By the time of this post is done, Diaspora, the web decentralization play from four NYU/Courant students in New York, will undoubtedly have $100,000 raised on Kickstarter. Over and above that, it seems like they’re on a clear path towards a million dollars. Think I’m poking the bear? I’m dead serious. You watch. A week from now, they get to seven digits. Why? Because the ire over Facebook’s privacy issues, platform aggression, etc. is real. If you’re concerned about Facebook, these guys are your heroes.
So, great… One day, you’re a bunch of tech dudes hacking away at a hardcore grad math program and the next day, you hit the proverbial startup lottery and you’re sitting with some major coin in the bank. Every VC and their mother is banging down your door, the media is all over you, and there are underage groupies lining up outside in Washington Square Park NKOTB-style. Ok, so maybe not the last one, but still. Undoubtedly you are completely overwhelmed, distracted, etc. What the hell do you do now?
If you’re Max, Dan, Raphael, and Ilya, (only two of whom are old enough to drink) here’s my suggested game plan:
1) Start talking—but on your own terms. You guys are now the startup version of the OJ Simpson white Bronco chase. All eyes are on you. The temperature of the media buzz around you is white hot—but it’s fueled by very little information whatsoever about what you’re building, what your intentions are, who you are, etc. The last thing you want is for people to start making up their own stories—especially that you’ve taken people’s money. They’ll start to build up their own expectations, and what’s worse is that they’ll repeat them. Before you know it, the “these guys want to kill Facebook” rumors will start and then you’ll find things from a strategic and competitive dynamic to be suddenly very difficult. Start blogging and telling the world, in very plain, innocuous, basic terms, what you’re aiming for, what your driving goals are, who you are, etc. The more fact you throw on this fire, the less you leave room for conjecture and the less interesting the story actually gets. Take away the story, essentially, by telling it yourselves. Sure, the buzz is nice for raising money, but it’s going to make things very difficult for you to concentrate and actually get all the work done you want.
2) Ask advisors that you trust to help you prioritize who you should talk to—and talk to only the ones that usually talk to people at your stage. Undoubtedly, you have a shit ton of inbound e-mail. I would just declare e-mail bankruptcy right now and delete all or most of it. Then, ask the people you know in the startup world who the 10 people you should have a conversation with are. Get their feedback, but then right away, get to work. You don’t need a ton of money, so don’t waste your time talking to all the investors who want to talk to you. In fact, you don’t need their money at all, so talk to the ones you think you can learn something from in terms of how to build a real business, if that’s your goal. Money is money, but there’s definitely a limited number of people who normally write checks of the kind of size you’d normally take at this stage. You don’t want someone who is willing to make you guys the exception—so stick with the people who help teams like yours at your stage on a regular basis.
3) Do the opposite. Everyone is expecting you guys to be their knight in shining armor against the likes of Facebook. You’ve clearly got a lot of support to be that, and the temptation may be to do exactly just that—but consider the opposite for a second. Are you really going to be the next Facebook—or perhaps if what you’re trying to do is to protect the average person and help give them control over their data, how can you do that the most effectively. Perhaps actually helping Facebook and other networks do to that, and to help them be successful, is your best bet to make the biggest impact. Helping Facebook isn’t exactly what people want to see you do, but in this firehose of publicity and feedback that you’re getting now, don’t forget to consider *all* the options.
4) Get your legal and financial ducks in order. Now that you have money, you’re going to have all sorts of legal and financial responsibility. Step one, get a bookkeeper who can also just do simple stuff like setup a bank account for you, get a cashflow statement going for you, and get you a corporate credit card to pay for things. I know an awesome one for you—she works for several local startups and will make your life much easier. Get a lawyer, too… especially given that you’ll have real IP and that you’ll have to deal with being at a University. You don’t want to spend a lot on a lawyer, either. Perhaps a brief meeting with Jonathan Askin would be a good start. He helps local startups get off the ground, using the resources of his Brooklyn Law class.
5) Get to work. This week is going to be crazy, awesome, overwhelming, stressful. It’s unlikely you’ll get to much code, but next week, get back to work. Focus. While you might feel like a rockstar today, the task you’ve bit off for yourselves is enormous and building a company is way fucking hard. Don’t forget that. Don’t let it all get to your heads. You have a lot of work to do now, so get to it!
If you need help, feedback, etc… my e-mail is charlie@firstround.com . I’ve been on your side of the table and I also teach entrepreneurship at Fordham. You’re welcome to ask awesome people like Evan Korth, who you know, about me and the folks I work with here at First Round. Good luck and thanks for helping to drum up the New York startup scene into the spotlight!!