Month: April 2010

Entrepreneur 101 Additions

I wrote my Entrepreneur 101 post back in February and added Entrepreneur 101 as a stand alone page around the same time.  I wanted to create a page where I could share all of the little things, services and time savers that I’ve learned in five years of entrepreneurship with anyone else who’s thinking about starting a business.  Entrepreneur 101 has been my most popular post and my most popular page, almost since I wrote it, so I’m happy at least someone’s reading it.  Hopefully it’s been helpful to at least one person so far.

I’ve learned a bunch more since writing Entrepreneur 101 and wanted to update the page to include some of the cool tools I’ve been using with Entrustet over the past few months.

Help A Reporter Out – HARO

I heard about HARO through Ellen Nordahl (check out her blog, it’s a good one) about 6 weeks ago and quickly signed up.  HARO is a free way for you to get PR about your area of expertise.  You sign up for the HARO emails and receive 3 per day.  Each HARO email has about 50ish requests for experts and sources from journalists who need information for stories they want to write.  I’ve seen reqeuests for sources from national publications, magazines, tv shows and other high influence publications, as well as smaller blogs looking for good stories.  If you see a request for info where you have expertise, you create a pitch in your HARO account and it gets sent to the journalist.  If the journalist thinks you’re a good fit, she will get back to you either by phone or by email.  I’ve been a member for probably about 6 weeks and have responded to 6 requests and have been mentioned in two articles, with a third one on the way.

You should subscribe to HARO just for the entertainment that comes from reading about all of the different stories that people are looking to write in the near future and from the intros to each email.  If you sign up, make sure to check out the founder Peter Shankman’s blog post about how to use HARO correctly.

HighRise – 37 Signals

37 Signals is a good company to know, even if you only read their great corporate blog.  They create really simple productivity tools that help you get things done.  We use HighRise to manage all of our contacts for Entrustet and it’s really inexpensive, about $15 per month.  You should start using a spreadsheet for your contact and task management, but once you get over about 50-75 contacts that you need to manage, check out HighRise.  37 Signals also puts out a great checklist management program as well as Basecamp, Backpack and Campfire, which are other great tools to check out.

Get Satisfaction

Get Satisfaction lets your users tell you what they like, don’t like and would like to see improved on your website.  It is also a community based customer service program.  For example, if someone has a question about how to use your service, they can ask it on your Get Satisfaction community and anyone of your users, or you, can answer the question to provide the answer.  I’m not using it now, but have used it with clients in the past.  At $15 per month, it is a great solution as soon as your startup or company starts to grow and gain users.

Wufoo

Wufoo makes creating forms easy and makes the forms themselves interesting and fun.  We’ve only experiemented with their free version, so I can’t comment on the paid versions, but check them out if you are creating forms.

Networking

I know I talked about networking in the original post, but I can’t stress enough how important it is to talk to others in your community.  Social media is a good starting point, but real relationships are made with face to face meetings and phone calls, not 140 character tweets or even emails.  You can use social media to augment your relationships, but there is no substitute for getting out there and talking with people.

Do you have any websites, services or tips that you think should be added to Entrepreneur 101?  Do you disagree with any of mine?  Let me know, it’s always a work in progress.

Burrill Business Plan Competition 2010 and a Look Back

4WF7X8NSTHFD

The 2010 Burrill business plan competition was held yesterday at UW.  One year ago today, Jesse and I won the students choice award for Entrustet.  Writing the plan, talking to the judges and presenting at the competition helped us launch the company.  Almost one exactly year later, we had our launch party in Madison and we’ve been featured on Mashable, The Financial Times and tons of other media.  It’s amazing what a year of hard work on a cool idea can bring!

I went to the 2010 public exhibition yesterday to check out the new companies and invite participants to join Capital Entrepreneurs.  It’s safe to say that the entrepreneurial spirit is alive and well on campus.  There were some really cool ideas this year, with the top prizes going to im-Bed Biosciences ($10k), Sector 67 ($7k), ProPov ($4k) and MycoLogyx LLC ($1k) with Student Spill taking home $1k and free office space in the Metro Innovation Center.  Buffalo Shoals took home the Green Credit worth $1k.

I took some pictures of some of the cool new businesses I checked out.  I only had my iPhone camera, so the picture quality does not match the business quality.  Sorry for that.

