Startup Grind 2014

I attended the 2014 Startup Grind event at the Computer History Museum in Mountain View, California earlier this month.

Derek Andersen has started quite a movement here. It was the highest energy startup event I’ve attended in years–and the cast of speakers was spectacular. I particularly enjoyed listening to George Zachary, Reid Hoffman (founder LinkedIn, venture investor with Greylock), Ben Horowitz (Andreesen Horowitz), MC Hammer, Scott Cook (Intuit), Jessica Livingston (Y Combinator), Dave McClure (500 Startups), Mark Suster (Upfront Ventures), Danae Ringelmann (co-founder IndieGoGo), Elizabeth Gore (Resident Entrepreneur at the United Nations Foundation–reports to Ted Turner!).

I missed a bunch of talks that I wanted to hear, partly because Derek made me say a word about StrengthsFinder 2.0 (the product I champion for Gallup) on the first evening, and I was literally swarmed for the next 3 days. I could hardly move from one conference session to another without an entrepreneur or ten eagerly asking me about StrengthsFinder. But that’s also what made the conference incredibly fun and energizing for me–engaging with dozens of entrepreneurs, from many countries, who are all looking for tools, tactics, and advice that will help them emerge from their startup grind with a successful business.

Thankfully I can catch the interviews I missed on the Startup Grind YouTube channel.

What I love most about Startup Grind is its values and the kind of people it attracts as a result. Derek credited George Zachary for helping him grasp the importance early on of establishing and communicating the values of the Startup Grind community.

The name itself connotes that startups are hard work and success often takes time. There are more comfortable things to do than “eating glass and staring into the abyss of death” which is how Elon Musk has apparently described entrepreneurship.

Startup Grind is not for get-rich-quick schemers, but for those who want to make their mark on the world through building a new company, “however long and hard the road.”

These Startup Grind values were plastered everywhere:

1. It feels better to give than to receive
2. Give more than you take
3. Make friends not contacts
4. Never give up

Another awesome part of the Startup Grind culture–and I experienced this first hand when I spoke at a Washington DC event last year–is that when introducing a speaker, the audience gives a huge standing ovation right up front. Everyone feels good, fired up. And the speakers get that sincere thanks right up front, for volunteering their time.

And then often, at the end of a Startup Grind interview, the guest is given a fun gift–such as an artifact connected to their favorite superhero. When I was interviewed, I explained why my favorite superhero was “Bill and Ted” (I know that’s a stretch), because their music “put an end to war and poverty.  It align[ed] the planets and br[ought] them into universal harmony allowing meaningful contact with all forms of life from extraterrestrial beings to common household pets, and . . . it’s excellent for dancing.” What superheroes have ever had a better outcome than that!

So they presented me with an awesome Bill and Ted movie poster.

The Startup Grind culture is just fantastic.

Back in the 90s when I was building my first company with my best friend and business partner, it was a pretty solitary endeavor–mostly just us trying to figure things out. Not until I attended the Inc 500 awards conference in Philadelphia in 1996 did I realize that there were people (authors, advisors, mentors) out there helping entrepreneurs to succeed. But today, there are far more.

It’s like the difference between writing software code in the 80s and 90s, when you wrote every line yourself or with your team–compared to now, when there are bazillions of lines of code written by millions of coders, on github and elsewhere, some of it packaged into amazingly useful libraries. If you are a coder, you are not alone in the universe–and you don’t need to write applications from scratch. Much of what you are doing is finding and learning and stitching–building on the shoulders of others.

Same with entrepreneurship. Today, instead of figuring everything out on your own long and lonely path, there are dozens of amazing accelerators, incubators, and seed stage funds, there are Startup Weekends, business plan and business model competitions, meetups everywhere, and crowdfunding platforms like IndieGoGo which are increasingly being used by companies to validate and refine their product–not just to raise capital.

The startup failure rate is widely reported as being 80-90% or higher over a 5-year period–who knows what the actual number is?–but I remember hearing from an expert in franchising that 94% of all franchisees are still in business after 5 years. Why? I assume it is because the brand, product, processes, business model, advertising strategies, and all that have been worked out and proven to work in advance, usually in scores of markets.

Imagine a world–with all the support of Startup Grind and the other resources mentioned above–where the success rate of startups doubles or triples? The success rate of Y Combinator companies is already so high that each company accepted into the 3-month accelerator program has an automated $150,000 in startup capital waiting for it at the end of the program–not to mention all the built-in support from other Y Combinator mentors and alumni. As Steve Blank and Eric Ries spread the Lean Startup gospel worldwide, and as more accelerators and incubators build support infrastructure to help, I wonder if it will be possible to significantly increase the success rate of startups.

The most interesting facet of startup success for me right now is trying to understand how the talents of the team–and the team dynamics–can lead to failure or success.

Marc Andreesen (2007) wrote that of the major factors in a startup–market, product, and team–he thought market was the most important of the three. But Jessica Livingston of Y Combinator made it clear that her major roles as a non-technical operator at Y Combinator was to make a decision, on the basis of a 10 minute interview with applicants, whether they have what it takes. She must be very gifted at this, given the success rate, but at the same time she humbly admitted that she never knows who really will succeed and who won’t. She especially loves co-founders who went to school together, or were roommates, and who already have a strong relationship. (There’s even a father-son founding team in Y Combinator now, and I think she said a set of twins.) Because when you don’t have that kind of trust between founders, when things get tough–and they always do–things can go bad really fast.

In my role at Gallup as evangelist for StrengthsFinder 2.0, I’m planning to attend a lot of entrepreneurial and investor events this year. For years, StrengthsFinder has been a powerful tool used by thousands of large and small companies to boost productivity, revenue, and profits by making individuals and teams more engaged and more efficient. I’m very excited to see it can be, along with the newest Gallup product Entrepreneurial StrengthsFinder, in helping boost the percentage of startups that survive and thrive. The economy needs a huge dose of the type of job-creating entrepreneurship that The Economist wrote about this week to create the millions of jobs that are so desperately needed today all over the world.

