrepreneur. The collective says you should do it today because every day you wait brings you closer to a life of poverty and regret. A central theme in the entrepreneurial world is challenging the status quo and questioning conventional wisdom in search of new and better ways of doing things. If you’re just going to follow the pack, you may as well just get a real job and call it a day. Entrepreneurship can be incredibly rewarding. Starting your own business may be the best decision you ever make. But it’s not for everyone. There’s a lot to consider before you take the plunge and a lot of myths to expose, starting with these. Let’s take a glance at some of the Myths of entrepreneurship: 1. You’ll be Happier Entrepreneurship can be incredibly rewarding. Starting your own business may be the best decision you ever make. But it’s not for everyone. There’s a lot to consider before you take the plunge and a lot of myths to expose, starting with these. 2. You’ll have more freedom, control and work-life balance If you’re on your own, chances are you’re going to find yourself wearing all sorts of hats and working 24×7 for a very long time. Work will become your life. There’s nothing wrong with that, but not everyone feels more freedom and control that way. 3.You’ll be more fulfilled Do we know what just about everyone loves to do? Great work that accomplishes goals they can be proud of. One can do that working for a big company, a small company, or their own company. Fulfillment has nothing to do with business ownership. If one wants to manage, lead, or run a business, it’s better off learning the ropes in a good company before starting your own. 4.There are no jobs; technology and outsourcing killed them all It is shockingly untrue. If technology destroyed jobs, then which one will you call the most lucrative and fastest-growing industry on the face of the earth.That’s right: technology. If you can’t find a job, chances are you lack in-demand skills or education, in which case, yes, you might want to consider starting a small business which does not require much of exclusive skill sets in particular. 5.Entrepreneurs Live a Glamorous Lifestyle That’s again untrue. Most entrepreneurs do not live a glamorous lifestyle; if they do, their investors should cringe. Entrepreneurs are notoriously frugal, hard working and opportunity-obsessed with little time for outside activities. These qualities are not hallmarks of the glamorous life. Now,Let’s look at some of the facts of entrepreneurship. Most successful entrepreneurs succeed by exceptional execution of ordinary ideas: See Jiffy Lube, Starbucks and Charles Schwab. Most successful entrepreneurs concentrate on minimizing risk rather than taking huge risk at the time of starting their companies. Successful entrepreneurs use their innovative passion in many ways, such as buying companies, creating new ventures within larger companies and re-strategising nonprofits. More than 80 percent of new ventures are boot-strapped from personal savings, credit cards, second mortgages and the like. The median start-up capital is about $10,000. Waste Management began with a single truck; Sam Walton started with $5,000. So, in short access capital is not required to startup. Being first to execute well and delight customers is not at all important for success. A lot of startups have entered quite late in a particular startup industry and have done well. _______________________________________________________________________ About the Author This article was written by Utkarsh Sharma. Continue Reading Latest Popular Callum Connects22 hours ago Jason Feng, Co-Founder of Pillpresso Entrepreneurship2 days ago Will Financial Liberalisation Trigger a Crisis in China? 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