25 Apr 2013 by Tonya Gisselberg
Jon Bridge spoke about the Ben Bridge Jewelry company, the Bridge family and changes in the Ben Bridge Jewelry business.
Ben Bridge Jewelry wants its associates and suppliers to share in the success and growth of the business. The business is built around business ethics and community involvement. Ben Bridge Jewelry wants to be a part of people’s lives and a part of fulfilling their needs. The business is based on the philosophy that part of our purpose on earth is to make life better. The price that we pay for being here on earth is to give back. That philosophy comes from the family’s religious background. “Tzedakah” is a Hebrew word meaning righteousness, charity and repairing the world. Ben Bridge Jewelry is a vehicle for the entire family to give back to the community.
Samuel Silverman, Jon Bridge’s great grandfather, was a fine guild watchmaker. In 1912, Sam opened up a store in downtown Seattle and shared the store front with an optician. The glass in the watches and in the eye glasses was made in the same way. Ben Bridge married Sally, Sam’s daughter, in 1922 and became a partner in the business. Ben purchased Sam’s interest in 1927, when Sam moved to California, and renamed the business Ben Bridge Jewelry. The company celebrated its 100th anniversary in 2012. Ben Bridge Jewelry has been at its current location at 4th and Pike since the building was built in 1928. As an interesting aside, Seattle has more street clocks than any other city in the U.S.
Ben Bridge Jewelry takes pride in its Customer Credo:
- We believe our company's success is in direct proportion to the services we perform for our customers and our community.
- We believe in and respect the individual integrity, the personal rights and the dignity of each individual working in our organization.
- We believe the cornerstones of our organization are based on truth and honesty in all our dealings, with our suppliers and with all our associates.
- We believe in providing equal opportunities to all our associates for personal growth and development.
- We expect each member of our organization to strive for excellence in accomplishing our daily tasks and our long term goals.
- We believe that each of us is interdependent and that by living the "golden rule" we can build goodwill, lasting friendships and provide benefits to everyone
Ben Bridge Jewelry appreciates its associates and recognizes them as part of the family business. Jon calls each associate on her first day of work to greet her. He also calls each associate on her birthday and anniversary with the company. One of the officers calls each of the 75 stores every night. They do it to keep in touch and to keep connected. This level of care doesn’t exist in many other companies. Calling 75 stores in one evening is no small feat. Jon was recently especially challenged in making all of the calls while still keeping tabs on his new puppy.
The Bridge family learned to step aside for the next generation. Ben Bridge gave each of his sons one quarter of the business when the son turned 18. When Jon’s father wanted to move to Denver to work for Zales, Ben stepped aside to let his sons run the business. Jon’s father was not quite 30 and his uncle was 24 at the time. Most businessmen wouldn’t have taken that risk. Ben became more involved in community activities after he stepped aside, as did Jon’s father after he stepped aside. Jon and his cousin run the business now.
Although it’s a family business, members of the family who become involved in the business are required to be competent. Putting a family member in who isn’t competent to handle the job causes a downward spiral in operations and deflates morale. Three generations of the Bridge family exist today and are involved in the business, including Jon’s son and daughter. Jon’s father and uncle are detached from the daily business operations, but are still there to give help when needed.
Jon’s family has a history of Navy relationships that started with his grandfather, Ben. From the Navy, the Bridge family learned about organization, personnel and how to treat people. Jon is the last of the Navy tradition. Jon went through law school in a Navy program and now teaches a class to JAG (Judge Advocate General) corps at a local university. Jon is outranked by his father, who is a 2 star Rear Admiral. Jon is thankful that his father finally gave up motorcycle riding. Jon was not about to pick up the pieces. In the legal profession, Jon is also outranked by his wife, Bobbe, who is a retired Washington State Supreme Court Justice.
Empathy plays a huge part in Ben Bridge Jewelry’s operations. The idea of leadership is to avoid going to court. In making a decision to do something, take a moment to think of how your decision affects the person who has to carry it out. Reflect on how your decision will affect other people.
Ben Bridge Jewelry expects all of its managers to be involved in community activities. Each of its managers is a member of either Rotary or the Kiwanis. Three reason support this expectation: 1) giving back to the community; 2) it’s good for the individual and gives her something to do above just making a living and 3) it’s great for business.
Ben Bridge Jewelry merged with Berkshire Hathaway, owned by Warren Buffet, in 2000. Jon described it as a flea merging with an elephant. Warren Buffett loves jewelry and owns 3 retail jewelry businesses. At the time of the merger, only 2 of Ben’s 6 grandchildren were involved in the business. The Bridge family needed to do something to provide for the family members who were not involved in the business. The options were to go public, sell to a retail concern, sell to a strategic buyer or participate in a leveraged buy-out. They chose to sell to a strategic buyer. It’s a remarkable tale of having their cake and eating it, too. Ben Bridge Jewelry operates as it did before Warren Buffet bought it. He leaves them alone.
Seven to eight percent of the total sale was set aside for Ben Bridge Jewelry’s associates. The company had no turn over in sales associates for the three years before the merger. Each sales associate received a check, based on her time with the company. One sales associate from the Dominical Republic was able to set aside a nest egg to become the first person in his family to own a house as a result of receiving the merger check. Ben Bridge Jewelry did not merge with Berkshire Hathaway to avoid estate taxes. The Bridge family believes in paying estate tax and in giving their money away when they die.
Ben Bridge educates its associates. Associates attend classes and earn certifications. Online jewelry retailers have reduced Ben Bridge’s margins and increased consumer knowledge. The increased consumer knowledge benefits Ben Bridge. Most people do not want to spend significant money on jewelry without seeing and touching. Consumers learn about it online, but then come into the store to make a purchase. The virtual world is not the same as the physical world when it comes to jewelry.
Jon loves giving back to the community. He lets his cousin, Ed, focus on the internal operations of the business while he focuses on community involvement.
Thanks, Jon, for sharing the Ben Bridge Jewelry story with us. Thanks to you, your family, and the company for all that you do for the community.
04 Apr 2013 by Steven CloughBlog by Steven Clough of NWEN partner Williams-Helde Marketing. Click here for other WH Blogs: http://bit.ly/10wnw7k
As data becomes more and more prevalent, tracking has quickly become a necessary component of any business plan. While focus groups and independent research are the most effective ways to collect data, they can also be costly and time consuming. Fortunately, you can still add value and effectiveness without adding high costs – by using free or inexpensive tools first. You’ll get the information you need and save time and money in the process. Here are a few inexpensive tools you can use to get immediate results:
Qualitative consumer data:
- Hit the streets: While there is a time and a place for focus groups, they can often either tell you what you already knew or worse, steer you in the wrong direction. When learning about an audience, start by immersing yourself into that group. Order magazines that the audience reads, watch shows they like, even spend a day at a construction work site or research lab getting to know people. This type of candid, real world feedback is frequently much more useful than anything you’ll hear in a highly controlled environment deciding whether participants like logo A or B better. It’s our job, as marketers, to make these decisions. But by entering the world of your consumers, you can better understand how they think, giving you insights and information to make smarter decisions with.Hit the web: Doing a web search for something your audience might be researching is a great start (i.e., if you’re developing a new baby learning app, a search for “ipad apps for babies”). Not only does it give you a moment to see the world through the eyes of your audience, but it’s also a great way to get useful ideas and learn about competitors. Can come up with any search ideas? Wordtracker provides a tool that shows you search questions based on keyword inputs. And if you don’t have time to sift through multiple sites, try the Ultimate Research Assistant, which performs a search for you and summarizes the findings into an executive summary.
- The original online social media: When we think of social media today, we think of Facebook and Twitter, but long before social networks, web forums were the go-to source for information from peers. Today, especially within niche groups, web forums hold a wealth of information and candid conversations. You can find a bunch of forums via a simple web search, or search a site like Forum Finder or Board Reader (if you search for “forum directories”, etc., there are a bunch of similar sites). Sites like Google Groups and Yahoo! Answers can provide a great deal of information about customer questions and concerns, as well as comments and reviews on sites like Amazon. Forums are a great place to put yourself into the middle of your consumers’ conversations.
- And the new social: Bing Social is a great tool for social media searching (or the similar 48ers). Others include Kurrently, Booshaka, Trackur, Whos Talkin, and Social Mention. Addictomatic is a great visual aggregator. Some paid tools, like SproutSocial, have limited time free trials that can help you get what you need.
- Dig up research online: Think With Google is one of my favorite little secrets (not to be confused with Google Think, which is also pretty great). It’s has a huge amount of research, statistics, case studies, and marketing tools. Not sure why it’s not more popular, but it’s an amazing tool. Google Scholar, Market Research and the Kauffman Foundation are other great tools, although a lot of the studies you’ll find are not free.
- Find consumer psychology profiles: At marketing-schools.org has a great section on their website about consumer psychology. There are some useful examples and information about consumers within different business verticals – including travel, beer, computers, exercise, foods, soft drinks, and apparel. If nothing else, it’s a good example of one approach to how to start thinking about consumer psychology.
- See what people are saying: Sites like Technorati, Google Blog Search are not only great tools to find blogs and articles on topics, but also a great research tools to see what topics are trending.
- Ask some questions: Tools like SurveyMonkey, KwikSurveys, QuestionPro, and Zoomerang are great resources that can be used for free or cheap to gather first party user information via surveys. If you want to go a step farther, check out AYTM, GutCheckIt or uSamp, sites where you can quickly pull together panels of participants for surveys or even real time in depth interviews.
Beyond qualitative data, quantitative data can be incredibly important as well, particularly for validating qualitative research and selling ideas. They’re less subjective, more comparable, and easier to interpret in a snapshot than qualitative data.
