Tag Archives: internet

The Truth About Real Estate

Posted on November 12, 2011 by Nitasha Tiku

My software company, 37signals, is nearly 11 years old. But until now, it’s never really had a place to call its own. For much of that time, we’ve been positively nomadic. Our first headquarters was in the office of one of our original partners, a Chicago-based graphic designer named Carlos Segura. Carlos’s office also housed his design firm, as well as the T26 Digital Type Foundry and Thickface Records. 37signals lived on a corner of a big desk in a room upstairs. It wasn’t glamorous, but we didn’t need much space. It kept our costs down, too. After we had been there a year, Carlos left the company, so it was time for us to move on as well. By this time, 37signals was three people — Ernest Kim, Matt Linderman, and me. We were making money and doing well and didn’t require much in the way of an office. So when some friends/clients at a company called Data Harbor invited us to sublease some of their extra space, we said, “Sure.” A year after that, Data Harbor moved, and we took over the remainder of its lease for a few months. Then we decided to finally get a place of our own. We found it across the street (we could see it from the window of the space we were still occupying). It was too big — 3,500 square feet for just three Chicago-based employees — but the location was good, the rent was fair, and the landlord was a nice guy. Still, it never really felt like home. Rather than investing in the space, we just put some cheap tables together and got DSL. We worked that way for three years. During this time, we brought on a couple more people, but they were working remotely from other cities. I suppose we were thinking about office space the way most businesses do — as a cost center. After all, between rent, furniture, technology, and the like, it adds up fast, especially for a young company. We were doing fairly well, so $2,500 a month wasn’t much of a burden. At the same time, it was $30,000 a year out the door when we could all have just worked from home, which might have explained our ambivalence. But over the course of three years in that Spartan space, we learned an important lesson: An office could make you money, not just cost you money. We had a lot of empty space. Our three desks, conference room, and personal space took up only about 25 percent of the office. Perhaps we could turn that empty space into a revenue stream. Not by subleasing it but by using it to host our own workshops and conferences. For a few years, we’d been sharing our ideas on software design, marketing, and business on our blog, Signal vs. Noise. We’d begun to build a loyal and passionate following. So why not take advantage of that and hold a workshop about the things we were writing about on the blog? We could host it in the spare space in our empty office. And charge for it. We put together a one-day agenda, charged about $300 a person, and sold about 30 seats. Suddenly, we found ourselves with $9,000 in additional revenue. Our monthly rent at the time was $2,500. In one day, we just paid more than three months’ rent. That was a light-bulb moment. An office can be free — and even a profit center — if you start thinking about your company’s byproducts. What do I mean by byproducts? Just like the lumber industry can sell its sawdust (a byproduct of milling trees), we discovered that we could sell our knowledge (a byproduct of running a business). And we could sell it in our spare space. Eventually, we packaged this knowledge in book form. All told, the combination of the book and the workshops has brought in revenue of more than $1 million. But back to our real estate saga. When our lease was up, we decided not to renew. But instead of getting another space of our own, we hooked up with another friendly company we knew: Coudal Partners. I knew Jim Coudal, owner of the advertising and design firm, through a mutual friend. Jim had some extra space, I mentioned that we were looking, and he offered it at a fair price. This was in 2003. For the past seven years, we’ve been working out of that office. It’s been a wonderful experience. The folks at Coudal Partners are wildly creative. We’ve hired them to shoot and produce some video for us, and we even started a side company together called The Deck, a targeted ad network that helps companies reach graphic designers, Web designers, and other creative professionals. However, since we’re sharing the space, it’s not ours to do whatever we want with. Holding workshops there has been a logistical challenge, because those events mean that the people at Coudal Partners can’t work at their own office for a day. That doesn’t scale well. We’d like to be able to do a workshop every six weeks. Or maybe host a spontaneous gathering of all our nearby customers. We needed more flexibility. What’s more, since we’ve expanded from just a few people to 20 (nine of whom are in Chicago), we’ve outgrown the six desks we had been renting. Privacy is another thing you don’t have much of when you share an office with another company. It wasn’t an issue early on, but it is now. Our friends at Coudal Partners have been fair and accommodating, but we decided it was time to move on. So last year, we began looking for a place of our own. From the outset, we decided to recall what we had learned years before: We weren’t just going to spend money on the space; we were actually going to make money on it. That requirement became the driving force for finding the right space. We looked at a bunch of places — houses, lofts, offices that already had been built out, raw traditional office spaces. We almost had a lease done on a large factory that had been turned into a six-bedroom residence (we’d use the bedrooms for private offices). But the deal fell through because of zoning and parking issues. Eventually, we found a beautiful raw space just six blocks from our current office. It’s a corner space with two enormous walls of windows. Natural light pours in. We hired architects to review the space and draw up plans. We negotiated the lease, paid the lawyers, paid the lawyers some more, and signed the papers. The design process took a few months, and the build-out took about four months. We finally moved in July. True to our vision, about a third of the 10,000 square feet is dedicated to teaching. We built a theater-style classroom, with 37 seats, in which we can give presentations, hold workshops, and offer training and support classes for our customers. We plan on holding the first of many regular workshops this fall. For the past few years, we’ve rented out different venues for our workshops. It cost us a few grand for the space, another few grand for the overpriced catering (we had to use each facility’s sanctioned caterer), and another few grand for audio-visual requirements and other logistical considerations. Though we were able to charge about $750 per seat for a one-day event and sell about 50 seats per workshop, renting still took a good chunk of profit out of the equation. With our own space, we’ll not only save money on the costs side; we can make more money on the profit side. We also believe we’ll be able to charge closer to $1,000 a seat. At 37 seats, that’s $37,000 in revenue. All we’ll have to pay for is catering. All the AV requirements and Internet connectivity are built into the space. And it’s much more attractive than the venues we were renting out before. Just a few of these workshops will cover our rent for the year. The lesson here is less about real estate than it is about business itself. Whenever you make something, you make something else. Your byproducts may not be as obvious as sawdust, but they’re there. Maybe it’s the knowledge you’ve acquired by running a business. Maybe it’s a piece of software you wound up making when you made another piece of software. It’s there; you just have to look for it. You may even find a business you never knew you had. Jason Fried is co-founder of 37signals, a Chicago-based software firm, and co-author of the book Rework. Coudal Partners – Business – 37signals – Real estate – Technology Continue reading →

