Archive for September, 2006

Mark Cuban on Becoming a Billionaire

paulballen — Fri, 29 Sep 2006 13:53:37 -0700

Last night I caught part of Big Idea with Donny Deutsch on cable. Donny was interviewing billionaire Mark Cuban, who is one of the smartest entrepreneurs I've ever followed.

The best written article I've seen about how Mark turned Broadcast.com into a multi-billion dollar company is the chapter in Net Entrepreneurs Only, published around 2000, to highlight a dozen or so successful online entrepreneurs. The work ethic that Mark and his partner Todd had back then is nicely described there. Mark talked about it again last night. He described a typical work day.

He works from home most of the time. Never lets anyone call him on the phone (except his wife). If they want a phone meeting or if he needs to have a meeting in person, he arranges it through email. His wife has 2 girls, including a 6-week old girl, so Mark describes a typical day as involving playing with his girls, feeding them in the morning, he even mentioned watching the Wiggles and Stanley with his older daughter. He had a great daddy-gleam in his eye as he talked about his girls. He seems to care more about his family than anything else.

I think there are at least three major lessons we can learn from Mark Cuban. (I happen to have almost the exact same approach to work that he does, and is has taken me places, but not nearly as far as Mark. Not even close. So we'll use Mark as the reason why internet entrepreneurs should adopt these practices.)

1. He reads like crazy and uses email like crazy and has access at his fingertips to all his correspondence for the last 15 years. The way he described it on the Big Idea was really cool.

(I have used Folio VIEWS for 16 years as my full-text database, and now I use gmail for my email archive. Someday I'll combine the two into a single seach engine.)

Mark dives in deep to any new technology. He learns everything he can about it and talks to all the pioneers in developing it. He knows his stuff.

2. He is willing to do the blocking and tackling to build a business, even if it means thousands of hours of what others might think is tedious work.

He described launching AudioNet (the precursor to Broadcast.com) and working crazy hours doing nothing but posting on forums and emailing and doing everything possible to generate interest and usage of his internet sports radio channel.

3. Like Warren Buffett, who claims that being an investor made him a better business man, and being a business man made him a better investor, Cuban obviously does both, does them a lot, and loves them.

The reason he was able to sell his internet company at a peak valuation of $5.7 billion is that he had seen the hardware industry, the networking industry, and the software industry all go through bubbles. He sold a computer software company for $6 million in 1990, and started investing. So he knew some of the macrotrends in the investment industry and saw the internet bubble for what it was. He got out when he could.

He said, and he is 100% right, that most entrepreneurs aren't willing to do the required blocking and tackling to build a successful company. John Bresee, at BackCountry.com, describes pretty much the same approach in the first few years of BackCountry.com. It was mostly going online all the time, trying to get links to your site, posting in usenet groups, on message boards and doing email. Same thing for the 2nd person at eBay. I remember reading that he used to answers something like 1,500 emails per day.

Most of the internet millionaires I know and the internet billionaires I've read about were completely willing to work 12-16 hours a day doing the most tedious possible things, like email and guerilla marketing, in order to get their companies in a position to win in their market.

How many of you are willing to do that? Have you ever spent till 2 or 3 in the morning working on your web site, visiting and posting on message boards, looking for the hundreds of online directories that should be linking to your company, finding email lists to advertise on, and visiting thousands of sites looking for the ones that ought to be your affiliates?

How many times have you done that? Would you be willing to do it many times a week, for several months, or even a year or two, to get your company in a position to succeed.

For some people, it might not be worth it. There is definitely more to happiness than financial success. And sometimes the pursuit of financial success costs people their health, family, friends, and peace of mind.

So it's definitely not for everyone. But it is an essential ingredient in most entrepreneur success stories.

Another lesson I'll point out, is that Mark Cuban is an avid blogger, and probably has one of the most interesting and controversial blogs in the world. He is never afraid to say what he thinks, no matter what fine the NBA might throw at him. He is incredibly smart and outspoken.

I have said before that every CEO should blog. It is so healthy for CEOs to be in touch with customers, employees, and to get feedback from everyone. And I love the transparency of blogging. That is healthy for companies.

If you are an internet entrepreneur, definitely check out the Mark Cuban blog regularly. He talks about trends that most people ignore. He got into HD TV when so many people ignored it, partly because he saw computer pricing drop over the years which led to a huge adoption rate, and he saw the same thing coming with plasma screens. He knows that we will all have amazing high-definition screens in multiple places in our homes in the coming years, and so just like with Broadcast.com where he and Todd went on a rampage and signed hundreds of licensing deals for audio content on the interenet in the first years in business, he repeated that approach with HDNet, and he is a leader in that marketplace now.