- Use online demographic data: Quantcast is one of my favorite tools for gathering site and user information. They have an awesome site analytics tool with some rich demographic data. This demographic data is very useful when you start looking at adjacent verticals or look at similar properties to get a better audience understanding (i.e., if you have a baby product, site demographics of parenting.com might be a good proxy for your audience. The one caveat to remember is that all website analytics have the confounding variable of being “website analytics.” If your audience is not heavy web users, your data might be skewed to the small segment of the population). You can also use Quantcast’s media planner tool to see what media properties your audience is visiting. This can be great for media planning, but also for competitive research and revealing other audience interests.
- Company data: BizStats, Hoovers, and Jigsaw all offer tools where you can collect data of different companies and industries. This is great for information to help with category validation, projections, and competitive research.
- Use public data sources: The Bureau of Labor Statistics, PEW, and the U.S. Census all have a phenomenal amount of data on different industries and populations (even information like “how frequently do people work out” broken down by different demographic parameters). Tools like Free Lunch can be helpful in navigating this massive database (there are other free tools like this if you search for them).
- Web resources: Need to find the population of Omaha, Nebraska? If you’re trying to find basic data about a product, person, place, region, event, and much more, Wikipedia, Wolfram Alpha, and Sitegeist are great resources that will provide quick, easy, and free answers to your questions.
- See what’s trending: Google Trends is a great tool to get search and compare trends for different keywords. This can be a great resource for data validation, gaining insights into adjacent categories, and help substantiate a market.
- Use other marketers: If you search for it, there’s an amazing amount of 3rd party research available. Organizations like the 4A’s, the DMA, the IMA, and the AMA, research firms like Ipsos, Experian/Simmons, Scarborough, LRW, emarketer, the Boston Consulting Group, the Hartman Group, and Forrester, agencies like Razorfish, Ogilvy, and of course, Williams Helde, vendors like Hubspot and WebTrends. The list goes on. Sites like SlideShare host a ton of great content from agencies around the world. For reports that aren’t free, you can usually find good summaries of them online. And if you can’t get access to a particular report, not public libraries and universities have access to a large volume of journals and research databases
- Reference infographics: Infographics are a useful and growing trend. A lot of agencies and organizations are footing the bill for research and providing free data to the world. Sites like Good.is, Mashable Infographics, Infographics Only, and Daily Infographic host a large database of infographics that contain a ton of rich data points. Furthermore, leveraging compiled data like this can save you time and energy from digging through different resources. Just make sure the sources are credible.
There are times when research precedes launch, but in the real world, where it’s nearly impossible to simply pull all your advertising until you finish a study, doing in-market research can be a phenomenal solution. Not only does this put your ad dollars to work while you’re gaining data, but it also gives you real world feedback instead of having to extrapolate a result from a small sample set. As in-market testing is a topic within itself, here are just some easy to use tools.
- Watch your website: Google Analytics is a great tool for on-site tracking. See where people are coming to your site from, what they’re searching for to get there, how they’re moving through your website. See if there are any sticky points in the purchase flow. Also see what keywords your users are using to find you. This could help you determine what’s triggering purchases and help inform your campaign messaging.. It’s a brilliant and intuitive tool. If you aren’t a Google fan, try Bing Webmaster Tools or open-source Piwik. Quantcast also provides some great on-site tracking features including site traffic and demographic profiles of your visitors. Clicktale allows you to see heat maps of where users are hovering while on your site.
- See what drives customers: Hootsuite, dlvr.it, bitly, and linktally.com are great tools to help you track how many times your links have been clicked. Try using different links for different banner creative to see if one out performs the other. There’s a bunch of tools that will track clicks if you search for them.
- Track your videos: Content remains king, and video is becoming the go-to content for web. Companies like OneLoad (formerly TubeMogul) and SocialCam help you distribute and track your video content. See which content pieces are resonating best with your audience and use this information as a gauge for your messaging hierarchy.
- Test messaging via email: Using tools like MailChimp, ConstantContact, or MyEmma, you can test different visuals, messaging concepts, and call to action through open and click tracking.
25 Feb 2013 by Daniel RossiThis blog has been re-posted from www.nerdwallet.com.
Top Ten Cities for Women Entrepreneurs - by Divya on February 25, 2013
Happy women’s history month! Although women now make up a majority of those enrolled in college, women are still underrepresented in some fields, including business and entrepreneurship. Many successful businesswomen shared their thoughts in our recent compilation of tips from small businesswomen, and they cited a lack of female mentorship and networking opportunities for women as barriers. Although female entrepreneurs are less common than male entrepreneurs, there are plenty of innovative, inspiring women in the business industry.
NerdWallet examined which cities are the best for women entrepreneurs based on the following questions:
- Is the city an entrepreneurial one? We assessed the cities’ entrepreneurial climates by the number of businesses in the city per 100 residents.
- Are there female entrepreneurs (for networking or mentorship)? We analyzed the percentage of businesses in the city that are women-owned to gauge the level of support women would be able to find as well as how friendly the city is to entrepreneurial women.
- Does the city have a thriving economy? We examined the median income and unemployment rate to determine which cities have an economy that is conducive to new businesses and which have strong economic fundamentals. Cities that ranked higher have a high median income and low unemployment rate.
- Is it a highly educated city? Education levels correlate with entrepreneurship, and a study found that 92% of tech founders hold a Bachelor’s degree. We assessed the presence of educated workers in the city by the percentage of residents over 25 years old with a Bachelor’s degree.
1. San Francisco, CA12345678910
1. San Francisco, CA
San Francisco is well-known for its entrepreneurial climate, particularly in the technology industry. With nearby Silicon Valley and a whopping 13.7 businesses per 100 residents, the city has plenty of fellow entrepreneurs for networking and collaboration opportunities. The Bay Area is also home to three of the nation’s most famous businesswomen, Sheryl Sandberg (COO of Facebook), Marissa Mayer (CEO of Yahoo) and Meg Whitman (CEO of Hewlett-Packard).
2. Seattle, WA
Seattle is one of the most highly educated cities and has a correspondingly high median income and low unemployment rate. With 12.5 businesses per 100 residents, the city is highly entrepreneurial, and women own around 4 of those businesses.
Organizations like CHEW organize events and panels to encourage female entrepreneurs to open their businesses in Seattle. Seattle is also home to one of the world’s most famous and civic-minded businesswomen, Melinda Gates, as well as rising chef and restaurant entrepreneur Renee Erickson.
3. Washington, DC
Over one-third of businesses in DC are owned by women, meaning that women in this city can find plenty of female coworkers and mentors. The city provides plenty of resources to women as well, such as the Washington, DC Women’s Business Center. The organization, partially funded by the SBA, offers trainings, classes and one-on-one consultations.
4. Minneapolis, MN
Minneapolis has the dual benefits of having a very low unemployment rate and an educated workforce. Additionally, women own almost a third of businesses in Minneapolis. Minnesotan businesswomen can meet each other and network at quarterly events at Women Entrepreneurs of Minnesota. The National Association of Women Business Owners (NAWBO) of Minnesota is very active, providing networking and other events, and nearby twin-city Saint Paul-based WomenVenture offers loans and transitional career services.
5. Portland, OR
This laid-back West Coast city has it all: plenty of businesses, a good share of which are owned by women, an educated general populace and a low unemployment rate. Additionally, organizations like Women Entrepreneurs of Oregon hold plenty of events for women. Intel is Oregon’s largest employer, and the company has six Oregon campuses as well as a female Executive Vice President, Renee James.
6. Atlanta, GA
Atlanta has plenty of businesses, a third of which are run by women, and an educated population, making it a great city for female entrepreneurs. Plus, businesswomen can meet at the various networking events and educational programs run by the NAWBO in Atlanta. The Georgia Mentor Protégé Connection assists women in finding mentors, and the state provides plenty of trainings and networking assistance for women business owners.
7. Austin, TX
Austin is known for its startups—there are almost 11 businesses for every 100 Austin residents. Austin has a very low unemployment rate of only 6.2%, which is one reason we rated it as the number one city for job seekers. With organizations like Austin Women in Technology, businesswomen in Austin will have little trouble finding a supportive and knowledgeable community.
8. Raleigh, NC
Raleigh’s low unemployment rate and high number of businesses per person make it a great city for female entrepreneurs. Entrepreneurs can check out organizations like Raleigh Business and Professional Women for resources. In addition, the City of Raleigh has adopted a Small Disadvantaged Minority and Women Owned Business Program, promising to award 15% of the city’s contracts to minority-owned and women-owned businesses.
9. Denver, CO
Denver is a highly educated city with plenty of businesses, 30% of which are owned by women. The Mile High City also has resources for businesswomen through The Entrepreneur Center at the University of Denver, which provides mentorship and networking opportunities. The city even hosts Denver Startup Week, a week of trainings, office hours, parties, mentorship and networking events. The week was so successful in 2012 that the city has announced a second year of the program.
10. San Diego, CA
With an educated population, moderately high median income and entrepreneurial atmosphere, San Diego is a great city for women in business. San Diego female entrepreneurs can access mentors, workshops, networking events and various small business tools through SCORE and the NAWBO. There are also several startup incubators in the city that help foster entrepreneurs and their ideas, including EvoNexus and the newly launched cybersecurity incubator CyberHive.
Rank City Per capita income Unemployment rate Businesses per 100 residents Percent of businesses that are women-owned Percent of population 25+ with a Bachelor’s degree Overall score for women entrepreneurs 1 San Francisco, CA $46,777 8.6% 13.7 30.1% 51.4% 63.4 2 Seattle, WA $41,695 7.5% 12.5 30.3% 55.8% 63.0 3 Washington, DC $43,993 10.2% 9.5 34.5% 50.5% 58.0 4 Minneapolis, MN $30,693 6.3% 10.4 32.1% 44.7% 51.8 5 Portland, OR $30,631 8.4% 11.9 31.9% 42.0% 50.6 6 Atlanta, GA $35,884 12.1% 9.8 33.4% 46.1% 50.1 7 Austin, TX $31,170 6.2% 10.8 28.2% 44.5% 48.7 8 Raleigh, NC $30,377 7.6% 10.5 28.4% 47.3% 48.5 9 Denver, CO $32,051 9.1% 11.5 30.1% 41.3% 47.7 10 San Diego, CA $33,135 10.0% 10.3 30.7% 41.0% 45.9
The overall score for female entrepreneurs was calculated from the following measures:
- Number of businesses per 100 residents from the U.S. Census
- Percent of businesses that are women-owned from the U.S. Census
- Median income from the U.S. Census (half-weighted)
- Unemployment rate from the Bureau of Labor Statistics (half-weighted)
- Percent of residents 25+ who have a Bachelor’s degree
50 of the most populous U.S. cities were included in this analysis.
