53

I love basketball. But my career pretty much ended in 9th grade when I was 5’2″ tall and had glasses–and though a pretty good shooter, I got cut from my junior high basketball team.

Finally I got my growth spurt, and was about 5’10″ as a senior where I tried out for my high school team. I made first and second cuts, but was the final person cut from the team and I’ve never fully recovered.

Back then I was a pretty good shooter. About 25 years ago I once hit 40 consecutive free throws. That was my personal best. About 10 years ago while practicing basketball at my local church (yes, a great reason to join the Mormon church is that they have a gym in almost every chapel) I hit 40 consecutive free throws again and was so upset when I missed on number 41. But my nerves got to me, and I choked.

But this week, I am thrilled to announce to the entire world that I achieved one of my major goals in 2008 by hitting 53 consecutive free throws on my new home court. That is now a very special number to me. And isn’t it the number of Herbie, the Love Bug too? I might have to buy a miniature Herbie on eBay and mount it on my trophy case.

When you were a basketball wanna-be who was the last person cut on his high school basketball team, and you’ve lived all these years wondering where your basketball career would have gone if only that one coach had believed in you…and then you do something like this…well, it just made me feel really good and I thought you might be happy for me.

So now, what do you do if you’ve achieved your year goal in February. I’m not sure what to do next.

I want to know if you have achieved any of your 2008 goals yet? If so, feel free to tell the world here, and then tell us what you are going to do next.

The Importance of Writing Ideas Down

I like the story of Johnny Appleseed. Sometimes I feel a bit like him,
planting seeds (starting companies) and watching them grow.

As I told a good and wealthy friend yesterday, I think I will be
tempted in the future, if my harvest ever comes, to stop doing startup
companies myself, but instead, to just teach and write and blog about
all the ideas that I think should happen.

I currently have a list of about 50 ideas that I believe could turn
into viable companies. I often wake up in the middle of the night (Brock Blake calls this “The Curse”) with a new idea, or first thing in the morning a new thought will strike me.

There is no way that I’ll ever be able to do them all. It might be best
to just scatter the seeds for these ideas as widely as possible in
hopes that they will find good soil somewhere and grow. We’ll see.

I used to carry 3×5 index cards around with me so that I could capture
new ideas whenever they struck. Now I use my Blackberry memo feature. I
have several memos marked “Ideas” that each contain many of my best
ideas. I always write down the date and the idea.

The amazing thing to me is how short my memory is. When I occasionally
review my idea memos, I often come across great ideas that I have already forgotten about. I think, “Wow, that is a great idea!”, as if it were a completely new thought!

Writing down great ideas makes them permanent (“the faintest pencil is
keener than the sharpest mind”) and if you think good ideas come from a
Higher Intelligence than your own and you value them enough to write
them down and act on them, from my experience, you’ll find that it
leads to having more of them.

Joseph Smith, Jr., born 200 years ago this December, said this about inspiration:

“A person may profit by noticing the
first intimation of the spirit of revelation; for instance, when you
feel pure intelligence flowing into you, it may give you sudden strokes
of ideas, so that by noticing it, you may find it fulfilled the same
day or soon;

Quotes from Business Leaders

I just noticed that a fairly large selection of quotes from business leaders has been added to the StrategyTree.com wiki. The beauty of a Wiki project is that any individual can add content and make the Wiki grow and become a useful resource.

I want to thank the person(s) who created this section and encourage
others who have collected inspiring quotes from business leaders and
entrepreneurs to add them to this growing collection.

A Myriad of Decisions for Internet Startups

I continually get questions from students and startups such as: Which
email solution provider should I use? What is the best affiliate
program to launch? What about payment processing? What is the best
low-cost or free web analytics software?

These are tough questions for anyone to answer because most of us, even
internet veterans, have tried only a handful of solutions in each
category (email, affiliate, analytics, payment processing, etc.) and
often have deep experience with only one.

