July 11, 2009
Through a series of comments this week the Venture Capital industry has proven once again to be a highly fragmented group of independent thinkers who will likely never play nicely with each other. A great article in the NY Times on the state of the Venture Capital market shows contending visions for the path back to glory… from removing firms from the market to adding firms to increasing investment and fund size to lowering it. And as you might imagine, they all think they’re right. Don’t we all?
What ever happened to raising money and investing the right amount in the right companies? It seems like all of the current debate is regarding the sweet spot of investment size and the sweet spot of fund sizes . In an industry that thrives on the ability to find a unique diamond in the rough and the savvy to understand and catalyze the creative class I’m surprised that they think it should be so simple. Really though, since the industry is broken, and they broke it, should they really be listening to their own advice as they try to piece together a solution? This all quite circular if you ask me.
Venture Capitalists are used to giving lots of advice. I think maybe it’s time that they sat down and asked some entrepreneurs (one of their customer bases) what they need. Oh… I think I’ve heard that exact advice in the VC boardroom before
- Financial partners who think operationally
- The right amount of capital at the right time
- Patient, level-headed board members
- VC firms made up of former company operators (up to a maximum of one Wall Street financial numbers guy among the partners)
- A clear understanding of the mutual expectations of the relationship
- What is currently the biggest opportunity in our market?
- How often will we talk about the business (daily, weekly, quarterly, annually)?
- How often will we receive advice from you?
- Are you providing money or leadership or both?
- Who exactly will you be introducing and promoting us to?
February 5, 2009
A friend of mine passed on an article to me tonight on the topic of (warning: some possibly offensive content on this site) dating an entrepreneur and I thought it was good enough to be shared. I don’t believe I ever dated an entrepreneur actually thinking back on it now. These days my wife is becoming a bit of an entrepreneur herself so I guess I’m wading into this situation slowly. In her article Kelli looks at what it’s like to date an entrepreneur, a reflection probably not far from the conversations in the heads of everyone I dated in my single years. I will mention as a marital-peace disclaimer… I do not remember these years.
Entrepreneurs can do very abnormal things but I think they are driven my pretty normal motivations.
I heard a great analogy from John Grinnell of Grinnell Leadership the other day about two different people approaching the same problem from different angles. The story goes like this. Two people with identical assets and situations see a beach house for sale and the first person decides that the monthly payment is simply too much for them so they turn down the opportunity to buy it. The second person sees the beach house and knows that they cannot afford the monthly payment but notices that because of the structure of the house two additional downstairs entrances would easily allow it to be subdivided into three units. Because the property is undervalued two units could easily be sold for the total value of the house which would yield them a free house at the beach. The house is smaller and the risk required to purchase the house and divide it into three separate units may be high… but the reward of a free beach house is high.
The funny stories you hear about entrepreneurs come in the midst of these little projects and I bet many of them rise out of the stress that comes from taking unusual risks. Using money and time carefully and seeing business opportunities everywhere comes naturally to this type. They can also be seen as loners because the large majority of the population thinks like the first person in the example above who would never consider subdividing the beach house.
September 21, 2008
Last night marked the finish of the Inc. 500 conference here at the Gaylord Hotel and Conference Center in National Harbor, Maryland just outside of Washington, DC. iContact was honored with the 85th position on the list and the 7th position nationally among marketing and advertising companies when the Inc. 500 list was released in mid August. The three day conference (more pictures from the event) included highlights like a two hour keynote by Jim Collins, famed entrepreneurial researcher and author of business bestsellers Built to Last and Good to Great. Other sessions included a one hour chat with marketing extraordinaire Seth Godin and longtime explorer of excellence Tom Peters.
