After some work, we settled on the Forward Technology Festival, headlined by Forward Technology Conference, Barcamp, High Tech Happy Hour, Capital Entrepreneurs and other entrepreneurship, startup and technology events in Madison.

We’ve partnered with the founders of the Forward Music Festival and have an eye toward unifying the dates for the music and tech festival in the future.

This year’s Forward Tech Conference will have some great sessions, including:

10:05 am – Startups 101: A panel discussion with Madison-area entrepreneurs with businesses at different stages of development. Hear what’s working and what’s not in today’s market. Your questions and participation are encouraged.

11:00 am – All About LLCs: Finally learn about the in’s and out’s of Limited Liability Companies. We’ll have an attorney and a CPA on the stage together to set the record straight, and you won’t have to worry about any hourly billing.

1:00 pm – Unconference: Here is where the attendees become the presenters! Come with topics to discuss and ideas to share. We’ll poll you and the other attendees for hot topics, and split off into four or five groups based on interest.

2:00 pm – Branding and Identity Panel: Learn about what to look for in choosing a good graphic designer, hear about relevant design trends, and learn about different identity philosophies from some of the area’s top design minds.

3:15 pm – Pitch Your Biz: Here’s your chance to pitch your new biz or big idea in front of your peers for some no-holds-barred feedback. Biz-pitchers will have exactly 5 minutes to sell the audience on their concept. After that, the floor is opened for feedback, compliments, and criticisms. Contact us if you’d like to be a Biz-pitcher

All of the session will have high quality speakers and presenters, but I’m most excited for the Pitch Your Biz session.  5 entrepreneurs will get 5 minutes each to pitch their idea, business plan or even full fledged business and then the audience will have 10 minutes per company to provide feedback to try to improve the business.  I haven’t seen anything like it and I think we’re going to have some really strong presenters that should make the session really interesting.

After the panels, we’ve reserved the top level of the deck overlooking the Memorial Union where we’ll host a networking happy hour, with 2 drinks included in your registration fee.  There will also be a live band on the terrace, which should be awesome.

I’m also excited that people in Madison are getting excited about technology, entrepreneurship and startups.  I’ve already started to hear some buzz surrounding FTC2010 and think that Madison has the chance to really showcase its entrepreneurship credentials.  After being featured in TechCrunch last week, people outside of the state are starting to figure out what’s going on in Madison.  I’m hoping that Forward Technology Festival, Forward Music Festival and the rest of the Forward Movement can help bring the Madison community together around new, interesting ideas and the culture that’s needed to help the city grow.

If you’re interested in attending FTC2010 or want to get involved, you can sign up here, or you can contact me for more info.

What do you think?  Are you excited for FTC2010?  What panel are you most looking forward to?

                          

There really wasn’t a good, free, entrepreneurship organization that was limited to founders.  To fill the gap, I founded Capital Entrepreneurs, an invite only meet up for founders of startups.  We meet up once per month at a bar in Madison, grab drinks and talk about our businesses, ideas and how we’re moving forward.

Here’s some Capital Entrepreneurs stats from the last year:

• Grew from 10 companies at the first meeting to over 65 now
• CE companies raised over $7.5m in funding
• CE companies were featured in The Washington Post, New York Times, Tech Crunch, Mashable, Lifehacker, BBC, Fox Business and tons of others
• There have been 15+ partnerships and services exchanged between CE member companies
• We’ve started the CE incubator that has six early stage companies sharing office space right off the Capital Square.  Entrustet and Hardin Design and Development are anchor tenants.
• Started the CE Angel List to help connect startups and investors in Madison
• Instrumental in creating Google Fiber effort in Madison

Best of all, it’s been something that we all look forward to each month.  It’s lonely starting a startup.  In the early stages, you might only see one other person (your cofounder) each day for months at a time.  Founders groups like CE help create a scene and allow you to commiserate with others in your situation.  You also get “coworkers” and if you’re lucky like we are in Madison, most of the startups will be located close together to facilitate lunches and happy hours.

The awesome thing is that it’s been really easy to get Capital Entrepreneurs started and it’s been incredibly successful, moreseo than I ever envisioned back in May 2009.  If your city doesn’t have a good founders group, I’m here to give you the steps to take to replicate the success that we’ve had with Capital Entrepreneurs.

