Investrish.com

Middle Class NOT Declining

STATS: The Myth of the Declining Middle Class

This sort of information has a huge impact on our economy in the form of consumer sentiment and needs to be promoted to counter the negative voices.

CEO Title Danger

Bloomberg.com: U.S.

Here is an example of the troubles that can come to the CEO. You get a lot more compensation than other employees but you also have a lot more responsibility. With that responsibility and compensation comes increased risk. Jerry Yang's job is on the line depending on how the company does as a whole.

This same thing happens in all companies that take investor money. The CEO reports to the board who represent the shareholders. In a public company the CEO reports, slightly indirectly, to the public. This is a far cry from "being your own boss".

The UI Revolution

I recently read the best article I've ever read about User Interfaces. It's by a guy named Bret Victor. It's very well conceived and thuroughly examined. You can find it at: http://worrydream.com/MagicInk/

Software as a Commodity Tiered Pricing Model

So... crazy idea. What if software would cost more each time you used it? but only very slightly more.

Imagine a software license that allowed you to use a program some number of times for free. Then it would cost a small amount for the next tranche of uses and a medium amount for the next tranche, and finally a large amount for uses above some high number...

]]> For some applications it would have to be measured in minutes or hours rather than instances since usage sessions might vary greatly in duration. Others could be based on number of transactions or number or matched queries.

We have a Photoshop education license. I thought about that term and it registered that in many ways we are still learning the program and maybe shouldn't have to pay as much as someone who knows the program well and therefor gets more power out of its use. Once we have used it on a daily basis for long periods of time we should have to start paying the full professional price and we would be willing to because we are clearly using it as a professional.

So, everyone could use a software package for free, not just for a limited 30 day trial window that starts the first time they install it. They could use all the features and really learn the program. If it turned out to be useful to them they would keep using it and probably increasingly so. They sell themselves on its usefulness. After the first couple hundred hours of use, if they can't see it being worth 10 dollars to keep using it, they won't want to keep using it anyway. And if they use it for another 300 hours and don't see it as worth 100 dollars, they probably won't keep using it anyway and on and on...

It would make corporate licensing simple. Companies would need a slightly larger alotment of free hours in order to let more people see how useful it is. But once they did, if it was truly useful, the cost might end up being quite a bit more than they would have paid otherwise, on the other hand they(and the vendor) have a clear measure of its adoption and usefulness to their company.

People will say it turns software into a commodity. So what?

Site Re-Design coming

I've decided that a better approach to this site will be to blogregate equity finance blogs. I'll have categories for VCs, Angels, Private Equity and Entrepreneurs. I'd like to use RSS to have it all work automatically and would like some sort of voting capability. Anyone aware of software that would do this? I guess it's going to be just a Digg-type site with a clear focus on equity finance blogs. I also still want to accomplish my initial goal which is to facilitate understanding of equity finance for entrepreneurs.

Simpler, Easier, Cheaper, Faster

Ad Thoughts: Cheap startups This is something I've been thinking about a lot lately. I believe that at the top of the tech industry there is increasing consolidation and yet outside it is getting much more fragmented. This is happening because it's so much easier to create stuff these days. It's becoming true in all parts of business. I'm quite excited about it. The real key is imagination, and execution.

The elevator pitch

Practicing the Art of Pitchcraft
A VC talks about the all-important elevator pitch. While reading his comments I came across an interesting application: http://www.yourelevatorpitch.com it's a cool little Ruby app that lets you post and rate pitches. Check mine out while you're there.

Business Plan Tips

Business Plans Gone Wild - Forbes.com Tom Taulli on Forbes writes a good article on a couple of simple but important tips for writing business plans.

Friends Family and Fools

Capitalizing On Family While I am somewhat opposed to borrowing from friends and family, this video segment presents useful tips on the first round of financing for a lot of startups.

]]> Friends and Family are well defined as to who they are for each entrepreneur. Fools, on the other hand, is something that might be new to some readers. This segment is occupied by non-businesspeople that are high-income earners such as dentists, doctors, lawyers, HR directors... These people want to be as wealthy as the world percieves them to be but aren't because their expenses tend to catch up quickly with their incomes. They have some cash available for investing and would love to be able to "hit it big" so they could stop working so much. CircleLending is a really good program for these lenders/investors that makes them feel like their risk is a little less than it would be otherwise. It might make the difference between getting their money or not.

LinkedInThis is one of my favorite business tools. It's incredibly useful for finding business contacts. We were able to use it to find the right people to contact at Yahoo, eBay and other companies in order to find an acquisition partner for byownerdaily.com. I suggest joining to everyone I know, whether it's for the potential of finding the right job, or having it find you, or due diligence, capital sources, team building etc.

Private Money for Real Estate

Private Money Lenders This is a useful audio file about raising capital from private lenders for real estate investing. It's kind of long but it's quite realistic and instructive.

Funding Mistakes

Fatal Funding Mistakes For Startups This article covers some interesting points relating to mistakes that companies often make when seeking early-stage financing. I think the "Wrong Investors" section is poorly titled. It asks questions that are not answered with advice and it also reinforces irrational fear of idea-stealing that most beginning entrepreneurs have. I thought it was interesting to see the contrast of the advice to not worry about NDAs with this fear of idea-stealing.

]]> Now that I've mentioned idea-stealing... it's an area that I think is super important in the mind of the beginning entrepreneur. I think that Guy Kawasaki of Garage Technology Ventures, www.garage.com, makes a valid argument that it really all comes down to execution. How well can you and your team implement this idea? If you can implement then you will win, especially if your idea is authentic to you and your team. The value of having an authentic idea is that you can see where the roots are and where the branches will likely lead. The founders of successful companies often seem to have quite a vision that plays out over time, morphing the original idea naturally as the company grows, enabling the growth with the change but rarely abandoning the underlying premise. Competitors and me-too shops will always copy successful strategies to the extent that they can. The authentic long vision will get you where you want to go regardless. So don't waste energy worrying about who is going to see what you are doing and if they might steal it, focus on beating everyone to market and staying ahead of them once they are there.

I have to also say that it doesn't make sense to give away any more information than is necessary. I think that retaining some portions of the vision for yourself enables you to have an advantage when it comes to allowing yourself to share in the success of your company with investors, lenders and employees. If you know that you have an ace up your sleeve that will eventually allow you to double or triple revenues beyond the targets then you can feel more confident sharing ownership since the pie will be bigger than everyone else expects it to be.

Very good article on Venture Debt

Connect :: Resource/Article :: Poison in the Well This article by Josh Coates of Berkeley Data Systems is very informative about seed funding and venture debt. While he restricts his criticism to Utah angel investors I am confident that similar investors and tactics exist nearly everywhere.

Success!

My current business is consulting with entrepreneurs who are seeking capital. I have been working on this for about 3 months with the current focus where I work mostly on finding debt sources. On Friday I had a conference call with a lender and one of my clients where the beginnings of an agreement was reached. This particular client was a subcontractor with very little collateral but a healthy services business. He was seeking capital in order to bid on a job that would double his revenues. After much searching, it appears I have succeeded. If he moves forward this will provide him with a virtually limitless capital source that is not contingent on his credit or assets.

What Investors Expect and Want to See

I actually intend to write a book on this very subject. It will cover what makes a business fundable from the perspectives of diverse capital sources. I am thinking of it as "What Those with Money WISH You Knew About Raising Capital". There are lots of good resources online that cover the basics that investors want to see in order to invest. I will compile some of them and see if we can come up with a basic set of docs and characteristics that are necessary to raise capital.