As a leader of a top 100 company on Friday I was extended the opportunity to join Jim Collins after his morning keynote for a private lunch round table to discuss issues currently facing entrepreneurs. Jim provided characteristically sharp but detailed responses to my questions which focused mostly on his new research that he included in his morning presentation. As an example, he mentioned his previous interpretation of the data collected in his Good to Great research project showing that the strength and quality of leaders in great companies was not substantially different from those in the comparison companies. His new research has segmented the leaders of these companies by leadership style instead of experience and conviction and has found a distinct difference in the leadership styles of those at the helm of great companies. Particularly, what he describes as a Level 5 leader, a leader who puts the cause her company serves before herself. I asked Jim specifically if he thought a Level 4 leader could become a genuine and effective Level 5 leader… or if this was a talent or style that one must non-consciously assume. He responded with an adamant yes but clarified that an experience much like an epiphany must occur, something of enough substance to humble a leader into inverting her priorities. I generally agree although I can only assume that sometimes an entrepreneurial leader (who will often succeed because of a level of arrogance that powers her motivation) will also require a life or career change before she can find a cause so engulfing that it proves to be of higher worth than self perpetuation.
The conference closed with a black-tie awards ceremony gala overlooking the setting sun on the Potomac River on Saturday night. The evening program included video profiles of a handful of companies each closing with their founder(s) on stage under a bright spotlight declaring their success and boldly stating “… and I’m an entrepreneur.” Profiles and specific awards for the highest ranking 10 companies followed including the number one company with over 30,000% three year annualized growth. That leading company had an amazing story of building to $150M in annual revenue in just five years. They were founded in 2003, the same year Ryan and I started iContact. Both their success as a business (they’ve been profitable for the last two years) and the honest passion with which they deliver their services (they help underprivileged elderly take maximal advantage of the services the government makes available to them) made their top position a real inspiration. Taking a company from zero to one hundred and fifty million dollars of annual revenue in just five years sounds like fun to me!
After seeing many of the companies on the list described in some detail in the opening session and as part of the top ten list and as each company’s name was announced I compiled a short list of interesting take-aways in my head. I decided to take a leasure day to write and reflect after the conference so although I jumped on a 40 minute flight up to DC Thursday after work I’m returning home today via a six hour route on AmTrak. As I write now we’re meandering through the countryside of rural Virginia. Here’s what’s left on my mind to ponder in conclusion to the conference.
1) There were far fewer technology companies on the Inc. 500 list than I expected.
I guess my own personal interest in technology and my tightly focused view of business models in the technology space led me to believe that technology companies would primarily be topping the list. That wasn’t true. Business models ranged widely from products to services and consumer goods to government contractors in industries like health care and consulting. Quite a few companies were in the construction business. Fellow North Carolina company and Triangle Fast 50 winner Mainline Contracting was among contractors in the construction space high on the Inc list. I wonder with the drastic cut in construction spending over the last 12 months if construction companies will fall against their peers in the Inc. list next year. I might have assumed this six months ago but with the continued collapse of financial markets in result of the mortgage-backed security crisis it looks like all companies (regardless of the industry) depending in some way on the capital markets will descend the Inc. list together. Companies topping the list in 2009 will likely be those who maintained very conservative cash reserves and who were thus able to use their own capital instead of others’ to make the push through.
2) There were far more family owned companies on the Inc. 500 list than I expected.
Again, it probably has something to do with my personal bias against working with family or friends. I’ve tried the working with friends thing specifically before and it only further confirmed my thoughts here, and that was even with someone three tiers removed from me within the organization. I’ve certainly had the best luck becoming friends with people who have first been business partners or simply remaining an acquaintance of those who I know marginally. A number of businesses took it a step further as husband and wife executive pairs. In the examples I remember one held the CEO title while the other was the President. That dangerous territory if you ask me but some couples can do it. On top of the additional stress it imposes on a marriage it’s also a classic example of putting all of your eggs in one basket from a personal capital and cash flow standpoint. But for some people it works and it looks like for them it works really well. It’s hard to argue with that.
