Entrepreneurs are all just a little bit crazy and add motherhood on top of that and you get a whole new experience! Entrepreneurs see the world differently, yet we still want to fit in, maybe more so if you are a woman and mother, for the sake of our children.
I’m sure there have been books written about the psychology of entrepreneurship, but I don’t have time to seek them out. I figure one will fall in my lap as I need it. And interestingly Liz Pabon, who wrote The MavHERick Mind, recently reached out to me and will be doing a guest post on my blog soon. I just began reading her book and so far it’s a fascinating read on how and why women entrepreneurs in particular hold themselves back from achieving the success that they are capable of.
A post also recently fell in my lap in-box written by Marc Andreessen, founder of Netscape and Ning, called The Psychology of Entrepreneurial Misjudgment. It is an excellent read where he puts modern language around observations made by Charlie Munger, Warren Buffet’s long time partner and Vice Chairman of Berkshire Hathaway. Here are the themes and you’ll have to head on over to Marc’s blog to read the rest:
The Doubt-Avoidance Tendency is the one that resonated with me the most. It’s true that “You’d better not have a lot of doubts about what you are doing because everyone else will, and if you do too, you’ll probably give up.” But it’s darn hard not to have doubts when the stakes can be so high. I would add that if you don’t have any doubts at all, then you might just run over a cliff without knowing it. But if you need a quick answer, you can always ask the Magic 8 Ball (thanks to Scott Allen of The Virtual Handshake for the link). I only had to ask my question 3 different ways to get the answers I wanted. 🙂
One thing I remember from Marc’s past blog posts is that there is a direct correlation between success and how many times you get up to bat. Many inventors had a string of things that didn’t work out before they found the few that did, and the chances of finding something that does work increases when you try more things. So Babble Soft is my second at bat. I believe we barely slid into 2nd base with our first company, which is still operating, so I’m swinging for the fences on this one!
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Unless you live under a rock or don’t drive a car, you have no doubt heard about or felt the state of the US economy. It’s in a state of well let’s say ‘confusion’ with indications it’s moving in the wrong direction. Gas prices are at record highs, people are filing for bankruptcy, they are losing their homes, the government has a record amount of debt, the stock market is going down, etc. etc.
So where does this leave us entrepreneurs who want to raise funds to take their businesses to the next level? Well, that’s a good question and a challenging one to answer.
I’ve had a handful of meetings with potential investors and a couple of them have expressed interest in participating, but they might change their minds given what’s going on in the economy. As the saying goes “It’s not in the bank, until it’s in the bank!” Fred Wilson, a venture capitalist in NYC, linked in his Read the Blogs post to a post on the Bear Stearns bailout by JP Morgan, which illustrates why even if you think it’s in the bank, it might not actually really be in the bank! Our personal savings accounts are also going down with the market.
I had several conversations with entrepreneurs coming from different parts of the country at SXSW Interactive who have been struggling for a while to raise funds for businesses that are up and running with strong visitor and user traction.
So despite only being less than two months into the process, all of this has forced me to revaluate my fundraising plans for Babble Soft. Entrepreneurship is not for the faint of heart as there are many ups, downs, and false starts. The economy changes however have a huge impact on the success or failure of a startup. If the economy is doing great you get all sorts of crazy new ideas/businesses popping up with chances to live and prove themselves. If it’s bad, even the companies with wonderful ideas can suffer, die out, or never even get a chance to shine.
The good news is that of all the industries out there (except for maybe the alcohol industry), the baby market is fairly recession proof. People don’t stop having babies nor do they stop buying things for their babies or things to help them take care of their babies. The bad news is that what we are trying to do at Babble Soft does not yet have a predefined “mental need or want” (because it’s so new) like say bouncy chairs, bright/shiny toys, Baby Einstein videos, or diapers.
On the plus side, we have not taken any outside money to date so we don’t have to worry about how and when we pay investors back like some other start-up companies. The downside is that if we don’t raise money right now, it will take longer to bring the exciting, potentially life changing vision I have to the world or worse we might miss the market opportunity.
I’m still trying to figure out the best plan of action. I wish we had more money to create a new user experience, enhance our current applications, and create new applications ourselves. I’m evaluating trying to raise a smaller amount of money and growing slower. Now’s the time when the creative juices start flowing!
If you know an entrepreneur, give them a hug (if you can’t give ‘em money) because it’s going to be a tough roller coaster ride for the next probably year or so. Some will be able to hang on and emerge stronger and better, some will get off gracefully, others might fall off unexpectedly, and yet others will wish they had fallen off before they lost their money and lost some of their sanity. 🙂
If any of you have any thoughts, advice, virtual hugs, or even questions please share below…
Yesterday was the last day of SXSW Interactive and I have practically a desk full of business cards. Our son came yesterday (yes, it’s Spring Break here) for part of it as well but went with husband this time to a panel he attended. I was only able to make one panel yesterday and spent the rest of the time networking. Check out my posts on events I attended on Sunday (including my take on the Zuckerberg/facebook interview) and Monday.
