Portfolio Rant

Around last fall, I started trading with an E*trade account to better understand other investors using Wikinvest.  Prior to that, I had spent some time positioning a 457 account, but nothing more than that. Just a few months into my time at Wikinvest, though, it was hard to not want to invest.  I’m constantly reading investment reports, finance blogs, news, and generally talking about the markets and investment ideas.  It was a perfect fit and, lucky for me, I decided to start my investment portfolio right around the time of one of the greatest stock market crashes ever.

Investing since Wall Street’s collapse in October (and then Geithner’s bobble in March) has its benefits.  With valuations seemingly at the lowest they’ve been in decades, it felt like a good time to be greedy (or as greedy one can be when purchasing 10-50 stocks at a time).

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Investing has since fascinated me.  I’m in awe of the thought that, for $9.82, I can own part of American Express (it certainly helps that their dividends offset some of my credit card interest too) or Tata Motors for $4.42.  Ownership can be addictive, and I certainly throughout some of the markets lows.

Since this is an entirely new portfolio of mine, I have a long horizon.  Unless we go into a 1990s Japan-like slide, I’m assuming that a monkey could make money with a long-term investment just after the Oct 08 to March 09 fall.  That said, I’m certainly not willing to count on that, and after markets rose this spring and summer, I’m now looking for quality companies.

I like a good, low debt-to-equity / high ROA / low P/E combo if it’s to make it into my portfolio.  From all the opportunities out there, I start with sectors and regions and work my way down to companies.  I stay away from retail in the U.S., but I embrace it in India and China.  I like companies that build things, or build things that are used to build things, or transport things, or dispose of the wreckage from buildings things.  I like financial institutions — a few of them at least, the ones I haven’t heard much about on television.  Before I invest in a company, I look at recent earnings reports, annual reports, investment reports, and read news associated with the company.

The Investment Portfolio as Venture Capital

It’s not long into this process that I realize what it must take for a VC to part ways with several million dollars of their and their client’s money for an unproven idea and company, all the while knowing they can only, maybe, get the initial investment back in three to five years.  If they’re incredibly good and lucky, they’ll get that investment back with interest.  It’s no wonder it’s hard to get money from a VC.

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I’ve found I have certain tendencies with my portfolio similar to a VC.  For my stable investment — the IRA — I’m less willing to risk an entire company’s collapse.  I focus on ETFs like ADRE or QQQQ that follow big emerging market and major technology companies, respectively.  On the other hand, I’ve come to think of my trading account as my “extra” savings where I can take chances.  It’s where I’m going to prove my investor worth.  I’m OK with it disappearing over night.  I’m willing to be risky with multiple small cap companies, looking for one explosive stock.  I spread those investments around; some work while others don’t.  I do what I can to be good and hope to get lucky.  Sometimes, it’s no wonder it’s so easy to get money from a VC.

Portfolios for Founders

The other part about running your own portfolio is — you learn to understand the levers for building your own business.  Create more value than you require.  Give away equity for cash; take on debt for cash.  Purchase people / space / machines.  Convince someone to give you more cash and continue the loop  It’s all there within your portfolio.  You expect management of your portfolio companies to control costs, increase their cash, and demonstrate health by increasing earnings, milestones, dividends, etc.  Management has to preach to employees and investors, alike, with probably a slightly different story for each.  It all sounds like start-up world to me (except those dividends, of course).

As an early founder, you’ll be stuck in the details of your business at all times.  Your investors won’t.  They’ll expect you to step back from the conversation about the misalignment of that button by 5px and figure out whether your market strategy is going to withstand this economy given your cash on hand.  They’ll want it in digestible figures and metrics.  Further, they’ll want you to put your thousands of hours a year into a half hour phone call and presentation.  They just want the basics — are you creating more value than you require?

It makes you understand both the weight of the founder and the risk a venture capital takes investing in a start-up.  Both parties are flying blind in this arrangement.  There’s no easily accessible “Sell” button like there is on my E*trade account, and a bankrupt start-up is worth even less than GM.  Investments are designed for a three to five year exit (at least) with only a hope and a prototype to go on.

Founders, it’s up to you to figure out the rest.  You should understand what your investors are going through (employees are investors too — but that requires another post).  Just remember to create more than you require.  Start from nothing and be willing to lose everything.  Create ownership.

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Where’s the feedback?

