Business Mentoring for Entrepreneurs
Bill Warner Wednesday, February 17, 2010
Approximately 26,000 new companies are formed each year in North Carolina. In that same year, over 23,000 companies fail due to poor management and operational mistakes. The statistics are worse in rural and minority populations. This means that good ideas go to waste along with the grant and investor funds that helped get these companies started. As a result, the potential growth of revenue and new jobs is lost also.
If we had assistance for entrepreneurs who are struggling to create successful businesses, the failures should decline considerably. Entrepreneurs should be seeking out business mentors that can help them through the early years of their business.
EntreDot™ Connects the Dots for Entrepreneurs
For the majority of the companies that fail, the missing ingredient that could have ensured their success is basic business-operations “know-how.” This is the void that EntreDot™ fills. At no cost to them, EntreDot™ provides business mentoring to entrepreneurs and helps them make the right decisions as they start and operate new companies.
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VC Investment Outstrips Fund Raising
Bill Warner Wednesday, January 27, 2010
In 2009, the venture capital industry experienced the biggest gap between investment and fund raising in the last six year. In a recent Wall Street Journal Venture Capital Dispatch blog, it was reported that investment was down nearly $10 billion, from $30 billion to $20 billion, while fund raising declined $17 billion, from $30 billion to $13 billion. This $6 billion plus difference is the amount more invested than was raised by VC’s.
Bad news for companies
The implication is that although venture firms still have a lot of money, it is still going to be increasingly hard to get funding because they are running low on available funds and it is still very difficult for them to raise further funds from their limited partners. Their limited partners are still suffering from the economic downturn and have not opened this investment class for funding.
Corporate and other private equity investment is also suffering, further reducing the number of options for equity financing.
Is IPO the answer?
Another source of funds could be successful IPO’s, which could breathe more money into the VC firms. We have recently read about an emergence of IPO filings, including Motricity, a former RTP darling. However, many analysts are quite skeptical that 2010 will bring much hope in this arena either.
What companies need to do
2010 is not going to be much different than 2009; perhaps worse, with respect to your chances of getting new VC investment. It is still a game of the “best of the best” getting due consideration. It means that you need to have a very compelling business, with meaningful and growing customer traction, having the potential for large and rapid growth, to a level that will provide a handsome return.
Due diligence will be treacherous, filled with disappointment for many, but there is still gold in “them there hills.” You will have to mine it with a focused laser.
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Entrepreneur Gets Overwhelming Support After VC Shark Attack
Bill Warner Wednesday, August 19, 2009
Kevin Flannery has had an interesting time since being bled to death by some not so real VC’s on the TV show Shark Tank. This hyped up TV show that portrays venture investing as a visit to a shark tank has tried to embarrass entrepreneurs and make venture investors look like vicious animals. None of this is real and has been put together by some mindless producers who are trampling on one of America’s most valuable assets, the entrepreneur and the business partners who finance them.
The entrepreneur gets even
Since the show was aired, Kevin has gotten hundreds of responses over his website. The vast majority are encouraging and supportive. Comments like “hang in there,” “prove them wrong,” “way to stand strong,” “keep going, the product is needed,” and many others. More importantly, many of these responses are from potential business partners who want to know more about his business. Unlike the Shark VC’s, many saw the value proposition of the WiSpots product line. Several respondents were sales and distribution companies who showed interest in marketing and selling the product. Lots of people had further product suggestions. They even got contacted by potential investors, even ones that had previously passed on the business.
So, at the end of the day, Kevin has beaten back the sharks in an amazing turnaround of fate. We all thought that Kevin now lies at the bottom of the ocean. Not at all. He is alive and energized.
WiSpots update
Long before the show was aired, Kevin had joined with fellow entrepreneur Jason Angel, and formed a new company called Wi-Ficiency. The company offers a suite of physician and patient-centric software and hardware solutions that maximize profitability by reducing costs, improving productivity and generating additional revenue from the patient waiting room, while simultaneously improving patient satisfaction through education and entertainment. This company has far reaching potential in improving the state of healthcare by providing a broad selection of relevant patient information, a targeted marketing and sales channel for healthcare products, state of the art online medical transcription services, compliant electronic medical records, and many more capabilities as they acquire additional technologies.
