Atlanta, Badgy, startups, Technology

Full-time startup: Badgy

Today is my first day working full-time on my startup, Badgy, and I’m excited to fully apply the lessons learned from building social games to the digital marketing world.

Badgy started about a year ago when I tried a simple experiment – I gave digital badges on Twitter to 100 people who mentioned the word “Badge”, and asked them to retweet me for another badge. I ran this experiment many times over a weekend, and when 20-25% of people did retweet me each time, I knew I had something, but I didn’t know what it was yet. In more recent months, as Badgy’s market became more clear, a few really talented Atlanta entrepreneurs joined the Badgy team to help build and sell our products.

We’ve discovered that Badgy is tremendously effective at helping consumer brands and the marketing agencies that often manage their social presence grow their audience of engaged users. We worked with a major toilet paper brand and boosted their Twitter followers by 700% over 10 weeks, while also improving the quality of interaction from their fans. More recently, we’ve added features that bring similar power to Facebook using the most effective tools popularized by social games like Zynga’s Farmville and Cityville, and are signing on 2 more customers. If you’re serious about building up the digital marketing program of a product people love, drop me an email at rob at bad dot gy and we’ll put together a plan for how Badgy can amplify your digital marketing efforts.

For me and a several other sharp people, our time making social games at Menue Americas wrapped up a bit sooner than expected. If you need an excellent creative director or 2D artists, let me know and I’ll get you connected. Some very good developers are now available. They’re taking their time finding their next great career move, but if you have some project work that needs to get done properly, especially Facebook development, PHP, Java, or Ruby on Rails web apps, drop me an email and I’ll pass it along if it’s a fit.

Does this mean I’m not going to “Join a Startup“? I’ve done that several times before, and will almost certainly do so again when a good opportunity arrives and makes sense, but that’s not something to rush into. Right now, I’ve got a great startup that has shipped product, shown traction, and generated revenue. That’s 3 steps further than many companies ever get. We’re in a great market – digital marketing has room to grow at least another $50 billion per year in spending. Here’s to the ride.

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ATDC Startup Showcase – Just Go

ATDC’s Startup Showcase will take place this Monday, May 9th, 2011. At $10 for a ticket, I recommend you take the afternoon and figure out a way to attend. I’ve enjoyed this event the past 2 years, and if I weren’t travelling next week, would absolutely be there. Some of the great reasons to attend:

  • Affordable – At $10/ticket ($15 walk up), it’s a lot easier buy than many conferences. Not only do you not need your company to pay for your ticket, you can actually pay for a ticket from cash in your waller.
  • Great Graduate Companies – A great class of companies is being recognized. I’ve had contact with graduates PlayOn Sports, BLiNQ Media, and Solohealth, and think very highly of them. Great startups, great momentum, and I expect the other graduates hold to a similar standard.
  • The Showcase – want to see what several dozen awesome Georgia startups are working on, and get the chance to actually talk to them instead of just staring at press releases and web sites? Lots of companies will have tables set up to show off and talk to you. If you want a startup job, this can be a good place to find a company that’s hiring.
  • Community – If you’re working on a startup, you need help, and you probably haven’t met everyone who could help you, or whom you could help with their company. Spend a few hours meeting other entrepreneurs, get some feedback on your ideas, pitch, strategies. Find someone to help. Good chance you’ll find someone you can help too.
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Losing the Talent War

Make no mistake about it. When it comes to entrepreneurial technical talent, Atlanta is losing the talent war on a daily basis.

Buried in an article about booming tech jobs is a mention of Brian Gorby. Brian’s a Georgia Tech grad who was working for Modosports, an Atlanta gaming company that folded due to funding issues, when I met him. He was pretty well versed in Adobe Flash & Flex development, and digging into iPhone development – he had the intellectual curiosity and internal drive that startups need & crave. I was at Xeko Elf Island – we liked Brian a lot, but because of our own funding challenges, couldn’t move fast enough to offer him a job before he was snapped up by Moxie, a prominent marketing agency (and he may or may not have joined us either way). He spent a brief turn after that in consulting, then built up iOS experience at Sapient before his apparent move to San Francisco – he’s now a Senior Mobile Developer at EventBrite, a pretty darn hot startup focused around event registration.

There are MASSIVE startup opportunities right now in the area of mobile and social. Now ask yourself… what hot Atlanta startup should a talented, entrepreneurial iOS developer have joined? Pretty limited options. After a couple of years at EventBrite, a solid senior engineer will probably be well-positioned to start their own company. What comparable opportunity is there in Atlanta?