How hard is it to get meaningful feedback online?  I recently took a look through all of the feedback emails sent to Wikinvest

since I joined.  Without actually counting them, here’s the rough breakdown of emails in order of email “market share”:

1. Classes and Conference invitations
2. Complain letters to company executives (i.e., someone goes to the Honeywell page and writes a nasty feedback letter “to Honeywell” — only, Honeywell doesn’t get it, we do.)
3. Requests for link exchanges
4. Advertising / Partnership inquiries
5. Feedback of the Useless Variety (everything looks great!)
6. Feedback of the Useful Variety (complaints)

There’s no better feedback than complaints.  Of course, we all love the pat-on-the-back feedback email, but its’ the “what the hell’s wrong with you?  No one can read that font!” email that really gets us moving.  At Wikinvest, total feedback — both useless and useful — probably only equates to 5% of all emails to our feedback address.  To take a great example, today Wikinvest released a whole slew of new features, including a bit of press to go with it.  What sort of volume did we see in our feedback inbox?  We had five emails — despite the fact that traffic today was multiples higher than a typical day.

Despite the huge Get Satisfaction Feedback buttons that have been popping up all over the web, it seems like most often, feedback emails are anything but.  That first time you put up the feedback button, you think, “Hey, someone’s going to email us and tell us they love that widget 13 pixels above the comment box.  It’s much better than the 5 pixels we argued about for half an hour.”  Surprisingly enough, it doesn’t work that way.

So, how do sites actually get meaningful feedback from their users?

Analytics

There’s no better way to understand what your users do and don’t like data and analytics.  You can get an unlimited amount of information about your users if you know how to pimp out your Google Analytics the right now.  If you’re not going to tell us what you like and don’t like with your words, well, we’re just going to figure it out with your clicks.  The only problem with analytics, though, is that it only tells you what people like and don’t like.  The “why” people like and don’t like your service is up to you to figure out.  Maybe some of these other methods help…

Social Media

Like I said, after today’s Wikinvest launch, we saw four meaningful feedback emails; however, the TechCrunch article had 19 comments.  The Giga Om and Wall Street Journal articles had a few more.  On Twitter, the flood of Wikinvest references certainly helped too.  Users are talking about your site, they’re just not talking to you so you have to go out and find them.

Group Protest

This one’s exclusive to sites that allow it’s users to form groups around certain passions.  That’s right, I’m talking to you Facebook.  Who knew you were so lucky to have groups you could go to like, “The New New NEW Facebook Redesign Sucks — Boycott Facebook! — Oh wait, no, we actually like it now.”

Power Users

At Wikinvest, we’ve discovered a novel way of getting feedback from our users — talking to them!  On the phone even!  A group of power users helps propel Wikinvest’s content, but, almost more importantly, they’re invaluable to feedback about new products and features.  They tell us what we should and shouldn’t be doing, help fill in gaps in our team’s knowledge base, and often, they just know what they want better than we do.  You might call them consiglieres; oh wait, we do call them consiglieres.  Thanks guys!

If you haven’t figured it out by now, I’m obsessed with finding ways to work faster and smarter.  I’ve talked about designing and brainstorming faster with my whiteboard and Balsamiq‘s mock up tool.  I spent over 600 words describing how I organize my email inbox, and I can’t wait for Ativiti to launch so I can share even more ideas about process.

Given all that, it’s no wonder I enjoy working for a startup.  From my experience, it’s the ultimate test in your ability to get a lot done in very little time.  There are always a million things you have to do.  There’s absolutely no way you can accomplish everything.  How do you figure out what gets done and what doesn’t?  When no one is telling you what to do, what’s the most important thing you should be doing?

From my experience with this and previous jobs, there’s the things you have to get done, no matter what, and then there’s everything else.

Things that have to get done, no matter what.

In most normal jobs, “the things that have to get done, no matter what” take up most of your time.  In a startup, though, these things are the least of your worries.  At a startup, the things that have to get done, no matter what, are the things that you’ve figured out already.  You know your payroll process.  You know your QA process.  Make them as fast as possible.  Make them take up 10% of your time.  You have to spend the rest of your days figuring out your new marketing strategy, the next product launch, the bug fix, and …

Everything else.

If 90% of your time is spent on everything else, what does that time look like?  How do you figure out the next most important thing for you to work on?  Your work has to constantly move a process forward, a contract forward, a task forward, the company forward.

Are you creating something new?