He has more ideas that he can handle himself, so sometimes he'll throw things out that he won't be doing personally, like this post about "3 ideas that are all yours." Not well received by some of his readers (he has a TON of comments on his blog.)

Google's Incentive for Search Engine Marketers

paulballen — Thu, 28 Sep 2006 12:09:52 -0700

I like Google's Advertising Professional Program. By becoming a Qualified Professional, internet marketers who manage pay-per-click accounts for multiple clients can get $100 credits for each new client they set up -- up to 60 per year.

This will certainly motivate search engine marketers to find more clients and get them set up with a pay-per-click campaign. Francisco Rebollo, the pay-per-click marketer who helps Provo Labs companies, is a Qualified Professional, and he has room for 1-2 more clients. If you are interested in his help, please send me an email and I'll connect you with him. (Click on CONTACT ME on my blog home page. It still uses my old Yahoo email address, but it should get forwarded to me. My new address is PAUL AT provolabs.com. (I don't use the @ sign because I don't want to get spammed...)

Another Google program that cuts smaller companies in on the multi-billion advertising revenue stream that Google generates is the AdSense program. AdSense has helped hundreds of thousands of content sites who formerly had a very hard time generating revenue from their traffic.

Yahoo has its Publisher Network and MSN is apparently working on its ContentAds network for web site publishers.

Has anyone compared the results from AdSense with YPN and ContentAds? Please let me know what you've seen or heard.

Company and Product Launch Events

paulballen — Wed, 27 Sep 2006 14:52:11 -0700

Startup companies with finished products need publicity, media and blogger coverage, and analysts and reviewers to take note of what they are doing. They also often need investor interest. Since investors often flock to the same hot deals, it can be good to have a large number of investors exposed to your deal at the same time.

Some launch events give startups a chance to reach all these audiences at the same time.

DEMO is a semi-annual event that has featured pitches from some of the remarkable technology companies of our time. Investors and the media pay a lot of attention to the companies that get selected to present at DEMO. At every DEMO, conference organizer Chris Shipley chooses a number of DEMOgods that are worthy of special attention.

Yesterday and today, about 70 hot companies have been introducing their products at DEMOfall 2006, including Pluggd, a Seattle startup with a podcast search engine that I am very interested in, whose video presentation you can watch here.

At Demo, your presentation will be recorded and stored in the Demo Video Archives permanently. So there will be a long tail of publicity and potential interest in your company.

I wish I were at DEMO, but at least I get to watch videos on all the companies that I'm interested in.

Besides DEMO, what other launch events are possible for high tech startups?

Someone ought to do a directory or Wiki of launch events, if one doesn't exist already. I know of a few.

FundingUniverse.com offers speedpitching events in several states. They aren't so much a public launch event, but they are a great way to reach local angel investors.

Where can you find a way to reach a group of early stage VCs all at once, rather than making the trek to Sandhill Road in the heart of Silicon Valley or hanging out at Buck's Woodside Restaurant, where more venture deals have been done than anywhere else on earth?

The VC Forum brings a number of Silicon Valley venture firms to cities around the country to meet local entrepreneurs and look at potential deals. One Provo Labs company is actually presenting on September 28th at VC Forum in Salt Lake City.

Another option is the Silcon Valley Association of Startup Entrepreneurs. I received an email yesterday from Jennifer, who represents SVASE, and she asked me to publicize one of their upcoming events. So here it is:

SVASE is hosting an event called Launch: Silicon Valley (www.launchsiliconvalley.org) occurring on November 8, 2006 at the Microsoft Campus in Mountain View, CA. The event will bring together the Top 30 best and brightest A and B round startups and will provide these start ups with a chance to showcase their products in front of an audience of leading Silicon Valley VCs looking for their next investment, and companies seeking to leverage business models and technologies as customers, strategic partnerships and potentially acquirers.

As an advocate for entrepreneurs I was hoping you could spread the word about this great opportunity that many of your readers might appreciate. If so here

Yahoo Mail Question

paulballen — Tue, 26 Sep 2006 23:47:09 -0700

I switched from Yahoo Mail to Gmail a long time ago, but I still get dozens of emails a day sent to my old Yahoo email address. I forward them to Gmail, but I'd like to make sure my 2,600 contacts in my Yahoo Address Book and many thousands of other people who have emailed me in the past know my new email address.