Sector 67 – Chris Meyer

Sector67 is a start up TechShop / Hacker space / Makerspace / Collaborative Environment in Madison, WI dedicated to providing members the opportunity to work on tomorrow’s technology; to build, collaborate, learn, and teach about next generation devices.  It’s basically a place for engineers and others who are trying to improve products or create new ones to use shared equipment and shared space.  Sector 67 is a non-profit and will be an awesome addition to the Madison community.  Chris is also one of the original members of Capital Entrepreneurs.

Student Spill – Heidi Allstop

SPILL is “an anonymous network of students who have formed a venting outlet for college problems that everyone seems to go through, but few people want to LISTEN to. We’re an email based support system FOR and OF college students …just to provide a place to spill your guts or console others who need to vent.”

Allstop started Spill as a student organization and has successfully helped students all over campus.  She has the potential to expand to other campuses across the country and won $1k plus free office space for a year.  Heidi is also a CE member!

ArcherVision Concepts – Raul Correa, Rahul Kamath, Alexander Jacobs, Divya Seethapathy, Sriraman Santhanvaradan

This team has a really cool product.  Many bikers use helmet mounted mirrors to see what’s behind them.  The team created a prototype that updates this system for the 21st century.  They have a camera that goes on the back of the helmet which transmits to a front mounted LCD screen.  They are in the early stages, but have a cool prototype.  Their goal is to embed the camera and the wiring into the helmet so that it will not hurt you if you crash.  Bikers love to spend money on the latest  gadget, so if done right, I could see it catching on and becoming profitable.

Flyboy Carnival – Kevin Burgess, Christopher Martinez

Flyboy Carnival is a cool tshirt company based out of the UW business incubator in the Univesity Square building.  They have some cool shirts, but my favorite part is their creative packaging.   They sell their tshirts in red and white striped popcorn boxes with their tshirts inside. Check out the picture below.

ProPOV – Jon Mumm

Jon has a really interesting backstory. Originally from Milwaukee, he got really good at the first person shooter Counter Strike.  He was so good that he was able to turn pro and earns money playing the game on the pro circuit.  I know many of you are thinking, “what? turning pro to play video games?” but there is actually a well developed professional video game circuit in the USA and an incredibly popular one in Asia.

Jon always had people asking his for tips on how to get better at the game, so he started a website called JuanSource to help teach counter strike players the tips they would need to get really good at the game.  He saved video of him playing the game and commented over the action, helping people get better.  Naturally, he charged money for the commentary and started to have a profitable online business.

His new software the he developed, ProPOV, takes in game commentary to the next level, allowing gamers to comment live over the game.  ProPOV has a nice niche that could be very profitable as it gets rolled out.

Summary

Overall, I was impressed by the quality of this year’s ideas.  You can watch all of the presentations in full on the Burrill website.  I’ve been involved in the competition as a participant or viewer since 2006, and it seems like the ideas keep getting better each year.  30% of this years entries had at least one female on the team, which I believe is a big improvement over past years.  What was even more impressive is that most of the women who entered the competition were doing so outside of fashion, which is a great improvement.  Imagine how many more cool companies there would be if women started startups at the same rate that men do?

Brilliant Idea: Let’s Make It Harder For Startups to Raise Money!

According to John Maudlin, startups and new small businesses are “the job-creation engine of the US.” He is right.  In a report by the Kauffman Foundation using US Census Data, start-ups and businesses less than five years old created all of the net new jobs over the last 25 years.

It is incredibly easy to start a business and find funding in the United States compared to the rest of the world.  You can start an LLC in Wisconsin in less than 10 minutes, compared to up to over year in some developing countries.  The US has the deepest and most well developed network of Venture Capitalists and Angel Investors anywhere in the world and if new businesses are looking for angel investment, they can obtain it with minimal paperwork.   According the the Kauffman Foundation, over the last 25 years, “angel investors were responsible for up to 90 percent of the funding these businesses received.”  This angel funding allowed these startups to create jobs and bring innovative ideas to the marketplace. In 2008, angels invested $19.2 billion in over 55,000 companies.

The US innovation and “job creation engine” is the envy of the rest of the world.  So what’s the best way to destroy this engine?  It sounds ridiculous, but it seems like the politicians who drafted the Restoring American Financial Stability Act of 2010 asked themselves this question when they were writing the bill.

Hidden inside the 1300 page bill are a few paragraphs that have the potential to kill job creation and innovation in the USA.  Currently, new businesses can raise money from Angel Investors fairly easily if the investors meet a few criteria.  Investors must have at least $1m in net worth or make $250k in income per year.  If your investors meet the criteria, they are considered Accredited Investors and startups can accept their money with a simple 5 page informational filing that goes to the SEC.  Startups can potentially raise hundreds of thousands of dollars in weeks if they have an amazing idea and find the right investors.

