We all forget too easily: the best startup funding is sales. Sure, angel investment, friends and family, SBA loans, all of those options are necessary for most startups. But sales is better.
If you can, find the early customers. Give them a deal, make them important, work with them to optimize their needs; but make a sale.
Even if you need to go out and find investment — and I speak now as an actual angel investor — there’s almost nothing as convincing as actual sales. People are spending money. It makes a new business proposal far more credible.
True, not all businesses can do that. But a lot of them can. And, as we write about business plans and seeking investment and all, we forget the real sweet spot: finance growth by making the sales.
I’m not saying this is the only problem. And, by the way, I’m in favor of entrepreneurship education, when it’s done well. I think it helps … but that’s another post.
It’s a simple story. It’s a real problem with business education concerning entrepreneurship in top institutions. It happens way too often. Not that it’s the only problem with entrepreneurship education, but it’s harder to spot.
Take an imaginary person named Leslie who’s interested in entrepreneurship and wants to study it and then teach it, as a career. Here’s what happens. 
First, she enrolls in a good graduate school intending to get a doctorate degree. In business grad schools, the MBAs study for two years to get jobs in business, not to teach business. Yet it takes a doctorate to teach business in a good school, as a career. Yes, there are exceptions to that rule, but Leslie is focused and motivated so she wants the best path to the best career opportunities, which means she needs the PhD degree. That’s a matter of academic records, standardized testing, essays, and recommendations, pretty much the same process people go through to get into college or university.
As she gets used to her studies and the general path to doctorate and teaching career she discovers, within the first year or so, that the academic study of business divides itself into standard groups; marketing, finance, operations, and so on, that don’t really include entrepreneurship (yet). And those functional divisions have generated a small set of academic journals, fewer than the fingers on one hand in most cases, that control her future. And the system of rewards and such within the small world of doctors of business is shockingly (to Leslie) well defined. Here is what she finds out:
- She can’t get the doctorate without a thesis.
- She’s not going to get into the upper echelon she wants for her career unless her thesis is published by one of those academic journals.
- And those journals focus on the standard specialties: marketing, finance, operations, etc. Not entrepreneurship.
Result: if she’s ambitious, Leslie drops the focus on entrepreneurship and moves over to finance or marketing or something else that’s more established within the academic hierarchies. And you, dear reader, can go from there to the other logical conclusions.
Think about the impact on education in entrepreneurship at the big business schools. Maybe it’s a good thing because it means more real-world entrepreneurs teaching, even if they’re normally adjunct instructors instead of professors. And maybe it’s not so good because it relegates entrepreneurship and the study of entrepreneurship to a lower rung on the career ladder. I don’t know.
If you’re out there in academia, reading this, and I’ve got it wrong, please tell me. I’ve had a chance to watch how this works. I haven’t been down this path myself, but I’ve been an adjunct instructor for a few years, teaching one class per year at the University of Oregon.
(photo credit: lynnlin/Shutterstock (modified by me))
I’ve complained before, on this blog, about some common misspellings that get to me like fingernails on a chalkboard.
Yesterday Megan tipped me off to 11 Gorgeously Ironic Misspellings In Protest Signs on 11Points.com, by Sam Greenspan. Misspelling is bad, yes, but it’s got to be worse, or at the very least more ironic, when people butcher the language while complaining about language. The post includes pictures showing the following exact quotes taken from protest signs defending the English language:
- Get a brain, morans
- Respect Are Country, Speak English
- This is America and our only lanaguage is English
You tell me: is that a great argument for basic spelling? It reminds me of Harvard math professor Tom Lehrer’s song Be Prepared, that included the following line:
Be prepared to hold your liquor pretty well
Don’t write naughty words on walls that you can’t spell
Useful sentiment. And, along the same lines, if you’re going to brandish your politics for all to see, in your yard … well, do you think this illustration is purposeful parody?
Finally, back to the xenophobic politics of the English-only crowd, just one last picture:
The photos shown here are just two of the 11 on the original post. Definitely worth a look: 11 Gorgeously Ironic Misspellings In Protest Signs on 11Points.com.
(Photo credit: both of those photos are taken directly from the post on 11Points.com, 11 Gorgeously Ironic Misspellings In Protest Signs)
Ugh, baby boomers, retirement, selling the business … ouch. Strikes me like “lions, tigers, and bears,” in the Wizard of Oz. Scary.