The winning entrepreneur
It’s a shame that the VC Sharks couldn’t listen long enough to learn of the true business model of this company and instead chose to go for the ratings and throw WiSpots to the fishes. Kevin and Jason are very much above water and riding in a speed boat to their next funding event.
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Entrepreneurship Remains Strong
Bill Warner Thursday, April 23, 2009
The first full day of CED’s Venture Conference was well attended by enthusiastic entrepreneurs and investors seriously looking for good companies. We had a full plate of great companies who made their presentations to packed rooms.
Wells Fargo introduced to North Carolina
The day was started by John Stumph, President & CEO of Wells Fargo, who gave a sincere presentation about how much he is impressed with North Carolina. Believe it or not, this was his first trip here. He has met with many community leaders, including current and past governors as well as senators and congressmen.
He assured everyone that their Wachovia accounts are safe and that the transition will be carefully done to protect its Wachovia customers. Stumph gave a compelling history of Wells Fargo and related the strong culture of his organization that truly cares about its people, customers and communities in which it resides.
As for the financial crisis, he quite precisely described the fundamental causes for the crisis, but quite frankly had no crystal ball telling him when the recovery will occur. He was bullish about the fact that Wells is lending money now and is actively looking for new loans to make. The company is in a very strong cash position.
All in all, Stumph said that he would not “bet against America.” We have been through difficult times in the last few decades. He is confident that we will pull through this one too, explaining that this is what Americans are good at.
Entrepreneurs are at the heart of the recovery
Erskine Bowles, President of the University of North Carolina, started his presentation with a humorous discussion about what a lousy politician he is and now how happy he is taking on the challenges at UNC.
He too gave us a dose of reality concerning the challenges that face the education system today. Last year’s $50M budget cut is near trivial compared to this year’s $175M cut with a potential cut of another $200M next year. This will cut to the bone of classes, people and potentially education quality.
Bowles noted that we are in a rapidly changing world. What we prepare our students for today will probably be obsolete in 10 years or less. He knows that the “old NC manufacturing jobs” will never come back as we move more and more to a knowledge-based economy. He said that we have to accept that we will continue to lose jobs to foreign countries that can provide many of them at much lower costs.
He pointed to the entrepreneur as being one of the major contributors to our return to a strong economy. He cited the need for increasing innovation and the support infrastructure that fosters it as being essential to our ultimate recovery.
North Carolina University is making substantial changes in its culture, technology transfer practices and accountability for academic results. Bowles stated that we have to focus on producing students that can think, communicate, be innovative and get things done in this new economy.
GreenTech – The next industrial revolution
To close out the day, John Denniston, Partner at Kleiner Perkins Caufield & Byers, made the proposition that we are on the verge of the next industrial revolution driven by the energy crisis. The revolution will be based on new energy sources driven by green technology.
Although an exciting premise, it was a disappointing presentation void of specific descriptions of innovations and technologies that would drive this kind of change. Quite frankly, this slow moving and elementary presentation addressed the audience as if we were eighth graders and couldn’t possibly have understood the basis for the industrial revolution of the early 1800’s or even understand who Thomas Edison and Henry Ford were. Nobody likes being talked down to.
Denniston cited the crisis as first being driven by man-made climate change as unanimously verified by United Nations organized scientists. Boy that sure isn’t very biased at all, from an organization that wants to transfer our wealth throughout the world through green house gas taxation. Secondly, and more compelling was his concern about energy security in that we are far too dependent on foreign sources of energy from countries that hate us. And finally he explained the alarming advances that are being made in innovation in other countries like China, asserting that America is losing competitiveness to them.
He then made sweeping analogies based on Moore’s law, claiming that similar improvements will be made in alternate energy source technologies using 1995 data to illustrate his point. He compared the sum total of all of earth’s natural energy sources to those of the sun, concluding that we need to tap into solar energy for that reason. The presentation continued to a merciful end without much substance about today’s green technology innovation.
Kleiner Perkins is the world’s leading venture capital firm, but this presentation feel far short of showing their expertise in green technology innovation and what it will mean to the future of our economy.
Entrepreneurs and investors enthusiastic
The entire conference was buzzing with enthusiasm and positive attitudes about what we need to do to recover from this economic downturn. New innovations are abundant. Investors are interested and engaged. Just rubbing shoulders with them all was a major pickup for me.