And today there are literally hundreds of available solutions, from
high-end enterprise solutions to entry-level solutions, including some
free services, and many, many open source solutions that are evolving
quickly.

In the 90s I used to rely heavily on Dr. Ralph Wilson of WilsonWeb.com.
Since 1995 he has been reviewing solutions continually and he has
helped hundreds of thousands of people find possible answers to these
questions.

Another resource that was first published in 2005 is a *must have* for
any serious internet entrepreneur, particularly one in the ecommerce
space. It’s the 2005 Guide to E-Retailing Resources published by Internet Retailer.

This guide book lists 378 retailing solutions in the following
categories: affiliate marketing, content management,
consulting/research, customer service, delivery services, e-commerce
systems, email marketing, fulfillment services, order management,
payments processing, search marketing, site search solutions, supply
chain solutions, returns processing, web analytics, web design/hosting,
and web monitoring.

It still won’t be easy to decide which solutions to try, but the Guide
often indicates how many employees or customers a particular company
has, and who some of their key customers are.

It is still hard to integrate some of these solutions, but at least you know what many of your best options are.

Entrepreneurs: Save Money with Free Legal Docs

Many entrepreneurs can’t afford to pay $200-300 per hour for legal
help, especially with simple things like incorporating and simple
contracts. There are many online libraries of legal docs, including
some that exist and generate revenue because of Google AdSense.

Today I found a consulting agreement on www.lectlaw.com and used part of it for a new contract. Lectlaw.com has 40,000 pages indexed by Google. If you run this query:

site:lectlaw.com consulting

it returns an okay consulting contract.

Use the same syntax to find other types of legal forms and documents.

I have visited many other legal sites before, but I can’t remember the
URLs. If you are an entrepreneur that finds free legal docs to save
money, tell me which sites you have found most helpful.

I’ll add the best sites to the Bootstrapping Section of
StrategyTree.com, a wiki for entrepreneurs where we hope to collect
thousands of good ideas from entrepreneurs about how to create business
success.

Will West and Amy Lewis on Management Teams

Thanks to Ryan Money (Junto 2005), I got a copy of the handouts Will and Amy used in today’s UITA breakfast.

Keys to Management Success – Will West, Control4

Hire right.
In fact, hire people that are better than you are. If you don’t you
can’t grow an exceptional organization. Do this right, and 80% of your
job is done. Do this wrong, and you’ll sink.

Be yourself. Don’t try to be the manager you read in a
book. Use those learningÂ?s to mold your approach, but don’t try to
become someone else. You aren’t, and you probably won’t do it well.

Create passion. Retention, extra hours, loyalty to the
business, etc. are all easier when your management team believes in a
vision. Help your team understand why you are going to change your
little comer of the world.

Measure. No matter how good your people are, you can’t
be successful without finding the critical drivers for your business
and measuring them. Find data that shows you the heart of your
business, and make sure each department is watching those vital signs
on a daily, weekly, and monthly basis.

The Executive Team is
the single greatest factor that determines Success or Failure for any Company – Amy Rees Lewis, Mediconnect.net

Hire the Right People for the Management Team:

. Different Skill Sets (area of expertise)

. Same Core Values

Examples of Core Values:

Hardworking

Integrity

Willing to say what they think (w/out fear of being wrong)

Willing to admit when someone else has a better way or idea

Genuinely Humble yet Confident

Loyal

Optimistic about the future and the people they lead

Respectful of all others

Willingness to make decisions (even if they’re wrong) – has guts!