I personally want to thank Derek, Startup Grind, and all of its dedicated chapter leaders and volunteers for doing their part to make this happen. And to  tell everyone — I can’t wait till Startup Grind 2015!

 

New Employee Checklist

The primary purpose of this blog since Nov 2003 has been to discuss topics related to being an internet entrepreneur. But my own personal role has changed several times during these past 6 years, as I’ve been CEO of an internet marketing company (which was sold in June 05), head of an internet incubator (Provo Labs), and then since January 2007, I’ve been 100% focused on running FamilyLink.com (including its genealogy properties, WorldVitalRecords, GenealogyWise, and soon GenSeek.)

During that time I taught business formation classes at (what is now) UVU, and internet marketing for 2 years at BYU. I’ve live-blogged a few conferences, and covered some political and investor topics as well. So I apologize to some of my readers who have noted my lack of consistency in blogging (I used to blog several times a week–now I’m lucky to blog once or twice a month) and the fact that I cover too many disparate topics in one blog. Ideally, I’d have 3-4 blogs dedicated to different topics, but then I’d probably not update any of them often enough. But, things are often not ideal, so I’ll just continue to blog when I can and on what topics I feel are worth covering.

One thing that has been far from ideal is the hiring practices of FamilyLink.com. We don’t yet have a real HR department, though we do have a benefits group that administers our health plan, etc. Growing from less than 20 to more than 60 people in six months poses a lot of challenges, especially when so many of our employees are remote (Seattle, Boulder, So. California, Salt Lake, etc). In the last couple of months we have really improved our recruiting process, our interviewing process, and we have the offer letter step down pat. Our stock options spreadsheet is updated every time we issue an offer letter that is accepted. So things are improving.

But one thing that still needs to be improved is the integration of new employees into the company culture and information flow. I have met with or talked with new employees after say 2-3 weeks on the job, and I’m always surprised to know that they don’t know really critical things, like who some of our other employees are, and what their responsibilities and skills are. When things are moving so fast for our company, it’s hard for the hiring manager to take a full day or two to orient the new employee to the org chart, who does what, what all our plans include. It is easy to make sure the person knows what their immediate tasks are supposed to be, but not necessarily how it fits into the big picture.

I decided a few weeks ago that FamilyLink needed a checklist for the hiring manager to use each time a new employee joins the company, so we don’t overlook any step–particularly with regards to making sure each new employee gets plugged in to who is doing what, and who they should be sharing ideas and knowledge with, or coordinating projects with. (Again, this is especially important because we have so many remote workers.)

Because Yammer is such a powerful tool for internal company communications, the first thing on my checklist would be to invite the new employee to Yammer, ask them to update their profile with all their contact information, and to browse the org chart to see who reports to whom. I wish the org chart could link directly to every employees LinkedIn profile–because I would require all the new employees to review the LinkedIn profile of all current employees. I’d also like them to spend a few hours browsing through various Yammer posts, doing searches, and seeing who has been involved in past discussions on topics that are relevant to them. All this would really give them a feel for who is on our team.

But in order to join our company Yammer account, the new employee has to first have an @familylink.com company email address, so that is actually the first thing on my checklist.

So here is my (slightly modified for public consumption) checklist of what I want to make sure that our hiring managers use whenever a new employee joins FamilyLink.com:

Offer letter
Sign Employee Agreement (confidentiality, assignment of invention)
Get email account on @familylink.com from Michael Jensen
Join Yammer: add personal contact info, including cell phone
Connect with all colleagues on Google Talk
Define key metric, goal, and reporting tool
Hardware needs (Chad Wright)
Review mobile phone policy and our expectations
Orientation about company-wide stats emails and confidentiality
Access to survey results — training on why it is important
Access to Uservoice
Set up LinkedIn account–connect with Paul and other employees
Connect on Facebook with colleagues
Sign up for FamilyLink.com — become an active user of the FamilyStream
Access to Dashboard
Lunch meeting with CEO
Discuss which blogs they will read on Google Reader — share with other employees
Conference Plan — list 1-5 conferences they want to attend this year
Twitter / blogging policies
Discuss key metric, goal and reporting tool
Discuss list of books to read
  1. Offer letter
  2. Sign Employee Agreement (confidentiality, assignment of invention)
  3. Get email account on @familylink.com
  4. Join Yammer: add personal contact info, including cell phone. Review all employee profiles on Yammer.
  5. Connect with all colleagues on Google Talk
  6. Define key metric, goal, and reporting tool
  7. Identify hardware and software and equipment needs with our purchasing manager
  8. Review mobile phone policy (who needs iPhone, blackberry, etc.?) and our expectations (increased productivity and use of our company applications)
  9. Complete paperwork to enroll in benefits
  10. Orientation about company-wide stats emails and confidentiality
  11. Provide access to customer surveys — training on why it is important (hint: we listen to our customers)
  12. Uservoice orientation (we use this for each of our sites/apps so customers can vote on what we should do next)
  13. Set up LinkedIn account–connect with other employees
  14. Connect on Facebook with colleagues
  15. Sign up for FamilyLink.com — become an active user of the FamilyStream
  16. Sign up for Google Reader, and follow other employee bloggers, as well as top industry blogs
  17. Lunch meeting with CEO
  • Discuss which blogs they will read on Google Reader — enabling sharing with other employees
  • Conference Plan — list 1-5 conferences they want to attend this year
  • What LinkedIn groups, Facebook groups or real world networking groups they plan to actively participate in
  • Discuss how to find smart people to follow on Twitter
  • Company Twitter / blogging policies
  • Discuss key metric, goal and reporting tool
  • Discuss list of books to read

New employees in our engineering or web design/development team will have several more items on the checklist, like getting access to our development environment, our SVN source code check-in system, product roadmap, and bug tracking system. New marketing employees will get access to all our analytics and reporting tools for their particular area of specialty. And our ad sales and product sales teams obviously get a lot of training on particular systems, software, and selling approaches and collateral material. But the overall checklist is designed to make sure all employees get connected internally to the people and systems they need to be productive right away.

