Archive for July, 2005

Are You Ready to Deal with VCs?

paulballen — Fri, 29 Jul 2005 10:42:32 -0700

If you are an entrepreneur and want to understand how smart VCs are in terms of financial wheeling and dealing, read this summary of the Intermix Media deal by VC Bill Birnhaum.

Like many entrepreneurs, you're probably either great at technology or
marketing, but you leave the finance stuff to others. This can be a
costly mistake. Invest a lot of time talking to investors and
entrepreneurs to get an idea for what kind of deals and terms are out
there. If you don't take the time to understand cap tables and term
sheets, trust me, you may be in for a wild ride, and you won't be in
the driver's seat. It can get painful.

Recently I loaned three books, including Term Sheets and Valuations (a
must read!), to a local entrepreneur who was raising a couple of
million dollars. He was very thankful. I told another entepreneur he
had to visit with Kent Thomas of CFO Solutions before accepting a term
sheet. He did, and they pushed back on a lot of terms and got a much
better deal.

Most of us make big mistakes the first time around, whether dealing
with angel investors or VCs. It's complicated stuff and not as
interesting as creating products and markets. But it's essential to get
good advice on these issues. Find some trusted advisors who have your
best interest at heart.

Design Your Own Personal Keyword Alert System

paulballen — Thu, 28 Jul 2005 09:07:19 -0700

I have almost 250 Google Alerts now on topics, people, and companies,
so I receive emails on my blackberry every time news occurs about any
of these. This is like having a personalized, real-time Burrelle's
clipping service that is delivered to my PDA. It is invaluable.

New terms I added today: fairtunes, giftwiki, bango, mobeon

Before I spend time personally one-on-one with entrepreneurs who want (free) advice, I ask them to do several things, including set up Google Alerts.

When I speak to students or educators I plead with them all to take
advantage of this amazing free service that will wire their brain to
breaking news around the globe about topics they are most interested in.

Imagine the increase in personal intellectual capital if every employee
in every company did this, and if every student and professor did this
as well.

Now fast forward a year or two when Google Alerts (or the equivalent)
will work with radio and TV broadcasts and conference transcripts and
university lectures and books as well.

Each of us will be able to design our own life-long learning
curriculum. We will be more intelligent, because we have designed our
knowledge alert systems, rather than reading a newspaper or watching a
TV news program with 22 minutes of airtime (with only a tiny fraction
of the information being relevant to us personally) and 8 minutes of
commercials, which are mind-numbing and inane.

One of the most useful skills in the future will be designing our own
personal keyword alert systems. I wonder if there is an opportunity to
consult with large corporations to help them implement personal keyword
alert systems for hundreds or thousands of employees, to help them stay
competitive, monitor their competition, be alerted to successes and
best practices that might affect them, and so forth.

I might be willing to design a consulting practice around this, in case someone is interested....

Most TV Ads Include URL

paulballen — Wed, 27 Jul 2005 23:36:31 -0700

A reader sent me this link,
which really surprised me. I guess I haven't seen TV commercials for a
long time since I use a PVR and skip all commercials all the time. So
it shocked me to learn than 51% of all TV ads include a URL, up from
18% in 1998.

Things I Love

paulballen — Wed, 27 Jul 2005 21:01:05 -0700

I love blogging.

Last month 23,000 unique visitors came to my web site, mostly to read
my blog. Two weeks ago I blogged about how only 4 students had signed
up for the Internet Marketing course at BYU that I'm scheduled to teach
this fall. Now there are 32 enrolled.

I love Wikis.

Our FundingUniverse.com
team launched a Wiki last week for entrepreneurs. We have 8 volunteer
editors so far who are going to help us recruit contributors and build
a Wiki that contains thousands of quotes and "success tactics" from the
most successful entrepreneurs of all time. Our hope is that
entrepreneurs will use this Wiki to find new ideas by discovering what
worked for others. I have several hundred extracts from
autobiographies, biographies, articles, and business histories to add
myself.

This morning at 4 am I woke up with two new ideas--a Wiki to track all
the venture capital firms in the world, and a Wiki to track angel
investors. I emailed our developer and by 12:00 noon he had launched both new Wikis
and the DNS was already propagated, so I could actually start editing
them. I was amazed. (I love smart developers. I love going from idea to
implementation in a matter of hours. That's what I try to optimize my
creative life around. That's why I like to be involved in lots of
companies with free developer resources.)

I love my mp3 player.

