The smell of a good startup

When I was over in Israel I was talking with a couple of journalists about what makes a good startup. One guy, I think it was TechCrunch’s Ouriel Ohayon, said he likes to visit startups to “smell the startup.”

That started a discussion of what you do smell. Do you smell money burning in the middle of the floor? I remember visiting ZDTV when it was just getting started and thinking to myself that this business would never be profitable. In my mind I imagined $100 bills burning in the middle of the floor. I wasn’t too far off.

Other journalists have told me they get nervous about a company if they claim to be a software house, yet there are too many “pretty people” running around. Engineers are rarely pretty. Or, if they are too scripted. Or if they have ostentatious offices. Startups should be in pretty cheap surroundings.

Yesterday Rocky and I drove for four hours to visit Threshold. Because we video each startup and don’t just talk to them over the phone, we get a far different feel of each company than someone who does a blog, but who doesn’t take the time to actually visit.

This is a huge tax, and explains why other bloggers can get 10 posts out a day, while I can only do one or two videos.

But, it does give me an advantage: I can “smell” the startup.

Yesterday we used those “smelling skills” to get to know Threshold. It’s a startup focused on building home-automation and control equipment. I’ve been interested in this field for some time, but I haven’t seen anyone really get it easy-enough-to-use to have a chance of getting anyone but the geekiest early adopters to use it.

Why is that? Well, let’s think about home automation. You might want to put in a security system. Or a system to control your thermostat (which is why I’m interested in the topic, since my heating bills are too high and I am always traveling, which means the house is freezing when I get home if I leave it off to save the money and the environment).

But usually these systems require you to go through some very geeky networking setup. Not Threshold’s equipment. They found a way to pair up all your sensors via an optical sensor on top of each one. No batteries are even needed. They call it the “magic blue spot.” Just get a new motion detector, say, and hold its blue spot next to the blue spot of your home base station, push a button, and they are paired. Works for all their sensors and controls. And everything is Web based, so you can now control that thermostat from your Web browser, so you can turn on your heater before you get home, right from your iPhone.

Anyway, back to the smell of the startup. The offices were in a low-cost place. They had what looked like used furniture. Clearly no expense had been overdone. And the people we met were geeky, passionate, and not very good on camera. Makes my job a little tougher, but tells me that we were in front of the real deal, not some dance and pony show. Funny, the same CEO even does his own videos on its Web site, along with the same cruddy furniture.

It worked on me. Threshold passed the smell test. I wish it well as it works to get to the next level (they are looking for funding to build even more modules and get more retailers on board).

How about you, can you “smell” a good startup?

Comments

  1. Home automation is a pretty interesting field. Most people think that it exists merely to turn lights on and off, but some pretty cool things can be done with it.

    Anyway, good luck to Threshold.

  2. Home automation is a pretty interesting field. Most people think that it exists merely to turn lights on and off, but some pretty cool things can be done with it.

    Anyway, good luck to Threshold.

  3. Sounds very interesting.
    One product for home security – Ingrid Home Security – ingridhome.com which I am using for my home, is worth a look. Very simple setup and installation

  4. Sounds very interesting.
    One product for home security – Ingrid Home Security – ingridhome.com which I am using for my home, is worth a look. Very simple setup and installation

  5. Arin: well, there ARE exceptions. Leah Culver at Pownce, for instance, but come to an O’Reilly Emerging Tech Conference and see how many pretty people there are. Not a very high percentage.

  6. Arin: well, there ARE exceptions. Leah Culver at Pownce, for instance, but come to an O’Reilly Emerging Tech Conference and see how many pretty people there are. Not a very high percentage.

  7. “but I haven’t seen anyone really get it easy-enough-to-use to have a chance of getting anyone but the geekiest early adopters to use it.” this is shocking!
    In my Pune real estate market, home automation is “in thing” Builders believe that all IT professionals, particularly those have worked in US, can’t live with out it! Good, there are still 14 – 18 months to complete the projects. I can start a blog and conduct workshop on using home automation products!

