Bootstrapper.com - Confessions of Serial Entrepreneurs

Inc magazine published their list of the fifteen best industries in which to start a business.  The first on their list was candy.

It got me realizing how our love of a quick sugar fix has actually produced a vast marketplace for many stable and long-lived brands.  Somehow, candy brands don’t die.  Necco started in 1847.  The kindly old Werthers grandpa has only been around for a decade, but the company itself dates from 1903.  Hershey’s was founded around the turn-of-the century, and its stock has paid a regular dividend for the past two decades.  I don’t know anybody who enjoys old-timey candies like Circus Peanuts, Wax Lips, Bit-O-Honey, Oh Henry, or the great taste of Charleston Chew, and yet a market clearly still exists for these 80-100 year old candies.

So if you’re one of those entrepreneurial types focused on sustainability and the long term, I second the call to create a new candy recipe.  Caramel wasabi cakes, anyone?

According to Danah Boyd, MySpace has become a digital ghetto, following the online equivalent of white flight to Facebook.  She doesn’t attribute this to any kind of active racism, but rather that offline racial and class divides are extending themselves onto the internet.  The “Stuff White People Like” blog has smartly parodied this phenomenon.

Although the internet was initially a color-blind and unwalled neighborhood, the hidden hand of racism had no problem moving into the digital age.  Kozmo.com, a casualty of the first internet bubble, ran a cool on-demand delivery service that redlined zip codes with a predominantly African-American population.  Google’s unsuccessful attempt at an online social network, Orkut, devolved into a haven for various hate groups in other countries.

The takeaway? Don’t invest in services that promise to make the world less divided.  It’s easiest to gain market share if you focus on dominating a tiny niche.  Competing services that try to be all things to all people will, if they survive, diverge and inheriting a different segment of the audience.

So I read over the entire economic plan for NYC. I think it’s very good and touches on many of the key things we need including capital, space and training. Kudos to the administration for doing it. (full disclosure: The City sponsors the Bootstrapper Summit and Katherine Oliver, the Commissioner for Film, Theatre & Broadcasting keynoted our last one. The one area where it can use enhancement is in promotion of the program to the wider community outside of finance. The city just put out an RFP for both managing training & building a new website to promote its services. At some point I hope we start seeing public service announcements and ads on taxi tv promoting the programming and telling where people can go for support and services. Meanwhile, great work Mr. Mayor, keep it up, the city needs you!

So I just joined the Internet Oldtimers Foundation So at the grand old age of 24, I am officially a veteran of the industry. Oy vey. It’s been a decade in the space and i’ve been on all sides of the industry but wow, I’m an old-timer!

So here’s something to chew on…the average fund charges 2% management fee and 20% of profits of the fund. Then the fund makes an investment in a company and last i checked the average founding team (on a good day) ends up seeing around 20% of the sales price of the company upon exit (assuming all went well and good) and saw an average salary of 100k a year. Let’s say the company raised $20MM over the life and that the core management team is 3 people, 2% of that would be around $400,000 a year or $133,000 per founder. (these are hypothetical) but if you look at the numbers the entrepreneur ends up seeing equivalent return that the VC sees (management fees = salary, carry = equity value) so it actually works out. I’m an entrepreneur (though i’ve self financed most of what i’ve done to date) and you know what, when you think about it, the model makes sense.

So here is a paradox … if you ask a VC “do they like bankers?”the vast majority says “no.” They will often go further and say “we don’t look at deals from bankers.” Now let’s take a step back for a second and ask the same VC, when was the last time they sold a company or took one public WITHOUT a banker? Never. I find it funny.
There are 2 primary reasons to avoid bankers. 1) shopping - bankers shop deals and they often shop them without proper targeting - this is in fact annoying and valid 2) expense. bankers make deals more expensive in 2 ways: first they charge fees and second they know what they are doing (usually) and how to negotiate (i should hope) and thus the investor pays more.
Truth is, most investors will look at deals from bankers they trust, the challenge is in the seed/early/A )where it is generally no mans land and there are very few bankers in the first place (mainly finders) but no one wants a cold shotgun shopped deal no matter what.
My feeling is if you can bring on a banker that can find you money. Do it. It will save you a headache and they probably will get a better deal for you even after their fees.
PS. I can’t wait to see the response to this one.

So this post is dedicated to a dear friend of mine, Heeky. I invited her out to join me and some interesting people for dinner next week and she said this “Hanging out with you is more than enough. I will try to make it. Friday sounds good.” … I’m still smiling

In my parent’s living room, the sound of keys being pressed is incessant, never-ending you might think. As a practicing attorney, even when I’m home I have research that I’m doing or various legal documents that I am writing.  However, the around the clock noise really comes from my brother, who is seventeen and applying to college.

