Ground Control to Major Moishe
"Though I’m past one hundred thousand miles
I’m feeling very still
And I think my spaceship knows which way to go”
Allow me to be blunt, the ‘pivot’ is a lie. You have one shot to get into orbit, and if you screw the pooch, it’s splatsville.
If you’re a first-time entrepreneur you surely believe you can turn around your company if ‘Plan A’ doesn’t work out. However, with very (very) few edge cases, if you’ve founded an early stage Israeli web or mobile startup you are better off embracing the notion that the ‘pivot’ is fiction.
The honest-to-god-truth is that if you intend to raise a Round A and haven’t achieved Escape Velocity six months before your seed funding runs out, you’re going to be pulled back by earth’s gravity. Your startup **will** close shop with no ability to do another raise.
This is why you have to be ready to ship your product out, and back it with paid distribution at the very latest, 3 months from closing the round. This means your product should be 80-100% complete when you start fundraising your seed round.
Let’s do the simple math:
- Payroll ($30K * 12 months) = $360K
- $7K (rent + everything else) = $84K
So, best case scenario, this leaves $54K if your total raise was $500K, and $306K if you raised $750K. Huge difference when you consider that the entire life of your startup rests upon your ability to spend these two amounts on marketing.
To give it a real go, your company must be spending $50-100K on marketing per month, from the third month. Otherwise, you might not have known it, but it was game over all that time.
If you raised $500K you don’t have money for even one good swing. If you raised $750K, all you got is one. Whichever way you cut it though, two swings you most certainly don’t have. And that is the pivot theory ball-game.
The point I’m trying to make is that ‘let’s just raise anything and start,’ and ‘$250K-$500K is just what we need,’ are fictitious operational scenarios. You’re dead before you started.
Make sure you have enough funding from the get-go, or don’t start at all.
Leaks: An Open Discussion
If there’s something to walk away with from last week’s posts about Israeli startup acquisition leaks, it’s that both sides have much to say on the subject.
Calcalist (which has found itself in the eye of the storm) reached out and invited me to come-in and talk with their editorial team on the subject. I replied:
As I said, I’m more than happy to sit with your Editorial team to discuss the issue.Also, I’m more than happy to have an open discussion at a venue where other outlets can sit and weigh in as well.
Leaks - The Prime Directive
Yesterday I posted my feelings regarding the Israeli press’ continued publishing of startup acquisition rumors.
My post drew feedbacks from one extreme, to the other…
There was Robin Wauters’ thoughtful ‘On Leeks and Family Matters.’ Meir Orbach was attempting to channel Will McAvoy with a comment on a Facebook thread that somehow drew a conclusion that not publishing acquisition rumors is fundamentally detrimental to ‘Freedom of Speech’.
There were also other less public feedbacks I received from investors and entrepreneurs, wishing journalists would be more responsible.
And then there were journalists that contacted me panicking from a potential industry ban upon them.
So all-in-all, a situation everyone involved would prefer resolved somehow.
From the investor/entrepreneur feedbacks I received, two solutions were offered:
1. Live with the status-quo. (Meaning, live with deals risked by leaks.)
2. Ban journalists and publications that publish acquisition rumors. (Extreme, but a legitimate response IMO if people’s livelihood is on the line.)
I would like to propose another solution, which as an homage to both PrimeSense and Gene Roddenberry, I will name as ‘The Prime Directive’:
Israeli startup acquisition rumors should be published only having been corroborated by three independent sources.
I believe this to be a fair and professional policy. It requires journalists to uphold themselves to a high standard, while protecting themselves, the startups, the employees, and the investors, from being manipulated by individuals with agendas (malicious, or otherwise).
As an investor, I can live with this myself. I expect other investors will as well.
As for journalists and publications:
It’s hard for me to foresee professional objections to the virtues of this approach.
Commercially, yes, the downside is that non-Israeli journalists and publications will reap the benefits of breaking acquisition rumor stories. That’s simply the price you pay for family.
I call upon Calcalist, GeekTime, Globes, TheMarker, Yedioth, and others to contact me and make The Prime Directive a reality.
Another Israeli exit, another leak. This time, PrimeSense.
Izhar Shay vented some strong words on Facebook to the potential leaker. His comments and mine were later picked up by Business Insider, which were then picked-up by Yahoo! Finance. Fun.
To answer the folks that have pinged me on this, no, I do not know who the leaker is. I made some calls because I was curious, but did not have an aggressive agenda to truly dig into it.