Robert Scoble even did an interview of me that was posted to Qik but for some strange reason (due to the 3G connection) it got broken down to 16 different few second clips. Here’s the first one, here’s a middle one, and here’s the last clip. They are going to try to see if they can string it together, but it’s looking doubtful. Guess that means we’ll have to do a more official one next time!
UPDATE: Qik was able to string pieces of the video together and you can see it HERE. Once they get Robert’s phone, they will see if they can fill in some of the missing gaps using the files on his phone. Once they do that, I’ll embed the video in a future blog post.
The Insiders Guide to Angel Investing This panel was not really a panel because the only speaker was David Rose. David is the founder of New York Angels and Angelsoft, a software application that helps angel investing groups manage plans received by entrepreneurs. He had some great info on angels and angel investing. He mentioned that he would make his slide-show presentation available and I will update this post if and when he sends the link, but here are some highlights:
There are 600K new companies started each year. Of those 350K are self-funded, 200K are funded by friends and family, 50K by Angel investors, and a mere 1200 by venture capitalists.
Angels are generally about 57 years old, they have a master’s degree, 15 years of entrepreneurial experience, have been involved with and/or started on average 2.7 ventures.
To be an accredited investor you must have $1 million in assets and have to have made $200K of annual revenue for the past 2 years.
The average angel investor has spent 9 years investing, had done 10 investments, had 2 exits (profitable or lost their money), and 10% of their wealth is tied up in angel investments.
Angels look for companies with Scalable Business Models, an “Unfair Advantage,” a Great Entrepreneur, External Validation, Low Investment Requirement, Reasonable Valuation ($1 to $3 million pre-money range), and a 20 to 30 times return on their investment within 5 to 7 years.
The single most important characteristic an Angel investor looks for in an entrepreneur is Integrity. Then they look for Passion, Experience, Knowledge, Skill, Leadership, Commitment, Vision, Realism, and Coachability.
David said most angel investors don’t end up making a ton of money from angel investing. In fact most lose money. Many invest because they want to give back and help other entrepreneurs. He even offered us a joke that goes like this: How do you make a small fortune angel investing? You have to make a large fortune first! 🙂
He then went on to talk about the process of applying to an Angel network and described what the entrepreneur as well as the Angel investor sees if they are using the Angelsoft software application tool. If you are an entrepreneur, he suggested you submit your plan at www.angelsoft.net/entrepreneurs. They will soon be launching a site called Open Deals where entrepreneurs who don’t have access to a local angel group can submit their plan. For a full list of angel groups, check out the Angel Capital Association site and their directory of angel groups.
All in all, I had a great time at SXSWi. I look forward to attending next year and maybe even being a panelist!
It’s been a long, fun filled day at SXSW Interactive today. So this post won’t be as meaty as my previous SXSW post. I met tons of people today and many people who know me and who I know from twitter. It was so cool to have so many people come up to me and say, ‘hey, aren’t you @aruni on twitter?’ I guess I kind of stand out in a crowd. 🙂 I probably gained about 30 followers just from tweeting about the panels I attended. Here’s a quick overview because honestly I’m kinda worn out:
The Care and Feeding of Your Startup This panel was made up of some local entrepreneurs from Unwired Nation as well as a venture capitalist from Texas based DFJ Mercury and a couple of others. Some key insights:
Someone needs to serve as the “Belief Engine” for your startup which I took to mean the “evangelist” but I thought that was a unique way of saying it.
Make sure your product fits into your users way of life and they don’t have to drastically change what they are doing
Understand if your concept is a feature or a business. It could be a feature that expands into a business.
You should aim to exceed investor’s expectations.
9 out of 10 entrepreneurs can’t go the distance so they really should identify a strong mentor.
Make sure the people you hire have ‘karmic velcro’ which means they have the fortitude to stick around when the going gets tough.
There are 3 key people you need in a start-up. 1 in charge of product, 1 handling business development who can close the early deals, and 1 evangelist.
It’s not appropriate to go to VCs in the first 2 years of a business, because in the first 2 years you are still assessing the market risk. Almost all the VC deals that occurred with Web companies in early stage have not worked out and they are struggling to get their money back.
Keep two sets of books. One you show your investors and one with even more aggressive numbers that you aim for internally.
True Stories from Social Media Sites
This panel was moderated by Guy Kawasaki, who was so kind to put my blog near the top of his new AllTop Moms site. It was notably a panel of 5 women and 1 guy. Two of the women were twitter pals so when I got up to ask a question and say ‘hi’ one of them was tweeting about me.
