Came across a great quote from Georges F. Doriot, considered to be of America’s first venture capitalists as founder of American Research and Development Corporation, the first publicly owned VC firm.

“There are two times for a young company to raise money; when there is lots of hope, or lots of results, but never in between.”

Posted by: Colin Mangham

Keeping with the theme from yesterday, you’re likely familiar with the KISS Principle, Keep it Simple and Short (also, Keep it Simple, Stupid). I believe the phrase was originally a prescription for smart product design, but it holds equally true in strategic planning — less can be more, simple can be smart, brevity can be powerful.

Posted by: Colin Mangham

So … yesterday I was just complying with the prescription to write a short letter … albeit totally nudge-nudge-wink-wink as, you may have guessed, I had more to say. (Somebody muzzle this man, yeah-yeah, I know.) Anyway, the pithy gist of Mr. Twain’s quip is that it’s easy to write and write and write (this blog is proof-positive) but to write concisely with real impact takes skill — and, can have great value, as any entrepreneur who’s lost sleep struggling with the proverbial Elevator Pitch can attest.

I mention this because recently someone asked me what part of a business plan for a new venture is the most important. Is it the management team? The pro formas? The intellectual property? The market size? The exit strategy? Use of funds? I planted myself squarely in the middle and professed that the Executive Summary is the curio cabinet, underscoring my holistic view that everything in the entrepreneur’s quiver is critical to success.

Few people will actually read an entire business plan unless they’ve got a real vested interest, or are a prospective investor who’s moved into a diligence phase or at least some mode of serious consideration. Far more likely they’ll read the summary overview and maybe flip through and skim the rest. As they turn the pages they might stop on something here or there, perhaps the bio of a key team member (e.g., CEO, President, Founder, Chairman), or a chart or other schematic that provides a visual overview of a process or critical path important to the success of the new venture. That’s about it.

Now, depending on one’s perspective (i.e., one’s area of expertise), it can fairly easily be argued that the financials are the most important. Meaning, how’s this thing going to actually make money? And if it does, how’s it going to stay afloat and throw off some tasty dividends? Hard to argue with that. Especially if there’s to be an earnest attempt to use the BP to guide the operations of the company moving forward. However, it’s rare that it will be used as much more than a North Star beyond capitalization.

Another thing, have you ever seen a set of pro formas that didn’t work? That didn’t present the company opportunity as being huge, the Next Big Thing? All too often financial projections are presented as “conservative” but are more akin to best case scenarios safe from hidden competition, ticking clocks, x-factors, downturns, acts of God and other anomalies that can put a bullet in a Big Idea.

OK, so what about the people? The leadership team? Critically important of course. But here again, the Executive Summary is an overview of the plan at large, so it should provide, at minimum, a narrative snapshot of the key players, what they’ve done, and why they’re the torchbearers, heavy lifters and super glue to make it happen.

Bottom line, in most cases business plans are developed, written, printed and bound simply to get the attention of a prospective investor or other strategic partner. From there the dance typically moves quickly (or not at all) into dog and pony show-n-tell and chemistry tests. And given the time impoverishment of most people today — and I’m impressed if you’ve taken the time to read this far — if they don’t understand the proposition quickly and clearly, you’ll lose them, count on it.

Posted by: Colin Mangham

There’s a saying you’ve probably heard, perhaps even used in some form or another, that’s generally attributed to Mark Twain (think “Tom Sawyer,” but not the ’80s hit by Rush): “I didn’t have time to write a short letter, so I wrote a long one.” Well, OK then, I guess that’s all for now.

Posted by: Colin Mangham

Just recalled the story of a shoe manufacturer who “many years ago, sent two of his marketing graduates to the interior of Australia to see if they could come up with new product ideas for the undeveloped Aborigine market. The first one responded, ‘Nah, there’s no business there; the natives don’t wear shoes of any type.’ The second one was far more enthusiastic about the prospects … ‘What a fantastic, perhaps even unprecedented opportunity … the natives haven’t even discovered shoes yet!’”

In a similar vein, someone — OK, I’ll admit it was my Dad — said to me recently, “As an entrepreneur, and someone who consults a lot of them, in this climate you must be frightfully concerned with just keeping momentum so you don’t fall through the ice.” Hard to argue with that, as it really serves no productive purpose to curl up in a ball and fret and whinge about it, now does it? (Ha.) More importantly, beyond that survival mode, entrepreneurs in this environment need to think with all five senses (or six or seven, if you have that Gift), to concurrently consider:

1. What you’ll do if the ice breaks [swim?].

2. What you’ll do next [pull yourself out, dry off and warm up (if you can)?].

3. What you’ll potentially discover in that life-threatening challenge that could hold an opportunity, a value prop, a blessing. What’s down there in the icy water? Maybe some fish for sushi? A unique bottled water product? A new meeting place for the Polar Bear Club? An inspiration for economically feasible desalination?

