Bootstrapper.com - Confessions of Serial Entrepreneurs

I recently saw a video on YouTube featuring David Rose, the very successful serial entrepreneur and financier. A summarization of his presentation (with some of my own comments included) follows…

Outside of what is on your previously prepared slide deck, there are 10 crucial traits an entrepreneur must convey to a group of Angels if they expect to be funded. They are qualities which one cannot fake and are the foundation for true success as an entrepreneur.

The single most important asset an Angel invests in is the entrepreneur. It is not business models, markets, financials or anything of the sort. They are investing in you. That’s it. Thus, the entire purpose of a pitch is to convince investors that you are the entrepreneur for whom they are going to risk and invest their money in, and as a result, then make a lot of money in return.

As stated previously, an entrepreneur has very little time to grab their audience’s attention….. actually only seconds- just those initial 10 seconds.  Therefore, make sure your pitch starts off like a rocket and then immediately transitions into conveying the top 10 traits which investors look for during your pitch. These include:

1)     Integrity: This is the most important attribute in a prospective entrepreneur. An investor would much rather invest in, and take a chance with, someone where there is no question regarding alternative motives or who they’re looking out for in the long term.

2)     Passion: Entrepreneurs by definition are individuals who are leaving something and starting something else. Something completely new. Creating a new venture and putting their lifeblood into it. If you’re not passionate about your venture… then why should anyone else be?

3)     Experience: You have to be able to say “Hey, I’ve done this before.”… this means starting an enterprise and creating value and also taking it/seeing it through beginning to end. This is why Angels love to fund serial entrepreneurs- because even if they didn’t do it right the first time, they’ve learned the hard lessons that will stand the test of time (which they won’t repeat). Plain and simple- they want experience in creating an organization.

4)     Knowledge: If you’re telling an investor you’re going to be the great developer of a new trend- you better understand the macro and micro-level implications of your new product/service and encompass an immense amount of domain expertise the given vertical. You must know your market, who the players are and why your product/service brings new and significant value.

5)     Skills: These include technical knowledge, marketing, sales, management, etc. Not everyone has such a large and diverse set of competencies and experiences. In fact, very few have a solid acumen in all of these crucial skill areas to run a company. Therefore, as the entrepreneur, you must be a leader (See #6).

6)     Leadership: An entrepreneur must convince investors that they’ve recruited and developed a team that encompasses all the necessary skill sets to run an organization efficiently and effectively, or, convince the investors that they can do so personally. They must present themselves as having the necessary charisma, management style and ability to get others to follow their lead, as well as inspire and motivate them.

7)     Commitment: An investor wants to be assured that you’re going to be there to the end with your venture. Convey that you’ll fight to the death and do anything possible before losing even one dollar of your investors money. Fiscal responsibility is imperative as bad things are bound to happen.

8)     Vision: You have to be able to see where the venture is going. There is not one investor in the world who wants another “me too” product. Instead they seek entrepreneurs who know they can change the world.

9)     Realism: Investors want someone who is grounded and realizes that a good idea doesn’t always ascend to a market changing idea. As stated previously, bad things do occasionally take place, thus it’s imperative to be rational and have such projections in place.

10) Coachable: Investors need to know that you have the ability to listen and accept constructive criticism.

So one of the people that applied to the BootStrapper Venture Summit told me a story about how he raised capital … so i’ll repost it for everyone …

It is imporrtant to recognize that I always defined an angel as looking for investor-partners, not just investors. In addition to a good business idea is the acceptance as who I am as co-founder, including the appreciation of how much we could produce by bootstrapping. I found my first angel investor by placing breakfast invitations under the hotel doors of all the attendees to a later-stage investor event. Two people came to my speciality coffee room, one became my first investor and the other sponsored another angel forum. I went to this angel forum which is where I met my 2nd angel investor.

Everyone along the way has been thanked, and thanked, and thanked as many times as possible. This requires no extra money other than time.