Your startup group should have the following characteristics:

1. Exclusive to Founders – No attorneys, accountants, people searching for jobs, consultants etc.  These are all nice people, but do not belong in an entrepreneurship group.
2. Private Email List – People like to keep their emails private.  Use BCC to send out invites
3. Open to new members – You’ll never grow if you exclude startups
4. Free – Do not charge admission
5. Website – Create a website and post updates
6. 1-2 people should control it – If there’s more, it gets too complex
7. Sponsors – After you’ve been going for awhile, you’ll find that attorneys, accountants and others will want to be invited.  We started offering sponsorships where service providers can attend one meeting per year as long as they do not try to sell their services.

Step 1

Survey the existing startup groups in your city and try them all out.  There are 6-7 entrepreneur and young professional groups here in Madison.  All are valuable, but none provided exactly what we wanted to do with Capital Entrepreneurs

Step 2

Reach out to your network.  I emailed all of the founders that I had gotten to know, about 15 of them, and asked if they were interested in a meet up specifically for founders.  I got a good response and moved forward.

Step 3

Set up a wordpress site.  I bought the Capital Entrepreneurs domain name and installed wordpress.  I created a members page that includes everyone’s logos and a 2 sentence description of their business.  The home page is a feed of press that our member companies gets and we have a contact form so that new businesses, press and other can get in contact with us.  We later added a resources page that lists some service provider sponsors to advertise to our members, along with a list of helpful articles and resources that came from Entrepreneur 101.

Step 4

Find a location.  We’ve been fortunate that we’ve had a regular meeting location.  The great guys at Brocach let us have a private room upstairs, give us free appetizers and run us a tab for drinks.  I called 5-6 bars in town to find the one with the best deal and you can too.  Try to find a place that will not charge you fees.

Step 5

Pick dates and time that people will be able to come to.  We’ve picked Wednesdays or Thursdays from 7-9pm, as we are a somewhat younger crowd and most of the people walk to the events.  Pick a time that works for your members and your city.

Step 6

Send invitation.  Shoot emails to all of the people who’ve expressed interest and tell them that they should forward the email on to any other startup founders.  Make sure that everyone understands that it is for founders, not service providers like attorneys, accountants or for people searching for jobs.

Step 7

At the first meeting, make sure to introduce everyone so that everyone is comfortable.  Explain that this will be a monthly event and that it is for founders.  Keep it casual and then schedule the next monthly meeting at the end of the event.

Overall

Overall, you want to create a place where founders can come to meet up, exchange ideas, get to know each other, without the burden of talking with service providers are those handing out resumes.  Once you get a group together, make sure to keep emails private and set up a twitter handle and website where you can post updates about group members.

If you follow these steps, you’ll likely be able to replicate what we’ve done in Madison.  I think cities of just about any size can benefit from founders groups.  Even if the groups are small, they can be fun, easy ways to connect with your fellow entrepreneurs.  If you’d like help starting a founders group in your city, please feel free to contact me.

Are there good startup groups in your city?  Have you started one?  Would you go to one if there was one in your city?

                          

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.

                          

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?

                          

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

                          

For those who do not know, SXSW stands for South By Southwest, which is a combination Technology, Film and Music festival held each year in Austin, Texas.  It is one of the biggest in the US, if not the world and brings some of the smartest and most interesting people together to listen to panels, network and go to parties.

I was lucky enough that my first time going to SXSW also included the added experience of launching Entrustet into beta, with Jesse giving a talk called “People Die, Profiles Don’t.” I met some great people and attended some really interesting sessions and will share my best of SXSW.  Check out our Entrustet blog for more info on what we did at SXSW.

Entrustet

We launched our beta version early in the morning on Friday March 12th, a day before our panel.  Everything’s been going really well and we’ve started to get some good traffic and user sign ups.  Our panel got some traction, especially online on Twitter.  Our stat that over 285k US Facebook users will die this year caused a stir and was used by our friends over at The Digital Beyond at their panel on the 16th.

More and more people are asking the question “what happens to my digital assets when I die?” and this attention is starting to reach a critical mass.  Everyone from Guy Kawasaki to the American Bar Association is starting to think about it.  Hugh Forrest, the founder of SXSW raised this question in an interview with NPR:

Yeah, we did one session on that last year and we create this virtual presence more and more with our new technologies. What happens to that presence when you pass away? Do you will that on to someone else to essentially keep on your virtual existence or how does that work? And there are lots or there are some services that help you with that process now.

