A recent study exposed an alarming trend in the tech industry. Immigrant entrepreneurs, who in recent years have launched half the startups in Silicon Valley, are founding drastically fewer companies. Except for one group: Indians. What makes entrepreneurs from India so different?

The startup study was sponsored by the Kauffman Foundation and conducted by Vivek Wadhwa, who’s the director of research at the Center for Entrepreneurship and Research Commercialization at Duke University. His data showed that the number of immigrant-founded startups in Silicon Valley has fallen from 52.4% to 43.9% since 2005, a drop that Wadhwa calls “shocking.”

Indian Startups Buck The Trend

But another statistic surprised Wadhwa as well: the number of startups founded by Indians is actually climbing. Against the decline in immigrant-founded startups - and our ever more xenophobic immigration policy - Indians are still launching startups.

“The data showed that Indians are defying gravity and starting more companies,” Wadhwa says. “The number of Indian startups went up from 26% to 33% of all immigrant startups.”

The immigrant founders surveyed in Wadhwa’s study hail from 60 different countries - but a full third of them are from India. What gives? Why are entrepreneurs from the subcontinent such overachievers?

Wadhwa says one reason is that Indian entrepreneurs have a very strong support network here in the U.S. Thirty years ago, when Indians began building momentum in Silicon Valley, that first generation of successful startup founders worked hard to help those who followed. They built organizations and created a U.S. ecosystem of successful Indian entrepreneurs - and, crucially, angel funders - to accelerate newcomers.

“It was a very conscious effort put in place by several dozen successful entrepreneurs,” Wadhwa says.

Indian Startups Are Cool

Another factor is the societal value placed on entrepreneurial endeavor. Indian kids think it’s cool to start companies. They don’t grow up aspiring to be the next Justin Bieber. They want to be the next Sabeer Bhatia.

Who?

The founder of Hotmail. “He’s a rock star in India,” Wadhwa says.

How did that happen? Wadhwa gives a brief history lesson. Just a few decades ago India was going nowhere. “The economy was stagnant, India was known as a country of beggars and snake charmers,” Wadhwa says. “Pessimism abounded. India was basically a loser of a country. Suddenly you had these people coming to Silicon Valley making extraordinary amounts of money. This caught the attention of people back home. The media was shocked that Indians could be so successful. Kids started dreaming of coming to Silicon Valley and creating companies like Hotmail.”

So OK. That’s how the Indian community pulled itself to success in Silicon Valley. What’s with other immigrant communities? Why haven’t they done the same?

Can Other Immigrants Emulate The Indians?

Wadhwa thinks Indians benefit from their heritage, which suits them better than many other immigrants to making it in America. They speak English. They come from a democratic society. More than that, they have a serious independent streak.

“Just like here, Indians are free to speak out against the government,” Wadhwa says. “There is a history of breaking the rules, just like here. Culturally, Americans and Indians are similar and that gives Indians a big advantage when they come to America because they fit right in.”

Compare that to the Chinese experience, he suggests. “In China you’re terrified of authority, you dare not speak out against the government because you’ll be taken away the next day. There is a culture shock from that perspective - people who come from authoritative regimes are afraid of defying authority. But to be an entrepreneur you need to defy authority, you need to break all the rules, you need to take a risk.”

The Indians Are Going Home

Now, a lot of Indian entrepreneurs are taking their risks back home. Although his recent study shows Indians are still starting a lot of companies in Silicon Valley, lately Wadhwa has noticed a change. U.S. immigration and employment laws have grown so unfriendly that even the indefatigable Indians are getting discouraged.

“The tide has turned,” Wadhwa says. “Many people could not get their visas to stay here after they graduated from U.S. schools so they went back to India to start their companies, taking their values, experience and education with them. Taking their money with them.”

Result: the tech startup culture in India is booming. Yes, ours is too. But for how long? Wadhwa wonders.

“We’re exporting our prosperity,” he says. “Even though Indian entrepreneurs have had tremendous success here, their numbers could be even stronger. We could have tens of thousands more startups.”

Instead, the top Indian graduates from U.S. universities are going back to the sub-continent. “Gladly returning home,” Wadhwa says. “Every year I see this more and more. There is a gradual but noticeable change in attitude. Many don’t even think of staying.”

Image courtesy of Shutterstock.

Imagine this: A startup with a vibrant and successful founder arrives with the vague notion of a good idea. Venture capitalists, knowing the success of this founder, throw a bunch of money at him and his team, even without a tangible product behind it. The startup eventually releases a product that few understand or find useful. The company, reeling from bad publicity, take months to re-imagine its product before releasing a new version that is also uninspired and unloved. A few months later, the company closes for good. 

You don't have to imagine it. That is the real-life story of Color, a once-hot San Francisco startup that raised $41 million in funding before even releasing a product. Reports say that the engineering talent from Color is going to be acquired by Apple for $2 million to $5 million and the app will be shut down. No one but its investors and employees not going to Apple will shed a single tear.

Color Made Few Friends

It is always sad to see a startup die. But when the startup in question is full of pretentious people with a semi-functional, hardly interesting product, many observers can't help but smile a little bit when they belly up. The demise of Color is bittersweet - but it gives the entire tech startup scene the ability to stand on the rooftops and shout, “I told you so!”

Color started as a social picture-sharing app. The concept seemed interesting and shades of Color’s original idea have cropped up in other San Francisco startups, including Highlight. It worked something like this: When you took a picture at a particular location, you could learn about other people that have also taken pictures there. The idea, termed “an implicit social network,” intrigued many innovators and media types, including ReadWriteWeb founder Richard MacManus, who once predicted that Color would be the next Twitter. 

The thing is, nobody understood Color and it hardly worked, despite huge publicity upon its launch (mostly derived from the compant's gargantuan funding round). The Android app was quickly taken off of the Android Market (as it was known at the time) and the iOS app did not last much longer. Color went back to the drawing board.

The summer and fall passed without much news from Color, outside from vague rumbles of dissension among the top ranks. In December, Color relaunched as a mobile Facebook app for iOS and Android. 

Once again, nobody really understood. The new Color was a means of providing 30-second video status updates on Facebook. The status updates, termed “visits,” were too-often trivial and after the first round of people playing with the app, they quickly disappeared from Facebook’s users news feeds. 

The silver lining in the story of Color is that the one true aspect of value that the company held, its engineers, will likely make some money by being "acqhired" by Apple and be able to continue interesting work on photos, cloud networking and the so-called elastic social network. 

Arrogance Doesn't Buy You Favors

The real problem with Color is that it was arrogant and combative from the start. CEO Bill Nguyen had already led several startups to big exits and he used his name to land the huge investment dollars. Recent rumors hint that when things went south, Nguyen more or less disappeared from Color’s offices and abandoned the startup. The people at Color were often difficult to work with, prickly about how their product was perceived and highly defensive when faced with bad press. It seemed that the Color team expected success as its birthright, like the brat child of some noble family. 

Natural resentment surrounded Color. How could this company, without anything tangible, receive such a mammoth infusion of cash? Companies with real business plans and real users struggle to raise seed rounds of $1 million or get a $5 million Series A. Alexia Tsotsis, co-editor of TechCrunch, summed up the feeling nicely in this tweet:

Wish all that Color money could have gone to charity.

— Alexia Tsotsis (@alexia) October 17, 2012

When Color received its funding, the cries of “tech bubble” couldn't be silenced. A sketchy company gets way too much money and everybody says that the entire venture capital market is about to implode.

Of course, this has not yet happened.

In the end, Color was nothing but an outlier in an ongoing equation that has worked to balance itself since the dot-com burst of the early 2000s. It is also a cautionary tale for investors, hot-shot startup founders and even run-of-the-mill entrepreneurs. Develop your product first, take only the money you need to scale and try not to brag about yourself (let happy users do it for you). Color failed in all three of these area - and will now fade to black. 

There comes in a time the life of many startups when it starts to become clear that everything is not going according to plan. But how do entrepreneurs tell if they need to keep going all in on the original plan, or pivot to something new?

To find out how real-world companies deal with that decision, we asked eight successful young entrepreneurs from the Young Entrepreneur Council (YEC) when they realized they had to let go of the products, plans and strategies that they worked so hard to develop. The most common indicator? Customers made it clear they wanted something different.

1. As Soon As You Can

Smart companies almost always pivot, usually multiple times. You might change the product because it doesn't meet the needs of the market you identified. You might change the market you're targeting because another market finds the product more useful, will pay more money, or has a larger pool of prospects. You might change the revenue model to one more attractive to customers. One of your primary goals early on should be to find out which elements of your business model are flawed as quickly as possible, so you can correct the course with minimal wasted time and effort. The key to doing this is having data. Analytics, surveys, face-to-face interviews and more will help you make informed decisions and ensure any pivots you make get you closer to your goal. - Sean Johnson, Digital Intent

2. Find New Goals You're Aligned With

It's quite the blow to the ego when you wake up one day and realize, "Wow... this isn't working, and it hasn't been working for a while." But the good news is, when you know something isn't working, deep down, you usually also know what would work better. It's just a matter of allowing yourself to "go there" and tune in to what feels out of alignment with who you are and your mission. The way I do this is by thinking back to a moment when I was working on something using one of my "old" models and feeling really frustrated and irritable. I think of the words that were forming in my head at that time (usually, it's something like, "If only I could ____ instead"). That's the clue that tells me what I should change. And voila: you've found your pivot point. - Amanda Aitken, The Girl's Guide to Web Design

3. The Feedback-Induced Pivot

It is time to pivot when your customers are consistently giving you the same feedback that things would need to be different for them to purchase. It often takes six months to a year to determine whether or not you are on the right path. Too often, we see entrepreneurs pivot too early before they have talked to enough customers to constitute an adequate data sample. - Eric Corl, Fundable LLC

4. Don't Throw Out Your Code!

Pivots are an evolution of your business, but it doesn't mean that you need to entirely let go. It can make your transition easier if you view the pivot as setting aside your previous hard work to pursue a strategy that will be stronger. Especially for technology entrepreneurs, I caution against scrapping and forgetting the code you and your team have worked hard to develop, because it's likely that, even post-pivot, you can adopt or adapt something from the early version of your product for the pivoted deliverables. Shelve your products and plans to pursue your pivot full-force, but don't let go of them completely. - Doreen Bloch, Poshly Inc.