Exec Team operates with Total Trust in One Another

  • Absolute and total Honesty and Open Communication (no back channel conversations or clandestine meetings about one another)
  • Willing to confront one another w/ disagreements
  • Always resolve an issue (no unspoken resentments)
  • Complete commitment to the Team

Exec Team Meetings

  • Passionate, intense, exhausting, and never boring
  • Keep meetings efficient (only discuss critical issues)
  • Openly hold each other accountable for individual performance
  • Fight about issues, not personalities
  • Challenge each others ideas
  • Ultimately
    arrive at decisions that everyone agrees to support (total buy in) . No
    one walks out of the meeting with bad feelings or resentment

Responsibility of CEO to Exec Team:

  • Embody the values you look for in hiring the exec team
  • Do what you say you will and Live _what you believe
  • Create the atmosphere that allows honesty wlout punishment or backlash
  • Make sure every exec understands exactly where the company is headed
  • Clearly define both your expectations and your success measurements for each exec on an individual basis
  • Make sure every exec knows the boundaries they can operate within (what they can do on their own with and w/out CEO approval)
  • Get out of their way and let them do the job you hired them to do
  • Always give credit to your exec team for every success
  • Commit to allow and encourage a balanced lifestyle for your execs
  • Remember that leadership isn’t about you; it’s about the people you serve.

How to Get Funding: Traction and Trajectory

Today I decided that in order to be compelling, business plan
presentations really need to have two things: traction and trajectory.

It’s pretty hard to convince anyone, especially an investor who is
naturally protective of his/her own money, that your idea will actually
work.

Entrepreneurs often count their chickens before they hatch. In fact, we
count our chickens before we have ever sourced the eggs. We just
believe. We just have faith that somehow it will all work out. So we
invest time and energy in our idea.

Investors aren’t “full of faith” like that. Investors have wealth and
they want to protect it. They want to grow it too, but there are myriad
ways to do that, some with very little risk. If they even consider
investing in high risk/high reward startup companies, they know they
will have to be careful because most businesses fail. Investors don’t
want tothrow their hard-earned money away.

So how do you convince someone that your idea really will work?

Show them evidence that it is already working. That’s traction.

And show them that the rate at which it is working is accelerating, and
therefore, that success will be achieved because the metrics show that
they will. That’s trajectory.

I like to think that with traction and trajectory that a business plan
presentation could become so compelling that no one would see it
without believing in it.

This happened to me when I saw Jeffrey Brewer, CEO of Goto.com give a
presentation at a conference sometime in 1999. His charts showed
quarter after quarter of dramatic query growth, growth in “paid
introductions” and growth in the average price per paid click.

I came away believing that this model was the best internet advertising model ever devised.

About a year later I championed the acquisition by MyFamily.com of
Ah-ha, a pay-per-click search engine company, because I believed
wholeheartedly in the model and saw Ah-ha charts showing similar
traction and a similar trajectory. (Today Ah-ha.com is known as Enhance
Interactive and is owned by Marchex, a publicly traded company.)

Of course, the Goto.com model was the best internet advertising model
ever devised, and it is the rocket fuel behind Yahoo and Google’s
meteoric success.

Business presentations that show traction and trajectory have tremendous power.

There is a scriptural account of a prophet in ancient times who spoke with so much power that “it were not possible that the people could disbelieve his words.”

Can you imagine giving a presentation that is so powerful that it is
not possible for people to disbelieve what you are saying? I think it
would take a lot of evidence (like in his case, raising someone from
the dead) for that to occur.

What evidence do you have that your idea is working?

What evidence do you have that your rate of success is increasing?

Build your presentation around that.

If you are an online business, make sure you invest adequately in web
analytics so that you can measure your success and your acceleration.
Without web analytics, it’s really tough to have the evidence that you
need.

When you show an investor that your faith (in your idea) has translated
into product development (already) and into marketing programs which
are bringing you customers daily (already) and that the rate of
customer attraction is accelerating and that your product and marketing
roadmaps will bring improvements that will actually increase the rate
of acceleration.

Convince investors with your evidence to the point that it is easy for
them to believe in your five year projections. Make sure it doesn’t
take a huge leap of faith on their part. As long as the global economy
doesn’t collapse, you can tell them, they can believe that you will
succeed.

Not every business has the traction or trajectory to convince investors
to put money down. But work hard and get as close as you can. And even
if you don’t raise capital, measuring your traction and trajectory will
help you run your business the right way.