Next form of bootstrapping is going to as many events as possible and flying in-and-out in the most inconvenient times possible, but never staying the extra day since you can easily spend an extra $500 to $750 on the extra day. Going to events includes participating as a panelist, pitching or just working the audience.

Another form of bootstrapping is to comment and respond to as many professional fund raising news stories and blogs as possible.

A final form of bootstrapping is to maintain an ongoing list of potential investors and to update them everytime a major milestone is achieved. This is a subset of the information provided to existing investors, whom by the way will usually invest more than once if they are treated as a partner- not just an investor.

Each of these requires persistence and professionalism. There are numerous tricks-of-the-trade that can be learned, but have to be embraced and accepted as part of the ongoing process to be successful at raising capital and growing a company.

Brian Javeline
President & CEO
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You’ve been sitting around with a few friends, talking, laughing and it hits you!  The next big thing!  Your next (or maybe first) company!  You share it with your friends and they help you work out the details and you just KNOW this thing will be awesome.

A few weeks go by and you’ve invested some serious time and effort (and maybe even money) into this effort.  You have the basics of a business plan, a rough sketch of a marketing plan and you’ve even told your family.  Everyone’s in your corner, rooting for you.

A few more weeks pass and you hit the wall… You realize that you didn’t do as much market research as you thought.  Maybe there’s another company that’s already doing what you’re doing.  Maybe the costs to start will be too high for you to handle.  What do you do?!

You can’t just “stop” because you’ve already told your friends and family about it and to stop now would mean losing face.  It would mean that forever more, you’re labeled as that dreamer that never gets things done but talks about those things all the time.

Relax.  We’ve all been there and we’ve all given up on a few ideas.  But at this point, you need to stop and think.  Take a break from starting this company of yours and assess if it’s really worth continuing.  The simplest thing to do at this point is to make a list of your alternatives.  What’s the alternative use of your time?  What’s the alternative use of your money?

Next, take those alternatives and create a little table to assess the pro’s and cons.  List EVERY pro (even the dumb ones) and EVERY con (ESPECIALLY the dumb ones) just to keep the analysis accurate.  After you’ve compiled your list of alternatives and the pros and cons of either staying on course or pursuing an alternative, STOP.  DO NOT DECIDE ANYTHING.

Give it a week to simmer, then look at your list and cross out the pros that are overlapping.  For example if you have three options:

1. Continuing to work on the business
2. Getting a job
3. Going back to school

If all three have a pro of “gives me a productive way to spend my day”, then cross that pro out!  Same with the cons.

Now that you have your FINAL list, spend some time thinking it over.  Which of those pros and cons do you really care about and which are just there for the sake of being there.

Remember, there’s no shame in throwing in the towel if it’s for good reason.  And quitting early may be better than quitting late.  I’d love to get your stories on when/how you quit ideas, so please leave comments.

One of the most important things for a successful startup or any company for that matter is a sound HR policy. Most young companies neglect HR and just hire friends or because a resume reads well. It is very important to build a cohesive team that works together. A bunch of brilliant people that hate each other is recipe for disaster. This should be common sense but rarely is down correctly.

Before you hire, please make sure you know the goals of the person, define a mission for the organization, a mission and milestones for the position and attempt to build a culture for the company. If your company doesn’t have a soul, why would anyone stay?

So I was going back and forth today with Jeff Pulver founder of Vonage and he was talking about everything he was working on and he made the comment that sometimes he felt he was busy on a million things and othertimes that he was doing nothing. I think that’s a trait worth exploring. I’ve seen it in all serial entrepreneurs, especially myself whenever we are trying to do too much. I’ve learned over the last few months that the most important thing for a crazy entrepreneur to have is focus. Spread to thin and we feel useless. But focused on a key task and we tend to work as fast as 20 people. Just something to think about next time everyone out there decides to start 12 things at once. Focus on one. Execute. As a result of this thinking, I really don’t want to get drawn into any more ventures, besides for lack of time, it causes a huge mental strain, even more so when I invest money in projects or companies. I don’t know how some people do it. If I go back into the investing side at all - my investment thesis will be simple, small investments in friends companies. $5-25k investments in people i believe in and forget about it. Small, simple and supporting friends that know what they are doing. This way i don’t have to be neurotic. Alas, i’m on the entrepreneur side so that won’t be for a while. Don’t be left thinking you’re a crazy person like me spread too thin. Luckily, i’m involved with a great startup right now i’m itching to tell you all about but am forbidden by my partner for fear of execution, hehe. my little joke.