I had my son with me at this panel because he’s home for Spring Break so I wasn’t able to take a lot of notes or do many tweets because half way through he wanted to play a game on my phone! He actually did really well, scribbled a bit, and then drew a funny looking dinosaur who he felt the need to show was pooping. Such a funny kid! He wanted me to go up to the mic and say something, but when I tried to get him to come with me, he got shy…he is only afterall 5 1/2.
The panelists discussed their great and not-so-great experiences using social media. What funny and sometimes unbelievable stories they shared!
I met up with my husband after that panel and we took our son for a late lunch at Bennigan’s and then he took him home, and I went to the BlogHaus to network with more bloggers.
Online Adulation: Use Don’t Abuse Your Fans
This panel had an editor from CNET as moderator and some pretty fabulous bloggers including the infamous Dooce whose current post is called Fueled Entirely by Advil.
I was sitting next to Wendy Piersall from eMoms at Home during this panel and she was twittering away. She had her laptop so she could do it much faster than I could so I let her take over so go read her twitter stream if you want to read all about it.
Went back to the Bloghaus after this panel and met none other than Darren Rowse (aka Problogger). Someone took a picture of us and said he’d email it to me so I’ll post it when I get it…assuming he remembers.
Conversation Starters
This event was hosted by DELL and Federated Media and they booked the entire Iron Cactus restaurant on 6th and Trinity. Richard at DELL was the lead blogging rep from DELL, who I had met a few weeks earlier at an Austin Tweet Up.
Because I’m twitter friends with Kim Haynes, I volunteered to help with registration since it was an RSVP only event. Of course, that meant I had access to extra drink tickets and people wanted to get to know me!
The key speakers were top blogger and FastCompany.tv producer Robert Scoble (aka Scobleizer) and Shel Israel of Global Neighborhoods.
I met so many twitter buds at Conversation Starters, including the famous Chris Brogan, and throughout the day that it would take me all night to type up their names. Already, this post is longer than I thought it would be!
Stay tuned for my next SXSWi post on Tuesday’s events.
Although I’ve lived in Austin for quite some time, I have never made it to SXSW but now since a big part of what I do for my company is social media related, I finally had a great reason to go. Most people associate SXSW with music, film making, bands, and people partying all night long. For those visiting from out of town and attending the music pieces of SXSW that might be true, but for those of us attending SXSW Interactive who live in town and have kids to take care of, we aren’t able to party (or should I say not interested in partying) all night long. Although tonight I was tempted to stay out late after having been asked by a couple of people to join some after parties. But since I just got back from Los Angeles, I figured I should get home and give my husband a little back-up break with the kids. Here are some brief overviews of the sessions I attend.
Mark Zuckerberg, Founder of facebook
Mark who is a 23 year old billionaire, seemed to be more comfortable during the interview than what I’ve heard he has been before, but he seemed to say some of the same stuff over and over again. I forgot my regular camera and my cell phone camera is not that great, hence the not-so-great picture above. However, here are some interesting things he said:
He mentioned that facebook was going to change their incentive system to one where the more invites you send out that are accepted, the more opportunities you have to invite others to join your network.
He also said that at facebook, they begin with the premise that everyone is fundamentally good and not trying to do evil/illicit things.
He felt that all of the mistakes they have made so far have had to do with them not giving their users enough control over the process.
He believes terrorism stems from people not feeling connected to each other.
The interviewer, Sarah Lacy, from BusinessWeek.com, had a strange interviewing style. Sadly, much of the audience was wondering why she was asking the questions she did and why she was asking them the way she did. Honestly, it seemed like she was a teenage girl flirting with a billionaire 20 something entrepreneur and many of her questions weren’t really questions they were statements. After, the audience turned on her, I thought she might wonder why but apparently she thought she did a great job and said Mark told her she did a great job. Omar Gallaga, who blogs for Austin 360 Digital Savant did a post-panel video interview with her that you can see HERE. Check it out, it’s a good interview. She believes that since she is one of the few women tech journalists that she always gets flack and is misunderstood. Since I’m a woman in tech, after seeing her today I wouldn’t agree with her assessment of why the audience didn’t like her, but kudos to her for putting herself out there and trying. I know she is being flamed on the Internet for the interview but if she can bounce back from this and learn & grow from this experience, she will be on her way to achieving great things.
Thom Singer, Author and Speaker on Networking
I tried hard to make it to Thom’s book reading, but after getting out of the room after Zuckerberg spoke, it was something like a 3 block hike from one end of the convention center to the other. I arrived as he was wrapping up his Q&A. Thom is an author and blogs at Some Assembly Required. He’s about to release a new book called Some Assembly Required for Women.