I’m 61. It was my choice to change my job more than two years ago, so that now instead of managing my company with 45 employees I’m writing, speaking, blogging, and teaching. And I thank God that I had that choice. The company’s better off with a new management team, and I’m better off with a new job. But I worry about the rest of us. Retirement scares the hell out of me.
One of my closest friends retired two years ago. Now he’s bored out of his mind, looking for things to do, and not happy about it.
I’ve seen some successful retirements: it seems to work when they jump from one thing to another, something they like, something they’ve always wanted to do. Golf and fishing, or the equivalent, are rarely enough.
One variable that I’m sure matters is liking what you do. As my good friend now retired used to talk about it with relish, just 3-4 years ago, it always sounded great to him, but horrible to me. And, no surprise, he was tired of his work, but had nowhere else obvious to go. I was getting tired of the managing, but I did have somewhere I wanted, badly to go: the writing, speaking, etc. I still love the company I started, just not the day-to-day management of it. I liken my new job here to the concept of a safe harbor. It’s different, it’s easily separable from what I did for years, but it’s still the same company, same industry. And it also keeps me away from meddling with the new management, which (I’m pretty sure) is a relief to them.
Apparently I’m not the only one. I just read Steve King’s Greying of the Workforce post on Small Business Labs. Lots of grey-haired folks are staying on longer. And that’s because they want to, not because they have to.
And then there’s this, which turned up last week in Why Retirement is Bad For You, on Forbes.com
Studies show that men who retired from corporate jobs, donned their gold watches and lazed about at a resort lived measurably shorter lives than those who sought productive work (e.g., volunteering for organizations like SCORE, the Service Corps of Retired Executives). In fact, plenty of retirees who traded productive work for sunshine and early-bird dinners dropped dead surprisingly soon after making the transition.
That seems like a variation on the same theme. Those older people in the work force are probably way better off for it, at least if they figure out how to be in jobs they like. Maybe that’s the best answer to an aging population?
Today’s a good day to post on my angel investment experience, because this afternoon I’ll be speaking to a group on this subject in Corvallis, Oregon. What I want to do is just describe how it went for me, one set of eyes, one viewpoint, without making any generalizations about the rest of the world of angel investing.
Last February I joined Willamette Angel Conference (WAC), an angel investment group in the southern Willamette Valley, including Eugene and Corvallis. Here’s what happened. 
- It started for me with the discovery, in early February, that the buy-in price was $5,000 plus $250 in fees. I always thought of angel investment as a matter of putting $50K or $100K or more into a startup. But I could manage $5K.
- The group entity was an LLC of which every member had shares depending on how many $5K shares he or she signed up for.
- I had to certify that I’m an “accredited” investor. Nobody audited my books or anything, but I did have to sign a paper guaranteeing that I met the Securities and Exchange Commission (SEC) guidelines. Details of that here. The point is that this is a very risky investment, and you have to be able to just plain lose that money.
- I got access to Angelsoft.net for the WAC group. There were 43 potential investments submitted to the group by late March.
- We – about 25 members, each of whom had at least one $5K share in the group — met in the evening every Monday in April. In our first meeting we narrowed the 43 plans to 13 (we had aimed for 15, but there was a natural break at 13). In the next two meetings, we studied the 13 remaining plans. We listened to pitch presentations by the entrepreneurs, and asked questions. We divided into smaller teams to visit their offices, if possible, and talk to them. In the last April meeting, we chose five finalists, and divided into groups, again, to look at them in more detail.
- In a last evening meeting in early May, we shared additional information on the five finalist companies.
- At an all-day event in middle May, we heard presentations again along with an audience of several hundred people, and voted a winner.
- My wife an I now have a small equity share in CenterSpace Software, of Corvallis, the winner we (the investor group) chose.
From my point of view, as someone who’s raised VC money for my own company and been on the board of a company that raised VC money and went public quickly, has taught entrepreneurship and consulted to VCs, and has mentored a lot of startups, and judged business plan competitions, it was an extremely satisfying role reversal to sit on the investor side of the table. I enjoyed the meetings thoroughly. I read the business plans, paid attention to the pitch presentations, asked questions, and enjoyed meeting and working with the other investors. This was all good.
I liked this experience so much that this autumn I agreed to be investor chair for next year’s version.
If this sounds interesting to you, look for local angel investment groups in your area. Ask your Chamber of Commerce. Browse the Web. Go look at Angelsoft.net.