At the risk of sounding all preachy, let’s remain positive, diligent and open-minded. Let’s ensure that we stay connected with our like-minded peers. Let’s embrace the truth in that arguably tired old adage that “challenges are opportunities” and skate some figure eights on the thin ice that lies beyond the warning signs, ever-confident that if we fall on our faces we might just discover the next big (or fantastically small) thing.

Posted by: Colin Mangham

This WSJ article’s a hot item for retweeting on Twitter presently — I’ve boomeranged it myself. But a good read and well worth a blog:

FEBRUARY 23, 2009 | COVER STORY
So, You Want to Be an Entrepreneur
First, answer these questions to see if you have what it takes

1. Are you willing and able to bear great financial risk?

2. Are you willing to sacrifice your lifestyle for potentially many years?

3. Is your significant other on board?

4. Do you like all aspects of running a business?

5. Are you comfortable making decisions on the fly with no playbook?

6. What’s your track record of executing your ideas?

7. How persuasive and well-spoken are you?

8. Do you have a concept you’re passionate about?

9. Are you a self-starter?

10. Do you have a business partner?

Here’s the article, with details addressing each of the above.

As an adjunct, I just IM’d to a budding entrepreneur: “As long as you have a relatively clear vision, an idea targeting a growth sector, a network of people you can count on, a day job or some money in the bank, and an indefatigable passion to see your baby through to success, you should be in good shape to take the leap.” Though, I suppose I neglected to point out that a little luck and, voilà(!), magic always helps….

Posted by: Colin Mangham

A longtime colleague pinged me in Facebook today regarding the Friedman article I plucked from Twitter threads and blogged about yesterday. His question, and it’s a good one: “Does it need to be one or the other?” My reply: Not at all. I think this is mostly concepted in cartoon. But I mainly like the notion of helping entrepreneurs and small business (no thanks to American Express) do their part in reviving the economy.

If we’re meant to be in the quote-unquote Creative Economy, with our number one export being or soon to be intellectual property, we’ve got to get behind the innovators, the visionaries, the guys in a garage thinking up the Next Big New Thing that the big boys (in tech, in auto, in government, in aerospace, in manufacturing/distribution, in the energy sector, etc.) will roll up into their big machines to pump it all out to the masses for, yes, the Greater Good.

But, again, yes, I agree, it’s not black-n-white, all or nothing, this or that or, particularly, Left or Right … this economy and its constituent stakeholders is an ecosystem as complex as the human body. Let’s just keep a focus on what’s good, what’s positive, what can bind us all together to harness all the hope out there and spin it into gold, that would be nice, but also food, water, shelter, comfort and confidence. Ever-forward….

He replied: “I agree. How do we get people to “unclench their fists”?

Now that will require some pondering, along with, for good measure, clicking the heels of ruby slippers and repeating “there’s no place like home … there’s no place like home … there’s no place like home…”

Posted by: Colin Mangham

Great to see more and more voices the likes of Thomas Friedman (NY Times article yesterday) helping to more effectively illuminate the role of entrepreneurial America in getting things back on track. Wait, no, maybe that’s the wrong figure of speech … it’s not that we need to get back on the same old track, but rather we need to blaze new trails and interconnect millions of tiny tracks. A topic for a longer discussion, for sure.

Now, Friedman’s model would need some tweaking of course. We know that. He knows that. It’s largely written in chalk to make a point. And I’m not suggesting baby-out-with-bathwater regarding the current stimulus plan. But the driving premise is compelling and necessary: entrepreneurs, many of whom will be former c-level execs forced into such roles, comprise the beating heart of what is, can and should be next for our economy.

Here’s a link to the article: http://www.nytimes.com/2009/02/22/opinion/22friedman.html?_r=2

Excerpt: “Bailing out the losers is not how we got rich as a country, and it is not how we’ll get out of this crisis … You want to spend $20 billion of taxpayer money creating jobs? Fine. Call up the top 20 venture capital firms in America, which are short of cash today because their partners — university endowments and pension funds — are tapped out, and make them this offer: The U.S. Treasury will give you each up to $1 billion to fund the best venture capital ideas that have come your way. If they go bust, we all lose. If any of them turns out to be the next Microsoft or Intel, taxpayers will give you 20 percent of the investors’ upside and keep 80 percent for themselves.”

“As we invest taxpayer money, let’s do it with an eye to starting a new generation of biotech, info-tech, nanotech and clean-tech companies, with real innovators, real 21st-century jobs and potentially real profits for taxpayers. Our motto should be, “Start-ups, not bailouts: nurture the next Google, don’t nurse the old G.M.’s.”

