StartFast Demo Day August 16, 2012 (last Thursday) was a remarkable experience. The Rochester Democrat and Chronicle called it, “An Amazing and Important Day.” After the event two investors approached me gushing with excitement and they and others talked about how this “changes everything.” I was amazed at how well the whole event came together and how well each company’s presentation was received. And I was proud of the teams, proud of Upstate New York and proud of everyone in the room for believing enough to show up.

There were roughly 280 attendees including roughly 140 accredited investors, angels and venture capitalists, along with mentors, community members, volunteers and the teams, their friends and family. I’m guessing there was over $1 billion of investment capacity in the room – perhaps the largest gathering of startup capital ever in Upstate New York. The Mayor of Syracuse spoke, there was an incredible display of African drumming, dance and acrobatics. People are already asking us how we can top this next year.

This excitement is warranted and if it is infectious it will accelerate the rise of the entrepreneurial culture in Upstate NY. But for eight young companies, the point of Demo Day was to introduce their companies and products to the world, and to have investors introduce themselves to the companies. That happened quietly at a lunch/reception just outside the Demo Day venue (the Everson Museum of Art). Within 90 minutes after the presentations ended, each team had logged investor interest more than equaling the capital they need to raise. Follow-up meetings are underway and capital rounds will be closing in the next several days and weeks.

Funding is important, but as I’ve said before, the main point of StartFast is to train great entrepreneurs to build great companies. I’m proud of each of these companies and of their founders, who have all learned how to do more faster. A great performance on Demo Day is not the point, but it is a catalyst. That performance punctuates the 100 days of hard work that went before it. Hagar Romach of Guard My Angel said, “Before Demo Day I was so nervous I thought I would pass out. But after our pitch all I could think was, ‘That was so fun! I want to do it again!’” That kind of enthusiasm will inspire exceptional applicants for next year’s program.

I’m proud of the Upstate Community for coming together to support StartFast. Investors, sponsors, interns, volunteers, mentors and community members make up an ecosystem, a support structure, without which this would have been impossible. It’s been days since the event and I’m still glowing with pride!

“The long practice of daily work gives us the muscles and sinews to uphold the work that wants to move through us” – Julie Cameron, The Artist’s Way

This summer the StartFast teams have worked incredibly hard. They’ve all learned how to do more faster. They’ve developed skills and abilities through experience and experiment, trial, tribulation and occasional triumph. Their entrepreneurial muscles have grown strong.

Each team is now ready for Demo Day, and has begun to look beyond it. Decisions like the balance of work and life beyond StartFast, the location of their office, where they will live, and how they will keep the momentum going are on their minds. As they continue to grow and develop their businesses as fast as possible, these entrepreneurs are also speaking with prospective investors and must balance the time committed to fund raising with the time required to run the business.

GuardMyAngel exceeded 10,000 Android downloads this past week (a rate of 200 new downloads per day) and launched their iPhone app. Canvita incorporates your story, creativity, and web presence (personal, professional and social), making it what some are calling Resume 2.0. Mozzo‘s email productivity application, MozzoMail, is now available from a button within Gmail and is processing 7,500 emails per user and 400,000 unique links for relevancy based on which contacts you communicate with most.  Relevancy is also central to adtech company, StreamSpec, who struck up a partnership with SiteScout.com, one of the largest ad unit providers in the business, to serve it’s ads when users hover over relevant images.

PadProof continues to rack up photographers (approach the 1,000 mark) who pay a commission when their images are sold through the application. BitePal‘s restaurant discount application is generating revenue in Ithaca and Syracuse, as the company continues its expansion into Rochester and Tucson. Tivity‘s CEO reports that they are working with five separate investors to identify who will lead the first round into this active lifestyle / employee health and wellness company. RevoPT, who are revolutionizing physical therapy and training through the use of video and mobile, have 20 physical therapists across 12 clinics nationwide using their beta, including some high-profile sports teams.

It’s amazing how quickly these companies are progressing. There will be a lot more revealed on Demo Day, but you have to be present to win. So balance your priorities accordingly and register now. We look forward to seeing you!