I've avoided using Plaxo just because it annoys me so much when other people use it. I love LinkedIn.com because the email addresses of my 480+ contacts there get updated automatically whenever they update their profile. Maybe I should use Plaxo, but I'm looking for another solution.

Does anyone know how I can email not only the contacts in my Yahoo Address Book but also the thousands of others with whom I have corresponded in Yahoo Mail, whom I haven't added to my Address Book?

I've been looking for some kind of email harvest tool, but every one I found works primarily on external web sites and won't allow me to legitimately harvest my own email contacts in my own personal address book?

That is my first question.

My second question is how do I harvest all the email addresses from people who have posted comments on my personal blog? I'd like to invite them to listen in on a free conference call and possibly join an online network of entrepreneurs in an exclusive private forum. I certainly don't want to collect their email addresses on at a time. I use WordPress 2.03, and I read something about a MySQL query that could give me access to the email addresses of the commenters, but I don't know more than that.

That is my second question.

Finally, how should I get around the Yahoo Mail limit of 100 emails sent at a time? To notify all my legitimate contacts that my email address has changed, I'll need to send about 5-6,000 emails out, and I don't want to do them in batches of 100.

That is my third question.

Any suggestions from all of the wonderful people out there?

Internet Marketer Wanted for Fun Provo-based Educational Software Company

paulballen — Tue, 26 Sep 2006 20:21:51 -0700

A friend emailed me this job description and said I could blog about it. Someone will have a lot of fun working in this exciting small company:

Company: Big Brainz
Job Title: Entrepreneurial Sales / Marketing / PR Director
Description: ABOUT BIG BRAINZ
Headquartered in Provo, Utah, Big Brainz is pioneering an incredible new generation of educational video games

#1 Need for Startups

paulballen — Tue, 26 Sep 2006 17:31:26 -0700

In May 2005 Fraser Bullock, one of Utah's brightest lights in the financial world (formerly with Bain Capital, now runs Sorenson Capital, helped with the 2002 Olympics turn-around), spoke at the Edison Conference in Salt Lake City.

Fortunately, I had my blackberry and I took extensive notes. Here are my notes from the middle part of his talk:

Management has to be adaptable. 1990 someone brought him into run home shopping network, pre-internet. Challenge was to get consumers to buy. They had a patent. Decided they had assets, what could they build that might be of worth. Built transaction processing engine for remote banking. Sold it to Visa International in 1994.

In fast moving tech environment, if I didn't step back every 3-6 months to fundamentally re-assess our assets and the environment, I might be missing a paradigm shift. You need the discipline to step back.

We invested in a hardware company, but we saw the asset in the software they had developed. We invested in it, but are converting it to a software company.

Ultimately we have to produce revenue. That always comes down to distribution. Our 1990 company did deal with Visa, they distributed to thousands. For new companies, it's distriution, distribution, distribution. Must be big, fast, easy. We always asked â€œWhere is the money.â€

Long term, to succeed, we needed to have a strategic competitive advantage. What makes you different? What will make people buy this? This is essential to any company we look at.

When you are looking at changing behavior (even if your product is twice as good), inertia is your worst enemy. Sometimes you have to be 10 times as good.

Looking at the handheld X-Ray system he said he'd like to use this on teenagers to find out what is going on in his life.

Utah more and more is coming of age. To our chagrin, most of the big tech companies we've built here have left. But we are getting more critical mass. And there is more capital now. The overhand is astonishing. If you have good management team and a distribution strategy, the money is out there.

We need companies here, and high paying jobs.

The key takeaway from Fraser Bullock's talk that I have been thinking about lately is his strong emphasis on distribution as the key to revenue.

Without sales and marketing distribution channels, you cannot get to revenue.

I also have notes from a Greg Warnock UVEF speech last year where he said a recent survey of 400 Utah entrepreneurs showed that the average time to revenue for a startup company is 14 months.

I think that is WAY too long. I think that if entrepreneurs would focus on distribution, they could cut the time to revenue dramatically, and find much greater chances of success.

I have a friend who made the Inc. 500 list in the 1990s, with a couple million dollars per year in annual revenue. He told me once that his revenue was tiny until he found a new distribution channel: home school conventions. Once his company found success with home school conventions, they started going to all of them and the company's revenues jumped dramatically. If he hadn't found this channel, no doubt the company would have folded.

So it's all about the channel.

At Infobases, the first company I founded and ran from 1990-1997, our two primary distribution channels were LDS bookstores that sold our CD ROM products, and then over time, our house mailing list, which eventually grew to nearly 150,000 customers.