(Photo credits: Willamette Angel Conference)
Do you like my headline here, on this post? Can you write a better one?
Headlines are critical. I’ve noted that, with some frustration (I’m not so good at headlines) on this blog before, here.
Headlines come up today because being in New York last week to judge the Forbes.com business plan contest gave me a chance to visit with my son Paul, who lives in New York, and is CTO of Huffington Post. And he told me what they’re doing on the Huffington Post about headlines.
Why do you care? Maybe because (whether you like its political views or not) in the last 2-3 years Huffington Post has posted huge growth in traffic and advertiser and investor interest and visibility and traffic. So they have to be doing a lot of things right. And, if you’re writing or blogging, you should know about how they do headlines.
It starts with a lot of testing. Paul was quoted in How the Huffington Post uses real-time testing for headlines in Harvard’s Nieman Journalism Lab:
The Huffington Post applies A/B testing to some of its headlines. Readers are randomly shown one of two headlines for the same story. After five minutes, which is enough time for such a high-traffic site, the version with the most clicks becomes the wood that everyone sees.
And then there’s Twitter. As a Twitter user, I enjoyed reading Huffpost crowd sources headlines in Snoo.ws. Here are highlights:
Using the hashtag #headlinehelp, visitors will be able to click on a link to an article and help write an appropriate headline that fits the story. Through social byproduct, the best headline will filter through to editors.
The Huffington Post made its first attempt at using the hashtag late yesterday asking participants to replace the headline, “No, YOU Lie,” regarding a story about Rep. Joe Wilson’s interjectory fireworks during President Obama’s address to a joint session of Congress.
Hashtags are not perfect aggregators by any means, as previous use of them has seen contests hijacked and critical messaging spoiled. With Huffington Post’s reputation, they surely have gained some followers who may wish to use this idea in a negative way for the company.
How cool is that? I’d love to copy that idea. But reality rears up its ugly head: Huffington Post has hundreds of thousands of followers on Twitter; I have barely four thousand. Mine are smarter and better looking, but still …
Or no, perhaps, not so cool? Maybe data-driven headlines are a problem (quoting The Noisy Channel on this subject):
I’m sure this approach must rattle some old-school journalists. And there is a real danger of optimizing for the wrong outcome. For example, including the word “sex” in this message might improve its traffic … but to what end?
OK, good point, but the discovery that there are some words (sex, violence, naked, brutal) which get better results is nothing new. It’s older than I am (I posted about words I won’t put into titles despite the temptation on this blog a couple of years ago). What’s new is the ability to test quickly and bring a crowd into it in a practical way.
It’s not about asking people what’s new, or changing the news content. It’s about headlines. And gaining readers.
by Tim Berry on October 26, 2009
in Weblogs
I’ve been a reader of Paul Kedrosky for several years now, so it was a privilege to listen to his 3.5 reasons for optimism last Friday at the Bend Venture Conference in Bend, Oregon. Paul posts at Infectious Greed and appears often in the media.
I admit its sorely tempting, but, after reflection (and some drafts), I’m not dumb enough to attempt to summarize somebody else’s brilliant 45-minute talk into a post like this. However, I can’t resist sharing at least these three high points and surprises.
1. The uninvention of fire
Consider this an opening salvo, which managed to wake up a sleeping crowd at barely after 8 a.m. on a sunny Friday morning. It worked something like a whack on the side of the head. For me at least. And maybe the coffee helped too.
FIRE = finance + insurance + real estate. For a generation or two now, a high percentage of our smartest people have been going from the high-status educational institutions into those FIRE industries. Now, after the fall, that’s less likely. Or so we hope.
2. Those population statistics
I’d heard somewhere that 40% of the people who ever lived are still walking around, alive today. No, as it turned out, or at least Paul K. seemed convincingly sure of himself as he said it, only 8% of the people who ever lived are alive today.
However, 50% of the lawyers who ever lived are alive today. And 75% of the scientists and engineers are alive today. You decide: good news, bad news, both? Which is which?
3. BioTech as attractive nuisance
Happily, the key visual on this theme is available here on Infectious Greed. It’s a very powerful image, showing that investment in BioTech hasn’t yielded a proportionate amount of new discoveries. I hadn’t heard the term “attractive nuisance” before, but it fit the context pretty well.
1. Clean up the clutter.