The matter at hand is much bigger than outing a single person though, it’s about nipping these leaks.
The risk they pose in acquisition deals, particularly with companies like Apple that have a disdain to such matters disclosed to the public prematurely, is immense.
Put even more bluntly, we are inching closer to the day a deal involving hundreds of people’s livelihoods will fall through because of a leak.
People’s livelihood in jeopardy because of a leak, is a state of being I have a problem accepting.
Instead of pleading to the leakers, I am making a public plea to the journalists and their employers…
Outlets such as Calcalist, Globes, TheMarker and GeekTime, have made a business of covering the ‘Startup Nation’, as you affectionally like to pimp it.
Without startups you neither have material to write about, nor conferences to revolve around. True, most of your businesses are not rooted on covering the tech industry, but it would be naive to not recognize that a substantial amount of revenue you make is a result of it.
And yet, at a drop of a hat — to the benefit of your personal interest — without so much as blinking, you’ll piss right into our bowl of hummus.
I’ve always found this behavior to be dis-tasteful and short-sighted (to say the least).
So here’s my plea: Don’t publish acquisition leaks.
I’ll go ahead and rebut what I expect your main arguments on this to be…
Argument 1: It’s in our business interest to publish acquisition leaks.
Rebuttal 1: Horsesh*t. Nobody gives a damn who came out with the story first. There is absolutely no financial gain by such stories. Your business interest should be to spotlight young and innovative companies. To tell entrepreneurial stories. To write pieces that enlighten the local readership. Your business interest is to think long-term.
Argument 2: If we don’t publish acquisition leaks, our Israeli competitors will.
Rebuttal 2: Not if we have a gentleman’s agreement. Assuming you’re men and women of honor, we can all meet, agree, and shake hands on this.
Argument 3: If we don’t publish acquisition leaks, our international competitors will.
Rebuttal 3: True. But they’re not family. We are.
If you’re a tech journalist or editor at an Israeli news outlet, do the right thing. Email me and help build the Startup Nation you claim to love, rather than tear at its seams.
The most interesting conversation I saw on-stage at the Dublin Web Summit Last month was between Shakil Khan (@Shak) who interviewed Jeremy Allaire (a stud of tech studs) about his new venture Circle.
A couple of statements Shak made stood out to me in particular:
“Bitcoin will go to zero or to many, many zeroes.”
"It’s still not too late because it’s so early in the stage that if it ends up going to $10,000 it kinda ends up being irrelevant whether it was $166 or $200"
Like many other investors and techies, I’ve been looking at Bitcoin a little more closely this past year. I’ve seen numerous Israeli Bitcoin-oriented ventures, though have yet to make an investment into one through Initial Capital.
After the Shak/Allaire interview, I decided to make lean-in personally…
Starting last month I began building a Bitcoin position. No, this isn’t a Chamath $5M position, but a boy has to start somewhere.
(Pictured: Shak & Allaire’s shoe… Credit: Web Summit)
I was abroad when the news that Soluto was acquired hit, and I’ve been waiting to get back to write a few words about it.
Soluto has a special place in my heart… Here’s the story:
I was introduced to Soluto on its first week of its existence. A friend told me there’s this guy called Ishay Green that I HAVE to meet because he’s working on a huge idea. It took me 30 seconds with Ishay to agree.
Later that week I met Tomer Dvir (the other co-founder). To be honest, the impression he made on me was far from the calibre of a professional, a CEO, and a friend he turned out to be.
Few know this, but I nearly orchestrated Soluto’s Round A. It fell through mostly of legal bs. Still, I fell in love with Tomer & Ishay and kept in close contact with them.
Fast forward a couple of years. I was going through a rough patch… My startup imploded and I was going through a shitty divorce. Out of a kindness of their heart, the guys offered me a part time gig, to help them launch Soluto into the world.
Then we got accepted to Disrupt, and everything changed. That week in NYC was by far the most emotional week of my life.
No one knows this, but on the flight back, while the guys were sleeping I went into a bathroom stall and cried. The emotions of that week finally burst through somewhere over the Atlantic.
For me, the little bit I did to help Soluto win… To help these three cats be kings of the world for that brief moment… Well, it’s one of my prouder moments.
In true ‘full circle’ fashion, I got to invest in Soluto in its last round. It wasn’t a large amount. That didn’t matter. It was karma.
I’d like to thank all of the folks at Soluto for their hard work. Many of you have become my friends, and that’s no small thing.