Throughout the StartFast program we drive our teams to build great companies and stress that this is much more important than raising money. Nonetheless, building a high-growth company requires financing. So we guide our companies to be financeable (to avoid the four pitfalls pointed out in StartFast the book and) by validating a large market opportunity, proving that there is an attractive way to make money in it, and building a strong team that can execute on that. StartFast’s Demo Day, unlike many recent demo days we’ve heard about, will be rife with opportunities for investors. All eight StartFast companies are seeking investment partners, and all eight will be investor-ready. Here are 11 ways from the StartFast book to get your company investor-ready and improve your odds of raising capital:

1. Have a product or service that people are using and that is generating some revenue.
2. Be able to relate how your product or service helps your customers make more money, save money, change their lives for the better or save their lives.
3. Identify your target market; fast growing markets are best.
4. Know who your competitors are and how you’re different.
5. Have a written sales and marketing plan identifying who your customers are and identifying proven cost-effective go-to-market tactics.
6. Have a forecast of how your business will grow over the next 2-3 years.
7. Have intellectual property agreements in place with your team. Have any relevant patents filed.
8. Make sure your team has both entrepreneurial and domain expertise and has invested a lot of its own time and money into the venture.
9. Use well-respected professionals (attorney, accountant, IP attorney) to represent you in the financing.
10. Know the kinds of deals prospective investors do, which companies they’ve invested in and cite parallels between them and your company.
11. Unless you’re looking at more than one offer, let the investor lead the discussion on valuation.

Our teams are busier than ever this week. Not only are they building great businesses, but also making sure they’re investor-ready, with virtual data rooms to support efficient due diligence. While it’s true that several savvy investors are already having meeting with StartFast teams, we look at Demo Day as the moment we’re managing to the peak of investor readiness. There’s always time to meet with interested investors. After all, either it’s just another chance at pitch practice, or something more.

Week 9 of the StartFast Venture Accelerator has come and gone; four weeks left to go until Demo Day, August 16. This week everything that happened pointed to the word Community. For example:

• SU and Cornell administration, faculty and staff leaning in to help StartFast and its teams succeed
• StartFast resources and teams banding together to stand-up two companies’ products to keep those companies from foundering, and then celebrating as those companies began to thrive
• Meeting other startups in the broader community at the Tech Garden, Student Sandbox, Tech Meetups, hackathons and Startup Weekends (e.g. Grafighters, Rounded, Singlebrook, BrandYourself)
• StartFast 2012 co-founders talking about coming back next year as mentors
• Seeing brand new companies co-founded by StartFast interns
• Having mentors fly in or drive in from far away, just to spend time with our teams (e.g. Matt Gough, Steve Gal, many others)
• Substantial support and active engagement from national and regional sponsors like TriNet, UVANY, and Manning & Napier
• Seeing new incubators and accelerators begin in Upstate like Z80 Labs in Buffalo and GrandSlam Alley in the Capital District
• Support and participation from angel groups across New York (SCFCNY, ENYA, WNYVA, RAN, and the New York Angels)

The Big Picture

Silicon Valley is a special place. It’s entirely futile for Upstate New York to try to be “the next Silicon Valley”. Manhattan is a special place too, and likewise futile to try to replicate. Upstate New York is home to great colleges and universities with over 500,000 students. That is a lot of talent and creativity and that is one of our unique strengths. We also have a passionate, engaged and supportive entrepreneurial community, low cost of living and good quality of life factors, especially for families. This region will never be Silicon Valley or Manhattan, but we can still be a great entrepreneurial community in our own way, with our own strengths and perhaps avoiding some of the weaknesses that SV and Manhattan have.

Brad Feld tells us that it’s a 20-year journey. We agree with him that it takes the long-term committed leadership of entrepreneurs to make a sustainable entrepreneurial community thrive. That’s why StartFast is entrepreneur-led, entrepreneur-funded and requires a minimum four-year commitment from its investors. We’re in this for the long haul.

