mHealth and Data Liquidity

Healthcare Needs APIs More than Apps

This post was written with my colleagues Joris Van Dam, Translational Sciences Strategic Project Leader at Novartis Institutes for Biomedical Research (NIBR); and John R. Walker, director of NIBR IT for Novartis.

As frequent attendees of mobile health conferences, we’ve been excited by the momentum and creativity we’ve seen in mobile health solutions (Health Apps). But we've also been concerned.

We’re excited because of the number of Health Apps being developed for patients and consumers in different disease areas, for wellness, prevention and care. As big believers in the potential of Health Apps to improve outcomes and lower healthcare costs, we’re glad to see this market really take off.

At the same time, it seems there’s an App for everything – and anything. Yet there’s very little talk of interoperability or data exchange – heck, even about preserving my personal health data when I want to exchange my App for a new one, when I need to re-image my phone, or when I want to buy a new phone.

It seems like in the rush to capture the value of mHealth, we’re launching and creating a staggering amount of new health data silos – making health data less liquid and shareable when we need just the opposite.  This is a big concern, because in the longer term, data liquidity is the key to sparking innovation, improving outcomes, and reducing healthcare costs.

At the recent 2012 mHealth Summit, it was encouraging to see that this approach is starting to shift. It seems that more and more healthcare companies are recognizing that even though their patients or their customers need these Apps, perhaps jumping head-first into Apps development isn’t their best bet. Instead, maybe healthcare companies should let “the market” develop these Apps (they seem to know what they’re doing!) while they support the market – with funding, with infrastructure, and with content (liquid data).

Getting It Right

One of the great examples at mHealth Summit was presented by Aetna, a 160-year-old health insurance company. Rather than joining the Apps Race, Aetna has developed and published the CarePass platform. The platform provides a set of APIs that allows you to build your own Apps, plus it provides interoperability among your App and all the other Apps developed using CarePass – including the 20+ Apps that Aetna has developed and acquired itself, such as iTriage.  Update of January 24, 2013:  Check out this great video interview with Aetna Vice President Martha Wofford.

AT&T and Qualcomm Life also presented their platforms, with APIs that connect to a variety of different health and wellness devices. These APIs allow you to build Apps that connect to these devices, yet also thereby become independent of the devices. For example, you could switch from one fitness sensor to another, buy a different wireless weight scale, or use a new blood-pressure monitor while the App preserves your health data.

Joris Van Dam

Entirely in the same vein, earlier this year Athena Health, the Watertown, Mass-based provider of cloud-based Electronic Health Record (EHR) systems, launched their “More Disruption Please” program. Participants in the program receive access to the API of Athena Health’s EHR system, a platform to build Apps. They can even get access to start-up funding and launch support for their Apps in the network of Athena Health customers.

Allscripts launched a similar developer program for their EHR. And in 2009 Cerner launched its uDevelop platform, providing their customers with a platform and APIs to develop new Apps, and an App store to share these Apps with each other.

Of course, the largest, and perhaps most influential, organization to get it right is the ONC, which has been setting the tone for improving data liquidity in healthcare, and thereby stimulating healthcare innovation in Health Apps development, through an array of policies and programs. These include health information exchanges, meaningful use criteria for EHR adoption, Project Blue Button, and the Health Data.gov platform – to name just a few.

Many of these programs also provide funding for you to develop Apps with their APIs. And, if not, there is always Health 2.0, which announced in May 2012 that it had already awarded more than $1 million to mobile health initiatives through its Developer Challenge series.

Where to Go from Here

There will always be a new App, a better App, an App that fits my health needs better as they evolve over time – and that’s OK. Yet all this tremendous activity and investment in Health Apps will only really and truly pay off, for individuals and their individual health needs as well as for a sustained impact on the healthcare system overall, if those Apps are built on, and contribute to, an underlying layer of liquid health data.