Applying to college after you’ve already been is infinitely less stressful than when you’re doing it the first time around. However, the questions are certainly tougher. Or maybe they only seem tougher.  Over the past few weeks as I’ve helped my brother decide how to go about answering these questions, I’ve been given the unique opportunity to reflect. I won’t take you down memory lane but I will tell you that the questions colleges are asking are the same ones you should be asking as an entrepreneur. Here’s a few that you might want to consider answering for yourself or for the rest of us who read and write on this blog…

1. A list of books you have read in the past twelve months
2. Please tell us about how you have spent the last two summers
3. Describe a trait or characteristic that has been passed along to your family. Tell us why you like or dislike this aspect of yourself.
4. “We might say that we were looking for global schemas, symmetries, universal and unchanging laws-and what we discovered is the mutable, the ephemral, the complex.” Support or challenge Nobel Prize winner Illya Prigogine’s assertion.
5. Identify and discuss a person who has helped shape culture and thought. You may select someone from any field: literature, the arts, science, politics, history, athletics, business, education, etc.
6. Reflect on an environmental scene that is important to you, paying close attention to the relation between what you are seeing and why it is meaningful for you.

It struck me that after we stop applying to college(s) , we stop asking these types of questions. Might we also be closeting ourselves from new ways of doing? To put it another way, if you believe in the value of interdisciplinary learning and thought, what disciplines beyond your industry and your business have you spent time thinking about lately?

So yesterdays post was about our intern at Groupable
(not live yet), Nelson. Since we’ve been self-financing the company and essentially paying to work - I think I am going to take a new title.

So from now on my title is Intern. I figure it beats being Chief Bootstrapper. It’s more authentic. Think about it, all of us entrepreneurs out there are our own interns! So remember - the password to the copier is ABC123.

Now that Obama has won the election. The question that needs to be answered is: Will the election rally hold.

Historically, the answer is “For a while.”

Seeking Alpha compiled all the daily closings from 1929 to August 8th, 2006 and came up with the following results.

What do these results show us?

1.The market stabilizes around the election before dropping a few months after the inauguration.

2. Once the new executive has settled into office there is a period of rapid growth based on the hope of change, followed by a steep decline as the mid term election approaches.

3. These results are independent of party, candidate, or economic situation as they have been averaged over 77 years of the DJIA’s history.

However people seem  to think things will be different this time around.

CNBC indicates that Obama’s victory comes a point where change is needed. “It’s a sense of absolute relief that some definition today will arrive,” says Diane de Vries Ashley, managing partner of Zenith Capital Partners in Coral Gables, Fla. “People are expressing ‘enough is enough’ and things are not as bleak as they appear to have been and now we can get down to business.”

But unlike previous periods where there is hope for change, a rally and then politics as usual, this time things seem different. Obama’s team is clearly focused and has proven its ability to deliver. This started with a bid for the Whitehouse. They put together a staff, not of politcos, but the best experts in the field of corporate strategy, corporate finance, social media, viral marketing, public relations and grass roots fundrasing to win the election. Then instead of touting rhetoric or attacking his opponent at his victory speech, Obama humbly asked America for its help in making it through the next several years. Today the Obama Presidential Transition Committe hits the ground running, without so much as 12 hours of celbration, to make good on dream of change that led Obama to victory.

It’s like they realize that winning  only gets them the starting line. There is still a 26.5 mile marathon left to run.

So Bluey got into a car accident last week. Thankfully, she’s okay but she was really shook up and focused on the fact that she left her lip gloss from Body Bakery in the hospital. Now, this sounds trivial but she was under a lot of stress and in pain so I sent a note to the founder of the Body Bakery saying how Bluey loves BB and lost her lip gloss (the one she lost was a special edition not for sale anymore) and you know what - Lia, the founder wrote back the next day AND sent a feel better gift basket. Talk about amazing customer service. She also sent a personal handwritten note and put band-aids on the packaging. Soooo sweet. Bluey loved it and got not just another limited edition lip gloss but a whole bunch of stuff. So to conclude Body Bakery is a great brand with an amazing founder who really understands customer service. Thank you!

So I’m involved in a couple of different things and while I have been cutting them down lately to be able to focus more, there are still a few things in common. I’m involved with a pair of advertising companies and Bootstrapper.com related events. I was hanging out with a friend of mine and I made the comment that I’m a walking Confluence of Interest opposed to a Conflict of Interest. It’s interesting because everything I do falls into one of 2 categories, advertising technology or creation of media (blogs, conferences) around technology & advertising. The Bootstrapper stuff serves to promote me & my ventures and everything else is advertising technology so they offer complementary contact bases. Just something to think about I suppose …

Just for fun, at the tech meetup 2 months ago I sat next Jimmy Wales, founder of Wikipedia and Scott had everyone swap cell phones with their neighbor for a minute and i got Jimmy’s phone. That was pretty cool. In how many other industries do you get to sit next to one of the most prolific and successful people in it and he just hands you his phone because someone else told him to ?

Here’s something random, My macbook froze, then deleted my entire mailbox, then i restarted and it came back to life and started running 5X faster … go figure…

So yesterday I talked about how there is a tipping point of entrepreneurship where an entrepreneur becomes a crazy entrepreneur. However, there is the opposite of that which is that we entrepreneurs tend to go through periods of feast or famine with ideas. Like there are weeks where we can get a 12 great ideas and months where we can go without a single decent idea… usually it has to do with relaxation and happiness so the more relaxed and happy an entrepreneur is, the more ideas that tend to flow. Almost all entrepreneurs are manic-depressive. When we’re in depressive moods, we tend to not have very many ideas and when manic, we tend to have a million. Just something to think about …