Archive for April, 2005

Become Worthy of Angels

paulballen — Fri, 29 Apr 2005 09:34:25 -0700

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

paulballen — Thu, 28 Apr 2005 07:04:48 -0700

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

paulballen — Thu, 28 Apr 2005 06:04:05 -0700

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

paulballen — Thu, 28 Apr 2005 04:14:33 -0700

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

paulballen — Wed, 27 Apr 2005 21:29:12 -0700

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

paulballen — Wed, 27 Apr 2005 21:04:51 -0700

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

paulballen — Mon, 25 Apr 2005 10:20:13 -0700

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

paulballen — Wed, 20 Apr 2005 20:04:39 -0700

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

paulballen — Wed, 20 Apr 2005 07:51:52 -0700

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

paulballen — Mon, 18 Apr 2005 22:04:14 -0700

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.

April 26th Press Conference with Governor Huntsman

paulballen — Mon, 18 Apr 2005 09:23:24 -0700

David Bradford (former general counsel of Novell) and I have teamed up to launch FundingUtah.com, a new free service that matches Utah angel investors with Utah entrepreneurs. We will be holding a launch event and press conference, with Utah Governor Jon Huntsman, Jr. on April 26th at 1:00 pm at the Larry H. Miller Business Innovation Center (Karen Miller Conference Center). Some of the leading investors and entrepreneurs in the state will be in attendance.

Seating is limited. To RSVP for this event, you must be an entrepreneur or angel investor (or press representative). If you need more information, please email me at paulballen - at - yahoo.com.

Best Freeware/Shareware Download Site

paulballen — Sat, 16 Apr 2005 03:04:09 -0700

My favorite open source developer says his favorite freeware/shareward download site is Snapfiles.com. They've been around since 1997 and have a good ratings system for all the software they offer. What is your favorite software download site?

Idea Stage Investing: Hitting Singles, Not Home Runs

paulballen — Fri, 15 Apr 2005 14:52:14 -0700

I keep puzzling over the fact that only 2% of venture capital flows into early stage companies when it is also reported as a fact that early stage investment funds provide the highest average returns. Maybe VCs like to swing for the fence and only invest in companies that have huge potential--admittedly, most seed stage companies don't. Many small businesses want to grow a bit, but aren't necessarily aiming to dominate a multi-billion dollar industry someday and therefore disqualify themselves from getting venture capital.

At an angel investing seminar recently I heard one angel who has done more than 30 deals say that the first thing he does when looking at a business plan is check the five year forecast. If it's not over some number (I think he said $50 million) he throws the plan out. Even though he knows full well that all revenue forecasts are just dreams, he still has decided that if the dream isn't big enough he isn't going to look any further.

So everyone seems to be swinging for the fences.

So what if a venture fund decided to go for all singles? Here's an interesting scenario:

What if a $10 million venture fund decided to invest $100,000 in 100 different early stage companies who had modest plans but a very low risk of failure? There are a lot of factors that can reduce the risk of failure: low startup costs, established partnerships, proven sales model, experienced management team, growth industry, use of technology, internet marketing skills, etc.

In fact, what if the venture fund focused energy on training key employees in each startup (group seminars, executive curriculum, required readings, etc.) so they could develop the skills they needed to be successful?

What if 50 of these companies fail, and the other 50 end up growing to $1 million in annual revenue over a 5-year period, and were either breakeven or slightly profitable?

What if the venture fund had the right to liquidate each company that didn't achieve more than $2 million in annual revenues in a 5-year period, and it's equity stake in companies under $2 million in revenue were automatically pushed to 50%? In other words, if the management team doesn't hit the milestones of $2 million in revenue, not only does the venture fund have the right to sell the company, but the management team doesn't get all the equity they originally hoped for.

So back to the scenario. If 50 companies doing $1 million in annual revenue were each sold for 1x revenues and the fund owned 50% of each company, then the fund would return $25 million to its investors.

The little calculator at youcalc.com says this would be a 20.1124% annual return over the 5 year life of the fund--higher than the average return for venture capital funds over the last 20 years.

Does anyone know of any venture capital firm that systematically goes for singles, and tries to help every company it invests in to eliminate the possibility of failure? I think that VCs often increase the chance of failure by investing too much money and asking management to spend it quickly so they can get big fast. The VCs still win if only 2 out of 10 portfolio companies hit a home run and the others all fail. But what about the entrepreneurs? 80% of them end up with nothing if 8 out of 10 companies fail.

Has anyone ever thought of something like this, or tried it? I'm curious to know if there is any academic literature on this or if anyone can point me to any articles that explore this concept.