Now, the other session you mentioned was My Right to Delete, which is, again, in this brave new world we live in, the things we say or do often get onto the Internet and it’s impossible to get rid of them. How do we move on, if and when we want to move on?

Gizmodo is dedicating an entire week to looking at what happens to your digital assets as people pass away, including an article called What Happens Online When We Die? and many other publications have been writing about this issue.  The Digital Beyond’s panel was well attended and Adele McAlear’s blog Death and Digital Legacy has been gaining strength.

I believe that 2010-2011 will be the year that consumers really start to think about what happens to their digital assets when they pass away.  What do you want done with your Facebook?  Your email?  How will you protect your family photos or all of your blog posts?

Panels

I went to some great panels this year.  My favorite one was about Seed Combinators and featured a who’s who of entrepreneurship forces.  The panel included Paul Graham, Naval Ravikant, Marc Nathan, David Cohen and Joshua Baer and they spoke about their efforts to create successful seed combinators across the country.  I think that Madison, WI has to potential to have a very successful seed combinator and am going to post about it in the next week or so.

Another great panel talked about Social Media in China.  In China, websites are not able to sustain themselves on “advertising” as a business model, so they have had to create innovative business models in order to survive.  I hadn’t realized how big TenCent is (1.5B in revenue, 40% profit margins) and all of it is based on virtual currency and virtual goods.  The Chinese version of Match.com charges $450 for 6 months, equivalent to 1 months salary for the average Chinese citizen.  Like match.com, the service matches you up with potential matches and you go on dates.  After the date, you call into their call center and rate how you thought the date went, what you liked and didn’t like about the other person and if you want to date them again.  The next day, the service calls you back and tells you what the other person thought of you.  It gives you the chance to improve your dating skills and cut through some of the awkwardness.

Another dating site allows you to create an avatar of yourself and go to a virtual “dance club” where you dance with potential partners.  You talk, exchange personal info and get to know each other.  The site makes money when the people buy drinks, gifts and other virtual goods for each other.  After awhile, if you like the other person, you can meet up in person.

Advertising has been a crutch in the American Internet space that is being removed as we speak.  I think you will start to see more innovative business models, like Mint.com and others come to the US in the near future.

I also attended Student Startups to hear about others experiences starting a business in college (nice job by the panel, including Ellen Chisa), The Third Coast, by the founders of Crowdspring and many others.  If I had to do it again, I would attend more core conversations, rather than panels, as there is more give and take and you have a better opportunity to interact with the speakers.

Food, Parties, Fun

I could write an entire post about each of these topics, but a short recap will have to do.  I had some amazing food in Austin, but the best came from a food cart called Texas Picnic.  I had one of the best pulled pork sandwiches I’ve ever had and their white BBQ sauce on their chicken was unlike anything I’ve ever tried.  I’m somewhat of a BBQ connoisseur, so that is high praise.  The Whole Foods we went to was the biggest I have ever seen, with a crazy amount of selection.  If I had unlimited money I’d shop and eat there all the time.

The parties were really fun, with the highlight being the Mashable party.  We had to wait in line for at least an hour, but we made the best of it, creating a new check in location on Gowalla that served as the unofficial Entrustet Launch party (8 people checked in).  We grabbed some beers from the liquor store across the way and made friends with the people around us and had a great time.  The Thrillist party on our last night had some great live music, although we missed the DJ.

I also met some great people who I hope to stay in contact with in the future.  One of the interesting people was Geoff Hamrick, a 19 year old entrepreneur from North Carolina.  Geoff and his partner George have a cool site called Group Story that lets you share photos and collaborate to create photo books.  They’ve got a really cool idea going.

Overall SXSW was a great experience.  I will definitely be back next year and hope to see many of the cool people I met this year again and hear about their successes in the year apart.  I learned a ton, including some lessons that will lead to direct improvements in Entrustet.  It was a week well spent.

                          

Introduction to the Course

Too many classes focus on theory and large, overarching issues instead of practical things that you will need to know to start a business.  Hopefully this class will prepare you to actually start your business by giving you the tools to do all of the nitty gritty work that is necessary to get started.  At the end of the semester, students will compete in a business plan competition in front of a panel of judges.