Kathy Sierra, Author and Speaker
Kathy Sierra was a very interesting speaker. She gave tips and advice on how to get your customers (and employees) passionate about your products. The room was packed and since I was coming back from the other side of the convention center they wouldn’t let us in! As I came up to the front of the line to ask what was going on, they said they couldn’t let us in because of fire code violation stuff. I was in line with Francine Hardaway and we along with a few others made some noise about how full it had been at the Zuckerberg talk and surely they can let us in since there weren’t more than 20 to 30 of us waiting outside and we had seen some people leave. After a few minutes, they let us in. Since I haven’t been blogging for a year yet, I didn’t know the back story on Kathy’s blogging stalker weirdness almost a year ago. She indicated that she might start blogging again, which I look forward to.
The Super Collider: A Hero of the Social Network
I attended this panel briefly and it wasn’t what I thought it would be. One of the panelists discussed how she was using the various social networks and social media to promote her business. It was interesting, but nothing new so I took off to the Entrepreneur’s Lounge at Fogo de Chao Brazilian restaurant for a short after party. It was hosted by ATI and uShip. Ran into Bryan Mennell of Austin Startup blog there.
Hearing these people speak was fascinating but what was even more exciting to me was meeting face to face with many of my blogging friends and meeting new friends including Wendy Piersall of eMoms at Home, Liz Strauss of Successful Blog, Tamar Weinberg of Mashable, Gina Trapani of lifehacker, Laura Mayes of Sk*rt, Annalee Newitz of io9 (she blogs on sci-fi stuff), and Tim Walker of Hoovers Business.
Stay tuned for more of my SXSWi experiences on Monday and Tuesday.
It all started when I was an adjunct lecturer of entrepreneurship at UT Austin and since then I’ve continued to advise as they need me and my schedule permits. This competition did not exist when I got my MBA, and even if I had the opportunity to participate I was too busy trying to start my first venture. What a plus it would have been for any entrepreneur to have seen a term sheet presented by experienced investors in an academic environment rather than in real life when you feel like you have to learn another language just to understand parts of the investment terms!
This year the regional competition was held at USC in LA on March 7, 2008. The UT team this year was comprised of:
I connect them with local venture capitalists and entrepreneurs to help them prepare but we had a late start with only about 5 weeks to get ready and midterms in between this year. Other teams have semester long classes to prepare for this competition!
At the competition, 6 teams were given business plans for 3 real companies including NiLA, makers of environmentally friendly lighting, on Wednesday, March 5 at 5:00 pm. They use the Internet and other relevant sources to research the companies and come up with questions for the entrepreneurs. On Friday, they heard the entrepreneurs pitch their business concepts in front of 11 real live venture capitalists, including Aditya Mathur of Revolution Ventures, Nathan Joyner of Pacific Ridge Capital, Neal Hansch of Rustic Canyon Ventures, representatives from Tech Coast Angel Group and many more.
They then go into little rooms and subject the entrepreneurs to answering several of the same questions over and over again from the 6 different teams. Why would any entrepreneur do this you might wonder? Because the VCs are in the room while they are being asked the questions so they are getting exposure that they might not have had otherwise to them.
After the questioning sessions are over, the teams again regroup and come up with a PowerPoint presentation which outlines which company they would chose to invest in and why. For the company they choose to invest in, they create a term sheet. They present their choice in 3 minutes in front of the VCs. The VCs then grill them for about 15 minutes on their company choice and investment terms.
At the end of the day, the judges decide who wins and who takes 2nd place. The 1st and 2nd place winners get money and the opportunity to compete in the national competition at University of North Carolina Kenan-Flagler Business School in April. I have personally seen one student get a job on a team I advised in venture capital because of participating in this competition.
As an advisor I get to be a fly on the wall and watch the VCs deliberate and observe the decision making process. Plus I build my network in areas outside of Austin. Personally, I believe this experience has helped me gain better perspective on what venture capitalists are looking for which is why I’m currently seeking money from angel investors or smaller boutique/seed stage venture firms.
So I’m sure the suspense is killing you as to whether or not our team placed and unfortunately they did not. They picked the company with the biggest market potential but with the highest risk and the VC judges picked NiLa, which has a great opportunity but less risk and less upside. Goes to show you that most VCs are not early stage investors!
There are so many variables that go into winning from judges backgrounds, to student’s experience, to understanding of the market of the presenting companies, etc. that you can’t always prepare for everything. But what an experience!
Flying back to Austin today for SXSW Interactive and will post about my experience as a newbie SXSW attendee. I’m looking forward to meeting many of the people I’ve met through blogging and twitter!