Inspiration from the Founder of JetBlue

paulballen — Thu, 14 Apr 2005 21:57:44 -0700

Today I had lunch with my cousin, an attorney from Salt Lake City. He told me about taking a JetBlue flight from New York last year and having the good fortune of being on the same plane with JetBlue Founder David Neeleman. Neeleman served the customers, as is his custom, and then sat next to my cousin and chatted for some time.

My cousin is not alone. Thousands of people have experienced David's personal service and concern. Last year Norm Brodsky wrote an article for Inc Magazine about how he met David Neeleman on a similar JetBlue flight. He asks all entrepreneurs how often they take time to talk personally with customers.

Just last week, JetBlue was again recognized for offering the best airline service.

A couple months ago I wrote an article for Connect Magazine which hit the newstand this week about how David Neeleman has inspired me to more earnestly search for business heroes.

Keep your eyes on Neeleman if you want to learn outstanding lessons about succeeding in business by putting your customers first and truly caring about them.

iProvo: Fiber Optic for a City of 100,000

paulballen — Wed, 13 Apr 2005 14:25:59 -0700

Provo, Utah, a city of more than 105,000 has owned its own power plant since 1940 (see Provo Mayor's message: November 2000). In 2000, Mayor Lewis Billings began discussions that resulted in decisions to deploy a city-wide fiber optic network called iProvo.

The city owns this network, but leases it to companies who will provide telecommunication services to Provo residents and businesses.

Larry Lessig would be pleased. He slammed the private sector in a Wired magazine article last year for failing to deliver broadband services quickly enough in the U.S. This nation has fallen from 1st place to 13th place in broadband deployment in the last few years.

Today I checked the map to see when my neighborhood will get the services. We are in one of the phase IV sections, so service will get here in July 2005. The entire city will be finished by mid-2006. iProvo claims speeds that are 100 times faster than cable and 250 times faster than DSL. I can't wait. I've had high speed internet since I bought a DirecPC satellite dish in the fall of 1995, but I've never had speeds this fast, even at work.

Novell is making 25,000 sq. ft of space available in one of its buildings for an incubator of open source software companies. All the businesses who locate there will be hooked into the iProvo fiber network, given them tremendous bandwidth at a very reasonable price.

Meanwhile, UTOPIA, the largest municipal fiber optic network in the country is now available in Orem and will soon be available in 14 other cities who voted to participate in this project.

It's nice to live in such a forward looking state. First the Utah pioneers developed irrigation techniques in 1847 so they could raise crops, even in a desert.

In the late 20th century we invented computer graphics at the U. of U. (Evans and Sutherland), digital audio (Tom Stockham), word processing (WordPerfect), and computer networking (Novell.) We also lead the nation in entrepreneurship, with more Inc. 500 companies per capita than any other state.

Now the UTOPIA project and iProvo will help ensure that we maintain an edge in innovation.

Thanks Mayor Billings and whoever championed UTOPIA. With our fastest internet speed, highest birth rate, and the biggest population under 18, we're going to be a force to be reckoned with for generations.

Raser Technologies Raises $20 Million

paulballen — Tue, 12 Apr 2005 22:04:40 -0700

Provo, UT-based Raser Technologies has raised $20 million in a private placement. The company went public in October 2003 and has an amazing two year stock chart.

Enterpreneurs in Utah should track publicly traded and fast growth Utah companies, so they can know who they can learn the ropes from. I have 44 public Utah companies in my MyYahoo Finance tracking portfolio. Job seekers should keep track of these fast growing companies as well. Two good lists of fast growing companies are the Utah 100 (awarded by Mountain West Capital Network every year) and the Top 25 Under 5 (awarded by Utah Valley Entrepreneurial Forum every year.) I like to track all these companies for business networking purposes and to find great speakers for the Utah Valley Entrepeneurial Forum and other business events.

Innovation in Mobile Content and Advertising

paulballen — Tue, 12 Apr 2005 21:04:58 -0700

I got an email this morning from MEOW: the Mobile Entertainment Opportunity Watch. The author lists these "cool companies" from the latest mobile conference he attended:

SOME COOL COMPANIES

ThirdScreen Media. This company is to mobile what DoubleClick is on the web. Established only a year ago, their timing to address the mobile advertising B2B opportunity should be good. www.thirdscreenmedia.com

M:Metrics. Seamus McAteer is launching a well-funded attack to create the 'Nielsen's-like' research and rating service for the mobile industry. www.mmetrics.com

m-Qube. Jon Bukosky took up the role as GM of Los Angeles and VP of Worldwide Content. This mobile marketing company is hot in Hollywood, partly fueled by the media industry growing to understand how to integrate promotional components into mobile programming. http://www.m-qube.com/

The State of Venture Capital -- 2004 returns and capital overhang

paulballen — Tue, 12 Apr 2005 16:20:28 -0700

A study was released yesterday which shows that venture capital firms averaged 19.3% returns in 2004, up from miserable numbers during the prior 3-5 years. There is an estimated $56.3 billion capital overhang in funds that venture capital firms have raised but have not yet invested.

