Since I first started traveling more in November 2010, Forrest Woolworth has taken over leadership of CE.  He’s done an outstanding job finding sponsors, adding entrepreneurs, standardizing the membership process and adding additional events like Build Madison and CE Pitch Days.  CE members have also been behind the Forward Technology Conference.  Besides for Forrest, credit should also go to Justin Beck, Chris Meyer, Scott Resnick and the rest of the original CE members for making our founders group what its turned into today.  I’m so proud to see Madison’s entrepreneurship ecosystem continue to grow and hope 2012 is even better than 2011!

From Forrest’s Capital Entrepreneurs 2011 Year End Review:

Capital Entrepreneurs companies are curing cancer, preventing suicides, and organizing community groups. They are making mobile apps and games used by millions, revolutionizing the digital music industry, making sense of social media, shaping some of the world’s largest brands, and much more. Capital Entrepreneurs companies participated in prestigious startup incubator programs including Y Combinator, TechStars, Startup Chile, and 94labs.

Over the last year, Capital Entrepreneurs companies were featured in news outlets around the globe. These included The New York Times, NPR, Mashable, TechCrunch, CNN, The Economist, The Wall Street Journal, Wired, MTV, Sports Illustrated, AdAge, and more. Locally, Capital Entrepreneurs companies were the topic of two Isthmus cover stories, and were featured in the Wisconsin State Journal, Madison Magazine, and InBusiness.

                          

I’ve gotten to know a bit about Chile and the entrepreneur ecosystem and wanted to share my thoughts.  Parts of this post may seem harsh, but remember, I could write a similar post about Madison, WI or any other city not named New York or San Francisco.  I’ve summarized Kohavi’s main points about Chile and the entrepreneur ecosystem (read the entire interview) and tried to respond to each one.

Chile is less dynamic than Asia because it is controlled by a handful of rich families who don’t care about the young or the poor.  They give money to support entrepreneurship, but it’s only in Spanish and they do it to stroke their ego.  Conservative organizations like Opus Dei and a bigoted older generation don’t encourage social ascension. Chile’s main problem is mental isolation, not just geographic and Chilean startups have to move abroad to be successful.  The investors are private equity guys who don’t know entrepreneurship or entrepreneurs. In 10 years and with education, Chile can be dynamic, but its not ready yet. That’s why I’m going to Singapore.

So is Kohavi right?  For him, leaving makes perfect sense because he wants to make money NOW and I’m not sure Chile actually needs a real Series A fund right now.  It needs more mentoring and smaller infusions of capital on the angel/micro angel scale.  Kohavi’s business model was not correct for the time in Chile.  I think if he experimented with business models, he could have made a name for himself and his fund, but instead he chose to go to Singapore.  Nothing wrong with that at all.

Next, he hits a wide range of issues affecting Chilean culture and the entrepreneur ecosystem and its potential for growth.  Has he been fair to Chile?  Lets take a closer look based on what I’ve seen over the past year.

I believe that there are huge opportunities for home grown and foreign entrepreneurs in Chile and Latin America.  They are just harder to execute.  Chileans are smart, talented and hard working and there are some great Chilean entrepreneurs.  I don’t see Kohavi’s article as an attack on them.  In fact, I respect Chilean entrepreneurs even more because they are able to succeed in a tough environment. Entrepreneurship is hard enough in Silicon Valley. Adding in Chilean cultural barriers and a developing ecosystem adds many additional roadblocks.  It’s harder to be an entrepreneur in Chile than in the US.

Kohavi is right, Chile is a very conservative country controlled by a few powerful families, supported by a small, wealthy upper class.  Many of these powerful families have natural resources connections.  Chile is very class stratified and Kohavi is right that class ascension is not encouraged.  Its not quite overtly discouraged, but it’s extremely common to hear “what high school did you attend, what’s your last name, are you related to so and so” in social conversations and even business meetings. People know their place and the classes really don’t mix.  In the US we have the American Dream which states that if you get a good education and work hard, you can move up in society.  Whether the American Dream is actually true anymore or is now just a myth is very debatable, but upward mobility is instilled in us from the time we are 5 years old.

