Become Worthy of Angels

Angel investors like their privacy. They don’t want to be bombarded with hundreds of investment requests, and so they are usually pretty low profile people. I know angels that have done dozens of investments and no one has heard of them. They don’t have a web site, a blog, and they don’t write articles in magazines that will bring attention to them and their wealth, and bring with that attention an unwanted rush of entrepreneurs knocking on their door.

So FundingUtah.com protects the privacy of investors.

But we are also figuring out a way to protect their time.

Investors are busy people. Many of them don’t have time to read scores of business plans looking for the real deal. There are so many poor business plans, so many wanna-be entrepreneurs who don’t really have (yet) what it takes to succeed, and so they are just wasting the time of investors by passing around a plan that will never be funded.

Organized angels often assign individuals to screen business plans and to select the best ones to present to the group meetings. But each individual angel will have a unique, subjective view of what qualifies as a good business plan. Some look at the market potential, some look at the entrepreneur’s track record, or the team, or the revenue projections after five years.

The problem is that some good plans, in fact, some of the best plans, might get overlooked entirely if the screening angel doesn’t understand the industry or the product or the strategy. Even VCs often pass on great companies. According to FastCompany, “Hotmail was turned down by a slew of VCs before Draper Fisher Jurvetson latched onto it and made it one of the internet’s killer apps.” I think disruptive companies and innovative ideas are very likely to be missed by angels.

To help angels find good plans and avoid sifting through too many poor ones, FundingUtah.com will be launching an innovative point system that will help entrepreneurs earn points as their company hits milestones which should help them become more worthy of funding.

Plans that are posted without enough “Prep Points” will not be viewed by our 79 angel investors. But as the team is built, as revenue is generated, as partnerships are formed, as technology is developed, and as marketing and sales start to kick in, the entrepreneur will earn enough Prep Points to become visible, first to early stage angels, and then later, to angels who want to invest in the growth phase. Plans that win business plan competitions and receive other awards for innovation will get Prep Points as well.

There are a lot of business plan competitions that use different criteria to weight the quality of a plan. We’ll probably borrow ideas from many of these. But rather than a one-time score, our point system will teach entrepreneurs the milestones they need to achieve in order to earn points over time so that their plan can be elevated to a higher status. As entrepreneurs earn points by actually running their company (and not just writing about it) they will become “worthy” to take the time of angel investors.

Our genius developer is working on this right now. If you have ideas that you’d like to see us incorporate into FundingUtah.com’s Prep Points system, please comment below or email us.

How PR is Helping FundingUtah.com

Many internet entrepreneurs I know (myself included) are pretty content sitting at the computer most of the time doing research and figuring how to generate traffic, improve web site design and conversion rate, and study web analytics to determine what to do next. We use the web for hours a day to do research on what everyone else is doing. Then, relying primarily on email and instant messaging, we can efficiently communicate hundreds of times per day with employees, customers, partners, etc. So why break away from the computer and have a real world event, when using the computer for everything is so efficient?

To generate publicity, for one thing.

One of our recent startups, FundingUtah.com hired a PR firm a couple months ago to help us with a single press release to announce our existence. John Pilmer, head of PilmerPR called me about a week later and suggested that since our business fit in so nicely with Utah Governor Jon Huntsman’s economic agenda, that he thought we might be able to attract the Governor to a press conference or launch event. With our permission, John Pilmer started the ball rolling.

Yesterday all the hard work culminated in a wonderful event with about 100 attendees yesterday in Sandy, Utah. We had about 40 angel investors and 50 entrepreneurs in the audience along with a few government and media representatives. The Governor made a great speech about entrepreneurship and economic growth in Utah. We are the 5th fastest growing state in the U.S., we have the youngest population, and the Governor is predicting a boom period because we have such a strong entrepreneurial spirit in this state.

David Bradford, a partner in FundingUtah.com told the story of hearing Jon Huntsman Sr. speak in California 30 years ago just when his styrofoam packaging company was getting under way. 30 years later Huntsman Chemical is one of the largest chemical companies in the world with a $4 billion plus market cap and manufacturing operations in 22 countries.

Today I woke up to find the FundingUtah.com story on the front page of the Deseret News business section. We also got coverage from the Salt Lake Tribune, KSL Radio (you can even hear an audio clip), and other media outlets.

With the coverage today we’ve jumped to 73 investors and $47 million in available capital, and we’ve had many new business plans added today from entrepreneurs who are seeking funding.

I told the audience yesterday that I haven’t seen people gather to see a launch of a web site since about 1994–but this story became newsworthy both because the Governor attended our event and because the site has the potential to help hundreds of Utah startup companies attract capital and create jobs.

The event was even better because we invited the two angel organizations in the state, Utah Angels and Top of Utah Angels (who are holding their first meeting on May 10th) to the party. Utah needs hundreds of active angels to provide fuel to the fire of innovation and talent that already exists in the state.

If you know any high net worth individuals who aren’t putting their money to use to grow our economy and make dreams come true, invite them to check out FundingUtah.com.

