Industry Leaders of Tech 2.0:
1. David, you
are the founder and CEO of TechStars, the elite startup accelerator. As indicated on TechStars' website, “TechStars provides seed funding from
over 75 top venture capital firms and angel investors who are vested in the
success of your startup, as well as intense mentorship from hundreds of the
best entrepreneurs in the world.”
TechStars
offers five programs (based in Boulder, Boston, New York City, Seattle and a
Cloud program in San Antonio) on a “regular schedule”.
Competition
for admission is intense. As stated: “TechStars is the #1 startup accelerator in the world. We’re very selective – Although thousands of
companies apply each year, we only invest our money and time in about ten
companies per program location. We have selection rates lower than the Ivy
League, so you have to be among the best of the best to earn investment from
TechStars.”
A few of the
superstars that TechStars utilizes as mentors in the program include: Brad Feld, (Managing Director, Foundry Group and also a TechStars co-founder); foursquare founder Dennis Crowley; and Jeff Clavier (Managing Partner of SoftTech VC ) among others.
In March 2011,
TechCrunch
reported that
“Startup incubator TechStars has raised $8 million in new funding for its
programs in Boston, Boulder, New York, and Seattle. The new funding comes from
more than fifty venture funds and over 25 individual angel investors. This
brings the incubator’s total funding to nearly $11.5 million.”
This was
followed around six months later with the news that “startup incubator and network
TechStars has raised $24 million in new funding from the Foundry Group, IA
Ventures, Avalon Ventures, DFJ Mercury, SoftBank Capital, SVB Financial Group,
RRE Ventures, Right Side Capital Management, TechStars Alumni, and several
individuals…this new funding will be used to offer every single new TechStars
company an additional $100,000 in funding in the form of a convertible note
immediately upon acceptance into TechStars.”
First begun in
Boulder in 2007, 8 TechStars companies have already been acquired, over 85% of TechStars
alumni companies are still active and less than 8% have failed. In addition, “our companies average over $1M in
outside venture capital raised after leaving TechStars” (SendGrid alone has raised over $27
million,
Orbotix $11 million, and quite a few others have raised over $1 million with
several raising over $5 million each to date). The ten companies from Boulder,
Summer 2009, have to date already raised over $41 million collectively.
David,
to begin, a few questions to try to gain some insight into this tremendous
success of TechStars. What, most essentially, is the “secret sauce of
TechStars”, and how has this developed and evolved as TechStars has expanded
its locations and funding?
David Cohen:
It
sounds really simple, and it is. It’s all about the people. We take the very
best entrepreneurs we can find, and put them in a room with the very best
mentors. We have over 1,000 great people that have asked to be TechStars mentors
that we haven’t brought in. Like everything we do, it’s about quality over
quantity. The 300 mentors that we do have are literally the best. They engage
deeply, and they’re incredible. When you put these mentors in a room with
really fantastic entrepreneurs the outcome is often pure magic. There’s a
saying about hiring top software developers. The top 1% are 10 times more
productive than the next 10%, who are 10% more productive than the rest. At
TechStars, we think the same is true of mentors and entrepreneurs. Filtering on
the best at both levels has produced something really special.
Industry Leaders of Tech 2.0:
What separates the accepted from the non-accepted TechStars
applicant? Could you provide a few examples of factors that have been critical
in making these decisions?
David Cohen:
Often, it’s very
little on the bubble. The #1 reason that people don’t get accepted into
TechStars is simply our focus on quality over quantity. Sure, we could fund 50
startups in every batch, but then they wouldn’t each get the right amount of
personal attention and 10 to 1 mentor to company ratio that we strive for.
Instead we choose to put our full energy in to the top 10 or so, and treat them
all like family. For us, it’s not a funnel or a way to figure out which ones
are good or bad. When you get into TechStars, it’s for life. So we take
admission very seriously.
Industry Leaders of Tech 2.0:
What are some of your roles within TechStars and how has
that evolved? What does a typical day for you (if there is such a thing?) look
like?