Like Sarah Lacy says, Chile’s wealthy are no different from old monied elite in the US, Europe, or anywhere else in the world.  Most elites like their power, their money and their lives and try to stay where they are and amass more land, money and power.  It’s normal.  But Chile is unique because the elite group is small enough that innovation can be stifled.  For example, I have a friend who wanted to implement a new process to save a few large companies lots of paperwork, time and money.  These companies could pass on their savings to consumers or earn more profit.

He got the right meetings through business associations and government contacts, but when he went to the sales meeting, the big wigs who organized the meeting trashed my friend’s idea in front of his potential client.  A few months later, my friend found out that the big wig was good friends with the guy who currently made a bunch of money managing the paperwork.  My friend’s solution would speed up commerce, save consumers money and time, but at the detriment of this guys friend.  This behavior is normal in all countries, but Chile is small enough that it can kill startups right in the beginning.  You don’t need the elites to buy into entrepreneurship, but it sure helps.

Chilean culture punishes failure and taking chances.  As the founder of a startup, people look at you like you’re unemployed, bouncing around with no direction in your life.  Companies are very conservative and there’s lots of red tape, paperwork and bureaucracy.  There’s also a very Chilean behavior, the “soft no”, where companies won’t say no directly and they’ll explore a deal for months on end with no desire to actually do anything.  I’ve also noticed that many Chileans are stubborn and very very unwilling to admit that they are wrong, as losing face/honor is more looked down on than in the US or Europe.  When working in startups or trying to make sales to large companies, this attitude is very hard to overcome.

People also are very open about nepotism.  In the States, one of my good friends got a job because his father was friends with the CEO of the company.  He does everything he can to hide that fact and works even harder to prove that he belongs.  In Chile, I see many people getting jobs because of connections, just like in the US, but in Chile people are proud that they’ve gotten the job that way.  It’s almost like a badge of honor.  That’s not good for a merit based startup ecosystem.

I’ve noticed a huge difference in attitude between Chileans who have lived and worked in the US, Europe or Australia compared with Chileans who have never been abroad for significant amounts of time.  Most who have lived abroad realize that being stubborn and refusing to admit they are wrong will not get them anywhere.

Kohavi is right on about most Chilean investors.  I spoke to just about every Chilean VC and angel network and the vast majority were bankers and private equity guys who knew nothing about startups.  They were investing in ideas, not entrepreneurs.  They tried to get the most equity possible (sometimes up to 60%!) and looked at it like a zero sum game, not as a partnership.  Industry standard is 20-35%.  This approach kills motivation in entrepreneurs and kills returns for investors.  But this it’s normal for a growing ecosystem, all of the VCs are learning on the fly.

So where do we go from here?

Chile has smart entrepreneurs, talented developers, great potential employees and has seen some successes (Needish, Zappedy, Welcu, Plataforma Arquitectura and others), but what makes life easier for entrepreneurs and really develops the Chilean startup ecosystem?  It’s not a bad thing that entrepreneurs have to leave Chile to succeed.  That’s how it is in most places not named New York, San Francisco and Austin.  The key is to create the development ecosystem so that companies can hire good talent and make entrepreneurship a viable model for a higher percentage of people so that the ecosystem grows over time.

Startup Chile

Startup Chile was founded to help change the culture by bringing foreigners, but they realized they were wrong to exclude Chileans after our first round.  Since then, they’ve accepted at least 55 Chilean startups.  The program is having some success: 8 of 23 startups in my round stayed and Chile is now on the world stage for its innovative program.