Working at a startup means you have the potential to create something new just about every day.  You can’t actually create something every day, but that’s the potential.  It takes a lot of prep work to create something new, especially to do so correctly.  Creating requires a process — brainstorm, refine, plan, build, refine — and with each step you’ll have to ask yourself the same question, what’s the most important thing I should be doing?

Are you doing something that will bring attention to your organization?

No news is bad news for a startup.  Find a way to get people talking about you.  There’s many ways to bring attention to your organization — create something new, improve your page rank, generate buzz on the blogosphere.  If you’re doing this, you’re always doing something important.

Are you creating something that’s lasting and replicable?

You’re creating something new.  We’ve established that.  You’re also creating something that may have to last.  You need to assess whether what you’re creating is a one-time activity or not.  Pulling a report is never a one-time activity.  Writing a feedback email isn’t either.  Obviously, this has to be balanced with a startup’s short-term need for speed and agility, but a little planning up front helps ensure longer term success.

Are you improving an existing process?

You’re taking a process from the person who first created it.  The problem is, you’re not someone who just takes a process as-is.  You want to question and improve it.  With enough people thinking like this you can quickly go from a guy writing a payroll check to an electronic, efficient direct deposit payroll system.  Be sure the time spent fixing your process justifies the effort, though.  If it takes several hours to reduce a back office process from three clicks to two, it might not be worth undertaking right now.  It might still be worth fixing, but not until a million other things are taken care of.

Are you developing something you can pass to another team?

You not only have to create things that can be passed to your own internal teams, you may need to make your work presentable to another team in your company or another company altogether.   You can’t simply give the administrative assistant a payroll task without re-explaining your process, highlighting any exceptions.  Your specification has to be written unambiguously in order for development to pick up where you leave off. What’s acceptable for internal team distribution often requires a new draft entirely for other teams.  Factor this extra effort into your planning.

Are you learning something new, something that you can re-use?

You know what you’re doing right now.  But do you know what you’re doing a year from now?  You should have an idea.  What will you need to know then that you don’t know now?  A few pilot programs now will make it easier for you to answer that question later.

Are you fixing something that’s broken?

Fixing something that’s broken helps make sure you’re not wasting time on things that don’t fit these criteria.  Remember what I said above, though, the effort mustn’t exceed the reward.

Finally, in this economy, there’s the most obvious question you should be asking yourself whenever you prioritize your work –

Is this going to make us any money?

Forget everything else.  If all else fails, focus on generating revenue.  In this economy, there’s nothing more important that you could be doing right now.

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I’m obsessed with process.  It’s impossible for me to work without thinking about how to turn 10 steps into 3, without figuring out how to do things faster, simpler.

Recently, I found something that made my process-obsessed self feel well documented, reproducible, and, well, whole.  Recently, I discovered Tasks for Gmail.  Tasks is an amazing but simple little feature you can find by digging into the Labs portion of your Gmail account.  It allows you to easily add a task, schedule it, and check it off with a fulfilling strike-through.  It rests in the bottom right portion of your Gmail window, and when you’re not using it, you can simply keep it minimized.  Tasks are also what finally brought my work stream full circle, and, Tasks have almost single-handedly rid me of my paper “habit”.

Before Tasks, I wrote all of my major To-Dos for the day in my notebook.  Each day, I would start from the top and work down the notebook completing tasks.  In the course of this, I would scratch things out, write notes in the margins, and generally make a mess out of each and every page.  Each night, I would list out what I hadn’t accomplished and include any additional tasks for the next day, prioritizing as I went.  The problem is, it was just a little too messy.  I was never a huge fan of the hand offs between my paper process and my email / work stream management.  I was wasting paper and ink with pages of scratched out, messy lists.

Along comes Tasks, and all of a sudden, I have a fully integrated process for managing both my micro tasks — email — and my macro tasks — things bigger than emails.  Check it out:

1. As emails come in, I have filters that organize and tag my emails based on either a work stream or specific project.
2. When I come in each morning, I review every piece of email until each ones has been read — I continue this throughout the day too by monitoring a FireFox tab with Gmail to see when it throws up a (1).
3. Emails that I can respond to immediately, I do.  If not, the item is starred and finds its way onto my task list.
4. Once the inbox is clear, I review my task list, add anything that’s missing, and prioritize.
5. Next, I work on tasks in my task list from top to bottom — stopping only to keep my inbox clear.
6. As I come to an item that is associated with a starred email, I address that email and remove the star.

