Best Book Ever Written for Entrepreneurs

I have previously blogged about “The Art of the Start” (by Guy Kawasaki) being essential reading for all entrepreneurs. In fact, I won’t mentor anyone who hasn’t read this book.

But I have three friends (including two veteran entrepreneurs) who tell me that “The Entrepreneur’s Manual” written by Richard White in 1977 is the best book ever written for entrepreneurs. Steve Gibson gave me a copy recently and I admit it is fascinating. It contains advice I’ve never seen anywhere before. (You can find several copies on Alibris.com)

For example, it suggests that you form a team of founders in the following way: Hold a 2-day interactive event where you bring 3-5 possible founders for each key management position together (at a hotel for example). The founding founder introduces the business concept over breakfast. Then everyone gets to introduce themselves and then interview each other. After everyone knows each other, you divide into teams and start creating departmental business plans. On day two there are group presentations. The final step is that all the candidates get to cast a secret ballot about who they think the founders should be and what positions they should fill. White claims that “the strongest and best qualified [candidates] almost always win the top positions by a landslide.”

Each founder keeps his/her full-time job and works about 16 hours per week in the startup until it is funded adequately.

White and his consulting associates often invited venture capitalists to these 2-day retreats, so that they could see the founding team being formed. Apparently, the VCs usually invested in the companies.

If this manual is so good, and if Richard White and his consulting associates really helped hundreds of successful Silicon Valley startups, and if these tactics really work, then why is the book out of print and why can’t I learn anything about White from Google or High Beam or Amazon’s “search within a book?” I guess I’ll have to try Google Scholar.

If anyone knows anything about Richard M. White, Jr. and his team of consultants and what Silicon Valley startups they backed and how or why this team seems to have disappeared off the map, please let me know. I may contact Chilton Publishing for reprint rights (this book should at least be available in PDF format) unless someone else wants to do that. The book is in serious need of a 2nd edition. The 45 pages that list VC firms (from 1977) just isn’t very useful anymore. But the concepts are powerful and should work.

I’m eager to try building a founding team for my next startup in this fashion.

[Update: I just searched Google Scholar and found only 1 citation to the Entrepreneur’s Manual in all the academic literature. Not too promising.]

Omniture Uses a New Free PR Service

I just read a press release from Omniture stating there were more than 3,000 site implementations last year. Omniture is one of the most exciting companies in Utah. And they are in one of the fastest growing industries. Yesterday I saw a prediction that web analytics will reach $11 billion in revenue by 2008.

I noticed that the Omniture press release was delivered on i-newswire.com, a free press release I hadn’t seen before. (It’s obviously quite new–check out it’s Alexa traffic growth over the past few months.) This service is similar to PRweb.com and press-world.com. Google News indexes press releases on i-newswire.com and PRweb.com.

All startups should take advantage of these free services which provide distribution to Google and Yahoo News readers. What a great, low-cost way to get your company news directly to end users.

How do I know these services work? Because I found the Omniture press release through them. (And now thousands of my readers will see it as well. I would call that working.)

Help Me Manage My Contacts in Microsoft Office!

Help!

I have been using categories in Microsoft Office (2002 Version) for almost a year now. I have several hundred contacts marked as investors and entrepreneurs. I really need to add all of them to a new “Distribution List” so that I can easily email this list when I need to. (I’ll of course use BCC: so that everyone doesn’t get everyone elses contact info.)

But this is where I stumble. I can use “Advanced Find” to find all the investors and entrepreneurs, but then I don’t know how to add these contacts to a new permanent distribution list all at once.

Is there any way to do this with Office 2002? Do I need to upgrade to the latest version? Or do I need to buy a third party email tool from someone like www.fairlogic.com? (I downloaded a trial version of their software but never activated it.)

I need to hear from my readers–how do you manage all your contacts in lists and easily send emails to large groups? I just don’t want to take hours and hours to add names one at a time to my distribution lists. It’s too painfully slow.

Should I dump Outlook entirely and use a third-party solution for contact management?