David Cohen:
Well, we’re big
enough that it’s not just about me. I have an incredible team of Managing
Directors that I’m very privileged to work with (Katie Rae in Boston, David
Tisch in NYC, Andy Sack in Seattle, Nicole Glaros in Boulder, and Jason Seats
in San Antonio). They’re on the front lines working with the companies every
day. I still love doing that but as the organization has grown I’ve had to
focus more on the product and service to our companies as well. I enjoy both,
and wish there was more time in the day. I’d say about half my time is spent
working with companies, and half on TechStars or the investment funds around it
overall.
Industry Leaders of Tech 2.0:
It seems as if every few months, if not more often, there is
an announcement of a new tech startup accelerator or incubator. Can you talk
about the role of the tech accelerator now in the funding of startups as it has
developed and where you see that going? How are tech accelerators
differentiated from each other and have we reached or are we approaching a
saturation point for tech accelerators?
David Cohen:
I think there is at
least one tech accelerator launching every day now. It’s not even a trend any
more, it’s beyond that. There are about 350 accelerators in the world that I
know about, and I’m sure there are more now. They’re like colleges. Not in the
“education” sense but in the “affiliation” sense - these programs will develop
reputations (good and bad) and that will say something about your company. They will
each have alumni networks trying to help each other. Overall, as long as
they’re well intentioned and are actually investing money and using reasonable
(industry standard) terms, I think they can’t really be bad for
entrepreneurship. There are going to be some bad actors out there, taking more
equity than they should, and/or providing no or less funding. At TechStars,
we’ve led the charge on transparency and have published our full results since
day 1 on our web site. We even released the tool for other accelerators to do
the same thing. It’s easy for an accelerator to be transparent, and the fact that
one might not be should tell you something about them.
Industry Leaders of Tech 2.0:
How competitive is the landscape? Do you consider TechStars
to be in competition with other tech accelerators, for example Y Combinator
(which employs what might be considered a similar financing model as TechStars), for the best
tech startups, and what does that competition look like?
David Cohen:
We’re fortunate to
have a strong reputation, the best mentors, and a recent #1 ranking by a
Kauffman Fellows study. I think Y Combinator and TechStars enjoy this
reputation effect and have access to some of the best companies. But we’re not
resting on our laurels - we know we have to deliver for our companies and help
them become successful. Over time, the most successful programs will continue
to get the best applicants.
Industry Leaders of Tech 2.0:
What assistance do TechStars companies receive after they
leave the initial three month mentoring program?
David Cohen:
We’re investors for the long term. We help like any investor
would long term (introductions, product feedback, business model feedback,
etc). We also have an incredibly vibrant alumni network and get together physically
once a year. It’s become a pretty amazing group. There are also very vibrant
online communities for our founders and companies that are heavily used. I used
the family metaphor earlier - and it’s a good one because I think everyone
feels this way.
Industry Leaders of Tech 2.0:
If things continue to go as well as they have, where might
TechStars be in five years?
David Cohen:
We might be in a few
more places, but again our focus on quality over quantity will win out. We
don’t want to be everywhere. When we do something we want to do it with
excellence. Look for us to continue to pile up unfair advantages for our
companies - ready access to the best people in the world, efficiency in
fundraising, better information, insight, and tools for them, etc.
Industry Leaders of Tech 2.0:
2. As if all of that growth isn’t enough, TechStars also has
also championed the Global Accelerator Network “in partnership with the White House Startup
America initiative. The Network consists of only the highest quality
independently owned and operated organizations from around the world that
utilize a mentorship-based startup accelerator model. All Global Accelerator
Network members have met rigorous standards to gain membership in the Network.
Members share best practices, participate in regular networking opportunities,
and have access to some of the best perks in the world which they may share
with the companies they fund”.
