Stress on Entrepreneurs? Try it without money!

The NYT's had an article on entrepreneurs, getting crowd funding and how it puts pressure on the company to deliver product.  As far as I can tell, crowd funding is great, I'm a big fan.  If you are going to make a product, at some point someone is going to get very stressed, at least, I always am.  I guess the spot light of a successful crowd funding effort, must be really bright.  Kind of like winning the lottery?

When I think back at what I was at 22, vs. what I was at 35, just can't imagine taking that multimillion dollar round, then having to play it out on twitter as a young guy.  By the time I was 35, I had seen much worse.

I can imagine prototyping here in Carbondale and trying to raise money by crowd funding very easily.  I'm planning on it.

Of course, your comments are welcome.

RSS Feed is now on.

But, since I lost all my readers since I moved from Carbondale... who cares? :)

I'm back in town, so if you see me around say hi.  I'm finishing my house remodel and generally working on mundane stuff.  I'll be back here soon.

Mark Cuban asks, "What USA Do You Work In?"

Over to Mark.

Could Faculty Entrepreneurs Drive Innovation?

Entrepreneur magazine asks, Could Faculty Entrepreneurs Drive Innovation?

Seems like a reasonable question to ask.  Worth a read if you are in the business of business in Southern Illinois.

Road Kill experiment shows 6% of drivers are Sadistic

Just had to share this.  Don't you wonder what the 6% are like to their kids?

I have run over a squirrel in the last few years, but that is about it.  How about you, run over anything lately? 

In Honor of Stephen Covey

Hopefully, you have read the "7 Habits of Highly Effective People Already."  The author, Stephen Covey died at the age of 79, from injuries received riding his bicycle, yesterday.  Saw this article with a few of his best quotes, worth a look.

Spiked Math Comics

Found in general searching on the internet - Spiked Math.  Here is the link to version below.

 

The WSJ had an article the other day about a company that got $10M (sorry, check July 2 back issue, if you don't subscribe) through KickStarter.com.  Worth a read.  Here is an link my earlier post.

Fixing my Jigsaw, isn't the internet great?

My jigsaw (a Bosch 1587AVS) won't allow me to change blades, bummer.  I could drop it at the repair place, but it is over a hour to drive there and surely over $100 to get it fixed. I was searching the internet and came across a YouTube video that showed how to fix it, and a link to buy the replacement part I'm like to need.  It is less than $20, all in.  I get to fix it myself too, which I like.

Computers and the internet make us all more efficient and wealthier.  Don't know about you, but I think it is so cool.

Cracks in the Chicago School of Economics model?

Once again we revisit the apparently flawed Chicago School of Economics model.  I read a review in the NYT about "The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and Public" by Lynn A. Stout.

I have always believed that a balance between the shareholders, customers and employees was far better then a focus on just one of them.

Isn't it funny how if you have the Protestant Work Ethic (The necessity for hard work as a component of a person's calling and worldly success is a visible sign or result (not a cause) of personal salvation), it all falls into place.  If you don't work hard, nothing else really matters.

9 Beliefs of Remarkably Successful People

This seems to ring true, have a read.

I saw Malcolm Gladwell in the San Francisco airport yesterday.  He didn't make eye contact, and I can't blame him.  I'm posting this link in his honor.

How to get your invention funded?

I don't know if you have seen KickStarter.com yet, but if you can make a prototype, then crowd funding might be the way to go.  In my Southern Illinois business contest days, we had many inventions submitted, but turning a plan into a prototype was beyond the inventor. 

So, build this, to build prototypes?  I think that might work.

Michael Lewis Commencement Speech To Princeton

I don't know if you have read Michael Lewis (Money ball or Liar's Poker), but I like his stuff.  I think I have read all his books, but one.

Should we take away that if you get a chance, eat the second cookie or how lucky we are?

I'm making a list...

Good article about the two lists you should make everyday.  I only make the first, the second is by default.

NYT Article on Vineyard Ownership

The New York Times has an interesting article about rich people owning a vineyard, and the wine business.  Bottom line, it takes 16 to 20 years to make a profit.  That doesn't mean that it doesn't generate jobs in the meantime, so no complaints from me.  Go, winery builders of Southern Illinois, you are doing good.

