Stanford Entrepreneurial Podcast Series

I've been listening to a number of podcasts the best of which is the Entrepreneurial Thought Leaders lecture series from Stanford University.

Stanford has the access and they've produced the best podcasts for entrepreneures on the net.

Designing Your Product: The sweet spot of lifetime value.

The Sweet Spot for Buying

 
Some people love the charts and graphs. They're helpful in thinking about the business you're in and how you're going to design your product offerings. I actually use a number of these same thoughts in designing medical service businesses and teach them to doctors (who also love to cram in the kitchen sink).  I would guess that the actual sweet spot moves over time.

Via: LukeW

In response to my Sweet Spot on the Curve article, Klaus Kaasgaard, Yahoo! Director of User Experience Research, pointed me toward a Harvard Business Review article titled Defeating Feature Fatigue that highlighted some additional considerations for determining the feature curve sweet spot. To paraphrase Klaus:

“Before using a product, people will judge its desirability and quality based on ‘what it does’ (i.e. the number of features). Even though they may be aware that usability is likely to suffer, they will mostly choose products with many features. After having used these products however, usability will start to matter more than features and people will choose easy-to-use products over products with many features. The dilemma is that in order to maximize initial sales one needs to build products with many features, products that do lots of “stuff”. But in order to maximize repeat sales, customer satisfaction and retention one needs to prioritize ease-of-use over features.”



Barry Schwartz echoed this situation in his talk at User Interface 11 when he articulated the capability vs. usability tension inherent in decision-making. In a test Barry referenced, participants preferred to have CD players with 21 features to ones with 7. But if they first used the 21-feature player for a while, they preferred the 7-feature one.

No flaming comments are safe.

I think that most businesses should be running their own blog. Most businesses don't.

The most common excuses I hear are no time and no knowledge. 

For the first time today on any of my blogs I deleted a comment. Damn. Simply a knee jerk reaction and something I regret. Adam, owner of My Secret Chef in Bountiful, flamed me for my post about customer service. I didn't even get the whole thing read and deleted it.

But there is something to be learned and it's something I've tried to teach to my daughter. "Never bait anyone who owns the mic". You're stuck in a no win situation. This blog gets a few thousand unique viewers each month from inside Utah. It's not the place to pick a fight since you don't control the mic.

I actually like Adam quite well. He's trying to run a difficult business from what I saw. I'm sure that he was angered when he came across a post that used him as an example of  what I saw as a poor choice. Guess he got a little miffed and decided to use my own blog to flame me. It's not the first time someone's taken exception to my opinion. These things can get a little out of hand and are generally not worth the effort and conflict.

So he flamed me and I deleted his comment. My bad and I'm sorry for it.

So, if you're around Bountiful, My Secret Chef is a great place to pick up dinner on your way home from work.

CEO Startup Networking: Fight Club Lunch

Fight Club had it's first lunch today and a whole new tribe showed up.

sm.fightclub.jpgWe'll, not entirely new but there were a few new faces. As is always the case, I didn't get to talk to everone for any great length of time. My apologies to those I specifically invited and then didn't get time to talk to. I'll have to make a complete FC list when I get a chance. I think I counted 17 and we were overflowing in some areas.

There are some interesting dynamics. I'm suprised at these events that there never seems to be any lapses in the conversations going on. Robin Peng of Design Engine showed up. Robin runs an industrial design shop that creates prototypes of about anything imaginable; cars, aircraft, light switches, medical devices, and the new Apple Core that's hitting the shelves as we speak.

I also got to talk for a while with Ted Broman of Integracore. They manufacture and oursorce anything and everything from DVD's to day planners. Ted's someone I've know and respected for some time now.

Brad Staker of Staker Group was also there but I didn't get a long time to talk to Brad.

Daniel Holsinger showed. I saw his pitch for his startup WikiReview.com at the Funding Univers speed pitching event and fired him off an email.

Judd & Jordy called me since they were at the wrong location. The Overstock duo made it in time to eat though.