Voila!  When my emails are done, my tasks are done.  When my tasks are done, my emails are done too.

There are all kinds of task management tools I could have chosen — just ask my friends at Ativiti about all of them.  What’s great about Tasks, though, is that I never had to think about it. It simply arrived and became a part of my day-to-day, all without requiring a single additional username and password, without another website to keep open, and, really, without much more functionality than a basic checklist.

It’s now a part of something bigger than itself.  It’s now a part of a process.

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Baveo allows users to post photos, videos, and text updates to a blog devoted entirely to the newest members of the family. The site is well designed for parents and family on the go. Parents can post directly to their Baveo blog via their site or their phones, and friends and family can stay updated via email or text messages.

I recently had the chance to chat with Ari Greenberg, Baveo’s CEO and founder. Ari helped break down where the idea for Baveo came from, how the team came to be, what they’re up to, and a few other thoughts about being an early entrepreneur.

After witnessing a childhood friend and his wife blog about the birth of their first child, Ari’s idea for Baveo was born. Ari saw the chance to make a wonderful and important experience even better. Expecting parents deserved a better and more integrated blogging experience.

Previously at Magnify.net, Ari spent his free time exploring the project further. He had always known he wanted to start his company, but he lacked an idea worth pursuing.

Baveo quickly became that idea, and when he realized it, Ari wasted no time building a team of three. Everyone works for equity, and Ari wouldn’t have it any other way. It’s how he knew the team believed in the idea and wanted to see it succeed. It also ensured the team would be honest with him and tell him when things weren’t going right. Both are equally important.

The site is currently invite-only so the team is working towards building out new features and publicizing the site. There’s a large community of mom and dad bloggers out there for them to tap into, and they’re exploring ways for users to better capture and share baby memories.

No matter what they think now, though, the team is focused on letting their users decide where Baveo goes next. “Everything needs to be about the user,” Ari says, “Users will tell you what they want if you listen.”

For all of you expecting parents out there, sign up for a Baveo invite now. Let your friends know what’s going on with your little cherub and let Baveo know what you think of their service. They’re listening.

When it comes to experience, though, early entrepreneurs should broaden themselves. When you’re starting out, participate in a wide swath of activities to better understand each part of a business. Write a business plan. Code part of your site. Try testing the site. Present your pitch. Whereas a scientist knows how to do research, an entrepreneur must know how to do the research, the grant writing, the accounting, and the floor mopping.

Widening your experiences also teaches you what you’re not good at. When it comes time to build your perfect team, experience will tell you that maybe you’re not the best guy for accounting, even though you know how to do it. Find a rock star accountant as soon as you can.

In the spirit of this idea, here are the 5 ways I try to broaden my experiences:

1. Read.

I’m an RSS (and book) junkie. I read anything from typography and web standards to financing and marketing (and biographies, fiction novels, and an occasional book of the Core Curriculum variety).

2. Get out there.

I practice my message and get new material by going to NYC tech events. Try to find events that are targeted to your market but emphasize different parts of your market. I can’t say enough for Meetup to help with your search. NYC has several Meetup web groups, some specific to video, marketing, web standards, programming languages, etc. There are also sites that announce weekly events. For NYC, try Garysguide, NextNY‘s calendar, and Silicon Alley Insider‘s weekly posts.

3. Try it.

Enter Venture is just one way that I try out my ideas. I practice teasing out ideas on my whiteboard and rough site specs for feedback from friends. You can build a local version of your site to practice your coding skills. Open Photoshop, or Gimp and play with some color scheme ideas using tutorials on the web. Sign up to be a software tester at uTest.

4. Analyze.

I’ve been using Google Analytics, Feedburner, and WP Stats to track visitor usage and identify visitor trends. I’m in the midst of using Crazy Egg to better understand usage patterns on the site, which will help drive my next round of Enter Venture updates.

5. Improve.

If you follow #1-4, you should always be improving. Be aware of what you’ve improved on and celebrate it. Be, also, aware of what you need work on and work on it.

Start from #1 again.

(If there are any rock star accountants out there, let me know what you’re up to.)

Before I go on, Iet’s talk about the furniture in my room. There’s the desk. That was free from craigslist. Then there’s the bureau — also free from craigslist. The bed frame cost me about $50, and my bookshelf about $40 (also from craigslist. That Craig’s got a great list).