Killthedot.com (long killed) was an attempt by us to let users type a word into their browser and hit enter so they don’t have to deal with typing .com’s. Now this technology was later built into the browser but we thought it was cool back then. We promoted it and then hoped to make money from toolbar installs and contexual advertising and the like. We never heavily promoted it, I can’t remember why.

So right now I throw 2 types of events. Happy Hours & BootStorming Sessions. Both are free or super cheap ($10) and we have a great turn out. But recently

If you’re an entrepreneur, one of the hardest things to do is stay motivated.  I wanted to get feedback from all of you as to how you stay motivated.  Start posting comments and let’s get this discussion started..

This post is dedicated to Joe Z

So I’m in the middle of partnering with a great entreprenuer and while poking around on him, I found the name of one of his companies, Occam’s razor LLC. Being the inquisitive mind that I am, I decided to look it up and found and found out the Occam’s Razor is a principle attributed to the 14th Century that states that one should not make more assumptions more than the bare minimum needed. What that means is - Simplicity is King. If you have 2 options, create complexity and delay or simplify and go to market - simplify. Why? People don’t really like choice, they like user experience.

An old story is the one where people are given the choice of 14 jams to try. Something like 11% of them bought the jam. Then, the test was done with only 4 options and something like 25% of them bought the a jam. Now, my numbers above are not the actual results of the test but the key is that the simpler the product, the easier to use. Remember the original version of facebook? It was a simple stupid one page directory listing, you had an option of 1 photo and no real functionality except for groups that themselves had no real functionality. Now facebook is a beast but it started as a flat stupid simple site. This happens to be why I have so much respect for facebook, they’ve rolled out their product in such an intelligent fashion that now it is ubiquitous  but they do it in small little steps.

I’ve started to try to keep the simplicity first rule myself, I never knew the origin until recently or even heard of Occam’s Razor but I wholeheartedly agree with it. With that said - always plan deep ahead so you have an idea of the issues that could develop but when it comes to execution - go simple. Get to market, relax. Get feedback, collect cash. Repeat.

I just wanted to give everyone a quick update on takesalltypes. A couple months back, we applies for the facebook fund for TAT, thinking it makes total sense given their goals. Well, we just heard back and we’ve made the next stage of their process. Woohoo!!! Thanks facebook, let’s see where this goes? Meanwhile, donations appreciated :) 
Richie

I’ve always admired people who can create value from nothing, in any field, in any context and whatever value means to them.

Once there was an idea . . . then there was liability insurance, after that - office furniture and if you’ve been smarter and luckier than most, “I want business class airfare specified in my contract,” will come up more often than you’d like. For the record, the answer to that one is always, no.

But before there are any of these things, there is a line. One the left side of the line (Point A) is your idea and on the right side (Point B) is the launch of your new, can’t fail, light-up boomerang with FM tuner.

How to get from A to B is where all this bootstrapping stuff comes in.

Here are some random thoughts to keep in mind at the start of your journey:

Persuade:

If you have the passion and an idea worth pursuing, convincing other people of its merits is what it’s all about. Where better to start than with those who can help you get it built?

Besides, if you raise a million dollars and pay handsome salaries to people to build it for you, what are the chances that each of your newest employees is as committed as you are? Zero.