I remember reading that Google used to publish its daily sales figures internally to all employees until it started down the IPO path. Their philosophy seems to be hire smart people who gets things done and empower them with data. We really try to do the same thing. Our daily company-wide emails provide insight into all our company’s key metrics and our financial position. (Thus the need for a reminder about confidentiality.)

I emailed this checklist to some hiring managers last week and it was well received. But most of our employees haven’t seen this list yet, until today. I’m eager to get this implemented and tested in real life, and to get feedback on it. Some items are more important than others, and some can probably be done over time, instead of immediately upon being hired. I’m sure we’re missing some key items that haven’t surfaced yet.

I hope the checklist reflects some of my personal interest in helping each employee invest in developing their minds and expanding and enhancing their personal social networks. In February 2005 I published an article called “Investing in Employees: Designing a Curriculum for Key Executives.” Our new checklist doesn’t go as far as that article did in making sure employees have all the encouragement and opportunity they might need to become life-long learners, but I think it’s a decent start.

What do you think is missing from this checklist? Have you worked for a company that does a great job at incorporating new employees? What are the worst things you’ve seen companies do when new employees join up?

Please share your thoughts.

Utah Angel Investor of the Year

On Tuesday, June 23rd at the Hilton Hotel in Salt Lake City, FundingUniverse will be announcing the first ever Utah Angel Investor of the Year award winner.

The top 15 finalists for this award are Alan Hall, Craig Earnshaw, David Carter, Gary Williams, Hal Widlansky, JD Gardner, John Richards, Kent Thomas, Kyle Love, Mark Madsen, Martin Frey, Nobu Mutaguchi, Robert Kunz, Scott Frazier and Warren Osborn.

Having been a big fan of the Ernst & Young Entrepreneur of the Year awards for many years, I think it is exciting that FundingUniverse is going upstream a little bit to recognize some of the many angel investors who help those entrepreneurs get businesses off the ground.

I personally appreciate several of these 15 angels because some of them were our early investors at Ancestry.com (back in 1998) and more recently in FamilyLink.com (2007-2009 funding rounds.)

I hope this becomes an annual event, and I hope it spreads nationwide too, because angel investors are the unsung heroes of our free market economy. VCs get a lot of attention because they back high-profile companies. But from what I’ve read, angels generally fund 30-50 times more startup companies per year than VCs, and they fund a ton of small businesses that never become high profile but do create jobs and add value to our economy.

Kudos to Brock Blake and his FundingUniverse team for launching this idea.

Hint to entrepreneurs: if you want some inexpensive networking time with Utah’s very best angel investors, I suggest you buy a ticket (it’s only $25 per seat) and show up Tuesday (with plenty of business cards for all!) :)

Brainstorm Breakfast for Entrepreneurs in Rexburg, Idaho

I worked this week in Missoula, Montana where my brother and his family live. On my way home, through Idaho, I decided to stop in Rexburg, the home of BYU-Idaho, and do some networking with entrepreneurs here.

In the tradition of the old Provo Labs Brainstorm Lunches (nick-named Twinkie Talks because the restaurant we ate at gave us all twinkies) I am holding a Brainstorm Breakfast at Joe’s Filling Station (diner) at 727 North 2nd East in Rexburg.

So far, 4 entrepreneurs have RSVPd with a couple others who hope to come, but I think we can handle 8-10 without disturbing the restaurant too much.

The way it works is this: everyone gets a chance to talk about their business, and share their #1 problem that they want help with or advice about. Then each person at the table gets to make suggestions, if they have any, about that particular problem. So it’s a very open format. Every time I’ve done it, I’ve learned a ton, and had the chance to share some things I consider important too.

If I recall, the idea was originally inspired by the book, “Never Eat Alone.” I used to do these often when I was running the Provo Labs incubator, but since leaving that to focus 100% on FamilyLink.com I haven’t held any. But I think I’m ready to start them up again, partly because these always lead to possible hiring opportunities or business development opportunities.

So…if you are in Rexburg, and want to join us at 9 am, please RSVP by emailing me tonight or tomorrow. PAUL AT FAMILYLINK.COM or DM me on www.twitter.com/paulballen

Utah entrepreneurs: don’t miss this free lecture series

Josh Coates is one of the most talented and energetic entrepreneurs/engineers I have ever met. I had the pleasure of serving on his advisory board at Mozy.com for a brief period as he was first launching his company. He outgrew my very part time services very quickly and I watched him build a very exciting company and sell it for a very large sum in a very short period of time. Very, very cool.

I blogged about Josh and Mozy back in April 2006 when they were still in beta mode but had already received 4 stars from PC Magazine. 

Now, Josh Coates is provide 6 weeks of free public lectures for entrepreneurs, but you have to register to attend.

Highly recommended!

Here’s the full scoop from Shauna Theobald:

 

Please register here for the Josh Coates weekly lecture series so we can accommodate all those who will be attending.  Thanks and see you there.  Can’t wait…it’s gonna be great!

Topics and dates are:

– Technology and Fundamental Business Concepts (Feb. 24)
— Raising Capital: The Simple, Well Understood Path (Mar. 3)
— Pro-active Product Development for the Enterprise Market (Mar. 10)
— Hiring the A-Team: Rocks and Clowns (Mar. 17)
— Practical Internet Marketing (Mar. 24)
— Personal Liquidity and Financial Exits (Mar. 31)

This free lecture series is open to the public every Tuesday from 12-1:30 p.m., starting Tuesday, February 24th.  Sponsors include the Utah Valley Entrepreneurial Forum, the Provo Technology Xelerator, the Technology Center at Novell, and SiliconSlopes/Omniture.

About Josh Coates:  Josh began his career doing research in parallel computing at UC Berkeley and went on to found two venture backed startups related to large scale data storage technology.  His extensive experience ranges from high performance computing and data center operations to venture funding, financial modeling, marketing and mergers and acquisitions.   Coates has been honored for his innovation by MIT and Ernst and Young and featured in Forbes and the Wall Street Journal.  He currently volunteers as an adjunct instructor in the Computer Science department at BYU.