There are different channels for different products and services. Each industry is unique. Entrepreneurs need to discover all the various channels and layers of influence that affect how decisions are made.

There are retail channels, network marketing channels, direct marketing, distributors and value-added resellers (VARs).

Since 1996 I have been focused primarily on the internet as a sales and marketing channel. My favorite "internet channel" is affiliate marketing, where thousands of motivated entrepreneurs and webmasters aggressively promote your products to all their site visitors or email list subscribers.

My next favorite channel is search engine marketing, a powerful channel where every keyword you purchase or get high natural rankings for becomes a sales person working for you 24-hours a day.

I don't know if I'm abusing Fraser Bullock's definition of a channel by describing the internet as a channel. But I do know that many if not most of the pureplay internet companies from the mid-90s have expanded over the years to become multi-channel retailers.

Except for potential channel conflict, which can damage a company, there is little reason for a company to stay purely within one channel. Companies want to expand, and finding new channels is a great way to grow your business.

But for startup companies, finding the first channel that gets you customers and revenue is the most important thing.

One unusual source that I rely on again and again to discover potential channels for companies that I am involved in is the Directories in Print, published by Gale. I own a 2003 edition. But local university libraries often have the latest edition on the shelves.

Directories in Print is like the yellow pages, which I also sometimes use for brainstorming potential channels and strategic partners. It covers hundreds of categories and topics. And within each topic, it lists industry organizations, associations, published guides, and all kinds of directories of members and companies. It's a great starting place to get a feel for an industry.

Next, I like to research all the periodicals and publications that cover a particular topic. The Gale Directory of Publications and Broadcast Media lists more than 11,000 periodicals, newspapers, radio, TV and cable stations. The 1994 edition listed more than 50 periodicals in the genealogy industry.

The Standard Periodical Directory lists more than 70,000 titles in 230 subject areas. Oxbridge publishes several titles including the Oxbridge Directory of Newsletters.

I don't have copies of any of these, but I hope to get copies of many of these reference books for the Provo Labs Academy Library. For now, we'll just prepare a directory of the most useful ones along with their call numbers in the BYU Library.

I've blogged before about the great need for entrepreneurs to write things down. Intellectual capital, even the name and email address of a single person whom you once met, might be the key to your finding the channel that will turn your company into a success.

The Apprentice episode a couple years ago that showed two teams competing to attract brides to a single day wedding gown sale in downtown New York City ended with one team failing miserably and the other team selling dozens of gowns to the crowd of brides-to-be that flocked to the sale. The difference? One team knew about theknot.com's bridal registry database; the other team did not.

The team with a channel wins over the team with no channel.

So what is the #1 need for startup companies? Find a channel that helps you find customers and generate sales. Of course as Fraser Bullock also pointed out, you have to have a great product to break into a channel, sometimes 10 times better than the competition that is already entrenched.

But some channels, like the internet, are great for new companies with new products. I encourage entrepreneurs to use sales channels like eBay to see if they can sell their product to the millions of people who shop there before investing thousands of dollars in building their own web site. I also advocate setting up stores on Yahoo and Amazon and not merely relying on your own single storefront. Take your products to where the customers are. Use all the available channels to reach the maximum number of people.

The ebook publishing company that Provo Labs recently invested in has some great online channels, including Handango and Mobipocket, with more coming soon, including a major web retailer.

The Deseret News has become a great partner for the LDS Media products. And mp3books.com is working with FranklinCovey to make its audio books more widely available to its customers.

FundingUniverse.com is using Sprout Marketing to help identify influencers in the angel investing world and also to find potential strategic partners. Strategic partners that bring you into contact with their constituents can also be considered channel partners in a broad sense -- don't just think retail channels.

So if you are a startup, think long and hard about the channels that you are going to use to get your company to profitability. Spend more time on that than you ever have before, and your chances for success will increase.

Advice from Shawn Nelson

paulballen — Mon, 25 Sep 2006 17:28:05 -0700

Kelly Anderson blogged about her lunch visit with Shawn Nelson of LoveSac and his wife Tiffany who owns a shoe boutique at the Gateway in Salt Lake City. Shawn gave her advice about retail and brand building.

Kelly has an excellent blog. I love how she gets so many other women entrepreneurs to guest blog on her site. One example is the guest blog from my friend Erika Wilde of StopDirt.com, who post some excellent advice about finding products to sell online.