11 Feb 2013 by Tonya Gisselberg
David Giuliani captivated and inspired us with his description of the success of his startups Sonicare and Clarisonic, and his latest mission, the Washington Business Alliance.
For David, it began with far away dreams. Both Sonicare and Clarisonic involved yet-to-be-invented breakthrough technologies in established industries with mature markets, dominated by major corporations. It was high risk, but it was a lot of fun and he accomplished his mission. Both ventures were sold to major corporations that could move the products forward to take advantage of unrealized opportunities. Sonicare was sold to Phillips and Clarisonic was sold to L’Oreal. Both ventures ended up turning 40 – 60 to 1 on the early money.
Having fun is essential to success. If you don’t have fun, the people working for you aren’t going to have fun, either. It’s important to love your people, because they are the ones who are committing themselves and making things happen. You love your people by offering stock options to everyone, treating them as owners, telling them what’s going on, reinforcing good behavior by telling people who work for you what you like, and by being truthful. Make the environment an alive and thriving environment with people who are excited to be involved with the risk of a small company going somewhere and who are happy to be there, not people who are worn out. The challenging work is inside the company. By building your people, you build yourself. It’s also essential for your family to be supportive.
Brand your product and position it in the marketplace. For Sonicare, they formed focus groups to find out what people were willing to pay, which was $30 to $50. They charged $195. They didn’t need to satisfy everyone in the marketplace, only the early adopters. It was a new product and with a new product, there is no price low enough that everyone will buy it. Before Sonicare was introduced into the marketplace, someone with periodontal disease heard about the product and offered $1,000 for a prototype. That person’s dentist told him that if he didn’t get his periodontal disease under control, his dentist was going to have to perform surgery on him. David ended up giving a prototype to the guy for nothing. Your early adopters will take care of you over time.
No dental product has ever succeeded without the endorsement of dentists. With Sonicare, they focused on selling to dentists and dental hygienists, leveraging their credibility. They went to dental shows. With Clarisonic, aestheticians filled the leverage role that dentists and hygienists filled for Sonicare. Retailers, particularly Nordstrom, were important for Clarisonic. Nordstrom was important because it’s local and has spas.
Public relations was by far the most effective tool in growing the businesses. They sent their PR person to the aquarium, where the keeper was using Sonicare on a seal with periodontal disease. The seal loved having Sonicare used on him. It was the Seal of Approval. Sonicare is unusually pleasant to use, especially for people.
Oprah was fabulous in helping the sales of both products. Oprah called Sonicare, asking for 350 units for her show, so that everyone in the audience could have one. The Sonicare employee who talked to Oprah initially thought it was a gag, not believing that Oprah would make her own calls. It really was Oprah. On her show, she told everyone they had to buy a Sonicare. She did the same thing for Clarisonic, but that time someone else made the call on her behalf.
With Clarisonic, lots of people were willing to help. David showed a slide with an actress or model walking down a runway with a Clarisonic. They didn’t pay people to do things like that. If people love a product, they will endorse it for free. With both Sonicare and Clarisonic, it’s a great product that really works and that people love. Both products are based on sincerity and integrity.
The rise of the Internet was a difference between the 2 products, which were about 10 years apart. The Clarisonic Facebook page was chosen as one of the top 20 company Facebook pages. Customers seeing what other customers are saying about the product leverages the customer loyalty.
L’Oreal saw a powerful brand in Clarisonic. Brand intensity is measured by the number of people who are aware of the brand compared to the number of people who use it. Brand intensity is high for Clarisonic.
Both Sonicare and Clarisonic are backed by powerful intellectual property rights, which were proven in court. The court wins increased the value of the brands. One of the low points for David occurred when Sonicare was in a major legal battle with a competitor. The competitor ignored Sonicare, to its detriment. David realized they could lose the lawsuit and the business. As he was sitting in the hot tub one night, David felt a great sense of confidence. He lives with integrity. He knew that no matter what happened, he could feel good about what he did.
Although both Sonicare and Clarisonic are under FDA control, they are not medical devices, so didn’t have to go through a medical device approval process. They didn’t make medical claims about these products. Sonicare is a non classified device and Clarisonic is a cosmetic appliance. Clarisonic works well on acne, but they couldn’t bring that up. They got around that by selling an acne cream with Clarisonic, so that they could mention acne.
Sonicare was initially based on technology licensed from the University of Washington. That technology was incapable of getting them where they needed to go, so they got busy inventing something that would work. During the development of Sonicare, they didn’t have money for clinical trials. The co-founder is a periodontist. He used the product on himself to determine when they had it right.
In setting the price for Sonicare, they set the price to value rather than cost plus. The price needed to be higher than the competition, signifying that Sonicare was significantly better. The manufacturing cost of about $50 was in line with the price charged. In financing Sonicare, they went the straight equity route, choosing not to use debt. Sonicare is built in the U.S., which was crazy in those days. David knew how to run an overseas plant, as he did it when he was in his 20s. David believed that with the yield and inventory turns, Sonicare could be competitive with products manufactured overseas.
Going international was daunting for both companies. They were under fulfilling their potential and in danger of having others move in. Both companies were sold at that point. When the asset is more valuable to the purchaser than the seller, it’s called “synergy” in business.” In real life, it’s called “magic.” When selling a company, make sure that the new owner gets full value for what it bought. David never recruited people out of the old company for the new venture. With Clarisonic, they handed over a good, solid, 5 year agenda.
It takes a lot of fortitude and belief to stand up and build a venture. With both Sonicare and Clarisonic, they were builders. They started out with a few people and built the company into many hundreds. They didn’t stop there. High performers are well on their way to a new business by the time the existing business is ready to sell.
David demonstrated an impressive knowledge of the law when describing how to avoid a taxable event when making stock option grants to employees.
David also described his latest mission, the Washington Business Alliance. The State of Washington has not achieved its full potential. The Alliance was created so that people in Washington could take responsibility for their futures. The Washington Business Alliance is nonpartisan, across state, inclusive and entrepreneurial.
The Washington Business Alliance is now in its third year. It has over 120 members. The Alliance is working to develop a strategic plan, a vision and specific enough goals to plan around. The current overall goal of the Alliance is to be in the top 10% of states in the areas of education, health, infrastructure, environment and governance by 2025.
The members of the Alliance have formed study groups to study the best practices in the areas of education, health, fiscal governance, strategic planning and infrastructure. The Alliance is using this information to engage government, get onto task forces and help get things done. For example, the Alliance is working to reduce pollution in Puget Sound, while working to reduce regulation.
David left his business cards for everyone to take. People who are interested in participating in the Washington Business Alliance can contact David at firstname.lastname@example.org.
Thank you, David, for sharing your successes with your past startups and your new calling, the Washington Business Alliance.
30 Apr 2012 by Daniel Rossi
One of the benefits of being NWEN's Director is I get to host office hours every week. We've taken to calling these sessions Idea Therapy. There's a couch. I talk in a deep mesmerizing voice. There's a lot of crying. Actually, entrepreneurs visit me and we talk about issues germane to their startup. Ideation, validation, writing their business plan, pitching investors. A lot of the time I'm helping translate "tech speak" into the Queen's English. Office hours are great...maybe the best part of my job.
But a few weeks ago I got stood up at office hours. No phone call, no warning. Nothing. There I was, all dressed up in my prom dress, a single tear rolling slowly down my face. Lucky for me I had four other prom dates that day. So I forgot all about it. Until today.
A funny thing happened today. I was writing to a list of people that had visited me over the last month or so at the office. I wanted to tell them about our Ideation eIQ that we're hosting this week. Entrepreneurs need to know how to come up with ideas and decipher the good from bad. We help do this because your family and friends are liars. An hour later this fella calls me up and says - hey, how do I get pulled off of your mailing list? I asked about the email content, it was the one I'd sent office hour attendees. One thing led to another, and then I discovered - quite loudly - that this was the office hour standup culprit!
As we chatted I agreed that I'd pull his name from our list. But I wanted to know why, and why had he pulled out of our meeting? What he told me next was both cause for laughter and concern. He told me that he was at another startup meetup and someone told him to be wary of NWEN because we're "a Ponzi scheme." Did this guy really think we were a Ponzi scheme? Really? Whatever he thought, it was bad enough to run like hell the other way when I sent him an email about Ideation.
So we talked. I explained that the Northwest Entrepreneur Network is decidedly NOT a Ponzi scheme. NWEN is a non-profit whose sole existence, whose very reason for being, is the proliferation of startups. We exist to help them succeed. We teach them everything they need to know and introduce them to everyone they need to know to make their first startup feel like their second. And when they come back for a second or third startup we help them reengage with the community all over again. NWEN helps startups succeed. Period.
In pragmatic terms we help startups through the process of ideation, business model validation, research and writing business plans and pitching investors. We do this for those who are launching companies. Then we help those running companies build their tech stacks, manage products, manage relationships with vendors, figure out their cap tables, price their stuff...and on and on. And we charge $99 per year for membership and small fees for every Breakfast Buzz, Pub Night, eIQ, Workshop, etc. Even Entrepreneur University is a mighty deal. I spent $60K on business school. You can learn what you need to about entrepreneurship for less than $400 total. It's one of the best values for startups anywhere. AND, if you get someone else to sign up you get a small percentage of what THEY spend on classes! Just kidding. We don't really do that... that's a pyramid scheme.