There are some downsides.  First, Startup Chile is going for quantity and critical mass over quality.  If it were me, I would have invited 25 high quality startups per round to avoid poor quality founders and people just looking for an adventure.  Creating the critical mass was not always in the plans, but after Vivek Wadhwa’s visit in 2010, plans changed.  To cope with the increased scale, they outsourced the judging to a group composed of many academics who don’t seem to understand startups. There are no interviews anymore, which leads to some companies who don’t deserve to be selected to slip in and some who would get selected in an interview to miss out.

Its unquestionable that Startup Chile has been a force for good. Unquestionable.  The team is incredibly dedicated and hard working, but I believe that the program won’t be as big of a success as it could have been, mostly because its brought too many lower quality startups because of focus on quantity, and the outsourced judges reliance on degrees from fancy universities instead of top notch entreprnerus who know how to get things done.

Global Connection

I would expand Global Connection, a government program to take Chilean entrepreneurs to foreign countries, to place smart, promising Chileans in top internships and jobs in the US, Europe and Australia.  I would select 300+ young Chileans every year and give them grants to encourage them to go abroad.  I believe that it’s not good enough to bring foreign entrepreneurs to Chile and give some Chileans money from Corfo.  It’s a start, but only part of the solution.  Chile needs to develop its intellectual capital and I think the best way to do it is to encourage Chileans to work abroad and then return home to share their experiences.

An ICQ like Success

Israel’s startup scene took off after ICQ was acquired for a ton of money.  Same thing happend in Madison after Jellyfish.  It showed everyone that they could start a startup and that it was a real career.  Chile needs a similar success.  Culture will not change without examples of success to show that entrepreneurship is a viable path.  It will be even better if the huge success comes from someone who’s already tried another startup and it did not succeed.

Overall, I think Chile is one of the most interesting places to start a business.  It has smart people, an involved government, lots of problems that need solving.  There are cultural issues that are holding many entrepreneurs back.  Some of these challenges are normal in a growing startup ecosystem, while others are particular to Chile.  I think Kohavi was naive about what to expect in Chile and I don’t read his interview as a knock on Chilean entrepreneurs.  I love this country and look at it as my second home. I still see huge potential in Chile and an ecosystem that’s made huge progress in the year since I arrived.

What do you think?

Here’s some other people’s comments on Kohavi’s comments:

Sarah Lacy – Attention World Don’t Give Arnon Kohavi Your Money

Mariano Amartino – De Chile, Startups y Oportunidades en Latinoamerica

Fayerwayer – Inversionista de riesgo abandona Chile

                          

As I made my way from Milwaukee, WI to Madison, WI for my freshman year of college in fall 2004, I had no idea what I wanted to do with my life.  I’d know for awhile that I liked working for myself: I’d been a soccer referee since I was 12, which allowed me to make my own hours and make more money than any 12 year old should be able to earn.  I’d been fairly bored with high school because we learned boring theories instead of practical ideas that would help me later in life.  My biggest take away from high school was “more practice, less theory.”

All of these thoughts took a backseat in my 18 year old mind when I received a letter from the University of Wisconsin notifying me that I’d lost the student football ticket lottery.  I was devastated.

After moving in, I’d been thinking about how to find tickets, but I didn’t have to look very far.  One of my friends invited me to a party my first night at college.  I was about ready to call it a night and walk home when I heard a guy screaming into his cell phone.  He hung up and was so mad that he slammed his phone on the ground, breaking it.  He got even angrier because he said he didn’t have the money to get a new cell phone.

Something in my brain just clicked and I said, “hey, do you have football tickets?”  He looked at me really strangely, but said he did.  I responded, “well I don’t have them, but I’d buy you a new phone for your tickets.”  I wasn’t really expecting anything, other than maybe some choice words, but to my surprise, he got excited.   The next day, I tracked the broken cell phone guy down via a friend in the frat, bought him the money for the phone and made the exchange.

I was pretty excited.  It only took me one night to get my football tickets.  All was right in the world.  I told my story to some of my new friends and quickly realized that there were a ton of kids who were in my same predicament.  I agreed to help them find tickets.  It pays to be in the right place at the right time.