Let’s look at the criteria many investors apply to startups – Stanford provides a nice framework of team, product, and market. Momentum is often a 4th criteria. Startup uber-incubator YCombinator focuses primarily on team, presumably because if you have a great team that handles feedback well, an investor can help a great team build the right product for the right market. So what is the crisis of conscience in Atlanta? There is NO lack of talent. We have founder-quality talent moving across the country to accept lesser roles than they would have as Silicon Valley natives. Do our investors lack the confidence that they can help companies find the right market and product? Perhaps.

At Xeko, we lost any chance we had of hiring Brian Gorby because our funding was in flux, and no other social gaming startup in Atlanta was ready to hire a developer with all of the right skills at a time when social gaming was a prime market opportunity (mid-2009).

Atlanta startup founders are often faced with the question of “Are you working on the business full time?” For technical founders, this question is a joke. Any technical founder with 2+ years of experience can pull down $80-120k per year, easy. Suggesting they should go for broke before their startup finds product-market fit is insane and makes no sense from an opportunity-cost perspective, especially when they start families and need insurance and the ability to provide for their family in a town where seed-stage cash is scarce. Once a startup finds traction, they should be able to find funding without being disqualified because they still have a day job they want to quit.

This isn’t a small problem. Atlanta has founder-quality entrepreneurs moving across the country to take staff-level jobs because we can’t recognize the OBVIOUS market opportunities. Mobile, social, gaming – HUGE opportunities. How many investor-driven startups are in Atlanta in this space? Do investors believe our teams aren’t equal to the task? Are investors uncertain in their ability to help great teams find the right market and product? Many investors seem to just want financial projections that imply a guarantee of success. That attitude leads to more brain drain. I hope we can do better, and retain more “Brians”.

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Tent Poles

Growing communities need rallying points, and Atlanta’s startup community is no exception. 

I joined the Atlanta startup community a little over 10 years ago as a developer at Air2Web.  I missed most of the dot-com free-flowing cash, but my experience at the TechJournal Deck Party in 2007 was that a lot of people flooded into startups in Atlanta and washed out when the money dried up.

Things were pretty quiet until around 2007, when events like Atlanta Startup Weekend (which spawned Skribit) and a couple of other events helped us all realize that we weren’t alone in wanting to build great new companies. I’ve hired 2 people I met that weekend, have worked with many more people, and keep in touch with many more people that that from 2007. Before this, I didn’t know of Atlanta startup events, and this was a great awakening.

A couple of years ago, there was a great debate over whether there were “too many” events. We had multiple startup events every week, and nobody knew which ones were important enough to go to. We still have numerous events each week. Some people go to most events, some people go to zero events, nobody knows which events they “should” go to.

I am suggesting that some events should be “can’t miss” events, but they need to be big enough that “important” people can blend in. Some friends we visited this past weekend attend a huge church in Nashville. Several fairly major celebrities such as country music star Brad Paisley attend this church because the event is big enough that they can blend in and not be noticed. Until we outgrow it, I’m suggesting that Atlanta needs some “tent pole” events that form the basis of our community, where successful and aspiring entrepreneurs, VCs, angel investors, and anyone else interesting can mingle without the event being so small that they feel like a target.

I am suggesting that Atlanta Startup Drinks and ATDC Entrepreneur’s Night should be “can’t miss” events each month. I think Startup Drinks needs to grow up a bit, but is up to the task. It needs to look more like the Mashable/Regator mixer, every month. Sponsored, big, in an event space. At this month’s Startup Drinks, we were kicked out at 8 pm – the hospitality and free food/drink were great, but the early ending was just too… early. $5k/month in sponsorships would give sponsors great exposure to some of the smartest, most innovative people in Atlanta and make for a KILLER monthly event.

I give great credit to ATDC for starting Entrepreneurs’ Night, apparently on the 3rd Thursday of each month. I’ve been to 2 of the 3 meetings so far, and assuming Cloud Sherpas doesn’t announce they are leaving town on April 21st, it should be a great event. If your startup isn’t willing to pony up $50/year for some of the best advice and networking in Atlanta, I question how serious you are about your startup. I don’t know if ATDC opens this event to angels and VCs, but I hope they do.