Week 1 – Introduction to Entrepreneurship

Class: There are many types of entrepreneurship, not just high tech.  It’s easier than you think and college is the best time to start. How to Live Before You Die.

Required reading: How to Start a Startup, What Startups are Really Like, The 3 Advantages of a Startup, Entrepreneurs Come in All Shapes and Sizes

Week 2 – Idea Generation and Business Plans

Class: How do you take an idea to a business plan?  How do you write a business plan? Malcolm Gladwell on Spaghetti Sauce

Required reading: The World is Flat, 9 Business Selection Criteria, 13 Sentences, College is the Best Time to Start a Business

Homework: Start thinking about a business to start for the business plan competition.

Week 3 – Types of Businesses Organization

Class: What type of entity should I use? LLC, Corporation, Non profit?  Learn how how to sign up for LLC.

Required Reading: 18 Mistakes that Kill Startups , The Top Ten Lies of Entrepreneurs

Homework: Sign up for an LLC, but don’t pay for it.  Start working on your business plan.

Week 4 – What are the Necessary Legal Docs Required?

Class: Operating agreements, partnership agreement and their  importance.  Guest speaker: A lawyer familiar with these issues.

Required Reading: Top 10 Geek Business Myths, The PayPal Wars

Week 5 – Taxes, Banking, Accounting

Class: How to setup a FEIN, get a free business bank account and start learning about Quickbooks.

Homework: Go to a bank and get a free business bank account set up (you don’t actually have to sign up), start exploring Quickbooks.

Week 6 – Quickbooks

Class: How to use Quickbooks in a small business or startup

Homework: Create a Quickbooks file for a hypothetical startup.

Required Reading: How to Get Taken Seriously Running A Startup Under 25

Week 7 – Credit Card Processing

Class: Teach how credit card processing system works, fill out forms

Homework: Call multiple resellers and see who can get the best rate.

Week 8 – Servers and SSL

Class: Overview of types of servers, server companies.   What is an ssl? Overview of ssl companies.  Test on first half of class.

Required Reading: Don’t Be Afraid of the Competition, My Rules for Startups

Homework: First draft of business plan due

Week 9 – Overview of Programming

Class: Types of programming languages, how programming works works, explanation of databases, what to look for when hiring a programmer.  How to register a domain name.

Required Reading: The Tipping Point

Homework: Register a domain for under $8.

Week 10 – Legal

Class: What to look for in a lawyer, what you need from them and the importance of a legal advisor.

Week 11 – Mentors

Class: Overview of why you need a mentor, who is willing to help, how you should look for a mentor.

Required Reading: Every Startup Needs a Mentor Team, The Entrepreneurial Push

Homework: Connect with a potential mentor on Linkedin, Twitter, email or phone.

Week 12 – Networking

Class: Why you need to network, strategies for successful networking, how to stay in contact with people.

Required Reading: The Business of Meeting People, Freakonomics

Homework: Get business cards for yourself, check out Brazen Careerist.

Week 13 – Blogging and Online Stores

Class: How to set up a blog, overview of WordPress, Blogger etc.  Overview of online shops.  Intro to Shopify.

Homework: Set up free wordpress blog.

Week 14 – Online Advertising, Social Media, Analytics, Document Sharing

Class: Overview of online advertising, CPM, CPC, Twitter, Facebook.  Intro to Google Adwords, Analytics, Docs and Calendar.

Required Reading: Made to Stick

Homework: sign up for Google docs, share a document with me.

Week 15 – Guide to Raising Money, Office Space

Class: How to value your business? Overview of friends & family, angel investors, VCs.  When is the right time to get an office?  How do you get the best deals?  Where should you look?

Required Reading: The Top Ten Lies of Venture Capitalists, To Office or Not to Office

Week 16 – Business Plan Competition

Final Exam – Business Plan Competition with panel of judges, based on Burrill Business Plan Competition.

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I really think that this sort of course would be incredibly beneficial to a student who is thinking about starting a business or even thinking about working for a startup.  These types of skills will give students a nice foundation so that they can start their own business.  Check out my full list of resources on my Entrepreneur 101 page for links to all of the companies I would use for each of these lessons.