An Incubator That Might Work in Southern Illinois

I have been trying to figure out business development in Southern Illinois for many years.  I have already written about how I don't think that traditional Venture Capital and/or Angel Investing is going to work.  After all, there is plenty of money, but nothing to invest in.  There is Dunn-Richmond, if you need white collar office or lab space, general start-up or business advice.  My attention has shifted to manufacturing and away from technology.

While reading the current issue of Business Week, I came across their article about TechShop.  Now, that is an idea that might work.  A work space, with all the equipment, training, help and free coffee and popcorn!

Seems worthy of some deep thought.  What do you think, can it work?  Would you start building something, if these kinds of resources were available?

Mike Bost goes off!

This is our guy at the capital?  I'm sure he is right.

Commenting on Carbondale issues

Since I don't live in town right now, I'm not commenting on Carbondale politics much.  I did want to give Joel Fritzler a tip of the hat for his work on the Tourism mess.  It is always brave to turn over that rock and stomp on those roaches.

Good work Joel.

Creating a Stellar Advisory Board

You might have read here before, that we are making the Dunn-Richman employees do too much.  They are great for getting you going, but after that, it is time to build an advisory board.  Have no doubt, you are going to have to pay your advisers in something, most likely stock.  The good news is that if it doesn't work out, you can build in to your agreement, that they can be fired and you can get their stock back.

Hire an advisory board - another good practice for the business owner.

Frictionless Solutions

A really neat idea from a Scientific American article.  The author suggests that people want frictionless solutions.  After all, who wants to sign the credit card receipt at the store? 

Mark Cuban wrote an article about newspapers that owned their customer's credit card numbers a few years ago, that is worth a look too.  I notice that magazine companies have all switch to this model over the last few years.  I buy from Amazon for exactly this reason, and the free shipping.

I guess what I'm saying is that it might be time to make your company easier to do business with.

Drive - a little history lesson

I have listened to Drive, by Daniel Pink, on CD lately.  There are lots of things in the book, that reminded me what I used to believe about work and management.  In "Drive," we are reminded that humans do better when they are properly motivated.  Pink writes that the Industrial Revolution created a management method he calls Motivation 2.0.  Further, he says that great companies need to be run on Motivation 3.0.  I like to think of Motivation 2.0 as management and Motivation 3.0 as leadership.  Once, I built a company, believing in what Pink writes about in Drive.  It was fun to remember that.

A little history about me.  I graduated with a CS degree from SIU and moved to Silicon Valley.  I would have happily stayed in Carbondale, but there were no jobs and I wanted to try the big time.  Often, I think of this, like an actor moving to NYC, but for geeks.  For 10 years, I worked for other people and the management was clueless.  I carefully watched what my managers did and cataloged their mistakes and few successes.  When I started to manage people, I believed in lots of stuff, so much that I would be better off write a book than trying to tell you it all here.  In overview, I believed that everyone should have a career path and the best people should get the best opportunities for new work.  I also believed in telling the truth and pushing the decision making down into the organization as far a possible.  After all, why hire smart people, if you aren't going to let them decide?  That leadership method worked for me.

No matter what you do, when you are managing 100 or more people, you will be consumed by work.  As I was being consumed by work, I was also having to deal with partners, who given the choice, preferred to manage in a strict top down management structure.  AKA, they failed as managers, because they couldn't lead.  You know the types, they are everywhere.  I was burned out on partners for a long time and could afford to fail because of it.  But, everyone in a company should feel like a partner, so it is time for me to take a deep breath and find partners again.  The number one failure of start ups in Carbondale is a lack of partners, board members and advisers.

I tried to start BoundlessGallery.com in Carbondale and failed.  Most of the failure is my fault and I have spent a lot of time thinking about that.  I will not repeat those mistakes again.  From now on, back to open books, shared ownership, or at least profit sharing, leadership, and very little management. 

Motivation 3.0 works.  Don't be fooled by anyone claiming that Motivation 2.0 works as well, it doesn't.  

"Drive" by Pink, it is recommended on book or CD.

The NSA is ignoring the Constitution?

This month's Wired Magazine has an article that might scare a sane person.  Looks like the NSA is recording all internet and phone traffic in the USA.  We know that a warrant-less search is specifically prohibited by the Fourth amendment in the Bill of Rights.  According to the article, there are no checks on the NSA's power to monitor all communications and they are working hard to beat modern encryption.