John R. Walker

As patients and consumers, we need to be able to switch from one device to the other, carry our health data from one provider to the other, switch insurance companies as we take new jobs, exchange one App for the other and so on – as our personal healthcare needs evolve over time. And those personal healthcare needs will really and truly only be served if our health data moves with us, as opposed to being caught in the latest fad and locked in the latest App.

For mHealth to pay off, we need APIs more than we need Apps.  It’s great to see that so many companies are getting it right. A year ago, we felt both excited and concerned at the prospect of mHealth. Today, we’re just pumped.

Upstart is in Beta - Check It Out

Help Support the Next Generation of Entrepreneurs

I posted previously about a great new company called Upstart that I’ve been helping to get off the ground. Now Upstart is in Beta. I’ve already backed more than a dozen outstanding Upstarts – and you should consider doing the same.

Upstart is Kickstarter for people: a crowd-funding platform that allows college grads to raise capital in exchange for a small share of their personal income over 10 years.  It aims to make it easier for grads to pursue what they really want instead of following a traditional job path, by matching the Upstarts with mentors and giving them a modest amount of economic freedom (to retire student debt or fund the first step of their dreams).  

At this point, Upstart has launched its first pilot class of funded students (that's one of them, Ian Shakil, above), and also attracted more than 30 leading universities into the Upstart network.  The company has also generated a great deal of positive press for its approach to addressing a major problem.

Now that Upstart is featuring its next batch of profiles, I wanted to invite you to join me in supporting the next generation of great entrepreneurs.

You can invest as little as $100 in an Upstart. I’d recommend diversification by spreading your investment among five or more Upstarts to maximize risk/return.  The great part about this is that you get returns that are better than T-Bills AND you are supporting specific young people who are pursuing alternative career paths – the kind of paths that usually lead to the most value creation in our economy (NOT investment banking or consulting).

You can browse some of the new Upstart profiles here:  https://beta.upstart.com/upstarts

You can register to be a backer here:  http://beta.upstart.com/register?code=b4d9ad169139872384acd56b10a9ff1d

About Upstart

Upstart was founded earlier this year by my close friend Dave Girouard, who was president of Google Enterprise for eight years (cloud apps, Gmail, Calendar, Google Docs, etc). Dave brought over a few members of his team from Google. Upstart was seed-funded by Kleiner, NEA, Google Ventures, First Round, and Mark Cuban, and the company and its team are off and running.

You can find some recent press on Upstart here:

   

Upstart - Empowering The Next Generation of Entrepreneurs

Today the team at Upstart announced what we’ve been up to over the past three months. 

The Upstart mission is inspiring (see Founder/CEO Dave Girouard's blog post here), the team is world-class, and the culture of the company is…well…a ton of fun.  I’m especially thrilled to be joined as a “Backer” by two close friends and trusted colleagues in Boston, Frank Moss and Jim Dougherty.  Their leadership in supporting young people who want to turn their passions into careers as entrepreneurs is exemplary.  I’m also thrilled to be working yet again with the fantastic partners at Kleiner Perkins, NEA and Google Ventures. 

Briefly, Upstart is a new approach to funding and mentorship. Using a crowdfunding model, it allows college grads/would-be entrepreneurs in virtually any field to raise capital in exchange for a small share of their income over a 10-year period.   Upstart aims to provide a modest amount of risk capital, paired with guidance and support from experienced backers, to help grads pursue less-traditional and more-inspiring careers.  