Free conference call for entrepreneurs

paulballen — Mon, 25 Sep 2006 17:04:49 -0700

I'm back from a 10-day vacation to Florida and the Western Caribbean (I even swam with stingrays at Disneys Castaway Cay). I am well-rested and eager to spend more time promoting entrepreneurship. This week I have several important things on my calendar.

Tomorrow at 1 pm MST I will be doing another Conference Call University teleseminar on entrepreneurship. Normally listeners pay to join these conference calls where we answer questions submitted by attendees.

But tomorrow we are offering free registration. Please visit www.learnfrompaulallen.com to sign up. Space is limited, so sign up now.

Later in the week Corporate Alliance is holding its three-day Reunion Summit, where more than 200 business owners/managers from Utah will be networking and deepening their relationships with one another. I love the culture that Corporate Alliance promotes.

Thursday I have been asked to speak at the Utah Valley Leadership Summit at Sundance from 8:15-8:45 am. I'm excited to talk with more than 100 business leaders about the state of entrepreneurship in Utah county and to talk about the role the media, government and educational institutions can play in promoting it.

Thursday afternoon my BYU lecture will cover pay-per-click marketing and search engine optimization--two of the best ways to bring visitors to your web site.

Finally, we are days away from opening up the new Provo Labs Academy on 9th east in Provo, across the street from BYU. Our internet access (including wireless) and phone systems should be ready by the end of the week. Our library is being organized and our conference room is being prepared. Most of our workstations should be furnished and ready to rent by next Monday. I'm working on the training curriculum and guest lecture calendar. This is going to be a lot of fun.

I recently blogged about the reasons that entrepreneurs give for wanting to join the Provo Labs Academy:

The #1 reason for people wanting to join the Academy was to be close to other entrepreneurs! 2nd was internet marketing training. And #3 was the location.

We hope to have 50 entrepreneurs in the Academy by the end of the year. I'll post the training topics soon and also the list of confirmed guest speakers, so you can see even more reasons to join.

And for those of you who live hundreds or thousands of miles away from our entrepreneurial paradise here in Provo, Utah, there's always the Conference Call University. Remember the free call tomorrow at 1 pm MST.

$31,000 in Prizes at BYU Student Entrepreneur of the Year Competition

paulballen — Wed, 20 Sep 2006 01:54:32 -0700

Kevin Willeitner, one of my BYU Internet Marketing students asked me to blog this:

Student entrepreneurs now have their change to win a little money to put into their business. The Collegiate Entrepreneurs' Organization of BYU is now accepting applications for the 2006 Student Entrepreneur of the Year. So far, they are planning to give out a total of $31,000 to the winners with $12,500 going to first place. Contestant get prizes all the way down to 12th place, so the chances of winning something are quite good. Last years winner was Jayson Edwards of J-Dawg's (a small hot dog shack on the edge of the BYU campus.)

Here is the official BYU Student Entrepreneur of the Year website.

Other previous winners include Adam Edmunds (CEO of Allegiance), Dave Bateman (CEO of Property Solutions), and Jonathan Coons (CEO of 1-800-Contacts). All of experiencing great success in their businesses.

Business competitions like this are a great way to get publicity which can be leveraged in a variety of ways to help your company succeed. The cash prizes don't hurt either!

I read recently that in the 1970s there were something like 20 university entrepreneurship programs in the U.S. Now there are something like 2,000. Many of them have business plan competitions these days. I wish there were a central directory of these competitions. Here's an incomplete one.

I know our team at FundingUniverse.com is interested in making sure that the winners of business plan competitions and the winners of Entrepreneur of the Year competitions like this one get a chance to meet with local angel investors when the time is right for them to raise capital for their business.

This one will be fun to watch, because I'm sure I'll know quite a few of the students who will be in the running.

Lingotek Needs Online Marketing/Sales Manager

paulballen — Tue, 12 Sep 2006 19:40:34 -0700

My friend Tim Hunt, a venture-backed entrepreneur whose company Lingotek is located at the Novell Open Source Incubator in Provo, called me the other day and said they have a new job opening for someone in internet marketing and sales.

I told him I would blog about the new position. His company has funding, a lot of momentum, and they are generating lots of buzz in the translation industry. Many leads are coming in every day. They have a powerful business model that takes advantage of the network effect. The last time I saw an exciting and innovative business model in Utah was Logoworks. I think Lingotek has a bright future.

Here is the job posting he sent me:

As I mentioned on the phone we are looking to hire a Director of Online Sales and Marketing. Here are some background points on the company and a description of the position.