Keep your eyes open, this isn't good news.

Mushrooms, now that is innovation

Don't know if you caught the article about the little company that is replacing plastic packing materials with mushrooms?  This is the kind of manufacturing that will work in Southern Illinois.  Innovation, matched with available talent is our best bet.

Art - sometimes a new way to look at the world

Wired Magazine online had this cute article about photos of dogs underwater.  This guy is doing nothing special with equipment, just taking shots that are different than everyone else.  He is innovating.  You don't have to reinvent everything, just one small part, to make something new.

Big Surprise - Car Deaths Fall After Cell Phone Ban

Looks like the results are in, car deaths fell 22%, in total, after cell phones were banned while driving, in California.  Now, if we could just break the thumbs of anyone texting while driving, the world would be an even better place.

One interesting difference between using cell phones and drunk driving. is that drunk drivers aren't killing people in the middle of the day.  Your kids are tucked safely in their beds, when most drunks are out killing people.

I like this quote later in the article -

Instead of looking for illegal cellphone use, LaMalfa said police should be on watch for erratic drivers no matter if they are distracted by cellphones, putting on makeup, shaving, or changing compact discs in a stereo system.


Wouldn't it be great if everything that made this much sense was made into law?  Maybe someday Illinois will reduce their car crash fatalities too?  Only took 10 extra years to outlaw cigarets in restaurants, maybe Illinois law makers will beat their record for cell phones and driving?

Could you write Minecraft or Angry Birds in Southern Illinois?

Clearly, it is possible.  You would need a couple of strong developers and a great designer to get things rolling.  Game play design is key in the case of Minecraft and GUI in the case of Angry Birds.   If you want to really do well, that is going to be hard.  I like this article about the Physics of Angry Birds.  These games work well, and the subtle details make them really shine.

There was an interesting article in Business Week about iPhone Apps a while back.  A maker of a shotgun noise app claims to have made $1M in ad sales.  Wow.

Maybe it would be better to work on games, instead of a national website and service company?  Higher margins, some possibility of success?

Anyone ready to jump in the pool and write a game?

What companies might be successful in Carbondale?

I have claimed, there isn't enough talent in Carbondale or in Southern Illinois to run a nationwide software company. So, what can you do and be successful?

iPhone/Android Apps

Computer Apps, without the nationwide aspect.

Kind of late for the passive e-commerce webpage, but maybe.

Liquor - boutique distillery, micro brew beer or wine.

Candy

Cookies

Door knobs

Kitchen knobs

Lamps

Christmas decorations

In general, manufacturing something that has enough value and profit margin to allow it to be sent UPS should work. Notice, none of these things are the standard, Southern Illinois style, cheapest thing in the price category. Higher value items, with less numbers of sales and more profit per item hold more promise.

What kinds of businesses could be successful in Southern Illinois?

The Aniston Axiom

I was reading along through this month's Wired magazine and came across this little story, inside of an article. The article quotes this -

“Let’s say you’re a unionized worker on the line,” Lefsetz says. “You’re working some overtime, you’re making some pay. You have a house, and you have a boat, and you’re sitting there having sexual fantasies about somebody on Friends. You say, ‘If I moved to Hollywood, I could fuck Jennifer Aniston.’ And you truly believe it. To get from there to actually fucking Jennifer Aniston is not impossible, but it’s an unbelievably long journey.”

I have written here about luck vs. skill many times. I can see many kids put their heads down and work really hard master "Mario Racetrack" video game, or the like. I have seen many people work hard enough to master many things, most of them fun and not productive.

Sometimes, I wonder if people understand what a long journey life is and also, what the alternative is to not walking that road? Not going on the journey and aways wondering what they missed. It is easier to move home again, after you tried, then you think. You can even move home twice, if you want to.

I'm about to over reach my boundaries again. Let the journey down one of my long roads begin.

8 Qualities of Remarkable Employees from Inc.

This is worth a read, both from the hiring end or if you just want to be better.

Enjoy.

Due Diligence 101 or Go Learn, Darn it.

