Vinny Lingham’s Blog

Courtesy of Chris Zaharias, I discovered a very nice slide show by Dave McClure

(Please view the full post to see the slideshow)

Llewellyn Claasen, who co-founded incuBeta with me, has spent the past 18 months completing his masters degree in technology and has today launched his new blog - CorpV2.com in which he will focus on providing startups with better management practices, and exploring the many facets of the online world that has become a reality for most businesses.

His opening post is titled “The Impact of Network Effects on Online Technology Plays… Part 1″, and is a great prelude of many good things to come!

I have a bit of a rough week ahead, and will be spending 3 days attending (and presenting) at a University of Cape Town Course on what is in effect, Web 2.0, called Nomadic Markets. I’ll try to blog some of the material, if I can get permission.

Social Media is becoming the dominant topic, other than FaceBook, which is a subset. Last night, I found out about two of my best friends finally getting engaged - through my newsfeed on Facebook, about 30 minutes after they posted it. They didn’t even have a chance to call me and I knew about it… how our world is changing!

One of South Africa’s social media experts, Mike Stopforth, discussed the impact of Social Media on South Africa, with CNBC last month. Here is the YouTube clip:

I’ve been very quiet lately, mainly because there are a lot of changes happening at the moment back in Cape Town.

As many of you know, Synthasite is launching soon (final confirmed date for the Technology Preview / Pre-Alpha is 4th June 07). We are looking forward to showing the world what we’ve been up to. Just to set expectations, we’re not releasing a fully functional application, but instead we’re trying to get feedback from our users in the early stages of development, in order to ensure that Synthasite will ultimately meet expectations by the time we get into Beta. In my previous blog post on Synthasite, I explained that I will be taking over Synthasite as CEO and spinning it out of incuBeta as a separate company, with incuBeta still retaining a small stake. I also indicated that we were going to attempt to move it to Silicon Valley in order to be closer to the action.

To this end, I’ve spent the better part of the past two months chatting with a few of the VC players in the space, both in London & Silicon Valley in order to get feedback, and potentially, Series A funding. The feedback we got just from the meetings were excellent, but most importantly, after speaking with VC’s in London, the view is that if development work can be done in a lower cost marketplace, such as Cape Town and the business development team is based in the business area’s that really meets the requirements of most startups.

So, in order to cut a long story short, I, along with the Synthasite team, will be basing ourselves in Cape Town permanently to develop Synthasite, and instead of moving the entire team across (disruptions and all), we’ll instead look to setup a Biz Dev office when the time is right, in key markets. The best part is, if we keep Synthasite in Cape Town, then there is really no need for a Series A type round of funding.

In order to focus on Synthasite, it was announced internally, and now to the rest of the world, that I will be leaving incuBeta on a full time basis, and moving directly into Synthasite, effective 1 August. It’s been really great growing a startup into an award winning company, but my passion has always been startups and I’m finally able to move into a full time role doing that in Synthasite. I’m lucky that there is a strong management team in place at incuBeta to drive the company forward, and the people on the ground are very capable of delivering. In order to ensure that the company can operate independently of me, there will be a full operational and relationship handover before 1 August.

In many ways, this has been a lifestyle decision, and I’m going to also try to cut down on the tremendous amount of air miles that I continue to rack up! As many of you may understand, the disruptive nature that flying around the world has on a person, on an almost monthly basis will eventually wear you down! I would like to spend at least the next few months firmly grounded in Cape Town, enjoying the life there (and I’m in Johannesburg right now!). Charlene, my wife & co-founder, will also be leaving the company to pursue her studies further and we’re planning on taking some much needed time off and we’re going to spend those airmiles going to places that we haven’t yet seen over the next year.

On a final note, in addition to Synthasite, I have setup a small Venture Capital fund for Cape Town based startups, called Lingham Capital (no site just yet), and I will aim to assist them with small amounts of seed capital and expertise in building their businesses, all of which will need to be globally focused in the medium term. I do not intend on investing in more than 5 startups at any one time, including Synthasite. My only other investment so far is SkyRove, which is a Social WiFi business based in Cape Town and after 1 August, I will be assisting Henk (the CEO) with taking his business to a global audience.

It’s really sad to be leaving incuBeta, but I know that all my relationships both internally and externally are all intact - so it’s not really a goodbye! I’ll probably post more reflections on this, and a slideshow later this week - but this was just a relatively quick heads up.