And remind them of this quote by Brigham Young, Utah’s first Territorial Governor:

A man has no right with property, which, according to the laws of the land, legally belongs to him, if he does not want to use it; he ought to possess no more than he can put to usury, and cause to do good to himself and his fellow man. When will a man accumulate money enough to justify him in salting it down, or, in other words, laying it away in the chest, to lock it up, there to lie, doing no manner of good either to himself or his neighbor? It is impossible for a man ever to do it. No man should keep money or property by him that he cannot put to usury for the advancement of that property in value or amount, and for the good of the community in which he lives; if he does, it becomes a dead weight upon him.

Nokia Announces Hard Drive Phone That Stores 3,000 Songs

Nokia will ship by the end of this year a number of new phones that offer rich multimedia capabilities. One of their phones has a 4 GB hard drive that will store 3,000 songs.

This is significant partly because in 2004 Nokia owned more than 30% of the global market for mobile phones, almost twice as high as the number two player Motorola.

Nokia is also talking about how nanotechnology will enable Nokia to cut costs on phones within 2-3 years. In order to have 3 billion phones in use by 2010, “costs will have to be on a completely new level” says Chief Strategist Tero Ojanpera.

Salt Lake City Jumps 73 Places in List of Top Cities for Doing Business

Reno, NV is ranked #1 and Boise, ID is ranked #2 in this years ranking of the top cities in which to do business, based primarily on economic growth. The survey was published today by Inc. Magazine. Salt Lake City ranks #31 but jumped an impressive 73 places. A total of 274 economic regions were studied. Read the full article here.

The Biggest Damper on the Entrepreneurial Spirit

I am a cheerleader for entrepreneurs. Nearly every week I meet new young entrepreneurs who think their idea can make a big impact on an industry. I want them to succeed and I know many of them will–the ones who dream and take the risks will often end up with amazing success stories.

But it is interesting is to contrast the young do-it-or-die-trying entrepreneurs with talented, seasoned employees who have been in the workforce sometime but are unwilling to make the leap, even to pursue a great idea that they have. The older group have more experience, more knowledge, more connections, more savings, and more ability to be successful. But they are almost always more risk-averse. They may have a family, a lifestyle to protect, and above all, they feel sometimes an overpowering need to keep their existing health insurance policy in place.

So this is the thing I have noticed, which someone needs to address–a primary reason for many people not to leave their current job and take an entrepreneurial risk (with the potential to create hundreds of jobs) is not salary, but it is health insurance.

Whatever happend to "portable health insurance?" I search Google News and see no hits on this topic. Are there any states that are trying to make it possible for small business owners and new entrepreneurs to team up and get decent health care plans collectively? I suppose employee leasing companies may offer this kind of thing.

Can anyone tell me what I should say to a middle-aged employee who really wants to leave a job and start out on his own, but he’s afraid to do it because of losing his health insurance? What are the best options?

Sites to See Near Omaha

While I attend the Berkshire Hathaway shareholder meeting this week in Omaha, I decided I might want to see some LDS Church History sites while there. I talked with Susan Easton Black who told me there is a nice museum at Winter Quarters where Mormon Pioneers built temporary housing on their trek from Illinois to Salt Lake City. Also, there is a restored building at Kanesville, Iowa that has significance for Latter-day Saints, because that is where Brigham Young was chosen to be the President of the Church, 3 years after the death of Joseph Smith.

Susan also told me there is a temple near Winter Quarters with striking stained glass windows. There are now about 120 Mormon Temples around the world, up from about 17 when I was young. About.com has some info on Mormon Temples.

Alan Hall on the 5 Cs of Hiring

Alan Hall, founder of MarketStar (which employs 2500 people and helped clients sell $8 billion in products last year) gave a great speech at Weber State University in Ogden last Thursday. His presentation was outstanding, and I want to blog about all of it, but one of the take-aways for me was how he recruits and hires the right people.

I took copious notes on my Blackberry and for some reason I can’t find my notes today. I’ve tried to find them on my blackberry and can’t, and I’ve also searched in my Outlook Notes (which syncs with the Blackberry Memo feature) and can’t find them there either. I’ll be so disappointed if they are lost. I’ll just have to go hear him speak again. He’s fantastic.

Hiring is something I want to get better at. For Alan, there are 5Cs in hiring/recruiting. Each have equal weight in the equation.

Competence. Most companies hire with about 100% weight on competence. But for Alan, it’s important, but only part of the equation. If someone is just right for a company, but doesn’t have the competence for the particular job, they can be trained. But some of the other Cs can’t be as easily taught.

Capability. This represents how much potential an employee has to grow in their job and be promoted in the future.

Compatibility. For Alan, this has become one of the most important criteria lately. A person has to fit with the team.

Character. Values, ethics, etc.

Commitment. This means that a person will be loyal and dedicated.

Alan says they do a 360 degree interview process, which means that you get references and talk to the candidate’s former boss, peers, and subordinates. You need to know how the candidate works with others. Always have both men and women interview the candidate, since you get different insights from each.