Whenever I don't have enough time for my morning "devotional" I listen
to scriptures, talks, and audio books on my Creative Zen 40 GB mp3
player. What I really want is an mp3 player that downloads content I want without having to connect to my computer; but that may
be a year or two away. In the meantime, I love content from Audible.com and LDSAudio.com. I'm looking forward to mp3books.com
(which my Infobase Media company launched a couple of weeks ago)
acquiring hundreds of new audio titles. I've been pointing them to some
wonderful sources.

I love my Blackberry.

I could accomplish only a fraction of what I do each day without my
Blackberry 7230 combo cell phone, email, address book and calendar. I
can type 55+ wpm using my thumbs. I have decided that this is my core
competency. :)

I love Yahoo's Mailing Lists feature.

I finally dumped Outlook (after my .pst files kept getting full) and
went to Yahoo Mail (I use Gmail as well to manage all my alerts). It
syncs with my Blackberry. I'm now taking my 2,600 contacts which were
extremely difficult to manage in Outlook and I'm building email groups
and lists very quickly.

VC Firms Increase Funding for Early Stage Startups

paulballen — Wed, 27 Jul 2005 18:07:53 -0700

A report shows that early stage funding is increasing.
$1.3 billion in venture capital flowed into early stage companies in
the second quarter up from $830 million in the first quarter. I keep
hearing that VCs are doing more early stage deals, but this is the
first report I have seen that bears this out.

Still, the 750 companies funded by VCs are a tiny number compared to
probably 10-15,000 that are funded each quarter by angel investors
(including friends and family, doctors and dentists and first-time and
serial angels). That is why there is such a need for FundingUniverse.com to match local entrepreneurs with local angels.

According to Angel Investing (p. 146), a book published in 2000 by two Harvard
Business School professors, "In the United States, angels invest in
around 22 percent of the deals they seriously consider" while "venture
capitalists invest in only about 1-3 percent of proposals received."

Serious entrepreneurs should consider both avenues when trying to get a
company off the ground. But the odds are far greater than angels will
fund your company than that you will be one of the few who attract
professional venture capital -- especially if you are a first-time
entrepreneur.

Mobile User Demographics by Carrier

paulballen — Wed, 27 Jul 2005 18:07:15 -0700

A fascinating report by M:Metrics on what kinds of cell phone users are attracted by each carrier, and how each carriers' users consume mobile content.

Strategy Tree

paulballen — Tue, 26 Jul 2005 16:01:02 -0700

I need help from some entrepreneurs and business school professors or students.

I am looking for ten people who will volunteer to be an editor on a new
Wiki for entrepreneurs, one that will identify the best entrepreneurs
of all time and the decisions that they made that led to their success.

We'll organize quotes from the entrepreneurs and extracts from
biographies and business histories into a taxonomy or decision tree. So
any entrepreneur who wants to know how to bootstrap, how to recruit
advisory board members, how to get their first sale, how to find a
strategic partner, or how to find an angel investor, will be able to
visit the Wiki, click on one or two links, and then read hopefully
dozens of actual quotes from actual entrepreneurs telling their story
-- how they did it.

Our goal is to spark the imagination of entrepreneurs by making it easy
for them to read how others succeeded each step of the way.

The wiki is live, but it's not ready for public consumption until we
have our volunteer editors in place. It is being sponsored by FundingUniverse.com.

The requirement for an editor is to spend about an hour each day adding
content to the Wiki (in keeping with our guidelines) and then, when we
launch publicly, to spend an hour each day making sure that the Wiki
content from outside contributors stays true to our mission.

We hope this turns into the Wikipedia for entrepreneurs worldwide.

If you have an interest, please email me at paulballen "at" yahoo.com.

Thanks

An Experiment in Open Source Business Ownership

paulballen — Mon, 18 Jul 2005 11:39:22 -0700

I don't have time to blog today...I'm preparing to fly out for the AlwaysOn Network event at Stanford...but I got this email about a very cool "wisdom of the crowds" concept where a group of 2,500 or so individuals will build and manage a new business by voting on the plan, who to hire, products to create, how to market them, etc. It's really a wild notion. I hope some journalist will pick up on this, interview the creator, watch the creation of this business over time, and write some interesting story about it.