Raising Capital from Angel Investors

paulballen — Mon, 11 Apr 2005 21:04:15 -0700

FundingUtah.com continues to attract angel investors and quality business plans from entrepreneurs. In order to create funding opportunities for startup companies outside of Utah, we will be launching FundingUniverse.com in the coming weeks as well as web sites for dozens of other states and countries.

Paul Allen the Lesser Climbs in Google

paulballen — Mon, 11 Apr 2005 08:20:18 -0700

For years I have been hearing about the "real Paul Allen." I was dubbed Paul Allen the Lesser by some of Utah's VCs to keep me straight from the Microsoft/Vulcan Ventures Paul Allen.

But my blogging is paying off. I now rank #3 in Google for the query "Paul Allen." Last year I was about #55, but I guess a lot of people are linking to my blog these days.

I always joked about contacting the real Paul Allen when I outranked him in Google to see if he wanted to invest in my search engine optimization company. I guess that day is rapidly approaching.

Last year I blogged about the benefits of blogging. I continue to find more. Last week I spent 30 minutes on the phone with some great Silicon Valley entrepreneurs who wanted to talk to me because of my "5 Most Valuable Services Most Entrepreneurs Can't Afford" post. We had a great visit and I now have new friends in the Bay Area who want to keep in touch.

Ourmedia vs Google; Wikipedia vs Britannica

paulballen — Fri, 08 Apr 2005 12:20:46 -0700

Google announced that it will host personal video content soon, but Ourmedia.org (a non-profit) is already offering free permanent hosting of any personal audio and video content. Check out the Ourmedia.org Alexa chart showing its rapid growth.

If Google's service is free and Ourmedia's is free, the winner will be the one that is easiest to use or has the most features, or perhaps is best integrated into consumer habits. So the winner will likely be Google (because their usability is second to none). Google will make more money on this particular feature than Ourmedia because its ability to monetize traffic and eyeballs usings its brilliant advertising model is much greater than Ourmedia's--therefore it is more sustainable.

It's interesting when a non-profit or open source project becomes the most popular service in its genre. It forces commercial players to build additional value on top of the free or commoditized service in order to generate revenue. In the end, while it's disruptive in the short term, in the long run, consumers benefit a great deal.

One of my favorite disruptions right now is Wikipedia, the open source encyclopedia which I have blogged about before. Wikipedia.org will soon become one of the top 50 most popular web site in the world soon. (It's one week average is #80). I actually think it will hit the top 20 in the next couple of years. This site is a great gift to mankind. It already has more than 500,000 articles compared to Britannica's 60-80,000, and thouands of improvements are made every day.

Wired Magazine posted an excellent article recently about the creators of Wikipedia--who some of top contributors are and what makes them tick.

One of the best books I have ever read is the Professor and the Madman: A Tale of Murder, Insanity, and the Making of the Oxford English Dictionary. It is a fascinating account of the 70-year history of the Oxford English Dictionary. Comparing the OED story with the making of Wikipedia shows how dramatically the internet has affected the pace of knowledge creation and organization.

Raising Private Capital--Powerpoint from Invest Nebraska

paulballen — Thu, 07 Apr 2005 23:04:57 -0700

When entrepreneurs post business summaries on FundingUtah.com, I want them to be able to list what stage they are at in their companies development. So I needed to find out how the industry categorizes companies that are seeking financing.

I found a great powerpoint from InvestNebraska.com that outlines the types of private equity that are available for entrepreneurs.

I was disappointed to be reminded about how little venture capital flows into seed stage companies. The data shows that in 2003, venture capital went into companies as follows:

Startup/Seed Stage, 2%
Early Stage, 18%
Expansion Stage, 55%
Later Stage, 25%

Of course, seed stage companies need relatively little capital while later stage companies need very large rounds.

The funny thing, as I blogged recently, is that seed stage investors have a higher average return than later stage investors. But most investors seem to shy away from doing this.

A more encouraging data point for new entrepreneurs was that 52% of angel investments are in seed and early stage companies, but it was 66% in 2002.

The categories we are going to use are:

Idea Stage (pre-team)
Startup/Seed Stage (team is being formed, pre-revenue)
Early Stage (revenue, but negative cash-flow)
Expansion Stage (need more capital to cross the chasm)
Later Stage (pre-IPO)

FundingUtah.com is showing a lot of promise. What I really need now is feedback from the 54 angel investors who have signed up for FundingUtah.com. I want to know what we can do to help them make more money by betting on the right entrepreneurs and teams. We're trying to get all FundingUtah entrepreneurs to join LinkedIn.com (and we link to their profile) so investors can quickly see who is credible. We're also thinking of making it possible for entrepreneurs to do online video pitches, so that investors can get a feel for them before meeting them for the first time.