I co-write articles on the topic of success for university alumni magazines with my fabulous writing partner Pam Losefsky. Our latest article for The University of Texas at Austin’s alumni magazine, The Alcalde, is onClay Nichols. Clay is a Michener Fellow at the Texas Center for Writers and Co-Founder and Chief Creative Officer at DadLabs, an Internet TV show featuring humor and advice on fatherhood.
Our goal with this endeavor was to get people thinking about what success means to them by reading stories on how others define success. Please click here to see more success profiles. Here is a thought provoking quote from the article:
“Leadership in a corporate context is very different from that in a family context. To me that’s painfully and brutally obvious, but I’ve run across many who don’t seem to recognize that distinction and the relationship with their families suffers irreparably.” He goes on to say “The time you spend with your kids is going to be as valuable to your ultimate success as the time you spend with your colleagues.”
You can’t manage relationships with friends and family the same way you manage relationships at work or manage your career. I fall victim to thinking it can be managed the same myself from time to time. They are two different things and as we’ve seen from observing people around us trying to fit a square peg in a round hole doesn’t usually turn out that well.
Stay tuned for a whole new series with the next edition of The Alcalde that will be called Self Starter. We will be interviewing exclusively entrepreneurs from The University of Texas at Austin. Hook ’em Horns!
So now we are about 2 ½ months and 3 ½ payments into Search Engine Optimization with SpryDev. We’ve made several changes to our site based on some great recommendations by Brian Massey at Customer Chaos and now we wait and measure the results. We have seen an increase in trial account sign ups and a few more sales, but I’m still waiting for the landslide! 🙂
I know it is sometimes an experimental process with keyword selection, and I know since we aren’t selling cupcakes (i.e., a well understood product) that things might take a little longer. I know all of this and yet I still want (dare I say need) to see those results immediately because I’m fundraising. With every presentation I make, the more users I can tell potential investors have signed up, the more compelling the story becomes and the chances of getting funding increase ever so slightly. Sort of a + b = c stuff. Sometimes those tiny incremental changes can make all the difference.
I was reading some blogs and came across a neat tool called Website Grader that tells you how your website ranks with regards to SEO. Social Media Mom mentioned it and when I ran the tool a distant memory was triggered because I was sure I had seen reference to this site before and lo and behold Pearl at Interesting Observations had mentioned it back in October 2007! I can’t remember the score I had on my blog when I ran it then, but I ran a report for both http://www.babblesoft.com/ and http://entrepremusing.wpengine.com/ and here are the results:
Babble Soft
Score: 67 out of 100 (a D grade – wah!)
Google PageRank: 5
Google Indexed Pages: 66
Last Google Crawl Date: February 25, 2008
Traffic Rank: Top 8.01%
Inbound Links: 2,815
I also discovered we were not yet listed in the Yahoo! Directory but that has since been corrected and now we are. We are still waiting for DMOZ and ZoomInfo to acknowledge our submissions. I know SpryDev has submitted us for many more directories. For some reason, this tool hasn’t really put the fact together that the related blog is this one. I hope at the next Google crawl date, we move out of the D range. Being the overachiever that I am, getting close to a failing grade makes me, well uh, let’s say not happy.
entrepreMusings
Score: 95 out of 100 (an A – yay!)
Google PageRank: 5
Google Indexed Pages: 334
Last Google Crawl Date: February 28, 2008
Traffic Rank: Top 4.08%
Inbound Links: 5,699
And that’s despite not being listed in Yahoo! or the other directories. I haven’t done any formal SEO on my blog (i.e., the report even tells me I don’t have page titles and descriptions) but I know the high rank is probably primarily due to the fact that I frequently update the blog making it fun and interesting for those Google spiders and my readers to reference.
So my conclusion is that even if you have hired an SEO firm, take time to check out other SEO tools out there like Website Grader. You might just find something to ask your firm about and learn something about the process along the way. Even the best of teams and people sometimes require a little oversight. If they are a good team, they won’t get defensive and they’ll work to fix it right away and make it up to you with hopefully more than yummy looking billiard cupcakes!
Stay tuned for more of my SEO journey that may involve cupcakes (or more likely other random pictures) by subscribing to my blog here! If you have an SEO experience you’d like to share, please don’t hesitate to leave a delicious comment below.
One of the interesting things about fundraising is the different perspectives you get from potential investors. If they spend enough time to really understand what you are trying to do, they offer great feedback, suggestions, and advice. They also sometimes ask a tough question or two.
I officially started the fundraising process a couple of weeks ago and have had a couple of meetings and a few more set up in the coming weeks. Since many of these angel investors are really busy, getting on their calendar can take weeks!