About Lingotek

Lingotek has created a new kind of translation technology called a Language Search Engine. It is basically a Google-like tool that runs in a web browser searching multilingual content. It differs from an internet search engine in two ways. First. it does meaning based searches instead of concordant searches like Google. If finds the same words with the same meaning in the same context in any language in the world. Second. it searches and indexes multilingual content stored on Lingotek servers from the community of translators around the world. It doesn

Alan Hall at UVEF on Thursday, September 14th

paulballen — Tue, 12 Sep 2006 19:25:32 -0700

I received this email from the UVEF mailing list. I love the Utah Valley Entrepreneurial Forum. I've been attending its lunches for 8 or 10 years. I've also heard Alan Hall speak, and he is the most active and inspiring promoter of the entrepreneur->philanthropist cycle that I have ever met. Please don't miss the chance to hear him in person.

We're sorry for the short notice on RSVP's for the luncheon this month, but if you are planning on coming, please let us know by tomorrow, Sept 13th by 1:00 at the latest to ensure that we can make a place for you. Thank you for all you do to support UVEF and entrepreneurship in general!

Growing Utah's Businesses
presented by
Alan Hall,
Founder & Chairman of Grow Utah Ventures

11:45 a.m. to 1:30 p.m.

Thursday, September 14, 2006

Novell campus, cafeteria. Follow the UVEF signs

Alan E. Hall is the Founder and Chairman of Grow Utah Ventures. Hall also founded MarketStar, a company specializing in getting the innovative products of emerging technology companies into national markets. Although Grow Utah Ventures primarily assists early stage Utah business ventures in obtaining equity financing and in meeting revenue milestones, the company also facilitates all forms of financing, provides meaningful mentoring, and is creating an ever-expanding circle of resources. Close partners in the Grow Utah Ventures include Junto Partners, Top of Utah Angels, and the Olympus Angels.

Alan Hall received a degree in psychology from Weber State University and a Masters of Business Administration from BYU. He is the past President of Netline Inc., a current board member of UTA (Utah Technology Association), and a member of the Wells Fargo Bank Northern Utah Advisory Board. Hall was honored in 1997 by Ernst & Young as Utah's Entrepreneur of the Year.

Don't miss this exciting opportunity to learn how to grow your business from one of Utah's top 'movers and shakers' in entrepreneurship!

Call today to reserve your place.
RSVP by Tuesday, September 12 to: danpurdon AT cedo.org
or call 801-226-1521.

Google and History

paulballen — Fri, 08 Sep 2006 12:55:03 -0700

I am very impressed with Google's recent launch of its News Archives Search. Basically, in partnership with major content owners, Google is indexing newspaper and magazine articles going back to the 18th century.

I spent an hour doing various searches and found the content very interesting, although a lot of the historic newspaper content is full of typos and OCR errors, and much of the best content is available only for a fee. Over time, more and more good historical content will be free. The Time Magazine content is very useful.

I've been listening to an audio book called "Lies My Teacher Told Me" that reviews 12 American History textbooks and shows how false and full of misinformation they are, especially when it comes to religious, race, and economic class issues in American History. Textbooks gloss over these issues and almost never quote from original sources.

Google's News Archive Search is a step in the right direction. Combined with Google Print, which will bring millions of public domain books onto the web (and into PDF format for free downloads), more people than ever before will be exposed to actual historical content. I really wonder what it will do to our view of ourselves when we realize how racist and bigoted we have been in this country (like under Woodrow Wilson), and how interventionist we have been (according to "Lies My Teacher Told Me" the U.S. has intervened in Nicaragua 17 times) and how the way other nations view America is shaped in part by what they teach in their history books and we omit from ours.

My own political views have been affected by listening to this audio book and discovering some historical facts I have been ignorant of. I look forward to learning more.

Teaching Internet Marketing at BYU and all over

paulballen — Thu, 07 Sep 2006 19:58:18 -0700

I'm starting my internet marketing class today at BYU. It's Bus M 457. The class is Thursdays from 3:30 - 6:20. There are currently 29 students enrolled and room for more.