See you there,

Shauna

Shauna L. Theobald

Novell Technology Center

Near Death Experiences

No, this blog post is not about metaphysical near-death experiences, but I bet the title caught your eye. (As an aside, I read the book Life After Life as a teenager, and thought it was pretty interesting. Since reading that book, though, I’ve seen many efforts to commercialize near-death experiences that I think are bogus. I firmly believe in the immortality of all human souls, and I believe that some near-death experiences are genuine, but that is not the topic of my blog post today.)

What I want to say is that many successful startup companies go through a near-death experience before they figure out how to make their business model work.

I’ve seen this over and over again, both in companies that I have founded, as well as in companies that I have advised or just observed.

I know many startups fail, so I suppose it makes sense that many other startups nearly fail, before becoming successful, but it does surprise me a bit to know of very, very few startup companies that don’t have a brush with death. You’d think that with all the business schools and case studies and entrepreneurial blogs and all the expert advice that is easily accessible to founding teams that many entrepreneurs could conceive of a business idea, write a plan, build a team, raise some capital, find customers and execute on the business plan without serious setbacks.

But that almost never happens. Implementing ideas is not easy. Recruiting the right people to a startup company is extremely difficult. Version 1 products have flaws. Internal systems can break. Competition can be extremely intense. Reaching the right customers can be difficult. Sales cycles can be way longer than planned. Getting attention in the marketplace can be expensive. So many things can go wrong, and usually do. Even when you’ve done startups before.

Paul Graham, who runs Y Combinator, which may turn out to be the most successful incubator of all time, publishes the most excellent essays for entrepreneurs. Founders should read all of his work. But more importantly, they should study the businesses that have come out of Y Combinator and try to understand how they can build products so inexpensively and attract customers so quickly and have exit options so soon. Y Combinator’s track record is amazing.

Y Combinator businesses may appear to be pursuing technology for technology’s sake, sometimes without a clear business model, but like Google, if you first set out to build an incredible world-changing product and succeed, you will almost always find a business model to support it.

I laugh at the commentators who speculate about Twitter’s future. People think the sky is falling because Twitter doesn’t generate revenue, doesn’t have a business model.

As a Twitter addict I know that such comments are completely absurd. There is no doubt at all that Twitter, like LinkedIn before it, will find a sustainable revenue model. Both companies will be worth billions. LinkedIn has forever changed business networking. It is ridiculous for people to try to do business without relying on LinkedIn. So while LinkedIn focused initially on attracting millions of avid users, eventually they got around to monetizing the very valuable audience. Google did the same thing before it. And Twitter will do the same thing after permanently changing the world of communication.

Another conclusion I make when considering Y Combinator is that Guy Kawasaki was right in Art of the Start when he talked about early stage company valuations. Guy said you add $500,000 for every engineer in your company and subtract $250,000 for every MBA. Pretty funny, but often rather true.

Y Combinator funds technologists. A lot of entrepreneurs are “business” people without the ability to develop their own technology. (In my first startup I was the product developer–now I’ve shifted to a management/executive role, and it is therefore more expensive for me to build a company now than it was in the early days. I need a “team” to build products now.) 

Certainly a company needs management and sales and marketing and support eventually. But I think one reason that so many companies go through near-death experiences is that they hire their team in the wrong order. First you have to nail the product. Then you scale the team to be able to sell and support the product.

My favorite near-death experience of all time is the story of Enhance Interactive (formerly Ah-ha), a pay-per-click search engine that held a company meeting sometime back in 2000 or so, to let all the employees know that the business was shutting down. The company was out of money and while it has some customer traction and some revenue, there was no more funding runway–so the doors had to close. At the end of the meeting one of the employees said, “Can we go back to work now?” The CEO was taken back and said, “Don’t you realize what this meeting was about? We are shutting the company down.” The employee said, no, I’ve got some customers to service, and went back to work. Apparently so too did another dozen or two employees, who basically worked for almost nothing until the company turned the corner. A few years later the company was sold for tens of millions of dollars. 

I won’t go into the details right now, and it wasn’t anything as dramatic as what Enhance Interactive experienced, but FamilyLink.com (corporate site) had its own very intense near-death experience in the past few weeks. Amid the global economic meltdown, a bank loan was called, and we scrambled for weeks to find a way to pay it off. A few options emerged, some less attractive than others, and then finally, a couple of days after Christmas, we were completely delivered from our financial pressures. We have now finalized our Series B funding which will be announced shortly.

Amazingly, at about the same time, we turned profitable. Just six months ago we were losing nearly $300,000 per month. But through a combination of very painful cost reductions and the growth in our subcription, advertising, and product revenue streams, we literally turned the corner the week after Christmas, and hope to never turn back.

It won’t be easy, since the economy is in rough shape and there are all kinds of execution risks still ahead of us. But there is literally a night-and-day difference between where we were last year and where we are today. Our team spirit is excellent. We’re hiring lots more people for our call center. And we are carefully recruiting top technologists who can help us improve our current web properties and build new ones as well. We’re also looking for a Chief Genealogy Officer who will help guide all our efforts to bring the world’s genealogy records to internet users worldwide.

We still plan to launch FamilyLink.com, GenSeek.com, and WorldHistory.com in the coming weeks/months. Each one has the potentia to revolutionize a market. We put up our corporate web site late last week, so that people can see everything the company does and not just define us by any single web site or application.

I have said many times before that FamilyLink.com is most likely my last company. This recent near-death experience confirms that for me. There is probably no way I can go through something like this again. I’m too old for this kind of intensity. I had serious insomnia for weeks and wasn’t able to sleep for more than 2 or 3 hours at a time. I missed out on most of the holidays with my family. 

I am sleeping better now, thank you very much, but this near-death experience probably took a few years off my life, and I’m not eager to repeat it any time soon. 

If you are a blogger and have written about your startup’s near death experience, please comment and link to it. (Maybe someday I’ll collect a couple dozen of these stories and have them published.)