User Generated Content and “Tagging”

I blogged in December about how fast growing web sites are often fueled by user content. Users post content, which attracts more users (as search engine index this content), who in turn post more content.

Today I discovered a new Idealab company called Insiderpages that is focused on the local yellow pages market. All the local listings are created by users. "The yellow pages written by friends", it says. Launched in November, the site has a 1 week Alexa ranking of 50,000, which is excellent for such a new site.

Another new site that lives on user generated content is 43things.com, a site apparently funded by an investment from Amazon.com. The site has a 1 week Alexa ranking of 9,620. That is extremely impressive. The site has recently gotten a ton of media coverage, primarily because of its connection to Amazon.

43things.com, like deli.cio.us and flickr, uses "tagging" — a new term that describes how every keyword that a customer uses to describe a photo, a web site, or a goal (or whatever object they are commenting on) becomes a tag that other customers can click on to find all other objects that also use that keyword.

I think the difference between the terms "tags" and "keywords" is that the term "keywords" primarily describes search engine queries while the term "tags" is used to identify metadata about content — and the metadata is used to create navigation links for other users.

Here are the most popular tags at 43things.com. They use tags to help people find other people with similar goals.

I’ve only discovered the term "tagging" in the last couple of weeks, and I haven’t yet built any sites that use tagging; but I think this is going to become very common on the web. I’m adding the term "tagging" it to my Google News Alerts keyword list so that I can see how other companies use it in conjuction with user generated content.

Jobs in Utah

I’ve recently heard radio ads for Saltlakehelpwanted.com which redirects to Utahhelpwanted.com. I’m always on the lookout for free web services that might make recruiting or job hunting easier. Hopefully this site will prosper.

In the meantime, I think Craig’s List is one of the great sites in the business world (everyone in the Bay Area uses this for all kinds of things), and it’s Salt Lake site needs more exposure. Here is an excellent job posting from BackCountry.com, one of Utah’s top ecommerce companies, for a Web Analyst.

If I were searching for a job, I would definitely use Craig’s List and LinkedIn.com every day.

We have also decided to add a Jobs section on FundingUtah.com, so that entrepreneurs can use the site not only to find investors, but also to recruit employees who want to work in a startup environment. I hope this feature can be available by March.

Josh Coates Speech at UVEF

If you live in Utah and want to excel as an entrepreneur, I highly recommend joining the Utah Valley Entrepreneurial Forum. I’ve been attending forum lunches for about 8 years. Today’s meeting was one of the best ever. Josh Coates, Silicon Valley entrepreneur and founder of scale8 (they raised more than $80 million) spoke to us today. He spent 30 minutes on the right way to develop enterprise products–by including potential customers in every step of the design process.

While at scale8 he personally visited about 80 large companies in three months talking to their IT teams to find out what storage technology they needed. His passion for understanding customers was evident when he showed us a few of the 8,000 quotes he had fastidiously recorded (almost verbatim) in his design review sessions. Imagine having 8,000 quotes from your potential customers about what they want in a solution–before you complete version 1.0!

If you want to see how smart Josh is, check out this article he wrote about Open Source Bigotry. For an engineer to be an expert in large scale storage (he talks about “pedabytes” with ease), to have crossed over to the business side (as a founder and board member of scale8) and to be able to quote literature and history (as he does in the bigotry article) — this guy is very high wattage.

Josh is planning to live in Utah for about two years–it’s his two year experiment. I’ve told him that my goal is to make sure that he is so successful here that he decides to stay.

He doesn’t avoid controversy. During the last 5-10 minutes of his speech he talked about what is good, bad, and ugly about the Utah Technology landscape. He likes the milk prices here, and the beauty of Utah. Besides our white vinyl fences and the fact that UDOT doesn’t know how to clear a freeway after an accident, the thing he lambasted the most was how Utah treats “venture debt.”

He said any entrepreneur that gets convertible debt for his/her startup company should never have to sign a personal guarantee or mortgage a home; that the interest rate should be very low; that no valuation should be made; and that all convertible debt should convert to Series A preferred stock when the professionals establish a valuation and fund the first round.