Today Marty Fahncke and I did our first Conference Call University teleconference call. We had 22 registrations for the call. Our next call will be in 2 weeks and we are hoping for 100 callers. Callers submit questions to Marty in advance and then he asks and I answer the questions, although he provides some great input as well. Today there were questions about fundraising for startups, pricing strategies, books to read, and how to focus on the most important things in a startup. The call was fun. I look forward to future calls. (Sign up for the next call)

Wall Street Journal Radio Edition: Story on Genealogy

paulballen — Fri, 01 Sep 2006 14:56:03 -0700

This morning on the radio (about 3:00 am on KSL's Wall Street Journal Broadcast) I heard the last few seconds of some big announcement about genealogy content digitization efforts. If you know what this was about, can you please comment or email me?

iTunes to launch movies soon

paulballen — Fri, 01 Sep 2006 14:52:50 -0700

PaidContent.org is the best single site for news about the media and content businesses. Read it, and you keep on top of virtually every important happening in this industry. (iTunes article)

Changes at Provo Labs: Returning to the Original Vision

paulballen — Fri, 01 Sep 2006 14:44:18 -0700

A month or so ago I held a difficult meeting with all the employees at Provo Labs. I started the meeting by admitting that I had made some mistakes in the past six months. Specifically, our burn rate got too high as we hired too many people, particularly developers. Our sales and marketing investments weren't sufficient enough to cover our overhead. And more importantly, we weren't creating dedicated teams for each new company idea, and giving the team members equity and letting them take risks along with the investor (Provo Labs), risks such as lower-than market salary. Instead, we were paying full salaries, and not giving options out, and shifting people from project to project. We should always be in bootstrap mode and we should not try to do so many things at once.

In fact, I now believe that rapid serial entrepreneurship is superior to parallel entrepreneurship, at least for me. I'd like to do one company at a time until it gets on its feet, before shifting attention to the next one. Maybe I'll try that in the future.

So at the company meeting I announced that Provo Labs would return to its roots as an investment company in seed stage startups (usually from ideas that I generate) and that all the existing staff would be assigned to one of the existing portfolio companies (some of them were already dedicated to a single company already) or be let go.

Our remaining funds were not going to be used to incubate new startup companies, but to support the 11 companies in our current portfolio. Specifically, I am choosing to fully fund 10Speed Media, a promising company that runs a video affiliate network mainly for direct response video, and WorldVitalRecords.com, which aims to be the #2 genealogy company in the world.

I was blunt in saying that our other companies would have to sink or swim, or as one developer put it, eat what they kill. This of course causes everyone in each company to focus on generating revenue. That is a good thing.

I also said that options would (finally) be available for employees in each company. (It was always the intention to do this, but we didn't always get around to it). If sacrifices have to be made by team members, then of course they are taking risks and deserve the reward of more ownership.

The meeting went better than I expected, but it still made it very difficult to let go of 6 talented employees who don't fit with the current needs of any of our portfolio companies, or where funding just isn't adequate to keep them.

Hardest hit was the development team, led by Phil Burns, an extremely creative and well connected technology, and someone who has become a good friend over the past year. My proposal there, since Phil had been working for a few weeks to find contract work from outside clients, was to spin out the technology team into a new company that does Web 2.0 development work. One of my close friends helped form Erudite, a development outsourcing and training company in the 1990s that was the fastest growing company in Utah for 2 years in a row. Doing contract development work is not necessarily a high margin business, but with a focus on Web 2.0, and with a large network of developers and a nice reach into the blogosphere, I was hopeful that Phil and his team could land some large contracts and keep things going.

Provo Labs original vision was to fund 12 companies over a 3 year period with up to $250,000 in funding, and to use that seed capital to get to cash flow positive or to be positioned to raise capital from angel investors (thus, the importance of FundingUniverse.com) or VCs.

I think we hired too fast and spent too much money, so in the end, we'll probably only end up with 8-10 portfolio companies that got as much capital and as much as my time as I would have liked.

But in the seed stage investment game, if just one small investment goes well, the entire fund gets repaid and the investors do well. In our case, we hope that more than half of them will succeed. And to me that means at least a million in annual revenue within 3-5 years. We have several companies that should achieve that. And we have a couple that are very promising -- big ideas and a great team.

What we don't have is a large payroll now (we're down to 3 people on the Provo Labs payroll) or a lot of talented developers working on new technology.

What we do have is the peace of mind that comes from a low burn rate and a focus on the top priorities.

I believe that I have maintained a good relationship with most of the people affected by the layoffs, and I am of course still involved in the active portfolio companies, helping where I can with strategy and marketing.

I have read some of the blog posts about the changes at Provo Labs. When every employee in a company is asked to blog regularly, and then when a change like this happens, of course lots of people will have lots of things to say.

I know this was a difficult change for many people. But we couldn't have gone on indefinitely without running out of money. Our fund is a small one and it has a definite strategy. For me, this reorganization was a painful but necessary return to the original vision of Provo Labs being an investment fund, not an operating company.

