Entrepreneurial hope is essential. It gets us over the hump and through the dip. There's a variety of this hope, though, that's far more damaging than helpful.

This is the hope of the magic lottery ticket.

A fledgling entrepreneur ambushes a venture capitalist who just appeared on a panel. "Excuse me," she says, then launches into a two, then six and eventually twenty minute pitch that will never (sorry, never) lead to the VC saying, "Great, here's a check for $2 million on your terms."

Or the fledgling author, the one who has been turned down by ten agents and then copies his manuscript and fedexes it to twenty large publishing houses--what is he hoping for, exactly? Perhaps he's hoping to win the magic lottery, to be the one piece of slush chosen out of a million (literally a million!) that goes on to be published and revered.

You deserve better than the dashed hopes of a magic lottery.

There's a hard work alternative to the magic lottery, one in which you can incrementally lay the groundwork and integrate into the system you say you want to work with. And yet instead of doing that work, our instinct is to demonize the person that wants to take away our ticket, to confuse the math of the situation (there are very few glass slippers available) with someone trying to slam the door in your faith/face.

You can either work yourself to point where you don't need the transom, or you can play a different game altogether, but throwing your stuff over the transom isn't worthy of the work you've done so far.

Starbucks didn't become Starbucks by getting discovered by Oprah Winfrey or being blessed by Warren Buffet when they only had a few stores. No, they plugged along. They raised bits of money here and there, flirted with disaster, added one store and then another, tweaked and measured and improved and repeated. Day by day, they dripped their way to success. No magic lottery.

What chance is there that Mark Cuban or Carlos Slim is going to agree to be your mentor, to open all doors and give you a shortcut to the top? Better, I think, to avoid wasting a moment of your time hoping for a fairy godmother. You're in a hurry and this is a dead end.

When someone encourages you to avoid the magic lottery, they're not criticizing your idea nor are they trying to shatter your faith or take away your hope. Instead, they're pointing out that shortcuts are rarely dependable (or particularly short) and that instead, perhaps, you should follow the longer, more deliberate, less magical path if you truly want to succeed.

If your business or your music or your art or your project is truly worth your energy and your passion, then don't sell it short by putting its future into a lottery ticket.

Here's another way to think about it: delight the audience you already have, amaze the customers you can already reach, dazzle the small investors who already trust you enough to listen to you. Take the permission you have and work your way up. Leaps look good in the movies, but in fact, success is mostly about finding a path and walking it one step at a time.

Building a Startup Culture

As the school year draws to a close, college graduates will making a move to the next stage of their lives. Will college have encouraged or discouraged them from making that next stage involve entrepreneurship?

Venture capitalist Roger Ehrenberg penned an impassioned call-to-arms on Monday, challenging the venture capital and startup industries to do a better job recruiting young entrepreneurs from college. He urges the "seeding of a startup culture."

Inspired in part by James Kwak's post "Why Do Harvard Kids Head to Wall Street?" Ehrenberg calls for better efforts to "lure the best and brightest into game-changing areas such as start-ups and social enterprises."

Ehrenberg says that it may be that too much emphasis is placed on the risks and the fears associated with startups - "bad marketing, plain and simple" - something that makes jobs on Wall Street or with established corporations seem safer. Instead Ehrenberg wants young entrepreneurs to be steeped in a "startup lore" and encourages experienced investors and founders/CEOs to tell what he contends are "better stories" about the challenges and opportunities that come with starting your own company.

Ehrenberg points to a number of VCs who have become instructors at universities in order to "use their positions as vehicles for identifying top students, building relationships that ultimately result in ideas getting funded or students placed in promising start-ups." However, he questions whether it's worth waiting for more hiring or for an institutional change at the university level to encourage entrepreneurship, and urges instead a "grassroots effort on the part of local venture investors and successful start-up executives to get into the classrooms and onto campus to re-orient talented students away from the money culture and towards the building culture."

Although some universities are working to develop entrepreneurial programs, it may be that the "culture" of business school isn't the right place on campus for the cultural transformation that Enhrenberg wants. (Entrepreneurs do major in things other than business.)

Ehrenberg's essays calls for a better "startup culture" and focuses primarily on storytelling from experienced VCs and entrepreneurs in order to foster it. How else might we go about fostering such a culture?

You can read Ehrenberg's full blog post here.

It is becoming alarmingly apparent that Foursquare is strongly considering a sale to Yahoo. As of the end of last week they had put the venture capitalists vying for their attention on ice. Those VCs happily provided term sheets valuing the company at $80 million or so. But in the meantime, Yahoo and maybe others expressed interest in the company, and are reportedly offering way above that $80 million.