A tent without poles looks like a messy blanket. Atlanta needs some tent pole events to move our community forward. We have too many struggling one-person startups, too many people who NEVER show up to ANY event, too many existing entrepreneurs with “FU Money” working on vanity projects, too many investors afraid of attending an event for fear of spending  an hour talking to a biz dev guy who wants to build a daily deal site but can’t find a developer to build it for them for 1% of the company.

What do YOU think? Could a couple of highly intentional monthly events plus a few annual/quarterly events do a better job of building community and success among Atlanta startups? Are there better monthly events to anchor community? What annual/quarterly events are key to the community?

Atlanta, startups, Technology

Exits not Exoduses

Notable members of Atlanta’s startup community are steadily draining away to greener pastures. We are in the midst of massive technology innovation, particularly in mobile and social applications, and the injection of games and game mechanics into most aspects of our lives. Sadly, Atlanta has been mostly a spectator in this wave of innovation, with little signs of change. We talk about the “clusters” we have, and what we are and are not good at.

Clusters sound magical and mythical, but I believe they can be quite simple for most purposes. You have a company with a highly successful exit. This makes the founders and some early employees wealthy enough that they don’t need to work ever again, and can spend some of their time investing in companies within their area of expertise and mentoring them. Many more employees make enough money from the exit that they will need to work eventually, but can afford to spend several months or years starting a new company without needing a paycheck. They happen to know the founders who invest in stuff, so they have a relationship with possible investors. Less sophisticated investors in the area invest in the people and sector because even if they don’t understand it, they know it was successful. Many more employees work at the exited company, forming a fertile labor pool to hire from. I think this mental model of clusters works for the purposes of most startup discussions.

The unfortunate message we have been sending in Atlanta is that if you aren’t in one of our favorite clusters, you’re doomed. And maybe you are doomed right now, but that needs to stop. Here’s why:

And that’s just in the past 2 weeks. We are talking about proven, successful entrepreneurial people leaving town. This is after losing:

  • Paul Stamatiou – entrepreneurial hacker type, stuck around for a while working on Skribit, now co-founder of YCombinator company Notifo
  • Jeff Haynie – Appcelerator founder, was a strong leader and advocate in the Atlanta startup community, moved to Mountain View, just acquired Aptana, which was a pretty killer move.
  • Courtenay Bird – social media rockstar
  • Suleman Ali – former Shotput Ventures partner, started and sold a Facebook app company Ezgut in the early days of Facebook apps. Just raised $18 million out west to make mobile games.
  • Jay Chaudry – Started and sold 4 significant startups in Atlanta in the early 2000s. I worked for Air2Web, which probably had the worst outcome of the companies he started, and they’re still around and seem to be growing.
  • Russ Jurney – super smart entrepreneur and hacker. Doing some really cool work with big data for LinkedIn. Expect him to do something even cooler in the future.
  • Nate Clark – another smart guy. Started a social networking company, Wamily, in Atlanta. Works for Pivotal Labs in SF.
  • Dave Williams – founder of BLiNQ Media and 360i, and another Shotput Ventures partner, seems to have moved off to New York. BLiNQ is still here, but I suspect Dave is gone for a while.

It’s not an exhaustive list, but it’s significant and probably represents a whole lot more brain drain that I don’t know or forgot to mention. We’re losing successful founders, funders, and builders, and for some reason, our state’s highest priority is often recruiting low-growth Fortune 500 companies.

Other data points and observations:

  • We are losing BIG when smart startup people leave. This tells us that our startup ecosystem is so far behind that it is worth them uprooting their family and abandoning their network to pursue opportunities elsewhere.
  • We are EXPOSED when outside money funds Atlanta companies. Most startup investors like to invest close to home. When outside money comes in, it means that the company is worth their investment and the inconvenience of long-distance investing. It means that there are other startups not being funded because local money does not see the opportunity.
  • Much of our best talent in business and software development is being wasted in mega-corps. The non-entrepreneurial types can still be invaluable to a growing startup, and are ripe for the taking when the startups are here.
  • Some of Atlanta’s currently most successful startups are bootstrapped and aren’t giving equity to employees, and have some of our best talent. So if the companies are home runs, these smart folks will have… jobs. No runway to build a cool startup.
  • It’s pretty easy for the smart sorts of developers you want building a startup to get into $100k annual salary territory here. Most of them already take a 10-20% discount vs market rates to work at funded startups in the area, if that’s their cup of tea. Asking them to work full-time and for free for a year if they really believe in a startup is a great idea is crazy unless they’re coasting on house money from a prior exit.
  • Most of the people I’ve seen go all-in on their startup have crashed and burned. Savings gone, massive debt, and they land in a big corporate job, probably never to return again. In Atlanta, it can be a dead end. Wonder why those developers won’t work for free?
  • I’ve had the privilege of knowing some great investors and advisors in Atlanta. I’ve also seen a lot of investors who want to invest in social web startups, but don’t even understand what Twitter and Foursquare are. It doesn’t take a “valley” pedigree to be smart money in this space. Open your eyes and do some research. You can become a pretty smart investor in this area by doing some research and some back-and-forth with other smart investors.
  • Some of the funded companies I have known have been funded by doing an excellent job convincing investors who don’t understand the startup’s business. Follower investors aren’t all bad, we just need more of them to do the homework to understand the business and lead.
  • Some of Atlanta’s smartest money doesn’t have a lot of money. Yet.