As for Tomer, Ishay & Adler… Have no mistake about it… We’re not done hearing from them. Not by far.
Thanks guys. (For everything you’ve done for me.)
Disrupt SF to Feature Both Israeli AND Brazilian Pavilions!
The upcoming TechCrunch Disrupt in San Francisco will not only feature the third Israeli Pavilion, it will also have an inaugural Brazilian Pavilion… This is fantastic news for the Brazilian startup community!
A bit of background: Back at Disrupt San Francisco in 2011 no less than 20 early-stage Israeli startups flew-in from Israel to demo and network themselves to the bone for three non-stop days in an area of the conference hall we called the ‘Israeli Pavilion’.
The inaugural Pavilion was such a success, we decided to have another one at the past Disrupt in NYC. Yet another 20 Israeli startups participated and it was a huge success.
Considering Initial Capital’s activity in Brazil I brought up the idea of having a Brazilian Pavilion at the next Disrupt and there was immediate support for it at TechCrunch.
What exactly are the Pavilions?
They’re basically extensions of the Startup Alley that include:
- A cocktail table for the entire duration of the event.
- Two tickets for the entire duration of the event.
You get all this for $1000. Killer, unbeatable price!
Note that only startups with less than $2M in funding and are less than two years old are eligible to participate. Also, Pavilion startups are not eligible to be voted for as the daily ‘Crowd Favorite’ (that goes up to present on the Battlefield stage).
If you are interested in sponsoring either Pavilion or have any questions about participation, email me at: email@example.com
The Israeli Pavilion at TechCrunch Disrupt is On!
Great news! The previous TechCrunch Disrupt featured an Israeli Pavilion. No less than twenty Israeli startups flew in to San Francisco to demo and network their asses off. And boy did they.
In fact, it was such a success, that we’re going to repeat it again for Disrupt NYC, taking place May 21-23.
Here are the details I was able to arrange for this special package:
- Cocktail table for the entire duration of the event.
- Two tickets for the entire duration of the event.
- Cost: $1000.
Considering Debuting at Disrupt? Talk To Me Pronto.
The most important event for Israeli startups is locked & loaded… TechCrunch Disrupt NYC has been officially announced to take place May 19-23!
As with every Disrupt, I’ll devote some of my time to help Israeli startups with tips and best-practices for making the best possible impression when applying for the Battlefield.
If you are considering applying, do yourself a favor and contact me at: firstname.lastname@example.org
Here’s to another Israeli Disrupt winner!
CodeBlue - The Israeli Hacker Academy
Hackers. The topic I have a conversation about at every industry event I attend. It’s always same conversation. And it’s been going on for at least three years. Hackers.
Or rather, the lack of hackers in the local market.
Put simply, our Startup Nation has been heading down a dangerous path for too long. There is just a crippling lack of hackers. By this I mean modern-day developers with not one, but an array of programming languages on their tool-belts. Developers that are versatile and capable of developing full-blown products on their couch, or at a bootstrap startup.
Nine months ago I grew tired of having the same old conversation, watching nodding agreement, and seeing nothing happen about it. So I started pushing a flake of snow down a hill. That flake snowballed.
Today I am ecstatic to announce the founding and launch of ‘CodeBlue’, a non-profit hacker academy where developers will be taught languages such as PHP, iOS, Android, Ruby, and more.
The idea is to teach classes upon classes of existing developers new skill-sets. Then we’re going to expand it to teenagers. Then we’re going to expand it to professional training from scratch.
CodeBlue was founded to be as frictionless as possible by having the courses be dirt-cheap. As in 750nis for 48-hour courses, making it a no-brainer to jump-in and enroll in them.
CodeBlue was not easy to get off the ground and some ‘thank you’s’ are in order:
First and foremost to Daniel Recanati was absolutely pivotal in the formation of CodeBlue. Not only was he instrumental in the structuring of CodeBlue as a non-profit, self-sufficient program, but his family’s philanthropic arm, the Yahel Foundation, provided the capital to get CodeBlue off the ground.
Second to thank is AppleSeeds, a fantastic and professionally run non-profit organization that embraced CodeBlue and will be managing its day-to-day operation. Eran Raviv played a key role in realizing CodeBlue and will be heading the program internally.
Third to thank is Zeev Suraski, one of the co-founders of PHP. With Zeev’s gracious help, CodeBlue was able to receive Zend’s official Education curriculum, completely free of charge.
Finally, special thanks to Yotam Troim for CodeBlue’s logo.
And now, let’s hack Israel.