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10 Things to Do Before You Start Your Start-Up

Posted on September 27, 2011 by admin

Is your great idea good enough? Can it grow in this slow economy? Can it become profitable, and return on any investments it requires? Well, there’s no way to know until you try, right? Hardly. There are some ways to prepare yourself, test your idea, and improve it before you actually found a company around it. We’ve compiled the best examples from recent Inc. articles and Inc.com guides of tips for the very early steps of building a start-up. 1. Scope out your industry. Or, if you’re just starting to think about entrepreneurship in general, find the best industry to fit your style and talents. For example, this year’s burgeoning industries include interactive technology (from mobile app design to tech-savvy translation), wellness (healthy beverages), and little luxuries, such as baked goods. When you start honing in on a specialty area, seek out counselors and talk to industry veterans. You can go to SCORE, the SBA, the Women’s Economic Development Agency , or scores more. The Internet, your local library, the U.S. Census Bureau , business schools, industry associations, can be invaluable sources of information and contacts. For instance, you might approach business schools in your area to see if one of their marketing classes will take on your business as a test project. You could potentially get some valuable market research results at no cost. Read more . 2. Size-up the competition. Study your competition by visiting stores or locations where their products are offered. Say you want to open a new restaurant. For starters, create a list of restaurants in the area. Look at the menus, pricing, and additional features (e.g., valet parking or late night bar). Then check out the diners those restaurants appeal to. Are they young college students, neighborhood employees, or families? Then, become a customer of the competition. Go into stealth mode by visiting its website and putting yourself on its e-mail list. Read articles written on them. Sign up for e-mail alerts about search terms of your choice on Google News, which tracks hundreds of news sources. After you study it, deconstruct it using Fagan Finder , a bare-bones but very useful research site. Plug the address into the search box. You will be able to quickly learn, for example, the other sites that link to it, which can reveal alliances, networks, suppliers, and customers. Business data aggregators such as Dun & Bradstreet and InfoUSA provide detailed company information, including financials, although the services are not cheap. Your aim is to understand what your competition is doing so you can do it better. Read more . 3. Second-guess yourself. “The biggest mistake I see these days is thinking that a business idea will automatically turn into a viable business model,” says Terri Lonier , president and founder of Working Solo , a New Paltz , New York -based business strategy consultancy, and author of Working Solo: The Real Guide to Freedom and Financial Success with Your Own Business . Then again, what if the idea really is viable? “A lot of people start with a kitchen table idea,” says Marla Tabaka , a business coach who writes The Successful Soloist blog for Inc.com . “It’s a great idea you come up with your cousin at dinner. But then the business booms, and your growth gets out of control. You need a plan.” Another important consideration is your personal financial resources. Make sure you have a considerable amount of capital set aside, especially because in a sole proprietorship you assume personal liability for all activities of that business. If you borrow money and can’t repay it, your personal assets are at stake. Read more . 4. Think about funding. A lot. Can you bootstrap your company? Or are you going to need a small business loan? Might an entrepreneur in the family be able to invest, or should you look for venture capital or an angel investor? Money is a big topic for entrepreneurs, and you’ll want to know your options early on. In order to get investors to open up their checkbooks, you’ll need to convince them that your idea is worthy and also be willing to subject yourself to increased scrutiny and give up a percentage of your company. That’s why it’s a good idea to first ask yourself whether you really need a professional investor at all, says David Henkel-Wallace , a serial entrepreneur who has raised $60 million from VCs. “If you’re starting a web software or mobile software company, you might be able to bootstrap it, which has the advantage that you get to keep all the money you earn,” says Henkel-Wallace. “You could also look into borrowing from friends and family – or even take out a second mortgage – for the same reason.” If you decide your business can only get to the next level with the aid of a professional investor, then you need to figure out what a potential backer looks for in a budding company, says Martin Babinec , who raised six rounds of funding through the business process outsourcing firm he founded, TriNet, which now boasts annual revenues in excess of $200 million. Start doing your research now, and don’t talk to investors until you have a strategy that involves foreseeable future liquidity. Read more . 5. Refine your concept. Adrienne Simpson initially intended to run a traditional moving company out of her home in October 2002. The idea came to her after relocating her mother from Georgia to Michigan . “I thought I’d put everything in a box, put it on a truck and send her on her way. Oh, no! Mom started walking me through her home, pointing at things saying, ‘I’ll take that, let’s sell that, and I want to give that away,’” she recalls. By the second year of operation, Simpson shifted gears to make her Stone Mountain, Georgia -based company, Smooth Mooove, specialize in transporting seniors—and their beloved pets—and providing such value-add services as packaging, house cleaning, room reassembly, antique appraisals, estate sales, and charity donations. Her crew does everything: put clothes in the closets, hang drapes, make the bed, fill the refrigerator. But even still business was stalling. “I knew how to run an existing company, but I didn’t know how to run a start-up,” says Simpson, who worked 20 years for Blue Cross/Blue Shield and 10 years with Cigna Healthcare . Seeking money and marketing advice, Simpson went to the U.S. Small Business Administration (SBA) office in Atlanta and was connected to SCORE (Service Corps of Retired Executives) counselor Jeff Mesquita . “When you position your company you have to think outside of the box in terms of what makes you different from the competition,” says Mesquita. “Adrienne described that what she does is move seniors from A to Z, so, when they arrive to their new home it is like walking into a hotel room.” The only thing her clients have to bring is the clothes on their back (and maybe their pet under their arm). That’s when Mesquita suggested the business name change to Smooth Mooove Senior Relocation Services. That same night, Simpson went to a networking event. When people asked ‘what do you do?’ and her response was ‘I have a senior relocation service.’ Right away people said ‘Oh, you move seniors.” The business took off from there. Read more . 6. Seek advise from friends, mentors … or anyone, really. A mentor can be a boon to an entrepreneur in a broad range of scenarios, whether he or she provides pointers on business strategy, helps you bolster your networking efforts, or act as confidantes when your work-life balance gets out of whack. But the first thing you need to know when seeking out a mentor is what you’re looking for from the arrangement. What can your mentor do for you? Determining what type of resource you need is a crucial first step in the mentor hunt. Lois Zachary, the president of Leadership Development Services, a Phoenix, Arizona -based business coaching firm, and author of The Mentee’s Guide: Making Mentoring Work for You, recommends starting with a list. You may want someone who’s a good listener, someone well connected, someone with expertise in, say, marketing, someone accessible. Ideally you could find a mentor with all of these qualities, but the reality is you may have to make some compromises. After you enumerate the qualities you’re looking for in a mentor, divide that list into wants and needs. Who’s best as a mentor? Look within your family, friends, business community, academic community, and even at your competitors – well, not your direct competition, but you get the idea. Read more . 7. Pick a name. Naming your business can be a stressful process. You want to choose a name that will last and, if possible, will embody both your values and your company’s distinguishing characteristics. But screening long lists of names with a focus group composed of friends and family can return mixed results. Alternatively, a naming firm will ask questions to learn more about your culture and what’s unique about you – things you’ll want to communicate to consumers. One thing that Phillip Davis , the founder of Tungsten Branding, a Brevard, North Carolina -based naming firm, asks entrepreneurs is “do you want to fit in or stand out?” It seems straightforward. Who wouldn’t want to stand out? But Davis explains that some businesses are so concerned about gaining credibility in their field, often those in financial services or consulting, that they will sacrifice an edgy or attention-getting name. “However, in the majority of cases, clients want to stand out and that’s a better approach when looking at your long-term goals. Even the companies that say ‘I just want to get my foot in the door’ will usually begin wishing that they stood out more once they pass that first hurdle.” Read more . 8. Get a grasp on marketing strategies. You don’t need to be a marketing whiz, but if you’re trying to build an idea from the ground-up, you’ll likely need to build an accompanying marketing strategy from the ground up. In doing so, you need to be clear on who your customers are, because you don’t have any time to waste on marketing to those who aren’t. “That’s really the biggest challenge, determining who exactly your customers are,” Lonier says. “Many times [business owners] think they understand who they are, but you need to be willing to interview and test potential customers, particularly in the early days of a company, in order to be able to build those relationships.” One way to make marketing easier is through joint-venture marketing, Tabaka says. When she owned a coffeehouse in Naperville , Illinois, she realized that her company and a major drugstore in the same shopping center could work together and support each other’s marketing goals. Another important and relatively easy way to get your name out into the market is building your web presence through social media like Twitter and Facebook . Be sure you familiarize yourself with and utilize Search Engine Optimization (SEO) to make it easier for people to find your website. Read more . 9. Do a little test-run. “The best way to test your idea is if you’re employed full-time and can sell your product or service in the marketplace on weekends,” says Sapp. If the business is already your day job, then you have to move quickly to test, verify, and tweak your model,” he adds. Try surveys, polls, and focus groups to gain insight into attitudes about your business idea. Solicit feedback on the cheap by using online survey tools available through such services as Zoomerang.com , Surveymonkey.com , and Constantcontact.com . The goal is to get to know your customers intimately. What turns them on? What causes them to tune out? Are they impulse buyers or do they like to deliberate over their buying decisions? There are a lot of products that people like but don’t buy, says Sapp. The price might not be right, for example. “Use social media to hone in on certain groups that can become your focus group,” says Susan Friedmann , a nichepreneur coach , in Lake Placid , New York and author of Riches in Niches: How to Make it Big in a Small Market . “Check out chat rooms, communities on social networks like Ning or Facebook , industry groups within LinkedIn ,” she says. “What are people discussing? Letters to the editor or articles in trade publications are resources for finding out about challenges in that particular industry. What are people writing about? What do people want to know about?” Knowing the answers to these types of questions may help you refine your idea. Read more . 10. Start searching for future talent. This might sound premature, but don’t forget that your business is supposed to grow someday. Keep your eyes peeled all the time for people who might fit into your organization – even if you can’t afford to pay them yet. No matter how small the internet has made the world, experts still recommend in-person networking as the No. 1 way to recruit talent. “I’ve done a lot of placing people into positions, and I have never used a job board as a way to do that,” says Rich Sloan , co-founder of StartupNation. ‘Personal [interaction] is so much more powerful and important to me.” So, if you meet someone interesting or knowledgable at a networking event, or even if you get particularly impressive service somewhere, be it a museum gift shop or helpline, ask that person a bit about themselves, what kind of business they see themselves in in five years – and the best people around will stick in your mind for when you need them. Read more . Business – Small business – Google – Entrepreneur – Venture capital Continue reading →