I may sound a bit down on Atlanta, but I’m also stubborn. I’m still here because I believe we can do better, and I want to be a part of it. Many other people have done much more to advance the case of startups in Atlanta, but I think we can and should do better.

We need to think bigger. We need to look at markets that are emerging and growing and figure out ways to target very big markets. Even many of Atlanta’s largest recent startup exits have been in somewhat small markets. Very few companies have been big enough ideas that could stand on their own rather than be acquired. There are very big markets out there, ripe for the taking. New markets are not beholden to “clusters”, they are the foundation of clusters.

In targeting big markets, we need real investors to step in at EVERY funding stage. Large markets will be pursued by many companies all over the world. Although the initial entry points and strategies will be different and may not need as much initial money, startups chasing big markets will need real early-stage money to grow faster than revenues and real venture money to chase the full extend of the market. I have been in under-funded Atlanta startups in very big markets. It’s painful. You can say the companies should execute smarter, but that implies the opponent isn’t smart too. That’s a bad bet.

We need entrepreneurs with visions to pursue big markets and visionary investors to enable that pursuit. We need exits that create positive feedback loops. I can’t blame anyone who has left, but we need people with the courage to stay after they have succeeded and perpetuate a cycle of big vision and success. We need exits, not exoduses.

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Georgia’s Amendment 1 – A Tale of Six Jobs #voteNoOn1

I’ve been concerned about the wording of the ballot initiative known as Amendment One since the first time I read it.  Political candidates aren’t allowed to campaign within hundreds of feet of polling places, but this wording campaigns for itself right there on the ballot.  Who wouldn’t want to “make Georgia more economically competitive”.  The situation smells fishy, and I want to highlight some of the fishiness through some of my recent experience.

I recently finished spending over 2 years as CTO of  Elf Island (and then Xeko after a merger).  We hired several key artists from a Rezilio, another local gaming company.  The company couldn’t pay its employees, but they hoped to turn the company around.  If they had enforceable non-compete agreements with these employees, they probably would have enforced them against us.  That’s not a judgement against Rezilio, just a logical move.  It’s much easier to turn a company around if the key employees haven’t been hired by someone else.  We would have spent much more time looking for excellent artists familiar with building flash games, and those employees would have waited for courts to sort out the non-competes or abandoned their game skills to start from scratch in another industry.

More recently, Xeko itself closed, leaving myself and several key employees without job or salary.  The company hopes to take on more funding and reopen the game.  While I also hope that happens, I have a family, a mortgage, and many other financial obligations.  Waiting around for funding was not an option.  Fortunately, we knew some people at Menue Americas, who were looking to add a development team to make a new Facebook game.  7 days after Xeko let us go, 6 of us had new jobs with competitive pay, great benefits, and exciting work.  We moved as a functioning team, which has allowed us to produce MUCH faster than a newly formed team could possibly have produced.

While I trust that Xeko’s founders would have treated us fairly, we had taken on several rounds of funding that could have left the decision of how to handle our employment agreements in the hands of investors.  The best interest of these investors is to ensure that key employees would be available to resume company operations in the event that new funding was secured.  I am fairly certain that folks like our team – CTOs, creative directors, art directors, lead developers, etc, are exactly the sort of people that Amendment 1 would seek to constrain under non-compete agreements.  If amendment 1 were in place, I have serious doubts that such a peaceful and quick transition could have been made.  Menue might have hesitated to hire us, fearing that Xeko’s investors would invoke their non-compete rights.  If they did hire us, they could have been tied up in legal disputes for months for the crime of hiring people who had lost their jobs.

