Friday, January 19, 2007

"Until we raise money, we're stuck!"

When I hear an entrepreneur say that his company is "stuck" because he can't raise any money, I cringe because he's probably right. This statement, more often than not, is the outward expression of a mental/creative block.

The fact is that start-up companies are rarely "stuck" -- with the exception of most pharma and biotech-type companies that require a ton of R&D and ramp-up time.

For example, I spoke with an entrepreneur the other day who has a great web-based idea and relationships with the right people to help him make it happen. He has already done a ton of work on the project and he's ready to roll.

One problem -- His website (as he put it) is hideous. When you're a web-based company, that's bad. He can't afford to pay web designers to fix it for him, so he says he's stuck.

Not really though. There are web designers out there who will work for equity and little or no pay if the idea is right. It takes work to find them, but they are out there. If you can't find them, there are people on the other side of the planet who will design a good-enough-to-start-raising-money website for a few rubles a day.

That's just one example. Here are a few examples of entrepreneurs who understand how to make things happen without funding:

  • I spoke with a great entrepreneur the other day who set up a meeting with a few potential investors and convinced a local real estate office to host the event for him and provide his guests with lunch. The dude was so broke that he had to go to a friend's house to print up the last of term sheets because his electricity had been shut off.
  • A great entrepreneur right here in Utah was completely out of money when he convinced a publicly traded company to give him a $100k contract for a service he hadn't even created yet.
  • Carolyn Duncan's Hundred Dollar Business experiment

The skill is part hustle, part bootstrapping, part salesmanship and part gusto. Most of the time it's a skill that comes out when your back is to the wall and your only other option is to close the doors.

When entrepreneurs dig deep and find ways to push forward through the lean times, they often discover on of the most important truths of entrepreneurship: The best way to finance your company is sell stuff and have your customers pay the bills. It took me a while to figure that one out.

Bottom line: Successful entrepreneurs make things happen with or without money. If you ever find yourself thinking "Until we raise money, we're stuck!" you're probably right.

If you have any war stories about making things happen with little or no money in the bank, leave a comment!

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Friday, January 05, 2007

There's Hope for the Rest of Us

A while back, Chris and Matt went toe-to-toe about an article Matt wrote for Connect Magazine that advised readers to leave Utah and learn from the best in the Bay Area. While it is obvious that there is a ton of action in the Bay Area and a boatload of very intelligent entrepreneurs and investors, VentureOne's report on the the biggest VC exits of 2006 suggests that there is plenty of action outside of the Valley for the rest of us.

Here's a breakdown of the locations of the purchased companies. Note that only two of the top ten are from the Bay Area.
  1. YouTube -- Bay Area
  2. Flarion -- New Jersey
  3. Xspedius Communications -- Missouri
  4. Healthfield -- Georgia
  5. CorSolutions -- Illinois
  6. Corus Pharma -- Washington
  7. Mobile 365 -- Virginia/DC
  8. LANDesk -- Utah
  9. GlycoFi -- Massachusettes
  10. Wily Technology -- Bay Area
Congrats to the local boys from LANDesk and vSpring Capital for cracking the list at #8!

I'm originally from California and my job revolves around angel investors and VC, so you know I've got nothing but love for the Bay Area. However, I'm glad to be outside of the Valley learning from some of the best here in Utah.

Thursday, January 04, 2007

Bill Gates is Sending me $1M

Brock Blake said that I would get a million dollars from Bill Gates if I wrote a post about five things people don't know about me.

Here goes ...

1) I was the singer for a rock/roll band called Aberdine back in my glory days. We were kind of a blend between Johnny Cash, Pearl Jam and the Black Crowes. It was just something we did for fun, but we ended up selling about 1,000 CDs and playing enough gigs to pay for a couple months rent.

2) I graduated from high school with a 2.15ish GPA. Although I was able to rebound from my high school daze and obtain a university degree, I still have a bad taste in my mouth for university and high school education systems. Good things happen in schools, but not often enough.

3) My unfinished, non-air conditioned attic was the first headquarters for FundingUniverse. It was at least 90 degrees up there for most of the summer of 2004. Trent and I had some great meetings up there. Good times, good times ...

4) When I grow up, I'm going to a sportswriter. When I was in school, I covered BYU men's basketball for the Daily Universe and I loved it. I can't say I was very good at it, but if it payed better, I'd be doing it right now.

5) In 1996 I danced with Lauryn Hill backstage at the Smokin' Grooves tour stop at Fresno State University. Okay, maybe it would be more accurate to say that I danced very near her but she probably didn't even notice I was there. Either way, me and my buddy Brian Cotta sneaked back stage while Ziggy Marley was playing and found ourselves in the middle of a party with Lauryn, Q-Tip (Tribe Called Quest), Wyclef Jean (Fugees), Busta Rhymes, B Real (Cypress Hill) and about two dozen other crew members.

Bill, I'm waiting for my check.

I tag Chip, Chad and Josh.