“The Global Accelerator Network consists of independently
owned and operated regional organizations that operate a high quality start-up
accelerator programs. The Network provides professional development, networking
opportunities, training, consulting and ongoing support for members...the
Global Accelerator Network encompasses 57 program locations across 6 continents”.
How did you come up with the idea for this type of
network, how does it benefit TechStars in addition to the ecosystem of startup
accelerators, how has it performed to date, and what are some of the
competitive advantages, despite its independent nature, of such uniformity or
scale?
David Cohen:
I was getting phone
calls 2-3 times a day from people starting accelerators wanting to know what
we’ve done and how we’ve done it. I
wanted to help, but it was taking up a ton of my time. Rather than think of
these folks as competitors, I decided to help because I believe that this
accelerator phenomenon is good for entrepreneurs overall (again, assuming they
are actually investor[s], and are not taking too much equity, and are being
transparent with their results). If it’s good for entrepreneurs, I want to
support it. But over time this became too much for me to handle - and got a bit
monotonous. So we talked to the folks behind Startup America in the Obama
Administration, and decided we’d open source TechStars and help champion the
Global Accelerator Network. Today I’m one of 7 advisors to the GAN and there
are about 45 member organizations globally. See www.joingan.com
for more information.
Industry Leaders of Tech 2.0:
3. David, the awareness of TechStars has been further developed
through TV, with TechStars on Bloomberg, and video, This
Week in TechStars and TechStars
TV (I also love the powerful video on the TechStars homepage in
which you start off the video by saying “TechStars is like an unfair advantage
for your startup” and near the end of the video exclaim “This is where you’ll
find the best community for your startup
on the planet”).
I watched this
episode of TechStars on Bloomberg which follows TechStars New York
companies six months after demo day (and introduces “the two Davids”) and one
thing that struck me was how companies could pivot so quickly in a short
program and the class still be so successful raising funding from investors.
How did and does the media exposure and examination of
how the sausage is made effect TechStars overall?
David Cohen:
We made the TV show
for two reasons. First, we wanted to let everyone see how valuable amazing
mentorship can be. We wanted to encourage more people to become mentors to
entrepreneurial companies. Once you’ve “made it” as an entrepreneur and had a
successful exit or two, you can choose to go relax on a sailboat somewhere, or
you can give back. Giving back makes a huge difference to our country, to job
creation, and to future generations. We
wanted to show people that they should do that. Second, we wanted to give
people an honest look at how hard it really is to do a startup. It’s not for
the faint of heart, and I think that came across.
Industry Leaders of Tech 2.0:
4. David, you have a strong
background as an entrepreneur. “David was a founder of several
software and web technology companies. He was the founder and CTO of Pinpoint
Technologies which was acquired by ZOLL Medical Corporation (NASDAQ: ZOLL) in 1999.
You can read about it in No Vision, All Drive [Amazon]. David was also the
founder and CEO of earFeeder.com, a music service which was sold to
SonicSwap.com in 2006. He also had what he likes to think of as a “graceful failure” in between.”
What are some of the lessons that you learned as an
entrepreneur, and how does this assist you in your work with the entrepreneurs
of TechStars?
David Cohen:
Too many to count. Startups are one of those things
that you only learn by doing. On the internet, one of my biggest lessons (and I
have a failed company to show for it) is the value and importance of
distribution. If you don’t have a way to get your product in front of the right
people, it won’t work. I wrote a blog post about this. The biggest
lesson though would be the value of mentorship. It’s why I started TechStars.
Inexperienced entrepreneurs greatly undervalue mentorship and network effects.
Industry Leaders of Tech 2.0:
5. David, I ordered and read your book, “Do More Faster”
(let’s just cut to the chase and admit that you are a genius, which you are),
co-written with Brad Feld and with many contributors across the themes of: Idea and Vision, People, Execution, Product,
Fundraising, Legal and Structure and Work and Life Balance.