So help me out: What am I missing?  Would you take a class like this?  Do you think universities would be willing to offer a class like this?

                          

My penmanship was pretty bad and the teacher realized that I was writing my letters backward.  Instead of writing some of my letters from bottom to top, I wrote from bottom to top.  I remember being annoyed and asking “what do we need to know this for?”  I could read my writing and so could the teacher, but I wasn’t following the rules.  In 3rd grade, I pretty much refused to learn cursive because I could print really fast and hated the new rules, again asking “what do we need to know this for?”  I continued this (probably incredibly annoying) refrain all the way through middle school: manually calculating slope instead of using a graphic calculator, diagramming sentences, specific types of bibliographies.  Even gym class wasn’t safe from my middle school ire.

Somewhere along the line, probably around freshman year of high school, I kept the questions to myself, but decided to tune out anything that I thought wasn’t going to help me later in life.  I loved reading about interesting things that had happened in real life and writing about current events, but hated theoretical or outdated lessons.  My favorite class in high school was consumer economics, an entire class devoted to balancing your checkbook, investing in stocks and personal economics.  It was real and I still use many of those skills I learned sophomore year.

I hated geometry because of the rigidity of proofs, hated calculus because I couldn’t understand why we had to do it by hand when we had graphing calculators to do it for us.  I hated memorizing the parts of a cell in freshman biology and reading about the Greek Gods.  It was boring and I couldn’t see the benefit later in life.  I haven’t used any of those “skills” since. This choice was the main reason why I got waitlisted at UW and almost didn’t get in, but I don’t regret it one bit.

When I got to college, I was expecting a change.  I thought we would learn how to succeed in the real world, but I quickly realized it was going to be more of the same inside the classroom.  I realized that if I was going to learn, I would have to do it myself.  After I bought ExchangeHut, I thought I’d try the business school.

After about half of a semester, I realized it wasn’t right for me.  Accounting 100 was rule driven and required you to do problems by hand.  After managing ExchangeHut’s accounting in Quickbooks for a few months, I couldn’t understand why we would figure out any of that stuff by hand.  Why not just use Quickbooks and save all of the trouble?  After the first four weeks, we started to learn about how Wal-Mart manages its inventory and how other large corporations prepare financial statements.  While I understand accountants need to know this stuff, I realized it was worthless to me.  I could use quickbooks for my accounting and if I ever got really successful, I’d hire an accountant.  Why bother?  I found the over reliance on theory to be extremely prevalent in business school classes.

I had a simple accounting question for ExchangeHut and asked four different friends who were Accounting majors with good GPAs.  None of them knew the answer, but they could sure solve the question on the exam about WalMart’s inventory system.  It happened again this year with an intern for Entrustet.  We have a finance major who earned a 4.0 from UW and is graduating in the spring.  He is clearly smart and learns quickly.  We have him doing some balance sheet work and other finance related tasks and he’s good at it.  He was working on our balance sheet and ran into a somewhat complex issue, so he went to his finance professor and asked for help.  The professor said “just use quickbooks, it’ll know where to put everything in the right place.”

At first I just laughed, but then I realized this was a microcosm of why students are having trouble adjusting the the real world.  I don’t think its our intern’s fault.  He just was never taught how to use quickbooks and as soon as he got to the real world, his professor says “use quickbooks.”  That’s what happens to graduates all over the country.  Rebecca Thorman’s post addresses how colleges are failing students, but I really think the over reliance on theory in the place of practice is what is hurting students.  Ellen Nordahl looks at the problem from the other side in her post about how students are unengaged.  Universities need to teach students more skills they will use in the workplace or they will not be prepared.  I bet if students weren’t asking themselves “what do we need to know this for” in their heads, they would be more engaged in their school work.

I am not saying that we should throw out all theory.  It is clear that you need to understand the basic theory in order to implement them in practice, but universities have swung way to far to toward the theory end of the continuum.

Schools are not the only place where the balance is out of whack. I ref a bunch of soccer each year and see the same basic problem.  I ref everything from U-11 to high school to semi-pro adults and I really enjoy it.  Each year, all refs have to take a recertification course that is supposed to refresh refs on the laws of the game and let us know about any rule changes.  It also gives instructors a chance to stress certain aspects of the game and teach better game management.  At the end of the class, everyone has to take a 100 question test and get at least a 75% in order to retain their badge. All USSF refs have to take this class each year, so attendees range from 12 year old first year refs to 70 year old guys who have been reffing for 35 years.  Sounds like a good system, right?