5. Your Customers Tell You What They Want

We started as a free-screenwriting-software company back in 2008. Our goal was to give away screenwriting software and convince producers they should buy screenplays from us. It wasn't until 2010, when Levi's came to us and said "Hey, you have a ton of writers on your screenwriting software platform (50,000 at the time), can they work on non-entertainment industry projects?" After we finished the project, we realized we were onto something, and more and more folks starting coming to us asking for help with blog posts, tweets and other written content - so we pivoted to Scripted. Our pivot was driven entirely by customer demand for our product. - Sunil Rajaraman, Scripted.com

6. You Need To Grow To Survive 

Pivoting is a big decision. The only time to consider pivoting your business is when a huge opportunity is in front of you. If you are going to make a major change to your organization, it's important to realize that this will affect everything else that goes on. Pivoting is not the way to fix smaller problems. The times when we've pivoted a business required looking at our entire operation and refocusing or even replacing sections. When we first launched Yodle, we intended the company to address all the Web services needs of small businesses. As we discovered what it would take to scale that business, we realized we should pivot and focus on just advertising and marketing. - Ben Rubenstein, Yodle

7. You Aren't In Love With The Future 

You're inevitably going to hit setbacks, so it's important to be motivated about reaching your destination. For that reason, you should pivot when you're not excited about the long-term direction you're heading in. Here's an example from my own business. I own a marketing company. And in the early days, we used to work only one-on-one with clients. When I looked into the future, I realized I would only be able to serve, at most, a couple dozen clients. I saw how this business model was limiting our growth and our overall impact, so we changed course. We pivoted to start offering self-service training in addition to one-on-one services. And we've been happier and more successful ever since. - Pete Kennedy, Main Street ROI

8. Your Product Isn't Connecting

First and foremost, it's always smart to listen to your customers. Their feedback is priceless, and a majority of businesses pivot because either their product/service is not connecting, or they can't monetize it. When a majority of customers keep saying your product is overpriced, it's probably true. If you are a service-based company that founded its business model on retainers, switch to a pay-for-performance model. These little things end up making a big difference. - Blake Beshore, Tatroux 

The Young Entrepreneur Council (YEC) is an invite-only nonprofit organization comprised of the world's most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.

Geoloqi was a smart little startup from Portland, Ore., that made software for telling a smartphone where in the world it is. All kinds of investors wanted a piece of the action, but Geoloqi said no, no, no. Its founders wanted to find a fit, not an “exit,” a place where they could keep building the apps and maps they love. Now they have. Geoloqi has been acquired by Esri.

“I felt like I had known them my entire life,” Geoloqi CEO Amber Case says of her first meetings with Esri, based in Redlands, Calif. “We wanted to be a longer term, more sustainable company, rather than try to knock it out of the park and be gone in two years.” Despite some early offers from other companies and investors, Geoloqi stuck it out, looking for an opportunity just like the one it announced Monday.

Location, Location, Location

Geoloqi’s tools help software developers integrate sensitive location features, which are hard to build from scratch. Location services eat into the phone’s performance and battery, it’s hard to find location accurately, and the data have to be secure to protect the user’s privacy. Geoloqi solves those problems for its developer customers.

Geoloqi’s free apps show off the kinds of superpowers that can be built using its software development kit. My favorite example: push notifications whenever you walk by a place that has a Wikipedia entry.

With the acquisition, Geoloqi’s software is not going away. On the contrary, version 2 is on its way with Esri’s blessing. The Geoloqi office is now the Esri Research and Development Center, and Geoloqi CEO Amber Case is now the center’s director. The same team will keep building the same software, but now its parent company can provide the other half of the value proposition: complete, powerful maps.

With Esri, Geoloqi Is On The Map

Esri is a map provider. It has amazing data for planning and logistics. I asked Case to rattle off some industries served by Esri’s map data. Here are just a few: education, tourism, government planning, construction planning, telecom/infrastructure planning, retail, environment management, emergency/disaster management... basically anything that uses a map.

For example, you could use Geoloqi’s software on Esri’s map data to create a geofence in the shape of a tornado warning, so every phone in the area would know exactly where it's safe - and where it isn't.

For their first trick together, Geoloqi and Esri released new geocoding features in the Geoloqi service. This allows apps to provide an address instead of just a latitude and longitude, and the service will figure out how to draw the geo trigger. It also allows reverse geocoding, so apps can find the address of a phone just by reading the phone's location.

Esri and Geoloqi are also now offering a mapping library that apps can use. It's powered by Esri's ArcGIS, so apps can use it as an alternative to Apple's MapKit. In other words, if Apple's maps aren't good enough, apps can build in Esri's instead.

Solving Real-World Problems

The merger helps Geoloqi concentrate on real-world problems instead of catering to the whims of the trendy app market. “They’re a nerdy, developer-focused company,” Case says of Esri, “and they service a lot of different industries that are real industries, not just these [markets for] 18-to–25 year old[s].”

To this smart team, the deal was a relief. “People were jumping up and down,” Case says. “We know we can be [at Esri] for a long time and work on cutting-edge stuff.” There’s a clear roadmap, they know what they’re working on, and they can hire more Portlanders. All Geoloqi’s investors hail from Oregon, and the company was a star of the city’s incubators. It’s a real local success story.

In an age of quick-flipping start-ups with no soul, the Geoloqi story is a lesson in the payoff of perseverance.

Disclosure: I used to hang out with Geoloqi a lot when I lived in Portland because I think what they do is awesome. That’s how I took those nice Instagrams of them.

Team photo courtesy of Geoloqi.

Immigration has always been the engine that drives the American economy. In Silicon Valley, foreign-born entrepreneurs have founded half the region’s startups in recent years - and kept the U.S. economy moving forward. So what happens if that innovation engine stalls? We’re about to find out.

A new study shows the number of immigrant-founded startups in Silicon Valley has tumbled from 52.4% to 43.9% since 2005. The study was sponsored by the Kauffman Foundation and conducted by Vivek Wadhwa, who’s the director of research at the Center for Entrepreneurship and Research Commercialization at Duke University.

Wadhwa has authored numerous studies on the topic of entrepreneurship and immigration. He says the findings of his new study are discouraging - but not surprising:

“I had a hunch this would happen. I predicted five years ago that if we didn’t fix our immigration policies we would have a reverse brain drain. Then the Kauffman Foundation came to me to update my research from 2006 because they were seeing entrepreneurship stagnate in the U.S. They were not seeing any significant increase and the economy badly needs it.”

What did surprise Wadhwa is how drastically immigrant entrepreneurship has slowed.

A Shocking Decline

“I was shocked,” he says. “I thought maybe immigrant startups in Silicon Valley would drop to about 50% or 49%, because it’s only been six or seven years since I did my last research and numbers don’t shift that rapidly. But when I saw the early numbers come in at the low 40s I was shocked.”

Wadhwa increased his sample size but the numbers didn’t budge. They show the immigrant innovation engine in Silicon Valley has sputtered to a halt. This is not good news for the national economy.

Anti-immigrant groups have questioned Wadhwa’s research, claiming the number of immigrant-founded startups is down because the number of American-founded startups is up.

Nice try. Not true.

“That’s not the case at all,” Wadhwa says. “We’re not having more native-founded startups, we’re just having fewer startups.”

But what about the tech bubble all these analysts are hyperventilating about? What about SocialCam and Airtime and Pinterest and Evernote? What about 99Dresses?

Mostly hype, Wadhwa says. It may look like a big fireworks show in Silicon Valley but it’s a sparkler in the driveway compared against past eras. “This so-called boom in startups is pretty weak compared to other periods.”

America's Loss Is The Rest Of The World's Gain

Meanwhile, the super-companies of the future are launching in other countries.

“We will have thousands and thousands of entrepreneurs starting their companies in other countries when they could have been starting them here,” Wadhwa says. “And they will be competing with us. We will wake up five to seven years from now and see Google-like companies coming out of India and China, founded by people who came out of Silicon Valley but had to return home.”

He points out that the impact of Google extends far and wide, because people leave Google and start new companies of their own. And when all that innovation is happening elsewhere, Wadhwa says, “then we’ll ask ourselves, ‘What were we doing? Why didn’t we have them here?’”

So, why?

Stupidity Is The Problem

“Because of our stupidity and our immigration policies,” Wadhwa believes.

Wadhwa says every Silicon Valley company and VC he’s asked - without exception - has told him that the difficulty in hiring immigrants is hurting them.

He thinks three policy changes would quickly ease the problem.

1. Make more green cards available.
2. Untether H-1B visas from employers and allow immigrants to carry them from job to job.
3. Create a “startup visa” and issue it to immigrants who want to start companies here.

