Sean Ammirati

Announcing Birchmere Book Club - The Lean Entrepreneur

Wed, 22 May 2013 09:18:18 -0400

As Tim Sanders likes to say “readers are leaders.” This is certainly part of the culture at Birchmere. I’m always getting book recommendations from my partners and portfolio companies.

We’ve decide to try an experiment for the next 5 weeks. We will be hosting a “book club” from May 28 through June 25 each week at 12:30pm at the Birchmere Pittsburgh office. This is open to anyone in the Pittsburgh Tech / Startup Community interested in attending and it’s free.

Specifically, each week we’ll review 2 chapters from The Lean Entrepreneur. So the schedule is: May 28 - Chapters 1 & 2; June 4 - Chapters 3 & 4; etc all they way through June 25 - Chapters 9 & 10.

This event is BYOL (Bring Your Own Lunch) and intended to be very informal. However, to make sure we have space in our conference room for everyone interested in attending, please grab a ticket here. (First come first served).

If this works, we may do it again. If not I can promise you’ll have read a fantastic book for everyone interested in entrepreneurship.

"When going through hyper-growth, there is a temptation to hire quickly. This tends to conflict with..."

Mon, 20 May 2013 14:42:38 -0400

“When going through hyper-growth, there is a temptation to hire quickly. This tends to conflict with the goal of only hiring the best people – and is exacerbated once a founder stops being involved in every hiring decision.”

- http://firstround.com/article/Aaron-Levie-on-How-to-Scale-10x-as-a-CEO-Built-a-Billion-Dollar-Business?utm_source=buffer&utm_medium=facebook&utm_campaign=Buffer&utm_content=buffer87a71

"Every dollar spent at a locally owned business generates two-to-four times the economic development..."

Tue, 30 Apr 2013 23:34:21 -0400

“Every dollar spent at a locally owned business generates two-to-four times the economic development impacts as a dollar spent on an equivalent non-local business.”

- Forbes piece on the amazing power of spending locally. (via poptech)
New statistics for next Innovation Happens!

$GM is about to have a higher P/E the $AAPL

Fri, 05 Apr 2013 17:29:00 -0400

The following chart is absolutely crazy in my opinion as the PE ratios for GM & Apple converge:

To put this into context, here are some more relevant comparisons for Apple (Amazon not included because oh yeah that’s right negative EPS):

Disclosure: I do own some $AAPL

What I mean by "pattern" ...

Thu, 04 Apr 2013 21:01:06 -0400

Alex Payne wrote a post about a year ago where he critiqued VC’s use of the term pattern matching:

There is a term that venture capitalists use: pattern matching. My ears perked up the first time I heard this from a VC, because in the world of computer science, pattern matching is a well-defined concept and a feature of more interesting programming languages … I have to admit, I was somewhat disappointed when I realized how the term was being employed at the negotiating table…What we’re [VCs] talking about is good old fashioned experience, which is what you get to call induction when you’re making money and what you say you earned instead of cash when you were losing money

I use the term “interaction pattern” and “business model pattern” a lot when interacting with others. I teach graduate students in my Lean Startup course Digital Business Model Patterns. I used “interaction pattern” when conversing on twitter with Jeremiah Owyang this morning.

So to be clear, when I say “pattern” what I mean is a template or generalizable solution.

So in the case of interaction pattern I mean an interaction (UI/UX) template that other apps can copy for different use cases. As an example, I think both TripIt and Expensify’s forward emails to capture, analyze & store relevant information is a great interaction pattern. In one case it’s used for expense reports and another travel itineraries. I beleive this could be applied to a lot more use cases.

In the case of business model pattern, I mean things like subscription commerce. What BirchBox is doing in Cosmetics, I believe could be similarly powerful in other industries / sectors.

This is a key part of how I look at opportunities at Birchmere, so wanted to share my definition of “pattern”

Image - Ego Pattern (creative commons)

"Nike didn’t discover the power of advertising, they discovered the power of their own voice"

Wed, 03 Apr 2013 09:51:17 -0400

“Nike didn’t discover the power of advertising, they discovered the power of their own voice”

- Dan Wieden

Brands are Built on What OTHER PEOPLE Say About You

Mon, 25 Mar 2013 15:22:55 -0400

Last week I flew on US Airways, United, Virgin and Delta airlines. (Life of a VC living in Pittsburgh). It’s fair to say that one of these airlines is not like the others.

However, what struck me as interesting is that as they’ve ALL replaced the safety instructions with a video demonstration it’s become popular to do a marketing message before the instructions like “here is how to fasten your seatbelt” comes on. They basically all say the same thing (with slightly different words) “we are a great airline please please please fly us again” but only one of them felt authentic at all.