PS - I convinced my new friend that we are NOT a Ponzi scheme. He scheduled himself another hour of Idea Therapy. I'm so going to make him cry!
11 Sep 2012 by Tonya GisselbergDaniel Lee, founder of Odin Brewery, spoke at the September Lunch Buzz. Daniel proclaimed his presentation a success even before he started, as he didn’t show a Power Point and he brought his own beer. The beer was delicious and Daniel’s presentation was great!
Daniel was born in Korea, but grew up in Canada. His first corporate position was with SC Johnson. His business philosophies stem from his experience there. He next worked at Miller, where he worked closely with the brewmaster. Sonicare recruited him to come to the Northwest. He left Sonicare to found the startup, Odin Brewery, in early 2009.
Daniel named his brewery “Odin” after the god of wisdom in Norse mythology. Odin gave the gift of fermentation to mankind.
Daniel generously shared with us the emotional things he was going through as his startup progressed and what he wasn’t ready for. He said that in corporate life, the breadth of emotion is narrow. In the world of entrepreneurs, the range of emotion is so wide that it’s off the charts. Just when he thought that he was as low as he could get, he discovered that there were several floors beneath him.
Daniel emphasized the importance of his network. He said that his network was more important to him than his financial backing. Without trying to be corny about it, he revealed that his startup story is a love story. It’s love for the company and the brand, for his wife, for his family and for his wife’s family. He had people that he could call in the middle of the night, tell them he needed $5,000 in two hours and they would come through for him, no questions asked. The experience has been so much more than building a company. It’s been a journey of getting closer to his family members.
Daniel and his wife have only been married two and one-half years. During the darkest days, he would come home and describe his day to his wife. She tried to help him by giving him ideas, which felt like criticism to him. They had many conversations on how to give and receive feedback. Daniel finally realized that he didn’t need more ideas – he needed solutions. Once they passed that point, they were able to more effectively communicate and his wife actively participated in making things happen.
Daniel chose beer as a startup because he had experience in the beer industry and because he likes beer. He thought he could bring something to the beer market, even though it’s a crowded market. He thought about building a winery, but there are more wineries than breweries in Washington State. With beer, once you get the equipment in place, you can produce beer in 30 days. Wine takes longer. Beer is asset heavy, but it’s a huge cash generator. Daniel wants to use beer as a jumping off point for creating other products. Beer equipment can be used to process sugar water, for example.
In early 2009, Daniel was in a wonderful space emotionally. The stock market tanked in October 2008, which allowed Daniel to become a net purchaser. He bought his equipment for pennies on the dollar.
From January to June, Daniel worked on the planning, regulatory requirements and getting a building. On July 1, construction started on the building. Around that time, he hired a professional brewer. The next few months were spent building the brewery. For the first 6 months, Daniel had so much fun that he wished he had done it 5 years earlier!
Around September or October 2009, they started brewing their first batches of beer. Daniel got the brewery’s name out by making a number of contacts in the local beer industry, including bloggers. In the second week of November, he received an unsolicited call from an account in Redmond. The account wanted to buy a keg. Even though the beer was not finished and was “green” beer, this guy insisted on buying beer because he wanted to be the first to have Odin beer on tap. Daniel still had money in the bank at that point and he was on Cloud 9!
That was the only unsolicited call Daniel received for a while. Daniel hit within 2% of his original three year forecast. The curve to get there was not what he had planned. It took 18 to 20 months to get the cash flow to neutral. He budgeted for 6 months. From the 6 month to the 18 month period, he daily expected for the doors to be closed on his business or for his employees to leave. Daniel referred to those as “the dark days.”
There were a number of things that Daniel didn’t know he didn’t know. His ego is both his best friend and his worst enemy. He thought that he had it down because it was on an Excel spreadsheet. One of the things he didn’t know is that when you have a company that is made up of 3 people, if one of those people has a bad day, everyone in the company has a bad day. It was a disproportionate impact that he was not prepared for.
One of Daniel’s key points is that entrepreneurs need to be aware of the kind of people they should surround themselves with. When people enter a startup, they don’t think about the down side. The fact is, most startups fail. Daniel made a mistake in hiring the brewmaster he initially hired. The brewmaster he initially hired was the sole wage earner for his family and had a wife and daughter with significant medical needs. That man could not afford to be paid even one day late. Daniel’s relationship with that brewmaster eroded and they split on very poor terms.
Some personal issues cannot be explored during job interviews, but personal issues can have a huge impact on the success or failure of the startup.
Prior to the split with his initial brewmaster, Daniel built up contacts with local brewers. He started “building a bench.” He was able to hire the head brewer from Mac & Jacks. That guy needed a month to leave his previous employment. In the meantime, word got out and bloggers wrote posts about it. Daniel’s initial brewer found out before Daniel planned to tell him and it was not a good situation.
Daniel was able to hire the head brewer from Mac & Jacks because Odin is much closer to the head brewer’s home than Mac & Jacks is and because the Odin job offered a greater opportunity to create more diverse products.
Daniel dug out of the dark days by making a couple of key additions: 1) he hired the new head brewer and 2) he brought his brother in to act as CFO. The initial brewer had issues with the equipment and thought that Daniel failed to support him by not buying the proper equipment. The brewery was not set up correctly and they kept buying more equipment, trying to get work arounds in place. At the end of his first week, the new head brewer told Daniel not to buy any more equipment or hire anyone else and to stay out of his face. If Daniel did that, the new head brewer told Daniel that he could double production in a month. After the new head brewer reorganized the brewery, the production was more than doubled in that month.
Bringing Daniel’s brother onboard gave the company a structure guy, but it also gave Daniel a person to tell things Daniel couldn’t say to other people in the company. It gave Daniel a sounding board that he needed.
Where is Odin Brewery now? The company just had 2 straight quarters of profitability. A year ago, Daniel’s horizon for survival was 24 hours. It was highly stressful. Today, there are just as many problems, but he is looking at 3, 6 and 12 month horizons.
Thank you, Daniel, for taking us on your emotional rollercoaster and for sharing your beer!
24 Sep 2012 by Daniel Rossi
Many of you know about our First Look Forum. NWEN received over 110 applications this year for our signature investor pitch prep event. 40 teams received at least one round of coaching. 24 received a second round and some serious pitch doctoring in preparation for pitching a large investor audience (angels/VCs) for the very first time. Hence the name First Look Forum.
Much can be and has been said about the need for early-stage investment here in the Pacific Northwest. Groups like NWEN help startups get prepared to pitch but who helps interested individuals of means to become Angels? That’s the other side of the coin and it too has an element of education. We know of several established Angel groups. Notable among them are groups with whom NWEN partners. They are the Alliance of Angels, Keiretsu Forum, Puget Sound Venture Club, Seraph Capital, and ZINO Society. We’re big fans of each of these groups.
We think you should know about another group in town of which NWEN has become a fan. It’s called the Seattle Angel Conference. Startups near first revenue can enter a pitch competition for a group of newly established Angels brought together to learn the basics of investing. That’s right, the SAC was established to bring new Angels into the fold and uses live startups as a means to teach aspiring investors the process of due diligence. In the end the winning startup can boast an investment of $100K from this newly formed LLC. There are great learning opportunities (for startups and Angels), great feedback, and an investment. That’s a win-win and it is a good thing for our startup ecosystem. That’s why NWEN is a partner of the SAC.
The second Seattle Angel Conference is coming up this fall. While the event runs on Dec 13th, there will be workshops and due diligence reviews of the applying companies throughout October and November. Don’t miss your chance to get involved. Entrepreneurs can submit their applications (no later than 10/15) HERE. NWENtrepreneurs can get a discount ($99 for the application) by using this code: angelinvite. If you’re interested in participating as an investor you can get more information and sign up here HERE.
01 Feb 2012 by Daniel Rossi
NWEN’s Entrepreneur University is on Tuesday … cool! As always, the sessions look interesting — keynotes from Lee Rhodes of glassybaby, David Roberts of PopCap Games and Dan Shapiro of SparkBuy, and a lot of great breakups. There’s the VC Bistro, where you can get a few mintues with a VC; and It ends with EU Idol and a cocktail reception.
The jam-packed agenda gives great value for its price but there’s no question it’s a big time investment. So a few days before the big day, here’s some thoughts on how to make good use of the time.
Everybody’s goals are different; so a good place to start is by thinking about what’s important for you. For me in the last two months of 2012, the top priorities are to assess and improve the likelihood of finding funding for my startup qweries, meeting potential cofounders (especially with a design background!) and/or other startups working in this space to partner with, warm up connections with local media and venture and angel investors, and finish and market an ebook. If I play my cards right EU can help with any and all of these.
Your priorities might be different: work on specific skills; find startups you might be interested in joining; recruit; or just get an overview of the Seattle area startup scene. The best ways you’ll want to spend your time at EU and preparing for it depend a lot on your goals so it’s worth investing some energy up front thinking about what you want out of the day.
Once I’ve done that, I make a short list of people who it will be useful for me to talk to. Some people like to use Linked In or a “contact management system” to organize this process; I’ve always been much more ad-hoc. I tweet them or send them mail or give them a call in advance, and let them know I’d like to meet with them if they’re there. It can be pretty chaotic so there are never any guarantees, but if we both know you’re looking for each other it’s a lot more likely to happen.
And finally I decide what kind of collateral I want — with me and available online. Business cards, of course, and an updated version of my executive summary. [Note to self: update executive summary!] Does my web site need updating? Do I have any needed bookmarks and demos ready? My pitch is probably a little rusty too, so I’ll spend a bit of time getting it back up to speed. That way I’m ready for whatever discussions start to happen.
It takes a little time to do this (I spent a couple hours on the prioritization and emails to my short list, and will spend a few more over the weekend tidying up the executive summary and the updating the website)but in my experience it’s well worth it.
See you at EU! Once I update my web site that is …
Jon Pincus is a Seattle-area strategist, writer, and activist. As a volunteer, he co-chaired the NWEN First Look Forum with Rochelle Whelan in Fall 2010 and Spring 2011.