3) The event is a joint gathering of Inc. 500 and Inc. 5000 companies
This is the second year that Inc. magazine has extended their 25 year tradition of doing only an Inc. 500 list out to a larger list of 5000 companies. For the magazine I’m sure this makes sense for a number of reasons not excluding revenue. At the dinner ceremony each company was given either a Inc. 500 or Inc. 5000 item of recognition. I think it’s worth mentioning that companies on the Inc. 500 are also on the Inc. 5000 and therefore I would like a second item of recognition to close this hole in mathematical logic Work with me people… or next year they should name it the Inc. 500 | Inc. 501-5000 Conference. Then, I’ll rest my case.
4) A lot of Inc. 500 companies have names that are hard to remember.
Despite their success I would personally never start a business with an acronym at its name. I figure that most of these companies have arrived at their shorter abbreviated names because their longer names were simply impossible to remember or even say in the first place. As an example, which I believe I remember from Geoffrey Moore’s book Crossing the Chasm, business names like Federal Express and American Express have been shorterned into smaller unique names greatly in part by common usage, FedEx and Amex respectively. Of course other longer names like International Business Machines have been shortened as well. When it comes to readability and speakability I think it’s clear that shorter names are better. But when it comes to memorability unique words do the best. So, if you’re starting a business and you want to call it Scott Rogers Business Consultants, SRBC is probably not the best name to take to the market. Although, either way you slice it, long or short, this name is hard to remember. In my opinion you’re much better off naming the business something like Green Tea Business Consultants or even better something that’s really off the wall like Slippery Tea Business Consultants. Just avoid words or phrases with any commonly known negative connotations and pick the wierdest combination you like. This also gets you tons of bonus points when it comes to finding an available domain name and in being at the top of the list when someone searches Google for your business by name. I mean honestly, who else is going to have already named their company Slippery Tea Business Consultants? But, as I mentioned in the prompt, the Inc. 500 is full of companies with names like SLFI Technologies, OPW Consultants, and The DLW Group (all fake names). Maybe they would have been much more successful had they given themselves better names, or maybe I’m just totally wrong here.
July 7, 2008
Traditional web analytics has fallen short in many ways that have frustrated web marketers who want more information and better ways to view it. For instance, the best web analytics packages show you information about:
- what your website’s visitors do while on the site
- how visitors move through the pages of your site (although because this is done by URL this provides very little information about which link on a page triggered that movement)
- which pages and websites incoming visitors clicked in from
- general location and browser environment information, and
- conversions and where those visitors came from
All of this data is helpful in learning about your site and making changes in an effort to optimize your online content. It also helps you learn about your typical visitor profile and helps you understand how visitor behavior differs among the various channels you pull them in from. But, a big gap remains between these details and the total picture of what your website visitors do online, not just on your website. Other very helpful details are typically not readily available including:
- Where your website visitors spend their time online
- What competitor websites your visitors surf to during the same online session that included their visitor to your website
- What paid search ads visitors click
- What keywords your visitors enter into searches that lead them to websites, and
- Demographic information for the general population of visitors to your competitors’ websites and websites that you might want to consider purchasing ad space on
This information has been available for a few years now among a fragmented set of information aggregators each with a different approach to information collection. The ones I’m aware of are as follows:
- Neilson: collects information from focus groups and individual user monitoring
- Compete.com: collects web activity information from 2 million online users and via surveys
- Alexa: collects information from the Alexa Score bar, and
- Hitwise: collects (and this one has always been my favorite, I want to know who negotiated these contracts) information anonymously from the logs of ISPs around the world
I have seen screen shots of the Hitwise offering as part of a presentation I attended at a Search Engine Strategies conference a few years back and I was blown away by type of information they can produce from the logs of ISPs. The information when brought together shows fascinating things about not only about how individual sites compete online but also general changes in Internet user behavior over time. I am not as familiar with the Neilson product but have used Alexa and the similar Compete.com for a while now. Both contain interesting but not very actionable information. Neilson is often used by larger companies to guide media buying decisions. I don’t know if Google’s DoubleClick ad placement product has had anything built into it historically to provide this information although it should have… and it does now.