Wadhwa points out that other countries issue startup visas and estimates that if the U.S. did the same, there would be tens of thousands of new startups here in short order.

Instead, Capitol Hill is busy stringing barbed wire. Recently Congress shot down the STEM Jobs Act, which would have increased the number of green cards available to foreign-born graduates with advanced science, tech, engineering and math degrees.

“Our politicians are acting like juveniles and not fixing our problems,” Wadhwa complains. “And I’m pessimistic because the problem should have been corrected by now and it has not been corrected. This is a landslide of a drop. This will become a national problem.”

It already is.

Lead image courtesy of Shutterstock.

Sometimes I fear for the future of entrepreneurship in America. A stock market crash is a breath away from draining the cash hoards of popular venture capitalists, the Securities Exchange Commission could easily change its rules to cripple the startup ecosystem and we are one serious privacy breach away from Congress enacting Draconian laws that could cripple a world they know nothing about. But judging by the online chatter, the biggest danger to startups in the United States is reality television.

I, of course, am kidding. Reality television will not be the death of startups in the U.S.

But in early November, cable channel Bravo will debut a new reality program titled “Silicon Valley” that will chronicle the lives and struggles of startup entrepreneurs in San Francisco. Bravo's trailer for the show hit the Web earlier this week and response from the entrepreneurial community and blogs has been predictable. 

The reaction went along three main lines:

1. This is basically just a disaster waiting to happen.
2. These people are crazy.
3. They don’t represent the true Silicon Valley.

...in the world according to @bravotv there are no Asians or Indians in Silicon Valley. Not even a few token ones. Where did they all go?

— Christine Lu (@christinelu) October 9, 2012

Why A Reality TV Show About Silicon Valley Will Obviously Be So Much Worse Than Blogs About It

— NextTechBlog (@NextTechBlog) October 8, 2012

The first two points are hard to argue with. As for the third, well, yes they do and no they do not. 

Reality TV Isn't

The first thing to remember when thinking about “Silicon Valley” is that it is over-produced reality television.

I am acquainted with some of the people featured in the show and have been to the mansion in San Francisco where they live and much of the program is shot. I also know people who have appeared on other Bravo reality shows, like Top Chef.

You know those spontaneous moments or dramatic shots that seem so off the cuff that they must real? Well, many of those scenes are shot half a dozen times before the producers are satisfied that they're spontaneous enough.

One such moment in "Silicon Valley" comes when one of the characters is riding a motorcycle with her boyfriend crossing the bridges in San Francisco. They went over the bridge once and then the producers had them do it a couple more times to get the shots right. So, take “reality” for what it is worth in the lexicon of Bravo programming. 

It's A Caricature

“Silicon Valley” will be a purposely designed caricature of startup life. We will see lots of over-sized personalities, drama for the sake of drama, borderline alcoholism and an endless stream of bad buzzwords and catchphrases. The show will be the quintessential guide to the Silicon Valley Echo Chamber, where things that nobody cares about outside of San Francisco become huge crises of conscience within that insulated environment. 

Yet, like any caricature or stereotype, there will be elements of truth to be found within “Silicon Valley.” Yes, startup founders really are full of their own self-importance. They can be arrogant, pretentious and pushy. They work long hours and are often razor-focused on their own mission, to the exclusion of the larger world around them.

They are also real people with emotions, moments of strength, moments of weakness and distinct visions for the future of the world. They often live in a semi-state of poverty, waiting for that first funding round to be able to eat, pay themselves and hire a team (this particular aspect of startup life is not something we will likely see in the show considering its posh setting). 

Entrepreneurial Truths

I have met startup founders and employees in San Francisco, Boston, New York City and Washington, D.C., among other locations. Each city's community has its own distinct sense of self but, by and large, they all share many of  of the characteristics listed above. The difference in Silicon Valley is that, because of the sheer volume of startups and the surplus of cash in the region, these characteristics are often magnified. 

That magnification is what the show “Silicon Valley” will likely try to capture, in all the splendor and bullshit that comes with reality television. The entrepreneurs of San Francisco and elsewhere might be wary of how Bravo will portray their world, but they cannot deny that, regardless of the tawdry presentation, "Silicon Valley" will also reveal some elements of truth.

Kitchen and skyline images by Dan Rowinski. Other images and video from Bravo.

Guest author Matthew Zehner is the CEO of ZehnerGroup, an interactive agency that specializes in launching Web startups and innovating established businesses.

Many startups scramble to create a "minimum viable product," or MVP, to get a version of their product to market quickly for testing. It’s a great way to cost-effectively test a website or app with real users. But be careful, if your MVP is too minimalist, it could torpedo your company's future.

The issue is that an MVP is usually the customers’ first exposure to your product, and a bad first impression could have long-lasting consequences.

So don’t take the word “minimum” too literally. Your goal is not really to create a minimum product, but rather a high-quality but focused product that you can create and release quickly.

Know Your Users

When mapping out the functionality for an MVP, the first step is to understand your potential users.

Think of three people who might use your product and identify everything you know about them. What kind of car do they drive? Where did they go to school? What kind of phone do they have? And so on. The more you know about your users the better equipped you’ll be to determine the features they’ll want from your MVP.

Once you’ve worked out the essential feature set, build your MVP around that. Stay focused. Don’t waste time adding features for every potential user need and scenario.

Focus On The Alpha Hypothesis

Define your Alpha Hypothesis early and stay true to it. Don’t ever forget the core of what your product is and what makes it unique and desirable.

How do you define an Alpha Hypothesis? After you have defined your users’ needs, identify your business goals. Create a feature set where the two intersect. Don’t release an MVP until it includes all of those features.

Any startup should be able to articulate its competitive edge, and it’s essential that you include all of the functions that differentiate you from your competitors in the MVP, even if those functions are the most technically difficult to create.

When you allow real customers to use your MVP, you’ll be testing your Alpha Hypothesis, and you’ll be able to identify where you need to adjust the functionality to meet the needs of your market.

Set Your Sights High

If you’re aiming to create the next big thing, be prepared for the fact that you might just do it. Build your MVP to be scalable, so that it can handle large traffic numbers and complex functionality in a capable manner. This will avoid the need to rebuild the site from scratch if your traffic or the user needs become too great for the current setup to handle.

How do you make your MVP scalable? By utilizing Web technologies that will easily grow with your product.

For example, rapid application development tools and frameworks have made it easier and faster to prototype, create and scale web software. A lot of successful startups have used Web frameworks such as Django (Python), Rails (Ruby) and Cake (PHP), as well as emerging Javascript and mobile frameworks. To speed the development process, automate as much as possible and standardize the codebase to simplify the ramp up of new developers.

Infrastructure has also been evolving to allow lower cost, a lower barrier to entry and instant scalability. Cloud computing, cloud storage and NoSQL all allow startups to pay only for the data storage they are using at the moment, but still be able to quickly scale up resources as needed.

So don’t think of your MVP as a minimum product, but as a focused product. Then get it to market and be prepared to scale for when your product gets traction towards becoming the next billion-dollar company.

Startup accelerators are great, as far as they go. The problem is that, after startups enjoy several months of pedal-to-the-metal support and mentorship, the vast majority of them exit the programs and hit a brick wall. The cheerleading stops, venture funding never materializes and the founders go back to writing code for a living. NestGSV is trying to fix that.

Like an accelerator or incubator program, NestGSV gives its resident startups office space, advice and lots of other amenities (even a beach volleyball court) at its Redwood City, California, campus near Silicon Valley.

Ecosystm + Incubator = Ecobator

Unlike other types of startup programs, NestGSV is an “ecobator,” an ecosystem plus incubator that brings the many participants in the innovation economy together under one roof so that entrepreneurs are surrounded with all the enablers they need.

Take a tour of the campus and you’ll see representatives from corporations, universities, governments and the investment community. You might even see a bigtime VC like Marc Andreessen in a spirited game of beach volleyball. (OK, maybe not.)

Kayvan Baroumand, NestGSV’s founder and CEO, sees NestGSV as “the evolution of the startup incubator and the startup accelerator.”

Baroumand, the former COO of Plug and Play Tech Center, doesn’t dismiss the value of incubators and accelerators. “They’re actually part of the NestGSV ecosystem,” he says. “They’re an important component. But they’re only three-month programs. And even though they talk about the network, after three months all the startups get booted out of the facilities.”

Startups Remain Vulnerable For Two Years

Baroumand thinks accelerators and incubators can be a lot of help to startups during those brief three months but he points out that most startups are highly vulnerable to failure for a minimum of two years. NestGSV’s solution is to provide ongoing support for startups and connect them with corporate, venture and government programs and funding that can help them survive. Some of them might even be graduates of accelerator programs.

NestGSV can accommodate up to 200 startups on its 75,000-square-foot campus. Currently 22 are residing there, paying $550 a month for a desk with 300Mbps of Internet bandwidth. There are conference rooms with audiovisual systems and seating for 250. Every Friday, NestGSV invites a handful of partners and service providers like lawyers, bankers and investors from its network and they sit down with startups that are candidates for a spot at NestGSV.

“At end of the meeting we give them a one-page report on how we can potentially help them,” Baroumand says. “There’s no obligation to join the facility. The worst-case scenario is that they walk away with the helpful one-page roadmap for their business. The best case for both parties is that they decide to join our community. That really differentiates us from any other accelerator or incubator out there.”