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Venture Capital Has Focused Optimism
Bill Warner Tuesday, April 21, 2009
CED’s Venture Conference is getting off to an optimistic but also sobering start with Tuesday night’s investor-only dinner in Pinehurst.
CED showing leadership
Joan Rose, President of CED, highlighted the evening with good news about the expected attendance at over 500 people, citing that this is extraordinary given the impact the economy has had on the companies and firms that are sending people to the conference. Actually, more individual companies will be attending this year than last year even though the overall attendance is down somewhat. In addition, CED membership is up considerably over last year, indicating that entrepreneurship is alive and well and that more and more companies want to learn about building successful businesses.
The venture capital world speaks up
The featured speaker was Mark Heesen, President of the National Venture Capital Association. He gave a very balanced update of the state of venture capital in the US. He didn’t try to sugarcoat the situation, but gave a very fair accounting of what is strong, what is weak and what we can expect in the near term.
Investing is down but still huge
With respect to the limited partners, over $4.3B was raised in the last quarter. The highlight though is that a substantial amount of the money came from Europe, Asia and the Middle East. Venture investing is down the last quarter, falling to $3.0B from $4.3B the previous quarter. He explained that most venture firms will not be raising further money this year and that we will continue to see fallout of venture firms throughout the year. He basically confirmed what we already know about the reduced chances companies have in raising venture capital money for the foreseeable future.
IPO’s may see a new dawn
On the IPO front, there has been one IPO since last August and only 26 companies are registered with the SEC. It will be unlikely that the IPO market will see much progress this year. However, Mr. Heesen cited some potential progress through new partnerships between the venture capital world and the boutique investment banking world that might open up a new avenue for IPO’s. Stay tuned.
Clean tech may save them all
Mr Heesen was bullish on “clean tech.” In his view, clean tech will be emerging as the darling of the venture capital world. He is not talking about the ill-conceived wind farms, biofuel plants and vast solar grids. He cited technological innovations in all walks of life, including building architecture, lighting, efficient air handling, fuel usage efficiency and many more. He was very excited about the innovation he is seeing and that there is increasing momentum in both the private and public sector to move this kind of innovation forward. He wasn’t talking about the near religious zealotry of sustainability gurus, but solid technology companies that bring demonstrable and profitable value to the market that improves our environment. The good news is that the venture capital world is seeing a business in clean technology innovation.
Entrepreneurship is strong
Mrs. Rose brought the evening to a close by reminding us all that more companies made applications to present at the conference this year than ever before. This again shows that although the economy is stifling, it hasn’t stifled entrepreneurship in the southeast.
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Get Ready To Find Your Next Job
Bill Warner Monday, April 20, 2009
With the unemployment rate continuing to rise I am meeting more and more people who are looking for their next opportunity. Unfortunately, many are nowhere near ready to actually approach an employer. I see people who have not really thought through what they want to do next, assessed their strengths and determined where they would best fit, written an effective resume, and cannot answer the simplest of questions about the value they bring to the table. With so many people on the job market, only the best of the best are going to land any jobs that might be available.
Tips that might help
Here are some tips on what to do to be ready for your job search:
- Smell the coffee – First, take a breather after leaving your last job. You have worked hard; now it’s time to decompress. It’s time to gather your thoughts and get over any lingering frustration about losing your job. You need a clear mind to think about the future.
- Assess yourself – Do a full assessment of your strengths and weaknesses to determine what the basis is for your value proposition. Yes, you are marketing yourself in this process, so you need to determine what your value proposition is as you sell yourself to a potential employer. So, write down what your personal value proposition is.
- Determine fit – Determine what your best fit might be for your next opportunity. Are you a big organization kind of person? Do you work in start-ups? What roles will you be best suited for in whatever sized company and industry you will be pursuing? Answer these questions helps you narrow down what kind of opportunities you intend to chase.
- Establish family priorities – Talk to your family once you have figured out your value proposition and best fit alternatives. Get an understanding of the limits that your family has for your job search. Are they willing to move? Are they willing to get less money? Are they willing to see you travel a lot? Get their buy-in to the kind of job search you intend to undertake. Surprises are not a good thing. Hey Honey! We are moving to Boston!