Posted by: Colin Mangham

Here’s a quote from Ray Bradbury, a favorite author, intended to inspire aspiring and/or creatively blocked writers, but the underlying bent is equally or more relevant for nerve-frazzled, sleep-deprived entrepreneurs in the wake of Wall Street’s continuing meltdown…

“If we listened to our intellect, we’d never have a love affair. We’d never have a friendship. We’d never go into business, because we’d be cynical. Well, that’s nonsense. You’ve got to jump off cliffs all the time and build your wings on the way down.”
Thinking about it, perhaps this quotation calls for the disclaimer car companies flicker momentarily in the footer of their speeding, swerving, screeching TV spots … “Professional driver on closed course.” Or better yet, “Do not try this at home.”

But, no. To jumpstart this economy across all sectors and reinstill a faith, if you will, in what’s possible and indeed necessary, now more than ever we need our entrepreneurs to be smart and steadfast. We even need our global corporations to occasionally think like start-ups; work lean, stretch dollars, build passion, reward loyalty, nurture innovation, and root up and leverage hidden opportunities.

Who’s with me? Call. Email. Skywrite. Megaphone from your rooftop. Time to build some wings on the way down. Onward. Upward.

Posted by: Colin Mangham

Here’s a head-shaking blast (or, ballast) from the past on the heels of today’s SEC’s allegations against Mark Cuban and, concomitantly, the planned departure of Jerry Yang over at Yahoo.

I flipped the switch on my Firefox flux capacitor (um, via Google, not Yahoo) and 0.08 seconds later it was 1999, the year Prince was crowned Nostradamus in loosely predicting how the dotcoms would indeed party – devil-may-care and sideways willy-nilly – till that lunar landing IPO or, far more likely, till Rocko, Joey Knuckles and Starving Students arrived to repo the foosballs, Razors and iMacs and padlock the doors on the way out. Conveniently enough, the article’s dated April 1 (no foolin’):

Thursday, April 1, 1999 Published at 21:23 GMT 22:23 UK
Business: The Company File
Yahoo buys Broadcast.com

Yahoo looks likely to spice up its site with audio and video

One of the most popular sites on the Internet, Yahoo, has bought an online company which broadcasts everything from presidential speeches to lingerie fashion shows. Yahoo, using its own highly valued shares, is paying $5.7bn (£3.2bn)  to acquire Broadcast.com.

Yahoo is the most popular portal site on the Internet, with 50m visitors a month. In simple terms, it is a massive directory of Web sites, akin to a global telephone directory – only this one is considerably larger. Analysts say the buy out of Broadcast.com will enable Yahoo to beef up its text-only services to include audio and video.

Critics say its content has been looking more humdrum compared with what some other sites are offering, and that it has trailed others in offering more varied media. Tim Koogle, chairman of Yahoo, said: “Broadcast.com’s tremendous first-to-market advantage has made it the leading destination on the Web for audio and video broadcasts, and it will provide significant added value to Yahoo’s audience worldwide.”

Yahoo is offering 0.7722 shares of its own stock for one share of Broadcast.com’s stock. Broadcast.com lost $14m on sales of $22m last year.

Smart move

“It will be a pretty neat deal from Yahoo’s perspective,” said Lanny Banker of Salomon Smith Barney. “They are seeking other platforms to distribute content and Broadcast.com is a really tight fit in terms of content, audience and technology.”

Some Internet users cannot easily access the “streaming video” offered on sites like Broadcast.com. To do so, they need broadband or high-speed Internet service. But the number of users who have broadband Internet access is growing fast and makes up a market which analysts say cannot be ignored for long.

Broadcast.com is based in Dallas. An improved use of media is seen as an important way ahead for the Internet. AtHome, which delivers the broadband Internet service enabling consumers to view video online, earlier this year agreed to buy Excite in a deal which will mean more multi-media services on the Internet.

Other Yahoo rivals include Lycos, subject of another takeover bid, and Snap.com, the portal jointly owned by CNET and General Electric, parent company of network television company NBC.

Changing ads

NBC is aggressively gearing up for the growing demand for media enhanced services. Snap recently overhauled its Internet portal to feature video and interactive features. Many advertisers are also seeking ways to place interactive and video promotions on the Internet, which they believe will be vastly more effective than the plain “banner ads” widely used.

As Internet stock prices have soared, acquistions using stock have become easier and more attractive. With its current value approaching $40bn, Yahoo is among the most highly capitalised Internet stocks on the market. Two months ago it bought Geocities, a service that allows people to run home pages online, for $3.7bn. Yahoo shares jumped 11 3/8 to 179 3/4 and Broadcast.com surged 11 13/16 to 130 on the news.

Article available from: http://news.bbc.co.uk/2/hi/business/309498.stm

*********

Wow, the future’s exciting! Where do I sign up?! Say, maybe I can find out more about Broadcast.com on YouTube.com. Be right back. Oh, and if I don’t post anything here for a few days it’s probably because I’m deep-diving webisodes of “Will it Blend” to gauge how easily I can frappe a few twine-tied bricks of worthless stock warrants….

Posted by: Colin Mangham