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How to Find Willing Investors

Posted on September 11, 2011 by

Most entrepreneurs who dream big simply don’t have access to the kind of money it takes to realize their aspirations. Enter the professional investor community. But, in order to get investors to open up their checkbooks, you’ll need to convince them that your idea is worthy and also be willing to subject yourself to increased scrutiny and give up a percentage of your company. That’s why it’s a good idea to first ask yourself whether you really need a professional investor at all, says David Henkel-Wallace, a serial entrepreneur who has raised $60 million from VCs. “If you’re starting a web software or mobile software company, you might be able to bootstrap it, which has the advantage that you get to keep all the money you earn,” says Henkel-Wallace. “You could also look into borrowing from friends and family – or even take out a second mortgage – for the same reason.” Dig Deeper: How to Pitch Your Business to Family and Friends Understand What Investors Want If you decide your business can only get to the next level with the aid of a professional investor, then you need to figure out what a potential backer looks for in a budding company, says Martin Babinec, who raised six rounds of funding through the business process outsourcing firm he founded, TriNet, which now boasts annual revenues in excess of $200 million. For one, he says, many entrepreneurs mistakenly think talking to investors involves loans or debt. “It should be clear that when you talk to an equity investor, you’re trading shares of your company that an investor can later sell,” he says. To that end, you need to show how your company is on a path to a “liquidity event,” industry parlance for an IPO or acquisition where the investors get a return on their money. Since not every company will actually go down such a path, “many investors use a portfolio approach, where they hope to spread their risk among several bets,” says Babinec, who now heads up Upstate Venture Connect, an organization that connects emerging technology companies in upstate New York with investors. “An investor may, for example, invest in ten companies, knowing that more than half of those companies will fail to capitalize on their potential. But, if just two of those bets pay off, and pay off big, then everyone comes out ahead.” Babinec says an investor will evaluate a company’s potential along four key criteria: 1. Does the company’s product or service address a large and growing market need? 2. Can the company scale quickly enough to take advantage of that market opportunity? 3. Does the company have a defensible competitive advantage? 4. Can the management team execute on the potential outlined in the first three criteria? In other words, the risk of investing in your company must be offset by the potential reward that can be delivered when your company experiences a liquidity event. “If you want a lot of capital, you’ll need to demonstrate that your company has rocket-ship growth potential,” says Babinec. Dig Deeper: 9 Ways to Make Your Business More Attractive to Investors Look for the Best Fit and Make Connections If your company passes those four tests, your next assignment is to prune down the list of investors who might be interested in your company. To do so, you’ll need to understand that the private company equity markets have become very fragmented, says Healy Jones, a former venture capitalist who now heads up marketing at OfficeDrop, a start-up that offers digital document scanning and filing and raised venture capital late last year. “There used to be just venture capitalists, now there are angels, super angels, micro-VCs, VC, and growth investors,” he says. “As an entrepreneur looking for capital you need to know where on the spectrum of investors your business falls – and target the right potential investors.” VCs, for instance, typically look to invest $3 million to $5 million. Angel investors, on the other hand, may invest just a few thousand dollars. Private equity groups may have tens of millions to invest. So how do you know what the right fit for your business is? Start by networking and building relationships even before you set out to acquire funding as a way to both determine who investors in your area might be as well as to develop connections to them. “VCs highly prefer introductions to new ideas from people they trust as opposed to receiving cold calls from companies looking for money,” says Jones. “The best introductions come from successful entrepreneurs, especially ones that have worked with the VC before.” Your networking should include professionals working for companies similar to yours, says Marc Wright, a serial entrepreneur, VC investor, founder of an incubator and an advisor to early-stage companies. “Look for news in your industry about investments and acquisitions involving companies in the spaces closest to yours,” says Wright. “The goal should be to target investors and even large companies who look for opportunities in your space.” Another suggestion from Babinec of UVC is that you can research who originally backed the public companies in your space. “This is a multiple step process that works you back to the investors who have made money in the space,” he says. This is essential because investors like to invest in areas where they have developed expertise, says Eric Lefkofsky, the co-founder of Groupon who, in addition to founding two companies that went public, has now started a venture fund of his own called Lightbank. “We only look to invest in early-stage tech companies,” says Lefkofsky. “If you had the best idea for a new restaurant, I’m the wrong guy to approach about it. We focus only on the things we know.” Investors, especially in early-stage ventures, also tend to place their bets close to home, according to Don Rainey, a general partner in Grotech Ventures, a VC firm in Washington, D.C. “Being closer geographically is better, but it also differs on where you are,” says Rainey. “In Silicon Valley, you might need to be 15 miles from your investor. In Dallas, it might be 300 miles.” And don’t be bashful about using social media tools to boost your networking efforts, says Wright, who is the CEO of Martinez & Wright, a business media and market data company in Laguna Beach, Calif. “I frequently use news sources and LinkedIn to find people who are connected to an investor target and then tap them for feedback and input on the business and ask what they think investors or buyers might like and dislike,” he says. “If the chemistry is right I’ll ask them for an intro. And if it’s really good, I’ll mention the possibility of a formal role as an advisor.” Dig Deeper: An Insider’s Guide to Venture Capital Financing Share Your Vision Once you’ve finally made some connections to investors who likely understand the kind of company you’re trying to build, you then need to whittle it down to those who share your vision of what’s possible. “As an entrepreneur, you need to find investors that buy into the assumptions you have made about the future,” Rainey of Grotech Ventures says. If you don’t share the same common view of what’s possible, an investor won’t invest with you.” Resources The Internet contains many websites dedicated to helping entrepreneurs navigate the investment community. Here are a few of our favorites: Startable : A blog penned by Jones of OfficeDrop which focuses on the early stage VC and angel environment and the Internet start-up market. Venture Hacks : A good source for fund-raising advice that also includes a list of active angel investors. StartupCFO : A source of advice from a veteran CFO. VC Ready Law : A blog with good resources for entrepreneurs looking to raise capital. Angel Capital Association : A great resource for understanding what an angel investor looks for as well as for finding angels near you. The following blogs written by investors also provide worthwhile information to capital seekers: Fred Wilson : A well-known NYC-based VC. Brad Feld : A good source on angel investing, venture capital and term sheets. Mark Suster : A VC and former start-up CEO, offers advice on raising capital and pitching VCs. Venture capital – Business – Angel investor – Entrepreneur – Investment Continue reading →

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Is "Don’t Be Evil" Over?