28 Nov 2012 by Tonya Gisselberg
Paul Shoemaker is the Executive Connector at Social Venture Partners Seattle. SVP helps donors fund local nonprofit businesses. Paul works with small businesses – they just happen to be nonprofits. Paul discussed SVP as a philanthropist and SVP as a small business. SVP’s role as a philanthropist goes beyond philanthropy. SVP connects people who want to change the world.
These are some of the differences between nonprofit and for profit businesses:
1. Nonprofits don’t have to give money back to the shareholders.
2. Nonprofits have different capital sources.
3. Nonprofits never have one goal. They always have multiple goals. In for profit businesses, the goal is to make money.
There are more similarities between nonprofit and for-profit businesses than there are differences. They have the same financial issues. Nonprofits must make more money than they spend. Financially, ninety percent of what is true for for-profit companies translates to nonprofit companies.
SVP funds nonprofit businesses in the community. SVP is focused on human capital as well as money capital. SVP is also focused on building the organization. It funds small to medium sized nonprofits.
SVP has learned these critical things in working with nonprofits:
1. You have to establish trust, mutual respect and listen.
2. Define knowing what good looks like. Do a 360 view of the organization and where it is at. Develop a visual of where the organization should go.
3. Financial management is more than a snapshot or audit. Look at the course of cash flow, reserves and strategy. Get the whole picture.
4. People with money do not necessarily make good board members.
5. SVP gives the money unrestricted, not tied to investment in a particular aspect of the company. Make it about the end goal and don’t tie people’s hands.
SVP learned some lessons about scaling:
1. Multiple sites. The core question is what can we do better together than we do on our own?
2. SVP International tried to do everything all at once when moving into a new city and screwed up in some locations. It then started doing things in sequence. For example, SVP International screwed up in San Francisco. It mended the fences as best it could. When Stanford Social Sector Review wanted Paul to write an article about why SVP International failed in San Francisco, Paul wrote the article. He was very transparent and as public as he could be. SVP International gave it a little time, then went back in. If you fail in a location once, give it some time and take what you learned from the failure with you when you go back in.
3. SVP didn’t understand what its core product was. “Core” is what makes it what it is.
4. It’s all about people. Great people make things work. SVP is always looking for great people and for multiple year relationships with those people. When looking for great people, SVP looks for honesty and integrity, communication skills and a sense of accountability. People who do not have honesty and integrity will destroy the place. Communications skills include the ability to communicate with a broad range of people. A sense of accountability includes accountability to work, self and to the mission. SVP can help people with these traits build a broader skill set.
5. The forms of leadership are aspirational and operational. You need both. Some people can do both. For those people, you have to look at who is around them. Is the organization solid, is the staff good, is the board good? Plan long term about how to replace key people. Don’t wait until you have only two months to do it.
6. Governance and boards. Boards either don’t understand their role or don’t do it. “Board” as a word stinks. Paul prefers to use “governance,” which means that those people are the stewards of the mission. Governance as Leadership is a book Paul recommended. Boards must be a team of people with a mixed skill set. The members of the board must be willing to work together. They have to check their egos and work collaboratively. They must understand what governance is about. Good board members develop themselves. They go to seminars, for example.
If you are going to be on a board, don’t do it for community service. When you do work for the board, don’t leave your business hat at the door. Work only on boards you feel intensely about and do it well.
7. How do you build purpose into a company? Get more people thinking about the social and community aspects of the business.
How do you bring the public, nonprofit and private sectors together? Individual sector can’t solve our problems. The public sector is not going to solve our growing problems. Nonprofits have the know-how, but not the money. The private sector has the money, but not the know-how. The private sector must be involved for social change to occur. There are more nonprofit/public sector hybrid companies out there now than there were twenty years ago. Collective impact from all sectors is hard, messy, doable and mandatory. Strive Cincinnati is an example of people from different sectors working together to make things happen. The high school and college graduation rates increased 10%, which is an incredible increase.
Thank you, Paul Shoemaker for sharing your experiences and expertise with us!
01 Nov 2012 by Daniel Rossi
Let’s talk about awesome things. Let’s talk about people you don’t know that want to give you money – or at least pay for you to attend a boot camp for entrepreneurs. Awesome things. That’s what the Herbert B. Jones Foundation is doing for business school students that hail from the great state of Washington. Why? Because they believe that entrepreneurism and small business are the backbone for the strength of our economic system. You know what? We at NWEN could not agree more. And so we are thrilled that HBJ is supporting Entrepreneur University once again this year.
Let’s talk about the dough. If you are a business school student from an accredited college or university you are eligible to apply for the HBJ scholarship. That takes a $159 ticket and turns it into $35. (And seriously, if the cash is a problem for you let us know. We’ll work it out). There is a half-page application where you answer a couple of questions about why you are considering entrepreneurship. That’s it. Fill it out and YOU get to come to EU 2012 and gain all of the benefits that come with your ticket.
Let’s talk about why you, as a student, should come to EU. First, you’re a student so we’ll feed you…a lot. Second, our keynotes rock. Richard Tait – he’ll tell you about Cranium and Golazo (you need energy drinks for finals after all) and he’ll tell you in his fine Scottish brogue. Molly Neitzel Moon – Ummm…Molly Moon’s Ice Cream? Seriously, she’s killing it. She’ll talk about fast growth and the social entrepreneurship angle of her startup. Phil Gordon - Okay, you’re in college. He’s a poker superstar and playing at the tournament afterward. AND he’s a successful serial entrepreneur that recently started a gaming company in Seattle with the development team formerly known for Full Tilt Poker. He’s about to rule the gaming world. You should hear about it and then play cards. And finally there are more chances to learn, meet other entrepreneurs looking for teammates, meet venture capitalists and even meet the startup journalists that you’ve been following. Poker tournament to follow. Don’t forget…we’ll feed you!
Let’s talk about shutting this mother down. Food, networking, knowledge, inspiration…and someone else wants to pay for it. So, fill out THIS SCHOLARSHIP FORM and email it to email@example.com then snag your ticket HERE. This is kind of like the easiest test you’ve ever been given. Pass the test student entrepreneurs. We’ll see you at EU!
31 Oct 2012 by Daniel RossiWe love lists @NWEN_org... so here is a list of seven reasons why you should be at Entrepreneur University 2012!
1. Come to CONNECT with Seattle's startup network - Students, Entrepreneurs, Organizations like Lean Startup Seattle - Startup Weekend - Founder Institute - Startup Washington, VCs and Angels, topical experts, handsome people, and maybe even a co-founder!
2. Come to LEARN - We have a ton of great subjects for startups at the beginning and middle of their growth phases. There will be top 10 checklists as well as specific how-to's like validating customers and building lean. For those mature startup junkies we have some amazing trending topics like crowd funding and gamification. And don’t forget the dozen contextual table topics at lunch. Read more..
3. Come to be INSPIRED. Our keynotes (Richard Tait, Molly Neitzel Moon, and Phil Gordon) have amazing stories. Some are hilarious, some are deep, and some simply make you say…yeah, I want to do that! Perhaps you'll see a bit of your journey in in theirs.
4. Come for VC BISTRO. You have the chance to belly up to a bistro table and talk about your startup to some of Seattle's best VCs! How often can you get advice like that? Answer..once a year at EU.
5. Come for MEDIA BISTRO. You know you want to see your story in GeekWire, Xconomy, Puget Sound Business Journal (PSBJ) or the Seattle Times. But HOW do you get it in front of the folks that pen them? Media Bistro is a chance to introduce yourself and find out how...right from the writer's mouths!
6. Come for the EXTRA CREDIT - Are you a business student interested in entrepreneurship? Did you know the Herbert B. Jones Foundation has given you a SCHOLARSHIP TO ATTEND the event? This is a great opportunity to let someone else pay your way and if your professor is really cool (some of them certainly are) they may even give you some extra credit for joining the EU crowd. I've heard stories!
7. After the event stay for drinks and even a POKER TOURNAMENT put on by Startup Poker 2.0. Try your luck/skill against poker superstar Phil Gordon. Seriously...good luck!
Snag your ticket at NWEN.org and if you are a student don’t forget to fill out the half-page application (takes five minutes) and email it to firstname.lastname@example.org. See you at EU next Friday.
18 Oct 2012 by Tonya GisselbergMartin Coles worked for the distressed pieces of big companies for most of his career, including positions with Procter & Gamble, Nike and Starbucks. He left Starbucks in 2009 and spent a year on a “walkabout,” i.e. hanging out on Mercer Island and getting to know people who live near him. During his walkabout time, he looked at buying a sports company. He never intended to become a CEO, but accepted the position when he was asked to become HaloSource’s CEO.
HaloSource is a science and technology company focused on making safe, affordable and ecologically friendly water available to people. The availability of water is a real issue in some other countries and is becoming an increasingly important issue in this country. HaloSource is based in Bothell and has operations in China, India and Brazil.
Mr. Coles’ presentation centered on these major points:
1. Walk in the shoes of your consumer and understand what is important to the consumer. What does the consumer need to know about your product? HaloSource’s consumers in India know that when they eat and drink things that are not cooked properly, they get sick. Telling them about how much bacteria gets killed by HaloSource’s product is not meaningful to them. Continuously live the consumer experience, because their lives change. Understand each consumer segment and what drives that segment.
2. Being in global markets is really about being relevant on a local level. It’s your brand made relevant in a local way. For example, in the U.S., people have a sense of ownership when they sit down to a table, so the tables at Starbucks are small. In China, that sense of ownership doesn’t exist. Tables at Starbuck in China are square, so that families who go to Starbucks can put tables together to seat the entire family.
3. Don’t let processes freeze the company. Strategy can become so big that it falls under its own weight. The ability to get to a quick “yes” or a quick “no” is critical for small companies. Expand the roles and take away the layers of decision-making. One of the things Mr. Coles likes about being CEO at HaloSource is that he can actually get something done.