In your chapter in the book “Be Open to Randomness” you
write in part: “Take a moment and think back to all of the good things that
have happened to you so far in your life. If you’re like me and you contemplate
that list, you’ll realize that many of those good things came about in very
random ways…Brad Feld is a great example. For many years, Brad has regularly
held ‘random days’ when he’ll meet anyone to talk about anything for 15 minutes…Now,
guess how I met Brad Feld. It was on one of his random days. And on that random
day, guess what we talked about? TechStars!”
How random are random days? How much of a role does
intuition play in randomness? Preparedness (in the sense of “luck favors the
prepared mind”)? The law of attraction?
David Cohen:
On random days, I’ll
literally meet anyone for any reason. That’s pretty random! If you go in with
the goal of “learn one thing” from every meeting, you’ll find that you usually
do! I think luck favors the available
mind, sometimes!
Industry Leaders of Tech 2.0:
You also wrote the title chapter “Do More Faster”. Briefly,
you wrote in part: “I’ve been involved with a few companies that couldn’t do
more faster…It turns out that giving up your one obvious competitive advantage
often proves to be deadly. If a startup can’t do more faster, it usually just
gets dead faster.”
Constant iteration (for example “the lean startup model”)
which also features the “minimal viable product” (MVP) is pretty much the rage
these days (and for good reason I think). What is the potential trade off,
however, between very quick versus more considered action?
David Cohen:
We use Lean Startup
concepts heavily at TechStars, and have been lucky enough to have Eric Ries and
Steve Blank around the program a fair amount. I honestly haven’t found any practical or meaningful tradeoffs when it
comes to Lean Startup techniques.
Industry Leaders of Tech 2.0:
6. David, you are also a blogger. In this recent post “Brad Feld’s random acts of kindness” you write in
part: “Brad has gone on to lead by example with his “give first, get later”
philosophy in countless ways… The “give first” philosophy is what powers TechStars,
in fact… So when Brad announced that he’d be donating at least $5,000 for each
of the 29 upcoming marathons he plans to run to “random” families via
GiveForward, and activating his community to amp it up all I could do was smile
and say “That’s so Brad.””
This type of service mentality is the same type of
experience that I have had with Brad and frankly all successful people in life
(I like to say that “talent takes one to the top but only character keeps one
there”). I also believe in the law of attraction such that like-minded people
of maturity are able to find each other and enjoy working together.
Can you talk about how you put all of the pieces together
by finding and keeping the best people throughout the TechStars organization.
Also, what does the blog mean to you?
David Cohen:
I’m very fortunate to work with such great people every day.
Not just the mentors and companies we fund, but my co-workers. There’s a mind
boggling amount of experience and at the same time humility and goodwill inside
of TechStars. People spend time on TechStars because they love it, and that’s a
great feeling.
The blog is just an outlet for getting some thoughts out. I
am living my professional life as an investor by one simple rule. Help
entrepreneurs. The blog is just an outlet to try to do that in another way that
has wide reach.
Industry Leaders of Tech 2.0:
7. Finally, David, anybody reading through all of your
accomplishments such as those detailed in this interview might well ask
themselves, “How does one person become so productive?” So
let’s add a few more: “David
is a[n] active startup advocate, advisor, board member, and technology advisor…
He is also very active at the University of Colorado, serving as a member of the
Board of Advisors of the Computer Science Department, the Entrepreneurial Advisory Board at Silicon Flatirons,
and the Board of Advisors of the Deming Center Venture Fund. He is a member of
the selection committee for Venture Capital in the Rockies, and runs the
Colorado chapter of the Open Angel Forum.”
So, what are some of the secrets to the success and
productivity of David Cohen?
David Cohen:
Never sleep. Kidding.
The secret is pretty simple and anyone who follows it can be incredibly
productive. Do what you love. Don’t do anything else. If you do what you love,
then work becomes play and pure joy. You just want to do more of it, and that’s
how I feel. I am proud that I have a balanced life, in fact as I write this I’m
returning from a family trip to Mexico. But when I’m working I work very hard
and I try to focus and prioritize. And I love every minute of it.
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