Elegant Design

Strive for Elegance, Not Simplicity

“Simplicity is a myth whose time has past, if it ever existed.” Thus claims Don Norman in a new article for Interactions magazine. Joel Splosky concurrs, noting

Making simple, 20% products is an excellent bootstrapping strategy because you can create them with limited resources and build an audience. It’s a Judo strategy, using your weakness as a strength, like the way the Blair Witch Project, filmed by kids with no money at all, used the only camera they could afford, a handheld video camera, but they invented a plot in which that was actually a virtue. So you sell “simple” as if it were this wonderful thing, when, coincidentally, it’s the only thing you have the resources to produce. Happy coincidence, that’s all, but it really is wonderful.

Startup Entrepreneure: 9 business selection criteria.

House_number_9.jpg

From Fabrice Grindas 9 business selection criteria:

 
Fabrice Gringa has an interesting history in startups. Listen to Fabrice Gringas podcast on Venture Voice and you'll see what I mean.

He also has taken the time to detail what he sees as the 9 criteria that need to be filled in order to undertake or launch a new venture. It's a great list. I've added my own views as a counterpoint. 

Fabrice details an number of points that stem from his self analysis that he has a lack of creativity so he must ride the coat tails of others if he's going to be successful. It seems to have worked so far. 

Note: The 9 criteria are all represented here but some extraneous comments are not included. Fabrice's entire post is here.

9 Business Selection Criteria

The traditional cliché of entrepreneurs is that they have an idea and vision. They build companies to fulfill that vision. I am not this type of entrepreneur. I realized long ago I lacked the creativity to come up with brilliant new ideas. Frankly I lack creative skills in general including the ability to paint, dance or sing :)

To cover up for that deficiency, I use a rational thought process in evaluating business ideas to decide which business I will create, invest in, buy or join. These are my 9 criteria:

1. At least a $1 billion addressable market
This criteria is inherently personal and depends on the entrepreneur’s ambition, but there are good reasons to target larger markets:

  • It’s easier to obtain funding
  • Many Internet businesses have a certain amount of fixed costs but limited variable costs, therefore the larger the business, the higher the net margin
  • I find it more interesting to build larger companies

This does not mean that the market must be a $1 billion market at the launch of the company, but that it must have the potential. 

2. A valid business model understood from the get go
There is only a 5% chance that a company created today will still be around in 5 years. I have not seen official statistics, but many VCs seem to believe that only 0.1% of the company started without a valid business model succeed. It’s so risky to create a company to begin with, I would rather have all the odds in my favor…

3. Does not require more than $2 million in seed or $15 million in first round VC money
If it requires much more, the business might be too capital intensive which could lead to too much dilution and suggest that this is an idea that is easier for a large incumbent to fund rather than a new startup.

4. A business where you have a real shot at being one of the top players - at least in the region you are targeting
Avoid entering businesses where many players are well funded or where the incumbents have a sustainable advantage. That is not to say not to enter businesses where there are incumbents - just make you have a hard to replicate edge on them - after all Skype did extremely well because it entered the telephony market with a radically lower cost structure than the traditional telcos and used it to its advantage.

5. A scalable idea
This is again a very personal criteria. Walmart and Starbucks are great businesses, but I would rather not be in a business where I need to open a new store to increase my sales as it leads to slower growth and greater capital requirements. Internet businesses are magical as they give you the ability to build and grow global companies in record times - just look at what Google, eBay, Skype and many others accomplished in less than 10 years - in some cases in less than 5 years!

6. A business with little or no risk of disintermediation and/or margin compression by suppliers and/or customers
You are in a much safer position if you are much larger than your customers and/or suppliers. Walmart exerts tremendous pressure on its suppliers which are much smaller than it is and depend on its sales. eBay can also continuously increase prices on its sellers - none of which is in a meaningful position to fight back on its own. 

7. A business that is in a rapidly growing market
A rising tide raises all boats. Growing markets generate more interest from the press, consumers, customers and suppliers. Moreover, if you are gaining share in a rapidly growing market, this can create exponential growth.

8. An idea that I know how to execute on or can learn how to execute on
For now I will probably focus on technology ideas as I have a clear comparative advantage in the field as I understand technology and know how to manage technology organizations.