4. Choose partners carefully. Partners must be able to make decisions quickly. In addition, partners represent your company and your brand and must do so in a way that is consistent with your company’s values and beliefs. Make sure that your company’s competencies and your partner’s competencies overlap, so that the consumer is covered.
5. Small companies need performing players in all of their positions. Small company employees must believe in the company and its mission. At HaloSource, the employees must be on the mission of solving the water problem. The bonus and stock options opportunities available in small companies are not good enough to carry employees who want to be passengers.
6. Deliberate imperfection. Don’t try to make your plans perfect. Leave open opportunities to make changes.
7. Focus on the core of what your small company does and don’t try to do too many things. Be willing to move back up the value chain. That way, your company stops looking like a competitor to your partners. HaloSource no longer manufactures its own devices. HaloSource now wants to get its technology into devices that are manufactured by others. The technology developed by HaloSource is the only approved technology for use in China.
8. Small companies live by the ring of the register. Look at the sales numbers every day. Limited resources force small companies to spend money in smart ways.
9. Branding is all of the things that you are and all of the things that you are not. Branding is a reflection of who you are. At Starbucks, they understand that customer experience varies by location and the time of day and adjust the ways they interact with the customer accordingly.
10. When getting started, be very clear about where your starting point is and where you want to get to. Do one to three year rolling plans. Don’t do five year plans, as five years is too far out. Be anal about breaking your plan down. The vital things are product, brand, people, reach and results.
11. Create the right environment for your employees to work in. It’s part of your branding, so make deliberate choices.
Thank you, Martin Coles, for your insights on how startups can better understand global markets.
10 Oct 2012 by Daniel Rossi
Join NWEN and TechStars -
November 1st at the DemoDay After Party. Celebrate with the Seattle startup community, over drinks, food, casino games! If you are already involved in the startup community, or just want to become more involved, anyone is welcome.
If you don't walk away with any prizes, we promise you will walk away with some new friends - and we promise to show you a good time!
17 Jul 2012 by Tonya GisselbergAndy Sack started off his Breakfast Buzz presentation by stating that he believes in direct, honest communication. He asked the audience to vote on a lecture type presentation or a Q&A session. A significant number of people wanted a Q&A session, so he moved through his slide deck quickly and devoted the rest of his time to answering questions.
Andy offered the Cliff Note version of his presentation:
1. Ideas are cheap.
2. Creating a cash flowing business is a process. It’s expensive in terms of time, money and passion. It’s hard.
3. Things to remember.
2. Cash flow is king.
3. Customer acquisition is queen.
4. Listen to your gut.
Andy’s favorite slide in his deck is the one that said “cash is more important than your mother.”
Since 2008, Andy has been swimming in the world of Founder’s Co-op, Lighter Capital and Tech Stars.
What’s the process of moving from an idea to a business?
1. Idea formation. The ideas that keep coming back to you are the ones to work on. You have to foster the idea into an opportunity.
2. Business Kernel.
-Validation, refinement and testing.
-Initial real world launch
3. Revenue generating business opportunity.
4. Cash flow positive business.
In a good scenario, 1 through 4 takes a year. Sometimes it can take less time and sometimes it can take a whole lot longer.
Popping from Kernel to Opportunity
+ target market/customer
+ product offering
+ deal structure/pricing
+ customer acquisition plan
+ committed entrepreneur
= business opportunity
Some advice Andy offered is to put your business on 2 pieces of paper: an Excel spreadsheet and one with the sequence of Popping from Kernel to Opportunity.
For the Excel spreadsheet, put columns across the top for 1) quantifying the value of the market, 2) how to create value and 3) how to extract money. Many people forget the part about making money. According to Andy, it’s better to be really good at extracting value than it is to be good at creating value. Master Card and Visa are examples of businesses that are really good at extracting value.
Going down the left side of the Excel spreadsheet, break down the target markets into segments. For example, hard core skiers, average skiers and beginner skiers. Creating value and extracting value from each segment is different.
Andy’s Concrete Tips
1. Put your business on 2 sheets of paper.
2. Read “Lean Startup” by Eric Ries.
3. Watch Steve Blank videos online.
4. Talk to 30 customers and ask questions about their activities.
5. Focus on market problems that matter.
Andy spent the rest of his presentation answering questions.
Q: Should you do customer validation?
A: It’s hard to get people to do it and to do it well. The process is helpful, even if it’s not done well. Talk to 50 target customers. By the time you are done talking to those customers, hopefully, your idea will evolve. Understand the nuances of problem solving for those customers.
Q: Why did Judy’s Book fail?
A: The business was early in the market and he didn’t persevere. When a business is early in the market, there is a fear of failure. There’s no difference between early in the market and wrong. Facebook and iPhone didn’t exist then. He chose to sell off and return the money to the investors. Yelp kept going. It’s the big fish that got away. He screwed up. The people at Yelp were having the same anxiety he was.
Q: What do you do with the information that you get from the 30 customers you talk to?
A: Share the information with other people. Learn from it, focus on the problems you are trying to solve and prioritize. Laser in on the problem to solve and you will create value.
Andy quoted someone as saying that he never met a business that did no business. Andy sees the fear not as fear of failing, but as fear of ending up with a break-even business that doesn’t grow. You want a business to grow, so that you can spend more time playing golf or doing whatever your hobby is, and not all of your time working to break even.
Q: What about NDA’s?
A: NDAs are worthless. Next question.
Q: Question about the amount of information needed to make decisions.
A: Life is a mix of rational and emotional. Trust your gut. Most decisions are made based on insufficient data. A lot of being an entrepreneur is managing anxiety and uncertainty.
Q: Do we need a business plan?
A: Andy wants to see the 2 pages he described – the Excel spreadsheet and the Popping from Kernel to Opportunity sequence. He can learn most of what he needs to know in a 5 to 10 minute conversation. The speed of change is so rapid, particularly in tech businesses, that doing a business plan is a waste of time because by the time it’s done, things are different.
Q: At the angel stage, do we need a team?
A: You need a team. Most businesses are built by a great team. You need two things, a great team and a great market.
Q: How do you get a great team?
A: Look at the teams that you worked on that were good and try to figure out what made it good. Even really good teams have really hard times. Know who you are getting into business with, trust them and make sure that what you are good at is different from what other team members are good at.
Q: When do you know when to stop and move on?
A: How do you know when a relationship is over? Trust your gut.
Q: What are the early stage numbers to look at?
A: In the early stage, look at what problems customers are having, how you are going to solve those problems and how to make money doing it.
Q: How do early stage entrepreneurs make it to beta without cash?
A: People get scrappy. Andy used as an example some entrepreneurs who repackaged Cheerios and sold them as Obama-Os.
Q: What problem does entertainment solve?
A: Those businesses solve emotional problems. Do I look good? How should I spend my entertainment dollars?
Q: What about businesses where users and customers are different?
A: That’s hard. You have to put the equation on the board and figure out how to make money. Andy thinks Steve Blank is awesome and that viewing his videos is a good way to advance business thinking.
Q: Why is “lean startup” hard to put into practice?
A: Once you figure out a customer problem to solve, understanding the problem and asking questions around it is pretty complex. For example, why do people paint their homes? There are a lot of emotional and financial reasons, such as wanting a certain look and preserving the value of the home. You need to compile a lot a data by asking a lot of questions of a lot of people. Entrepreneurs don’t like to get that detailed.
Andy ended his presentation by asking what he could have done to make his presentation better. He asked for direct, honest communication. One person thought that he should have used more examples. Another person thought he should have provided more information on where to find resources.
Thanks to Andy for an informative, fast-paced and interactive presentation.
13 Aug 2012 by Tonya Gisselberg
The August Breakfast Buzz drew an exuberant crowd for the fifth annual NWEN Idol Breakfast Buzz. Three Idolists pitched their startups to the celebrity judge panel of Deb Hay (Altitude 7 Group), Jason Stoffer (Maveron LLC) and Erik Benson (Voyager Capital).
First Up.... Jeremy Luby, Talk to the Manager
Talk to the Manager lets independent restaurants interact with their patrons by allowing patrons to anonymously text the restaurant management and staff in real time. Typically, restaurant patrons who are dissatisfied won’t confront the management or staff, but will go home and post a tirade on the Internet. The problem is these online reviews, such as those on Yelp, can hurt small businesses by posting negative comments. Talk to the Manager gives the restaurant management and staff a chance to respond before the patron leaves the restaurant. Talk to the Manager costs $29 per month, went live in March and has over 40 locations.
Deb Hay: What is the go to market strategy?
A: Talk to the Manager has used the press and social media. The startup is now attempting to work through channels. For example, it is trying to get Sysco to offer the service to restaurants.
Erik Benson: Talk to the Manager should check out net promoter scores. What is the benefit to the restaurant patron to tell someone at the restaurant what is happening?
A: It gives the customer an immediate chance to express their dissatisfaction and to do it anonymously, instead of going home and putting something up on the web.
Jason Stoffer: What kind of engagement are restaurants getting from their patrons?
A: Pinocchio’s gets 2 to 3 texts a day. Restaurants love engaging with their customers.
Second Up.... Chuks Onwuneme, Personify.it
Personify.it makes volunteering simple. People would volunteer more if they knew what to do. Currently, there is no way to connect people with similar interests in making a difference locally. Personify.it connects you with people with similar interests and with opportunities around you. It’s a mobile app, so you can find people and connect with them wherever you go.
Jason Stoffer: How are you building supply and demand?
A: Personify.it is starting in Seattle, which is a good community to build this type of business. There are many socially responsible businesses in Seattle.
Jason Stoffer: What about the consumer side?
A: Personify.it is using Pinterest and Facebook.
Erik Benson: What is the business model?
A: Personify.it has a tool to help businesses with corporate matching. Companies pay a fee for Personify.it to host the platform. The charge is based on the organization’s size.
Last Up.... Tiffany Reiss, TheHubEDU
TheHubEDU is an educational startup. It fills a gap between current management systems and popular social networks. The problem is disorganized information. Relevant information is located in a number of different places. Better organization leads to more engaged students and enhanced learning.