Simply put, if you are an employee, or ever expect to be an employee, Amendment 1 is very bad for you in that it WILL limit your ability to use the expertise used in one job to find another job.  Critics suggest that employees should merely read and negotiate their employment agreements as they enter a job.  In the past decade, every single job I have taken has required a non-compete agreement which I have been told is non-negotiable.  This is with small companies – imagine trying to tell AT&T, UPS, Turner, etc. that you, as a staff employee, wish to negotiate your non-compete agreement.  They’ll tell you to go find another job, and the issue is that under Amendment 1, every company’s lawyers will tell them to construct the most restrictive employment agreements possible and let the courts sort it out.  Especially in a time of 10% unemployment (but really any time), people need jobs FAR more than the hiring firms need specific people for specific jobs.  There is an imbalance of negotiating power that current Georgia law addresses, while the proposed law leaves employees with very little power.

Consider the 6 of us who needed a job post-Xeko.  Imagine that we showed up for work on day 1 and had non-compete agreements thrust at us precluding us from working on games for 2 years after our employment with Menue (they did not, but note that the 1st day of work is typically when this sort of agreement is dumped on an employee).  We’re then faced with a choice – extend our period of zero income, or put a major constraint on our future job prospects – most would choose the former, and this does NOT “make Georgia more economically competitive”.  Are we to go home and tell our family that we quit the job on the first day because they threw a document at us that we didn’t like, that the next employer is equally likely to throw at us?  The lack of enforceable non-competes allowed 6 employees and 1 company to reach a mutually beneficial agreement quickly.

There are cases where the government needs to step in to address power imbalances in the free market.  Lawyers and their paranoid advice to companies create a power imbalance in employment that Georgia’s government has, to this point, addressed.  This misleading amendment throws employees to the wolves, where employees will not be able to accept most interesting jobs without compromising their future employability.  This amendment asks voters to vote themselves into handcuffs.  There is no evidence suggesting that Georgia’s economic competitiveness has been harmed.  Newell-Rubbermaid and NCR moved here quite recently, and there’s little evidence that our existing Fortune 500 companies are looking for an escape route because non-competes are harming their business.  There is plenty of research and obvious logical evidence that this will harm early-stage technology firms in Georgia.

Please strongly consider voting “No” on Georgia’s amendment 1.

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Who are Silicon Valley & San Francisco Startups Hiring?

I just returned from a trip to the San Francisco Bay Area, and although it was mostly for vacation, I had enough interactions with the startup community there that I’d like to share some observations in the days ahead.

I wasn’t looking for a job out there, and don’t plan on joining Atlanta’s apparent westward migration, but I did have some interesting interactions with startups at all funding phases – seed funding, $1 million+ Series A rounds, and companies funded even better than that.  An interesting trend emerged – all of them had very similar hiring goals.

What was the common role that they were ALL hiring for?  Steve Ballmer knows:

Yes, developers, developers, developers.  One company was at 11 people, all developers, and still hiring for more.

This is VERY contrary to the pattern I’ve seen in my Atlanta startup experience.  The Atlanta norm seems to be starting with a developer or two, filling out the team at the seed or Series A stage, and then minimal developer hires after that.  I’ve seen several entire funding rounds dedicated to building out sales teams, marketing teams, biz dev, etc. with zero additional developer hires.  As a CTO/developer type myself, I’ve often felt like this is a stage where organizational vapor lock begins and progress toward the original, ambitious idea slows dramatically.  (Don’t get me wrong, I like revenue a LOT.)

So what’s the difference?  Of course I don’t KNOW, but I have some ideas.  First, I’d characterize Bay Area startups as somewhat more ambitious, risky ideas on average (more on this at a later date).  When your goal is bigger, you don’t have time to slow the organization down.  Any round of funding is an opportunity to get even further ahead of the competition, and you do that by building product.  Paul Graham has recently written about the importance of a hacker-centric culture – hiring more developers helps with that.  Mark Zuckerberg often hired developers for non-developer roles at Facebook – marketing and more.

I’m honestly a bit jealous, because I can imagine the sorts of awesome companies Atlanta could build if we could concentrate our entrepreneurial developer talent in some big ideas.

So you might ask how these startups set product direction?  I suspect they get great feedback from their users, board, advisors, and peers, and the founders remain heavily involved in setting the product direction.

What do you think?  Does Atlanta hire fewer developers at each stage of funding?  Why or why not?  Is this a good thing or a bad thing?