If this bill passes, it will raise the accredited investor net worth criteria to $2.3m in net worth or $450k in annual income, eliminating close to 60% of the potential angels in the USA.  I’ve raised close to 500k in angel investment between both of my businesses and we wouldn’t have been able to accept ANY of it if these rules were in place. If anything, the rules should be changed so that the net worth requirement is lower.  We allow anyone to invest in stocks, bonds, options, futures and other exotic investments, but not in new businesses.  Says John Maudlin:

Why should 95% (or maybe soon to be 99%!) of Americans, simply because they have less than $1,000,000 (or $2,500,000?), be precluded from the same choices available to the rich? Why do we assume those with less than $1,000,000 to be sophisticated enough to understand the risks in stocks (which have lost trillions of investor dollars), stock options (the vast majority of which expire worthless), futures (where 95% of retail investors lose money), mutual funds (80% of which underperform the market), and a whole host of very high-risk investments, yet deem them to be incapable of understanding the risks…”

The other change in the bill is even more damaging.  The bill requires that all startups register with the SEC and implements a 120 day waiting period so that the SEC can approve new businesses.  Startups move in minutes and hours, not weeks and months.  Entrustet has been live for just over 1 month now and we’ve gotten real users and made real money.  A 120 day waiting period would kill companies before they even get off the ground. But the waiting period isn’t even the worst part.  Registering with the SEC would cost up to $100k in legal, accounting and other fees, not to mention lost productivity when startup founders could be working on their idea instead of battling the government for access to capital.

And what if a small project like Facebook started to grow rapidly?  It could take weeks to draft all of the legal paperwork, plus another 4 months of waiting around on the SEC.  And this is assuming the SEC doesn’t get backed up like the US Patent Office.  I also don’t want some government bureaucrat processing SEC applications while I am hurting for investment.  Facebook could have very easily died in Zuckerberg’s Harvard door room if he had to wait 120 days for SEC approval before getting his first round of funding. I have no doubt that if this bill passes, the waiting period will be over 200 days within 2 years.  After all, it takes an average of 34 months for the patent office to review new patents.

The last change in the bill devolves some of the power to regulate angel investors to the states.  This change means that instead of one filing, every state will be different.  For Entrustet, we have investors in multiple states.  We would have had to file new paperwork in each state if the rules change.

So why is Congress attempting to change the one part of the US economy that is creating jobs?  The US currently regulates angel investors as if they were investing in hedge funds.  We do need more regulation on hedge funds, but the problem is that angel investors are getting caught in the net.  This is a huge mistake.

There is a fundamental difference between hedge funds and startups.  While both are risky, hedge funds generally shuffle money around to make money and don’t create much, if any, value, whereas startups spark innovation, create jobs and improve society as a whole.  Startups use the money to create new jobs and innovate.  Think betting that the South African Rand will fall in value vs. funding the next Google.  Here’s Maudlin’s solution, which I agree with 100%:

Here’s what needs to happen. Get rid of the disastrous rule requiring filing with the SEC. It makes no sense and will cost hundreds of thousand of jobs and divert the SEC from their main tasks. Angel investing has not been a problem to date, and there is no need to fix something that is not broken.

Second, if you really think we need to raise the accredited investor limits, then carve out an exemption for venture capital.

And keep the clause that gives startups federal exemption.

And, if you really want to create jobs, then cut capital-gains taxes on new ventures and angel investing to 10% or less. Let’s create some incentive to get America moving!

If passed without any amendments, these rule changes will be a huge detriment to the US economy.  They are short sighted and attempt to protect us from ourselves.  By lumping angels with hedge funds, the government is painting with a broad brush and there will be all sorts of unintended consequences.  This issue is not a republican vs. democrat issue either.  Everyone should want to make it easier for startups to create new businesses and new jobs, especially in this economy.  This bill does the exact opposite and would be terrible if it passes.  I hope that there is enough negative publicity so that this part of the bill never makes it into law.

Do you think this bill will pass as is?  Do you think hedge funds and angel investors should be treated the same way?  What do you think will happen in your own startup?

HT: Forrest Woolworth and the PerBlue Blog

Do You Value Experiences Or Things?

I just booked my flight to South Africa for World Cup 2010.  I’m going with my friends Andy and Katie and we have tickets for all three USA group stage games, plus a the Spain vs. Switzerland group stage match.  Everyone I talk to says something along the lines of “oh wow, you must be rich to be able to go to the World Cup.”  When I talk about some of the other places I’ve been, people are even more shocked.