I believe that Upstart has the potential to supercharge the US Innovation Economy - as Dave says "When politicians say we need more entrepreneurs, what they mean is that we need more people creating jobs, rather than taking them." I couldn't agree more - it's time to do the heavy lifting required to create more entrepreneurs so that they can do the heavy lifting required to drive job growth over the next two decades. Upstart believes that one of the key factors in creating more entrepreneurs is early intervention in their career development. Some of the key principles that are driving us include:

●       Innovative and ambitious young people should be empowered to pursue their passions when they are young.  If we don’t empower them when they are young, they risk being numbed by the bureaucracy of the larger organizations that they often join for lack of a viable alternative path as entrepreneurs. It’s not that big companies are bad. It’s just that young people who have a high risk/return profile can quickly lose their edge and passion as they succumb to the broader interests of a large organization vs. pursuing something that they care about deeply.  65% of our job growth over the past 2 decades has come from companies with less than 500 people - over the next 2 decades it's the Millennials/Generation Y that will create those companies and create the bulk of jobs that our country needs so desperately - we need to empower them as much as possible.  It's time to bet on Generation Y.

●        It’s fundamentally valuable for our economy to balance the recruiting machines of large organizations with a social networking-based system that facilitates young people who want to follow more independent, highly individual paths.  This generation just wants to connect with people who could be their mentors in pursuing their interests and passions. Mentors just want to connect with inspiring young people. Upstart makes those connections easy and automatic. 

●        Not every young person has a high risk/return profile, but many more young people will pursue entrepreneurial interests if they have a little bit of  financial flexibility at the right time.  Modest amounts of financial support as young people graduate from school, along with some strong support and encouragement from great mentors, can go a long way.  I know because I've had fantastic support from many great mentors during my career.  

●        Mentorship is just as rewarding for the mentor as for the mentee – if only we can make the right connections. What’s been missing is a system to connect potential mentors and mentees around shared interests and affinities.  I’m a software guy who is interested in the life sciences, so I’m naturally prone to want to mentor smart, young, enthusiastic people who share those interests.  But I’m also passionate about rugby, so anyone who is involved in rugby always gets more of my time than those who don’t ;)  When young people who share my interests ask for my help - I'm compelled to help them - because I get way more back than I give.

●        Most mentors who have the financial resources – when provided with the opportunity to earn a return similar to bonds – would be thrilled to invest their own money in promising young people with similar passions and interests. Upstart matches mentors with the young talent who will power the growth of our economy over the next 20+ years – and does this at scale.  I can't think of a better investment - definitely better than T-Bills.

●        To scale entrepreneurship in the US, we need to scale our ability to empower and coach young people who are capable of taking risks and executing on their passions. I’ve spent a lot of time starting companies from scratch. In my experience, the older and more successful people get, the more they are prone to take for granted the value of a small amount of coaching and financial resources early in the career of a budding entrepreneur.  Small amounts of time and money directed strategically and without friction at scale, can have a huge positive effect on our economy.

●        Most entrepreneurs need help, coaching and advice in order to achieve their missions. Most people are not the kind of superstar entrepreneurs that the media popularizes every day:  Steve Jobs, Bill Gates, and so on.  At the same time, these young people contribute the bulk of the job creation through the number of companies they start and the never ending flow of their ideas, energy, passion. A big part of what Upstart provides to young entrepreneurs is a network that can fill the gaps in their experience, knowledge and contacts so they can reach their full potential.

I’m honored to be partnering with my great friend and trusted colleague Dave Girouard as the Founding BOD Member at Upstart and thrilled to be the #1 Backer. 

Let’s take the “post-industrial reins” off our brightest, ambitious young people and empower them to leverage the Information Economy to change the world for the better.  Our country was founded on a core principle of rugged individualism. Let’s coach our young people to take control of their own careers, professional lives and interests and pursue their passions.  We will benefit as an economy and a society in ways that we can't begin to imagine. 

Steve Blank on Demystifying the Start-Up Culture

In his remarks yesterday at the closing session of the National Governors Association Annual Meeting, author, successful entrepreneur and educator Steve Blank did a great job of articulating in layman’s terms how the start-up ecosystem in Silicon Valley works, why start-ups are different and require specific expertise, and why embracing start-up culture and expertise is so critical.  I believe Steve's work is going to be a primary driver of innovation at scale for our country. It’s BRILLIANT.  

