Recently I decided to leave my job at Thomson Reuters to go all in on an unfunded startup that I started with Kevin Marshall.  This was a remarkably easy decision, but one that took me a long time to even approach.  

I’ve read about risk tolerance and how it’s a major factor in defining an entrepreneur (along with several other things) and realized it was a characteristic that I thought I had myself, but wasn’t demonstrating.  I’ve considered myself an entrepreneur since we first started Chalq in early 2007, but even then it was a nights and weekends project for me (Matt and Napoleon did work on the company full time). I wasn’t able to go all in on Chalq because I hadn’t properly identified my risk profile.  

Since Chalq failed in 2008, I’ve made a point to put myself in a better position to succeed in my next company.  Specifically:

1. I’ve saved money by significantly cutting down my living costs (my main risk concern).
2. I spent 2 years aggressively building my network of entrepreneurs and investors.
3. I’ve spent significant time in defining and refining what I believe are the skills needed by a non-tech founder of a web company (this will be an entirely separate post).

What is important is identifying what your risk tolerance on a personal level is.  For me it was the $0 mark and related to #1 above.  I didn’t want to go into debt, so I made sure that if I created another opportunity I would execute on it without it feeling risky.  For others it may be something completely different (opportunity costs, knowledge insecurity, confidence in your idea/team, etc…), but knowing what it is makes all the difference.  

If your dream is to build things from scratch and own what you build, identify what those points of risk are and eliminate them.  It took me 3 years to do this properly, and now I have the chance to work on my dream.  The best part is, it doesn’t feel the least bit risky.

Testing a Text Post via Tumblr as we iron out the details for adding Tumblr as a source on Know About It.

I’ve been quiet the past couple of months because I am working on a new startup Know About It.

Know About It is a link collection service that pulls in links that flow through your social streams (think Facebook, Twitter etc…) and gives you tools to search and consume the content.  We’ve seen that the average user on our system has 300-500 links flowing coming at them everyday, far too much information to actually keep up with in real time.  The tools we’re building are phase 1 of the business, and there is a lot more to come around social, classification, and additional sources.  It’s been great working with my co-founder Kevin Marshall, and we’re really excited about what we’ve built in such a short period of time as well as what’s to come. 

I’ll be writing much more about the project in the future, but for now go sign up and let us know what you think.  Alpha code is available upon request, or just hang out in the waiting area and we’ll approve your invite manually.

I’ve been frequenting startup events lately, showing off Know About It to anyone who will listen and sign up for the alpha we’re working on.  Naturally we talk about the fund raising process, and it seems like there is a bit of a disconnect in what a Seed Fund actually invests in.  Namely, there is a complaint I hear that seed investors put too much emphasis on “traction” early on, and that from an entrepreneurs view, the entire point of the seed investment is to hit certain traction milestones.

From general observations and talks with a few investors, basically it comes down to this:  If you have previous experience gaining traction for an application as a founder or as an early employee, then it makes sense to raise a seed round with no traction.  If you don’t have that experience, you will need traction, even in a small round. 

We hear all the time that Angels and VC’s are investing in people, and that this is particularly important in early stage deals.  If your people have never built anything of scale, and your current project hasn’t been released to the masses, you’re likely not going to pass this first test.

Startup incubators like TechStars are a great way for first time entrepreneurs that run up against this paradox to break through.  Or if you’re like me, find a co-founder who passes the test.