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martinzwilling_136Martin Zwilling Contributor

A startup begins with a great idea, but all too often, that’s where it ends. Ideas have to be implemented well to get the desired results. Good implementation requires a plan, and a good plan and good operational decisions come from good people. That’s why investors invest in entrepreneurs, rather than ideas.

People and operational excellence have to converge in every business, large or small. Microsoft found this out last year when their market capitalization, once at $560 billion in the year 2000, had fallen to $219 billion, allowing them to be passed by Apple at $222 billion, who grew from $15.6 billion during the same period. Both had access to the same technology, people, and market.

So what could have happened here? I found a good summary of the relevant keys to business operational excellence in a new book by Faisal Hoque, called “The Power of Convergence.” His focus is on repeatable practices to maximize business opportunities in large companies, but I’m convinced that these apply equally well to startups:

1.  Clearly define your value chain. Your value chain consists of customers, partners, vendors, internal systems, and your own team. Make sure you understand this chain, as well as market dynamics, to drive operational innovations and every decision. Apple has been able to innovate at an amazing pace to define and meet new market opportunities.
2.  Visualize abnormal or suboptimal performance. Recognizing and understanding deviations enables a startup or any business to take corrective action quickly. This requires executives and a team that understands the parameters, and is focused on customers, quality, and continuous improvement.
3.  Facilitate the power of your team. Startups need to empower their people to take action in the absence of orders. That doesn’t mean abdication in setting corporate policies, which provide parameters to ensure that individuals have to ability to act collectively in the company’s best interest. Steve Jobs has a committed team.
4.  Communicate effectively with the team and customers. Communication is a challenge in any organization, but it’s a particular challenge when you’re working in a startup, where customers, products, processes, and the team are new. Most founders forget that communication becomes exponentially more difficult as the business grows.
5.  Measure value flow and performance. Measuring performance may seem self-evident, but many entrepreneurs mistake this task as a point-in-time or a one-time event. In operationally excellent startups, performance measurement is an ongoing effort throughout the process chain, not just at the outcome.
6.  Define response mechanisms. Anticipating and planning for worst-case scenarios, and having a Plan-B, will enable the quick-response and pivots required to put a startup back on track. Metrics are required for ensuring the return to a known good baseline.
7.  Maximize technology architecture and standards. Continuous innovation to maintain your competitive advantage does not mean that you can ignore current architectures and standards. These must always be leveraged produce optimal intended product outcomes.
What every business needs is a convergence of business and technology elements to optimize return and competitive positioning. All too often, entrepreneurs posit a new technology or idea, without understanding that a successful business is a never-ending process of adapting and improving all the elements in a business – especially business model, processes, and people, as well as technology.

Apple, with Steve Jobs, has demonstrated a rare convergence of technology, market understanding, business process, and people. Are you focused on all the right execution principles in your startup to do the same?

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Article from TechCrunch.

Dave McClure’s 500 Startups is looking for participants to join its next incubator program, which will run from October through January. And for the first time ever, it’s going to open the process up to allow anyone to apply. To help it get through the process, 500 Startups Accelerator will be using AngelList, making it the first incubator to leverage the platform for applications.

McClure told me that historically, the program has avoided having an open application process and instead has taken on Accelerator startups only through referrals. So far, that has worked out just fine for 500 Startups: It’s had four successful incubator programs, usually with 20 to 35 startups participating.

As a result, McClure & Co. have been able to avoid the frustrating, time-consuming process of reviewing applications. That said, McClure told me that, while referrals have helped it to find a ton of interesting startups — and avoid sorting through a lot of crap — he also recognized that he’s probably missed a few that might not have been part of his network.

That’s where AngelList comes in. The professional network for startups and investors will help 500 Startups vet applicants through a mix of algorithmic ranking and curation from mentors and others. The AngelList platform will help speed up the process by weeding out unqualified applicants. It will also allow 500 Startups to scale up the application process without having to manually review all the applications by hand.

Not everyone in the next class will come from AngelList — 500 Startups expects to choose between five and 10 startups through this process. It’s already picked a few to participate and is reviewing several others. But McClure said that it was important to open up the applications process in a way that would allow it to review companies that it might not have seen. That’s especially important because so much of 500 Startups’ focus is on startups that are somewhat non-typical, for instance those that are in international markets.

In addition to opening up the application process, 500 Startups is changing the terms of its investment for companies that have already raised some funding. Typically, it provides $50,000 for 5 percent of equity, with an option for up to $200,000 in later rounds. But companies that have raised at least $250,000 will be able to join the program for only 3 to 4 percent of equity.

The fifth 500 Startups Accelerator will begin in October, with Demo Days in late January or early February. Companies interested in applying can do so on AngelList at angel.co/500startups.

Read more here.

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Article from NYTimes.

MENLO PARK, Calif. — Matt Cohler was employee No. 7 at Facebook. Adam D’Angelo joined his high school friend Mark Zuckerberg’s quirky little start-up in 2004 — and became its chief technology officer. Ruchi Sanghvi was the first woman on its engineering team.

All have left Facebook. None are retiring. With lucrative shares and a web of valuable industry contacts, they have left to either create their own companies, or bankroll their friends.

With Facebook’s public offering in mid-May, more will probably join their ranks in what could be one of Facebook’s lasting legacies — a new generation of tech tycoons looking to create or invest in, well, the next Facebook.

“The history of Silicon Valley has always been one generation of companies gives birth to great companies that follow,” said Mr. Cohler, who, at 35, is now a partner at Benchmark Capital, and an investor in several start-ups created by his old friends from Facebook. “People who learned at one set of companies often go on to start new companies on their own.”