There is a multiplier effect at work too. I like to call it the Pay It Forward mentality. Tech entrepreneurs, the best ones anyway, are always available to help one another – often with no formality or expectation of immediate or specific return. This is not altruism, but rather a culture that understands that we are all connected and that helping each other is the only rational choice once you know that. That’s what I mean by Community. And we have a vibrant entrepreneurial community like that here now. Programs like StartFast and the Sandbox are examples of what makes this entrepreneurial community grow. Our 2012 founders will come back as mentors in 2013 and beyond. They will send us applicants they recommend. Some will stay in the area growing our economic base  and some will set up shop elsewhere, spreading our reach to other communities. Some will succeed wildly, putting a larger supply of capital back into the system through their own desire to invest and through the returns they provide their investors. Some will fail, releasing the talent in these companies and the wisdom of lessons learned the hard best way to enrich other companies. And thus our entrepreneurial community grows.

Thanks for letting me expound on the Macro. I needed that. Day to day there are challenges. Teams fall down and are lifted up again. Founders and teams have crises of all kinds. If pain builds character then we must be constructing the Great Pyramid of character. But the StartFast community and the larger entrepreneurial community increases the likelihood that each team will find success. There are eight dramatic, compelling, personal, heartfelt, passionate stories unfolding at StartFast. There are eight great companies being built. You don’t want to miss a single one. You must join over 200 investors, founders, mentors and friends at Demo Day, August 16, 2012.

Pitch practice has begun at StartFast along with the requisite preparation for Demo Day. Every team is creating a presentation as well as an online data room with the basics that an investor would need for due diligence after a term sheet is accepted. Starting with 30-second elevator pitches and working our way up to 8-minute demo-day pitches, each team is preparing to tell their story in a compelling, personal and factual manner. We also began weekly CEO conclaves every Monday morning to create another opportunity for sharing challenges, solutions and generally cross-pollinating. All these activities are in addition to teams continuing to write and debug code, launch applications and run marketing campaigns. As these challenges mount, the need for a new role has arisen in most if not all of the companies – the Product Manager.

Lean Product Management

Each of the StartFast 2012 companies has developed quickly using the Lean Startup principle of evolving towards Product/Market fit through the process of Customer Development. The primary tool of this process is iteration – testing each hypothesis and making fact-based decisions. The Product Manager is in charge of this process, determining which experiments to run as well as the criteria for success. Until now, the role of Product Manager role may have been spread across more than one person, but as the intensity and complexity of this activity rises, most of the companies have found that designating an explicit individual to manage the product is helpful. Typically the Product Manager owns product P&L, product marketing and the product roadmap (the timeline of releases, schedule of features and feature specifications).

In a lean startup, Product Managers only spec out the minimum necessary to demonstrate each feature and get early feedback about whether customers actually use it, like it or not. The two-fold benefit is saving time/money and retaining flexibility to adjust quickly if a feature proves not to work in the market. A Product Roadmap is the schedule of new features into releases. It is a living document maintained by the Product Manager and a useful tool in communicating plans with customers, developers and investors as long as the process is made clear – that it is subject to constant revision.

The relationship between the Product Manager and developers is a close one in a lean startup environment. Specifications of features, while written, may not be detailed enough to effectively outsource development. This means that the Product Manager should ideally sit close to the developers and should always be available to promptly respond to questions, even if by Skype or phone. The Lean Product Manager must know the skills and abilities of the developers and incorporate that knowledge when designing and spec’ing new features.

As important as knowing the developers, knowing customers is even more crucial. Product managers need to get out of the building and talk to customers often. Understanding the use case from the customer’s point of view is paramount to any product feature or function decision. Knowing individual customers is necessary but not sufficient. Product Managers also need to know the statistics of customer behavior so that they can prioritize features that the largest number of customers want and need. Surveys can help, but customers are notoriously bad at knowing and reporting accurately what they want. Trust what customers do over what they say. It is also the Product Manager’s job to devise quick experiments which can measure customer behavior without having to develop the entire feature first. Lean startups can test new features before writing code by offering the feature and performing the function manually until it’s clear that building it for real would be worthwhile. Having staff fulfill requests or perform functions (ala “pay no attention to the man behind the curtain”) can yield valuable customer feedback needed to build the right product feature. Even paper mockups and fake prototypes can work to find out what customers really value.  The judicious application of these techniques allow prioritizing new features in the most productive manner.