- Prepare your resume – Write a results-oriented resume. Employers want to know what your objective is and what results you have achieved in previous jobs. I stress results; not just simple statements of what you worked on. You sold products. Well, how much? You created marketing programs. Well, how many leads did it generate? You increased revenue or profit. Well, by how much? Employers want to know what you got done, not so much what you did.
- Network – Get out of your house and voraciously meet people. Use your contacts to give you referrals to people you need to meet that might know about new job opportunities. Yes, this is networking with a purpose. Go to important networking events and meet companies. Make contacts with professional services firms that might know about job opportunities that are arising with their clients; like, attorneys, accountants, HR firms and business consultants. Make yourself known to search and staffing firms.
- Determine targets – Do enough research that you have a list of companies that you want to pursue. Use your contacts to possibly give you referrals to people inside the company. So, when asking a business associate for help, you are not taking a thoughtless approach of simply asking them what opportunities they see. Instead, you are telling them that you are chasing a specific opportunity and you want them to help with a referral. You get a lot more help that way, by showing that you have done your homework.
- Market your resume – Don’t send a resume into the blue sky. Instead, send resumes to targeted companies that you have researched, where you customize your cover letter and follow up with phone calls to inquire about openings.
- Use the Web – Do make a habit of following the major job boards on the Web. Use Linked-In to make yourself known to your network. Overall, use the power of the web to learn about opportunities and to market yourself.
- Practice your story – You need to clearly state your value proposition, what a best fit opportunity is for you, why you left your last job, what you are looking for next and your excitement about taking this next step in your career. These points have to roll off your tongue with enthusiasm, commitment and integrity.
Hunt with a purpose
The hunt for a new job is a major undertaking. Take it as seriously as you would take launching a new product or service in your last company. You need a well thought out marketing program that generates new opportunities that are right for you and then sell yourself into those opportunities using solid sales technique and know-how.
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Setting and Exceeding Expectations
Bill Warner Tuesday, January 20, 2009
At last week’s Business Clubs of America meeting we met an amazing young man that all entrepreneurs can learn from. Logan Aldridge, at the age of thirteen, lost his left arm in a tragic boating accident. His recovery was long and painful. During that time he had hundreds of visitors who expressed sympathy and also unknowingly set expectations that life will never be the same again for Logan. Well, Logan was going to have none of that gloom and doom, and quite frankly did not accept that life was never going to be the same. He proceeded throughout his recovery therapy to set goals, one day at a time, to work himself back into regular life. He had to learn to write with his right hand, because he used to be lefty. He had to learn how to eat, dress, tie his shoes, brush his teeth and the hundreds of things we all do everyday with two arms. Once he got the basics of living, he went back to water skiing, learned to surf and wrote a book. He played lacross and became the team captain.
As he matured, he became and ever increasing inspiration to the people around him. He continues to be a very active full time student at Ravenscroft and most people can’t keep up with him. His motto is “beyond expectations.” This is a young man that all business people can learn from. Don’t let others determine what you can and cannot do. Certainly listen to good advice and coaching, but don’t let the limitations of others become yours. Take every day, one day at a time, and have goals that drive your work and play. Put all your energy into meeting and driving past those goals by exceeding every expectation you have about them.
Now at the age on eighteen, Logan has his own website at www.loganaldridge.com where he talks about exceeding expecations. He will try to sell you a book too in order to finance his growing foundation, but it would good for you and your children to read and become inspired by Logan’s message.
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Internet Companies - Now Grownups
Bill Warner Thursday, December 18, 2008
In reflecting on the recent Internet Summit in Research Triangle Park there were certainly an impressive group of entrepreneurs, investors and consultants presenting on a wide variety of topics. In addition to a delightful key note presentation by Bob Young, the conference covered such topics as the current state of the internet markets, as well as the future of the SaaS, email marketing, blogging, search engine, ecommerce, mobile internet, and social networking businesses. Many related topics about venture capital, internet law, internet infrastructure and internet marketing rounded out the conference with an overall comprehensive look at the state of internet-based businesses.
However, it struck me how different this group of people is from the comparable group of people who were presenting as little as eight years ago. During the dot.com era of the late 90’s and early 2000’s, there certainly was as much enthusiasm as we saw at this Internet Summit, but the business maturity of the presenters at that time was far less than today.