Wrong.  The test focuses on incredibly abstract game situations that would never happen, even to a World Cup level referee.  Here’s some actual questions from the test:

Q: An offensive player is dribbling toward goal, standing outside the penalty area.  A defender who is standing in the penalty area takes off his shoe and throws it at the ball, knocking it away.

Q: A player takes his shin guard off and slaps the ball with the shin guard in his hand.

There are a ton more, but you get the idea.  You have to know the rules to get these questions right, but they cause everyone’s eyes to glaze over.  It would be a test that would be great to do as trivia, but doesn’t really help a 12 year old new referee manage a game.

Because the test is so skewed toward situations that will never happen to you, the instructors have to teach to the test, just like teachers in middle and high schools do for state tests.  To make matter worse, the instructors use jargon heavy language instead of using concrete examples.  For example, at my most recent clinic, a kid of about 13 was confused about offside.  The instructor had said “as the assistant referee, make sure you stay with the second to last defender.”  The kid raised his hand and said “I thought it was the last defender.”  It was clear that the kid forgot that the goalkeeper counts as a defender, but instead of explaining it with an example, the instructor just repeated his sentence again, but more slowly and with more emphasis.  The kid didn’t understand until another ref at my table explained it to him with a diagram and an example.  There were so many other examples like this during the 8 hour course, my head started to hurt.

A huge percentage of kids quit refereeing each year because they get screamed at by coaches and parents.  The recertification classes should teach foul recognition (ie, when to blow the whistle and when not to), how to kick a coach out, how to deal with parents and the basic rules of the game, not what to do if someone throws a shoe at the ball or whether the correct restart after a chicken walks onto the field and knocks the ball over the end-line is a drop ball or a goal kick.  They should be showing videos of fouls from youth and adult games to keep people engaged.  A quick search of YouTube for “soccer violence” or “youth soccer red cards” brings up tons of teaching moments.  Additionally, FIFA makes rule changes each year, usually as a result of something that happened in an important game.  We could have watched videos of each situation to explain why FIFA decided to make the change, but instead we just read it from the book. Just like you learn how to succeed in the real world by doing things and learning practical things like Quickbooks, soccer referees learn from watching other successful referees work and learning from real life situations.

It is harder to come up with engaging, real life lesson plans than it is to teach theory.  Its also riskier.  I think educators are less likely to try to teach real life situations because it takes time to come up with more in depth lesson plans and it’s not the safe choice.  In The Wire (my favorite tv show ever), a teacher realizes that he can teach probability to his inner city students via dice.  The kids love it and learn because they can see how they will use this skill in real life.  I think everyone agrees that the US has to do a better job of preparing students for the future.  The first step is to stop teaching so much theory and start teaching things that students will use in real life.

                          

I think his latest piece titled More (Steve) Jobs, Jobs, Jobs, Jobs has the potential to impact the lives of even more people.  Friedman says:

The most striking feature of Barack Obama’s campaign for the presidency was the amazing, young, Internet-enabled, grass-roots movement he mobilized to get elected. The most striking feature of Obama’s presidency a year later is how thoroughly that movement has disappeared.

I remember getting inundated by posts from my friends on Facebook in the weeks leading up to the election urging me to support Obama, attend rallies or make sure to go out and vote.  The movement continued for the next few weeks, but has completely lost steam.  Even the most ardent Obama supporters among my friends aren’t engaged via social media anymore.  This in itself is pretty amazing, but not Friedman’s main point. He wants President Obama to re-engage America’s youth and doesn’t believe that going after Wall Street or other negative methods will work.  He continues:

Obama should launch his own moon shot. What the country needs most now is not more government stimulus, but more stimulation. We need to get millions of American kids, not just the geniuses, excited about innovation and entrepreneurship again. We need to make 2010 what Obama should have made 2009: the year of innovation, the year of making our pie bigger, the year of “Start-Up America.”

Obama should make the centerpiece of his presidency mobilizing a million new start-up companies that won’t just give us temporary highway jobs, but lasting good jobs that keep America on the cutting edge. The best way to counter the Tea Party movement, which is all about stopping things, is with an Innovation Movement, which is all about starting things. Without inventing more new products and services that make people more productive, healthier or entertained — that we can sell around the world — we’ll never be able to afford the health care our people need, let alone pay off our debts.