If you care about start-up/founder culture or start-ups, you should watch his talk in its entirety.  

Steve mentions the importance of researchers who focus not only on world-class research going on inside of their respective academic institutions, but also on the application of their research at scale in the public and private sectors.  Some of my favorite role-model researchers in Cambridge include:  

George Church 
Eric Lander
Bob Langer
Marvin Minsky
Mike Stonebraker

These innovators have done not just one or two start-ups each, but many dozens of start-ups. It's this combination of world-class academic research and commercial innovation that creates exponential value in our economy and in society.  

Here is a quick summary of Steve's talk and some highlights that really hit home with me.

A Quick Summary  

Four lessons: 

• Different types of start-ups
• What a start-up ecosystem looks like
• How to make start-ups fail less
• Can we actually teach what we now know?

Types of start-ups: 

• Lifestyle start-up - small businesses that serve known customers with known products and feed the family
• Scalable start-ups – which are designed to grow big (“We’re going to build a company that will take over the universe!”)
• Buyable start-ups – which have low capital requirements and can be very valuable very quickly
• Large companies that focus on “sustaining innovation.” They innovate on core products but cycle time is compressing, creating pressure for large companies to innovate faster

Important Highlights

Referring to the Nokia Board of Directors’ reaction to the iPhone on day of launch – “It's a toy. Why should we worry about this?” – Steve said: “To a big company, a disruptive innovation always looks like a toy on day 1.”

“The secret history of Silicon Valley” [another great video]

“The first venture capital was an unintended consequence of Sputnik”

“We want the engineering department at Stanford to face outward as well as inward”  

“Recognize that 90% of start-ups fail”

“Failure = Experience. We understand that these are the risks”

“Start-up culture is not just about the great entrepreneurs. It's about the ecosystem. Building this ecosystem is critical in getting any cluster off the ground.”

"Start-ups are not just small versions of big companies" - Steve Blank

“Embrace failure as part of the process”

“95% of start-ups fail because they didn't find customers or markets”

“We now know that start-ups search for something and large companies execute...The difference between search and execution are not just words...it's actually the difference in how we build these things”

“On day one, start-ups just have guesses...A start-up is a faith-based enterprise.. You want to turn the faith into facts as quickly as possible”

“What we now know is that no business plan survives first contact with customers”

“A start-up is a temporary organization”

“A start-up is designed to search for something that is repeatable and scalable”

“In the Customer Development Process, everything you know or think you know is a guess"

“In a start-up, it used to be when you failed you fired the VP of Sales, then fired the VP of Marketing, then the CEO.  We know now that start-ups go from failure to failure…Pivot says that this is going to happen all the time.”

And, I love the fact that he was the only dude not in a suit. Now there’s a lesson in itself :)

Vertica - Remembering the Early Days

I had an awesome visit @ Vertica earlier this week for lunch. Cool new space in Cambridge and so many fantastic new people. Thanks to Colin Mahony for the invite and to all the talented engineers and business people at Vertica for building such an amazing product and a great organization!

Couple of memories that came to life for me during my visit:

Reading the draft of Mike Stonebraker's  "One Size Does Not Fit All" paper and thinking:  "This is the mission of an important new company: to prove that One Size Does Not Fit All in Database Systems."

During my first meetings with the "Vertica professors" - Mike, Dave Dewitt, Mitch Cherniack, Stan Zdonick, Sam Madden and Dan Abadi - thinking "We have an unfair intellectual advantage."  The technical hurdle was set early by this fantastic team.