My whiteboard, the only other substantial thing in my room, cost me a cumbersome ride on the F train and around $75. It’s by far the most valuable thing in my room.

Now, why was it worth over 75% more than the rest of my bedroom combined? Quite simply, it’s the best tool for helping you get started on almost any project. It is the figurative “blank slate” come to life. It’s perfect for that idea you’ve been thinking through for days now and finally need to dump.

Actually, once you dump it on the board, you realize there are major gaps missing in your idea. You erase the whole thing, start again fresh. (Rinse, repeat, and you get the idea.)

A whiteboard is every early entrepreneur’s best friend. There are numerous different people you need to contact, things you’ve got to learn, and places you need to go. The whiteboard is a great place for all of this and more. Over the past few months, here are the different ways I’ve found myself using my whiteboard:

1. Task lists

This is the most obvious. My whiteboard currently has a few different task lists going on at once. A list of half baked post ideas for the Enter Venture blog are in the upper right corner. There’s a few technical topics I’ve committed to learning on the left, and a few people I need to email are listed just above my computer in the lower right corner.

On paper, you check or cross off your tasks and end up a book full of squiggles and lines. Whiteboards let you erase your tasks completely. This is somehow more gratifying, I think.

2. Blog Schedule

I’ve tried to keep a fairly consistent posting schedule with Enter Venture as well as keep variety in my posts. Creating calendars on the go has helped with this immensely. I don’t need to map out my blog’s calendar for 3 months. I certainly don’t have 3 months worth of ideas figured out, but a 2 week calendar is perfect for my needs.

I can quickly visualize when I’ll be at an event, whether I’ve added a book lately, or when Vik will be posting.

3. Idea Prototyping

Like any early entrepreneur, I’ve always got a few different ideas floating in my head. When I originally envisioned Enter Venture it was going to be a more comprehensive site with a wider range of social networking features. Prototyping these ideas on the white board made me realize I didn’t have a clear picture of what it was I wanted to create. I kept whittling down features until I was looking at a blog. Here you have it.

4. Doodling

Whiteboards are not only a great tool — your friends will love it! You’ll be the ‘it’ destination for various doodles and messages. People will enter your room and leave having felt like they left a mark, an impression.

Let them do it with a whiteboard. I’ve seen people try to do this with markers and a wall. It wasn’t pretty.

5. A fresh start.

This is the most important. Like any truly great tool, a whiteboard gives you the ultimate in flexibility. For a week, my whiteboard will have a series of screen shots on it. The next week, it has a calendar. Changing your frame of reference will help keep you and your ideas fresh.

In fact, I’m going to clean my board now. I could use a few new ideas for my next post…

Several months ago I asked my friend Laks to recommend a good book that would really help me better understand how software should be done. For the past two years, I’ve worked in two completely different environments and seen two completely different ways of creating a web application. Unfortunately, I’ve never really felt like I’d learned to do things the right way.

I first tried reading the book online, but I didn’t appreciate the book in the same way when I had to follow a link somewhere, get up from my computer, sit down and find my place if I hadn’t left the page open from the night before. I knew I enjoyed what I was reading, but it was hard to keep coming back so I broke down and bought the book version for $25.

Aside from The Elements of Style, I don’t think there’s a smaller, more valuable book out there. I read the book on my way back from this year’s New Orleans Jazz Fest. On what should have been a let down flight, I found myself riveted by all 187 pages of this thing. A day after Jazz Fest and 2 hours into my flight I had the chills.

Getting real isn’t the type of book that’s going to tell you what to do with every little detail. It tells you how to focus on a tightly focused framework that will guide you to how you should handle every little detail. Just check out the chapter titles:

• Introduction
• The Starting Line
• Stay Lean
• Priorities
• Feature Selection
• Process
• The Organization
• Staffing
• Interface Design
• Code
• Words
• Pricing and Signup
• Promotion
• Support
• Post-Launch
• Conclusion

Talk about brevity. This book hits you over the head with its succinctness. Try digging through another book about software and see if you can find as much covered in as few words as 37signals has done with Getting Real.

One of the tell tale ways I know I’ve found a good book is by checking to see how many pages I’ve dog ear’d. I’d say about 15% of this book meets this description. There’s all kinds of gems in here, everything from hiring:

“Find someone who’s enthusiastic… Someone who’s excited to build what you’re building. Someone who hates the same things you hate. Someone who’s thrilled to climb aboard your train.”