  8. “but I haven’t seen anyone really get it easy-enough-to-use to have a chance of getting anyone but the geekiest early adopters to use it.” this is shocking!
    In my Pune real estate market, home automation is “in thing” Builders believe that all IT professionals, particularly those have worked in US, can’t live with out it! Good, there are still 14 – 18 months to complete the projects. I can start a blog and conduct workshop on using home automation products!

  9. I think you should smell Passenger, Inc. Web startup working to take online collaboration and social media from the client to the members. Marketing, focus groups, internal communication, but I’m curious to see how it smells. Maybe you could market yourself as the “Smell Consultant”.

    http://thinkpassenger.com/

  10. I think you should smell Passenger, Inc. Web startup working to take online collaboration and social media from the client to the members. Marketing, focus groups, internal communication, but I’m curious to see how it smells. Maybe you could market yourself as the “Smell Consultant”.

    http://thinkpassenger.com/

  11. Cool!

    So, we have no cash, home made videos and second hand furniture. We’re not pretty, but at least we’re remembering to eat these days (unlike the first frantic month)… it’s a recognised ailment… we’ve just got ‘startup’ is all.

  12. Cool!

    So, we have no cash, home made videos and second hand furniture. We’re not pretty, but at least we’re remembering to eat these days (unlike the first frantic month)… it’s a recognised ailment… we’ve just got ‘startup’ is all.

  13. I saw a demo of this product at CES in January. Looks really cool and it does work! They paired up a few different devices they had at the show with their demo unit. The possiblities are endless and to have an open source protocol for home networking for once. I love that. Thanks Threshold. Best of luck to you guys.

  14. I saw a demo of this product at CES in January. Looks really cool and it does work! They paired up a few different devices they had at the show with their demo unit. The possiblities are endless and to have an open source protocol for home networking for once. I love that. Thanks Threshold. Best of luck to you guys.

  15. Guess that “smelling skill” wasn’t even developed yet when you were VP at PodTech?

  16. Guess that “smelling skill” wasn’t even developed yet when you were VP at PodTech?

  17. how long until startup spend thousands driving around the city looking for a discarded couch with the right amount of cool wear to seem low cost? Or interior designer who start coming in to do shabby chic make overs because the scobleizer is coming in for an interview?

  18. how long until startup spend thousands driving around the city looking for a discarded couch with the right amount of cool wear to seem low cost? Or interior designer who start coming in to do shabby chic make overs because the scobleizer is coming in for an interview?

  19. I don;’t think it completely true to think that start-ups operate form offices in cheaper surroundings. In big cities like London, star-ups often work out of flexible offices and business centres that are modern and in the heart of the city. Business centres and VOIP have brought abut a new generation of entrepreneurs who work form as efficient work environments as established businesses.
    Posted by:
    http://www.kronikmedia.co.uk

  20. I don;’t think it completely true to think that start-ups operate form offices in cheaper surroundings. In big cities like London, star-ups often work out of flexible offices and business centres that are modern and in the heart of the city. Business centres and VOIP have brought abut a new generation of entrepreneurs who work form as efficient work environments as established businesses.
    Posted by:
    http://www.kronikmedia.co.uk

  21. Pretty cool startup!

    We (Amahi) are doing something that eventually would like to take in the home automation direction. However, we’re coming from a whole different angle (which we think it’s sexy! :-)

    We are building an Open Source Home Server and we’ve done it with a popular distro under the hood (Fedora, Ubuntu soon). We have built an apps/plug-in system to easily deploy new apps for the home server (we have 6 demo apps so far and looking for developers).

    In addition of that and having the typical NAS/router/file server functionality, we also have wiki, calendar server, media server, VPN, backup server, etc.

    We are doing more with less, we’re going to try and not have offices, though we are in the middle of Silicon Valley.