NestGSV also offers regular workshops on leadership, business and technology taught by entrepreneurs, university professors and other experts. Startups participating in NestGSV can attend or not. Sessions aren’t mandatory.

Not Just About Office Space

If you’re familiar with Plug and Play, the model may sound familiar. The big difference, says Baroumand, is that NestGSV is not constantly flogging office space.

“From day one, the most important thing we do with the companies in our facility is to network them and accelerate their innovation and bring all the resources together for them. The approach at Plug and Play is very different. You walk into a Plug and Play and the first thing that happens in the lobby is you get approached by two people trying to sell you real estate. We’re the exact opposite.”

Like Plug and Play, though, NestGSV will invest in resident startups it considers promising. (Plug and Play made its big score with an investment in a startup tenant called PayPal.) “We get very good insight into these companies because we’re living with them,” Baroumand says. “I get to know the good the bad and the ugly. I can predict the companies that will do really well and those that might not make it.”

Baroumand has big plans for the future. He says NestGSV will host hackathons and investor pitch meetings. He plans new NestGSV campuses in New York, Los Angeles, Texas and North Carolina.

Now if only he could do something about that term, “ecobator.” It sounds like some sort of weird... well, you know. We’ll just leave it at that.

Failure gets a lot of praise in the tech world. It’s a great learning experience, it’s a vital growth opportunity, etc. But nobody celebrates the actual event. Recently several entrepreneurs in New York City got together to do just that, holding the inaugural Startup Funeral to honor the memory of three dead technology companies.

“Every startup has a launch party, but what happens when a startup dies?” asks event co-organizer Leo Newball Jr. “No one is around to commemorate the life of that startup. There are launch parties but never any funerals, so we wanted to have an event that celebrates startups that don’t make it and what was learned from that.”

Joining Newball to organize the event were four of his colleagues at New Work City, a coworking space in New York's Chinatown: Kevin Galligan, Jason Kende, Valerie Lisyansky and Jason Nadaf. They had people dressed as priests, mourners, urns full of hard candy, a bagpiper and lots of alcohol, which is almost always a good idea on occasions like this. (The alcohol, not the bagpiper.) They thought about a casket but caskets are expensive, even to rent.

Addieu, Get-A-Game, Kozmo.com

The dead startups honored were mobile social-networking company Addieu, mobile game and activity locator Get-a-Game and the late, seldom-lamented but often-derided Kozmo.com, which failed way back in 2001 but to this day is held up as the embodiment of dotcom-era foolhardiness. Three ex-execs spoke and 100 or so in the audience listened and commemorated.

“These people never got the opportunity to say goodbye properly to the startup they founded or worked for,” Newball says. “So it felt like a real goodbye for them. It was cathartic on a certain level but it was all done tongue in cheek, so there was a spirit of fun and many people just enjoyed the ridiculousness of it. The event was different things to different people.” 

After Grieving, Starting Over

For Chris Siragusa, former CTO of Kozmo, it was a chance to talk about his new company, Max Delivery, which is a lot like his old company. Kozmo offered one-hour delivery of snacks, coffee, DVDs, magazines, tubes of toothpaste - pretty much whatever you wanted at a moment’s notice. Max Delivery does the same, with one big difference: Kozmo was free and was killed by its high-cost, low-revenue business model. (In 2000 its revenues were $30 million, delivery costs $35 million and net loss $120 million.) Max Delivery charges a fee and makes a profit.

“Startups are often an iterative process,” Newball says. “Even if one dies, the entrepreneur can go on and learn from the process. Life continues, even if the startup doesn’t. That’s the message of Startup Funeral. Not everyone is going to make a Twitter or a Facebook on their first try.”

More Funerals Coming

The team behind Startup Funeral is now planning its second event, which will take place early next year. They’re deciding between a marching band and a Viking funeral theme. The hardest part, says Newball - aside from getting a permit for a flaming Norse galleon - is finding startup founders willing to stand onstage and tell an audience what they did wrong.

“It takes a brave person to get up in a public forum and say, ‘Hey, I failed.’ But, honestly, we don’t care what you say when you get up to the podium. You can talk about your dog if you want. Or you can talk about the lessons you learned. We won’t judge you one way or another. We’re just happy to have you at the event.”

Two people who did not attend the Startup Funeral were Kozmo cofounders Joseph Park and Yong Kang, the guys who blew through $250 million in funding in three short years. Park is now president of BibleGateway.com. Kang went back to his former career, Wall Street investment banking… at Lehman Brothers. Some people never learn.

It’s like a harmonic convergence. Startups need workers, and the largest generation ever born in America — the Millennials — is desperately searching for work. But as every startup knows, it's never as easy as all that.

According to a new research study from PayScale, the world’s leading provider of on-demand compensation data and software, and Millennial Branding, a Gen Y research and management consulting company, Millennials (ages 18 to 29) are underemployed. According to Dan Schawbel, founder of Millennial Branding and author of Me 2.0, their unemployment rate is a whopping 14%.

Not only does that mean there are millions of Millennials looking for work, but the survey shows they prefer to work for smaller companies that “allow for more flexibility, an opportunity to embrace their entrepreneurial ambitions, and the opportunity to use social networks at work without strict corporate guidelines.”

Does that sound like your startup? Just be aware, though, that some studies have indicated that new graduates are not interested in startups. (See College Grads Shun Startup Jobs - And How To Hire Them Anyway.)

Tech Employers Get The Most Interest

Most of the Millennials surveyed even say their “best” employers would be technology companies. And they’re preparing for employment by “arming themselves with skills and educational training focused in technology and social media.” Schawbel says they’re more likely to major in neuroscience and bioengineering — “the degrees that are in demand today.”

But there are other skill sets Millennials can bring to your startup, too. Schawbel’s study reports some of the most common job skills for Gen Y workers include blogging, social media optimization and writing press releases.

Obviously coming of “career” age when they did, Millennials’ job hunt has been hampered by the economy. This quickly put an end, Schawbel says, to the labeling of this generation as “entitled.” Millennials now realize, says Schawbel, that “nothing is guaranteed.”

How To Keep Gen Y Workers From Leaving

One rap against Millennial staffers is that they don’t stay on the job, often leaving after less than two years. Comparatively, according to Schawbel, Gen X workers stick around for five years, and Baby Boomers are loyal for seven years.

That may not be an issue for many fast-moving startups (see Why Job-Hopping Is Essential For Startups, but there are ways to change that equation by giving Gen Y more reasons to stay. Schawbel says the number-one reason Millennials leave a job is due to “lack of career opportunity.” If given more chances to advance, Millennials would stay on the job for nearly five years.

This is particularly important when competing against bigger companies (particularly in technology) that want to hire some of this young talent. In fact, Schawbel notes that some big companies are buying startups just to get their hands on the young talent. (See "Will Work For $1 Billion.")

Can Startups Cope With Acqui-hires?

Schawbel says you can win the talent war by “guaranteeing” Millennials a promotion within the first year. But I’m not sure a guarantee is your best option. After all, do you really want to promise an untested employee more money and more responsibility? Schawbel suggests that startups create internal procedures that help pave the way for new young hires.

So where can you find Millennials eager to work for your startup? Online, according to another study, "The Multi-Generational Job Search” Millennial Branding conducted, this time with job site Beyond.com. In fact all generations spend between 5 and 20 hours a week searching for jobs, and almost all say job boards are their top go-to resource, followed by company websites and classified ads.

What about social networks? We’ve all heard how valuable LinkedIn is in looking for employees, but that seems to hold true mostly for Baby Boomers, for whom it's the top social platform. If you want to hire Millennials, though, you’re more likely to find them (35%) using Google and Google+ (also the first choice of Gen X job seekers). Job-seeking Millennials do use other services, including LinkedIn (23%), Facebook (21%), and lastly, Twitter (only 8%). (Actually no generation found Twitter particularly useful for job seeking.)

Hire Millennials. Or Compete Against Them

If you don’t hire Millennials, you’ll likely find yourself competing with them. The third most popular major for the Millennials in the PayScale survey was “entrepreneurial studies.” Schawbel says Gen Y workers realize they “need to do their own thing and be proactive” about pursuing that goal.

Personally, I believe Millennials are the most entrepreneurial generation this country has ever seen, so consider yourself warned.

Image courtesy of Shutterstock.

Web groceries, sock puppets, podcasting - Internet trends come and go. The trick is to know when the end is near and avoid doing something foolish, like paying $580 million for MySpace. Today, that means consumer Internet startups taking on celebrity investors.

The Benefits Of Being Famous

The temptation is understandable. Celebrities offer a startup many potential benefits. Bold-face names can attract instant attention and help draw paying customers. At the same, they can establish credibility with investors, who these days will fund consumer Internet companies only if they can demonstrate a customer-acquisition cost lower than Kim Kardashian’s neckline.

Plus, the celebs are into it too. Ever since Ashton Kutcher and Bono got (way more) rich investing in startups like Foursquare and Airbnb (Kutcher) and Facebook and Dropbox (Bono), every Hollywood star and has-been wants in on a hot startup.

But if you have a consumer Internet company and you don’t already have a celebrity investor, you've pretty much missed the bus. The startup-star marriage is over. Over like Tom Cruise and Katie Holmes. Over like Paris Hilton and DJ Afrojack.

Every Which Way But Loose

Trouble is, all the good celebs are taken. There are only a handful of stars like Kutcher, who invests serious money and, by all accounts, adds real value to the companies he funds. The rest are just into tech for the buzz. And you don’t want people like that - or their hangers-on - getting their paws on your startup.