Posted on September 2, 2011 by

Each day, Inc.’s reporters scour the Web for the most important and interesting news to entrepreneurs. Here’s what we found today: Google founders fret over privacy . Is “Don’t Be Evil” falling by the wayside? The Wall Street Journal uncovers an internal memo from 2008 that suggests “soul-searching” at Google, as founders Larry Page and Sergey Brin resisted efforts by other executives to be more aggressive about using information about customer behavior. Among the ideas suggested in the memo: Using more data from Gmail accounts, creating an exchange for the buying and selling of data, and letting people pay to opt out of advertisements. The Journal says that Google fell behind competitors, who have aggressively exploited private data, but that the company is now trying to catch up. “[F]or years it resisted using any method to track people online without their knowledge at the fierce insistence of Sergey Brin and [Larry] Page,” the Journal writes. “But the two men have gradually decided they can begin exploiting the data their company controls, without exploiting consumers.” The bad boss backlash. If you ever needed a reason not to flirt with your assistant, this would be it. Meet Jenny . She just quit her job in a series of dry erase board messages, which she then photographed and sent around to her entire office, about 20 employees total. Oh and they made it onto the Internet, of course. In addition to telling her boss, that “being your assistant’s been a special hell,” Jenny also calls attention to his bad breath, says she heard him call her a “hot piece of ass” over the phone and exposes the number of hours a week he spends playing FarmVille (19.7, if you’re wondering). Jenny doesn’t have a job lined up yet, but, she writes, “Something tells me I’ll be just fine.” And to think: this is only the second most dramatic resignation of the week. Are salespeople overpaid? That’s the question Jay Goltz ponders in a New York Times’s blog post. He tells a story of a boss (and his wife) touring his top salesperson’s lavish new home, which was nicer, his wife noted, than the boss’s own. Bitterness, and harsh words, ensued. But Goltz says that if a solid commission structure is in place for a sales team, it can work, even when the numbers soar. The moral of the story? When your salespeople make money, you make money. “The fact is, though, that great salespeople are not easy to find, and they deserve to be paid more money than sometimes seems reasonable. They earn that money.” The anti-Facebook. Christopher Poole thinks 4chan, the site he created at age 15, is it. The two sites make for an interesting study in contrasts. 4chan, the sprawling online message-board community, is largely anonymous, highly amorphous, and usually disorganized. But with more than 1 million posts per day, and 730 million page views a month (that’s similar what the New York Times attracts), the 4chan community proves that undirected self-organization works, the Washington Post reports . Users of the site have successfully pranked large organizations like Google and the Church of Scientology . Poole, now 22, recently raised $625,000 in funding from the likes of Netscape founder Marc Andreessen and former AOL executive Kenneth Lerer, to create a new online community. Steve Nash, point guard and…venture capitalist? Two years ago, Steve Nash, the two-time MVP point guard, took an unpaid internship at the ad agency Deutsch. Now, Nash is co-founding a venture capital firm with Mike Duda, one of the partners at the agency (via GigaOM ). Nash hopes to raise a $20 million fund that will invest in “e-commerce, sports, durables and performance categories” with a focus on early stage companies. If you’re thinking of pitching Nash or another VC, you should check out the advice of an entrepreneur who went over to venture capital . How not to handle a product recall. In the 1980s, Johnson & Johnson was faced with a crisis. Seven people died from Tylenol capsules that were laced with cyanide. But the company’s swift response to the recall allowed Tylenol to regain more than 80 percent of its previous market share within just a year. The most recent Tylenol recall is quite a different story, the Chicago Tribune reports. As one expert sums it up, “This has been a much slower response. There’s been a lack of commitment, transparency or empathy, and who owns this crisis isn’t completely clear.” Major retailers are capitalizing on the recall by promoting their store brand drugs as safe alternatives. For tips on how to handle a product recall the right way, check out our guide . Who’s getting VC money these days? CB Insights has just published the second part of its study on the demographics of the entrepreneurs who received venture capital funding in the first half of this year. The first part (via Huffington Post ) looked at race, age, and experience. The new study finds that 87 percent of founders are white, but that Asian founding teams tend to raise the largest rounds. And, in case you needed further proof of gender imbalance in Silicon Valley, 92 percent of VC-backed founders are men. 5 emerging Web design trends. Mashable lists some tricks to help you convert browsers into buyers. The post suggests paying for unique, custom photography rather than relying on stock images, getting creative with bold typography, and incorporating some sort of call to action. If you’re hungry for more advice on putting together a stellar website, Inc. has more tips from the pros . More from Inc. Magazine: Get this delivered to your inbox. Follow us on Twitter. Follow us on Tumblr. Like us on Facebook. Google – Facebook – Venture capital – Netscape – Larry Page Continue reading →

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How To Refine Your Business Idea