Looking up at the new duct work from our original server room (at our original office), which Carty Castaldi vented into the conference room because the conf room was so cold and the servers were running so hot ;)

Inspired Duct Work by Carty Castaldi

The thrill I felt the first time that I watched SELECT work on the Vertica DB :)<

Our first Purchase Order. Thanks to Emmanuelle Skala and Tom O'Connell for that one and the many more that followed and made it possible to build such a great product :)

At our first company summer picnic at Mike's place on Lake Winnipesaukee: taking Shilpa's husband Nitin Sonawane for a ride on the JetSki and him being thrown 10 feet in the air going over a wave. I thought he'd never talk to me again. So glad that he didn't get hurt and that he talks to me regularly ;) 

Our first big customer deal with Verizon and then the first repeat purchases by V. Thanks to Derek Schoettle and Rob O'Brien for building such a great telco vertical and for doing deals with integrity from Day One.

Sitting in the basement at Zip's house in Chicago with Stan, Zip and Mike as they jammed Bluegrass music and we all ate Chicago-style pizza until the wee hours.   Thanks to Zip and to everyone at Getco for being such a great early customer and partner.

Relief I felt when Sybase admitted that Vertica did not infringe on their IP :)  Thanks to Mike Hughes and everyone else involved for the truly awesome result.

Getting early offers from a bunch of big companies to buy Vertica and thinking "These guys don't realize how important Big Data is going to be and how great our product is and how incredibly talented our engineering team is."  Thank you to our BOD for resisting the early temptation in spite of tough economic conditions at the time and thanks to Chris Lynch for negotiating such a great deal with HP.  

During lunch on Wednesday, realizing that Vertica's product is truly world-class and has proven that one size does not fit all. Special thanks to every engineer at Vertica, especially Chuck B. : you all ROCK!

I have a much more detailed post in the works, about the early days of Vertica and what I as a founder learned from the experience.  Stay tuned for this post in the next few months.

Founders: Are You Stuck Before You Start?

Where Start-ups Get Stuck – and How to Avoid Going There

Between us, my long-time friend (and fellow blogger) Jim McHugh and I have started a lot of companies. We also advise many other companies and look at even more pitches from start-ups.  A shared observation is that while a few start-ups shine (or at least glimmer) and go on to some success, other start-ups seem stuck before they start.  Why?

Here are our observations on where start-up founders get stuck and our advice on how to prevent Stuck situations, presented Q&A style.  

Q.        Jim, where are the most common places you see founders getting stuck – and why?

In my experience, the two most common causes of becoming stuck are 1) an incomplete or muddled business model (see Stuck in the Fog) and 2) directly related to that, not clearly understanding the specific needs of their customers (see Stuck in a Rut).

Jim McHugh
McHugh & Company

What do I mean by an incomplete business model?  A well-defined business model (i.e., the “guts of the business”) states how the company is organized; what products and services it sells to whom; and how the company “goes to market.” In addition, the whole company clearly understands the associated operational policies, processes and needs (both for the supplier and the customer).

Start-up and early-stage teams become obsessed (as they should) with the product/prototype, the team, and the market potential. However, they sometimes fall short in three important areas.  First, they are naive about all aspects of the business model. Second, they don’t understand – or they have chosen to ignore – the specific linkages of their product to their customer’s product. Third, they have not solved or put in place key components of the business model and assume it will be easy to “finish those later.”

The business model can be pretty straightforward if it is a simple B2C or B2B connection – that is, “we make it, you consume it.” The linkages become more difficult to sort out if the start-up’s product becomes embedded in their customer’s product offerings – for example, as a component. 

One striking example I have seen of an incomplete business model was a food ingredient technology company that had considerable success raising seed money from a group of angels. This company had traction:

●       The technically elegant prototype demonstrated product effectiveness and potential significant benefits to consumers

●       The company had received approval from a key regulatory agency

●       The product was going to revolutionize one segment of the food industry

●       There were positive (but limited) real-world test applications

●       The expected market was huge

Then the company’s traction stalled; they became stuck. How could that happen?  

This revolutionary product was not sold directly to end-user consumers. It was an ingredient that became part of other companies’ product formulations. The industrial and consumer target customers who evaluated the start-up’s product realized they would have to change their end-use product specs, add equipment and processes to their production line, and change their quality control testing procedures. They would also have to change their existing descriptive product information and packaging.