9. An idea that I like and want to do!
One of the keys to happiness and success in life is to do things you love and are passionate about…

A few things to note:
As you can see, I did not mention barriers to entry as a business selection criteria. While it would be nice to be in a position to have strong barriers to entry from the get go - it’s relatively rare to be in a position to have a sustainable barriers to entry from the start especially as it is becoming easier to duplicate technology or even get around many patents. I prefer to focus on building the barriers to entry with the business - the very fact of operating a business - having customers, suppliers, press attention, creating a brand - creates barriers to entry.

Googles Radio Ads: Taking on the mainstream media.

From the Wall Street journal: Google selling radio advertising

"You'll be able to target your customers by location, station type, day of the week, and time of day," wrote a member of the Google Audio Ads team on the company's Inside AdWords blog. "After the radio ads are run, you will be able to view online reports that tell you exactly when your ad played."

The ads can by played on "hundreds" of radio stations across the country, Google said. Using the online interface, advertisers will be able to set a weekly budget and define their campaigns, and then Google will let customers see and alter how their ad budgets will be spent.

This is going to put Google on a collision course with the media companies. I would expect that after letting Google develop the market the larger media companies would go direct with their own solutions leaving Google with the smaller players. The larger players won't let Google have control of their inventory. This may still make sense since the aggregate of the smaller players may be substantial by themselves.

Yahoo can't be far behind. 

The BYU Marriott School of Business ranks 3rd in regional business schools.

Brigham Young University at No. 3 in The Wall Street Journal/Harris Interactive Regional ranking.

byu.gifIn this year's survey, recruiters gave the Marriott School its top scores for students' teamwork skills, work ethic, and analytical and problem-solving abilities.

It was rated lowest for students' previous work experience, experiential learning in the curriculum, the career-services office, and graduates' willingness to relocate.

Brigham Young's major deficiency, recruiters say, is its lack of diversity, with women accounting for only 17% of its M.B.A. students, minorities 10% and foreign nationals 12%. The school hopes to boost those percentages through its "diversity initiative" for recruiting more underrepresented students and faculty and offering special scholarships to minorities.

Evidently all those hard working, team oriented, puzzle solving white boys just don't want to give up living in Provo. Bowling and eating ice cream must be a lot more fun than I realize.

Fight Club Lunch

sm.fightclub.jpgThere's been a number of requests to try a Fight Club lunch rather than dinner.

So, we're going to oblige. (Money says I have to.)

Fight Club Luncheon & High Tea will be next Wednesday, Dec. 13 at noon.

We'll also be changing the venue to a location in the South of the valley. Jordy and I are getting tired of a straight diet of fish 'n chips.

I'll be sending an email out this weekend.

Looks like Tag Jungle has powered up.

logo.gifIt looks like somebody in that Utah Valley Basement has kept the lights on since it appears that Tag Jungle is now live.

I'd been less that optimistic since the entire crew had been mum post Silicon Valley Launch. My guess was that it had not gone well. I hope that wasn't the case or at least it wasn't a killer cause.

I've been trying to figure out how to work the site. I guess the 'how to' pages are for a later iteration. 

New VC Strategies: Venture debt or angel money?

venture_capital.jpgAlex wants to grow up and be a VC.

(Possiblly so he can afford to hire personal protection and prevent further beat-downs.)

 Here's Alex's idea for funding startups:

"If I like the entrepreneur and the company or idea, I will fund it, up to a certain amount, using the following simple formula (sample dollar amounts only, actual invested dollars will of course vary):


Amount Invested = $250,000

I own 75% for my cash investment, entrepreneur owns 25%.

The moment I receive my $250,000 back with a 20% increase (for a total of $300,000), the equity flip-flops. I own 25%, the entrepreneur owns 75%.

This simple method allows for a few things to happen. First and foremost the entrepreneur is highly motivated to get my initial investment plus interest back to me as fast as they possibly can. I don’t care how they do it. Bank loan, profits, home equity line, friends and family, outside investor - it doesn’t matter. Once they pay it back, they own their company again, until then, I own it. I don’t want to run it or mettle in their business. In fact, I won’t do that. But the fact that I own 75% will motivate any entrepreneur worth their salt to hurry up and change that around.