In the dot.com era, we would have heard about how “cool” the internet is and what the possibilities are for reaching consumers and collaboration, but not much on why any of it made business sense. Yet, these companies got millions of dollars to try out their ideas; signed on the backs of napkins over a beer at the bar.
At this Internet Summit, the discussions and presentations were distinctly different from the dot.com era:
- We heard about successful business models instead of business dreams.
- They presented where internet commerce is today in dollars and cents instead of the assertions that it will be billions someday.
- We got information on what works and what doesn’t work in internet marketing and blogging instead of claims that everything works.
- Entrepreneurs talked about how revenue traction is effectively achieved instead of boasting that the world would beat a path to their doors.
- Venture capitalists were discussing quantifiable markets and revenue models that work and had solid opinions on what makes business sense instead of clamoring to write checks.
- The black cloak was taken off of email marketing with a very real perspective as to why it makes sense today, instead of glossing over its simplicity.
- We heard about the details of what makes the SaaS model effective and the solutions to the real issues of successfully deploying the infrastructure and achieving cost effective marketing and sales programs instead of words about moving to the ASP model because it is cheaper.
- They presented solid business rationale for mobile applications and the outlook for new mobile technologies instead of explaining how cool ringtones are.
- The realities of social networking were presented including a balanced view of this delicate business model instead of projections about the wonderful world of collaboration.
- We got the down-to-earth realities about the future of search engine businesses were presented in a very candid and realistic way instead of the techno-geek talk of the dot.com era.
There was a distinct absence of the unrealistic zealots of the dot.com era. Where did they go? Heck, many of the people we saw at the Internet Summit were some of the very same people who made the outrageous claims during the dot.com era. They look older now. They sound like business people with a purpose. They make sense.
Then it dawned on me. Many of the entrepreneurs of the dot.com era have grown up and are now adults in the business world. They have learned a great deal from their experiences, regardless of success or failure. They are seasoned and thoughtful business people who absolutely know the ins and outs of their businesses. They are well connected to their industries and know exactly how their business models work, know what’s wrong with them and have innovative ideas on how to fix them.
Out of the ashes of the dot.com era has come a powerful bread of internet business professionals that know how to build successful internet-based businesses. In fact, they are teaching others as they lead their companies and mentor other entrepreneurs in the community. We are not in Kansas anymore. You can have much greater confidence that this industry is now being led by some of the brightest, energetic and insightful business professionals in America.
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Internet Commerce - Weathering the Storm
Bill Warner Saturday, November 29, 2008
At the recent Internet Summit in Research Triangle Park, the kick-off presentation was a sobering look at the business status of internet commerce given by comScore, a global Internet information provider to which leading companies turn for consumer behavior insight that drives their marketing, sales and trading strategies. comScore maintains massive proprietary databases that provide a continuous, real-time measurement of the myriad ways in which the Internet is used and the wide variety of activities that are occurring online, giving them a comprehensive view of consumer behavior. In other words, this is company that is watching your every mouse click and key stroke.
Intuition would tell you that internet commerce is suffering just as much as the rest of the industry in this market downturn. However, your intuition might not tell you the deeper insights that you need to know. Through the 3rd quarter 2008, ecommerce is up 10 percent over 2007. That is less than half the annual growth that has occurred since 2002, but nevertheless is growing. This can be broken down by consumer income segment, observing that spending by people whose income is less than $100,000 per year is actually declining, while those above $100,000 is increasing 14% over 2007. Clearly, the economic downturn is affecting the lower income group the most.
This can mostly be attributed to higher prices, led by the over 30 percent increase in motor fuel, all of which has significantly squeezed discretionary spending. But, fuel prices over the last several weeks has fallen to less than $2.00 per gallon and food prices are starting to drop as well. One might think that ecommerce is going resume its 20 plus percentage growth again, but that is not what is going to happen. When asked what their major issue is now, the concern about rising prices of consumers whose income is greater than $100,000 is being replaced by a significant concern about the financial markets. For consumers whose income is less than $100,000, their concern is about inflation; including prices, jobs and financial markets.
When asked what they thought their spending for the holiday season would be, about 60 percent of consumers whose income is less than $100,000 said they would be spending less than last year, while 43 percent of those greater than $100,000 said the same.
comScore can only tell us what has occurred, not what will occur. So they have no crystal ball. They did ask about the effect of the presidential election showing that over one third of the consumers are either not sure or have less confidence in making near-term expenditures. The Obama effect is a big unknown and the markets are hanging on every word he says or doesn’t say as well as what the administration says about the various bail-outs that are being proposed.