For some customers that would mean altering (for the better?) very successful, stable products that were established with consumers. 

Were the customers prepared to take the market and product risk (with a start-up) and incur the costs and aggravation associated with adopting this new technology? Having a great product was a prerequisite for the big food ingredient companies, but it quickly became apparent to the start-up that many other factors influenced the prospective customers’ decision-making process.

Q.        So, what’s your advice for avoiding getting Stuck before you Start?

To be sure, the business model for early-stage companies evolves over time. It gets fine-tuned, even changed.  But fine-tuning is a lot different from having a naive view of the customers’ needs out of the gate.

It’s a cliché, but how many times does “knowing the customer’s needs” have to be said to founders? 

Q.        Any general tips about how to avoid getting stuck?

Yes, it really helps to have the right people on the team who understand and have experience in the industry they are selling into.

Q,        Andy, where are the most common places you see founders getting stuck, and why?

Andy Palmer
Start-Up Specialist 

I see a lot of founders get stuck at the very earliest stages – by being distracted by fundraising.  I’ve said before – over and over again – founders should focus on developing their business first and not worry about fundraising nearly as much as they would probably like.  It’s natural to be nervous when you don’t have any money in the bank.  But it’s a healthy discipline to figure out how you are going to create value for customers who will pay you instead of spending time thinking about how to extract money from venture capitalists or seed investors.  As an angel investor, I’m always looking for people who are mission-driven and focused on their customers, as Jim says, instead of worrying about what potential investors might think.

 Q.        So how can entrepreneurs avoid getting distracted by fundraising? 

Just focus on your business and your customers.  Wake up every morning thinking about how you are going to create value for your customers. Go to sleep at night considering which of your customers you helped that day and how.  Be maniacally focused on your customers’ needs.  It sounds simple – and it is – but executing this when you are starting from scratch – with no product, no credibility, and no people –  is really hard. It requires all your energy and your concentration. 

Q.        Any final tips on how to avoid getting stuck?

Be maniacally focused on your mission, particularly understanding and meeting your customers’ needs. In my experience, the money will follow.

Medio and The Future of Big Data Analytics

Why I Joined the Advisory BoD of Medio Systems

Today, I'm thrilled to announce that I've joined the advisory Board of Directors of Medio Systems.  

Over the past nine months, I've had a chance to work with Brian Lent, Rob Lilleness and many of the other folks on the team at Medio.  I've been approached by dozens of "Big Data" companies over the past two to three years as more people have begun to focus on large-scale database challenges.  Medio is one of the few companies that I've chosen to work with directly because they're creatively tackling some of the most pressing challenges, including: 

• Big Data Analytics in Real Time:  Over the past 10 years I've watched as database systems have become more and more "real time": as data is generated, users expect to see that data and be able to analyze it immediately.  Medio has created a  platform that enables its customers to analyze their data in real time without the daily-latency constraints of traditional data warehouse solutions. Incredibly powerful. 

• Mobile/Tablet Devices: As I sit here writing this blog post, my wife and father-in-law are playing Words with Friends on their respective iPads. Two years ago, my wife told me she would never use an iPad. Now, she's addicted. Mobile/tablet devices matter, and they generate a wealth of Big Data that can help businesses understand and get closer to their customers than ever before. The Medio team has uniquely deep experience with mobile app analytics.

• Democratizing Analytics: As we were building Vertica back in 2005-2010, it became clear to me that once people had figured out how to represent their data more efficiently, the bottleneck would quickly become how to enable regular people (not just database experts or business analysts) to take advantage of the data and use the data plus statistics to ask complex questions and solve cool problems.  Medio's focus has been on empowering business people with the tools necessary to make better business decisions, truly democratizing analytics.  