Enter Google (you probably guessed it). Last week they announced Google Ad Planner, shortly following a launch of Google Web Trends (similarly named to the popular web analytics product and company WebTrends) just a few weeks before as well. Google Ad Planner brings together information that Google has (Google’s goal you might remember seems to be to have all of the information in the world at their disposal, and to make it available to you for free) collected from a number of sources. Although Google hasn’t been very forthcoming about the sources of Ad Planner data we know they have information from the following assets in their possession:
- The Google Toolbar (more discussion about this is on TechCrunch)
- Organic search information
- Paid search including results-page CPC ads and display ads across their content network
- Google Analytics
Considering their search market share of 70%+ (source) and their broad install base of Google Toolbar (cannot easily find a reference to the number of Google Toolbar installs) this is likely an incredibly large slice of online user behavior data. If in fact they’re using Gmail and Google Analytics data they’re probably getting much higher quality information than the existing players because of the depth of behind-the-curtain details they can glean from website visitors who also use Gmail who are on websites that use Google Analytics. That’s the full backstage pass and Google has earned this position by creating compelling value propositions with both the Gmail and Google Analytics applications.
Google Ad Planner provides deep demographic and competitive site user session analysis where the complementing Google Web Trends product now allows you to track the popularity over time of websites as well as keywords (which they’ve supported for several years now). Google Web Trends also allows you to see a top-ten list of the following information for visitors to any website they track (only sites with pretty substantial traffic are available right now):
- visitor origin-country
- competitive sites from user sessions, and
- keyword searches performed
Many rumors exist for how Google will ultimately make these tools available but I think they’re going to leave Google Web Trends free and available to anyone as it is now and the current invitation-only beta of Google Ad Planner will become available for free to anyone with a DoubleClick or AdSense account (possibly with a minimum monthly spend requirement). This would only make sense as I don’t think Google will want to mess with charging a monthly subscription fee and it would allow them to drive account acquisition among their two online advertising powerhouses. So, maybe now is a good time to get a DoubleClick or AdSense account if you don’t have one, maybe there won’t be a minimum spend requirement at all. Or maybe I’m completely wrong about all of this and you’ll get one anyway.
One closing thought. The combination of Google Web Trends and Google Webmaster Tools and Google Analytics is a free triple-play of website competition tools that when used together (although they don’t really integrate together) as part of a comprehensive web strategy will allow the small business to compete in awesome new ways. This value exists for businesses without any marketing budget to allow them to begin playing in AdSense, or later on, DoubleClick. The information these tools provide basically allows an entrepreneur to plug their brand new startup website into Google and receive automated feedback on:
- how well their online content is being understood by Google
- how that content is being found by relevant visitors
- what sites compete with them for this traffic
- how their visitors search for their competitors, and
- how much and what type of traffic they’re receiving in comparison to their competitors.
After struggling to find this data for years it’s now available through the collection of these tools in action together. Then, when the startup business begins to find success through content optimization and really starts to understand their online visitor profile, the combination of Google AdSense and DoubleClick and Google Ad Planner will allow them to target specific paid search (keywords used by competitive properties) and paid display ad opportunities (sites with similar visitor profiles) that match their preferred online audience and hit the right person with the right message… the web marketer’s knockout punch, but it isn’t free at this level.
June 6, 2008
Tonight I attended the Council for Entrepreneurial Development’s 2008 Entrepreneurial Excellence Awards in Bay 7 at the American Tobacco Campus in downtown Durham, NC along with 15 of our closest friends from iContact. We had two full tables and a few people even overflowed to join nearby groups for dinner. iContact was a headline sponsor of the event so we were able to bring a ton of people. It was great to have a great showing from our team at the dinner.