In doing our business planing for Synthasite going forward we were lucky enough to be offered the assistance of a great team of MBA students from Georgetown University, thanks to the Endeavor Network. Thanks to Endeavor, we will also be getting the services of a bright young Harvard MBA candidate later this year for 10 full weeks, which we’re very excited about! I encourage entrepreneurs to apply to join the Endeavor program as the support they can offer growing companies is really fantastic.
The Synthasite team got to spend a lot of time with the Georgetown team, both in Washington DC in January and also yesterday in Cape Town, where they made the long trip to come and visit us and present their research to us. It was a great experience, and I highly recommend using these types of resources to assist in business planning in particular.
One of the tools that they prepared for us was this Excel Spreadsheet, which can be used by startups to plan and structure their financial cost projections and courtesy of Trey Davis, who created this spreadsheet, who has given permission to publish it on this blog and offer it to anyone who would like to use it. (Please do not redistribute it, instead please link back to this post).
The costs and calculations for payroll taxes are for California, but can be changed.

For the record - the numbers in there currently are just proxy and no indication of what our financial plan for Synthasite is

I’ve been spending much of my time reading and understanding Startups & Venture Capital, especially in the US markets (which was somewhat foreign to me, in terms of financial structuring - being South African, of course). As many of you know, Synthasite has been under development for a while now, and sits smack in the middle of that over-used catchphrase, Web 2.0. For me, it’s been a great learning curve both from a hands-on perspective (with incuBeta having just raised private equity/venture capital from Mark Shuttleworth’s HBD Fund), but also a theoretical one, where I have been trying to build the mental bridge between what an entrepreneur wants, and a venture capitalist wants.

We’re launching Synthasite Version 2.0 on 1 June 2007 and in terms of the rebuild it will have taken us a total of 6 months from concept to deployment, using a core team of 3 full time engineers, 1 QA/Server infrastructure resource & some very agile methodologies (utilizing Basebamp & Rally) to launch Version 2.0. By comparison, Version 1.0 took the inputs of over a dozen people and about 2 years of development to complete. Couple that, in addition to the fact that we were building an AJAX application way before it was even called AJAX, means that there was a large amount of R&D that went into evolving the product, none of which was wasted, and ultimately led us down the new path that we are walking.

We aim to relocate the Synthasite team (6 people in total) to Silicon Valley in the next few months and run Synthasite from there, spinning it off as a separate entity to incuBeta - which as a Group is growing quickly in many areas, hence the reason to apply a more dedicated and focused team to grow Synthasite. I will be leading the company from there and I have effectively taken over as CEO of Synthasite.

Update: Here is the video embedded for your convenience.

Why are we doing the move? Paul Graham’s article on “Why Startups Condense in America” somehow struck a chord with me. Synthasite is South African homegrown technology, but in order for us to grow the business and stay ahead, it seems like the most obvious move is to base ourselves at the center of the the tech world. That’s not to say that you can’t grow a tech business elsewhere, but for most techies & geeks, at some point in your life, you want to be in a startup in Silicon Valley! Also, I had a meeting with Reid Hoffman, CEO of LinkedIn back in January and he basically said to me that (admittedly biased), it’s no coincidence that global companies such as eBay, Yahoo, Google & YouTube are all within a few miles from each other - good point!
Why have we done the rebuild? In short, when we started building Synthasite - Internet Explorer had a 90% market share and Firefox was a 1980’s movie starring Clint Eastwood. That was then and this is now - the new version of Synthasite will be cross browser compatible and have a host of other great features. Bear in mind that we’re only going with an Alpha launch in June, with Beta expected sometime around Q3, not everything will be in the first build.

Another good reason for the relaunch was that the market has evolved considerably since the original planning and build phase, and it was good to take a step back and create a vision for Version 2.0 before jumping straight in. Much of what has been done up to now has been trial and error - with great feedback from our Version 1.0 Beta testers. We now know where we are going, and in the spirit of all things “Web 2.0″ we’ve gone back into Stealth mode until June 1st.

So, a bit of advice to other Internet startup entrepreneurs that I have either learnt the easy way, or the hard way (not going to say which!):

1. Read Jason Fried’s Getting Real
2. Bootstrap Version 1.0 and get it out there ASAP - user feedback is imperative
3. Talk to other entrepreneurs who have been there, done that
4. Don’t bother the VC’s until you’re really ready with a focused offering - you only really get one shot to do a solid pitch.
5. Just do it! Stop planning and start prioritizing. It’s amazing what we can achieve when we focus and take action.

Here are some of the VC blogs that I read regularly - I don’t necessarily know these guys, but trust me, judging from their content, they know what they are talking about - and it’s worth taking a page out of their book, err… blog.

• FirstRound Capital’s Josh Kopelman - RedEye VC - Most notably, his most recent post.
• Crosslink Capital’s Peter Rip - EarlyStageVC
• Hummer Winblad’s Will Price - Particularly this slideshow/powerpoint that he produced.
• August Capital’s David Hornik - VentureBlog
• Guy Kawasaki’s - How to Change The World
• Union Square Ventures’ Fed Wilson - A VC - I particularly liked this post on widgets.
• YCombinator’s Paul Graham