Although I am very lucky that I do not have any student loan debt and had a business where I made some money, I am not rich.  The reason I can afford to travel is that I value experiences over physical things.  Let me explain.

I value experiences like traveling, going to sporting events, eating good food and learning new skills.  I don’t value physical things like the latest tech gadgets, new cars, expensive houses, fashion and other material things.  That’s why I’ve traveled to Europe multiple times and am going to South Africa this summer.

I’m able to travel because I drive a scratched and dented ’95 Toyota Carolla (link isn’t my car, its too clean).  It is one of the cheapest cars to drive and maintain and my insurance is cheap because I don’t have comprehensive insurance, just collision.  I get 30 MPG and live close to my office, so I rarely drive.

I could afford to upgrade to a “better” car, but what’s the use?  I view a car as a way to get from point A to point B.  As long as the car is safe and reliable, why change?  I look at it this way:  I could have a new car or a trip to Europe each year.  The average US car payment is $400, or $4800 per year.  I’ll choose driving a “crappy” car every single day of the week if it means I can go to Europe once per year.

I also don’t need luxury living.  I pay $400/month to rent a room in a house that I share with 4 friends.  We have an entire house here in Madison and have plenty of space.  We have a great location, close to the Capitol, restaurants and bars.  I could live on my own for $700 or live with a roommate in a nicer apartment for anywhere between 600-1200/month.  That $200/month minimum difference in rent, or $2400, will more than pay for my flight to South Africa this summer.  It could also pay for my groceries, since I cook most days of the week.

I also have had the same cell phone for the past 6 years.  It’s functional, makes calls and I’ve had fewer than 10 dropped calls in that time period, unless I’m in an elevator.  Since I’ve had the phone for so long, I don’t have a long term contract and my rates are low.  I recently got an iPhone for business and the price difference is stunning.  My old phone costs about $40/month.  If this weren’t for business, a new iPhone can cost up to $100/month.

I don’t care about fashion.  Obviously, I want to look good, just like everyone else, but I don’t need to be on the cutting edge.  If I find something that fits and looks decent, I’ll wear it until its worn out.  I own (and wear) shoes from 2004, 2008 and 2009 that still are comfortable and look decent.  If you see me around Madison, you’ll probably see me in one of 5-6 different clothing combos.  I spent under $200 on new clothes in 2009.  I have friends who spend $200 on a single pair of jeans.  That savings will pay for my match tickets to 4 world cup games and my food while I’m there.

I also try to pack a lunch instead of going out to lunch.  A nice sandwich, salad and piece of fruit costs about $2 at most.  The average lunch at a sandwich shop costs $7.  That $5 per day difference goes toward eating dinners at interesting restaurants and trying new cuisines.

I don’t impulse buy.  I never buy cheap, plastic things that will only be used once.  I was talking with my friend Andy about buying things when we were on our way back from visiting our friends Mike and Pat in Chicago.

Andy said he remembered sitting in an intro Finance class sophomore year of college where the professor said “we all buy things everyday.”  She was trying to give an introduction to finance, but Andy couldn’t stop thinking to himself “No, I don’t buy things everyday.  Sometimes i even go 3-4 days without buying anything.”  I’m in the same boat.

In the US, you can say “we buy things everyday” and for most people, it is true.  I know when my parents were growing up, their families did not buy things everyday.  They bought a weeks worth of groceries at the store and cooked meals at home.  Eating at restaurants was rare and fast food places like Qdoba, Potbelly, Subway and others were nonexistent.  Going out was considered a special treat.  They wouldn’t buy candy from vending machines, cheap plastic junk from stores or close to 75% of the inventory in your typical Walmart.  It’s amazing that there can be stores in the US that only sell cheap plastic junk that will only be used once.  At least Walmart sells groceries and other necessities.  People buy all sorts of things without even thinking about them and many times, rarely use them more than once, if at all.

I think there are three subsets of people.  People who value experiences over things, people who value experiences over things, but get sucked into buying lots of material things and people who value things over experiences.   I don’t think there is a “right” way to live, although I personally can’t imagine being happy based on purchasing electronics, cars and clothes; everyone can be happy in any of the three categories.  The point of this post is not to chastise people who value things over experiences, but to point out that people in the middle group can get out of the “things” trap.  Instead of spending money on things to “keep up with the Joneses” they could save the money and actually do the things they’ve always wanted to.

What do you think?  Which category to you fit into?  What experiences would you like to be able to do in your life?