Enter Exchangehut.  I first remember seeing flyers and spray paint stencils for the site a week into my freshman year.  I checked it out, signed up and was user number 1117.  Exchangehut was a ticket exchange that worked like the stock market.  Buyers could input a bid price and sellers could put in an ask price, creating the market.  When the prices matched up, a sale happened and both parties were contacted.  I used the site to help 4-5 friends buy tickets and quickly saw how useful the site was.

As the year went on, I became one of the more active users, I realized that the site had limitations and thought about creating a competitor.  I wrote up a simple business plan, but got discouraged because I was having trouble finding a programmer to write the new site.  I put the project on the back burner and went on with my summer.

I was in the right place at the right time again a month later.  The owner of Exchangehut was selling the site via an auction because he was graduating.  I quickly shot an email back, did my research and put in a bid.  I excitedly talked with my friends about how I was buying a business and to my surprise, one of my best friends from high school said he was too.  I said “what business” and we both said “exchangehut” at the same time.  He was a computer engineering major and we decided to merge our bids.  A month later, we were the proud owners of a 2000 person tickets and textbooks website at age 19.

We ran the site until 2008, growing the site to 150k users across 8 college campuses.  We learned a ton and needless to say, I was hooked.  I loved coming up with ideas for the site, promoting the brand and working my own hours.  I was making more money each week working on average 8 hours per week than my roommates were making bartending and waiting tables full time.  I loved the freedom that came with being able to work from anywhere.  I got to travel places and meet interesting, creative people.  I enjoyed meeting people who though “how can we fix a problem” not “why can’t we.” We sold the business to our ad network in summer 2008, but I knew I was going to start a new business.  This isn’t to say it was easy.  We put in long hours, answered angry customer emails and calls and continued to go to class.

Like many entrepreneurs I know, I keep a business idea list.  I had over 200 ideas on my list and after selling, worked on cutting them down to 10 that I thought were promising and would be fun to work on.  All that stopped when three professors I had gotten to know independently told me that I had to meet a student named Jesse Davis.  At the same time, two of my friends said that Jesse was working on something cool and needed a partner.

I met Jesse in one of the libraries on campus and he pitched me his idea.  Jesse’s pitch went something like this:

“I just read Thomas Friedman’s The World is Flat and couldn’t get through it when I got to US Marine Justin Ellsworth’s story.  He was killed in action in Iraq and his family wanted access to his Yahoo! email account.  Yahoo said no.

After a long court battle, a judge ordered Yahoo! to turn over the contents of his email accounts to his parents.   It shouldn’t take months to gain access to a deceased person’s email account.  Also, what if I don’t want my parents looking into my Facebook account or other sites I might have? Friedman ends the passage by saying “someone sort this out.”  Let’s create a system for people to store their last wishes for their digital assets, which are any online account or file on their computer, and let’s allow them to input their passwords so that their survivors have access.

I immediately thought back to ExchangeHut.  In 2005, we hired a programmer to help us make improvements with the site and at one point, I realized that our programmer has all of the usernames and passwords to the server, database, credit card processing, affiliate programs and everything else that was necessary to run the site.   Like programmers like to do, he used a random password generator, so there would be no way we’d be able to guess his passwords if he were to get hit by the proverbial bus.  We ended up having our programmer write down every password on a piece of paper and I stored it in our safe deposit box, just in case.  Jesse’s idea would have solved this problem.

I was looking for a project, Jesse was looking for a cofounder with some experience and we hit it off.  Two months later, we founded Entrustet.

I was sold on Entrustet because we had a chance to create a solution a real life problem.  The death of a loved one is an incredibly stressful time and we thought we could help give people peace of mind that their digital assets would be dealt with according to their wishes, and that survivors wouldn’t have the burden of having to guess what the deceased person wanted done with their online accounts.