Content wants to be collected and organized. TheHubEDU uses a shelf system to organize content. It has a mechanism for faculty and students to interact in a disciplined way. TheHubEDU will charge an institutional subscriber rate.
Jason Stoffer: What is your go to market strategy?
A: They want to keep it free for faculty and students. Long term, there will be an institutional subscription. Short term, it will be an SaaS or freemium service.
Jason Stoffer: What is the pain point of where the instructor says, “I need this”?
A: The pain point is when the instructor needs to organize and put the information into context.
Erik Benson: How do you get the user count up? Yammer is a clear model. How do you get network effects and viral effects?
A: TheHubEDU is a great way to be interdisciplinary. Students can follow faculty members from other disciplines. The viral effects will be driven by the faculty.
The winner: Personify.it!
Thank you to the Idolists for their informative and fast-paced presentations! Thank you to the celebrity judges for their time and expertise!
19 Jun 2012 by Daniel Rossi
Join Team NWEN, aong with a number of Members of the NWEN Board, at the Geekwire Summer Bash on June 21st at the SODO Showbox. The Geekwire events are always fantastic affairs, and this one should be no diffferent .
The Geekwire events traditionally bring out much of the who's who in the Seattle Entrepreneurial landscape - and thus provide multiple networking opportunities. Daniel and Caitlin will be hovering around the Geekwire table, but the event also promises ping-pong, photo booths and more.
You never know if a Seattle start-up might try to sneak some sort of announcement into the mix as well.
We hope to see you all there! Who's with us?
11 Jun 2012 by Tonya Gisselberg
Mitch Gitelman was the speaker at the June 2012 NWEN Breakfast Buzz. Mitch is the Studio Manager and a partner at Harebrained Schemes Studios LLC. Jordan Weisman, CEO of Harebrained Schemes, was also scheduled to speak, but was unable to attend.
Mitch spoke about the crowdsource funding of Shadowrun Returns, a 2D turn-based RPG (role playing game) for tablets and PCs. Jordan Weisman originally created Shadowrun as a pen and paper RPG in 1989. Shadowrun was a tremendously popular game. As CEO of Harebrained Schemes, Jordan decided he wanted to relaunch the Shadowrun franchise for the digital, Internet world.
Kickstarter is a crowdsource funding website for creative projects. Kickstarter allows creators to go directly to the people that will ultimately be their customers. The way Kickstarter works is that the funding seeker sets a fund raising goal and gets a certain amount of time to raise that money. The funding seeker makes a pitch on the Kickstarter website. Mitch and Jordan put a video on Kickstarter to help them make their pitch. People go to Kickstarter and pledge money to the projects pitched on the website. If the funding seeker raises the specified amount of money in the allotted time, there is an opportunity to raise even more money. If the funding seeker does not meet the time and/or money constraints, she doesn’t get anything. With Kickstarter, there is no promise on the part of the person making the pledge to deliver and there is no obligation on the funding seeker to deliver.
Crowdsource funding Shadowrun Returns is one of the most fun adventures Mitch has been on in his life. It took them 25 days to shoot the Kickstarter video. As they were in a crunch to get another game out the door at the same time, everyone at Harebrained Schemes was working 15 hour days. They loved it!
Mitch and Jordan had a fund raising goal of $400,000, but were able to raise $1.9 million through Kickstarter. Mitch shared what he learned from his Kickstarter crowdsourcing experience with us.
Vision, Clarity and Confidence
1. Inspire them with your vision. Mitch and Jordan knew their audience was the old school game crowd.
2. Illustrate that vision for them. Mitch and Jordan relied on nostalgia, memory and references to similar things.
3. Prove that you can realize that vision. Say how you are going to do it. Give a sense of security that you can deliver.
People will only invest in your idea after you have invested. People at Harebrained Schemes made a huge emotional investment in reviving the Shadowrun franchise.
Know What You Are Making
1. Research. Have you done this before? If not, study others who have. There were very few others for Mitch and Jordan to study. Those interested in crowdsource funding should study the Kickstarter website, specifically studying both winners and failures.
For Harebrained Scheme’s pitch on Kickstarter, Mitch had the idea of doing a documentary-type video about putting Shadowrun Returns together. Mitch sent Jordan an email about it. Usually Jordan responds to Mitch’s emails immediately, but didn’t respond to this email. Mitch knew then that they had to do that video. Mitch said that if it’s scary, run towards it.
2. Budget Development Carefully. With crowdsourcing, you have one chance to set the number. There is no going back to the well. In addition, your reputation is on the line. Another piece of wisdom Mitch shared is that you can weather any storm – it’s all about getting up in the morning.
3. Include the Costs of Fundraising. You have to offer some swag to incentivize people to pledge in the higher tiers and to make them feel like they are part of the event. You need to give people a sense of being in the journey with you and investing in your vision. All of that swag has costs associated with it, which must be properly calculated. For example, Kickstarter and Amazon have to take their cut.
4. Don’t Forget Marketing. There is marketing for the funding and marketing that occurs after that.
Research Funding Examples
1. Look at similar projects. What worked and what didn’t?
2. What funding ranges work?
3. What reward prices worked? Graph the revenue per price point. Mitch and Jordan had price tiers that went from students all the way up to $10,000. The $10,000 slots were limited to 3, as it included having someone from Harebrained Schemes fly to the contributor’s home and put on a role play. The 3 $10,000 slots were grabbed up immediately, making Mitch think they should have offered a few more.
4. What reward items and content worked? Mitch and Jordan had a couple of reward tiers that didn’t work.
5. What elements of the videos worked? It’s extremely important to listen to customers and backers and make adjustments based on their feedback. There were a number of different online forums following the Shadowrun Returns Kickstarter crowdsourcing project. Mitch and Jordan hired people to go to these various websites and track numbers on the types of comments made.
6. What elements of the text and graphics worked?
Work Out COGs
1. Digital distribution.
2. Design and management costs.
3. Cost of goods. Low volume = high costs. Choose swag that can be produced in enough quantity to make the price affordable.
4. The three horsemen of the funding apocalypse: picking, packing and shipping. Mitch and Jordan wanted to get people from the $100 price tier to the $250 price tier. They came up with the idea of a box set that included USB dog tags. For the USB dog tags, they set a price of $175, which they thought was fair.
1. Keep the video professional, but personal.
2. Keep it simple, stupid (K.I.S.S.)
3. Hierarchy of information. Make important points first.
Market the Funding
1. Bring your audience to the funding site.
2. Use social media to spread the word. There are other social media sites than Facebook. “Like my page” sounds desperate and comes off as desperate.
3. Reach your audience where they live, both online and offline. Mitch and Jordan knew where Shadowrun fans hung out on the Internet. Try to figure out what kind of people are in your audience and go to those people.
Respond to Your Audience
1. Answer questions promptly. Determine what your approach will be, so that outgoing communications from your company are consistent.
2. Say “thank you” personally.
3. Constantly participate in the dialog.
4. Regularly publish new content. People would tell them stories about the meaning of Shadowrun in their lives. Mitch and Jordan put up a giant fan website to build community and keep the fan base engaged.
5. Sleep when it’s over.
6. Beware of stretch goals. Harebrained Schemes hit its initial goal in 28 hours, giving it the opportunity to raise more money in the time left. In the stretch, don’t over-commit on development. For example, Harebrained Schemes had to retract on the idea of a multi-player game. They were honest and direct in telling Shadowrun fans that they were sticking to the original vision of a single player game. The community respected Harebrained Schemes for this. Poorly-researched rewards can also be a problem in this phase.
The Costs of Crowdfunding
1. Websites’ share.
2. COGs and 3 horsemen.
3. Community management.
4. Accounting and taxes.
5. Early adopter audience has already bought. You can’t rely on the early adopters to contribute again, because they won’t.
1. The floodgates have opened and the novelty is over in crowdsourcing. It is now a crowded marketplace.
2. Potential for fraud.
3. It’s red-hot right now, but the forecast is chillier. Some big name is likely to fail at crowdsourcing by not delivering. This will likely lead to a big brouhaha, followed by the creation of greater consumer protections.
In response to audience questions, Mitch made the following points:
Mitch and Jordan did not feel constrained by rules in putting together their Kickstarter crowdsourcing project.
The Shadowrun game takes place in the city of Seattle. When Harebrained Schemes retracted its position on the multi-player game, they made up for it by committing to add a second city. The backers get to vote on what city will be added.
Ninetendo and Sega fans loved the music that went along with those games. Harebrained Schemes contacted these fans. Harebrained Schemes has also lined up the composers for the Nintendo and Sega versions to work on Shadowrun Returns.
Thanks, Mitch, for a thorough and entertaining presentation on crowdsource funding.
18 May 2012 by Tonya GisselbergRobbie Bach told the story of intrapreneurship by comparing two startups within Microsoft: Xbox and Zune. When the “e” in entrepreneur is replaced with an “i,” intrapreneur, many of the same rules apply and businesses succeed and fail for many of the same reasons. Robbie is in a unique position to discuss Xbox and Zune, as he led the Microsoft (MS) division that was responsible for developing both of these products. Robbie bucked MS tradition by deciding not to use a PowerPoint for his NWEN presentation.
Xbox is the MS console gaming product. Zune was the MS portable music player. Xbox and Zune started in similar ways. Both started from proposals made at MS executive staff retreats. Xbox was proposed in 1999 and Zune was proposed in 2005. Both projects were driven by competitive pressures. By startup standards, both were very well funded. They were treated as startups. People from different areas of the company and from outside of the company were brought in to build these products. It was Robbie’s job to get all of these people with diverse backgrounds to work together.
Xbox became a very successful product, but Zune did not. What happened?
Discontinuities. Xbox focused on two discontinuities, or disruptions in expectations. Firstly, MS decided to put a hard drive in its console, which was a different way to think about video games. The hard drive enabled downloading from the Internet. Secondly, MS took the modem out of the Xbox and relied on broadband Internet. Broadband Internet was not a sure thing at that time. MS bet on the Internet and online gaming.