“The very best companies, like Facebook,” he continued, “end up being places where people who come there really learn to build things.”

This is the story line of Silicon Valley, from Apple to Netscape to PayPal and now, to Facebook. Every public offering creates a new circle of tech magnates with money to invest. This one, though, with a jaw-dropping $100 billion valuation, will create a far richer fraternity.

Its members will be, by and large, young men, mostly white and Asian who, if nothing else, understand the value of social networks. And they have the money. Some early executives at Facebook have already sold their shares on the private market and have millions of dollars at their disposal.

Mr. Cohler, for example, is at the center of a complex web of business and social connections stemming from Facebook.

In 2002, barely two years out of Yale, he was at a party where he met Reid Hoffman, a former PayPal executive who was part of a slightly older social circle. The two men “hit it off,” as Mr. Cohler recalled on the online question-and-answer platform, Quora (which was co-founded by Mr. D’Angelo). He became Mr. Hoffman’s protégé, assisting him with his entrepreneurial investments, and following him to his new start-up, LinkedIn.

Then, Mr. Cohler joined a company that Mr. Hoffman and several other ex-PayPal executives were backing: Facebook.

Mr. Cohler stayed at Facebook from 2005 to 2008, as it went from being a college site to a mainstream social network. One of his responsibilities was to recruit the best talent he could find, including from other companies.

Mr. Cohler left the company to retool himself into a venture capitalist. He has since been valuable to his old friends from Facebook.

Through his venture firm, Mr. Cohler has raised money for several companies founded by Facebook alumni, including Quora, created in 2010 by Mr. D’Angelo and another early Facebook engineer, Charlie Cheever. Other companies include Asana, which provides software for work management and was created in 2009 by Dustin Moskovitz, a Facebook co-founder; and Peixe Urbano, a Brazilian commerce Web site conceived by Julio Vasconcellos, who managed Facebook’s Brazil office in São Paulo.

Mr. Cohler has put his own money into Path, a photo-sharing application formed in 2010 by yet another former Facebook colleague, Dave Morin. Path is also bankrolled by one of Facebook’s venture backers: Greylock Partners, where Mr. Hoffman is a partner.

And he has invested in Instagram, which was scooped up by Facebook itself for a spectacular $1 billion. “Thrilled to see two companies near and dear to my heart joining forces!” Mr. Cohler posted on Twitter after the acquisition.

Instagram clearly was a good bet; it is impossible to say whether any of the other investments Mr. Cohler or other Facebookers are making will catch fire or whether the start-ups they found will last. Certainly, there is so much money in the Valley today that start-ups have room to grow without even a notion of turning a profit.

Ms. Sanghvi, one of the company’s first 20 employees, married a fellow Facebook engineer, Aditya Agarwal. Mr. Zuckerberg attended their wedding in Goa, India.

Read the rest of this article here.

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Article from SFGate.

“If Facebook is like hanging out at a banquet with a large buffet to feast on, then social network Path is an intimate dinner with close friends. Path is now getting new silverware and table decorations, so to speak, with the release of updated software.

CEO Dave Morin, a Facebook alum, says the dinner-party philosophy remains but users can now share their comings and goings with up to 150 friends, up from the original 50.

With the new version available this week, a year after its debut, Path aims to be more than a sharing application. It wants to be a digital journal that documents your days with a push of a button.

Morin describes it as “a slightly social experience.” You’re not just updating it to share your day with others; you’re recording your life for yourself.

“The idea has always been to give you a trusted place to share with your close friends and family,” Morin said. “Now that the (mobile phone) is the accessory you have in your hand all the time, it’s become a journal.”

Path began as an iPhone application for sharing photos and videos. Users later got the ability to add one of five emoticons to their friends’ photos.

The new version lets users post music and tell everyone where they are, with whom and whether they are awake or asleep. It’s also compatible with Android-running phones for the first time. And, it includes technology that allows the application to make updates on its own, as long as the user agrees to it, or opts in.

For example, if you fly to Minneapolis, the application can track you with GPS and post this when you land: “Arrived in Minneapolis, it’s 6:06 p.m. Mostly cloudy and 50 degrees.” The location updates are neighborhood and city specific but will not pin an actual location.

Morin says the auto-updates make it easier for users to share richer content without much effort. And, while the details may seem personal, your network is only of close friends and family.

The update retains strict privacy controls, which Morin says is key to making people comfortable with sharing, especially in the wake of high-profile debates over privacy issues at Facebook.

On Tuesday, the government announced a proposed settlement with Facebook over “unfair and deceptive” business practices. The pact requires the company to get people’s approval before changing how it shares their data.

The new version of Path integrates larger social networks Facebook, Twitter and Foursquare, allowing status updates to those sites from the Path application.

Morin says the San Francisco-based startup has enough funding for its next stage and just hired its 20th employee. Path has more than 1 million users.”

Read more here.

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Here is an excellent read from GigaOm:

By now, most agree that this recession is likely be longer, deeper and fiercer than those in the past, rendering smaller, newer companies especially vulnerable. Such vulnerability is already playing out in the public markets: Over the past three months, the Russell 2000 has fallen much further than the Dow.

There is, however, a way for startups to not only stand out in this recession, but thrive in it: By being as disruptive as possible.

The me-too business model that fared pretty well during good times will be toxic this year. Venture-backed IPOs grew scarce last year and there will likely be few in 2009; merger activity is also expected to remain sluggish. Startups with little or no revenues or a high burn rate may not make it through December.

In an economy where risk is shunned, boldness is a risk that still offers a shot at success. It’s much easier to say this than to make it happen. But there is reason to believe that 2009 will allow original ideas, and companies behind them to come forth.

Click here to read the whole article at GigaOm

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