Tough lessons at Bootcamp
The war for executive talent and the thorny question of trust emerged as the key issues at Garage.com's first European "Bootcamp for Startups".
Around 650 entrepreneurs, advisers and talent spotters attended the two-day event in London, which featured seminars and panels from names including eBay founder Pierre Omidyar; Goldman Sachs managing director Paul Harvey; and Guy Kawasaki, author of "Rules for Revolutionaries" and founder of Garage.com.
Perhaps the most repeated message was that for a technology startup to win funding and succeed in its market, it has to be prepared to pay for the best management talent. In a frequently used metaphor, the market is a racecourse, a business is a horse and the management team is the jockey - and investors back jockeys.
Garage.com "human capitalist" Amy Vernetti emphasised the case for million dollar-plus cash and equity packages for talented chief executives. "The only number that matters is the number it takes to get the candidate you want for your company," she argued.
It was a message that the budding entrepreneurs on the floor didn't necessarily want to hear, however. The most enthusiastic reception was reserved for Atari founder and serial entrepreneur Nolan Bushnell, who declared that a deal with a VC was a deal with the devil - and a particularly dumb devil at that.
Many of the entrepreneurial attendees shared Bushnell's lack of faith in venture capitalists - although some were also complaining that there weren't as many VCs available for pitching to as they expected.
The unwillingness of VCs to sign non-disclosure agreements was a particular concern to many. Of a panel of five VCs, including Frank Boehnke of Wellington Partners, Michael Chalfen of Apax Partners and Allen Morgan of Mayfield Fund, only two said they would ever sign an NDA, and then only under exceptional circumstances.
The panel of business angels was equally against the practice, with Andrew Constantin of Constantin Partners claiming: "NDA stands for not doing anything. What you're doing is putting up red tape. The chances of you getting an idea no one else has is nil."
Although the VCs argue that NDAs are unworkable because of the sheer number of business plans they have to review, many entrepreneurs still want them for fear that their carefully crafted business idea will be stolen. Such lack of trust is hardly encouraging for the future of either the VC industry or the European entrepreneurship.
As Kawazaki noted in his closing presentation: "Paranoia is not a good sign in an entrepreneur."
A more optimistic note was struck by Paul Harvey in his keynote speech. Presenting a banker's perspective of the European technology markets, he said that there are still "extraordinary opportunities" to be had.
Harvey emphasised that to be successful from a banker's perspective, you have to be successful in an IPO - and while this is more difficult than before April, it is still the only game in town.
"The blind acceptance of issues that didn't have strong business plans is well over," he noted. "This is a more healthy business environment for everybody."
Some of the best opportunities lie in teaming up with the ISPs and other high capitalisation companies who managed to float at the height of the dotcom craze, Harvey claimed.
And an alternative view from Venturedome's 'Sideways Glance' column:
Garage.com's first European Bootcamp showed that the transatlantic culture gap still holds sway - especially when the chips are down
At the end of the first day of Garage.com's first European "Bootcamp for Startups", many of the attendees remained in the Royal Lancaster's cavernous function room to network at the inevitable reception. As the budding entrepreneurs scampered about in the ongoing hunt for a VC with his guard down, the waiting staff circulated with the nibbles - crustless sandwiches, chicken pieces, dim sum, and rapidly cooling platters of deep fried potato chunks.
It was an unusual choice for such a slick event, the buffet equivalent of a "Kiss me quick" hat at a board meeting. Perhaps it was an attempt to introduce the multinational attendees to the delights of English cuisine - except that the chips were not served, as they might appear at first glance, with the traditional accompaniment of mushy peas, but with guacamole.
It fell to the transatlantic talents of Jan Ziff, former BBC reporter turned CBS technology reviewer, to figure out the meaning of this culinary faux pas. The US hosts had apparently asked for "chips and guacamole" to be served - meaning tortilla chips. The UK caterers had taken the familiar meaning of "chips" - what the Americans would call French fries.
It's an old cliche that the US and UK are two cultures divided by a common language. But from the name of the event itself and the "Graazh.com" who brought it to us, to the baffling baseball analogies and the advice to entrepreneurs to "cover your fanny", events confirmed that the cliches can be true.
A few of the speakers did acknowledge the problem. Garage.com VP Bill Joos, in his talk on perfecting your elevator pitch, noted that the phrase "lift pitch" somehow didn't sound quite right. And the spelling of Nolan Bushnell's talk, on "Why entrepreneurs go gray", was amended to local tastes sometime between the printing of the programme and the talk itself. But references to "mezzanine funding" were in the US sense of a pre-IPO round, and not the European quasi-debt sense.
Other transatlantic perspectives were more perplexing. Can English public transport really be far superior to that in the US, as one speaker claimed? Or could it be that they'd just ridden in on the Heathrow Express, and had yet to experience the delights of our regional rail franchises?
Perhaps the most puzzling aspect of Bootcamp had nothing to do with linguistic differences, however, but with the choice of music in the gaps between presentations. The choice of Pink Floyd's "Money" - with lyrics including " Money it's a crime / Share it fairly but don't take a slice of my pie" - showed that the Americans have a tighter grasp of irony than we Brits assume (we hope).
But why, exactly, was the event kicked off with the theme from TV drama "The Sopranos" (by, as it happens, the London band Alabama 3)? Surely no-one's suggesting that the VC community is a mafia-like family of close-knit racketeers? As they say in the US, hold that thought...