When they pay me back, I will still get to participate in their company as a shareholder, and hopefully I can add value as a 25% owner. They will be in control though and I will be along for the ride.

Why is a 25% equity stake in your company too much to ask for funding the entire business with no personal risk on your end? All i make is a 20% return..."

Ok Alex, you asked for it.
Let's take a look at a situation like this from the entrepreneurs perspective. 

What you're offering is venture debt with a few unusual caveats.

  • You'll lend money without a personal guarantee on flat rate terms of 20% for which you take 75% of the equity.
  • You'll take a 20% return.
  • You'll keep 25% of the company.

So here come the problems: 

  • Why would I take on venture debt for a 25% stake (if everything works perfectly) when an angel will take the same equity postion up front  (typically 20-30%) without ever taking control of the company.
  • When does the 20% have to be repaid?
  • Say the company is growing fast. You own 75%. What would prevent you from wresting control of the company from the entrepreneure minority shareholder?

You're right that banks don't fund startups without personal guarantees. (Been there. Done that.) But the capital markets are highly efficient and there's a reason that they're structured a certain way. (Please believe that I'm not arguing that there aren't better ways.) You might be able to give money to a company, but only a very deperate one. Any startup that can attract an angel round can do so without giving up control of the company at all.

Charles River has their new CRV QuickStart Seed Funding Program. You'll notice some fundimental differences in how the transaction takes place. Charles makes their terms very attractive, but of course they're looking to stay on for future rounds.

Wharton School of Drones?

Ravi has it in for Wharton: Where Entrepreneurship Comes to Die


p_wharton.gifAnd Penn wonders why their precious school doesn't churn out high profile start ups. So where's the problem? In this case, part of it is apparent: the class itself is atrocious. For half a semester, I've listened to our Professor use the same Marketing 101 buzzwords in an attempt to describe what is different about getting the word out for start ups. And, for that half a semester, he's really said nothing.

Pony Tail Club: A girl & her horse.

ponytailclub.icon.pngPony Tail Club

My daughters new blog.

 
I thought this was a good idea for a number of reasons. First, she loves horses and if I'm going to have to continue to pay for shoeing, vet bills, feed and training... We're going to make it a business. (Of course, Dad doesn't get it.)

(After seeing that I received a check from Yahoo last month my daughter also thinks this is a good idea. She has dollar signs prancing in her head already.)

My wife is also involved. She's just got her new advertising site up (Wild Blue Creative) and now we're off on the pony express. Our goals with this new pony site are:

  • Give Madison (our daughter) a place to express herself and gain positive feedback. Gramsie & Gramps, Yaya & Papu, aunts, uncles, cousins, friends and fellow academy riders can all be counted on to provide this.
  • Provide a method that by itself teaches consistency and self motivation. ie. No posts / no quality = no traffic.
  • Provides and outlet where she can express her love for riding.
  • Offers some experience in building something of value that people want.
  • Lets her generate income that's a direct result of her own efforts (with parential help and moderation).
Pony Tail Club will be completely kid safe, friendly and positive. If you have anyone interested in reading the ongoing reality show saga of girls who love horses, please send them a link.

 jumpingthumbs.png


Interestingly, I just put the site up yesterday and there are already 30 rss subscribers. I find that unusual.

Hey Fight Club wusses: Where's yer story?

fight_stories_193106.jpgFight Club: Membership Requirement #1

I've heard much talk from some about what great fight stories some of you have. So far it's just been big talk. Alex and Ryan... you know who you are.

Membership Requirement #1:

Write and publish (to this site) the story of the last fight you were involved in. (Physical blows exchanged.)

Entrepreneure Fights


If you've never been in a fight you have three alternatives: Write a fictional story of a fight that you might have been in at some time in your lift but that you loose embarrassingly. Write a thesis on why physical violence can't solve society's problems and how this site is destroying our children. Put your tail between your legs and slink away knowing you're not Fight Club material.

Write your story and send it to me here. 

Zero Sex Lift: The life of a startup entrepreneure.