I made the changes openly at a company meeting, admitting my mistakes, and I hoped for and actively worked for a good outcome for those who were affected. I can't guarantee that everyone will end up with a positive outcome, but as one former employee said in a recent email, he is a better person and employee for the time he spent at Provo Labs and what he learned from our successes and failures. I hope everyone feels that way. If not, I'm sorry. I'd be happy to have a private conversation with anyone who hasn't yet given me a piece of their mind. :)

I've been very gratified by the amount of goodwill that exists among the former Provo Labs team and the current portfolio companies. If there is any animosity or back-stabbing, I haven't seen it (or felt it yet!). Well, I saw a little, but it seemed resolved with an anonymous poster bravely stepped forward to apologize about what she had written.

I welcome any comments to this post and any questions that you want me to address in future posts.

Happenings

paulballen — Fri, 01 Sep 2006 14:00:38 -0700

Yesterday was our best FundingUniverse.com board meeting ever, in the wake of another successful speed-pitching event. The team is energized and the company should be profitable soon (maybe October or November). Then, it will have an indefinite runway on which to launch new products and services for entrepreneurs and angel investors. Great job, team!
10Speed Media, our video-based affiliate network led by CEO Erik Johnson (formerly with iBahn), rated very high at the speed-pitching event. Getting good feedback from attendees is a great motivator.
This week Evident Marketing had record sales of Childrens Miracle Music as our first email campaigns began hitting. We have some very exciting marketing plans for this product. My philosophy is to always do a split A/B test on email campaigns. Never miss out on a chance to learn something. This time, we tested subject lines. One generated an open rate of about 3.9% while the other was under 3%. It's very important to learn something every time you invest in an email campaign.
LDSAudio.com, an LDS music download site is having an excellent month. It's home page promotions (daily discounts on certain products) have increased revenue significantly this month.
Yesterday I hired an experienced manager to help me finish the build-out and furnishings of the new Provo Lab office space on ninth east in Provo, next to BYU. The entire 1st floor will be occupied by members of the Provo Lab Academy. For as little as $200 per month they get shared office space, equipment, and training on internet marketing and entrepreneurship. I hope this will become the smartest place to start a new company in Utah.
But yesterday I also saw the new E-Station at the Davis Applied Technology College. What an incredible facility! FundingUniverse.com has an office there. I am very impressed with the commitment to entrepreneurship that is being demonstrated by this building and those who are there to provide training and services to entrepreneurs.
Yesterday I surveyed the nearly 30 applicants to the Provo Labs Academy that have signed up in the last week. We are going to do a random drawing soon (maybe this afternoon) to choose 1 applicant who will get their first month free, a $200 value. I asked the applicants what kind of phone systems and computer systems they want, and what most attracted them to our Academy. Every business owner needs to do regular surveys of customers and potential customers if they want to know how to provide better service and how to make their marketing messages better. Anyway, I was pretty surprised that 36% don't even want an office phone--they rely on their cell phone for their business. Another 36% want a live receptionist to answer their phone calls. 54% don't need a computer--they'll either bring in a desktop or their laptop. 36% want us to supply them with an Intel based desktop. No one asked for a Mac. 45% are ready to move in to the new space in September. 27% in the fourth quarter. The #1 reason for people wanting to join the Academy was to be close to other entrepreneurs! 2nd was internet marketing training. And #3 was the location. I liked the write in votes that said they wanted to be close to me. Made my day!
This morning I got up at 2:30, couldn't sleep. So I worked on my Chamber of Commerce talk today. It will be about the economy, China and India, the need for more entrepreneurship, and some of the most powerful internet tools that modern entrepreneurs need to learn how to use. I'll definitely be plugging LinkedIn.com and promoting blogging. But there are so many things to talk about.
Then I worked out and ran 12 miles at the gym. Did you realize Gold's Gym also spells "go LDS" gym? Hey, I like to promote my favorite religion whenever I can. :) I'm training for the Las Vegas marathon on November 18th. I really hope I can pull this off. I hope my knees hold up.
I'm listening to the Portable MBA audio book from audible. While I was watching the local news, I noticed that LogoWorks, a company founded by Morgan Lynch (who has been kind enough to lecture at my UVSC classes in the past) was ranked the #1 fastest growing company in Utah by Inc. Magazine, and #66 overall nationwide. So now I need to go see what other Utah companies made the list. Usually, we are the top state in terms of companies per capita making the list. Congrats Morgan and team!
Now, due to popular demand, I finally need to write a very thoughtful post about the recent changes at Provo Labs.