The burden of debt hinders the growth of many companies. He wishes there were more early stage venture funds in Utah. He thinks Utah has way too many small Mom and Pop businesses (like how many dozens of wireless internet companies are there in Utah with 4 employees) that don’t have a funding strategy, a growth strategy, an exit strategy–they are just happy to stay small and get a paycheck.

Clearly, Josh is ambitious, wants to change the world, and can’t understand why Utah has so many small business owners that are comfortable and lack ambition.

Listening to Josh reminds me of my 19 months in Silicon Valley where there is a high concentration of ambitious, smart people who constantly talk about investing and high tech, have worked for a number of different companies, and who have an amazing energy and intensity. I hope Josh can infect hundreds of other Utah entrepreneurs with the ability to think big. After today, I’d say he’s well on his way.

Building a Mobile Content Business

In the early 90’s, many CD ROM publishers did very well. The Bureau of Electronic Publishing had a catalog with thousands of popular titles.

In the late 90’s, content migrated to the web. “Content is King” was the theme of many internet conferences. Many content companies did very well–some with advertising business models, some with ecommerce, and some with subscription business models.

In the future, the same content that drove CD ROM sales and mass adoption of the internet will migrate to cell phones and other portable devices.

As an information entrepreneur, I often go back to my 1992 Updata CD ROM catalog or my old Bureau of Electronic Publishing catalogs to see what was popular in the early days of CD ROM. I also visit the BYU library to use the reference books that tell me about the most popular databases from commercial and government sources.

Before building a mobile content business, collect these old catalogs and reference books and see what you can learn from the earlier CD ROM and Internet content providers.

Millionaires in Utah

Mailing list companies have massive databases that include most consumers and businesses in the United States. You can target consumers by age, gender, income, interests, credit, location, subscriptions to specific magazines, and hundreds of other traits. I’ve done less direct marketing using mailing lists in the last few years than I did in the 90’s with my first company, but I still like to receive free catalogs from the mailing list vendors.

Since I’m trying to get 300 investors in Utah to join FundingUtah.com, I decided to contact www.dunhills.com which has a nationwide database of millionaires (with home addresses) to see how many millionaires are listed in Utah. Then I called Dunhills to see if they could give me this data by county.

Here is the breakdown:

Millionaires in UT displayed by county
ROW TOTALS
UT – BEAVER 2
UT – BOX ELDER 57
UT – CACHE 362
UT – CARBON 15
UT – DAVIS 1817
UT – DUCHESNE 11
UT – EMERY 7
UT – GARFIELD 3
UT – GRAND 6
UT – IRON 41
UT – JUAB 2
UT – KANE 5
UT – MILLARD 6
UT – MORGAN 8
UT – RICH 3
UT – SALT LAKE 6331
UT – SAN JUAN 6
UT – SANPETE 3
UT – SEVIER 3
UT – SUMMIT 844
UT – TOOELE 20
UT – UINTAH 6
UT – UTAH 1200
UT – WASATCH 27
UT – WASHINGTON 529
UT – WAYNE 2
UT – WEBER 1041

I’m thinking of renting this list and sending a direct mail invitation to invite these wealthy Utahns to join FundingUtah.com.

Once FundingUtah.com has hundreds of accredited investors signed up, we will probably start enabling startup CEOs to do online presentations to investors who express an interest in hearing a pitch.

7 Reasons Google Will Rule the World

Once again Google surprised the street with much higher than expected earnings. The stock price has jumped $20 today to more than $210 per share and the market cap is almost $58 billion.

I will not be surprised to see consistent positive earnings surprises coming from Google for many years.