(more…)

Make no mistake entrepreneurs- an Angel presentation is a war: You as the entrepreneur will be challenged from the second you open your mouth. Not only because what you say throughout your presentation will be critiqued from every angle during the follow-up Q&A session (constructive criticism meant to expose bottlenecks, loopholes, etc), but also because it’s immensely difficult to present a short, concise and easy to understand business model articulating the macro (and also the important micro) parts of your venture within 10 minutes (which fly by quite fast- trust me).

Anyone who honestly believes presenting in front of Angels is easy has a screw or two loose because it’s an enormous challenge to clearly articulate (in only 10 minutes) something you’re so steeped in and committed to mentally, emotionally, financially, etc. It’s very hard to take a step back from being totally steeped in your venture from all angles (such as: mission, niche, scalability, competitive advantages, etc) and put yourself in the shoes of those who will be watching you.

This is another part of the war- being humble, dedicated and confident enough in your venture (and what you’re going to say) to be able to literally have an outer body experience. As an entrepreneur who wants to be in the top 10% of all presentations I’ve seen you must literally go through your presentation (fully) in your head at least 15 times as if you’re watching yourself present to you and other Angels in a large mahogany board room. You need to step back, envision yourself presenting, and critique yourself first. From there, you present to other associates in your venture, friends, family, etc. You should run through your presentation at least 20 times (in addition to the 15 in your head) before getting in front of an Angel Group. It may sound crazy/repetitive/pointless but this accomplishes many things:  

- You begin to visualize how you want to present your venture (tone, posture, slide deck, additional facts/visuals/stats to incorporate or take out, etc)

-  You learn what to say and what not to say through constructive feedback and criticism

- The more you present in preparation for your 10 minutes of fame, the more honed you presentation becomes

- The more you hone your presentation, the more confident you become

- The more confident you become, the more engaging your presentation will be because conviction in a purpose (in this case- getting financing for your venture) is shown subconsciously through your mannerisms whether your realize it or not

Hopefully now you begin to see the steamroll effect that begins to happen (As a side note, if you would like additional information/coaching on this preparation stage (or anything else written in my blog) please don’t hesitate to email me. I’m an entrepreneur myself, thus I’m always willing to help other fellow entrepreneurs- I wouldn’t be where I am without others who’ve invested in me by taking their own personal time to teach me principles such as these). Now back the topic at hand……

Running through your presentation, preparing to deal with follow-up Q&A, etc isn’t the end of the war, it continues: Remember, although there will be an Angel or two who do have specific competencies in the market you’re targeting, the other 20 or so members most likely won’t. Thus, you must tirelessly prepare to go from 1 MPH (articulating the market opportunity and value proposition) to 50 MPH (features, benefits, IP, competitive advantage(s)) to 100 MPH (a clearly articulated SWOT and exit strategy) within 10 minutes.  Learning how to do this not only takes insight and being completely steeped in your venture, but it takes time, patience, reflection, honesty with yourself and (most importantly) the collective acknowledgement/acceptance of the critiques/feedback given to you by family, friends and associates. 

Hey everyone!

Welcome to my little piece of the startup world.  I was pretty pumped when Richie invited me to blog on BootStrapper.com and I think that this will be a fantastic opportunity for me to learn from all of you and vice versa.  I wanted to start off by talking a bit about the core of any business.  Big businesses, small businesses and everything in between all need one thing to be successful: a plan.  Now this doesn’t have to be a formal business plan (but it doesn’t hurt if it is), but the more developed the plan is, the more questions you’ll be able to answer.  There’s a million websites and a billion books about how to structure the plan, but it really is simple.  There is no standard format that works across all business.  There are no sections that are universal.  Your business is unique and beautiful and needs to be expressed as such.

One frequently asked question is: what do I put in the plan?

The answer: everything.