Posted on August 21, 2011 by admin

You know you have a brilliant idea for a business and you are convinced people will buy your product or service. Well, guess what. Even a good business idea might not be financially viable. It’s all a matter of putting aside your ego and being willing to create a business that will not only survive, but thrive. If you have an idea for a new product or service, you can’t be afraid to rethink it and refine it, says Jim R. Sapp, national business consultant and author of Starting Your First Business . The more you set out to do before the launch, the less you’ll have to do afterwards, adds Sapp. Also, the less costly it will be trying to fix things. Adrienne Simpson initially intended to run a traditional moving company out of her home in October 2002. The idea came to her after relocating her mother from Georgia to Michigan. “I thought I’d put everything in a box, put it on a truck and send her on her way. Oh, no! Mom started walking me through her home, pointing at things saying, ‘I’ll take that, let’s sell that, and I want to give that away,’” she recalls. Simpson’s first business plan (she’s done five revisions in nine years) described the company as a packing service. But she soon realized that when the elderly move they often relocate to a smaller home, an apartment in a retirement community or an assisted living facility. “The process involves many steps and is very fragmented,” explains the certified trucker who can handle 18-wheelers. By the second year of operation, Simpson shifted gears to make her Stone Mountain, Georgia-based company, Smooth Mooove, specialize in transporting seniors—and their beloved pets—and providing such value-add services as packaging, house cleaning, room reassembly, antique appraisals, estate sales, and charity donations. Her crew does everything: put clothes in the closets, hang drapes, make the bed, fill the refrigerator. But even still business was stalling. “I knew how to run an existing company, but I didn’t know how to run a start-up,” says Simpson, who worked 20 years for Blue Cross/Blue Shield and 10 years with Cigna Healthcare. Seeking money and marketing advice, Simpson went to the U.S. Small Business Administration (SBA) office in Atlanta and was connected to SCORE (Service Corps of Retired Executives) counselor Jeff Mesquita. “When you position your company you have to think outside of the box in terms of what makes you different from the competition,” says Mesquita. “Adrienne described that what she does is move seniors from A to Z, so, when they arrive to their new home it is like walking into a hotel room.” The only thing her clients have to bring is the clothes on their back (and maybe their pet under their arm). That’s when Mesquita suggested the business name change to Smooth Mooove Senior Relocation Services. That same night, Simpson went to a networking event. When people asked ‘what do you do?’ and her response was ‘I have a senior relocation service.’ Right away people said ‘Oh, you move seniors.” The business took off from there. It goes without saying that it takes more than having the right business name to run a profitable business. So, how do you guarantee your product or service is a money-maker. Here are five ingredients to help you create a recipe for success. How To Refine Your Business Idea: Test Your Idea “The best way to test your idea is if you’re employed full-time and can sell your product or service in the marketplace on weekends,” says Sapp. If the business is already your day job, then you have to move quickly to test, verify, and tweak your model,” he adds. Try surveys, polls, and focus groups to gain insight into attitudes about your business idea. Solicit feedback on the cheap by using online survey tools available through such services as Zommerang.com , Surveymonkey.com , and Constantcontact.com . The goal is to get to know your customers intimately. What turns them on? What causes them to tune out? Are they impulse buyers or do they like to deliberate over their buying decisions? There are a lot of products that people like but don’t buy, says Sapp. The price might not be right, for example. Simpson charges $3,000 to move a two-bedroom apartment in Atlanta. That might seem pricey for someone on a fixed-income. Although seniors are Smooth Mooove’s end-users, direct clients are their Baby Boomer children. “Use social media to hone in on certain groups that can become your focus group,” says Susan Friedmann, a nichepreneur coach , in Lake Placid, New York and author of Riches in Niches: How to Make it Big in a Small Market . “Check out chat rooms, communities on social networks like Ning or Facebook, industry groups within LinkedIn,” she says. “What are people discussing? Letters to the editor or articles in trade publications are resources for finding out about challenges in that particular industry. What are people writing about? What do people want to know about?” Knowing the answers to these types of questions may help you refine your idea. Dig Deeper: How to Use Online Tools for Customer Surveys How To Refine Your Business Idea: Size Up the Competition Study your competition by visiting stores or locations where their products are offered. “Analyze the site, customers, traffic patterns, hours of operation, prices, quality of goods and services,” suggests Sapp. What if you want to open a new restaurant? For starters, create a list of restaurants in the area. Look at the menus, pricing, and additional features (e.g., valet parking or late night bar). Then check out the diners those restaurants appeal to. Are they young college students, neighbourhood employees, or families? Become a customer of the competition. Go into stealth mode by visiting their website and putting yourself on their e-mail list. Talk to their customers to ask them what they like or don’t like about your competitor’s product or service. Also, review their company literature and marketing materials, says Mosquita. Read articles written on them. Your aim is to understand what your competition is doing so you can do it better. Maybe their service is poor. Maybe their product has some flaws. Find your selling point. “You want to unearth the opportunities in the market, a niche that is not being served at all or not being served adequately,” says Friedmann. Simpson’s strategic trade mark is that her competitors move things but her company moves people. Smooth Mooove has a staff of 15, three trucks and a luxury passenger van, moving anywhere from 30 to 50 clients a month. The business, which had gross revenues were just under $500,000 in 2009, covers Alabama, Arkansas, the Carolinas, Florida, Georgia, Kentucky, Louisiana, Mississippi, Tennessee, and Virginia. Moreover, Simpson has received 1,500 inquiries from around the world about franchising her business idea. Dig Deeper: How to Keep Tabs on the Competition How To Refine Your Business Idea: Convene With Your Suppliers This includes manufacturers, wholesalers and retailers. “Talk to vendors who service your customers. They may be willing to share market research they have done on your industry,” says Sapp. Talking to suppliers can tell you a great deal about how your industry works, which product lines are selling off the shelves, and why some companies are more successful at marketing their products than others. Attend trade shows, conventions, and local business association meetings—anywhere people in your industry gather. “The most important aspects of what is going on in any particular industry is going to be found at a trade show,” says Friedmann. “It can be through the educational sessions or from the exhibiting vendors, which will give you good sense of what’s hot and what’s not.” Dig Deeper: How to Boost Traffic at Your Trade Show Booth How To Refine Your Business Idea: Do the Math Don’t overestimate your sales and under estimate your costs, says Mosquita. Research what your optimal sales should be. “Talk to other business owners and leaders in your industry, join a trade association, do whatever it takes to get an accurate estimate of your revenues that first year in business,” suggests Mosquita. Suppliers also may be able to tell you what price potential customers would be willing to pay for the products or services you want to sell. To test how your business idea will fare, you should prepare a “break-even analysis.” This is where you project income and expenses for a year to determine whether your business will make enough sales revenue to pay for its expenses. Dig Deeper: Business Forecasting in a Crazy, Mixed-up World How To Refine Your Business Idea: Talk to the Pros Seek out counselors and talk to industry veterans. Simpson went to SCORE, the SBA and the Women’s Economic Development Agency. She also joined the National Association of Senior Move Managers. The Internet, your local library, the U.S. Census Bureau, business schools, industry associations, can be invaluable sources of information and contacts. For instance, you might approach business schools in your area to see if one of their marketing classes will take on your business as a test project. You could potentially get some valuable market research results at no cost. Dig Deeper: How to Find a Business Mentor Business – Facebook – Social network – Small business – LinkedIn Continue reading →