The most ridiculous example was United Airlines CEO talking about how important customer service is to United. The guy sitting next to me asked out loud to no one in particular ‘has he ever flown his own airline?’ and the entire group within ear shot burst out laughing. It was a good reminder of one of my favorite Guy Kawasaki quotes:

Brands are built on what people are saying about you, not what you’re saying about yourself.

Next time you sit down to work on your content marketing and brand strategy (which you should do), make sure you aren’t being as ridiculous as United!

Lessons from Tech for Creative Class Transformation

Thu, 21 Mar 2013 12:10:50 -0400

A little over a decade ago, I was a research fellow at the Sloan Software Industry Center at CMU led by the one and only Richard Florida whose brilliance at that time was being discovered by more and more of the world with the release of Rise of the Creative Class. If you aren’t familiar with the book, it’s well worth downloading and reading.

The full title of the book is “The Rise of the Creative Class: And How It’s Transforming Work, Leisure, Community And Everyday Life”. While many commentators focused on the regional economic development aspects of the book, in my opinion the most important aspect was how this creative class was transforming how we work.

My research with Richard at SWIC and our regular conversations was an attempt to formalize and more deeply explore some of the “work transformation”. My hope was that ultimately this would lead to a book documenting and providing best practices based on this reshaping.

We made some great progress, but the entrepreneurial allure of Peak Strategy pulled me away which kicked off a series of fun startup adventures. Richard also left CMU shortly after to move to DC and then to the University of Toronto where he directs The Martin Prosperity Institute and teaches business and creativity.

So short story: the book never got written. Over the years, I’d think about it but as time went by I had started to believe we’d experienced enough of this transformation that it was relatively self evident. Except as I was in Austin a week ago for my 8th annual “geeks on spring break” (otherwise known as SxSW) I realized that wasn’t what happened at all.

Instead what happened is that I’ve put on thicker and thicker mental blinders as my focus has been almost exclusively early-stage high growth technology startups. Technology companies (especially at the earliest stage) definitely take into account this “creative class” transformation.

This still is my focus, but something interesting has happened — “software is eating the world” (the growth of SxSW interactive is another fun data point backing this up). As it does, not only does it change the economics of these businesses but it also brings a change to how people think about doing business. While it’d be an interesting chicken and egg debate about which came first, here are a few examples (not intended to be an exhaustive list) of things I’d argue illustrate this:

Interdisciplinary skills become more valuable and new job functions are created (data scientist jumps to mind)
As we said in the Birchmere Labs manifesto, “Design and the user experience are not an afterthought but a key source of differentiation.”
Data & community transform work even for those not obviously knowledge works (see Om’s column last week)

I’ve been thinking about this a lot over the last few weeks and thought I’d ‘think out loud’ in public for other’s reaction.

Photo via Le ciel azur creative commons.

I know $AMZN monitors every pixel, but these ads (for non Amazon...

Wed, 20 Mar 2013 11:00:26 -0400

I know $AMZN monitors every pixel, but these ads (for non Amazon products) can’t be a good use of screen real estate!

Benefit of 'Getting Out of the Building' ... You Get Started

Tue, 19 Mar 2013 09:15:00 -0400

Last night I started teaching another mini of Lean Entrepreneurship at CMU. It looks like it’s going to be an amazing class. The students are a wonderful mix of different CMU graduate programs and from the first night’s interactions come with some really relevant prior work experiences.

However, about 4pm I started coming up with a bunch of excuses why it was going to be difficult such as “you have so much going on at Birchmere” or “one more night away from my kids each week.” Obviously, I’d committed and I really love to teach this class. So I wasn’t seriously considering not doing the class but upon reflection I realized it was really just me dealing with the challenges of starting something again.

As disciplined as I try to be, it’s hard to get started. Yet every professional accomplishment I’m proud of involved me creating this momentum. It seems like I’m not alone as I shared both these quotes this morning on my twitter account:

“amateurs sit and wait for inspiration, the rest of us get up and go to work” - Stephen King

“The way to get started is to quit talking and begin doing” - Walt Disney

I think part of the brillance of the Lean Startup & Customer Discovery / Development techniques we is that they provide a process to get started - specifically the emphasis on actually creating things and testing them or ‘getting out of the building’. Don’t get me wrong the biggest benefit is that the voice of the market really is smarter than any product manager. But a secondary (yet powerful) benefit is that it forces you to get started.

5 Tips for Entrepreneurs 1 Year after Switching Sides of the Table

Fri, 15 Mar 2013 11:23:25 -0400

Exactly one year ago today, I announced that I had left RWW (3 months post our acquisition by SAY Media) to join Birchmere Ventures both to invest out of their existing fund and raise a seed & studio fund Birchmere Labs. I was really excited to become a VC and the reaction from the press was really great.