We certainly have not seen the end of the trend setting for consumer spending as the situation is still very volatile with more shoes to fall with the change in administration.
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IBM Director of Research - Bullish on New Opportunities
Bill Warner Tuesday, November 11, 2008
“Invest now, this too will pass,” says Dr. John Kelly, IBM Senior Vice President and Director of Research, while speaking with a small group of executives and entrepreneurs at the Council for Entrepreneurial development in RTP. John was quite bullish on the possibilities for new opportunities for IBM premier offerings in information technology services and products.
He gave a broad perspective of where IBM is today, and contrasted it to a very different profile as little as a decade ago. A $100B company with 10% market share, IBM is predominately an IT services company with 55% of its revenue coming from worldwide services. The remainder is split evenly between software and hardware. They spend about $6B annually in R&D which fuels a broad array of new technologies.
John is quite cognizant of the economic impact we are now feeling with the downturn of the public markets resulting from the credit crisis. He says those with the strongest balance sheets will weather this storm, and views this as a time to grasp new opportunities. He has no crystal ball as to when the recovery will come, but knows that IBM is in a strong position to invest in profitable growth and become much more competitive in the process.
He cited several examples of industry growth areas, such as financial services and healthcare to name a couple. He believes that the future growth will be fueled by the ever increasing use of computer technology to improve efficiency and competitive advantages in all industries. Actually, this is no different than it has been since the dawn of the computer age, but his bullishness to accelerate growth was refreshing.
John reflected with great respect on the transformation that IBM has made since its “near death” experience in the early 90’s. The culture has changed, the company is leaner and meaner, and all said and done has transformed itself into the leading professional services company in the world. IBM has been managed brilliantly, not taking the bait in the late 90’s dot.com boom. It stuck to its guns by achieving business success through a focus on profit growth and earnings growth. Just growing revenue doesn’t cut it, as did many companies in the late 90’s and early 2000’s. Most of them are now gone. IBM remains strong, because it focused on keeping a strong balance sheet. Go look for yourselves.
He is deeply concerned about US competitiveness, and highlighted his disappointment with the lack of congressional action to fund the America Competes Act in 2007, which would have called for significantly increased investment research. He cited several examples of other countries leaping forward in this area and producing large numbers of highly qualified university graduates that will very quickly have a material effect in making those countries, like China, much more competitive.
He was of course asked about the importance of protecting intellectual property (IP). After all, we were talking to the person who manages one of the largest patent portfolios on the face of the earth. His perspective was very balanced, in that IBM certainly makes over $1B annually in licensing fees but also gives away for free the use of patents that could easily make 4-5 times as much for IBM. Their view is that much of their technology will help fuel the growth of industry in general, and as other “boats rise, so will IBM’s.”
Acquisition is still a key strategy for IBM which has recently spent $5-10B on acquiring innovative companies that fill out their product line and broaden them into new markets. This is all driven by the business units within IBM who identify acquisition opportunities as IBM tries to reach further into the IT industry.
Of special note is John’s healthy perspective about people and the fact that business success is really dependent on hiring the best of the best. He spends a lot of time focused on IBM’s hiring practices, the universities they are coming from and the industry expertise they bring. Whether or not they are in research, product development or professional services, IBM still goes after the best people it can find and believes they are the key to their own competitiveness.
He confirmed IBM’s commitment to RTP and was very supportive of the work being done by the IBM team which is now predominately software development and services. Don’t be fooled when you drive by all those buildings that look like manufacturing facilities or warehouses. There is a lot of software development going on in RTP.
During the Q&A period, he speculated on the future of communications devices (like cell phones), saying that speech recognition, including language translation, technologies are the next break-through that we should see. So, those of you who cannot type, you will soon be able to speak into your cell phone and have messages automatically written for you in most any language. Of course, this is one simple example of the endless possibilities that effective speech recognition can bring us.
John’s closing comments called for us all to focus on the global economy, and achieve global reach in our businesses. He left us with a positive view of the economic situation we are in by saying that this is the time to invest in growth opportunities.