There are so many reasons why this deal shouldn’t happen. Here are just a few:

1. It’s bad for Yahoo: Yahoo’s senior team is grasping at straws, and they desperately want to find a way to stay relevant. But this is not it. What the heck is Yahoo going to do with Foursquare that will somehow turn around their business? Absolutely nothing, that’s what. M&A for PR purposes is not what savvy executive teams do. Whatever tech cred they think they’ll get by buying Foursquare is in their imagination.

2. Yahoo is a horrendous choice for Foursquare. It’s where startups go to die. They’ve bought so many companies that were so promising, only to see them wither on the vine. And the founders always leave in disgust (see Flickr, Delicious and the rest in the left sidebar on their CrunchBase page – how many of these were successful?). And sometimes they buy companies just to shut them down entirely a year later. See Yahoo Kills Maven: From Acquisition To Deadpool In 17 Months Try to imagine what Facebook would be today if Yahoo had successfully acquired them in 2006.

3. You only sell now if you think your business doesn’t have legs. Aardvark did it because of very slow user growth and the founders got nervous. They were in a similar situation at Foursquare – lots of VCs ready to put in money at a great valuation, but they took the sale to Google instead. Now we’ll never know what Aardvark could have become had it stayed independent. Guys like Facebook and Twitter stayed independent despite outrageous acquisition offers. If the Foursquare team believes in their product, they should stay in the game.

4. The Dodgeball/Google debacle should have given founder Dennis Crowley enough of a taste of what happens to most companies when they get acquired. Dennis, remember when you wrote this – “It’s no real secret that Google wasn’t supporting dodgeball the way we expected. The whole experience was incredibly frustrating for us – especially as we couldn’t convince them that dodgeball was worth engineering resources, leaving us to watch as other startups got to innovate in the mobile + social space.” You sold your startup too soon once before. Why do it again now?

5. You can hedge. Lots of startups take money off the table in a venture round instead of selling outright. The WordPress guys did it, for example. The Aardvark team had the option of doing it. You can ask your VCs to redo their term sheets and double the amount raised. Take half off the table and you, your children and their children will never want for anything material in their lives, even if Foursquare goes south right afterwards.

Foursquare has a destiny. It may be to go out of business. It may be to go public and be a huge force in our culture. It may be something in between. But selling out now is like dropping out of college to take up drugs. Whatever you would have become, that isn’t what you’ll become once you sell out to Yahoo. Call Caterina from Flickr and ask her if she wishes she hadn’t sold to Yahoo. Call Joshua Schachter from Delicious and ask him the same thing. My guess is both will privately tell you NFW would they have sold to Yahoo knowing what they were stepping into.

Facebook and Twitter hitting the geo space must be a scary thing for a small startup to contemplate. But there’s real momentum and that intangible buzz behind your product right now. Play this out. In ten years, you’ll be glad you did. Unless you’re broke then because Foursquare failed, of course, and bitter that you didn’t take the money from Yahoo when it was offered. But there’s a reason why you became an entrepreneur and didn’t just stay a mid level developer grunt at a variety of large organizations. You have the fire to change the world. So go do it.

When I'm not sure what I want to write about, I start reading blogs until I come across something that interests me or strikes me. Today the blog that did that to me was Chris Dixon's. A few weeks ago he wrote a post about sizing markets with narratives, not numbers.

I love that advice and want to reinforce it. I see pitches every day, sometimes several in a day. And I can tell you that a picture/vision will light up my imagination in a way that numbers never will.

Chris says:

Some popular current narratives include: people are spending more and more time online and somehow brand advertisers will find a way to effectively influence them; social link sharing is becoming an increasingly significant source of website traffic and somehow will be monetized; mobile devices are becoming powerful enough to replace laptops for most tasks and will unleash a flood of new applications and business models.

Let's take that social link sharing "narrative." Last year at this time, Jeff Pulver asked me to talk to the 140 conference. I wanted to explain to everyone why I thought Twitter was going to unleash a potent new economic model on the web. I could have gone and found some analyst's projections and thrown some big numbers on the screen. 

Instead I talked about search versus social. Here is Jonny Goldstein's sketch of my talk (link to a video of it):

 

I love that sketch Jonny did. I wonder if you could turn his sketches into a textbook.

Anyway, by comparing social to search, I created a narrative that suggested something very big. Paid search is a $30bn market and is still growing. I didn't even have to show any numbers to make that point.

Another reason narratives are better than numbers is that it is easy to challenge numbers. You'll get "Where did you get those numbers?" or "They didn't do that math right." A narrative is just a story and you are the storyteller. It's harder to poke holes in a story, particularly if it is told well.

So I would encourage all entrepreneurs and everyone who is selling something to someone to focus on narratives over numbers, particularly when you are in the initial meeting. If the person you are pitching bites, there will be an opportunity to go over the numbers later. But you have to get yourself that opportunity and story telling is the best way to get there.