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Announcing Summer@Highland 2013

Yet, we also recognized that many of these student-founded businesses ran into the same problems with hiring the wrong people, building the wrong product, or going after the wrong market. Students, almost by definition, don’t have the benefit of hindsight to guide them to make informed decisions. This frustrated us because we felt that our shared knowledge of company building, garnered over the last 25 years of Highland’s existence, could help students get to the right answer faster, and create lasting value for their companies.

And so Summer@Highland was born. We designed it exclusively for student founders and the unique problems they face:

• Hard to find flexible sources of small amounts of capital. We give each team an $18K stipend, no strings attached. Founders retain ultimate flexibility with what they want to do after the program.
• Challenged to engage relevant business mentors. We actually spend time with the teams, and treat them as we would portfolio companies.
• Lack of initial business network. We bring in top founders and CEOs and introduce them to the teams. We also open up our personal networks to help these founders grow their businesses.
• Difficult to procure short-term office space. We open up our offices in Silicon Valley and Boston for these teams to work alongside one and other.

So far, we believe the program has been successful. Our 35 teams have raised close to $100M in venture capital, and we are proud to have companies like Cloudflare, Gemvara, and Wildfire as alumni.

We are thrilled to announce that the application for Summer@Highland 2013 is now open at http://summer.hcp.com. We’re looking forward to another great year, and can’t wait to see what this year’s applicants are working on!

[ reposted with love from http://summerathighland.tumblr.com ]

How to set a Wildfire

It’s January, which means it’s “east coast schools visit Silicon Valley” season. Harvard Business School, in particular, does a great job at connecting students with alumni entrepreneurs out here. A week or so ago, I attended one of these HBS events featuring ‘08 alum Victoria Ransom, co-founder of the social media marketing pioneer Wildfire. Victoria started Wildfire during our Summer@Highland program in ‘07, and recently sold her company to Google for an undisclosed (but most likely very favorable) price. Victoria had a couple pieces of advice for the audience, which I’ll share here.

Just say “no” to customization.
Customization leads to low margins, due to a higher level of service and added distraction for the development team. While some companies may charge separately for services, adding a services component in most businesses reduces the ability to scale quickly, even if revenues are higher.

Victoria took the position that Wildfire would build tools for its customers to manage social media marketing campaigns, but would not customize its tools beyond the core feature set. Such behavior should be saved for digital agencies, not tech companies. This decision was a contentious one, since Wildfire was often approached by companies with big marketing budgets demanding special attention. Yet, it enabled Wildfire to have great margins, the evidence for which is how little venture capital it raised to get to a similar scale as its competition.

Use a commission-based sales model with a low base.
Setting a low base salary for her inside sales force created several benefits for Wildfire. First off, sales costs scaled in line with revenue, so the business stayed capital efficient. Second, a high commission structure relative to base attracted a different type of sales person: younger, hard-working, more driven to succeed. Finally, because high commission structures are attractive to those earlier in their careers, the pool of people to hire was significantly larger.

The caveat here is that a great sales machine, which takes inexperienced young people as an input, requires world-class training. As such, Wildfire hosted regular sales bootcamps and promoted its own star salespeople into managers to run them.

Enable every employee to be a recruiter.
In the competitive Silicon Valley hiring market, relying on paid recruiters is an arms race, where the company with more money and more recruiters wins. Wildfire took a different approach. A key metric watched by management was employee churn (excluding those let go for performance reasons). They noticed that low employee churn correlated with a high degree of job referrals from the employee base. No surprise: happy employees tell their friends to come work at their company.

Today, roughly 50% of Wildfire’s new hires come through employee referral. When you’re running a business that scales with a sales machine, that organic hiring ability is a real competitive advantage.

Back in the saddle

You may have noticed this blog has been a bit sparse lately, if not totally barren. The change from my weekly-ish posting to nothing at all was somewhat intentional. With a cross country move just completed, I forced myself to focus on getting in the swing of things out here in CA. No time to blog unfortunately.

It’s been in a crazy end of 2012 to say the least. I am involved in several, early stage investments now, all of which are tackling big problems with technology. At this point, however, I can only talk about one of them: thredUP. I will do so in a future post.

I have also taken the reigns of our Summer@Highland program, which we will be launching formally over the coming month. We are very excited to roll out our sixth annual program to help university students build companies over the summer. More to come on that as well.

Finally, let me add again that I appreciate all the support of the regular readers of this blog. Do me a favor and tweet, share, or subscribe to spread the word. Here’s to a productive 2013!

P.S. I wrote this post in the Tumblr app on my iPhone 5. Mobile first, baby!

CEO = Chief Triage Officer

Our Summer@Highland teams spent the morning on Wednesday with Keith Rabois, COO of Square. Keith had many choice nuggets of wisdom for our group, and one of the teams was thankfully taking notes. I wasn’t, but I did take to heart a particularly insightful piece of advice Keith had for the young CEOs in the audience.

(Please note: these are not Keith’s direct words, but my interpretation of them. Trolls be forewarned!)

Keith compared the job of a CEO to that of a doctor in the emergency room doing triage. It’s like every problem that comes across your desk has one of these attached to it:

A good CEO is necessarily good at telling whether a problem is one that requires immediate action, or one that will resolve itself. He or she is also good at figuring out how to resolve those issues that are marked “Immediate” or, perish the thought, “Morgue.”

This qualification represents a challenge for young CEOs because, by definition, they have yet to aggregate the years of experience that inform triage decisions. It’s not uncommon for an “Delayed” situation to pass by him or her without noticing. By the time the sickness is revealed, the patient could be on death’s door.

It gets even worse, according to Keith: as a young CEO, your advisors can’t help much. They don’t work at the company, and are not likely to be around when you don’t see something you should. Board members are a bit more involved, and maybe if they’re talking to you on a daily basis they can help you bridge the gap.

At the end of the day, however, a good triage process can only be implemented from inside the company, which either means that (1) you learn how to triage or (2) you hire someone who does. Mistakes in triage are inevitable at the beginning, so the best you can do is be paranoid about making them and correct them quickly when you do.

Quotes from Summer@Highland applications

It’s that time of year again when I find myself pouring over hundreds of applications to our Summer@Highland program. Summer@Highland is our summer accelerator program for university-affiliated entrepreneurs and is responsible for helping awesome companies like Wildfire, Gemvara, Cloudflare, and Tivli get up and running back in the day.

I tweeted a few of my favorite quotes from these apps over the last few days, but when TimeHop showed me some of my tweets about the applications from a year ago, I decided it was time to write a post compiling a few of my favorites.

I just saw The Social Network and am ready to rock & roll. (2010)

We all have full-time offers, but honestly full-time job offers are relatively easy to come by for us. (2010)

I love the fact that a few guys with only a computer and an idea can change the world. (2010)

Our market potential is super-colossal. (2010)

I love the internet, and, if I had to bet, I’d bet that you love it too. (2011)

I must meet the founders of CafeMom [HCP port co] so I can get my Mom off Facebook and my frat brothers to stop friending her. (2011)

[so says Nick] I’ll tell you what 13 year old Nick would say, and it’s the same thing that 24 year old Nick would say. (2011)

And closing with my favorite, which came not from an application, but a letter of reference from a CEO:

In all honesty, I hope that Highland rejects them so I can poach them for my own team. (2011)