One question I was asked had to do with the cost of customer acquisition. It’s so hard to tell what that might be given the uncertainty and newness of many business concepts out there (including mine) today. I searched and searched and oddly only found very dated ancient info (i.e., 1999 – 2001) figures for sites like Amazon.com. At a high-level, the cost of customer acquisition is how much it costs to get a customer/visitor to your site. My guess is for sites with successful viral uptake like facebook the cost is in the cents (i.e. [total marketing and some R&D costs]/number of unique visitors). On the other hand I’ve heard that customer acquisition costs for companies like Vonage are in the hundreds of dollars. Anyone who has seen their mailers and expensive TV commercials can see why that number is so high. Last I heard I think it takes them at least 2 years to break-even on each customer they get.
I even had the MBA student who helped me create the financial model search his resources and no such luck. I would be happy to get information on even what the amount that a magazine like O Magazine or Pregnancy Magazine spends getting one customer to sign up. You’d think that as much has been written about facebook, that their cost per visitor would be somewhere on the Internet, but for some strange reason that information is not readily available. Go figure!
In my quest, I happened upon the following links that might be useful for any other entrepreneurs looking for the same information.
There may not be a satisfactory answer (or more likely I don’t have access to the money or resources to help me find it) but at least being aware that there could be an answer is probably not a bad thing. I ended up backing into some numbers using the information in our financial model which to me, the ever optimistic entrepreneur, seemed reasonable enough. 🙂
UPDATE: This post was re-published on Found|Read here. Check it out to see additional comments by their readers.
My sister-in-law, who lives in Mexico, forwarded me this email from Luis Molinar who she knows. I thought it was simple, powerful and compelling enough to share on this Valentine’s Day 2008.
Photo by Sandy Blanchard. Bulbs by Michelle Campion
Hello Dear One’s,
Knowing that for us to grow and heal from old wounds that keep us repeating our limited patterns that may say no to the universe, we some times need to take risks. I’d like to share this writing about taking risks in one’s life, to see if you’re living in fear and not taking risks, but stuck in your old patterns and consequently not living a happy and content life.
Risk
To laugh is to risk appearing a fool.
To weep is to risk appearing sentimental.
To reach out for another is to risk involvement.
To express feelings is to risk exposing your true self.
To place ideas and dreams before a crowd is to risk ridicule.
To Love is to risk not being loved in return.
To live is to risk dying.
To hope is to risk despair.
To try is to risk failure
And at the same time risks must be taken, because the greatest hazard in life is to risk nothing.
The person who risks nothing, does nothing, has nothing, is nothing.
He/she may avoid suffering and sorrow, but he/she cannot LOVE, LEARN, FEEL, CHANGE, GROW and LIVE.
Chained by his/her attitudes he/she is a slave.
He/she has forfeited his/her freedom.
Only the person who RISKS is truly FREE.
*********************
So Dear One’s, how Free are you???
Luis Molinar
HeartWorks, Inc. ToltecHeartWisdom.com
Several readers who saw my Fundraising Toolkit post have asked me about my experience raising funds from angels and VCs for my first entrepreneurial endeavor. We raised about $15 million of which $3.5 million was from angels or what I would call boutique VC firms (i.e. a group of angels under one investment roof). Keep in mind that was all before the bubble burst back in 2001. Here are some of my observations based on my experience and from stories I’ve heard from other entrepreneurs.
Angels
They tend to invest their own money and reputation in earlier stage companies that can benefit not only from dollars but also their advice and contacts.
The really good ones (yes, there are fallen bad ones) have built their own businesses from the ground up. They have a great appreciation of what it takes to build a business and are creative with solutions to the inevitable unexpected issues that arise.
They tend to get their ‘hands dirty.’ Our lead angel investor for my first company was Marc Seriff, founding CTO of America Online. You may recall that in 1999/2000 talent was scarce and the Internet bubble was close to its biggest. Marc actually manned a career fair booth that we had at The University of Texas at Austin. He also participated in the interview process of finding great developers! Needless to say we found some good people. Since Marc was our lead for our first round, he even assured our vendors that he would make sure (i.e. personally guarantee) they got paid if for some reason we couldn’t close the round!
They tend to bring their friends along for the ride. Marc and another of our angel investors, Jack Baum, brought in their friends and contacts making the fundraising process a little bit easier. Jack also introduced us to the owners of our very first big paying customer who ended up doing a nationwide rollout with us. I remember framing the check! He and his partner Steve Winter brought in two of our three venture investors. The two good ones! Steve even served as our interim-CEO between the time we parted ways with the first CEO we hired to replace me until we found the next one.
They don’t necessarily have to invest money to be an angel. Richard Benkendorf was one of our advisors who introduced us to our first key customer in the Coca-Cola bottling system that helped us achieve our first $1 million in revenue! We framed that check too!
When the dollars needed get big for future financing rounds, angel investors usually voluntarily step back or can’t provide the needed growth capital.