Big Event for Utah Investors and Entrepreneurs, Nov. 20th

Mark Cuban pointed out on his blog last week that President Elect Obama has made his first mistake: he failed to appoint a single entrepreneur to his economic advisory team, when it is clear that "entrepreneurs that start and run small businesses will be the propellant in this economy." He suggested that the new President should "ask the people who are actually starting new businesses what they need," so that the government doesn’t adopt policies that will backfire by hurting entrepreneurs.

This morning I watched a 1 hour documentary on the Biography Channel about Sam Walton, the founder of Wal-Mart, who by 1985 was the richest man in the United States. It was especially interesting to see how he grew up during the Great Depression, and how many of his values and goals were shaped by watching his father eek out a living during the depression.

After WWII, Sam bought a five-and-dime store that was losing money and turned it around by experimenting with a new retail trend called self-service, where the customers actually browsed for their own merchandise rather than asking a clerk to get it for him. His store sales tripled. Within three years he had repaid the $20,000 startup capital he had borrowed from his father-in-law, and he was ready to expand. However, the building owner decided not to renew his lease, so Sam lost his store location.

The documentary explained the obstacles and hardships Sam Walton faced on his way to becoming the most successful retailer in the history of the world. One decision he made in 1961 that I found particularly interesting (it made me smile) was when he bought controlling interest in an Arkansas bank so he could lend himself more money to open more retail stores. Now that is creative, out of the box thinking, for an entrepreneur!

You can read about the history of Wal-Mart at FundingUniverse, along with thousands of other company histories. Many of them contain amazing stories of entrepreneurs overcoming hard times along their path to success. 

Next week, Utah Entrepreneurs have a chance to learn about steps they can take along their road to entrepreneurial success. On Thursday, November 20th, an important event for entrepreneurs and Utah angel investors will take place:

Starting Nov. 17th, Utah joins more than 100 countries and organizations representing millions of entrepreneurs to celebrate Global Entrepreneurship Week. A highlight of Utah’s celebration is a day-long entrepreneur and angel investing event on Thursday, Nov. 20th.

The one-day event – “Unleashing Ideas: Igniting High-Growth Entrepreneurship in Utah” – takes place Thursday, Nov. 20, from 8 a.m.-5 p.m. at Sandy’s South Towne Exposition Center. Entrepreneurs, angel investors, venture capitalists, and experts in numerous core service industries will attend.

The Nov. 20th conference features the third annual Angel Summit, attracting angel investors throughout the state. Angel investors are high net-worth individuals who fund early-stage, high-potential business opportunities. Registration and additional information are available via www.GewUtah.com. (Source: UtahPulse.com)

I have agreed to participate all-day in this conference by chairing one of the tracks that will address the needs of entrepreneurs and inventors who need help raising capital or doing online marketing.

There is a quality program planned with multiple tracks, and I encourage all Utah entrepeneurs to spread the word and turn this into a well-attended event.

Against the backdrop of national economic crisis, let’s take a day to brainstorm with each other what entrepreneurs can do to create value and generate positive economic activity that will help us, as previous generations have done, claw our way back to prosperity through hard work and innovation.

I’ll see you there.

What to do with good news and bad news

Last week I sent an email to the investors in World Vital Records with a bunch of good news. We had a record sales week. We are signing more partnerships. Our marketing programs are gaining momentum. Our content collection is growing fast. One of them emailed back with a question: how are our Facebook apps doing?

I hadn’t addressed our Facebook apps in my investor email, because it is not yet one of the areas where we have positive news. Even though I attended the Facebook platform launch event and immediately called my developers and told them this is the biggest opportunity in ten years, and even though my enthusiastic blog post about Facebook was widely quoted and even linked to from Marc Andreesen’s blog, I have failed to successfully implement a Facebook strategy so far.

The good news came from our own sites, Worldvitalrecords.com, and our FamilyLink.com social network site, which is growing faster since we enabled our site members to upload their family tree and share it with others. Nearly 2 million names have been added already.

I realize I have a tendency to get excited about good news and to share the good news. I like to highlight the things that are working, or that are promising, and to not call a lot of attention to the things we are struggling with, or that are frustrating. Of course, in my day to day work, I spend the majority of my time finding things that aren’t working and fixing them. But in my communication with key stakeholders (investors, partners, customers), I tend to emphasize the good things that are happening. I want everyone to believe what I believe–that World Vital Records can become a major player in the online genealogy industry. If our current momentum continues, we really will achieve that goal.

Sharing positive news as it happens builds momentum.

But I’ll never pretend that there isn’t bad news as well.

Startups always face obstacles and challenges. I hope that everyone knows that. When you are celebrating a record week of sales, your merchant account transaction limit is hit and you can’t process credit cards for 24 hours. But you talk about the record sales and quietly fix the merchant account problem. When you add 1,000 databases, you broadcast it, and then you quietly fix the image usability issues that were discovered soon after they launched.

You always have good news and bad news. I think it is proper in the normal course of business to report on the good things and quietly fix the bad ones. Success breeds success, and good news leads to more good news.

There are always Chicken Littles who believe the sky is falling. If the sky is actually falling, or if the company is literally out of runway and hasn’t achieved take-off, you must accept the reality. But if you are an entrepreneur who sees traction and momentum, and believes that your company will turn the corner and reach the blissful state of positive cash flow, and eventually make its hopes and dreams come true, then you will probably, like me, find yourself taking about the good things, the things that excite you, and that will excite others as well.

I suppose I could take the opposite approach and constantly talk about all the disappoinments and failures and problems that are we are facing. But I don’t know any successful entrepreneurs who do this. Entrepreneurs tend to be optimistic and hopeful. Sometimes to a fault. They don’t tend to be hampered by a negative attitude.

Eric Ruff (PowerQuest, Quickutz) once said the way to ensure success in a startup company is to identify all the reasons for potential failure and eliminate them one at a time. I suppose that a startup will fail, by definition, when no one believes in it anymore. Sharing good news is a great way to help others believe in a companies future success.

I have never worked for a publicly traded company, where I am sure there are many regulations about disclosing both good and bad news. But I have served on several boards of directors and I have seen the absolute need for full disclosure of both good and bad news to board members. I have seen the awful consequences of over-emphasing the good news and ignoring the bad news at the board level. And I have seen equally bad consequences when only bad news is discussed and the board thinks the sky is falling, when it really isn’t. I think honest and balanced reporting of what is going on in a company is absolutely essential at the board level.

