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  • Daniel 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...
    see more Daniel 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!

    • charles tucker I can relate to this in so many ways. I'm right in the middle of our Brewery and Distillery start-up and let me say they are "Dark Days" right now.
      15 days ago
    • Tomy Teo Thanks mat kinh for such a great article here. I was kinh can searching for... see moreThanks mat kinh for such a great article here. I was kinh can searching for something like vi da nam this for quite a long time and at This is what exactly I was searching, the information was overall very useful for me, thanks a lot.
      4 days ago
  • Daniel Rossi:
    Seattle Angel Conference - Take Two!

    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...

    see more

    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.

    • Tomy Teo Greetings! mat kinh The site is great. Thank you for a great resource
      4 days ago
  • Daniel Rossi:
    Getting ready for Entrepreneur University this Tuesday!

    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...

    see more

    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


    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.

    Tags: entrepreneur university, EU, nwen

  • 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...

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    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!

  • 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...

    see more

    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 cgoetze@nwen.org 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!

  • Daniel Rossi:
    We 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...
    see more We 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 info@nwen.org. See you at EU next Friday.
  • Passport to Global Markets with Martin Coles of HaloSource
    Martin 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...
    see more Martin 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.

    • Jonathan Copley Thanks for the excellent summary, Tonya, of what was a most illuminating presentation by Martin.
      2 months ago
  • Daniel Rossi:
    DemoDay After Party - Join Us There!

    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. 

    see more

    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!

  • Andy 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,...
    see more Andy 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.
        1. KISS
        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
    Idea
    + 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.

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    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!

  • 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...

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    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.  

    You can get more info on the event, including a link to the Eventbrite page to buy tickets, here:  

    We hope to see you all there!  Who's with us?

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    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.


    The Pitch

    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.


    The Deluge

    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.

  • 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...

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    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!


  • Robbie 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. ... see more Robbie 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.

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    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!

  • 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...

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    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.

     

    When:

    It's on 4/24/12 from 3:30 - 5:30 At the Arctic Club Hotel in downtown Seattle. 


    Details:

    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 info@nwen.org 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.

     

  • Daniel Rossi:

    A business plan, an elevator pitch, a pitch deck — the number of different things you have to have to successfully pitch your company is amazing. Now add in the one pager. Whether you call it that or an executive summary or a company overview, it’s an essential part of the whole story. Like the one-page resume, you want a single, concise one-page document that you can hand to potential investors and business partners. There are lots of advantages to having it be a single page, but I’m only going to...

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    A business plan, an elevator pitch, a pitch deck — the number of different things you have to have to successfully pitch your company is amazing. Now add in the one pager. Whether you call it that or an executive summary or a company overview, it’s an essential part of the whole story. Like the one-page resume, you want a single, concise one-page document that you can hand to potential investors and business partners. There are lots of advantages to having it be a single page, but I’m only going to mention the most important one — investors expect it.


    To create my one pager, I started with my five-page business plan. I went through and highlighted all the most important stuff, then consolidated that in a new document which ended up about two pages long. Then I started looking for things to trim. I was pretty close to finished when I decided that I should make sure what I was doing was consistent with what I needed to submit to another competition, the Willamette Angel Conference (although I’ll be at a disadvantage because Groupthink isn’t an Oregon company, I figure the extra connections will be worth it). It was at that point that I realized I’d made a mistake. The Willamette Angel Conference uses Angelsoft, and the whole way it works is different — your one pager gets created by filling in a form on the site. Here are the items you’re asked for:


    • One line pitch
    • Summarize your business
    • What specifically makes your management team most qualified to build this business?
    • Define customer problem
    • Describe the solution you sell
    • Define your market
    • List your current or potential customers
    • Sales and marketing strategy
    • Describe your business model
    • Describe the competitive landscape and list your competitors
    • Define your competitive advantage and list barriers to entry


    Each of these items also has a longer explanation you see as you’re filling out the form. For example, the explanation for “Define customer problem” reads: Investors fund pain killers, not vitamin pills. What critical customer need does your company address? If you are a web company, you may need to make a hard decision here on whether to talk about your audience or the people who will ultimately pay you (like your advertisers). You only get 210 characters to answer that one. When you’re done, Angelsoft turns your information into a one page summary that looks like this sample:

    At first, I was thrown for a loop, but then I realized that this was a much better way to do it. After all, investors looking at your one pager have a bunch of questions in their head that the’ll use to decide if they want to read anymore. If you don’t answer those questions, it’s over. So the number one task really should be to make sure you answer those questions!