Some of them may not have sat on a Board or been involved in building their own businesses making some board meetings interesting to say the least. In other words, an angel who made his/her money from their own business versus someone who came in later at Google, Microsoft, or Dell have different perspectives and experiences.
Venture Capitalists
They tend to invest in later stage companies with some revenue, product completed, and market traction. They seem to like to come in after an initial angel round of investment (if the deal structure is not too messed up).
The really good ones (yes there are bad VCs – in case you haven’t heard) have had repeated success with other portfolio companies, have built their own businesses, and come with a big rolodex of contacts and partners to help you cross some of the early hurdles. One of our venture investors, SAP Ventures, led by Jeff Nolan who blogs at Venture Chronicles (the only former investor I found who blogs publicly) introduced us to departments within SAP who were targeting the same customers that we were. He also gave me a copy of The Monk and The Riddle by Randy Komisar (see below for book link) that was a great read at a time when I think he sensed I was no longer enjoying the journey.
They tend to be more bankers/financiers than operating (i.e., built their own business) people. They tend to look at a business with a black/white eye on numbers and how fast they can get their money plus a nice return on their money out.
The good ones will often bring along investment partners in what is called a syndicate. A few VC firms who have worked together before will join forces to fund a deal which makes life easier for the founders because they can go back to building the business versus fundraising sooner.
They seem to use and apply a formula that they have achieved financial success with before which often means replacing the founding CEO or other key founders with people they have worked with many times before. If more often than not something has worked for them with a portfolio company in the past, they’ll apply the same logic to future deals companies.
They are investing other people’s money (i.e. their limited partner’s money – insurance companies, wealthy individuals, other corporations) and if they perform well those people will give them more money to invest. In other words they are risking more than just their finances and reputations, they are risking other people’s finances and reputations as well.
Who To Choose?
Personally, I think it all comes down to the investor fit and the stage of the start-up game you are in. It’s definitely better to have people who have built businesses on your side. It’s also good to have people who have backed high-growth businesses if you plan to IPO or sell to an established business in the near future.
Most technology start-ups don’t make it big. It’s a unique combination of talent, dedication, luck, timing, and great people that make the difference between the companies who become household names and those who shut down on the wayside or find another comfortable existence. We often forget that it is more than OK to start a good profitable business that provides value to your local community. If you want to play with venture capitalists, then you need to aim for the ‘household name’ category like Google or Yahoo! even if chances are high you won’t make it to an IPO.
My biggest learning was how important it was to be able to communicate with your investors openly and honestly. Trust your gut and if they respect and trust you as a person and you respect and trust them, it will be much easier to weather the inevitable storms. It’s easy to take money for money’s sake but in the end it can end up being more costly than what it was worth.
As Ben Yoskovitz says in his Startup CEO School of Hard Knocks post, you must have fun! When you are no longer enjoying the journey, take a break and look around to make sure you are doing what you should be doing. Make sure you are in the right place at the right time for yourself and don’t be afraid to make changes.
I’m so excited to say that the first official video of Babble Soft Applications went live today on DadLabs – Gear Daddy. I have wanted to do a video demonstration of our applications for a long time now but I was cycling through my entrepreneurial hats so fast, that I didn’t have the time or money to do a really nice one. So now thanks to all the cool dads at DadLabs we have our very first one and it cost me some beers was relatively free!
Go to their site and please Digg/Stumble the post if you like it. They are fellow entrepreneurs and the more hits/visits they get to their site the more loved they feel and more importantly the more cool advertisers they can attract. Sitter City is their sponsor this week. Plus they always make me laugh which is one of my 2008 goals! If you for some reason you need even more incentive to go to their site, I’ve embedded the video below:
I also just found out that it’s on YouTube also. So you can check it out there too:
One of the many hats an entrepreneur wears is the “getting great press mentions” hat. It’s typically a frustrating process since unless you happen to know each editor personally, chances are quite high they will hit ‘delete’ or not return your messages thereby not giving you a chance to tell your wonderful, glorious story. This seems even more true in the baby/new parent industry because there are a bunch of cool new products released every day in this industry and the editors are inundated with pitches.
I know it must be tough for editors because they get so many thousands of emails from everyone wanting them to write a story about what they believe is TNBT (i.e., The Next Big Thing). But it’s tough for us entrepreneurs to get noticed too! Since we are spending money on SEO, I decided to take on doing the traditional PR work myself until we raise funds. This means emails and follow up calls to editors at places like Parenting Magazine, Twins Magazine, Parents, Pregnancy, etc., etc. Only the most popular magazines for parents….
That’s why our SEO firm has also submitted it for distribution in free press release avenues on the Internet which should drive more traffic to our site or at least build up some of our back links. 🙂
The problem with wearing so many hats is that you don’t have the time to wear one long enough to spend the required, necessary time to really dig in deep and make a big impact. I wonder what color the press release hat is?