We’ve been working on Entrustet since November of 2008 and launched in March 2010.  In our first year, we spent under $20k starting the business.  We were able to spend so little because we hustled and were located in Madison.  We’ve stayed in Madison, even though we’ve had opportunities to move to Silicon Valley, New York, Boston or Austin.  Being located in the Midwest has given us some advantages that are often overlooked by people on the coasts.

It’s incredibly cheap to live and work in Madison.  Our office is located across the street from the state capital and we pay $200 per month.  I pay $400 per month to live in a nice apartment four blocks from the office.  On the coasts, we’d have had to pay 5-10x more.  While the talent pool is not as deep, we’ve found talented employees who cost a fraction of what they would on the coasts.

Madison is small enough that we’re able to get in contact with anyone we want to relatively easily and Madison has groups like MERLIN Mentors that help new startups by pairing founders with successful entrepreneurs who server as in informal board of advisers. Everyone in our company walks to work and we’ve become active in the startup community by starting Capital Entrepreneurs, a founders group with over 60 tech companies in the Madison area.

I’m a huge believer is pursing your passion and starting starups has allowed me to pursue mine.

                          

Schumacher Furs 1923, Click to enlarge

My Mom has been looking into our family history over the past year or two and sent me this advertisement from a newspaper in Cedarburg, WI from 1923.  The ad on the right hand side is for my great-grandmother’s fur store, advertising the best furs in the Milwaukee area.  Her brother, my great-uncle, set up trading posts in Alaska to cut out the middle man in the fur trade.  He then shipped his furs back to St. Louis, where he chose some of the best ones for his sister’s, my great grandmother’s, shop.

She shared the other half of the building with her husband, my great grandfather, who ran a painting and decorating business.  As my Mom put it “double entrepreneurs in the same shop!”  Maybe some of my entrepreneurial talents got passed down the generations?  Either way, I think it’s cool to learn about some family history.

                          

 

It’s really easy to find information about raising money from angel investors or VCs, but many people don’t think about another important way to fund your startup: raising money from family and friends. I’ve raised money from friends and family twice and want to share what I’ve learned so that you can raise money from your friends and family and still be able to attend your family reunions. Raising money from friends and family can be easier and less complicated than raising money from professional investors, but is not without drawbacks.

There are certainly pros and cons to raising money from family and friends and when it came time to raise money with my first company, I had the choice to raise money via angel investors or from family and friends. We were able to raise six figures fairly quickly from a good group of investors, which helped us stay focused on running our business rather than raising money. Unlike working with an angle or VC groups that would have wanted to get to know us for at least three months, we were able to close our round in about six weeks. And four years later, we raised another round with significant friends and family contributions for Entrustet, a website that helps people find, access, transfer and delete online accounts when someone dies, in about eight weeks.

You can the rest of the article and all of the tips over on Fast Company.  Let me know what you think!

                          

Share office space with other startups

We contacted a few startups in Madison and told them we were looking for office space.  One of our friends told us they had an extra room in their office that they would rent to use cheaply.  We ended up with prime real estate on the capital square in Madison for $200 a month instead of $600+.  The space was big enough for 8 people at a time.

Interns

Our best money saving idea was to hire University of Wisconsin interns.  We did not pay them a salary, but we gave them oportunities to earn money.  We also showed them that they had real responibility and could actually affect the company on day one.  People are not always motivated by money.  They can be motivated by responsibility, recognition, learning, entertainment and a ton of other things.  Search out what motivates your interns and give it to them.  We made sure that our interns were learning something new every single day and that they were contributing to the company from the very start.  One intern suggested a new features on his first day.  Two days later, we pushed it to production.  Another intern wrote a blog post her first day.  I’m most proud of our intern program over anything else we accomplished at Entrustet.