    In the process of answering the questions, I managed to get in every one of my key points and pretty much nothing extraneous, but the document wasn’t exactly what I wanted to best represent the company. For Angelsoft applications, I have to take what I get, but that’s not true for NWEN or other investors. So, after I finished up the Angelsoft process, I took all the information and created a new document that I could edit. Then I made a few changes:


    • Combined the one line pitch, business summary, and customer problem into a new opening section which read better than the three individual sections.
    • Combined target market and customers sections.
    • Combined competitors and competitive advantage sections.
    • Added a little bit of additional detail in a few places where I’d been constrained by Angelsoft’s character limits.
    • Added a (small) illustration to help explain the product.


    In each of the cases, I made the change to improve readability or punch. But, overall, it’s a lot like the one pager from Angelsoft.


    (Re-posted from March 2009)

  • Daniel Rossi:
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    This is reposted information sent to us from our partners at the Washington Interactive Network:


    Seattle, WA – Jobs and revenue are still growing in the Seattle area’s Interactive Media industry announced Friday during the Washington Interactive Network’s 5th Annual Power of Play. There are more than 350 firms in the region, up from 150 in 2007 making it an annual growth rate of 18% in the last five years. Revenues from regional games companies estimated at $9.7 billion in 2010, up from $4.1 billion in 2006, a 25% compounded annual growth.

    These numbers are early results from a new Economic Impact Study and Cluster Analysis with the full report to be released in April. The study is being conducted by Community Attributes Inc. in Seattle, the same company that led the 2007 study. The study is funded by enterpriseSeattle and a grant provided by the Jobs and Innovation Accelerator Challenge.

     

    The annual growth rate over the last five years in local industry jobs is estimated between 4 and 4.5% reaching a total of 16,500 to 17,500 interactive media employees in the Seattle area. “Tracking the jobs and dollars for the interactive media industry is quite challenging”, said Kristina Hudson, Executive Director of the Washington Interactive Network. “Many groups around the world attempt to give accurate numbers of this industry, but almost always they are using mailing lists, multipliers, and formulas to try and calculate the number of companies and employees in a region. We are the only group that I know of who actually tracks company-by-company to give the most accurate representation of employment as possible.”

     

    An industry competitiveness study by was conducted in 2010 and it may shed some light as to the reason why the Seattle region is seeing this kind of growth. The study found that three cities rank in the top tier of the world’s leading regions in Interactive Media: Seattle, San Francisco, and San Jose. Of these top tier regions, this study finds the Seattle area the most competitive in the United States and the world for growth in the Interactive Media sector. These findings are based on industry-selected indicators of competitiveness: Number of firms, Computer and engineering talent, Multimedia and animation talent, Educational institutions, Cost of living, and Cost of business.

     

    "These numbers will come as a breath of fresh air in a time of a struggling economy," said Jeff Marcell, President and CEO of enterpriseSeattle. "We are proud to have this growing industry in our region and we are committed to doing everything we can to maintaining the growth."

  • Daniel Rossi:
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    We recently posted a blog discussing Kickstarter and using it (or other crowdfunding methods) as a means to raise startup capital.  We featured an NWEN startup called Green Simian who was smack dab in the middle of trying to raise $100,000.  The end result was that they were unable to reach that amount which on Kickstarter which means they wouldn't get any of their dough.

    Not to be deterred (very entrepreneur-esque) they reloaded their campaign with a lower capital request.  This time, Greem Simian got their money.  We asked them what they liked about the process and what they learned from it.  Here's what they have to say:

    What I (Green Simian) really love about crowdfunding is as follows:


    1. Benefit # 1: No VC/Angel ties.  As strategic as it may be, funding for equity is time consuming and diluting.  With crowdfunding i get a shortcut to the consumer, real market conditions and just enough capital to build and deliver product.

    2. Benefit # 2: Tap into peer feedback.  Capital aside, peer feedback has been hugely valuable.  We eliminated at least 3 significant design errors that we never saw, but the 300+ backer feedback unraveled.  So you see, the "brainfunding" is just as important as the crowdfunding aspect of this experiment.

    3. Learning # 1: Get into crowdfunding when you are in beta, not earlier.  Its one step behind retail, funders want to see the real product you are working on, less so Photoshop rendering.

    4. Learning # 2: Press.  Get your friends in the media lined up to write about you and spark a viral uptake.

    5. Learning # 3: Video and Rewards.  Find the hipster within and build an amazing video.  Build creative rewards too.  I can tell you that I have a lot to learn on this front.