I have been approached by several companies looking for investment, over the last couple of months. It is always surprising to me when I realize that the leaders, owners, partners of a company haven't read anything about all those little details that might allow them to succeed. I was browsing the "Small Business" section of the Huffington Post and found this article about investor due diligence. Here is another article from the same page about employee turnover.

After running a Google search for "attracting angel investors." Here are the first two links, 1 and 2. Seems like reasonable ideas to me. If I was trying to get an Angel deal, I would read the first 20 articles and see how they compare.

I spent years reading Business Week, Inc Magazine, Wired, the local paper and everything else I could think of. My standard metric was to spend 1 hour each day studying about business. There were so many times that I dipped into my pool of accumulated knowledge, those long hours of study drove my success. Imagine, reading up on what you don't know, but have to know to succeed? Crazy.

In answer to the little companies looking for my money, you should realize, I'm going to ask all the questions in those due diligence articles, sooner or later. Go read up, what you need to do is in those links. Hopefully, the easy part is spelled out in free text, the hard part is doing it. To everyone else, if you read about your work, you will do better.

Of course, your comments are welcome.

Why Everyone is Starting a Software Company -

and why choosing the right company focus is so hard.

I have written here, that the entrepreneurial talent in Southern Illinois is opting to try their hands at Internet/Software Companies. First, the good news, it is possible to start a software company for cheap. For $25k to $100k, you can have a good run at making a product and launching. When you think about most any other kind of company, it is going to cost a whole lot more to launch.

More good news, because our entrepreneurs are mostly young, college undergrads, they can raise the money to start a company from many places. The traditional statement about funding sources is friends, families and fools. After all $25k, just isn't that much money. You can also depend on volunteer labor, unpaid interns and founding partners to work cheap, instead of that coming up with all of the $25k yourself.

There is a feeling that somehow the startup business is being dominated by the young. A more valid thought is that if enough monkeys type randomly on typewriters... or if enough people start internet companies, surely some small number will succeed. It will be so much easier at 30, assuming they work hard until then, than it is at 22. Historically, the sweet spot for starting a company and being successful is between the ages of 30 and 50 years old. Those are the years where you are energetic enough and experienced enough to solve many of your problems. Hopefully, you have management experience, some money in the banks, polished technical skills. Where there are many examples of people founding companies much younger, they are the exception and not the rule (yes, I know about Microsoft, Facebook and Quatro's).

I respect the desire to start a company and can see why software is so desirable, but let me suggest that there are several problems that are common to Southern Illinois software startups.

First - there is no management team. How can you attract investors or run a company, when you are a one man company? You can't. If you can't find a few friends/fools to start a company with you and you can't manage to keep that core together, how can you possibly manage a company?

Second - there are no management skills. Not only do most of our startups not have any management skills, ideas or experience, they often have never had a job working for anyone. I started launching startups with a complete management philosophy, that I learned through reading, working, managing and watching the startups I worked for fail. I'll write about my management philosophy was at 30 and why I lost it in my last tour through Carbondale soon.

Third - there is a real lack of the talent to do the work. Even if you are a great new college grad, you just aren't a senior engineer. The saddest thing that could happen to anybody is to be as good at 20, as you will be at 30 (or 50). You just can't get there, from here, without walking that road. It shouldn't amaze you that when startup companies talk to me about software, they will almost always change some important strategy. I once was a senior software engineer and might have a few other skills too. You can overcome these problems by knitting together a team with diverse talents, but that implies you have a team.

Fourth - the scope of the project is very large. So large that the company will not have the resources to have a real chance. I'm sorry, your Carbondale based company is not going to get big enough to provide software service solutions to every car dealer in the USA or the like.

Fifth - the business plan makes no sense. I can write a reasonable and fundable business plan in a day. Of course, I would have to invest my heart and soul in that area for months to understand what is possible first. If you can't provide a business plan that explains the vision, the team, the market place, the competition and the money - you are not getting funded. You can start with four pages, it isn't long. The problem is, you have to understand business and your business space, to begin writing and there are very few people who do.

Sixth - the Silicon Valley culture is to have an "Advisory Board." Unpaid, and general stock compensated, to help provide an infrastructure of support to startups. In Southern Illinois, we have inserted the Dunn-Richman incubator folks into those rolls. They are there to help, but that isn't their job.