“This is typical monkey behavior of imitation and greed,” says Paul Kedrosky, a senior fellow at the Kauffman Foundation who focuses on entrepreneurship and innovation. “We’re all a bunch of apes and we see the other apes doing things that make them money and get them attention, so we imitate. And there’s no place more full of imitative behavior than the entertainment industry. These people are acutely aware of being a fast follower and that currently involves this fondness for technology.”

Kedrosky says celebrities come with the same advantages and disadvantages as other angel investors “but dialed to 11.” Some do have domain competencies that match the startups they pair off with - like Lady Gaga and Turntable.fm - but even then they tend to be fickle. They don’t have the attention span for follow-on investments and they hit the exit at the first sign of trouble. “It’s the usual bipolar disorder you get when dealing with angel investors,” Kedrosky says, “but way more exaggerated.”

Is Your Startup A "Winner"?

Worse, you could end up hitching your company to a Charlie Sheen or Amanda Bynes. “You rise up with them but then they become embroiled in some goat-boy scandal and you fall with them, with no connection to the merits of your company.”

If you feel you must recruit a celebrity, aim for a star with a large Twitter following. “If you are going to get an angel investor involved who’s writing smaller checks, they’d better be able to bring a lot of Twitter followers,” Kedrosky advises. “There’s a correlation between people on Twitter with the most followers and the likelihood they’ll become celebrity investors. I have no hard data but I’d argue that is absolutely the case.”

Make Sure The Stars Align

Also make sure your product aligns with the talents of the star, Kedrosky suggests. “If you have some kind of enterprise application for building cloud services, good luck with that. Odds are you won’t get an A-list actor to invest.”

Whoever you decide to pursue, you should hurry. The celebrity-investor craze is coming to a close. In fact, Kedrosky thinks it’s time to get out of the consumer Internet business altogether.

“As soon as it becomes obvious to people that this is an easy way to make money, then it no longer is easy. So we’re approaching the end of the current cycle. My guess is we’re long past the peak of the consumer Web and the mobile/local/social cycle. It peaked at least a year ago and now you have a bunch of monkeys showing up at the end, not knowing that the meteor has already struck and the fire is coming across the landscape and they are toast.”

Hmmm. ToastedMonkey.com? Somebody get Billie Joe Armstrong on the phone!

Images courtesy of Shutterstock.

Now is the best time in history to start your own business. But depending on what kind of company you’re building, you have to figure out if your idea is poised to capture a trend - or doomed to miss one and face a much tougher road to success.

To learn about the impact of properly timing a trend - or of missing one - we asked 8 successful young entrepreneurs from the Young Entrepreneur Council (YEC) for their experiences. And we also got their advice on how to perfectly time your business:

1. Missed Opportunities Open New Doors

It was 2011 when we started building a platform for social media. By then, Buddy Media had already raised over $90 million, Wildfire announced that they had over 10,000 customers, and companies like Vitrue and Involver were the industry titans. Some potential investors told us we were late to the party. However, in hindsight, and especially in light of all of the recent acquisitions of the aforementioned, I believe we had a core advantage to really plug into the “second wave” of social, which has the potential to be even more disruptive than the first. We were able to speak to people who were already using a social media platform and figure out what needs still weren’t being met. By staying small and nimble, we were able to quickly adapt to the rapidly changing landscape of social media. - Abby Ross, Blueye Creative

2. Revisit Past Failures

There’s no lack of ideas that were “before their time.” Many business models that failed in the early 2000s are now incredibly successful because now, the timing is right, the technology is here, and it’s easier than ever before to achieve scale. As an example, my company SitePoint tried selling eBooks back in 2000 and no one bought into it. It was a complete and utter disaster and forced us to print and ship physical books – which sold like hot cakes. The reason is simple, people were still getting used to the idea of shopping online, and paying for digital goods was still a foreign concept to many. Fast forward a few years, with the iTunes revolution, Kindle and iPad, and all of a sudden, eBook sales are trending sharply upward every year. - Matt Mickiewicz, Flippa and 99designs

3. Some Ideas Transcend Timing & Trends

Timing is everything – if your idea is reliant on time. If you want to create a flash valuation or raise a certain amount of money quickly, then it’s of utmost importance. And it’s important for tech in general. But I believe that there are other ideas – rooted in timeless truths – that are not restricted to a certain epoch or Zeitgeist. If your idea is rooted in one of these things, then timing is far less important. If you’re a social entrepreneur fighting for human dignity in a particular area, for example, then it’s less critical whether you start today or tomorrow. My personal view is that I want to be involved with an organization that I believe will be important a thousand years from now. If I find an idea worthy of that standard, then I know it’s rooted in something essential. - Luke Burgis, ActivPrayer

4. Timing Boosts Your Success Potential

Bad Idea + Wrong Time = Biggest Failure Ever. Bad Idea + Right Time = Total Failure. Good Idea + Wrong Time = Likely Failure. Good Idea + Right Time = Best Chance of Success. Timing is essential. A business can come to market before people are truly ready or after too many market leaders have established footing for you to truly get through the door, but in the end, I still think that a phenomenal idea that is well-executed can survive average or even poor timing. For example, last year, I would have said that the app Path was too late to the social media market, but the company has executed the business in such an amazing way that it no longer matters that it followed Twitter and Facebook. Path scratches an itch that those networks don’t, and it does it so well that it is growing like crazy. - Shaun King, HopeMob

5. Start Your Own Trend

Timing is not everything. Some people get lucky but, over time, it is the ones who adhere to proven principles and have enough self-knowledge that continuously succeed. Trends come and go; change is constant. So, to paraphrase Gandhi, be the change you wish to see in the world. Great companies start trends and make movements – they don’t follow others, nor are they solely motivated by their greed to take advantage of fickle market whims. Believe in your own ideas, test your ideas, accept that you’re going to fail sometimes – or maybe a lot at first – and do it all in your own authentic style. Too often we focus on trying to “getting it right” within the context of others' point of view. Rather, we should strive to get it right within our own perspective. - Matthew Ackerson, PetoVera

6. Overnight Successes Don’t Exist

It often takes longer than you expect for an idea to catch on. What that means is that when you’re working on an idea and worried that it’s “too early,” you need to be patient. Grow slowly and conserve cash until the market is truly ready. Many of the best companies start out when only the earliest of adopters are ready for it; with the patience and dedication of learning from those customers, they become prepared for the bigger opportunity that eventually exists. The challenge is keeping your finances tight during that time and seizing every opportunity to grow and learn from the market. Then what you may have been working on for years will suddenly seem like it has the “perfect timing.” - Jason Evanish, Greenhorn Connect

7. Timing Sure Does Help

I wouldnít say that timing is everything, but it certainly helps. I launched Money Crashers at the height of the recession and that certainly was to my benefit in the beginning. This is the way I look at it: If you launch a business based on a fading trend, youíre unlikely to succeed. For example, if you're looking to start a small business based on the “daily deal website” business model, you may not have much luck. Some daily deal sites still exist, but many are struggling today. On the other hand, if you come up with a product or service that meets a need people didnít know they had, you can create your own market trend. One example of this is a website called Gradsave. With this website, you can create a way for family and friends to contribute to your child’s 529 plan. - Andrew Schrage, Money Crashers Personal Finance

8. Don’t Depend On Timing

If you’re depending on timing to ensure that your company is going to make money, you probably don’t have a sustainable business model on your hands. Timing may help, in terms of getting ahead of the competition, but you need to be sure that you’ve got something that can do well even if the timing gets screwed up. There are exceptions, of course, but personally, I wouldn’t want to run a business that is dependent on catching the wave of a particular fad. It’s just not going to provide long-term growth. - Thursday Bram, Hyper Modern Consulting

The Young Entrepreneur Council (YEC) is an invite-only nonprofit organization comprised of the world’s most promising young entrepreneurs. The YEC recently published #FixYoungAmerica: How to Rebuild Our Economy and Put Young Americans Back to Work (for Good), a book of 30+ proven solutions to help end youth unemployment.

There are a number of certainties in life. There’s death. And taxes. And if you’re the founder of a successful startup and you’re not named Mark Zuckerberg, there’s the day when you’re replaced as CEO. Don’t pout - your ouster is actually the ultimate validation of your company.

So says David Feinleib, author of Why Startups Fail: And How Yours Can Succeed. Feinleib has been on both sides of the process. He was a venture capitalist at Mohr Davidow Ventures and, prior to that, he founded four companies of his own, one of which was acquired by Hewlett-Packard, another by Keynote Systems.

See The Silver Lining

He’s learned to see the founder pink slip’s silver lining.

“An old colleague recently called me, upset because the guys who gave him money for his startup wanted to get rid of him,” Feinleib says. “My response to him was, ‘Congratulations, man. You’ve arrived!’”

Of course it’s not easy to give up the business you’ve built. When your board members call you in to tell you it’s time to move on, you might be mad, you might be sad, you’ll probably have to force a smile, but you should be glad.

Why Getting Replaced Is A Stamp Of Approval

Founding CEOs should consider getting the boot a stamp of approval, Feinleib says. “It means you did something right and people care enough about your company to want to replace you.”

OK. This is where you start rolling your eyes at the VC-speak. But Feinleib has a valid point and many of the best entrepreneurs know it. They launch and leave - and let other people sweat the long-term.

“But other founders are more like, ‘This is my baby and there’s no way you’re taking it away from me,’” Feinleib says. “They may even see that things are not going the right way or they don’t have the right skill set - and still they won’t relinquish.”