Play the startup card

Companies know that startups usually don’t have much money and that they need to stretch every single dollar.  They also know that if a startup grows and earns money, they might have a large client in the future.  We always asked if we could get a discount on services since we were a startup. We got all sorts of discounts simply by asking.  It cannot hurt to ask.   The worst they can say is no.

Services for Equity

I’m a big fan of services for equity deals.  I’ve done them in both of my startups and its worked out really well.  Find a service provider who believes in you and ask them if they’ll take some of their compensation as equity.  Saving money at the beginning on expensive professional services is key.

Use your Entrepreneurial Network

I am not a programmer, so when I have technology questions that I don’t want to bother my tech team with, I reach out to other entrepreneurs in my network who can give me advice.  When my tech friends have questions on PR, advertising, marketing, business models etc, I help them.  Instead of paying for outside help, share with people in your network. Make sure this is not a one way relationship so you are not taking advice for free.

Crowdsource

You can use design options like Crowdspring or 99Designs, but be creative.  Think of ways to crowdsource other aspects of your business.  We hired a copy editor who charged us about $1000 to read all of our website copy and a few of our blog posts.  It was expensive.  Next time we needed copy help, we told everyone in our office that they had to read the website.  We put a bounty of $5 or one free drink for each error they found that resulted in a correction.  We found around 30 errors on the site and paid $150 for copy editing instead of $1000.  Plus, it brought our team together.

Keep and active blog and use social media

Our blog on Entrustet generates over 40% of our traffic.  After we created the content, it’s completely free lead generation.  We also had two of our posts go viral, spiking traffic and getting us a ton of press.  Blogging takes time, but I think it’s worth it.

Play the Student Card

While I was a student, I always introduced myself as a student entrepreneur.  People love students who are running businesses and it opened doors that are now more closed to me now that I am not a student anymore.  Our student interns were still able to play the card from time to time and received discounts, extra information and benefits.

Buy in small quantities

It can be tempting to buy more units of something for a lower unit price, but in a startup it’s better to buy just what you need right now.  I still have keychains, schedule magnets and spray chalk from Exchangehut three years after I sold the business.  Complete waste of money.

What have you done to save money?  Do you have any funny stories?  Any techniques that really worked for you?

                          

I’m most excited for the Forward Technology Conference, which is slated for August 26th at the Memorial Union.  Last year’s inaugural conference had more than 125 attendees and Fred Foster’s keynote was the highlight of the festival and I can’t wait for the 2011 version.  We’ll kick off the day with breakfast at 9am, followed by Madison Failcon, a session dedicated to lessons that founders learned when their businesses did not actually succeed.  I love this session, especially since I see the fear of failure as one of the biggest obstacles to Madison’s success as an entrepreneurial center.

Next, three successful Madison entrepreneurs will share their experiences starting and running a startup in Madison.  Justin Beck will talk about how he started and grew PerBlue and the lessons he learned doing it.  Greg Tracy of Asthmapolis will share his story as well.  I love hearing founders tell their stories, so it should be a great session.  After a lunch break, five up and coming Madison startups will share what they’ve been up to and ask the community for feedback and ideas on how to improve their business.  Last year’s pitch your biz participant Heidi Allstop of Student Spill ended up in Techstars and has since been featured in hundreds of publications, so this is your chance to hear about up and coming businesses before they make it big.

In the afternoon, Silicon Valley expert Brant Cooper will talk about customer development and the lean startup method and how startups can use it get started more quickly, while spending less money.  The customer development method is one of the hottest topics in the startup world right now and Madison hasn’t seen any of the top experts until now, so Cooper’s session is a can’t miss.

Laurie Benson will give our FTC 2011 keynote address, during which she’ll tell her story about how she started technology services business Inacom and grew it to one of the largest companies in her industry, leading to its acquisition.  Laurie has been extremely active in mentoring young founders and served on my MERLIN Mentor team with Entrustet (she’s awesome!).  She’s got a great story and I can’t wait to hear here tell it at the conference.  After the keynote, we’ll have a reception above the Union Terrace with snacks and drinks.