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New Zealand Business Angels Debut Web Technology To Fund Startups

Posted on August 21, 2011 by

/New York, Auckland/ Angel Association New Zealand AANZ , the national association of New Zealand business angel investment groups and early stage funds, is moving startup financing onto the Internet. AANZ announced a partnership today with international financial technology provider Angelsoft … Continue reading →

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Yelp Co-founder Ducks Out

Posted on August 16, 2011 by Lauren Folino

Yelp co-founder leaving company. A little less than six years after launching review site Yelp with his former PayPal co-worker Jeremy Stoppelman, CTO Russel Simmons is leaving Yelp , TechCrunch is reporting. “Simmons will be transitioning to an advisor role and take some time off to travel,” Robin Wauters writes. It’s already been a tumultuous year for Yelp, which walked away from a huge takeover deal with Google and later became the target of class-action lawsuit . While the site has reached 31 million monthly unique visitors, there’s still a love-hate relationship between small businesses and Yelp , as we told reported in our February cover story. R.I.P. to the king of the breakfast sausage. A fond farewell this morning goes out to country singer, TV host, and sausage entrepreneur, Jimmy Dean , who died yesterday at the age of 81. An earlier generation may remember Dean best for his 1961 Grammy-winning song “Big Bad John,” but of late he was more acclaimed for his Jimmy Dean brand of breakfast sausages. Born in 1928 and raised in poverty in Plainview, Texas, Dean dropped out of high school in ninth grade before eventually getting into the entertainment business. As the Washington Post reports, Dean got into the sausage business in the late 1960s, using the experience he gained from butchering hogs while growing up. The Jimmy Dean Meat Co. was profitable after six months and was ultimately sold to Sara Lee in 1984. In addition to being remembered as a popular entertainer and successful businessman, Dean’s legacy unfortunately also includes the notoriously stomach-turning creation, blueberry pancake and sausage on a stick . Has the recession actually been good for entrepreneurship? The New York Times ran a piece a couple of weeks ago arguing that “last year was a fabulous one for entrepreneurs,” but Small Business Trends has a different take on the numbers. The Kauffman index, which the Times quotes in the piece, reported a 13.3 percent increase in the number of people who became self-employed from 2007 to 2009, but the post at Small Biz Trends points out that the BLS shows a 5.9 percent drop for the same period. Still, “what’s not measured by either source is the number of people who quit self-employment in a particular month,” the post’s author writes. He points to additional statistics that indicate the self-employment failure rate has become “so large that the number of people working for themselves has dropped, despite a sizeable increase in the number of people becoming self-employed.” I can has Internet empire? The New York Times gets inside the mind of Ben Huh , the man behind quirky blogs like Fail Blog . According to the story, Huh stumbled upon I Can Has Cheezburger, a website full of kitty photos and misspelled captions just three years ago. He posted a link of it to his own blog, which quickly broke down due to the influx of Web traffic. He bought the site with investments and $10,000 of his own savings, and tells the Times that the business, which has grown to include 53 sites, has been profitable since the get go, with most of the money coming from advertising, licensing and merchandise sales. According to Kiki Kane, who works on site development, the Cheezburger Network has grown because of the staff’s commitment to keeping their fingers on the pulse of Internet trends. “We’re constantly monitoring the Web for new memes,” she told the Times. “Those bits of cultural shorthand, inside jokes that you get right away just by seeing a visual image.” How Diapers.com became a $180 million phenomenon . Robots! That’s according to Singularity Hub, which says that the Inc. 500 company was able to quickly fill lots of orders by using robots made by Kiva Systems . We’re not sure if we believe that’s the only reason; fans of the Singularity love robots, after all, but we do think that Kiva’s robots, which allow warehouse workers to stay in one place as the orders come to them, are really darn cool . As the blog says, they are “a great example of how man and machine working together can maximize the efficiency of each.” The company behind Diapers.com, Quidsi, is set to launch a new store, Soap.com, which will try to break into the drugstore business. With the help of robots, naturally. How do you know if your idea will work? Short answer: do your homework and ask for feedback. When Saverio Mancina thought he might be laid off from his job of five years, he started e-mailing more than two dozen executives to find out whether their companies would hire him for projects if he launched his own PR firm. After that, Mancina used LinkedIn to query industry insiders on his business model. When he got the pink slip, he felt confident starting his own company, which now has 10 steady clients. It might be tempting to jump in and hope for the best, but the the Wall Street Journal recommends doing your research first. Solicit feedback from potential buyers to see if they’d be interest in your product and what they’d consider paying for it. For putting together affordable online surveys, try SurveyMonkey or Zoomerang . Seven ways to generate buzz. Small businesses need to get more creative than big corporations when it comes to marketing themselves because they don’t have the seven-figure budgets to blow on pricey ad campaigns. However, SMBs do have the advantage of being able to give their marketing outreach a more personal touch. WebWorkerDaily has seven ideas for entrepreneurs to generate buzz for their small businesses . Some, such as conducting an interview series on your podcast or blog, seem solid, but others, such as organizing a “one-day book club,” might just not be for everyone. In business, how do you measure “inventiveness?” The Daily Beast says that’s simple: just tally how many patents a given company has. To compile a list of the 50 Most Inventive Companies , the site added a twist. It took the number of approved U.S. patents in the past five years and divided it by number of employees, to “measure which companies are inventive in their DNA, versus their bulk size.” Which companies fared best ? Within the top 10, most companies make semiconductors or cellular technology. At #3 is Altera, a semiconductor maker that’s filed 1,064 patents over the past five years. Ranking second is another semiconductor industry player, LSA Corporations, which was lauded in 2006 for improving digital video encoding and decoding for Blu-ray and high-def DVD players. No. 1? that’s InterDigital Communications, a comparatively smaller company that’s been a player in evolving cellphone technology since the 1960s. More from Inc. Magazine: Get this delivered to your inbox. Or get it on the Kindle. Follow us on Twitter or Tumblr . Friend us on Facebook. Apply now for the 2010 Inc. 500|5000 . Business – New York Times – Yelp – Jeremy Stoppelman – Small business Continue reading →