Seventh - you need to give people stock in your company. It just doesn't work to get people to help you for free. They want to play. There are no high growth companies where the founders have all the stock. Your chances go up, if you buy people's support with stock. Yes, that is employees, advisors, and the pizza delivery person. Everyone wants a small piece.

Finally - the product choice was made too quickly. If someone told you they were starting a company, attacking a space with two venture capital backed companies, each with a multi-year head start, would you invest your life savings? No, me either. What about, if they told you there was a multi-billion dollar market, but if they worked really hard, they could make several million? Nope, not me.

The good news - it is cheap and easy to start a software company. Several people are trying. There is lots of good literature about starting and running companies.

The bad news - it is still very hard and success is difficult to achieve. People don't read the literature. People don't get the right kind of help. People don't share the wealth to bind people to their cause.

More to come.

The hiring funnel - how many do you have to interview?

So, I put up a link to the NYT piece on manufacturing the iPhone in China. Let me expand on how this idea effects business development in Southern Illinois.

At my little company, bSquare Corp of Bellevue, WA (NASDAQ - BSQR), we experienced rapid growth. We were founded in 1994, at the end of that year, we had 3 founders and 2 employees. At the end of 1995, we had 11 total people. At the end of 1996, we had 40. At the end of 1997, we had 160 (or so). When I sold out in 1999/2000, we had about 550 employees. I ran hiring from founding, until into 1998. I put ads in the paper, got faxed resumes, phone screened, and interviewed a whole lot of people.

Here are the stats, as I remember them. In 1997, I phone screened around 1000 people, interviewed 250 in person and hired over 100. Now remember, we are taking about computer people, college educated, and looking to work in a startup (or at least to get a job in the computer industry). I think this was fairly typical, 10 phone screens to 1 hire. Notice, that isn't 10 resumes to 1 hire, I screened over 50% of the resumes too.

If you are starting a company in Southern Illinois, that you intend to make a national brand. Can you do it in software? I would have to say no. Sooner or later, you are going to need a team of programmers. Can you find 100 people, who have resumes worth looking hard at, in order to hire 10? I don't think so.

Let me suggest a different business model, that you build something that will allow you to succeed. For example, iPhone/Android apps for the software focused. You only need 1 or 3 programmers. The complexity is easier, so your need for experienced people is smaller. Once you get rolling, it would be easier to ramp it up.

If you read "The Millionaire Mind/Next Door," they seem to claim there are very few high tech millionaires (on a percentage basis). Financial success can easily come from almost any area. The laser focus of Southern Illinois entrepreneurs on high tech is likely self defeating. Historically, rural areas have been in the high value, specialty manufacturing business. You need a few smart people to develop the company and a lot of motivated people to turn the gears. I suspect, this model is still the right one for Southern Illinois.

In the end, we have yet to see anyone build a team of 10 programmers in Carbondale area. Doesn't mean it can't be done, but if you need to have that many programmers to have a chance, wouldn't you be better off in Silicon Valley?

More about my startup ideas and failings to come.

Of course, your comments are welcome.

Why Apple doesn't make the iPhone in the USA

and what it means to Southern Illinois business.

Here is the article that got me started - TUAW Overview. Here is a link to the NY Times article that had the original research. The summary - "the Times found is both simple and chilling: iPhones aren't made in America because they just can't be. The infrastructure and labor force doesn't exist at the levels necessary to support Apple's operations -- it's not even close."

The big problem I found running BoundlessGallery.com was the lack of trained talent to do the work. After thinking about this for a long time, I have decided that you can't run an IP based, technology company, that requires 50 or 200 software engineers. So, in a small way, we (Southern Illinois) vs. Silicon Valley are/is just like the US vs. China.

We had better do something where you can get enough talent. I'm thinking iPhone apps, small scale factories and the like are the future. I'm liking the sin business more and more.

More about this later, but it is interesting to think about.

Of course, your comments are welcome.

Pols are sh**heads!

Movie actor Daniel Craig recently was quoted as saying, "Pols are sh**heads." What a wonderful summary of politics in the USA. Can you imagine sitting down for lunch with someone, have them look you in the eye and lie to you. Knowing their lying, the politician knowing that you know they are lying or will soon know, but they think that is OK?

As we wander down the road of life, isn't it too short to have people telling us lies?