How to Have an Overnight Internet Success

My brother Curt, founder of Folio Corp, former CEO of MyFamily.com, and
current CEO of Agilix, a venture-backed company, is fond of saying
telling how his company was going to be an overnight success…after 10
years of hard work.

I believe that the single most important key to success in an online
venture is doing the little things day after day for years and years
until you magically reach the tipping point and everyone seems to have
heard of you. In other words, persistence is required for most
successful ventures.

The reason that I love daily metrics — keeping track of all the key
operating statistics in your company day after day — is that daily
metrics tell me if we are persisting in something that is hopeless, or
if we are persisting in something that is bound to reach the tipping
point and bring us the success that we hope for.

For example, when we launched Ancestry.com’s subscription service in
April 1997, we started getting 50 new subscribers per day. It took a
few months before we got to cash flow positive, and a few months to
convince investors that we could really pull this off, but Dan Taggart
(co-founder) and I knew that with 50 subs per day Ancestry.com was
going to be a huge success.

What were the daily things that we had to persist in before we reached
the tipping point and became the largest genealogy company in the world?

The most important thing we did was add at least one new genealogy
database every business day beginning in April 1997. We started with 55
premium databases. Now, eight years later, the company has thousands of
databases and probably more than 3 billion records.

The next most important thing was internet marketing. Every day we
collected email addresses from registered users, asking them if they
wanted to be notified of our new databases every day or every week. In
1998 and 1999 we did search engine marketing, buying keywords, building
banner ads, and measuring every day which ads brought us the most
visitors. We also launched our most important marketing channel of all
time–our affiliate marketing program–and we started recruiting new
affiliates every day.

By persisting day after day with the blocking and tackling of content
publishing and internet marketing, we built a great company. Today
MyFamily.com (the parent of Ancestry.com) operates as a very profitable
pre-IPO internet company–the largest genealogy company in the
world–with more than 1,000 employees.

There are so many success stories on the internet, so many companies
making millions; and in almost every case, if you dig deep enough,
you’ll find a small team of web developers and marketers and other key
employees in the company, who day after day, and year after year, have
been working hard, focusing on the little things that make a huge
different over time.

Today I’m watching several companies in our portfolio who are months or
years away from reaching the tipping point, and I’m trying to make sure
that the management are tracking the key metrics and that the employees
are focusing hard on doing the little things day after day after day
which over time will turn their company into a big success.

FundingUniverse.com is one
of those. Every day we are recruiting new investors to join our 50
state web sites, and every day we are getting dozens of entrepreneurs
to sign up, many of whom post their business plans online.

Just 30 days ago, I observed that we had 17 states that had at least
one registered angel investor and at least one posted business plan. Today we have reached this level in 28 states. 30 days ago we had only 4 states where we had at least 4 angel investors and 4 business plans. Now we have 7.

It doesn’t take a great deal of faith to project forward and say, if we
continue at this pace (not even accounting for the J-curve that happens
as sites get momentum and as word-of-mouth and PR coverage kicks in)
then we will have about 1,000 angel investors and about 8-9,000
entrepreneurs all across the country who are looking for funding.

The best question for us is not will we have enough traffic, it is,
what is the best way to monetize this traffic, in other words, what is
the best business model to pursue.

Currently, the service is free for investors and entrepreneurs. We sell
sponsorships to attorneys, accountants, office leasing companies and
insurance providers — people who provide services to entrepreneurs and
investors — in every state.

We can project a few million in revenue from this business model. But
perhaps there are other revenue streams (we are currently brainstorming
many) that we could create by selling products or services directly to
our users — premium services, for example.

But my point of this blog post is not to highlight FundingUniverse.com.
It’s the principle that success comes by doing small things over a long
period of time.

My point is this: use metrics, project forward, and if the thing is
promising, knuckle-down and focus on daily execution of the little
things that will turn your online company into a great success.

Don’t give up too soon. You could be walking away from a fortune.

Are You Ready to Deal with VCs?

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

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

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

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

VC Firms Increase Funding for Early Stage Startups

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

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

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

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