Here's the email I got from the founder. I don't know enough about it yet to endorse it, but I like the experiment at first glance:

I've been searching the blogosphere for people interested in entrepreneurship and unique ideas to promote something new, www.thebusinessexperiment.com. It's an open source, "wisdom of crowds" approach to business. It may fail miserably, or it may change the way we think about business. I don't know, but it is my attempt to get these ideas more attention. I hope you will check it out and, if you like it, register and participate.

My initial post explaining it can be found at http://www.businesspundit.com/archives/002142.htmlBest regards,Rob May

Check it out and tell me what you think.

Finding Technical Jobs in Utah

paulballen — Fri, 15 Jul 2005 22:07:51 -0700

Robert Merrill has a great web site and seems to be doing all the right things to help employers find high tech employees and to help job seekers find great companies. He asked me to mention that there are a lot of good programming jobs available in Utah right now.

Looking for Utah Recruiters

paulballen — Fri, 15 Jul 2005 22:07:39 -0700

I'm trying to compile a list of 10-20 recruiters in Utah. I'm going to contact all of them to see if they might be interested in the Team Building Event that I am planning. The more qualified applicants we get for this founders retreat, the more successful it will be.

But I haven't yet figured out how recruiters could be involved, since they will want compensation for any help they give. But, maybe one recruiter could be a sponsor/underwriter of the event, and maybe their own database of talent could grow as a result of being involved.

Do you know of any Utah recruiters that do a lot with high tech? I know of Management Recruiters in Park City, and I read an article (I think in Connect Magazine) about two women who started a recruiting company recently in the Salt Lake City area. But I'm anxious to get in contact with any others.

According to Never Eat Alone author Keith Ferrazzi, every entrepreneur should know a recruiter and a fund raiser, since they are among the most connected people of all.

What other recruiters in Utah are you aware of?

BYU as an Incubator

paulballen — Fri, 15 Jul 2005 22:07:26 -0700

My friend Tad Walch wrote an article in today's Deseret News about the Business Week article that highlights Provo and 4 other cities as great places to start companies. BYU gets a lot of credit, as does the missionary program of the LDS Church, for creating entrepreneurs.

Tad got some good quotes from my other friend, Dave Bateman, who is possibly my favorite bootstrapping entrepreneur of all time--a constant source of inspiration and amazingly smart ideas.

I told Tad I would blog about what a great guy he is . . .

Google Maps and Venture Capital

paulballen — Fri, 15 Jul 2005 10:07:27 -0700

Ben Kou (a former Utah guy) from socalTECH sent me two great links yesterday:

I thought you might be interested in a Google Maps API implementation that intersects with your interests. This graphs Southern California venture investments against Google Maps: http://www.socaltech.com/intelligence/map/
You also might be interested in an unrelated page which graphs restaurant reviews in major U.S. cities (including Salt Lake): http://www.realeats.com/Salt_Lake/

Companies Using P2P in Business Strategy

paulballen — Fri, 15 Jul 2005 10:01:59 -0700

I found this one year old list of businesses who use P2P (peer to peer) technology in their business strategy. (The list doesn't include consumer file sharing companies.) Many are defunct. If you've considered using P2P, you should study this list.

Need Help Selling A Great Domain Name!

paulballen — Fri, 15 Jul 2005 07:07:26 -0700

I have purchased dozens of good domain names over the years, but haven't sold a great one before. But one of my companies is trying to sell the directory.net domain name.

From your experience, what is the best way to sell a good domain name like this? Should we list it on various broker sites (like greatdomains.com), hire a professional broker, or what?

Any suggestions would be appreciated.

Turnkey SEO Business Opportunity

paulballen — Fri, 15 Jul 2005 07:07:23 -0700

If you are entrepreneurial and would like to start your own SEO company, consider this: WebEvident (in our portfolio) makes it possible to start a turn-key SEO business, similar to The Search Doctor.

The Search Doctor was the first SEO startup company to license the WebEvident Technology (including the proprietary Predictive Engine) a few months ago. It is now generating new leads and clients every week. The company has more than two dozen customers and will be cash flow positive in another month or so.

Dane Robertson, CEO of WebEvident, can show you how with a small investment (most of it in online lead generation and sales) you could have your own search engine optimization agency up and running within weeks. He'll also help you set up the online lead generation system, your own CRM system, and training on how to use the WebEvident technology.

If you are tired of working for someone else, and have sales and marketing skills or management skills, let me know, and I'll put you in contact with Dane, where you can talk about licensing this technology or getting set up with your own franchise SEO firm.