This guy is an honorary Fight Club member, right up there with Billy Barty. This is one of the funniest blogs I've ever read. Here's some tidbits.

zero_sex_life_header_main.jpg

Six weeks ago facing the one year anniversary of the last time I touched a girl I, out of both desperation and a momentary lapse of judgment, put down my $19.95 and jumped into the internet dating scene. Let this be a lesson to everyone reading; never try an Internet dating site. For those of you who don't listen to my warning here is a little advice. If she looks like a model, it's a porn site trying to get you to check out a page so they can send you enough junk e-mail to sink a battle ship. If she doesn't look half-bad, it's an old photo before the accident or the Ding Dongs reduced her life to meeting tubby computer geeks with no social skills over the internet.

Their thinking is the same as yours, "I'll rope them in to liking the real me, than when he/she sees my grotesque Jaba the Hut exterior it won't matter because they love the real me."

Truth is you don't want someone like that any more than they want you. You'll have to forgive me; currently I'm a unique combination of bitter, drunk, and lonely. I'm also getting ahead of myself.

A woman who looks lost is walking toward me. She looks like she could be the shorter fatter sister of the slightly less than average looking woman I am waiting for.

"Are you Mike?" Oh shit, it's not the sister.
"Darla?" She smiles but I can tell she's disappointed. She undoubtedly went through dozens of pictures to find the one that made her look a little closer to human than the oily husk she parades around in, as did I. After two appetizers and a few drinks she goes to, "Powder her nose" and never returns. Someone Kill me.

Progress Log

The following statistics apply to everything that has happened to me since the creation of this site, February 2003.

number of people I have had sex with (Not counting myself)

(0)

number of women who have submitted requests for sex

(4)

number of those to result in sex

(0)

number of those to turn out to be a 13-year-old punk kid who sent me a computer virus.

(1)

number of men pretending to be women who've submitted requests for sex

(38)

number of women in other countries who've made "offers"

(19)

number of nude photos sent to my e-mail / P.O. box

(12)

number of people to suggest I go on "Queer eye for the strait guy"

(9)

total amount I've paid to keep this site up (bandwidth, virus software, hosting, ect.)

($453.85)

total amount of money donated

($266.12)


Why the hell would you eat brownies sent to you by a stranger?
Yes, I was an idiot to eat the brownies but look at it for a moment from my point of veiw. I have a hand written (extremely feminine) letter that smells slightly of perfume telling me the story about a girl who had really bad acne in highschool and who can relate to my story. She is poor as well and can't donate any money but wanted to do something nice for me, so she made me some brownies.

Why would I immediatly think anyone would want to poison me? I haven't done anything wrong to anyone. Who would get so worked up about my site as to send me chocolate ExLax? And I couldn't taste it! I had a brownie, it tasted good. I had another, still good. I think I had four total before I started to feel sick. They were small though, I'm not that much of a pig.

The next thing I know I'm giving birth to the antichrist.

,

Googles Big Idea Challenge:

,

google-big-idea-challenge.jpg

Google nips startups.

It seems that Google thinks that good ideas might be germinating in the halls of higher education. I can understand Googles motivations, they want to have the smartest people working for them rather than competing with great ideas.

Via Google Blogscoped: Sam Davyson says, “This morning in my university pigeon hole I got a flyer about the Google Big Idea challenge. They're targeting grads.” The flyer reads:

The Google Big Idea Challenge
What is Google’s next revolutionary product and why?*
Graduate Jobs at Google

We are looking for final year students and recent graduates who are creative and think differently. By answering the question posed above in the The Big Idea Challenge, you have the opportunity to impress us and get a job at Google. Your answer can be in any format you choose; this might be a business plan, schematic diagram, presentation, or just some text. The top entrants will be invited to the Googleplex in London to meet the the team and talk through their Big Idea.

How to Apply

• Visit www.google.co.uk/bigideachallenge to find out more
• Send us your application by January 5th 2007

*This must not be an existing Google product.

I am curious about what kinds of reaction they'll get. I would think that they might get some great ideas and scoop up a few crack troops, but it might be that the best startup ideas won't be attracted to working for the man. The allure of becoming a G-man may begin to wear thin. I'd think that working for Google is beginning to resemble many large tech companies (free food notwithstanding).