• Analytics Made Easy: I watched dozens of our customers at Vertica deploy solutions that required them to integrate database technologies with reporting and visualization tools and then tune/tweak those tools and the integrations. This turned out to be a  never-ending problem that distracted them from the actual problems and questions they were trying to analyze. Customers didn't want to be experts at database systems or visualization: what they wanted were tools to help them answer business questions faster and more effectively. Medio has created the infrastructure that enables  customers to focus on asking and getting answers to their questions without worrying about how the underlying technology works.  

• Predictive Capabilities: I strongly believe that analytic systems must have forward-looking/predictive capabilities. Just analyzing history is no longer enough. The next wave of analytic systems will empower users to anticipate what might happen in the future and model the potential impact of decisions they make today, leveraging history as the basis for those models.  Medio CTO Brian Lent has been an early proponent and tireless champion of using information to help support decision-making with predictive capabilities. His vision and the technology the Medio team has created are unique.  

To see for yourself, check out Medio.  This is a company worth watching.

Spend More Time on Your Mission - The Money Will Follow

Time – and how you use it – is the most important consideration for a Founder.  This is one of the most important lessons I’ve learned in my 20 years as an early employee, founder, and CEO of start-ups.

When you’re starting a new company from scratch, time is your most precious resource because it’s so scarce.  Initially all you have is yourself and one or two partners who are preferably (at least in my case) a lot smarter than you.

If you believe, as I do, that your success is determined by how you spend your time, then start by spending it on your mission and the experience of your customers – not on money.  Randy Komisar at Kleiner Perkins likes to talk about “mission-driven” founders and start-ups. I like that phrase a lot.  And I believe that you need to embrace the concept from Day One – by being mission-driven in how you allocate your time.

Spend your time talking to customers, recruits, and partners; not with consultants or financiers – it’s almost a complete waste of your time. 

As money for early-stage companies increasingly becomes a commodity, entrepreneurs’ success will be determined more by their ability to create a great business – and less by their networks and credibility with a small number of professional early-stage investors (who control the purse strings granted to them by a small number of relatively disconnected Limited Partners). 

I’m not saying that early-stage/venture investors don’t add value. Specific people absolutely do add value and are important to the success of many companies. However, early-stage/venture investors shouldn’t be the primary focus of your time – and the good ones don’t want you to focus on them anyway. They want to help you build a great business – to put the priority of your time ahead of their own.  The ability of a venture investor to prioritize the time of the entrepreneur ahead of their own time is a primary test of a great investor.

The best venture investor partners are those who embrace modesty as a primary quality: in other words, they exist to help make the company (and by definition the founders) successful.  In interviews, Peter Barris of New Enterprise Associates has specifically and frequently cited modesty as a primary cultural dynamic at NEA. I've experienced this first hand working with many partners at NEA – especially Harry Weller and Tom Grossi –and I believe it is a key component of NEA's ability to scale successfully. John Lilly at Greylock is another great example of someone who demonstrates this type of modesty – putting the entrepreneur first.

Often, the problem for Founders and venture partners is conflicting objectives relative to their time.  

As a company Founder, your goal is to get the best possible return on the time you spend achieving the mission of your company. For many venture investors, the goal is to meet with as many prospects as possible because their limited partners are essentially paying them to talk to people and gather information that the partners can use to make optimal investment decisions. This behavior is particularly true of younger, less-experienced early-stage investors, who have lots of time to spend.  Some young venture investors may meet with you even when they have no money to invest. Talk about a waste of time – it happens more than anyone would ever admit.  

You may ask:  “But don’t I get value from every meeting with investors?  Even if the meeting doesn’t result in an investment, won’t I get useful free advice?”  

This is a serious dysfunction, especially for first-time Founders. Sure, some of these folks can provide valuable advice, but to be mission-driven, it's much more important to focus on your customers, the people working for you and your business.   