As some of you know we signed up with a Search Engine Optimization (SEO) firm, SpryDev, back in mid-December. It’s been a great process and I already wish that we had our site designed with SEO in mind to being with. We are making several design, layout, menu, text, etc. changes that are very time consuming. I wish they could all be done overnight but given all of our time constraints unfortunately they can’t!
I think my biggest learning experience (note to self) so far is to have an SEO expert involved during the design of the site. It apparently will save a lot of time later. Now we won’t be sure if any of these changes will actually result in increased conversions for some time but so far they make sense to me. Apparently seeing results overnight doesn’t happen just like we can’t make all the changes overnight. Sigh.
The good news is in the past month we have seen a slight increase in the number of visitors. We’ve also seen more people finding us based on organic search (i.e., search terms in Google) versus a direct landing. Most people still find the Babble Soft site by searching on terms like Babble Soft, Baby Insights, Aruni (my name), etc. which is what I’m calling a direct landing. Since I’m not Britney Spears or some other famous person, it doesn’t really do us much good for people to be searching on my name! Now a noticeable few are finding us with relevant keywords.
Here are some of things we have done or are still working on:
Changing our menu navigation and adding cool buttons. All in the name of increasing conversion. Brian Massey who blogs at Customer Chaos is their conversion specialist and he’s given us some great recommendations that will hopefully pay off big time. Interestingly, he just did a great post called Here’s the Truth About Building Your Website that is pretty accurate.
Setting up a phone number to display on our site (should have that up soon – I need to record a great greeting message)
Adding Page Titles and Descriptions to each page. I can’t believe we hadn’t done that. DOH!! I guess that’s why they get the big bucks and further reason why we should have involved an SEO expert during the design phase of the site.
Building links.
Submitting articles, press releases, and other stuff to all the various sites that love them as much as we do. 🙂
Rose, our project manager at SpryDev seems to be very patient since I email her night and day asking her what else we can do and how fast we can do it. When it’s your personal credit card that gets hit each month you want to do everything possible to start seeing sales come in to offset those expenses.
Did I know that we would have to make some changes to our site going in? Yes, of course. Did I realize the extent of the changes, the time it would take to make them, and that cash wouldn’t start rolling in the door 10 seconds after we made each change? Not so much.
If you are interested in learning more about “What They Don’t Tell You About SEO,” go ahead and subscribe to this blog. If you know more about SEO than I do (chances are you do), then leave a comment and share your wonderful wisdom with the rest of us!
Picture by Sandy Blanchard Choosing a corporate attorney is an interesting endeavor. I have avoided using attorney’s for Babble Soft in the past because a) they are very expensive, b) sometimes they make you feel like they need to review everything you do for fear of some horrible thing happening, and c) I wasn’t sure what I was going to do with my life what my strategic business plan was. Since I have a new business strategy and have decided to raise funds, an attorney is a must have.
I’ve met with a couple and spoken to a few more. The first I spoke to was the attorney at my first company and although I would love to work with her we both agreed that the firm she is at now is catered more for more established businesses (i.e., very, very expensive). It is so much better to understand that up front because we have worked on many outside projects together, and I consider her a friend.
The second attorney I spoke to was referred by another entrepreneur in the area. I liked her and her partner but a few things gave me pause. One potential area of risk is the fact we might end up doing business with the other entrepreneur’s company which might result in a conflict of interest. They had good rates and good experience but did not have an in-house tax attorney. Since Babble Soft is currently an LLC and we’d like to continue as an LLC for at least our first round of financing, having someone who understands the tax implications could be important.
The third attorney I met had done some pro-bono work for me a year or so ago because I guess he knew I couldn’t afford his services at the time. What I liked about him is that he does have a tax attorney in his firm, has represented several small companies in the technology space, one of my business Advisor’s has worked with him in the past, he was on time for our meeting, said he could help with introductions to potential investors, and he sent a brief follow-up note after our meeting expressing his interest in working with me. However, his rate is $125/hour more than the attorneys at the second firm I spoke with!
Special thanks to @princess_belle who blogs at GloKay, @chelpixie who blogs at Chelpixie.com, and LPT who blogs at Direct2Dell who tweeted me things to think about and questions to ask the attorneys. I plan on making a decision in the next couple of weeks so if you have attorney stories or suggestions to share with me or the blogosphere, please leave a comment. Thank you!
Unless you live under a rock or don’t drive a car, you have no doubt heard about or felt the state of the US economy. It’s in a state of well let’s say ‘confusion’ with indications it’s moving in the wrong direction. Gas prices are at record highs, people are filing for bankruptcy, they are losing their homes, the government has a record amount of debt, the stock market is going down, etc. etc.
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