    We are starting to open the Beta to more people and we have received great interest so far. You can get a flavor of what we do at our blog at http://blog.amahi.org. Main site at http://www.amahi.org

  22. Pretty cool startup!

    We (Amahi) are doing something that eventually would like to take in the home automation direction. However, we’re coming from a whole different angle (which we think it’s sexy! :-)

    We are building an Open Source Home Server and we’ve done it with a popular distro under the hood (Fedora, Ubuntu soon). We have built an apps/plug-in system to easily deploy new apps for the home server (we have 6 demo apps so far and looking for developers).

    In addition of that and having the typical NAS/router/file server functionality, we also have wiki, calendar server, media server, VPN, backup server, etc.

    We are doing more with less, we’re going to try and not have offices, though we are in the middle of Silicon Valley.

    We are starting to open the Beta to more people and we have received great interest so far. You can get a flavor of what we do at our blog at http://blog.amahi.org. Main site at http://www.amahi.org

  23. It’s not your smell that counts, it’s the customers.

    Start-ups should be in cheap surroundings, poor and ugly and in a rough part of town? Yeah? Says who? Maybe that strategy will backfire, big customers will think of them as not up to par, and shy away. Sometimes the right look and location makes ALL the difference. And further still, sometimes “pretty people” work out much better, than ugly geeky trolls with zero social graces.

    Start-ups don’t have to take a vow of poverty, but neither can they re-cue up the Boom Era, holding parties and spending pets.com-like wanton cash for “buzz”.

    Home Automation is still a niche field, and by the time it becomes commodity, the start-ups will get eaten alive. Blaze the sky, burning out, just when the market develops, as they can’t industrial-level scale or deal with endless price wars. As such, the best hope is to be bought out, and looking spartan and poor, will get them a lower offer.

    In short, this is hardly a science, your romantic vision of a “Little House on the Prairie” like start-ups, might still crash and burn. And the shiny gold-brass, arrogant sales-goons type of start-up might (sadly) win, even if the so-called “early adopters” hate it.

    Poor and Ugly
    —————–
    Pro: Able to last, frugal
    Con: Not perceived as having anything worth much, it’s not about the best product, it’s about MARKETING a good product. And sometimes being too frugal is pure death.

    Rich and Pretty
    ——————-
    Pro: Able to attract big-fish, perception higher, a feeling of being alive.
    Con: Might need cash-infusion every other quarter, and tend to be led by Narcissistic Personality Disorder CEOs, who believe their own hype.

  24. It’s not your smell that counts, it’s the customers.

    Start-ups should be in cheap surroundings, poor and ugly and in a rough part of town? Yeah? Says who? Maybe that strategy will backfire, big customers will think of them as not up to par, and shy away. Sometimes the right look and location makes ALL the difference. And further still, sometimes “pretty people” work out much better, than ugly geeky trolls with zero social graces.

    Start-ups don’t have to take a vow of poverty, but neither can they re-cue up the Boom Era, holding parties and spending pets.com-like wanton cash for “buzz”.

    Home Automation is still a niche field, and by the time it becomes commodity, the start-ups will get eaten alive. Blaze the sky, burning out, just when the market develops, as they can’t industrial-level scale or deal with endless price wars. As such, the best hope is to be bought out, and looking spartan and poor, will get them a lower offer.

    In short, this is hardly a science, your romantic vision of a “Little House on the Prairie” like start-ups, might still crash and burn. And the shiny gold-brass, arrogant sales-goons type of start-up might (sadly) win, even if the so-called “early adopters” hate it.

    Poor and Ugly
    —————–
    Pro: Able to last, frugal
    Con: Not perceived as having anything worth much, it’s not about the best product, it’s about MARKETING a good product. And sometimes being too frugal is pure death.