Our teams regularly work 16-hour days during the StartFast program, but it’s also important to have breaks in such a demanding schedule. July 4th was an opportunity to relax, bond, celebrate and blow off a little steam with an evening of canoeing, tractor rides (with or without crop circles), trampoline, football, softball, Frisbee, bonfire (with or without s’mores), sliders, dogs, salads, sangria, beer, drumming, didgeridoo, and oh yes – fireworks.

Steve Blank likes to say that all startups learn from failure. At StartFast, a big part of the process is to define a business hypothesis, test that hypothesis and learn from the results. A failed hypothesis gives you the data and knowledge to make a better hypothesis and move forward. By it’s nature, StartFast accelerates that process, increasing the probability that a startup will find success before they run out of time and money. By the time Demo Day rolls around, these teams will have formed, tested and iterated on so many hypotheses, so many times that they will truly be ready to scale and be financed.

Another effect of the venture accelerator model is to increase the level of stress on the startup teams. Working long days on tight deadlines with so much riding on the outcomes, the founders naturally get a little frayed around the edges. In some cases, the stress causes a fracture – a team member realizes that they aren’t cut out for the life of a high-growth startup co-founder. There’s no doubt that this is traumatic, but better to test the team’s mettle and find issues now rather than later. Week Six presented a fair share of “team dynamics” as it is euphemistically called (AKA “cofounder issues”). StartFast mentor and TechStars alum Aaron Foss visited and shared war stories with the teams letting them know that their trials and tribulations are not unique. Nietzsche (and a huge number of lazy pop lyricists) said, “What doesn’t kill me makes me stronger” and that’s certainly evident in all the StartFast teams.

While dealing with team dynamics, these eight startups are also accelerating user acquisition, refining business models and testing out marketing approaches. Mozzo’s goal this week was to double to the number of users from the previous week while pursuing a controlled eMail marketing campaign. They exceeded this goal and in the process, gained a better understanding of the variables at play. Mozzo will launch other campaigns this week including LinkedIn, Facebook and reaching out to small-to-medium size businesses that are Google Apps users. Request an invite for MozzoMail here.

Cayotech continued driving strong downloads of GuardMyAngel on the Android platform, published two press releases, and is in the final stage of discussion with University of Rochester to include their flyer as part of the orientation material for incoming students. Cayotech is also experimenting with ad campaigns via Facebook, AdMob, AppBrain and others which are initially showing about $0.25 per customer acquisition. The team is sprinting to get their iPhone version out next week. Get the Android version here.

PadProof has added over 500 photographers to date and is in the process of optimizing their event upload function to drive additional revenues.  The big photo labs that partner with PadProof can reach hundreds of thousands of photographers and the PadProof team is hoping to sign up over 5,000 photographers and 60,000 end-users by Demo Day. Download PadProof here.

Tivity applied growth hacking tips from StartFast Mentor Phil Kaplan and had a 55.6% increase in customer requests while StreamSpec continued partnering with new ad networks and web publishers.

RevoPT signed up more clinics and stream-lined their product work flow based on customer feedback. BitePal closed deals with more restaurants as StartFast HackStars Ben Gelb and Elliott Regan worked into the wee hours to release the beta product. Canvita continued to get validation, direction and sign-ups from mentors and others while also actively recruiting additional resources.

Also this week, StartFast sponsor Bousquet Holstein held office hours, assisting the teams with legal questions and issues. StartFast mentor Michael Geer shared with us the inside story on how mobile app Badoo grew quickly to 150 million users and StartFast mentor Martin Perry met with all the teams on site. We also had a Skype redux with StartFast mentor Jonathan Matus who runs hacker development for Facebook Mobile.