If you have any other suggestions on how an online matching service can help angel investors more, please let me know. We may be rolling out other state sites soon and a parent site, FundingUniverse.com. That will put us in competition with FundingPost.com and vFinance.com, among others.

Google Promises Most Clicks for the Money

paulballen — Thu, 07 Apr 2005 20:04:38 -0700

Google's gaggle of Ph.D.s has added another yet intelligent twist on search engine marketing. Google's new Budget Optimizer will manage your keyword bids in order to get the highest number of clicks possible given your AdWords budget.

As search engine marketers know, you can burn through a budget very quickly by getting in a battle with a major competitor for the #1 spot on a critical keyword. I read recently that at the end of a quarter where revenue targets might not be met, two well-known diet companies were paying upwards of $60.00 per click for weight loss keywords.

Now, Google will take some of the emotion and intensity out of the process of getting clicks from AdWords by using an algorithm to optimize your campaign for you. I don't understand yet how this algorithm will work if there are say a dozen companies in the auto industry all bidding for the same keywords--how will Google optimize all of their campaigns at the same time. Optimization works best when you have "dumb" competitors who never change their bids or respond to what you do. Some smart SEO professionals have strategies to "trick" other bidders into going too high (and blow through their budgets) so that at the end of a month they can get sweet deals. Google's approach might make some of these games and tactics obsolete.

10 Finalists for Utah Entrepreneurial Challenge

paulballen — Thu, 07 Apr 2005 10:49:28 -0700

The Deseret News reported today the 10 finalists in the 2005 Utah Entrepreneur Challenge. They are:

Aculus Inc., which specializes in Web analytic software.
BilliardEx, which imports and sells pool tables.
CareXpress, which offers health care to people without insurance.
Cartoon Solutions, which offers customized animation for businesses.
eHealthCompete, which provides an interactive environment for employees to keep track of exercise activity and set up competitions.
HireVue, which has developed software that allows companies to conduct customized interviews over the Web.
Mirai Studios, which has developed a new style of video games.
Smart Tech Innovations, which has developed a new technology for medicine bottle caps.
Top Brands USA, which exports clothing from the top U.S. brands into the Ukraine.
Wasatch Microfluidics Inc., which has developed a technology that improves test results to better future drug developments.

I hope all these entrepreneurs will list their business summary on FundingUtah.com where there are more than $30 million in available funds from more than 50 angel investors throughout the state. Of course, not all of them are even seeking capital other than the $40,000 top prize they hope to win from this state-wide competition.

Imagining the Future

paulballen — Wed, 06 Apr 2005 08:45:07 -0700

You know what I love about the internet era? You use software and web sites and online services of all kinds, and when they aren't perfect you can blog about what you wish they did for you. Then, sometimes within a few weeks or months, the new version appears -- joila! -- and addresses what you wished for. You don't get the idea that your particular blog post was read by a particular decision maker at a particular company -- so there's no direct cause-and-effect relationship -- but you do get the sense that your post, added to or compounded by other blogs and emails to the company, collectively made a difference, if not in the decision to do something then perhaps in the timing or prioritization of it.

So imagine how happy I was today to learn that the new version of Skype allows you to import your Microsoft Outlook contacts. Last October 20 I wrote:

I'm blogging to give Skype this advice: please allow me to import all the phone numbers in my Outlook file to Skype. I'm lazy. Often I use my cell phone (a Blackberry 7230 from RIM) to make phone calls because all my contacts are one click away. It's almost instantaneous. I don't like dialing 10 digits on a desktop phone. If Skype could give me one click access to all my contacts, my usage would skyrocket.

This reminds me of blogging in November 2003 about how Google needed a desktop search engine and then on October 14, 2004 blogging about how they had finally done it.

It feels great to feel a need for something, blog about it, and then watch it happen later, even if there was no cause and effect relationship.

Alan Kay said the best way to predict the future is to invent it. But maybe now the best way to predict the future is to blog about it, so someone else will invent it.

Economist magazine has a 14-page spread this week about how the internet has finally made consumers king, after more than 125 years of retailers giving lip service to the notion that customers are king, now they really are because they can arm themselves with all the information they need before going into a store to make a purchase. Ford reports that 8 of 10 car buyers already know the model they want and the price they are willing to pay before going to a dealership.

As importantly, consumers can now have a greater voice in influencing the development of new products by using the internet, email and blogs to reach product developers with their opinions.