Don’t Take It Personally

Most founders get replaced because they have the vision to create a great company but they don’t have the tools to scale it.

A common shortcoming is interpersonal skills. Often founders with a genius for product are not so good at managing people. Maybe they don’t hire fast enough or they’re too short-tempered to attract top talent. That’s when the board decides to kick the founder to a corner office so the company can grow.

The key is not to take it personally, Feinleib says. “If you’re getting replaced as CEO, it does not mean you’re a failure or disgrace. It can mean quite the opposite. It can mean the company is outpacing you as the founder and you either have to transform yourself or get out of the way. But it’s hard for a lot of founders to see that.”

Seeing The Writing On The Wall

Something else many founders don’t see: the warning signs, even though they’re usually readily apparent. This, according to Feinleib, is why investors are often unfairly cast as the bad guys, blaming the founder for everything and giving him the quick heave-ho when it suits them.

“In one way or another, someone on your board has been indicating to you that it’s time to ramp it up well before the ultimate conversation ever takes place. For founders, there are telltale signs that they may be in trouble and need to step aside. Like if you agree to hire a new VP of engineering and six months later you still haven’t done it, you’re heading for a conversation with your board members.”

Another red flag: a board member suggests you sit down with someone because that someone might have good advice. A lot of founders reject the suggestion out of hand. Others nod and smile and never take the meeting.

Investors notice. And eventually they react.

When they do, try to look at the upside. “Getting ousted is a rite of passage,” Feinleib says. “It means you’ve arrived. You’ve done enough. You’ve raised enough money, you’ve hired enough people, you’ve built a great product.”

Sort Of Like Getting Dumped By A Girlfriend

At times, Feinleib starts to sound like a girlfriend who’s breaking up with you. “It’s really a growth moment,” he says. But he’s right. And besides, there are lots of other fish in the Valley.

“Getting replaced as a founding CEO is not the end of the world, especially in Silicon Valley. It’s not a black mark. You’ll have the opportunity to start another company. There are tons of guys who have rebounded and gone on to new and better things.”

Hmmm. Where have we heard that before?

Adam and Eve. Sonny and Cher. Jobs and Wozniak. Legendary partners all. Sometimes even the most dedicated, uber-competent entrepreneur doesn’t have everything it takes to ensure startup success. That’s when you need that “perfect partner.” But how do you find the right one?

Finding that ideal startup partner can be as elusive as finding a compatible mate. And just like millions of people have put their love lives in the hands of technology, you can now find your business soul mate online. 

Kaviani co-founded CoFoundersLab less than two years ago with the aim of bringing entrepreneurs together to launch startups. CoFoundersLab makes matches (for free) via its online platform or through in-person Meetups. The company is currently in six markets, but expects to at least double that number by year end. It has also teamed up with TechStars in Boulder, Colo., Harvard i-Labs in Boston, and with New York University’s Stern School of Business.

To find out more about how co-founders can help startups succeed,and how founders can find the right partners, I talked with Kaviani and Julie Edge, Ph.D., who is the founder of Inside Edge Solutions, on the faculty of Washington University in St. Louis, and has worked with Kaviani.

RIEVA LESONSKY: CoFoundersLab has been described as “eHarmony for entrepreneurs.” Is looking for a co-founder like looking for a mate?

DR. JULIE EDGE: Ironically it is a bit like looking for a marriage partner.You need to have great trust, be able to engage in healthy conflict, and hold the other person accountable. You need the right personality match to get through the dark days together. In business you need to know if this person has the right skill set for you.

But don’t look for someone who is “most closely aligned” with how you think. The Hogan Personality Inventory (a personality assessment tool) shows that the best teams are the ones that are the most different on all [measurement] scales.

SHAHAB KAVIANI: You also need an equal-level appreciation of the co-founder’s “art” and what they do. The level of complexity for tech roles is highly valued today; the subtle skills of sales and marketing not as highly. But there needs to be mutual appreciation.

LESONSKY: If tech skills are more highly valued, how do the co-founders strike the right balance?

EDGE: First, you need to make sure you need a co-founder, and not an employee. Co-founders = co-owners, both parties have skin in the game.

KAVIANI: Ask yourself, “Am I ready for a co-founder? Can I give up the sole decision making, or am I really just looking for [help]?”

LESONSKY: Then why not go it alone and hire the skills you need?

EDGE: Not everyone needs a co-founder. If the business doesn’t have to scale quickly, going it alone might be the way to go. Technology is a highly competitive industry with a race to market. To get up and running is often too much work for one person. You need a co-founder so you can divide and conquer and get a leap ahead.

KAVIANI: Industries with high partnership rates include clean energy, green businesses, biotech and health. They’re also growing the fastest.

EDGE: The biotech and health fields [are ideal for partners] since science and tech come together. Science doesn’t know business. Two to three skill sets are needed to make a company viable. Many accelerators are only looking at co-founder teams. There’s a 12-14 week period to build a company very quickly.

LESONSKY: Shahab, you’re a veteran of co-founding. What do you look for?

KAVIANI: Here at CoFoundersLab we meaure “teamability.” Are they ready for commitment, and compatible with the team? They need to be empathetic, level-headed, and have ability to look at issues from different points of view.

LESONSKY: So in this age of technology, can co-founders have a long-distance relationship? Or do they have to “live” together?

KAVIANI: Co-founders don’t need to necessarily spend all their time together, but partners should be within 150 miles of one another and get together at least two to three times a month. [Co-founders] need to build trust. That happens in person. The more distance, the higher the likelihood of failing.

LESONSKY: But why would someone need a “matchmaking” service? Isn’t it riskier to partner with a stranger?

KAVIANI: Almost half the people who team up now do it with family or old college roommates. But you have to think with your head and not your heart. The new aspect [of our business] is getting people who don’t know one another to team up.

EDGE: Trust is the primary reason people turn to people they already know. It’s more comfortable to team up with someone from college. There’s a tradeoff using a service like CoFoundersLab. You get a better fit, but you don’t have trust at the beginning.

LESONSKY: How do you establish trust with a stranger?

KAVIANI: You have to make sure the innate characteristics of the size of play is the same — that you share a common goal. Do you [each] want to build a lifestyle business or a VC-backed business? These have different tempos and you have to be on the same page. You both have to be willing to do whatever it takes.

EDGE: The hard part is people don’t know that at the beginning. And don’t divide the equity too early. One co-founder might not do as much as the other. Don’t worry about defining equity until you understand what each co-founder does.

LESONSKY: How does CoFoundersLab help?

KAVIANI: We look at a range of skills.  What does each person bring? It could be money, sweat equity, connections or industry experience. Very soon you'll be able to filter by personality, values and goals.

EDGE: The science of personality has been around a long time, but there’s no magic formula. There’s a better chance of success if you’re paired using personality theory. We’re talking about fit, not just for a job, but with another person. Tools, if used properly, pull emotion out of the decision. They make co-founders see how they behave vs. how they think they do.

LESONSKY: You both feel strongly about the benefits of a co-founder?

EDGE: Yes. Entrepreneurship is a hard road. It’s easier to grow a business if you have someone to share the journey with.

KAVIANI: Emotional support is not talked about a lot. But that, and camaraderie are valuable contributors to a startup’s success.

Sonny & Cher image courtesy of Shutterstock.

It takes more than a big idea and a thorough business plan to start a new business. Most entrepreneurs aren’t quite sure what else it takes until they’re well underway, and many are shocked to discover important elements of startup success that they simply hadn’t considered at all.

To find out what startups learn they really need but never though of, we asked eight successful young entrepreneurs from the Young Entrepreneur Council (YEC) for their input. The results may surprise you as much as it did these startup founders:

1. Adaptability

During the early days of our startup, we were bringing on people with very specific experiences and skill sets who had previously worked at larger organizations that were more structured and reliable. We soon realized that a better fit for us was to hire employees who were highly adaptable and open to - and able to - constantly change their roles and responsibilities depending on the needs of the business. The people who thrived and really made a significant impact to the success of our startup were those who could evolve and roll with the punches. They were comfortable with the relative lack of stability that you typically experience at a startup as it begins to ramp up. - Ben Rubenstein, Yodle

2. The Ability To Say “No”

Many startups focus intensely on growth - sometimes to a fault. When I dove into real estate, I found myself exploring and experimenting with every possible revenue-generating activity. At the time I thought I was being thorough and productive, but I was really straining our company’s resources and physically draining myself. While it’s extremely important to experiment, every company should have a clearly identified core focus and mission. This helps you analyze opportunities that arise along the way and decline those that aren’t best aligned with your goals. It took me a while to realize it, but saying “no” is equally as important as green-lighting certain initiatives. The most productive, and ironically, sustainably innovative businesses I know are also very good at saying “no.” - Kent Healy, The Uncommon Life

3. Logistics

After raising our angel round of funding, my company decided to greatly increase our marketing and advertising spend. We sponsored 11 conferences throughout the year in major cities across the US. I tried to organize everything myself, but scheduling flights, hotels, car rentals and sponsorship passes was an absolute nightmare for me. Luckily, the Account Manager on my team was very organized and loved logistics. He took the lead and turned my nightmare into a happy dream. I focused on closing client deals while our new Logistics and Operations Manager took care of all of the logistics. - Jun Loayza, Tour Woo

