Monthly Archives: January 2008

Startups and Amateur Entrepreneurs

Note: This essay was originally published on the Guidewire Labs blog. It has been moved here in an attempt to consolidate my writings. – CS

Over the past 30 days, I’ve been corralling a about 80 companies into the DEMO 2008 program.

Now let me be the first to say that being invited — and accepting an invitation — to DEMO is a high hurdle for a young company, and it’s particularly tough for an unfunded startup. First, companies have to bring a significant and market-impacting product to the table. Every company and product is screened by either me or Guidewire Group analyst Carla Thompson, and ultimately I have final say and personally issue the invitation to the event. Once invited, the company is also required to pay a hefty fee to participate. A lot has been written about this practice. Some think that it’s wrong to ask a company to effectively cover the cost of its participation in the conference.

DEMO is a major production, executed with a level of professionalism not found at many executive conferences. In fact, I’d say only the Wall Street Journal’s D:All Things Digital even comes close. The fee DEMO charges participating companies allows us to create the best possible environment for a product launch. It allows us to invite the most engaged media from the most influential outlets. It insures that each and every on stage demonstration comes off flawlessly.

And let’s be honest: the fee – $18,500 – is a line in the sand. It separates real, viable, growth-minded companies from slap-dash startups and amateur entrepreneurs.

Let me also say that this fee is no secret. It’s on the DEMO Web site. Still, it seems to come as a surprise to some number of the 70+ companies we invite to launch a product at each DEMO conference.

And here’s where I meander to my point: What business person would not fully investigate a launch venue and/or media opportunity before throwing him or herself headlong into a screening process in which one’s goal is to receive an invitation to a prestigious event? What entrepreneur would accept said invitation, sign a binding contract, then feign (?) surprise when the “big bad media company” expects the “little, unfunded startup” to behave like the professional company it purported to be?

Ah, but there are always a few of these in every DEMO pool. In many ways, I don’t fault the startup that missed the not-so-fine print and declines the invitation. In fact, I respect a company that takes its obligations seriously. And I will never fault the entrepreneur who pushes for a better deal. That’s as it should be. These folks are showing that they are responsible with their investment and to their investors. I get that, and I respect it.

Sure, I scratch my head sometimes when a founder tells me he “can’t make the ROI work,” largely because there is no other venue at any price that will put a young startup on a level playing field with some mighty big companies, parade the company in front of the most influential group of investors, media, and corporate development execs in the industry, and effectively endorse the product and company above hundreds of others that just didn’t make the cut.

But, that’s a matter of opinion. And sometimes, a whole lot of words are needed to say “no” and to feel good about it. I get that.

It’s the other group that I find most baffling. The folks who sign contracts. Violate them. Then use the “but-I’m-just-a-startup-and-you-are-a-mean-old-media” excuse to explain away their lack of commitment to their word. I heard this after DEMOfall, when one company launched its product prior to DEMO in violation of the contract, and after having been warned that the consequence would be removal from the program. I heard this recently when we had to send an agreement to collections. These companies’ entrepreneurs somehow believe that being a small startup is a Get Out of Jail Free card for poor fiscal management.

People! It’s not! A startup business is not a charity case until you get funded and successful. And if you believe that for a single minute, you’re an amateur entrepreneur. You may need to negotiate harder, be more creative, push for more lenient terms. All that is good business practice. But asking for a bye because your just a little company s a sign of immaturity and inexperience.

And I say this not because I’m heartless and working for a big, mean media company. I’m the founder of a pre-Series A venture. We negotiate diligently with our vendors. And when we face bumps in the road, as every startup will, we address them like smart business people. We don’t ignore problems then try to blame the creditor for our woes. And we don’t go to a dance that we can’t afford.

I’m not saying that Guidewire Group – or even DEMO, for that matter — gets it right all the time. And to be clear, the vast majority of startups are managed by people with business sense and true integrity.

So, forgive me if I’m a little baffled when amateur entrepreneurs want to play in the big leagues but by a set of rules that even the minors wouldn’t accept.