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Connecting Your E-mail and Social Marketing

Posted on August 2, 2011 by admin

Your business has accumulated an e-mail list, but you have no idea how to connect those e-mail subscribers to your Facebook page, your Twitter followers and other social networks. You’re looking for a relationship with those customers, maybe something more than responses to your marketing e-mails. Enter Flowtown.com . Co-Founder Ethan Bloch started his first business at 13, using IRC (Internet Relay Chat – the grandfather of Twitter and Instant Messaging) to directly market the products from his electronics ecommerce site. Ethan offered Playstation and Dreamcast accessories during the summer of 1999, and was successful competing on price for 6 months. Then suddenly, he lost all his customers because someone had created a similar website with better prices. Bloch learned at that moment about the value of creating customer relationships. Fast-forward 10 years, and Bloch, formerly the host of the Internet video show WSYK (What Should You Know) and his cofounder Dan Martel, a Canadian long-time entrepreneur, launched the company. Flowtown is simple tool that allows you to run a list of e-mails and obtain the connected accounts on Facebook , Twitter , StumbleUpon , LinkedIn and more than 40 other networks. You can then communicate with the people from your list on those networks as well. Additionally, you can learn your list’s demographics, geographic characteristics, and the subscribers’ influence ranking. “We reached out to these influencers directly via Facebook,” said Meaghan Edelstein, Social Media Director of Smashyn.com . “We said ‘We see you’re a customer who has purchased before and we’d love to hear what you think, and we’d encourage you to like and link to our customer’s page on your own page.’ Everyone that we reached out to did this – quickly.” Another feature Flowtown enables is parsing your incoming e-mail subscribers, to see if they meet certain criteria, and flagging them. (Flowtown can be integrated with e-mail services iContact , MailChimp and Campaign Monitor as well as form creator Wufoo .). So if a person with a million Twitter followers joins your list, you will find out about it when it happens. “We push these demographic stories into these mail tools – so they can help you create segmented lists based on gender, age, location and social network.” How would you start such a communication without making your customers feel like you were spamming them on Social Networks? Edelstein told me that her firm used Flowtown for their client Natural Skin Shop . “With our first outreach, the client increased the “Likes” on their Facebook Page by over 50%. Further, we sent out a campaign to all the customers who were on Facebook asking them to post on the Fan Page wall why they love Natural Skin Shop. In less than 24 hours around 200 posts from customers showed up on the wall. Twitter followers increased as well but not by as much. However, the number of people who purchase products from natural Skin Shop via Twitter has increased significantly.” What kind of return on investment did they achieve? Flowtown can cost a few dollars a month plus about 4.5 cents to import each user. Bloch says “If you can get one influential person to blog about you, it should generate more marketing attention than the $450 you would spend on Flowtown for importing 10,000 users.” Bloch emphasizes that “Connecting with customers on Social Networks shouldn’t replace your e-mail marketing efforts – rather it should compliment them. If you’re a bakery in the MidWest, you might send e-mail news once a month. What Flowtown will do is help you understand what you should be saying, and to whom, since now you know a lot more about your subscribers.” Additionally, if you analyze your list and see you have a lot of Facebook users but few are on Twitter, you know where to concentrate your social outreach efforts. The way small businesses connect to customers is changing, and Flowtown seems like a useful tool in a marketer’s up-to-date arsenal. What are you using to find and connect with customers? Share your tips below. Flowtown – Social network – Facebook – Business – MailChimp Continue reading →

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Taking Your Green Business Idea to the Next Level

Posted on July 12, 2011 by

Starting a green business isn’t easy, but these days even the most established companies are trying to find ways to go green. The market is open to entrepreneurs with big ideas. When it comes to green business, no one has … Continue reading →

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Inc. 5000 Update: Auction Systems Auctioneers & Appraisers

Posted on July 5, 2011 by

Auctioneering, not prostitution, is the oldest profession known to man. Deborah Weidenhamer seemed destined for a career in finance until a chance conversation led her to become an auctioneer. Sixteen years later, Weidenhamer’s business, Auction Systems Auctioneers & Appraisers, is thriving, with revenue of $93.3 million—and the No. 1,532 spot on the 2010 Inc. 5000, the company’s seventh appearance on the list. I was on a flight to Phoenix, and I started talking to the gentleman next to me, who happened to be an auctioneer. I learned that auctions are a huge industry—$270 billion in 2010—dominated by a few family-run firms. I was mesmerized. The first thing I did was to sign up for auction school, where I learned how to chant and talk fast. My husband thought I had lost my mind. He has since gotten over it. We sell for banks, lawyers, courts, government agencies, and individuals. We sell everything from bulldozers from the Department of Transportation to stolen and confiscated goods from law enforcement. We once sold a decree from the Salem witch trials. My firm has a TV show called Auctioneer$, where they film us at work. I think the recent craze of reality shows has made auctions more popular, but what really changed things was the economy. Ordinary folks were looking for the fastest way to sell their stuff. People are also looking to maintain their lifestyle without spending as much. What gives us our competitive advantage is that all of our auctions are simulcast online, which means we have people bidding live and on their computers. Everything is transparent. For more on the Inc. 500|5000, go to www.inc.com/inc5000. Continue reading →

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