4. Implementation

There’s no shortage of great ideas and vision in the excitement of a startup, but without implementation, it falls flat! Having a team in place and members who excel at follow-through and implementation is key to taking the vision and putting it into action. Most entrepreneurs are quick starters and big dreamers, so details become tedious and bothersome. If you’re not strong at follow-through, partner with a business manager or create automated systems that ensure things get done! - Kelly Azeved, She’s Got Systems

5. Avoiding Growth For Growth’s Sake

When my partner Lev and I grew InsuranceAgents.com to #24 on the Inc. 500, we did it by growing for growth’s sake, not smart growth. Any revenue-generating opportunity we came across, we automatically said, “Yes!” The end result was a massive collapse of the company in 2009. However, through sheer effort and tons of luck, we managed to save it at the last second. Lesson learned: never grow for growth’s sake. It’s critical to slow down, take a deep breath, and ask yourself if your company can honestly support the strain that comes along with that new revenue stream. - Seth Kravitz, Technori

6. Time Management

I know, it sounds boring. But as an entrepreneur, you are naturally dealing with limited resources, and you need to maximize your productivity. Specifically, you need to prioritize your activities so you are focusing your time, money and energy on activities that will bring you closer to your goals. If you don’t have a system for managing your time effectively, youíre squandering your most precious resource. If you want some great productivity tips, check out the book, No B.S. Time Management for Entrepreneurs by Dan Kennedy. - Pete Kennedy, Main Street ROI

7. Sales Is For Everyone

When starting a business, it is quite easy to put different hats on your team - “I will be sales, you lead our tech, she’ll be marketing and he’ll be in charge of operations and administration.” The reality of startup life is that everyone needs to build skills in selling the idea. This does not mean that each employee should treat every person they meet as an opportunity for a cash transaction. However, when you are involved in a startup, every person you meet might be of value, whether as a customer, adviser, partner or simply a brand advocate. Knowing your idea and being able to discuss it clearly and passionately will help the business uncover critical resources from everywhere. Every team member’s informal development plan should include a goal of improving communication and sales. - Aaron Schwartz, Modify Watches

8. Don’t Ignore Your Health

This might sound silly, but hydration is super important to keep my mind strong while in startup mode. We are all attached to our desks, cranking away on computers, and in business meetings. When do we have time to drink water? I’m serious - sometimes our health is ignored in our business, but in fact it enables our personal and business health. Stay hydrated! - Erica Dhawan, Erica Dhawan Inc. and Galahads

The Young Entrepreneur Council (YEC) is an invite-only nonprofit organization comprised of the world’s most promising young entrepreneurs. The YEC recently published #FixYoungAmerica: How to Rebuild Our Economy and Put Young Americans Back to Work (for Good), a book of 30+ proven solutions to help end youth unemployment.

Startup contests like TechCrunch Disrupt can generate a lot of hype and interest, but does that translate into any lasting benefit for the startups involved? Sure, winning brings monetary benefits - TechCrunch Disrupt offers $50,000 - which never hurts, but does participating really help a startup succeed? And does winning a key contest really predict eventual success? To find out, we caught up with the winners of the four most Disrupt events:

New York, 2012: ÜberConference

What It Is: Audio conference calls aren’t going away, so Firespotter Labs' ÜberConference made them less sucky. By removing login annoyances (“Can you text me that code? I’m on my cell!”), adding visual controls and giving you something productive to do with your mouse and keyboard while sitting on hours of endless calls, ÜberConference actually makes audio calls cool again.

How It’s Doing: Uberconference is killing it. Just a month after taking home first prize at Disrupt, Firespotter won $15 million from Andreessen Horowitz and Google Ventures. The company is hiring for several open positions, most of them in engineering. iOS, Android and paid versions of the service are due soon, and UberConfernce can monetize its already-solid feature set, prospects look good.

San Francisco, 2011: Shaker

What It Is: Shaker’s founders are betting that users will want to hang out in virtual spaces (starting with a bar called Club 53), represented by avatars. If this strikes you as a little like Second Life, you’re not alone, but the folks at TechCrunch and $18 million in venture funding believed Shaker offers something more than just another chat room.

How It’s Doing: Most avatar-based chat environments have been notoriously anonymous, quickly degrading from social discovery to Leisure Suit Larry. Shaker removes the anonymity by tying profiles to your Facebook account, helping users to meet others with common interests snd form real relationships. Promoters (at this point, mostly bands) sponsor rooms, and Shaker works its magic on the back end to segment the rooms so you’ll actually bump into people with shared interests beyond the band.

For now Shaker remains a bit of a ghost town. As of September 10, there were only two events on the calendar: a Foo Fighters Tribute party with 226 RSVPs, and a “Hangout” the following Sunday with 37. Still, Live Nation has signed on as a promotional partner, which could help Shaker attract the users it needs to really take off.

New York, 2011: Getaround

What It Is: Getaround is AirBnB for car rentals. Owners can list their cars during downtime, allowing drivers to rent them by the hour. Drivers can place up to five requests, and the first response wins the business. One price covers rental cost, background checks and insurance. Owners get a monthly payment for their car, drivers get to drive whatever they want while saving money, and Getaround takes a cut from the middle without having to maintain its own inventory. The concept is a win-win-win.

How It’s Doing: So far, it seems to be still growing. Getaround has signed up thousands of cars, and it’s hiring for aggressive expansions into new markets. The startup’s most recent venture is Getaway, a long-term rental service for drivers who need a car for a week or longer. But over all, the car-sharing market has a long way to go before becoming mainstream.

New York, 2010: Qwiki

What It Is: Qwiki is a slick, simple, online application that lets users create video presentations in their browser. The interface is extremely simple, and and even a total noob can throw together a slick-looking video in less than five minutes.

How It’s Doing: Qwiki works great for last-minute school presentations or fashion retrospectives, but as others have pointed out, it has yet to become the transformative application its founder promised. To date, Qwiki hasn’t disrupted much of anything, but recent ties to more mainstream media outlets could help change that.

Even the hottest startup needs a little time to change the world - or make a billion dollars - so it’s a little early to pass final judgment. But so far, at least, the four most recent Disrupt winners are all still in business - and not every startup can say the same.

At the same time, though, while some have gotten funding, none has come close to changing the world or a transformative financial event for founders and investors. And plenty of other startups - ones who didn’t win startup contests - or doing even better.

Need funding for your startup? Don’t load up your PowerPoint with nifty charts showing all the users your online service has grabbed. Venture capitalists are no longer impressed. These days, investors want to hear about the revenue you’re generating, not the traffic.

“There have been a lot of companies that had a lot of users and didn’t make as much money as they should have, so investors are reevaluating,” explains Naval Ravikant, founder of the startup advice site Venture Hacks and the investor-entrepreneur matchmaking site AngelList. “This became most apparent in the Facebook app craze, when lot of top-ranked Facebook apps showed 60 million or 100 million users but ended up being worth almost nothing. Even Facebook hasn’t been able to monetize as well as Wall Street was expecting.”

Revenue Rules

The new generation of billion-dollar internet companies is built on revenue. Businesses like Airbnb, GitHub and Dropbox all have plenty of users. But much more important, those users generate serious cash flow.

The flipside is that even companies without massive traffic can now attract intense investor interest - if they have real revenue. “A company like Uber doesn’t have a ton of users but they’re making gobs and gobs of money with their high-ticket mobile car service,” Ravikant says. “They have huge margins and high-frequency repeat business.”

You Now Need 20 Million Eyeballs

Users do still figure into the equation when VCs evaluate an Internet startup. But the bar keeps rising. The new thinking, as outlined in a recent blog post by Chris Dixon: 10 million is the new 1 million. And a few years from now the benchmark for consumer Iinternet startups could be 100 million.

“Think about it,” Ravikant said. “Instagram reached 80 million users with only six employees. User stats can get blown out very quickly. But VCs are starting to adjust. There are a number of companies that have come along recently that have generated huge user-number spikes - but either those numbers are not sustainable or they’re not reflective of engagement underneath or they’re not monetizable.”

Take Socialcam, for example. It has a lot of users but can those folks be monetized? Autodesk, which paid $60 million for the video sharing app, will have to figure out the answer. “Eyeballs will always be a proxy stat to get to valuation,” predicts Ravikant, who founded Epinions and [Vast](http://www.vast.com/. “But if you give it a long enough timeline, people will learn to game proxy stats. But they can’t game profits.”

Turns out that many of the highest-usage consumer Internet companies also have the thinnest and least monetizable engagement, which is a big disincentive for investors.

Early Revenue Matters Most

So a lot of Internet startup founders now emphasize early revenue when they pitch VCs.

“That’s for two reasons,” Ravikant says. “First, you can move the needle more on early revenue than you can on early users. If you have a product that’s not getting picked up by the marketplace, getting to 5 million users can seem like an impossible problem. But if, say, you need $20,000 a month in revenue, you can do that just by picking up four or five big customers. Second, a lot of companies have such a low burn rate that if you can get revenue quickly you can get to break-even and sustain yourself much longer. You can do $10,000 in revenue with just four or five really impassioned customers.”

Customers… what a concept!

Eyeball image courtesy of Shutterstock.

By necessity, running a startup is like flying by the seat of your pants. Because the company is new, founders often have to make up things as they go along - with little opportunity to check and see how they're doing. That's starting to change, though, as new startup benchmarking services promise insight on how well your startup stacks up against peers and competitors. But are these benchmarks relevant to all tech startups, and do they really help new companies succeed?