Google: Take Me to Omaha

The annual Berkshire Hathaway shareholder meeting will be in Omaha, Nebraska on Saturday, April 30th. There is a chance I will be able to attend. There are a few tickets available on eBay in case the one I’m hoping for has already been given away.

A few months ago I read an amazing book about Warren Buffett and blogged about wanting to attend his annual meeting. He may be the greatest investor of all time, will soon pass Bill Gates as the richest man in the world, and his annual meeting is only 900+ miles away. I have to do this.

I used a travel site to find flights from Salt Lake City to Omaha. I don’t really like travel site interfaces, with calendars that pop up and throw you off as you try to check for flights. They always try to throw in hotels and car rentals as well.

Then I had a most amazing experience at Google Maps. I just decided to type in:

slc, ut to omaha, ne

to see what would happen.

The result was so cool

Think of the efficiency of my query, and how instantly I knew the route and the distance between these two cities. I didn’t have to wade through any interfaces or fill out any forms to get exactly what I was hoping to see.

Now, imagine if Google Maps provided this same query engine and interface with airline data overlaid on top of my query.

If I could type:

slc, ut to omaha, ne from apr 28 to may 1

Then I should get the same map as before, only this time, I should have several different lines showing different flights or routes between the two cities. Each different airline could be color-coded and pricing information could also be visible on the map.

Efficient query syntax is required by many power users, but more importantly, I predict that companies that enable efficient (concise) queries will dominate companies who rely on traditional software or web interfaces in the mobile content arena, where navigation through pages or filling out forms is a horrible user experience.

Mobile users who can learn this kind of syntax can have great power using a tiny mobile device without a keyboard. When Google Maps are combined with Google SMS (and then overlaid with travel agency type data), the raw power we’ll have through our cell phones will be phenomenal.

A Few Thoughts About eBay’s Decline

Bambi Francisco, the best columnist covering internet stocks, announced some very surprising things this week about eBay’s traffic decline. For nine consecutive months, the internet giant has seen declines in traffic, year over year.

eBay is a great company, empowering millions of people to buy and sell. I love the original vision for eBay and the tremendous impact this company has on our economy. But I know of two serious problems that are likely getting in the way of future growth:

1. Greed. I wonder if eBay has gotten a little greedy and strayed from its founders original intent. Virtually everyone I know who sells on eBay has become increasingly frustrated over the years as eBays fees keep expanding. eBay, with its near monopoly on auctions has been squeezing and squeezing sells for quite some time. Of course, sellers keep looking for alternatives, whether that be launching their own ecommerce site and using Google AdWords to drive traffic, or even switching to Overstock’s new auctions. When Overstock launched its auction service, they were definitely in tune with the negative attitude towards eBay from sellers, and they are capitalizing on it.

In our increasingly open source and information-rich world, business models that are driven by greed are becoming obsolete. It’s harder to have a monopoly these days. The idea of owning customers and therefore being able and willing to keep raising prices until you are extracting unfair sums from customers who have no other choice should be discarded. Consumers have the power in an increasingly knowlege-rich, transparent economy. Companies that ignore customer sentiments for too long will find competition springing up quickly and from unexpected sources and customers fleeing.

2. Too Hard to Use. I am going to sound stupid admitting this, but I have the hardest time buying anything on eBay. I buy from Amazon several times a month, sometimes using 1-Click and sometimes filling a shopping cart with several items. I’ve never had a problem with Amazon. I love it. I go there for all kinds of products. But despite being an avid internet user since 1994, despite having used hundreds of sites and having built many, I struggle to complete a transaction on eBay. I think the main problem is that I have an eBay account and a separate PayPal account. I’m not a big PayPal user, so I struggle to remember my password. I’m confused whenever I get to the payment section. When I “win an auction” or click on “Buy It Now” I just want to pay for the dumb thing with my credit card and have it over with. I don’t want to have to figure out the PayPal thing everytime. Twice I’ve tried to purchase something from eBay in the past year and failed. Why keep trying? I don’t. I just go to Amazon now.And I’m not the only one with this problem. My wife thought she bought something for me for our anniversary on eBay, but it turns out she messed up on the PayPal step, so I didn’t get the Ty Detmer helmet after all.

I’m listening to an Audible book right now called The eBay Phenomenon, published in 2001 I think by the former editor of Upside magazine. (One of the best magazines during the bubble!). It’s a great story of the amazing growth of a truly internet-enabled business.

I want to believe that eBay will get back on a growth trajectory. I liked their investment in Craig’s List. I like their international expansion. But if they don’t solve these two problems and a related one which Bambi pointed out — that all the smartest people are flocking to Google and Yahoo — then I think eBay long term will continue to lose to the more efficient (speaking of the user experience) and less greedy (for the time being) Google and Amazon.

Skype Hits 100 Million Downloads

Another milestone for the distruptive VOIP company with headquarters in Luxembourg. They have also recently announced two more premium services, Skype Voicemail and SkypeIn.

As I have said many times before, the most powerful internet marketing tactic of all is to give away something valueable and free. Successful business models will then monetize the huge audience you attract with premium or add-on services or advertising revenue, a la Google.