I’m really looking forward to the entire week of events and it’s been great to see Madison’s tech community come together to make the Festival a success.  If you’d like more information on any of the events, visit the Forward Technology Festival website or the Forward Technology Conference registration page.  While most of the events are free, the conference costs $50, but we have 50% off discounted tickets available until August 1st.  These events really showcase Madison as an up and coming technology and innovation center in the Midwest and I’m excited to be a part of it.

                          

In the Valley, NYC, Boulder, Austin and other startup hotbeds, everyone talks openly about their startups.  It’s how you test your ideas and get feedback.  I can’t count the number of times I’ve gotten great from other entrepreneurs.  Or the times times someone has said “oh, that’s an awesome idea, you need to meet so and so” or “I’m a reporter for (insert publication), I’d love to cover your story.” or “I’m a programmer/biz dev/sales specialist and I’d love to work for you” or “you should partner with (insert company).”

I met the guys who acquired my first business, my first programmer, my attorney/mentor, my current business partner Jesse, got countless press interviews and tons of other connections just by talking to people.  Entrustet would be nowhere near what it is today if we refused to talk about it for our first year and a half until we were fully launched.

These connections and conversations ARE the ecosystem that people talk about.  If all of the startups in Silicon Valley suddenly stopped talking to each other, deal flow, partnerships and innovation would stop.  You need to make ideas run into each other for innovation to happen.  You need other smart people giving you feedback if you want to succeed.

So what are you scared of?  Do you think some other entrepreneur is going to steal your idea?  Do you think your idea is so special it can’t see the light of day?  I don’t remember which startup guru said it, but if your idea is 1 in a million, 3oo other people in the us are working on it.  For my Chilean readers, that means 16 other people in Chile are working on it!  Entrepreneurship is all execution, not the your idea.  As my friends at Planet Propaganda like to say, “I’d rather have a ham sandwich than just a good idea, you can at least eat the sandwich!”

If you think you wont be able to succeed because someone else knows a little bit about your idea, you probably shouldn’t be starting your business.  You need to out execute everyone.  You can’t be scared of someone copying your idea.  You need to get feedback and make connections.  The only way to do this is to talk to people!

Entrepreneurs who are already working on their own companies are the least likely people to steal your ideas and they are the most likely to give you actionable, valuable feedback that will help your business grow, or connect you with a partner or investor your need to grow your business.  The tiny risk that someone will steal your idea pales in comparison to the huge benefits you can get in feedback, advice, press and partnerships.   Entrepreneurs, for the most part, want to help other entrepreneurs.  They are smart and think like you.  What better way to challenge your thinking than to have another smart person think about your ideas with you?

It’s a problem in Chile, Madison, Milwaukee and other aspiring startup hubs.  The other week, I talked to a 20 year old UW student who wouldn’t tell me more than he was into “green technology.”  I can’t help you if you don’t tell me more!  Moral of the story: it pays to talk about your ideas!

                          

We went to home depot and bought two 8×4 foot tile boards for a total of $20.  We had the guys at Home Depot cut our boards into our desks’ dimensions and taped them down with double sided tape.  It was a cheap investment that’s been a unique addition to our office.  Check out some pictures:

Do you have anything unique in your office that helps you work better or more efficiently?

                          

It’s been two years since I started Capital Entrepreneurs, an organization to help Madison entrepreneurs connect. I’ve been blown away by how fast CE has grown and how quickly time has gone by.  On our two year anniversary, here’s the story of how we got to where we are today.

In April 2009, I was a month short of gruduating from UW.  I had just started my second company, Entrustet, with my business partner Jesse Davis.  Many of our friends were taking jobs outside of Madison and the two of us were going to be staying in Madison to startup Entrustet.  We both had been a part of the UW entrepreneur scene and had received support from other students, professors and the university itself, but since we were graduating, we were worried that we would not be able to take advantage of the support system any more.