     

    If you need more proof that this works, look at these two projects, it will blow your mind:

    1. http://www.kickstarter.com/projects/hop/elevation-dock-the-best-dock-for-iphone?ref=live

    2. http://www.kickstarter.com/projects/66710809/double-fine-adventure?ref=live

     
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    Jonathan Roberts of Ignition Partners spoke at the February Breakfast Buzz about the things that he has learned through his extensive marketing and business experience.  He held a number of high profile marketing and business development positions at Microsoft before becoming a founding partner at Ignition Partners.  His presentation included some of the fundamentals he teaches to engineering and business students at the University of Washington.


    Roberts joked that he synthesized everything he has learned during his career.  That’s the good news.  The bad news is that it only takes 2 pages.  He emphasized that as you grow in business, you learn a set of skills that you apply over and over again.  You need to take ownership of those skills.  He believes his skills include a faculty for strategic planning and go to market.

    Four Paradigms/Frameworks.  He encouraged the audience to learn these key paradigms and apply them over and over again.

    1.      Tell the story.  Why did you start this company?  What are the key insights you had?  Marketing is about amplifying your story.

    2.      The A, B, C’s of business planning.  A, then B, then C, D follows.  A is the situation, the objective facts about the market.  B is the critical issues.  C is your objective.  D is the tactics that follow, given A, B and C.  Out of habit, people will talk about only the Bs and Ds.  You have to be clear on A,B and C, then you will know what D should be.


    3.      The 2X2 of establishing your position in the market.  This is the market on vertical and horizontal axes.  How does this market function?  It is what is true about the market, not what you want to be true.  You have to be honest about the market.  Finding the axes is very important and takes time.


    4.      The X, Y, Zs of product positioning.  X, that does Y, for Z.  This is how Roberts phrased it in answer to a follow-up question:

     

    Complete the X, Y, and Z positioning exercise.   X, that does Y, for Z.  This really narrows in what your company is about and who it is delighting. The litmus test for a positioning is to see if it clearly repositions your competition.  All too often companies will say the same thing.  We do great stuff that makes money and is for everybody. The most common mistake is what I call, a lazy Z.  In other words, not being super clear on the person you delight.  You can have value propositions for other constituents but you have to delight somebody.

     

    Roberts also made these points:  1)  After you find out who you delight, you need to know what your propositions are for everyone else; and 2) It is very hard to change who you delight.

     

    The 3 steps to thought leadership are figuring out how to win, owning the future and figuring out a way to get between the two points.

     

    Own the future by aligning to key trends that are bigger than your single company.  For example, some key trends right now are the consumerization of IT, empowerment of decision makers and the lack of technical lock-in.

     

    Roberts stated that entrepreneurs are too evangelical.  If it’s a “nice to have,” it’s not budgeted.  Entrepreneurs need to sell to a “need to have.”  He stated that an entrepreneur must work with what a customer business has.  Don’t rip and replace.

     

    5 Principles to Adopt

     

    1.      Slavishly and constantly engage with your customers.  Seek first to understand.  Roberts described an anecdote about AOL.  He said that when AOL started out, it allowed people to build communities, that it had the beginnings of Facebook.  Then AOL stopped listening to its customers and lost what it had.

    2.      Own the process.  You can’t outsource to consultants and you can’t let consultants drive the process.  He said that if he is helping your business, he expects you as the business owner to be at every meeting he attends on behalf of your business.  Otherwise he will not participate.


    3.      Collaborate.  Humans are a social species.  Get informed outsiders involved to get around the forest for the trees problem.  Bring in new ideas.  Free associating with other people is how people work.  People don’t work well stuck in a cubicle.

    4.      Iterate.  Show some intellectual humility.  Intellectual humility means that the CEO should figure out what she does not know and ask questions of others.  Be willing to change.  Don’t get stuck on an onerous 3 year plan.  Don’t overthink the process so much that you don’t do it.


    5.      See it through.  Begin with the End in mind and get there!  Entrepreneurs are in crisis mode all of the time.  If it’s not urgent, they don’t do it.  Planning is not urgent, so it doesn’t get done. 

    Roberts compared business planning to sailing – you set a bearing, but then you have to tack.  How often do you tack?

    Roberts emphasized that when you are working with a company, find intelligent life and listen to it.  If it’s not in the room, walk down the hall and seek it out.


    Thank you to Jonathan Roberts for his fast-paced, informative presentation!

    • Daniel Rossi Tonya came to play...and listen hard at last week's BB! Well done Tonya!
      11 months ago
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