At World Vital Records we have our share of challenges and setbacks. In the past two weeks I have contacted two talented people I know, one with a job offer, and the other with an invitation to interview for a position. Both accepted jobs with the same fast-growing Utah company just days before I called them. Also, we have made offers to two lead developers in the last two months, and both decided to do their own startup company. One already had commitments from investors. Recruiting the right people will take some time. Utah has the lowest unemployment rate in its history.

We have ongoing discussions with many strategic partners, some of which have had successful outcomes, but many of which are still underway, taking longer than we had hoped. Our web sites are still not as usable as they should be, our search engine enhancements are taking a lot of time, we just had to spend another $10,000 on new servers to handle the load, our internal management systems are weak, our royalty calculations and financials are complicated and too manual, and there are many well-funded competitors that also seem to be gaining momentum.

So yes, I admit, there are a lot of startup issues. Some days we are emotionally up and some days we are emotionally down.

But whenever I get a chance to share good news, even great news, I like to do it. Here are a few examples:

  • Yesterday WorldVitalRecords.com had its highest unique visitor count ever, with 16,706 visitors. Our previous high was September 18th with 13,740 visitors.
  • We passed 15,000 subscribers recently
  • We signed up 1,006 new subscribers in a single week, by far our best week ever
  • We have more than 500 million genealogy records online and continue to add new databases every business day
  • Dick Eastman and others have reported on our recent funding. We had decided not to announce our funding yet, for several reasons. But the news came out apparently from filings that investors make. The news was first reported by pehub.com and then it showed up on venturebeat.com.
  • DearMyrtle, commenting on our recent partnership with RootsMagic, said “WVR clearly wins the award for the ‘most prolific agreement-signing genealogy website of the year.'” I loved her comment since one of our highest goals is to be the best partner in the genealogy industry.
  • I was honored by the Utah Genealogical Association at their recent annual banquet. They surprised me with a prestigious award and made me a Fellow of the Utah Genealogical Association. David Lifferth said to me the next day, “Do you have any idea who the other recipients have been? They are the ones who walk on water in the genealogy industry!” He mentioned several prominent names. I accepted the award, but I do feel underqualified. I have a long ways to go before I can walk on water. But I do pledge to UGA and to the genealogy industry that I will try to grow into this award. For months now I have been travelling a great deal and studying genealogy handbooks and research guides for many countries around the world. I hope someday to have the kind of knowledge of genealogy sources that would qualify me to be a UGA Fellow.

There is a lot of good news and there are a lot of promising possibilities that are not ready to be shared publicly yet. And of course, there are private and internal challenges that will probably never be openly discussed. But for me, the overarching good news that I want to report is that I love my job! I love focusing on online genealogy and family social networking. I love the people in the genealogy industry. We have been received so warmly by so many people in this industry and we are determined to be a great partner and provide a great service and be a significant part of helping people find their ancestors and connect with their living relatives.

Recruiting 2.0

Some people say that the most important role of a CEO is “resource allocation”–deciding how to spend company resources. But I remember as Amazon grew and brought in a seasoned COO, Jeff Bezos said he was grateful to be freed up from operations so that he could spend more time recruiting. Perhaps the most important role of a CEO is to bring the right people together to accomplish the company’s mission.

World Vital Records was formed last year with the goal of becoming the #2 company in the genealogy industry. We are making progress towards that goal, as you can see by looking at our World Vital Records Quantcast chart. Our site had record visitors and page views the last few days. And there is no end in site. As we add thousands of new databases to our web site, and as our online marketing programs mature, we believe that in the coming years we will attract millions of users to our web sites.

With a small core team (8 full time and 4 part time and some contractors), we’ve been able to accomplish a lot in the past few months. Not as much as Wikipedia, with their 5 full time employees, mind you. But still very promising results.

And now we are growing.

So how do we go about looking for top talent these days? What methods are useful today in attracting potential employees?

Google has been in the news recently with their non-traditional methods of recruiting, such as holding Google Games at various universities, puzzle hunts, and Campus pizzas, social events that also test the intelligence and creativity of potential employees. They are recruiting at nearly 200 universities. Yahoo holds hack days. There are cool ways for these top internet companies who are hiring so many new employees (Google is hiring 500 per month) to attract a lot of interest.

Maturing local companies like Omniture, Doba, and Logoworks with many jobs to fill have successfully used billboards on I-15 to attract resumes.

But what does a small startup do to attract interest from talented people who could thrive in a startup environment, without spending thousands on a billboard or a recruiter?

One of my friends suggested a SpeedHiring Event, patterned after FundingUniverse’s SpeedPitching Events, where you could have an initial interview with maybe 10 people in one hour–where they would be prepped to sell themselves and their skills in a pitch format, and then you would follow up with the ones that were most impressive. I always find myself avoiding interviews, because I don’t have enough for them. But if they were short, and in rapid succession, I think I would do these all the time. I would even pay to have someone set all this up and run it for me.

World Vital Records is looking to hire two outstanding developers. We need a top PHP coder and a top Adobe Flex coder. Genealogy interest/experience is a plus. We are also hiring a sales manager to set up and manage our call center. We currently have 2 people doing telephone support, but we have no consistent inbound/outbound sales effort going on. We think this is one of the keys to our future growth and profitability.

One easy and low-cost way to get the word out about our hiring is through my blog, our company blog, and our employee blogs. We are also using Craigslist.

And, for the first time, we are using Facebook and LinkedIn to contact dozens of people in Utah County, who are currently employed as developers, and ask them to refer us to the best coder they know in exchange for a $500 referral fee, if their applicant is hired.

We’re doing the same thing for our sales manager. We found nearly 200 Facebook users currently employed in sales, just in Provo, and we are hoping to find, through referrals, a top sales manager that wants a ground floor opportunity at a fast-growing internet company.