I believe that Google is on track to being the most valuable company on the planet. I blogged last year my prediction that within 10-15 years Google will surpass Microsoft in market cap. Here are 7 reasons why it won’t even take 10 years for this to happen:

  • Google Philosophy. Google has the right philosophy for our time–they want to change the world by helping everyone in the world have access to the information they need at any time. By giving us all access to extremely valuable data and tools, they are amassing the largest customer base in the world. After providing a service and attracting an audience, they figure out smart ways to monetize it. But that is not their first priority–changing the world is.
  • Efficiency of Advertising Model. Once they have eyeballs, the Google self-service model allows hundreds of thousands of businesses to manage their own accounts. New advertisers can set up an account and have traffic coming to a site in just a few minutes. Overture’s staff of humans often takes days to approve a new campaign. Google pays almost nothing to get new customers and almost nothing to generate this revenue–the customers themselves do all the work. The profit margins here are breathtaking.
  • Good Partner. Google is unbelievably generous with partners–content sites who accept Google ads in exchange for a percentage of the revenue. Because Google is not evil, and they want all sites to accept their ads, they share most of the revenue with their content partners.
  • Employee Pet Projects. Long term, this is the #1 reason why Google will become the most valuable company in the world. I have read that every employee at Google is allowed (or maybe even required) to spend 20% of their time each week working on a pet project. Most companies operate from the top-down. Managers tell employees what to do. Executives make all the resource allocation decisions. But Google has embraced a philosophy which I think can revolutionize the business world–if other companies are smart enough to adopt it. While the most talented, creative, and entrepreneurial people leave companies like Microsoft in frustration in order to start their own enterprises, Google has created an environment where the most talented, creative, and entrepreneurial employees can play in their own sandbox, attract attention and support from top management, and have their pet projected funded within the company. I understand that Larry and Sergei keep a list of the top 100 pet projects in the company. Many of the existing services which Google offers (including Orkut and Google News) were developed by employees. I expect to see hundreds more innovating and exciting free services coming from Google in the coming years. I see more innovation here than from almost all the other top internet companies combined.
  • Speed of Decision Making at the Top. Once a pet project or an outside company catches the imagination of Google’s founders, its maybe only a matter of days before they make a decision to invest in something or make an acquisition. Consider Google’s acquisition of Blogger and Picasa. I don’t think a dozen MBAs took weeks or months to build extensive financial models to justify the decision to get into blogging or free photo sharing. Google’s founders’ instincts are so good and they have the ability to make decisions so quickly–that the rest of the world–slow and bureaucratized as most of it is–better watch out as Google makes big moves and does business at the speed of thought.
  • Cash Flow Funds Pet Projects and Acquisitions. Google’s cash flow is so amazing that anything the founders want to do in terms of funding employee pet projects or making acquisition, they will be able to do. While Microsoft is distributing tens of billions of dollars to its shareholders through dividends (signalling the end of their ability to generate high returns from investing the cash internally), Google will be investing more and more in its world changing strategies–like scanning millions of books from the major research libraries in the world and offering free voice over IP (free telecommunications) to people around the world. No doubt they will become a leader in instant messaging; they will launch a browser to steal market share away from Internet Explorer; they will be prominent in blogging, online photo sharing, and in online communities. Eventually they may even offer an operating system or network computer with application functionality that will compete head on with Microsoft Windows and Office.
  • Open Source and Declining Hardware Costs. All the services Google rolls out are being launched on cheap hardware using open source software. The costs of providing services to the world are declining at an astonishing rate. And Google is there at the right time, investing like crazy. I heard a Berkeley professor in 1999 talk about how CPU, storage and bandwidth costs were approaching zero over time. I don’t think most companies understand what this means. Google is on track to having a million or more cheap computers configured into one great network computer system that will store our personal data, host the knowledge of the world, and provide us with tools for communicating with each other. And the cost of deploying such a world-wide network is decreasing all the time. Which means profit margins at Google will be breath-taking for years to come and the street will continue to be surprised.

In the spirit of full disclosure, I’ve sold my Google stock and invested the profits in Infobase Ventures’ own startup companies. Even if Google increases in value over the next few years and passes Microsoft in market, the return on equity for a good startup company should be much higher than the 5-6 fold returns that Google might provide, the way I see things.

The main risk I see in investing in our own startup companies is that the thousands of smart Google employees might beat us to the punch in executing on most of our good ideas. They seem to be everywhere these days; and I see their pace of innovation only accelerating.