Junto Partners Present at UVEF

paulballen — Fri, 15 Jul 2005 06:07:16 -0700

Greg Warnock, founder of Junto Parnters, spoke at the UVEF meeting today.

I missed the first couple of minutes, but tried to take notes as best I could on my blackberry. Here they are:

Greg's background: between 1988 and 1990 [dates might not be right] he started or funded 18 companies, including chemical, computer retail, selling cement edging, techsem(sic) labs which was a byu tech transfer deal, another company was a tech transfer deal from Cornell, another company had technology to monitor high volume freight.

Later, he invested in Knowlix, cofounded vSpring in 2000. This was something of a departure from pure entrepreneurship, but it was worthwhile. Our community needed this. But there were elements of entrepreneurship that he missed.

Without a grand scheme in mind, he invited 15 entrepreneurs to his home to discuss what gets in the way of people being entrepreneurs. He proposed telling them all he knew about entrepreneurship in 8 weeks, thinking that if they could just all work for themselves, this would be a cure for all job ailments. This discussion turned into Junto. Out of that group I selected 5. They named themselves Junto. Its hard to develop a peer group as an entrepreneur.

Failure comes from picking the wrong project, overcommitting to the wrong idea, or the lack of a little lubricating capital.

Q. Who funds the Junto group? A. The first year he did it. Last year he met Alan Hall. He has become committed to the Junto idea, so together they provided the capital for 2nd year's groups of 10 Junto winners.

Q. What is the deal between Junto members and investors?A. We want it to become a self-sustaining model. When we run out of money, the first years' should be returning to the fund.

Q. Does Junto get debt or equity in the startups?A. Primarily debt, but 35% equity is used to fuel future Juntos.

Introduction of Junto 2004

Brent Davis: His deal is a tool to sell to professional and collegiate sports teams, enabling them to communicate more with fans, and let fans track events they are planning to attend. The Junto model lets us look at a lot of deals, shut them down quickly if they don't work. This idea works for him because local pro teams liked it, and it's higher ticket, and it's face to face sale. We sell it to teams as a subscription. They offer free downloads of our software to their fans. [He hasn't heard of SportsNutz, which Steve Grizzelle said was sold recently.]

Brent Thompson, Agile Studios. He runs a software engineering firm, they do a lot with open source. He already had this going before he joined Junto.

Q. What did he get out of it?A. Four partners that are smartest, brightest people he has met, great networks, plus Greg's endless network.

Clint Carlos, Garagemahall (sic). They do high end custom garage interiors. Cabinets, flooring, lighting. Has been doing this a few months. He looked at a lot of deals before settling on this. He sent roofers to Florida after the hurricane, trying to put them to work in the winter during their offtime. But there was a major bottleneck in supplies, so it didn't work out.

Q. What is the consequence of failure to you? A. Probably mostly shame. I want to be one of the first millionaire's in the group. I don't want to have to work for one of these other guys. But if wasn't part of Junto I would love to work for any of these companies because of their growth potential.

Q. If you succeed, how does money get distributed?A. I own majority of my company and a small piece of others, and Junto owns a piece. There is no personal guarantee on the $50,000, which you would never get from a bank.

Will Allred, Firepoll. I was working on a marketing related deal, when a friend told me that the research was taking too long. The internet is supposed to provide instant communications, so they build software that allows them to run surveys quickly and sell data to companies, ad agencies, market research firms, etc.

This week they helped a software company choose a name out of about 12 options. They charge by number of responses, usually $7 per response for a short survey. Most companies will buy 100 responses. Our cost is from incentives. We pay about a dollar (cash, mp3 files, etc.) to our end users for taking the surveys. Our sweet spot is consumers age 13-34.

Ryan Money, HireVue. He worked on this from almost the very start. He saw a report that 50% of people fabricate on resumes. We want to solve this problem. Greg Warnock said he hated job interviews. Sometimes in the middle of them he wants to end the interview so badly he feels like pulling out $100 and giving it to the candidate and just saying, "this isn't going to work." HireVue lets you see video clips of candidates before bringing them in. He hired a couple developers to build it, but they didn't succeed. So in the meantime, while it was being developed, he bought a LoveSac franchise. He learned a ton by running this retail business. First, you get a ridiculous number of tax notices. He has also learned the rule of two: things always take twice as long, and cost twice as much as you think they will. I've learned a lot about having employees.

Benefit [of Junto] for me was having someone front the money.