The event was as it always is, one of the best I find each year to network with business people, entrepreneurs, vendors, supporters, and friends from the Triangle who support iContact and Preation and Ryan and I personally. I mentioned to Ryan as we sat down for dinner that it was amazing how many more people among the total attendance I knew and had relationships with than just four years ago when we first began to get involved with CED and really with any people outside of the UNC community. We speculated that we could together name 50% of the people in attendance and probably had established relationships with at least half of those. There are few regions of the country that I feel are as full of people as passionate and motivated and willing to help than as in the Triangle area of North Carolina.
iContact was honored with the CED Growth Company of the Year distinction for 2008 which was truly an honor. CED’s website provides the following description of the award: “The Growth Company of the Year award is presented to an entrepreneur of a high growth company who has successfully navigated the early stage waters and had a large impact on maximizing long term value for the company. The nominee should have played a major role in the company’s success and have a large part in crafting the company’s strategic focus for the future.” It’s hard to believe that we’re being considered a Growth Company now. For five years straight we’ve been called and proudly called ourselves a startup. I guess we’ve recently grown enough to graduate to the next level. Very cool.
Ryan and I had the pleasure of accepting the award on behalf of the iContact team. Video of the award announcement is now on YouTube. In our audio presentation, that we recorded at CED in advance, Ryan and I spoke about our strategy for success, how the team has contributed (as if any of this could have been possible without an incredible team), and our unique culture that values fun. It was a nice opportunity to speak briefly about the company and hit some of the high points in front of a local crowd that’s followed our progress for many years now. It’s incredible to think that we’ve been running iContact solid for nearly five years now… although I guess it’s only been called iContact for 12 months .
May 12, 2008
David, Frank, and I are at the annual Warrillow conference in Las Vegas this week Monday through Wednesday. The tabletop booth looks really nice and the side presentation which involves an on-screen web-based value calculator. Thanks to the Preation team for a job well done there. The calculator application been rock solid all day and the graphed results have been received well, several have been sent which is exciting!
Today was registration and some general presentations that were really all pre-conference content, much being lead by sponsors. Overall the content was good, some of the coverage of new marketing methods (online) was a bit outdated but probably appropriate for the audience members who are typically in charge of both traditional and new media marketing to small businesses.
Google’s presentation abused the term small business a bit while trying to prove that new media channels including YouTube contain lots of content and lots of visitors interested in finding information about small businesses. I found this to be odd considering all of the research that Warrillow has done to prove that small business don’t enjoy being called small… they prefer terms like business owner and entrepreneur. As an entrepreneur myself (and small business owner ) I completely agree. So, Google is a sponsor of the conference but isn’t paying attention to Warrillow research. I enjoyed the irony.
For a pre-conference day the foot traffic was exceptional by our booth. I took this picture after walking a round of the exhibit floor during a really slow spell. I was excited to return to the iContact booth two minutes later and see a crowd of three talking with David and Frank when I bet there were less than 10 people talking with exhibitors in the entire space at the time. A lot of good connections have been made already.
May 5, 2008
|image credit motivatedentrepreneur.com|
Three interesting rules-of-thumb were discussed among a group of entrepreneurs I met with recently. I found the points interesting at the time but now that a few weeks have passed I’ve found myself either mentally referencing them or mentioning them to others frequently enough to justify taking a second to write them down in a place where they might be shared with others.
The first concept which I really loved was in reference to how entrepreneurs (although appropriate to literally everyone) build and maintain wealth and I found it to be very true of the paths I’ve seen other people succeed along. It was said that you build wealth by taking the most valuable resources you have (your intelligence, connections, unique skills and talents, physical resources, time, money, etc) and bringing them together to focus on a single effort and that you maintain wealth by taking the most valuable resources you have and spreading them as far apart from each other as you can. That’s fascinating to me. If this is true it implies that the old saying “don’t put all of your eggs in one basket” might apply well to people maintaining wealth but in the case of entrepreneurs trying to build wealth it might be the reason for their failure. I certainly agree that success in a startup is about focus and pooling every resource you have, because in the beginning money is low and available time is high.