Zune missed the big discontinuities. The portable media player market was gone. Instead of skipping portable media players, MS ended up chasing Apple.
Marketing message. Through Xbox’s marketing and branding, people could see the difference. Xbox was more powerful and was about Internet gaming. People could see the future from the product.
The marketing message for Zune was confused and people didn’t get a clear picture of what the product was or where it was headed.
Partners. The Xbox group found partners outside of MS that allowed Xbox to be successful. For example, retailers supported Xbox disproportionately, because if they didn’t, then Sony, with PlayStation, would be the only game in town.
The music industry did not have the same reaction to Zune. That industry didn’t figure out that Apple would be the only game in town without Zune. The label business in the music industry has not recovered.
Competitors. There was clear competition in both spaces. Some of Xbox’s success results from Sony’s mismanagement of its 70% console gaming market share. Xbox now has a 45 to 50% share in that market.
On the other hand, Apple executed incredibly well and has made remarkably few mistakes with its iPod. It’s hard to get established in a market place if the competitors don’t make mistakes.
One of the points that Robbie reiterated in a few different ways is that starting a business inside of a big company is still building a startup. You still need strategy, execution, a product and a culture that breeds success. Some notable startups inside MS are PowerPoint, Azure and SharePoint, which are successes. Bob, Kin and Zune failed. Outside of MS, Amazon has two startups, iPod was a startup for Apple and the 787 was a startup for Boeing. These businesses were startups because they were completely different processes for these companies.
There are complications in starting up a product in a big company that don’t exist for small startups. One is the overhead of the company’s established brands. That led to the decision to call the MS gaming console “Xbox.” There were shareholders and people inside of MS that did not like the Xbox. Bill Gates and Steve Ballmer did an amazing job of protecting the Xbox. Both the startup business leader and the big company leaders must exercise extensive leadership skills to make it work.
Robbie distinguished between innovation based on inspiration versus innovation based on necessity. The two are different processes to manage.
Funding is an obvious difference between big company startups and other startups. One of the side effects of having more funding is the way cash is managed. For example, when there is more cash, the team can get two bids on something and chose one. Unless care is taken, this can let the team off the hook in being thoughtful about the process. MS went through a one billion dollar write-off on Xbox, which was not a pleasant experience for Robbie.
MS produced the Xbox in 15 months development time, start to finish. They could to it because they had Direct X, an established PC games business and established partnerships with original equipment manufacturers (OEMs). In contrast, they had to be very disciplined about what went into the Xbox operating system and had to branch way off of the Windows tree to make the operating system small enough.
One of Robbie’s final points is that he believes in serendipity, that things happen in ways that you can’t control, but are good. The key is to see the serendipity and take advantage of it. Robbie is not a gamer, but he became the head of Xbox and it was the best 10 years of his life. Another point Robbie made is that there is no substitute for hard work. He says that he was not the smartest guy at MS, but he worked really, really hard and the Xbox team worked tremendously hard.
Regarding building a team, most people are good at either innovation or execution, but not both. You have to find the right balance between coming up with ideas and turning those ideas into reality.
Robbie left MS about 16 months ago. He is on the board of directors for several organizations, including the Boys & Girls Clubs of America, the U.S. Olympic Committee, Sonos and the Bellevue Boys and Girls Club. He is looking to buy a small family-owned business in the Seattle area.
Thanks, Robbie, for sharing your incredible knowledge of the Xbox and Zune successes and failures with us.
19 Apr 2012 by Tonya Gisselberg
David Isett and Richard Wood energetically and entertainingly described the process of raising capital through an investment banker. David is the CEO of Concordia Coffee Systems. Richard is a co-founder of First Hill Partners, a middle market investment bank. Based on their experience in working together to raise about 10 million dollars for Concordia, they offered general guidance to those interested in using an investment banker to raise capital.
Concordia Coffee manufactures coffee makers that make café quality beverages at the touch of a button. These machines can make over 1,000 drink combinations. The emphasis is on quality. If you drink one of these beverages and come away saying, “it’s pretty good for a machine,” David sees that as failure. The goal is a high quality coffee drink, period.
Why did Concordia raise equity? The world-wide market for this kind of coffee machine is booming. Coffee is the most consumed beverage other than water. Fifty percent of coffee beverages are sold to go. Concordia’s machines are the anti-barista, in that they produce high quality beverages instantly, as opposed to the 2 to 3 minutes that it takes a barista to produce a beverage. The company knew that it had stellar growth ahead and wanted to realize that growth.
Why did Concordia chose to raise capital through an investment banker? David has raised capital many times in the past. This is the first time he has used an investment banker and now he says he will never raise capital any other way again. Seattle is not a good market for a manufacturing company, such as Concordia, to raise capital. The focus in Seattle is on technology – everyone wants the next Google. Concordia needed somebody that represented the company, not the various needs of the investors
David’s criteria for choosing an investment banker:
1. Can they get you the money?
2. Want a licensed securities broker/dealer.
3. Experience in your space and size.
4. Wanted principals, no juniors.
5. Hunger – want banker hungry for success.
6. Chemistry – have to be able to get along with the banker.
7. Fees – it costs a lot of money, but it’s worth every penny.
First Hill Partners is a regionally focused, middle market investment bank. This is First Hill Partners’ second year in business. The partners wanted to work in the community and with entrepreneurs. They don’t have any juniors. They believe in long term relationships. They want to build equal access to funding for growth companies. They can help an organization by telling it what things will build value in the organization. Richard and his partner believe in a hands on approach and can only do so many deals a year as a result. First Hill offers merger and acquisition, capital raising and advisory board services.
Richard outlined the capital raising process:
1. Get Ready. 2 to 4 weeks.
2. Talk to Investors. 5 to 7 weeks.
3. Closing. 4 to 8 weeks.
The deal is not done after the first meeting. It’s important to stay top of mind and to get requested information to potential investors quickly. Momentum is important. The process includes talking to many investors and being willing to look outside of the community. It’s also important to think about the fit with the investors. Are the investors going to stay involved long term? The objectives of the investor and the company must match. Don’t take the money without understanding the investors’ goals.
According to Richard, closing is your enemy. The company seeking the funding wants this part of the process to be as short as possible. The potential investor wants this process to be as long as possible and will drag out due diligence. The company really needs to push this and not let the potential investor drag it out.
The company seeking funding really needs to understand the process between signing the term sheet and closing. The company must understand precisely what events need to occur to close the deal.
The company also must understand the implications of the security that the investor is taking. This can be a huge deal and result in the founders not getting much at the exit, while the investors do well on their investment. Richard emphasized that getting a clean deal is more important than the valuation.
David said that the single most important thing for him in this process was to be honest about what he didn’t know.
The Top 10 Lessons offered by David and Richard:
1. Pick the right banker/ pick the right client.
2. Be prepared, really prepared. Do this, no matter how painful it is. Do not let potential investors find anything on due diligence. Grill the investor team and practice. Hard core coaching is a must. David said that it’s not fun, but going through this process made the company a better company. Do not let 8 hours go by without answering a question from a potential investor. One hour is preferable. Time is your enemy in this process.
3. Allow enough time. Don’t start raising money when you don’t have any. Start raising money before you need it. A company does not have any bargaining power when it needs the money to meet payroll in two weeks.
4. Get enough money the first time.
5. It’s all about having options and choices in the end.
6. Allow no surprises if at all possible. (Don’t miss your numbers!)
7. Fund raising is a team sport: banker, company, current investors, lawyer, auditors. The prospective investor will talk to all of these people. The current investors must support raising more capital – after all, their shares will be diluted. The current investors might need to make an additional investment in the company before outside investors will agree to invest.
8. Shut up! More information is not always helpful.
9. Let your bankers do their job. They are better at this than you are and you must trust them.
10. Don’t let the business go to hell while you are out raising money. Raising money takes about 80% of the CEO’s time, over a 4 to 6 month period. It is essential to keep the company from losing ground during this time.
Thanks to David and Richard for their informative and entertaining presentation!
13 Apr 2012 by Daniel Rossi
NWEN's Spring First Look Forum or FLF is just around the corner. I'm going to hear 12 startup teams that have been preparing for months with investor/serial entrepreneur coaches pitch their hearts out for the VERY FIRST TIME in front of a massive crowd of angel and venture capital investors. I'm excited to go because I like hanging around very successful startup junkies and investors. It makes for a great atmosphere. And these teams that may be doing their first startups add to the excitement in the air.
It's on 4/24/12 from 3:30 - 5:30 At the Arctic Club Hotel in downtown Seattle.
This is an invite only event for investors. THEY should come because their colleagues and trusted advisors have been preparing the 12 finalist teams and the ideas/pitches being shared are going to be brand new. Deal flow - brand new deals - and they'll be pretty good because great coaches have been prepping the teams for months. If an accredited investor wants to come check out the fun they should write NWEN's staff and RSVP.
This years competition:
There are always some great companies that announce themselves to the world at the First Look Forum. Gaming, SaaS, app development, and even fresh hot pies will be represented in this FLF. There are up and coming entrepreneurs as well as a bevy of gnarled and experienced startup junkies that are back in the saddle again. And the investor attendees will get a chance to see it all first.
What to expect:
I expect to learn a lot about the aforementioned markets - their size, competitors there, what's broken and how these teams plan to fix them. I also look forward to hearing the celebrity VC judges ask their pointed questions and imagine that is me with another company in the future.
Want to attend this FLF:
Email email@example.com to RSVP. Remember, you MUST be an accredited investor to attend at this point. Otherwise, check out NWEN.org or our weekly email to find out when the next FLF round opens up (late May).
There are a lot of competitions out there these days asking for investors to come and hear pitches. NWEN's First Look Forum has been around for a while and has a reputation of preparing the competitors. So the pitches heard are great...and brand new...no one else has heard them yet.
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