I am 100% behind this idea.  It makes perfect sense and would appeal to both sides of the aisle at at time when partisanship is at a seemingly all time high because of the fight over health care.  It would harken back to the Obama that many young people voted for, rather than the less than inspirational version of the President who we have gotten to know since his election.

I believe that entrepreneurship is our best hope for saving the US from its mammoth debt obligations.  We need to find ways to “grow the pie” rather than trying to raise taxes on a stagnant (or shrinking) pie.  I believe that all kinds of entrepreneurship are going to be necessary to solve our problems.  We are going to need traditional entrepreneurs like Steve Jobs and Bill Gates, but we will also need social entrepreneurs like Muhammad Yunus and the social entrepreneurs featured in Business Week.

I think that if President Obama were to make entrepreneurship a central portion of his presidency, he will find a huge groundswell of willing entrepreneurs who will be willing to help.  Friedman mentions National Lab Day and the Network for Teaching Entrepreneurship as examples of organization that are helping young people get interested in innovation.  Both programs would not be able to survive without older, successful mentors.  I think that entrepreneurs are willing to help out as mentors and young people are waiting to be entrepreneurs, but some are just waiting to be pushed.  Inc. Magazine contributor and author of Upstarts!, Donna Fenn says:

Over 75% of the entrepreneurs I interviewed for my book, Upstarts! said that they were very or highly likely to start another company; most had already founded two or more.”  She continues, “70% said their companies had a social mission. But make no mistake: they’re laser-focused on the bottom line as well and they understand why growing a profitable, sustainable company that creates jobs is a social good in and of itself. It’s pretty clear to me: this is a generation worth investing in.

Fenn‘s point is important because many startups are not only creating jobs and coming up with new solutions to problems, but they are also trying to make the world a better place.  If we can get more people to think with this mindset, the US and the world will be a better place.  So President Obama, please follow Friedman’s advice.  This is a no lose issue for you and the country.  You should be able to get support from both sides of the aisle.  You should be able to reconnect with an electorate that wants to support you, but has not because you have abandoned what got you into office.  Go back to the politics of hope, propose real solutions that everyone can get behind and see what happens.  I bet it will change lives.

                          

Startup friendly cities need to have a high density of smart people.  Potential founders of startups need other smart people who could be potential partners, contractors or employees.  Most cities that have a high density of smart people happen to be cities with large universities that attract a huge supply of smart people each year.  It helps that these cities have universities because it’s even better to have young smart people, rather than simply smart people.  Young people can afford to take bigger risks and are more willing to work longer hours for little or no pay than older people who may already have families, mortgages or other obligations.

Another helpful characteristic is low cost of living.  If founders can live cheaply and find cheap office space, it makes it much easier for a startup to get off the ground.  Additionally, having a low cost of living allows startups to stretch their investment dollars much further.  Employees, rent and just about everything else is cheaper.  I talked to one Madison-based founder who has successfully sold one company and is on his second startup who believes that Madison’s low cost of living is one of the most important reasons why his company succeeded and his competitors did not.

Access to affordable office space in a business incubator is another key characteristic of startup friendly cities.  Business incubators are an important asset for startups, especially if they are affordable.  Unfortunately, many incubators I’ve seen end up charging close to market rates.  Incubators are an important step for startups because they are usually the first move from working out of the founder’s bedroom.  They also provide camaraderie, connections and bring startups out of isolation because the rest of the people in your office are also running startups.  It’s much better for a startup to move into an affordable business incubator with other startups, rather than move into an affordable office space next to a lawyer, construction contracting company and a non-profit.

It is extremely important for startups to interact in a community of other startups. Having other entrepreneurs around, especially entrepreneurs who have been successful in the past, is important because founders can ask for advice when they have problems.  A mentor program like MERLIN Mentors is very important because it matches up experienced people who have been successful before with inexperienced startup founders.  These mentor programs not only build a community of startups, but they provide specific feedback to startups and help them overcome challenges that they might not if they were left on their own.