The second concept was more simple but was meant to provide a framework for thinking of milestones in wealth creation. It’s very interesting to me because my original goal in starting a number of startups previously was to build a company to $1M (M = million dollars) in annual sales. When you’re in your late-teens this seems like the mark of success no matter how you slice it, and at that age it probably is. It was said that the 2-10-100 million dollar rule applies. I’ll explain. At $2M of personal net worth you have enough money to not worry about money again and to probably not have to work if you don’t want to. At $10M of personal net worth you’re considered wealthy and you can pretty much do whatever you want to. You also have enough money to comfortably leave behind enough for the next few generations in trusts, etc. At $100M you basically cross the threshold where your available financial resources exceed any normal person’s ability to spend cash in a lifetime by so much that you will basically need to spend your time trying to figure out the best ways to give the money away. Which you better be doing a lot of if you have this much money! I thought this perspective into what drives people with these higher levels of wealth was very interesting and very much in line with the few people that I know that have reached these levels of financial success. Also to note, the $2M first mark was recently increased from $1M due to inflation according to the person who told me this.
The third concept was put much more simply than the rest. It was said that “the best time to sell your company is when someone offers to buy it.” This brief and comical statement probably rings true with many entrepreneurs who own private companies whose stock is worth as much as monopoly money (my preferred term for it) until a reasonable buyer comes along and declares a dollar amount he would be willing to purchase the company for. It’s a truly odd situation when you’re in it. I’ll add to this a great story told to me by a successful entrepreneur about 24 months ago. He was advising a friend on the possible sale of his business and the friend posed the situation to him that he wasn’t sure if he was ready to sell his company and that a prospective buyer had offered him $10M for the business when he was absolutely sure the business was worth at least $20M. My friend asked his friend a great question which was this, if you had that $10M in cash right now instead of your business, how would you invest it? After little pause he responded that he would put some of the money into the stock market, would save some of it in a trust for his children, and would put a bunch of it in low-risk bonds and other safe financial vehicles and then would probably put 10% of it back into the business to see where it could go in the future. What my friend then explained to him was that conceptually if he decided not to sell the business for $10M he was also at the same time making the decision to reinvest all 100% of his $10M (currently available to him in cash through a sale) back into the business. The point immediately made was that a reasonable person is perfectly capable of determining an appropriately risk averse portfolio for their cash investments but that entrepreneurs for a variety of reasons (the pride of parenting the business, the emotional commitment, the pattern of work they’ve come to love, etc) can easily make very poor financial decisions regarding the equity they own in their businesses. In this case the entrepreneur had become so focused on putting all of his resources into growing his business that he lost sight of his responsibility to protect the wealth he had so far created by spreading his bets wide and far (back to concept number one). I love the concept and completely understand how this can happen in the heads-down world of high-growth startups.
I hope these morsels of thought are valuable to you and that you might easily navigate the course of building a successful company while not forgetting to take care of yourself along the way. Good news though, it’s a fun ride and in the world of fast-paced technology companies there is always time to learn from your mistakes. Happy business building!
May 1, 2008
For over 10 years I’ve had a passion for solving problems with technology. Technology itself is an enabler like few we’ve seen in history yet its misuses equal its proper implementations. Innovation with technology when done right allows us to rethink progress from a simple linear path of fast to faster or small to smaller and instead make progress that benefits people, moving from one meaningful implementation to another.
The traditional technology race to increase speed and cut cost distracts many intelligent people and makes real progress with technology, especially real progress that benefits the people that use the technology (not that sell it), a bit elusive. This is probably one of the reasons I love the new Dyson commercials for the Airblade and the Ball. Dyson and others who dare to build solutions entirely different than their class of comparables are risk takers who venture to push humanity forward. Whether it be vacuum devices, medical equipment, or business software those who work outside of the bounds of the mainstream often experience their adventure with a small or nonexistent support team.
Mark Twain says “The man with a new idea is a crank, until the idea succeeds.” This blog is a tribute to entrepreneurs and creators of any type who live the adventure of moving technology toward the type of innovation that makes real progress by positively affecting people.