The nature of the venture capital business is that it’s populated by a lot of people with relatively large egos. In my experience, such people are prone to radically over-estimate the value of the time they “invest” in your business. They do get a lot of data from a broad variety of sources – they get paid to meet with lots of companies ;) So if you're looking for a lot of data – great, go out and ask them a ton of questions. But be specific about what you are trying to get out of the interaction instead of just “catching up.” 

The best investors will want to get to decisions quickly and not waste time – yours or theirs.  They recognize that their success as investors will depend on how wisely you spend your time to build a great business in a short period of time.  In my experience, the best investors almost always start their side of the meeting with "How can I help?" not "You should think about...." They arrive prepared, they listen, they help and they give you decisions very quickly.

So, given all the "red flags" I talked about above, how do you find the best prospective investors and avoid wasting your time?

Time-Saving Tips for Dealing with Investors

Before you meet with any investor, try to qualify the person and the firm.   Sometimes this is difficult because of lack of transparency in the venture business.

Fortunately, transparency is steadily improving. Be sure to read the Kauffman Report, which does a great job moving us toward transparency for early-stage investing.  Kudos to the Kauffman team. 

It's somewhat ironic that so many venture investors  (who profess so much faith in capitalism and free markets) have worked so incredibly hard to limit transparency, both at the micro and macro level.   

• Who are the actual top venture firms by return?  
• Who are the partners who have created value for common shareholders vs. those that jump at the chance to dilute common shareholders at every opportunity?

This kind of information has traditionally been hard to find, even by doing primary research within entrepreneurship inner circles.

Here are some other to-do's:

Look up the investors on The Funded.  Get every source of information you possibly can about not only the firm – and the culture of the firm – but also the PERSON who you are taking money from. Relentlessly pursue personal and professional references. 

Before you agree to meet, ask them the following questions:

• How much of your existing fund(s) is still available to invest?
• When are you planning to raise another fund and what is the target size?
• How many investments have you (firm and partner) made in the past month, quarter, year?

Also, ask yourself:  “Who do I trust that has had experiences with the firm/partner?” Try to have candid conversations with those people.  True character in early-stage companies is measured by what people do during the worst of times and the best of times. This is where you see their true values reflected in their actions – you want to know that they will do when it looks most grim or when there is a ton of money on the table. Those who will support the mission of the company in either of those cases are the people you want to work with.  Empirical evidence is always telling.  

If you do meet with investors and they say anything other than “absolutely yes – we want to do this deal ASAP – here is a term sheet or I will have a term sheet to you within X days,” you should interpret their response as essentially a “NO.” 

Great companies are built by people (including investors) who are fiercely mission-driven.  If external financing is required (which is far less often than most entrepreneurs realize) – make sure that your investors believe that great companies are defined by their ability to create value for ALL shareholders through the achievement of the companies' missions – not a quick flip to pump up the value of a particular venture fund.  This is a long-term view that is all too rare among venture capitalists, but a key attribute of the most consistently successful early-stage investors. 

Transparency: It’s About Time

Fortunately, there is a massive culture change brewing in early-stage investing (thanks again to the Kauffman team and many others). The potential of democratized early-stage investing is becoming obvious: combine AngelList with the potential impact of the Jobs Act.  Entrepreneurs are realizing that it’s their time that’s precious (to themselves and their future investors), NOT the time of the investors.  This has always been true among the best companies and the best people at the high end of the start-up market, but it’s now coming downstream.  Hallelujah.

So, spend your time pursuing your mission, developing your idea and creating your technology.  Spend it with potential customers, turning them into real paying satisfied customers.  If you do this well enough, and are smart, disciplined and mission-driven, there will always be capital available for your company.

Finally, if you’re wasting time thinking “But I have a pit in my stomach because I can’t pay my mortgage,” stop. This is how it feels to take risks. It’s painful but it WILL make you stronger as a person (insert Nietzsche cliche). It will make you stronger as a role model for potential employees and customers, who will respect your commitment and sacrifice in the interest of achieving your mission.   And it will make you more attractive to the right kinds of investors, if and when you need them.