Write it ALL down.  I’m helping a friend right now work on a business of hers and she really is getting the value of a plan.  She started out struggling for content, but now her plan is flowing with information.  What is the business?  How will people know about it?  Who are the competitors?  What is needed?  What can be expected?  Anytime anyone asks you a question about your venture, you should make a mental note and stick it in the plan and answer it!  There’s about a thousand questions that you’ve thought of already and about 9,000 that you haven’t.

Who is the plan for?

YOU!  Don’t worry about the VC’s and the angel’s and the bankers and the rest of ‘em.  When you’re just starting out, the plan is for YOU and you alone.  Once YOU understand what your business is all about, you’ll have a MUCH easier time telling other people about it.  So write it for yourself and don’t get caught up in the details, like format, and proper grammar and the rest of it.  Let MS Word do the pretty-making stuff (or Pages if you’re a Mac person… which you should be) and you worry about filling it up.

What next?

Edit it.  Read it.  Review it.  Constantly.  It’s a living document and you need to make sure that you keep going back to it to see if there’s something important in there that you’ve sort of ignored.  Or maybe there’s something new that you need to add in there that you’re just realizing.

Well, that about sums it up for me for today.  Let me know what you think

Angel investors are a unique breed when trying to obtain financing for your venture. They listen to your presentation, challenge every loophole and bottleneck in your strategy, they are due diligence experts in their respective fields, negotiators of investment terms, and mostly importantly (to you) the ones who sign on the dotted line to fund your company. Before presenting to individuals like this, you must realize up front (and be honest with yourself) that mostly likely you’re not ready.  

As an entrepreneur, you only have previous experience presenting to (and being in front of) your family and friends. Whether you want to believe it or not, they are somewhat biased toward your venture- whether good or bad- and they’re probably not even close to seasoned veterans in the space you’re looking to enter. On the other hand, angel investors are experts in the field you want to enter, they encompass specific competencies which add value to the overall pool of angels you’re presenting in front of and they’re an unbiased 3^rd party. What you also must realize is that although angels may be hard to crack (and rip you up one side and down the other), in the end it boils down to the fact that they enjoy helping promising entrepreneurs who encompass a great vision for their industry. They were once just like you- ambitious, forward thinking, but lacking the resources they needed. They’re successful men and women who’ve been there, who now enjoy giving back to those with unique and disruptive ideas by opening up their rolodex and resources (ideas, funding, etc). 

My point in writing this continuing 4 part series is to let you, the early-stage (angel round) companies, know exactly what investors like this are expecting from you. I would estimate at least 80% of early-stage companies don’t know what an angel investor needs to become an active participant (and financier) in your company. Within 2 minutes of a CEO first opening their mouth I can tell whether they’re ready to tell me what I need to know. If so, I listen. If they bore me and don’t cater to what I’m looking for, they’ve already lost me in those first 2 minutes and I’m now thinking about the other 20 or so deals I’m on during my day jobs. Thus, the point in this series is to help you become a successful and confident presenter. 

You’ll have roughly 10 minutes to pitch your idea with a follow-on 10 minute period to answer questions. Throughout the following series of blogs I will provide specific suggestions on how to efficiently and effective organize your presentation so that your delivery is within the top 10% of all presenters. In addition, I will detail and explain some of the more common mistakes early-stage firms make. I intend for these suggestions to be enlightening but also encouraging so that you’ll soon have the tools necessary to be not only prepared, but overly prepared, and more importantly- confident.  By following my suggestions, I can estimate that you’ll be within the top 10% of all presenters. Obviously I cannot guarantee investment by angels in your venture if you follow these guidelines (because that’s all they are- guidelines). However, at the very least you’ll have increased the likelihood that many of the angels listening to your presentation will be significantly more engaged and attentive.

This is the goal: peak their interest first and foremost- be a salesperson, a darn good one who can clearly articulate every aspect of your business. If you can do that, you’re half way home to getting funding already. What I detail going forward in this series will help you with the other half.  

This is the first post from Mehul “Mike” Patel. Just a test of this system here. I’m an entrepreneur and love single malts. Hope to be speaking with many of you soon :)