I know I came across a web site a year or two ago that offered referral fees for employee referrals and managed the whole process of tracking the applicants, who got hired, and actually paid the commissions. I can’t find that site right now. If you know what I’m talking about, please let me know.

What is the most successful recruiting practice you have ever tried? I’d love to hear from you.

Prediction: Facebook will be the largest social network in the world

I saw history in the making today.

For some reason, I was lucky enough to be in San Francisco for the Facebook f8 Platform launch event. This announcement was at least an 8.0 on the Richter scale. It was a whopper.

In fact, I haven’t come away from an event so excited since September 21, 1995, after attending the Online Developers II conference, also in San Francisco, when it hit me that my CD ROM publishing days were ending, and that I would soon become an internet entrepreneur. In the next five years, our team quickly shifted from publishing to online, launched Ancestry.com and MyFamily.com, and then went on to raise $90 million, acquire Rootsweb (and later Family Tree Maker / Genealogy.com) starting what has since become the largest genealogy company in the world. (Note: I left the company in Feb 2002 and have recently started a competing firm, with two properties: WorldVitalRecords.com and FamilyLink.com)

For me, that journey all started at Online Developers II.

That story doesn’t necessarily have a happy ending for any of the company’s founders or even its early employees or investors. Like Ray Noorda used to say, “Finders Keepers, Founders Weepers.” Crossing The Chasm by Geoffrey Moore explains why pioneers (company founders and innovators) don’t often do well in the end, while settlers (who are usually better are operations) do. I’m actually fine with that, and reading that in Moore’s book was one of a dozen things that helped me move on emotionally.

Today felt just like September 1995 to me.

And it makes me wonder what the next 10 years might bring.

I sat on the third row and drank deeply of the kool-aid as Mark Zuckerberg, who turned 23 years old just 11 days ago, presented what may be the best business opportunity for internet entrepreneurs in the past ten years.

A huge new opportunity was presented to the few hundred people in the room, including 65 companies that have spent the last few weeks developing applications for the launch of Facebook Platform.

Facebook is inviting anyone to develop applications for their users on top of what Mark calls their “social graph”–the core of their service which basically keeps track of real people and their real connections to each other.

Facebook has 24 million active users (meaning they’ve used the site in the last 30 days–I like how they aren’t overstating numbers like SecondLife) and 50% of them login each day. Mark says the next most active social network is not more than 15%.

Last fall as I taught Internet Marketing at BYU we learned that a UCLA survey showed that 50% of college age females said Facebook was their #1 most important web site (even more than Google, Wikipedia, or anything else) and that 1/3 of college age males said it was their #1.

Look how many “addicts” Facebook has, according to Quantcast. 63% of visits are from addicts. eBay is only 56%.

Facebook is adding 100,000 new users per day. That’s 3% growth per month. And the fastest growing segment is over age 25. At this rate, they’ll have 50 million users by the end of this year, and 75% of them will be out of college. I read just on paidcontent.org that Facebook is the fastest growing social network in the UK, and today Mark said that 10% of Canada’s population is using it.

With 40 billion pages view per month, Facebook has passed eBay in page views, and is now in 6th place, just behind Google.

So this is no small thing for a 3 year old web site. Facebook is absolutely for real. I like Facebook a lot; while I can’t stand MySpace. Facebook is clean and nicely designed and architected. MySpace in my opinion is messy and mostly full of garbage. Facebook is a real social network for real people. And it is really, really popular.

And it’s growth will be dramatically accelerated by the Platform announcement. If Facebook is adding 100,000 new users per day with its own few simple applications (like its photo sharing, a very simple service that has given Facebook twice as many photos as all other photo sharing sites combined), what will happen when thousands or tens of thousands of developers start building apps in Facebook and marketing them to more users?

Facebook will reach 50 million, then 100 million, then 200 million users, and beyond.

Rather than continue to try to develop features within its own proprietary, closed network, basically keeping all of its users to itself (and kicking out widgets they don’t like, like MySpace does), Facebook intuitively gets the concepts that are so brilliantly discussed in Wikinomics (which are so non-intuitive to old school business types), and has chosen to open up its network for all to participate in. Because they embrace the winning philosophy, they will win.

Application developers can now have access to core Facebook features, such as user profiles and user connections, and even publishing to the News Feed, all with the control and permission of Facebook users. So if a Facebook user chooses your app, it will show up on their profile for all their friends to see, and they can enable that app with a single click, and so your application can spread virally to the 24 million other users.

When Facebook has 100 million users, in the not too distant future, having the ability to develop an App in their system will almost be like being able to get a link on Google’s own home page.

Can you imagine Google ever doing that? No way. They have too much at stake. Their $147 billion market cap couldn’t take it. Google’s philosophy was to not be evil. But I think Facebook’s philosophy is a decade fresher and even more in line with where things need to go than even Google–a company that I admire more than any other.

When Clayton Christenson spoke at the first Open Source Business Conference (again in San Francisco) about three years ago, he spoke about how the LAMP stack has provided a powerful low-cost platform for companies to develop applications on top of. Linux, Apache, MySQL, and PHP enable companies to develop applications that used to cost millions, but by building on top of all these projects, companies could move “up the stack” and focus on providing unique value that wasn’t in the stack already.

There are more and more free layers being added to the stack all the time, powerful services that can be embedded in your own new applications, like Skype, Maps from Google or Microsoft, storage and utility computing from Amazon, and video layers like YouTube and Google Video.

When anyone develops an application on top of the LAMP stack, like a CRM system for example, they always risk being disrupted by someone who provides that for free on top of the already existing stack.

Any new open source application or creative commons layer can be added to the stack, which might commoditize that application and put some companies out of business, but then that enables everyone else to again add more value on top of the stack.

This process continues, and all the while the consumer benefits greatly, and developers can continue developing innovative and valuable services on top of the ever-growing application stack.

The way I view the Facebook Platform announcement is this: the LAMP stack has just been extended by the huge and growing “social graph” that Facebook is opening up to the world. (It’s not completely open, because you have to develop apps within Facebook, but it’s a start in the right direction.)