To making opinionated software:

“Some people argue software should be agnostic… We think that’s bullshit. The best software has a vision. The best software takes sides.”

To how to approach any type of problem:

“Are you facing an issue that’s too big to wrap your mind around? Break it down. Keep dividing problems into smaller and smaller pieces until you’re able to digest them.”

And on and on. Or not so “on and on”? The book’s only 187 pages!

Finally, if you’re not ready to plunk down $25 for your own copy, check out this David Heinemeir Hansson speech. Let one of the authors push you over the hill:

(Isn’t Omnisio’s video / powerpoint slick? I have to think this will become more popular.)

I don’t think I’ll ever stumble upon the best way to create software, but I think this book is certainly close.

Sometimes the right choice is no team at all — but this is not the sustainable or scalable option for most operations.

How does an entrepreneur, and a starving one at that, build a team of like-minded, competent, individuals who will work with and not against the entrepreneur or each other?

I don’t know the right answer, but have a running theory:

The optimal team is build both with trusted associates, as well as with experimental new talent.  Unfortunately, payroll takes capital. If you’re starving, that capital comes out of the marketing budget or the R&D budget, or food/rent.

So how do you compensate a resource without funding?

Stay tuned for an upcoming post on incentives…

I have launched a social experiment of my own for new talent that includes both experiential incentives and targeted good faith.

My current team includes a few trusted associates, all part-time, and freelanced admin and skilled labor resources. If the experiment above goes well, it will include a few more feet on the ground.

I can’t seem to post word documents to the blog, but am happy to let people see it. It exemplifies much of what I believe in partnering with your talent and structuring fair incentives.

I would be glad to share it with anyone who is interested, and don’t even mind if you use it as long as you ask.

You might know you want to start a website, but it’s tempting to imagine your site 3 years down the line, rather than the first 3 months from now. I think this is something you’re seeing with a lot of social networks these days. It’s a way to make a successful business, but not all that distinguishing. We’ll call this the ‘zero to facebook’ method. Remember kids, Facebook started out as a simple friend connection and photo sharing site.

It’s probably been said to death that you should focus on that one, core idea. Become the leader in something. Well, how do you get there? I’m not sure I have an exact framework for finding the right idea, but I’ll offer a completely unrelated story to that point. I think there’s a message in here somewhere…

In high school, I was lucky enough to be introduced to one of the great, growing sports in the U.S. — lacrosse. I had played ice hockey throughout my childhood with some football, soccer, and baseball mixed in, but I had barely ever seen a lacrosse game. The ones I had seen were limited to rowdy, indoor box lacrosse games in whatever now-defunct league the Boston Blazers played in.

(Digression from my digression: These Blazers games were insane. I once saw a goalie, after the teams were pelted by debris for the remaining minutes of the game, pick up a squashed beer can with his stick and hurl the can back into the stands where it would have knocked out a heckler if not for a small railing between the can and his face. You could hear the ‘ping’ throughout the old Garden.)

Anyways, when I began playing lacrosse, I started with a blank slate and little understanding of the game’s rules, techniques, positions, or formations. My lacrosse coaches throughout my high school years taught me most of what I would learn about how to play the game over the four years that I played there.

One thing I learned about lacrosse is that there’s a position called ‘attack’. How cool is that? Attack only play offense (again, how cool is that?). In lacrosse, you have to have a certain number of players on each side of the field at one time. This keeps the defensemen in the defensive zone and the attack in the offensive zone.

When an attack ended up on the defensive zone, it was usually because of some kind of break down and it put the attack, and team, in dangerously unfamiliar territory. Attack spend all of their time trying to beat defensive sets and suddenly they’re on the other side of the battle. To combat this, my varsity coach gave the following advice, “Get to the net first and figure out what to do next once you get there.”

His point was, if all else fails, be the first person to reach the most important point on the field, and then figure things out from there. Run through all of the chaos, and get to the starting point. Once you’re in front of the net, you’re at least clogging up a key lane for the other team. You’re able to look out and find men to cover. You can be directed by the goalie or a defenseman to where you should be.

I think getting to the net first is exactly the type of advice early entrepreneurs need when getting to the essence of their idea. When you start out, there’s a million and one things your website and your business can be. You can offer the world’s greatest social network with messaging, profiles, chat, blogs, forums, vendor services, Q&A, and competitions, but the problem is that everyone’s site has messaging, profiles, chat, blogs, forums, vendor services, Q&A, and competitions. Now what?