I always meet very interesting people when I visit General Assembly in New York. Upon arriving Monday before teaching my class, Growth Hacking or How to get your first 1000 (or 500,000) users I ran into one of the inventors on a patent in an area in which I have great interest. Later, in the class, I had company founders from NYC, an entrepreneur from San Francisco, a securities analyst with J.P. Morgan, someone from the London Business School and the brand partnerships manager for Klout. For those of you who are interested, here is a copy of my class presentation:
Growth Hacking: How to Get Your First 1000 (500,000) Users

Of course the StartFast 2012 Teams have been doing their own Growth Hacking during week 5, figuring which campaigns yield the best results. Regardless of the results, learning rapidly is the desired outcome. For example, getting 0 clicks from a very specifically targeted Facebook campaign is definitely telling you something. It might mean that ones assumptions about target markets may need revision.  Of course, rapid growth tells you something too.

Speaking of rapid growth, GuardMyAngel has nearly doubled the organic rate of new user acquisition by adding Facebook integration. The indications are that this is a naturally viral app. Since joining the StartFast program, Guard My Angel’s development and go-to-market initiatives have boosted its ratings in the Google Play Store to 4.8 out of 5 – indicating its mobile application is well received in the market. Personally, I can’t wait for the iPhone version to come out (just a couple of weeks!) to see how growth accelerates.

Mozzo Analytics just released MozzoMail, a significant enhancement over MozzoLinks. MozzoMail organizes attachments and links, and in my opinion, is an incredibly cool productivity app already. The Mozzo team is evolving it so rapidly, I’m pretty sure it will be insanely great before the summer’s over.

Many of the teams have two-sided growth models. These companies have to growth-hack each of their respective funnels. For example, PadProof needs both photographers and consumers. They rapidly signed over 500 new photographers and learned that they needed to make uploading the photographer’s profiles and events easier to enable rapid revenue growth. BitePal needs both restaurants and eaters so they are building a simple merchant portal to automate restaurant on-boarding and deal maintenance. StreamSpec, who achieved revenue in Week 5, needs both advertisers and web-publishers. They are scaling up their back-end and adding advertising inventory to support rapid growth.

Some teams have two-sided growth funnels that can be grown by concentrating solely on one side. For example,  RevoPT needs both trainers/therapists and clients/patients, but can rely upon the trainers/therapists to invite their clients to download the app. They are putting up some amazing early sales statistics (e.g. a 25% response rate and a 75% close rate). Likewise, Canvita needs both employers/recruiters and employees/job-seekers, but to a certain extent, if they get one, they can rely upon getting the other. Tivity used to have a two-sided growth model, but because of a recent pivot, has simplified both it’s value proposition and funnel. Now they just need to sign up athletes, and they have a plan to do so rapidly.

All assumptions will be tested by trying, failing (or succeeding sub-optimally) and trying again. By August 16, Demo Day, each of these teams will have done enough customer development through iteration after iteration that they will be both very tired, and ready for angel or venture investment.

Week 5 mentor meetings at StartFast included Amy Johnson, Owner of Capstone, Inc.,  Jonathan Matus, head of hacker development for Facebook Mobile, and Jeffrey Rubin, CEO of SIDEARM Sports. We’re grateful to these and our other mentors for keeping in touch with and guiding the teams.

On Wednesday, June 6, StartFast mentor Brad Feld, Managing Partner of Foundry Group and father of TechStars, presented on how to get the most from mentors. He then answered questions. Mike D’Eredita, CEO of Mozzo Analytics asked, “Where should we be at this point in the program?” Brad answered, “What are you in Week 4? Tired and confused.”

The mass sigh was almost audible as the blood pressure dropped to near-normal for everyone in the room. I could almost see thought bubbles appear above multiple heads saying, “Thank God it’s not just me!”

Over the first four weeks of StartFast 2012  our eight teams have met individually and in groups with over 30 world-class mentors. This point is the peak of “mentor whiplash”, a phenomenon which happens when founders receive a tsunami of often conflicting advice from multiple mentors.