Now, instead of application developers having to each build their own web site and try to get people to find it and use it and share it, the viral marketing of any good application site will come right from the Facebook interface itself. As users adopt new apps, they will spread quickly through the network.

Mark made three big announcements. 1) Applications can be deeply integrated with Facebook 2) Distribution of the applications will occur through the network, and 3) The business opportunity Facebook is providing will give 100% of advertising revenue (for third party applications) and 100% of transaction revenue to the application developers.

Now that is the true spirit of Wikinomics.

VPs from Microsoft and Amazon were present to express their support for the Facebook Platform. Microsoft will enable application develop with Silverlight and Popfly, and Amazon discussed how its web services enable Facebook Platform apps.

The CEO of Slide mentioned that the Platform developer wins big, but that applications developers also have a huge business opportunity here.

Microsoft’s market cap is $280 billion. But the top three application developers on Microsoft’s platform have a combined market cap of $40 billion.

I don’t think Facebook’s market cap vs it’s application developers will be nearly that lopsided. In fact, the way they are treating their own applications versus Platform applications makes it a pretty level playing field. Facebook users can deselect apps they don’t want to use–even Facebook’s own apps–and sign up to any other.

The core asset Facebook wants to own, extend, and leverage, is the social graph–who is connected to whom.

It is even possible that some future Facebook app developers could end up with a greater market cap than Facebook–if they permanently maintain the 100% of revenue going to the partner model. For example, a MMORP game built into Facebook might someday have 10 million users paying $10 per month, or $1 billion in revenue, when Facebook might at that point have $500 million in advertising revenue. (Reportedly it will make $150 million this year.)

Okay, not likely, but maybe possible.

The cool thing is that the marketing costs for these application developers will be basically nothing. All viral. All courtesy of Facebook’s users.

One of the self-serving reasons why companies like Google and Amazon create so many APIs and web services is to get a vast community of developers doing R&D for them and prototyping applications to see what works best. Then, they acquire the ones the like best.

Facebook will certainly be in a strong position, once it has a liquid currency, to acquire some of the most interesting application developers using its Platform.

If you haven’t read it recently, read Chapter 7 of Wikinomics, “Platforms for Participation” in the context of today’s announcement.

Here are a couple quotes.

“The winners in this evolution will be companies that can create the most comprehensive incentive frameworks to adequately reward all stakeholders.” (p. 207)

How about letting them keep 100% of their ad and transaction revenue? That’s quite an incentive.

“Winning in a world of cocreation and combinatorial innovation is all about building a loyal base of innovators that make your ecosystem stronger.” (p. 210)

Like I said at the beginning, I felt very lucky to be invited to this event. I got the invitation because we invested in YackPack last year, which is one of the companies that is launching its application within Facebook.

I didn’t see anyone else from Utah there, partly because every internet entrepreneur and marketer in the state was probably attending Seth Godin’s speech in Salt Lake City, which was probably very good.

If you are from Utah and went to the Facebook f8 event, please comment here or email me. I really want to connect. I think we need a Facebook Platform Developer Community here in Utah.

I searched LinkedIn tonight and found 140 Facebook employees, board members, etc, on LinkedIn. I’m 2 degrees away from many of them. But then I searched for “facebook api” to see how many people in my 2 million + network have any experience developing for Facebook and only 1 person came up.

Hopefully there will be some developer forums that emerge quickly so that more people can get guidance on how to proceed.

So here is my final thought. I’ve been pretty fortunate in my career to kind of see the big waves and trends coming and to get positioned to take advantage of them. I think I have pretty good instincts, because my brother Curt taught me to read everything (and he buys me new books from Amazon almost every month) and to go to conferences all the time. I already mentioned the transition from CD ROM publisher to Internet Publisher. After reading Net.Gain in 1998, we created Ancestry.com’s user generated content strategy (it became our most popular database) and launched MyFamily.com which was really an early social network for families. At our peak we were adding 20-30,000 new users per day. Unfortunately, our investors stopped supporting that free site because it wasn’t making money. Doh.

After reading an article in Industry Standard in 1998, I decided to attend the first ever affiliate summit held in New York City, where Commission Junction, Be Free, and LinkShare all presented. We chose Be Free, launched our affiliate program, and over the next few years, affiliate marketing was our #1 source of new customers at Ancestry.com.

In the last few years, I blogged before Google’s IPO that it would disrupt Microsoft by offering free software (including Office apps) and said it will one day pass Microsoft in market cap. And, more recently, in my latest example of prescience, I blogged about Lindsay Campbell of Wallstrip after her first day as anchor, and suggested that she might one day rank up there with Soledad O’Brian and Diana Sawyer, and now CBS paid $5 million for Wallstrip, and Lindsay’s career will soar. Way to go, Lindsay!

The only reason I’m reciting these past predictions is to try to lend a little weight to my next prediction: that Facebook will become the #1 social network worldwide (and the first to get 1 billion users–I love Facebook mobile, by the way) and that thousands of entrepreneurs will become extremely successful by developing to this new platform.

I hope that Facebook won’t be acquired. I hope it will go public and become the next major Internet company along with Google, Yahoo, Amazon and eBay. Another hugely profitable company that can potentially acquire lots of other great smaller companies.

I like Mark Zuckerberg a lot. I met him tonight as he was just visiting with lots of the individual companies supporting the launch event, and thanking them for their support. He was very genuine. I can see him in 10 years with the influence of the Google founders and in 20 years with the influence of Bill Gates. He is just getting started. At the recent Startup School, he advised startups to hire coders — even in the marketing department — and he talked about time he spends thinking about philosophies and how at this young age his life is not cluttered with things and family responsibilities.

Can you imagine in a couple years when Facebook has 200 million users worldwide, with half of them logging in every day, and a 25 year old will be CEO of this company? I can’t think of a parallel in world history where someone this young had this much influence. Oh wait. Alexander the Great.

Ok. I’ll stop now. It’s 2:40 am. And my post is going on and on and on, and all over the place.

But I’m serious about this Facebook Platform. Check it out. Mark’s philosophy of openness is an open invitation to co-create something remarkable with him and his 24 million users.