    Rich and Pretty
    ——————-
    Pro: Able to attract big-fish, perception higher, a feeling of being alive.
    Con: Might need cash-infusion every other quarter, and tend to be led by Narcissistic Personality Disorder CEOs, who believe their own hype.

  25. I just read the “Ghost of Robert Scoble!”

    In my RSS feed tonight there were five new Robert posts. In the first four posts there 10 links to things he thought important, or else he wouldn’t have linked to them. And of those ten links I read nothing before or after them that would interest me into clicking the link.

    One post read “Well, just spent the past four hours watching FriendFeed for interesting discussions about the Yahoo/Microsoft deal. This is the result. Page-after-page of conversations. It’s like a new talk show. There’s even an audio talk show that I participated in during this time. Do you see it on the feed? This is the new conversation. Now compare to Techmeme’s conversations about the same. It has a totally different feel, don’t ya think?
    Which do you find more interesting, why?”

    There was nothing in there that gave me any reason to go to any of those links… But then “The Smell of a good startup” came along and Robert finally gave me the who, what, where and why I should follow the link to Threshold and find out more.

    Robert, when you were at Microsoft you had a lot of these posts that gave us readers the information on why we should trust your judgement to invest more time into the links you provide. Keep giving us more of this type of content.

  26. I just read the “Ghost of Robert Scoble!”

    In my RSS feed tonight there were five new Robert posts. In the first four posts there 10 links to things he thought important, or else he wouldn’t have linked to them. And of those ten links I read nothing before or after them that would interest me into clicking the link.

    One post read “Well, just spent the past four hours watching FriendFeed for interesting discussions about the Yahoo/Microsoft deal. This is the result. Page-after-page of conversations. It’s like a new talk show. There’s even an audio talk show that I participated in during this time. Do you see it on the feed? This is the new conversation. Now compare to Techmeme’s conversations about the same. It has a totally different feel, don’t ya think?
    Which do you find more interesting, why?”

    There was nothing in there that gave me any reason to go to any of those links… But then “The Smell of a good startup” came along and Robert finally gave me the who, what, where and why I should follow the link to Threshold and find out more.

    Robert, when you were at Microsoft you had a lot of these posts that gave us readers the information on why we should trust your judgement to invest more time into the links you provide. Keep giving us more of this type of content.

  27. Robert – I think you’d be impressed with our day light basement office and scruffy, geeky engineers. Our CEO Pete Grillo lives by these words: “You Are Spending Your Equity.” I mean, my office is in the kitchen!

    And dang it, we have a business here.

    This start up smells good so far. :-)

  28. Robert – I think you’d be impressed with our day light basement office and scruffy, geeky engineers. Our CEO Pete Grillo lives by these words: “You Are Spending Your Equity.” I mean, my office is in the kitchen!

    And dang it, we have a business here.

    This start up smells good so far. :-)

  29. The “smell test” kind of reminds me of Warren Buffet’s intrinsic value idea. A lot of people try to put on the bells and whistles to make things seem bigger and better than they are. But in reality, they are often just showing how inefficient they are.

    When you can pick up on the real value of the product or service and authenticity in the people building it, bells and whistles are not necessary.

  30. The “smell test” kind of reminds me of Warren Buffet’s intrinsic value idea. A lot of people try to put on the bells and whistles to make things seem bigger and better than they are. But in reality, they are often just showing how inefficient they are.

    When you can pick up on the real value of the product or service and authenticity in the people building it, bells and whistles are not necessary.

  31. We refurbished our office in an old fire station overlooking an airfield which hadn’t been used since 1986. The ‘smell’ of our startup at the beginning was old dusty carpet tiles heaved from the first floor into a dumpster. I don’t recommend refurbishing but its great for cheap rent!

  32. We refurbished our office in an old fire station overlooking an airfield which hadn’t been used since 1986. The ‘smell’ of our startup at the beginning was old dusty carpet tiles heaved from the first floor into a dumpster. I don’t recommend refurbishing but its great for cheap rent!