Another important aspect of an entrepreneur community is free networking events like the High Tech Happy Hour and Capital Entrepreneurs. Events like the High Tech Happy Hour bring smart people together who are not necessarily focused on entrepreneurship and startups, but are fertile ground for finding employees.  Local, free entrepreneurship groups like Capital Entrepreneurs offer founders of startups a place to meet others who are doing what they are doing.  It also creates a community and gives founders of startups some semblance of co-workers.  Starting a startup can be lonely if you do not get out and interact with others who are facing the same challenges and dilemmas that you are.

These free networking events provide a way for experienced entrepreneurs to mingle with people who are just getting started.  Experienced entrepreneurs set an example and show everyone in the city that starting a company is viable.  They can also provide advice, but simply having experienced, successful entrepreneurs in your city makes your city startup friendly.  Cities like Boston, San Francisco and Seattle have these networks.  Others like Madison and Boulder are just getting started, but are on the right track.

These experienced entrepreneurs can introduce inexperienced founders to professional service providers like lawyers and accountants who are willing to help entrepreneurs.  It also helps if your city cultivates a network of experienced, flexible professional service providers.  These service providers should be willing to take equity, give discounts or defer payments into the future for startups that they think are going to be successful.  It is extremely helpful if startups can still get top notch professional services, without breaking the bank during the company’s research stage.

These professional service providers can help startups gain access to capital that they need to fund their business.  Ideally, a startup friendly city will have VCs, angels and other rich people who are interested in investing in startups, but not all cities must have all three.  A strong network of professional service providers who work with entrepreneurs can make introductions to rich people who are willing to invest.  Some startup friendly cities can be heavy on angel and rich individuals, but light on VCs.  Another way cities can help entrepreneurs is by advocating for small business loans and other alternative ways of funding.

Startup friendly cities generally have support programs in place for entrepreneurs.  They tend to have low taxes.  It is much easier to start a startup in a city that does not have 10% sales tax, like the city of Chicago.  The state of Wisconsin provides a 25% tax credit to angel investors who invest in certified Wisconsin startups.  Wisconsin also offers low interest loans that are forgiven if the startup fails.  Both of these programs help entrepreneurs succeed.  Other states have implemented programs that fund early stage startups.

Finally, many people who start statups generally like living in cities.  They like walking to work and living in tolerant environments.  They like to be able to meet in coffee shops, go to interesting restaurants and enjoy life with their peers.  It’s best to have good weather.  Low crime and good schools are also helpful.  Overall, creating a city with high quality of life keeps the three most important ingredients, experienced entrepreneurs, rich people and smart, young people, in one place.

Cities can begin to implement policies that help foster entrepreneurship.  Cities can start by creating a business incubator for startups that offers offices (with windows) at 50% discounts.  They can start to create mentor programs like MERLIN and create entrepreneur networking groups like Capital Entrepreneurs.  Service providers can start offering discounts or equity for service deals.  Once one service provider has success offering this deal, it quickly becomes the industry standard.  I’m not advocating that government do all of this.  People who want to see their cities become more friendly to startups have to do some of the work themselves.

Government does have a place.  It can offer incentives for startups to move to their cities.  It can lower taxes or offer government programs that provide easier access to capital.  It could create a new business incubator and it could help create a community of entrepreneurs by publicizing entrepreneur success stories or the local startup community.  Government could help make cities more startup friendly simply by being more friendly to startups themselves.

Characteristics of Startup Friendly Cities

Figure out if your city is startup friendly.  Rate your city on a scale of 0-2 for each characteristic and score total the score at the end.  0 means that your city does not do it at all, 2 means your city does is very well.

1. Access to capital
2. High concentration of smart people
3. Low cost of living
4. High concentration of rich people
5. Network of experienced entrepreneurs
6. Mentor programs
7. Low cost startup incubator
8. Low taxes
9. Governemnt support
10. Flexible professional service providors
11. Free networking events
12. High quality of life
13. Tolerant, vibrant, walkable cities
14. Large universities
15. Culture of entrepreneurship
16. Educated workforce
17. Good weather
18. High concentration of science and technology workers
19. Direct national flights
20. Entrepreneurship advocacy groups

I would say Madison, WI gets a score of 23/40.  Milwaukee gets a 13/40.  San Francisco gets 36/40.

How startup friendly is your city?  Do you agree with my list?  Do you have any characteristics to add?