“We do this for a reason.” says StartFast co-managing director Chuck Stormon, “The entire StartFast program, beginning with the application process and continuing right on up through Demo Day and beyond, is designed to challenge companies, ideas, products and founders in such a way as to find weaknesses and accelerate the failure of those elements which will hold a company back.”  Co-managing director Nasir Ali adds, “By failing fast and iterating, StartFast companies evolve at a greatly accelerated pace. Where else can a company safely fail five times in three months?”

Acceleration is what it’s all about. StartFast has three teams who are already in the scaling phase, building momentum as fast as possible. Guard My Angel topped 7,112 total downloads of their Android app this week as they rolled out the new features and experimented with campaigns on Facebook. This team is ready for a big partnership to drive massive user adoption. PadProof added 160 new photography studios this week alone as they leveraged partner-power in both social media and email campaigns. StreamSpec just started the scaling phase as they went live with their first customer this week, web publisher SnagFreebies.com.

On the brink of scaling are Mozzo Analytics, BitePal and RevoPT. MozzoLinks is about to shift from private beta with 138 users and over the next few weeks start scaling users exponentially. RevoPT has 6 physical therapists in 3 clinics using their beta release. One therapist created 15 exercise videos last week alone.  They have mapped out a plan to onboard more clinics over the coming weeks. BitePal is developing a merchant portal to allow restaurants to onboard themselves with a few clicks. They’ll be testing marketing campaigns over the next couple of weeks. Two StartFast teams, Tivity and Canvita, are beta testing new prototypes each week, looking for the right mix of design and features before scaling. Getting this right is crucial and these teams are iterating rapidly to find product/market fit.

It appears that the high-pressure environment of the StartFast Venture Accelerator is beginning to produce diamonds. For this we are entirely grateful to our fabulous mentors who all have some connection with Upstate New York and are helping our founders in countless ways. This week mentors Kate Dohring, owner of Rock It Media,  Lee Huang, Product Director, Digital Newsstand and Emerging Content at Barnes & Noble,  Kate Brodock, Executive Director of Digital & Social Media, Syracuse University | CMO, Girls in Tech | Founder, Other Side Group, angel investor Jud Gostin, high-growth icon Philip Kaplan, Jeremy Levine, Founder and CEO of StarStreet Sports, Brad Feld, Martin Babinec and Michael Flannery, Managing Director of Redwood Partners met with the StartFast teams.

This past week of the StartFast program was a momentous one as each of the eight teams began to get traction. We started off the week with a Memorial Day barbeque at Nasir’s.  With their complete team reunited, PadProof made breakthroughs, both in vision and in execution.  Realizing their potential to make professional digital images available for sharing and purchase on any iPad, the team began building real momentum, signing up 63 new photography studios on their platform this week.

GuardMyAngel‘s 6,969 downloads to date is only the beginning as the team maps out an execution strategy to multiply that number. RevoPT launched their application in private beta and set up their first client clinic this week. At least two more clinics are expected to sign on early next week.

Mozzo Analytics issued a new release of their MozzoLinks beta. CEO Mike D’Eredita explains, “In the cloud, everything is a link.” Mozzo’s vision is to make sense of data spread multiple cloud repositories as well as email and local files.

Canvita, Tivity and StreamSpec all launched beta’s this week as well.  BitePal is making in-roads into the Syracuse restaurant scene as a microcosm toward building a national brand.

Mentor meetings included Aaron Newman, CEO/Founder at Techrigy, Don Carr, Associate Professor of Design at Syracuse University, Michael Duda, Managing Partner, Consigliere Brand Capital, LLC and also a mentor for TechStars New York,  Greg Gibson, Founder and CEO at Scrappy, Startup Advisor at Gibson Venture Labs and Advisor at Scripped Inc., Zach Schulman, Managing Partner at Cayuga Venture Fund and Senior Lecturer of Management at the Johnson School of Cornell University, and Tim Godzich, co-founder and President at QBHealth.