One of our customers is an engineering firm in Canada. They used to fly people up. Now they do video interviews. They send cameras all over. We have a subscription model, like cell phone plan per minutes. We have some pods in call centers. Ave cost of goods is about 30%.

Q. What was the first thing you did when you found out you were a $50,000 winner? A. I saw it in email, I was ecstatic.

Q. What did you spend the money on?A. We are very frugal, free office space, commandeered other resources from wherever we could get them. Later we got some great space at LoveSac for about $200 per month, desks at DI. We got free biz cards at vistaprint.com. I got my software developed for equity, over 8 1/2 months with full time developers working on it.

Q. To Greg: what do you get out of this? A. I enjoy working with these guys, evenings, weekends, vacation time. Think of what happens if you sutract Huntsman, Sorenson, Eccles, Larry Miller from our economy, what happens to jobs, sports, arts, libraries, etc? I hope these guys become the next generation of business people that can benefit the community.

Q. How do you recruit?A. The first year he asked business school professors in the state for email addresses of their most passionate (not their smartest) students. He emailed them and asked them what they wanted to do the next 3-5 years, had them take an online personality profile, asked them if they had ever run a business before. From the responses he chose 15 for his first meetings.

Q. How does this scale?A. First year I had 35 candidates, invited 15 and chose 5 winners. The next year we had 85 applicants, held one class in the south and one in the north. We had 10 winners that year. There are now 15 active Junto partners.

Q. What next?A. It seems like there should be a master plan, but there really isn't. I'm just taking this a step at a time.

Q. [Dave Politis] What is the best idea you didn't fund?A. [Greg] The Junto candidates don't come with ideas; they are selected for their capabilities, for getting stuff done. We test them on selling stuff (bottled water, LoveSacs), on organizing service projects, etc. Some people just get things done, others don't.

Greg. Each Junto comes up with their own operating agreement, how much equity to split, how to release funds, where to office, what hours to work, etc. This would make fascinating case study.

A recent survey shows that the average time to rev in Utah startups is 14 months based on responses from 400 entrepreneurs.

The Junto winners know that the future funding for Junto will come from their successes. We can only do this for about 3 years, and then we will need to have funding come from prior years' successes.

Who Can Blog This Event for Me?

paulballen — Thu, 14 Jul 2005 22:22:41 -0700

I won't be able to attend this event next week:

7/19 Emerging CXO P2P Forum

Don't Miss Tomorrow's UVEF Meeting

paulballen — Thu, 14 Jul 2005 11:07:11 -0700

In May I blogged about Junto and a Salt Lake Tribune article about this super-innovative new business model for creating teams of entrepreneurs. Tomorrow's UVEF luncheon (Provo Marriott at 12:00 pm) will feature Greg Warnock, the visionary behind Junto, and several of the Junto winners (there have been 15 so far who have received $50,000 in startup funding.) I totally love this concept and can't wait to hear more about it. Here's a link to the UVEF July newsletter which announced the program.

Provo Highlighted in Business Week

paulballen — Thu, 14 Jul 2005 11:07:09 -0700

Alianza, one of Provo's newest exciting startups, is mentioned in a Business Week article about why Provo is a great city for entrepreneurs.

Internet Marketing at BYU -- Fall Semester 2005-2006

paulballen — Wed, 13 Jul 2005 22:36:58 -0700

This fall, I'll be teaching BusM 457, a 3 credit hour class on Internet Marketing. My name isn't listed in the course catalog, and only 4 people have enrolled so far. If that doesn't change, and if we don't get at least 15 students, I'll be embarrassed and BYU may not hold the class. Don't let this happen.

The curriculum will be my first attempt to teach everything I know about internet marketing in 16 weeks. (I previously taught entrepreneurship at UVSC which included about 4-5 weeks on internet marketing.) I'm extremely excited about the class and the opportunity to teach at BYU. If you know any BYU business, computer science, or marketing students, do me a favor and let them know about this course. I'd love to fill it up.

Best Time in History to Start a New Company

paulballen — Fri, 01 Jul 2005 21:07:50 -0700

I argue in a recent Connect Magazine article that there has never been a better time in the history of the world to start a new company. Let me know what you think.

Google Maps API

paulballen — Fri, 01 Jul 2005 08:48:37 -0700

Finally, the Google Maps API is here so that web developers can overlay all kinds of data on top of the best online mapping system in the world. Soon worldhistory.com
will have tens of thousands of historic sites available to view on top
of Google Maps. It's currently being developed. I can't wait for this
to launch.