Warren Buffet has a great quote (paraphrased) that he is a better businessman because he’s a good investor and a better investor because he’s a businessman. I definitely feel like this is true for me: I can’t imagine doing this job having not been a founder / operator for 12 years and conversely I’ve learned a ton watching our amazing portfolio companies.

I also have had an interesting view into early stage venture fundraising process from the “other side of the table”. Below are 5 tips …

Tip 1: Simplicity Trumps Complexity

Oliver Wendell Holmes is attributed as saying “I wouldn’t give a fig for the simplicity on this side of complexity; I would give my right arm for the simplicity on the far side of complexity” After hearing hundreds of pitches every month, this quote rings so true. Entrepreneurs who know their business inside and out are able to describe it in simple but complete terms and then appropriately dig into the areas we investigate in our diligence. Make sure you know your material cold and can describe it completely yet simply.

Tip 2: Worry About Quality of Your Business Not Your Pitch

I think way too many entrepreneurs think it’s a magical process to get funding. After 1 year, I can unequivocally say it’s not magical. Venture Funds want to invest in great businesses at rational valuations. Obviously, what is a “great business” and “rational valuation” is a subject of debate. However, spending time focused on building a great business is a much better use of your time that “tweaking your slides” one more time.

Tip 3: Understand What Investments Fit a Particular Fund

It’s really important to understand what types of investments (stage, sector, business model) a firm is targeting. We’re investing out of two funds at Birchmere both Birchmere Ventures and Birchmere Labs. In both cases, we try to be very transparent abut the types of investments we’re looking for. Also, our portfolio demonstrates this as well. Remember it’s not how many people you pitch, it’s how many reasonable targets that you pitch.

Tip 4: In Search of 10x+

The math of managing a portfolio of early stage companies, requires you to optimize for each investment to possibly create a huge (10x plus) return given the risk associated with each investment. Over the last year, a number of interesting businesses have pitched me on investing where I though they were great businesses and much lower risk but if everything worked out they wouldn’t be worth enough to create that mysterious 10x return. In each case, I tried to be helpful and introduce them to potential customers and angels who may be able to help them achieve their dream. These aren’t bad businesses to be clear, just a specific (and surprisingly common) type of way that a lot of businesses don’t fit.

Tip 5: Don’t Describe Comps to Me You & I Both Know Nothing About

Finally, I love reading TechCrunch, ReadWrite, Pando Daily and other publications that follow high growth startups, but most entrepreneurs don’t give every detail about their strategy and accomplished milestones to these outlets. Therefore, the “fact” another firm invested a lot of money in a “competitor who has made far less progress” is a very questionable fact if your only source is a link to a blog post. In a few cases, I’ve even met the other company later and realized how much more to their story existed. It’s certainly important to pay attention to what your competitors are doing but don’t try to use that to validate your business.

Raising Capital for Your Startup

Mon, 03 Dec 2012 10:00:00 -0500

Lean entrepreneurship - Raising Capital for Your Startup from seanammirati

Slides from Agile Product Development Lecture @ #CMULean

Tue, 27 Nov 2012 21:31:00 -0500

Forgot to post this week, thanks for the reminder…

Digital Business Models

Mon, 12 Nov 2012 10:00:00 -0500

Developing a Replicable Online Sales & Marketing Model

Mon, 05 Nov 2012 10:00:00 -0500

Third set of slides from my Lean Entrepreneurship course at CMU.

Customer Discovery Slides: CMU Lean Entrepreneurship

Mon, 29 Oct 2012 10:00:04 -0400

CMU Lean Entrepreneurship - Introductory Class

Sun, 21 Oct 2012 20:42:00 -0400

For those of you who have been asking about my Lean Entrepreneurship course at CMU this second mini - I thought I’d share my syllabus & first set of slides this week. I’ll also probably post future slides under the CMULean tag here, to make it easy to follow along.

As always, feedback is certainly appreciated!

Lean Entrepreneurship Syllabus

"Nielsen says a 9% to 14% increase in buzz volume (depending on where a particular show is in its..."

Thu, 20 Sep 2012 14:28:36 -0400

“Nielsen says a 9% to 14% increase in buzz volume (depending on where a particular show is in its season) correlates to a 1% increase in ratings in the 18-to-34 demo.”

- http://adage.com/article/the-media-guy/hype-things-social-tv/234134/ (Social TV can increase ratings)

noraleah: jaymug: Ride Your Bike. Will do.

Mon, 28 May 2012 14:25:49 -0400

noraleah:

jaymug:

Ride Your Bike.

Will do.

One other way Automattic is unusual is its incredibly low rate of staff attrition. Mullenweg said...

Wed, 25 Apr 2012 12:43:46 -0400

One other way Automattic is unusual is its incredibly low rate of staff attrition. Mullenweg said that the company currently has 106 employees — and it has only ever hired 118 people.

Absolutely incredible stat! Other companies should look at Automattic closely when building their own culture