You’ll find this same advice all over the place. Guy Kawasaki talks about the importance of having a mantra in the opening pages of The Art of the Start. Getting Real by 37signals hits you over the head with the ‘get to the net first’ mentality. From the first two pages of the Priorities chapter we hear things like, “Explicitly define the one-point vision for your app … What does your app stand for? What’s it really about?” and from the Ignore Details Early On section, “Details reveal themselves as you use what you’re building.” If anything, listen to these guys.

Make things simple for yourself. If Twitter can make a business (and no one’s sure of that yet) out of 140 characters, there’s got to be more one line ideas out there. You probably need to take your idea and cut it in half. You might need to just focus on that one piece of your idea. You might even need to keep thinking about it, but better this than sounding the trumpets for the marketing team and business development teams before you’ve defined what you’re all about.

Once you have that idea, you’re only 0.01% of the way towards becoming a successful entrepreneur. Success will be found in the execution of the 99.99% of your other activities, but starting from the right point will make all the difference.

Get to the net first. What’s your idea?

In this post, I will try to cover some of the more straightforward options.

1. Self-funding: If you are employed, or have any sort of income, some of that can be used to fund your idea. Depending on your circumstance, this may mean dialing back some elements of the “lifestyle” or re-examining your income and expenses to see what you can really afford.

Pros: Ease
Cons: Often inadequate

2. Bootstrapping: This works best for short term, high pressure, low risk usage of funding. While risk in a young venture can be difficult to grasp, suffice it to say that massing credit card debt or high interest small business loans (angel funding) should be held until they are truly needed.

Pros: Quick, relative ease
Cons: High interest debt

3. Big Bank Small Business Loan: This could also be the use of home equity or similar low interest collateralized loan. Typically taken from a bank or large money lender at published rates. In my experience this is very difficult to get without at least one success story under your belt. Defaulting can cost you your house.

Pros: Large sums, Low interest
Cons: Collateralized debt, track record needed

4. Venture Capital: So many success stories involve venture funding that it is easy to think this is the only way business ideas get funded. This is a great option if you idea is in some facet revolutionary, or mildly innovative in a field of interest to the VC firm. VC firms typically take a controlling interest in the company in exchange for their capital, which can be frustrating for the passionate entrepreneur. However, VCs can often provide the monumental sums that cannot be raised any other way. Typically, you need to have a compelling and differentiating business plan, and the patience to be rejected over and over again.

Pros: Enormous sums, no repayment
Cons: Very difficult, and not suited to all plans. Loss of control, track record a plus.

5. The Rich Uncle: While not always an option, friends and family are more likely to trust and understand the passionate entrepreneur and will frequently provide better payment terms and interest than lending institutions. However, defaulting will make you feel guilty, and may make family life uncomfortable. That said, many successful businesses have gotten their start this way.

Pros: Ease, terms
Cons: Risking family money can be worse than risking your own.

6. Grants: A new option to me, and one I am still considering. There are many institutions, the US government included, that gives away money to people who are doing things of interest to them in some facet. If your idea is, or can be adapted to fit that definition, you may be eligible for grant funding. Several colleagues of mine have raised thousands of dollars this way.

Pros: No repayment
Cons: Difficult to research, difficult to win

————–

Given the options facing a starving entrepreneur, what is the optimal path to funding?

The path I am going to explore follows:

Start with my own income capital, and build success on a small scale before approaching grant organizations for funding. Show them favorable track record on a small scale, and a detailed plan on how their funding will be used. This is an option for me as I frequently build charitable contribution into my plans.

Using grant funding to drive growth and payroll expansion, I will scout for a low interest small business loan, and more rounds of grant funding. The loan capital will be used as much as possible on appreciating or stable assets or property that can be used to collateralize it. After staying in the black for several months or a year, I will begin approaching VCs with the aim of structuring a deal that will pay off the loans and limit the level of control they seek. Ideal would be to gain funding from two firms so that their interests can be faced against each other when applicable.

Thoughts welcome.

-Vik

1. Business plan = business success.

I think any endeavor will fail without a at least some planning, but a polished business plan document is neither a requirement nor guarantor for success. While a business plan will document your ideas and should clearly lay out your value proposition, unless you already have funding secured or a lot of staff, it will be too high level to be actionable. Recommendation: put more effort into the sales strategy and marketing plan.