We're about to find out. According The Wall Street Journal, several new companies are providing benchmarking measurements, based on various algorithms, for startups. The Journal claimed that thousands of startup entrepreneurs have turned to companies such as Startup Compass, G-Score, and BOSI, to "assess their young companies, based on an analysis of comparable data from their peers." (In May, ReadWriteWeb's Tim Devaney and Tom Stein wrote about Startup Compass in Stop Flying Blind: Use Big Data To Benchmark Your Startup.)

Several entrepreneurs told The Journal they thought the services were helpful by pointing out potential danger spots. But the Journal also quoted Patricia Greene, a professor of entrepreneurship at Babson College(which often ranks as the nation's top entrepreneurial college) warning that benchmarking could actually discourage companies from using innovative business models. "You could go into analysis paralysis," she explained.

Good Points, Bad Points Of Startup Benchmarking

Gail Goodman, the Chairman, president and CEO of Constant Contactsees both advantages and disadvantages to benchmarking your startup. "Tools and models are helpful because they can force you to step back, especially when it's easy to get lost in the weeds of the day to day [operations. But] no two companies are the same," she warns, "and benchmarking is no substitute for building a great mentor team to advise you." The number one thing startups need to do, Goodman says, is "to build a team, and not necessarily a paid one." Goodman believes startups particularly need people they can count on, whether it's an informal board of advisors, peers, a formal board or a mentor.

Don't Benchmark In A Vacuum

Ken Yancey, the CEO of SCORE, a nonprofit organization that provides mentors and counseling to startups and business owners, believes business algorithms can "potentially be a good tool, but shouldn't be used in a vacuum. You need other metrics about what drives your business to make smart decisions." Yancey adds that it's always a good idea to seek as much data as possible: "Entrepreneurs who seek knowledge will always outperform those that don't."

But sometimes all that knowledge can be overwhelming - there's just so much data to keep track of. One tool that might help early-stage entrepreneurs stay on top of all this information is this startup dashboard from InfoCaptor. It's simple, and best of all it's free.

Don't Be A Slave To The Benchmarks

Are there dangers in benchmarking? Yancey and Goodman both warn that startups shouldn't be a "slave to benchmarking." Information is useful, but success is about taking action. Business consultant Brian Moran, CEO of Brian Moran & Associates, says that while it makes sense to incorporate the "critical data" a benchmarking service can provide into your strategic plan, "there is a time for planning and a time for execution." Too many startups fail," Moran says, "because they constantly look at their plan, but don't execute it."

Everyone agrees you can't factor "gut reactions" out of the process. "Benchmarking," says Yancey, "can take the guess work out, but it can't take away the 'gut work.' By itself benchmarking is not as valuable as your knowledge and your gut feelings. But if the benchmarking doesn't support your gut, you need to ask more questions, and possibly amend your startup plans."

Anti-Entrepreneurial?

To me, though, relying on algorithms is almost anti-entrepreneurial. Babson's Greene warned that "Abnormality might be [a startup's] competitive advantage." But a benchmarking tool might not see it that way.

Goodman agrees. "Constant Contact overinvests in customer care. But it's my differentiator. Of course I'm not going to match the benchmarks, but I do it on purpose."

The decision of how much to rely on benchmarks and algorithms is obviously up to every startup. Yancey says benchmarking can be "immensely valuable for fast-growth" startups, looking to avoid big mistakes as they scale up. On the other hand, some entrepreneurs succeed precisely because they follow the path less traveled.

OK. That’s an exaggeration. Odds are you can’t win every startup competition you enter. But you could win 92.59%. Candace Klein did. Klein is the founder and CEO of a new peer-to-peer lending platform called SoMoLend and she’s won 25 of the 27 startup competitions she’s (That’s a winning percentage of 92.59% - do the math). We asked her how she did it.

Get A Mentor

Most startup competitions offer entrants the chance to connect with a mentor. Take it, says Klein, who has signed up for a mentor at every competition she’s won.

“We’ve had media mentors who have gotten us press. I had one mentor who helped us negotiate a term sheet. Anyone entering a business plan competition should sign up for the mentorship. It’s a huge mistake not to.”

Best of all, mentors are often on the competition’s panel of judges. So even if you don’t take home prize money, you will benefit from the free advice.

Keep It Simple

It’s easy to be complicated - to show up at your presentation and regurgitate the technical details at the heart of your innovation. That will not sway judges and investors.

“Even if you have a complicated concept, you should make it understandable,” Klein says. “You get engineers and mathematicians who are starting companies and they get so bogged down in details they don’t do a good job of explaining what the business does. Make it simple, make it so a third-grader can understand.”

Pack Your Bags

Klein has entered and won competitions from Xavier University to the University of Dayton, where she took five of the five awards on offer. On May 10 she won best of show at FinovateSpring and the week before finished first at Business Insider’s Startup 2012.

“The downside of participating in all these competitions is that it’s a tax on your time,” she says. “You have to be there in person. We drove to St. Louis six times for the Olin Cup competition at Washington University. We did win it but we had to be there on six different occasions.”

Be Yourself

You’re not Mark Cuban. Don’t try to be. When you present at a startup competition, just be yourself, Klein says.

“If you’re a funny person, be funny on stage. If you’re a storyteller, tell stories. If you’re a sweet person, be sweet. The judges want to believe in the jockey. The horse itself may be a concept they like or don’t like. They want the jockey. I know I raised money from people who liked me and not just my idea. They want to see you’re poised and confident and quick on your feet.”

Klein is certainly confident. At 31, she’s won $500,000 dollars in prizes and raised over $1 million in angel and seed funding. She was born to a teenage mother, the oldest of five kids, and her father left when she was 5. She has four college degrees and has had ovarian cancer twice. (It’s now in remission.)

Enter Plenty Of Competitions

She recommends that every startup enter at least five competitions. Even if you don’t win, you’ll learn how to pitch. “The reason I do all this is it gives me great practice for when I go in front of investors. It is intimidating and stressful but that’s a good thing. The second benefit is most of the judges at these competitions are also investors, people who are looking for deal flow.”

But Avoid Those Without Prize Money

Obviously, Klein has entered far more than five competitions. But there are those she avoids: the ones that don’t offer prize money. She won’t sign up for any competitions that doesn’t promise at least $10,000 in prizes. And while she’s pocketed her share of cash, she’s won a lot of services as well, including six months’ free office space in New York and legal help from three different firms.

“I don’t know if winning all these competitions will translate into a successful business. We’re still a startup. But what I will say is that I can articulate what my business does to anyone. I can sell the vision.”

Klein recently launched her own startup competition, SoMoLaunch. First prize is $5,000 and consulting from Klein. She’s taking applications at SoMoLend.com until Sept. 30.

Image courtesy of Shutterstock.

A lot of people in Silicon Valley are down on job-hoppers these days. They’re flaky, they’re bad employees, they steal all the Sharpies when they leave, blah, blah, blah. But it turns out that all that job-hopping is an important part of what makes the Valley so special. 

Everyone loves a good game of musical chairs. The tune kicks on, everyone jumps up and runs in a circle laughing and the party is good. That’s Silicon Valley over the past few years. A lot of people whirling around and having a grand old time. But what would happen if the music started and nobody got up to play? What if companies want to hire but all the workers stay firmly seated in their current positions?

The truth is that Silicon Valley startups depend on job-hoppers to fill their open positions - and a lot of them would struggle if the job-hoppers stopped hopping.

Job Hopping Makes Silicon Valley Hum

“That’s why employers populate Silicon Valley, because they have access to great talent,” said Kathryn Shaw, a professor at the Stanford Graduate School of Business, who researches ways that firms attract top talent in knowledge industries. “They want people to be relatively mobile, because when they have a need for a particular skill, they want people to be available.”

Job-hopping means startups have an easier time finding a match for their needs. If job-hopping ceased, Silicon Valley would lose a lot of its appeal as a location, Shaw said. “You need job-hopping to continually update the matching process between employer and employee. That’s why we have Silicon Valley. Otherwise people would be more scattered.”

So job-hoppers are a vital commodity for tech companies. But what about the other side of the chip? Conventional wisdom among startups workers is: move around as much as you can and you’ll benefit from ever-increasing compensation as firms seek to attract your talents.

Surprise: Job Hoppers Make Less Cash

In fact, that’s not true. In her research, Shaw has discovered that people who stay longer at one company get paid more. A few years ago she did a study of 50,000 Silicon Valley software employees and found that those with at least five years’ experience at the same employer typically earned annual raises of 8%, compared to 5% for those with a history of job-hopping. She also found that employees who stay in place longer are more productive and creative. (Perhaps because they don’t waste so much time in orientation sessions.)

Shaw’s data included stock options vested as they were realized. She drew her data from the state of California, not survey forms.

“To constantly hop between jobs to try to chase the greatest pay is not advisable,” she said. “If you take someone who has high income right now and look at the sources of that income, what they did to achieve that high income, how they did it was staying with one or two employers, not by hopping [among] employers.”

The Future Of Job Hopping

So will startup workers keep on job-hopping? Culture is the key to the decision-making process. When workers see a culture in which every employee at Instagram gets filthy rich overnight, it’s only natural for them to decide to chase the next Instagram. When they look around and see their friends jumping from one startup to another for more stock options and cooler rooftop parties, it’s easy for them to do the same.

But what happens if the bubble pops and everybody sobers up and admits the reality revealed in research by people like Shaw? it’s likely there will be less mobility in Silicon Valley. Exactly how much job-hopping continues could hold long-term implications for companies big and small - not to mention their employees.

IBM, anyone?

Image courtesy of Shutterstock.