I realized that most people make new friends after college via their job, but since Jesse and I were the only people in our company, I worried that we’d get isolated.  I knew that there were other founders in town who were graduating who likely felt the same and wanted to do something make us more like coworkers, even though we were all working on separate businesses.

I’d been to most of the startup focused meetups and events around town and thought that there was a niche for a group that was specifically for founders that could compliment the existing networking events like High Tech Happy Hour and Madison Magnet.  I wanted to create a place where founders could get to know each other, hang out and talk freely about their problems, dreams and goals, without having to worry about getting pitched by attorneys, insurance agents, accounts or the press.  I wanted a place where ideas flowed freely and entrepreneurs would feel comfortable both asking for help.  I wanted it to be free and without structure.  I wanted Madison’s entrepreneurs to be a community of friends, not a disparate group of people who just happened to start companies.

At the end of April, I talked to a few of my entrepreneur friends and asked them what they thought.  Everyone loved the idea, so I started to look for a venue that would give us a private space for free, along with some other enticement to get our business.  Our friends at Brocach gave us a space in their upstairs bar, along with a nice food special and we set our first meeting.  I invited all of my friends who met two simple rules.  They were:

1. The founder or first employee of a Madison business
2. Were not a service provider like an attorney, accountant, insurance agent

Our first meeting was right before graudation in May 2009.  Around 10 founders showed up.  We introduced ourselves, had beers and talked.  It was great.  We decided to do a second meeting that next month.  I quickly realized that Madison entrepreneurs were doing some amazing things, but that the rest of the community had no idea.  So I started a website.  It’s a simple blog that gets updates whenever a CE company gets press, sends out a press release or the city itself makes news.  It also includes a list of member companies, resources for Madison’s startups, along with info on how to join.

Since May 2009, CE has grown slowly, but surely each month.  The second meeting had 12 founders, the 4th 17.  It just kept growing.  One year later, CE had 34 member companies and 60 registered members.  As we grew, service providers wanted to attend to meet the entrepreneurs.  We decided service providers could sponsor CE and attend ONE meeting per year.  At that meeting, they are not allowed to sell their services, just answer questions and get to know the entrepreneurs.  They also have to pay for our bar tab.

We were lucky enough that Neider and Boucher, Michael Best, Boardman Law Firm, Marquette Golden Angels and Venture Investors agreed to be our first sponsors.  Sponsorship worked out great for CE and the sponsors.  It was a great way for entrepreneurs to get to know service providers and for the service providers to get to know us.  It was also a great way to attract new, high growth clients.

CE continued to grow, but I was a little worried when Jesse and I got selected for the Startup Chile program.  Forrest Woolworth stepped up and ran CE while I was gone and did an amazing job.  Over the last year and especially in the last six months, CE has started to take off.  We now have over 75 member companies and 120 people on the email list.  We’ve been featured in Techcrunch, Read Write Web, Madison Magazine and tons of other publications.

Member companies have been featured in the NY Times, The Economist, Financial Times, Wall Street Journal, Techcrunch, Mashabale, Forbes, BBC and hundreds of other influential blogs, newspapers and magazines.  CE companies have created over 300 full and part time jobs during one of the worst economies in recent history.  We’ve raise over $15m in funding.  Spinback, founded by CE alumni Andrew Ferenci and Corey Capasso, was acquired.  Spill, founded by CE alum Heidi Allstop was selected for Techstars.  My company, Entrustet, was selected for Startup Chile.  CE members have been instrumental in helping start the Forward Technology Conference, Build Madison and other entrepreneurship initiatives in Madison.

Madison’s startup scene has grown significantly in the past few years and I’m excited and proud that CE has been a part of it.  I can’t wait to see what the Madison startup scene looks like in another year!  I’d like to thank everyone who’s helped make Capital Entrepreneurs what it is today.  It would never have been a success without all of your help!