2. Business plan is a tool for new recruits.

In two of my past startups, the business plan never graced the desk of a VC, but helped tremendously in communicating my goals and ideas to staff and potential partners that I came across. Be sure that your business plan clearly lays out operational details as well as clearly stating your high level concept and strategy.

3. Business plan is the gateway to real capital.

If you dream epic dreams (as starving entrepreneurs typically do) you will eventually want to use your business plan to get money out of potential investors. While small capital <$50K can typically be raised with a good story and a pleasant smile, landing millions of dollars from established VCs will surely take a polished business plan and more.

4. A business plan is a living document that changes with the organization.

When you do get up and running, don’t throw the business plan away, or let it collect dust. Keep it as a document that changes with your organization and catalogues your successes and failures — not only to show your readers how effective you are, but to keep for lessens learned and best practices in your next venture.

So how does one go about putting a business plan together? Typically with one of two tools — a normal word processor (Microsoft word) or else a specialized business plan builder
(Business plan pro). In my experience, the specialized editors work well if your scheme fits the mold of other mainstream businesses, like selling a product or service domestically through established channels, or if you are in the early stages of you plan. A wordprocesser is typically better if your plan is fundamentally different from established businesses — different channel strategy, different structure, global base, as your items may not be the ones offered to you by the template.

I have found that a good way to go is to use the template offered by business plan pro, and then edit the output in word until you like it.

Final Steps: Finishing

In the end, you are presenting more than your ideas, you are presenting yourself. Carry your brand through your document by finishing it in a way that defines it and you in exactly the way you want. Have relevant graphics in a layout that guides the viewers through your steps, and that makes the entire document easy to read. Pick a nice font, keep a consistent color theme, print on nice paper. Make sure that your brand is well defined and smells like success.

Do you have any other tips on a good bplan? Please share.

-vik

I think there’s a waterfall effect when it comes to creating a new website. First, you have an idea for a website that’s going to change the world (or just make you a lot of money). Once you have an idea, you have to come up with a name. Once you have a name, you have to design your logo. Once you have a logo, you have to design your site.

Once you have users, you realize that the idea, name, logo, and site design all need to be fixed, but that’s another post altogether. (There are a lot more steps involved, but this is a post about the logo and design so just go with it).

For this post, I’ll take you through my waterfall.

The Name

Enter Venture. I like the way the two words rhyme. Bingo.

Honestly, deciding to choose the name Enter Venture was an easy, gut reaction; however, it took it took me 2 months working with 3 different people, countless checks on register.com, and plenty of time with thesaurus.com to come up with Enter Venture / enterventure.com.

There were a few exercises I went through to come up with Enter Venture. My favorite exercise is the stream of consciousness word dump onto a whiteboard. Next, I took a step back to think of synonyms for the words that best encapsulated my idea. Working with other people helped further diversify my options. Finally, I confined myself to certain guidelines: no three word names, must have a “.com” address, etc.

There are probably a million ways to come up with a website or company name, but I think the three guiding principles of 1) Brainstorm 2) Build Constraints and 3) Get Feedback, in whatever order, will give you your best chance for naming success.

The Logo

It took surprisingly little time to conceive the idea for the Enter Venture logo. I knew we wanted a something simple (a theme you’ll hear repeated on this blog). I would much rather start with something simple and build on it. Also, who needs a great logo? I’d much rather have a great product than an intricate logo. See Facebook, Digg, etc.

One simple look at the “Enter” key on my keyboard gave me the idea to separate the two words Enter and Venture by putting Enter in button. I was open to any button but thought something that evoked the idea of an “Enter” key would be clever.

With an affordable designer I was able to test out this one idea and three other design concepts. The button idea looked great and with a few tweaks to color and font, Enter Venture’s logo was complete.

The Design

Another thing that we communicated to our designer was that we would have a white background site. I love white background sites. I don’t see any other real option for text rich sites. White backgrounds have worked for text since the days of papyrus so it’ll be tough to convince me to do otherwise.

The design, like the logo, is minimalist. It’s so basic that I decided to immediately remove the Google Ads I originally placed in the sidebar. With a basic, but unique design I will be able to focus on creating content.

(One final note about the design: it’s not done. For all of you IE browser users out there, bear with me).

I’ve now nearly wrapped up the ‘why i’m here’ and ‘what i’m about’ pieces. Stay tuned next time for my Modus Operandi, part 1. We’re almost there.