WFS Entrepreneurship Network

Editor’s note: Doug Smith is the founder of Headsdown providing consulting for business strategy, M&A, strategic projects, marketing, and finance.

The emergence of crowd funding is becoming a reality. We have entered into a unique time that the adoption of eCommerce by consumers and trust in the internet have allowed for such services as Kickstarter to take hold. Kickstarter allows for individuals and companies to raise money online for their idea. Idea’s range from music albums and art projects to consumer products and video games.

The individuals and companies typically reward their donors by giving the product to them for free. The logic behind these is simple, people that are willing to pay for a product, even before it even exists or otherwise they are willing to pre-order the product.

There exist a few caveats such as the individual or company using the service must meet a predefined goal of money to be raised, if they do not the donors are not charged. If a idea hits its funding milestone a small percentage of 5% total will be taken by Kickstarter and Amazon, which is the payment processor. The money is then released to fund the idea.

The beauty of this for individuals who do not have the capital to build the product they can now have access to individuals that might be able to help them fund their dream. This also opens up a great opportunity for people to test business/product ideas with no expense to them outside of time.

A success story example is Coffee Joulies that raised the funds to launch an unique product that gets coffee to an optimal temperature. They are now doing millions in products sales annually and have purchased their own factory. 

Notably people that use KickStarter are normally early adopters. The fact they are early adopters means they tend to set trends. The site is also heavily integrated with social media. Thus when someone funds an idea or product they nearly always share it with their network, which include other early adopters via Kickstarter and social media sites like Twitter or Facebook.

This does two things:

1) Free marketing because every one share on Facebook leads to nine people visiting a page

2) Influences their peers. Nearly 70% say peer recommendation drove their purchasing decision

(You can find more statistics about social media and its impact on purchasing here)

If you have the prototype laying around wanted to test the waters. There is now a place in Kickstarter to see if  folks out there willing to help you bring that product to market and be your first customer. The only cost too you is time invested in applying and promoting your idea via Kickstarter.

Note: Kickstarter has received attention from some projects that received funding and a product is never delivered, thus they have enhanced their review process for projects. Bloomberg highlighted some of the recent pitfalls for donors on  Kickstarter.

Editor’s note: Doug Smith is the founder of Headsdown providing consulting for business strategy, M&A, strategic projects, marketing, and finance.

A simple one-hour meeting with a team of 10 seems fairly normal. Now take into consideration that meeting is actually 10 hours of time used by your team not doing something else. Now extrapolate that  one-hour meeting and make it reoccur once a week for 52 weeks. This will lead to nearly 58 work days lost to that reoccurring meeting, if your team works 9 hour days.

A few ways to save time and improve meetings:

• Set strick timelines and make meetings only as long as they need to be. This ensures those presenting get to the point and move on.Do not be beholden to Outlook and schedule 30 minute and hour long meetings.

• Do not allow computers, tablets, or smart phones into meetings they distract attendees.

• Have standing meetings they have roots as far back as World War 1 and reports have found they last 1/3 the time and the decions making is on par with seated meetings.

Editor’s note: Doug Smith is the founder of Headsdown providing consulting for business strategy, M&A, strategic projects, marketing, and finance.

AngelList & Gust are the two main sites used by angel investors to source deals. Most specifically technology based startups that are fast growing and should make the investor a small fortune or other in terms a place to find unicorns. Most investors realize the risk’s associated with startups and these sites help better glean deals for them to review. Both are useful and any entrepreneur that is preparing or in the process of seeking early stage funding can find these sites to be valuable tool. My first hand experience from a usability stand point is that AngelList is like Facebook whereas Gust is like LinkedIn. Gust even utilizes LinkedIn as its primary third party login tool.

AngelList is a very clean program and has led to over $1.1 billion worth of investment dollars going into startup’s utilizing the site. The site was developed by the creators of Venture Hacks, Babak Nivi and Naval Ravikant a fantastic blog about venture capital written to explain the numerous nuances of venture investing to entrepreneurs. The site is very clean and the user experience is smooth, much like Facebook. The social network effect is present in site and familiar elements can be seen from many popular social networks, such as Twitter seen in the sites ability to post 140 character messages. A newer feature recently rolled out is the job/recruiting portion of the site allowing for startups to source startup-minded employees.

Gust is much more like LinkedIn it is a functional tool and has a substantial amount of angel groups “professionals” utilizing it as the main tool to have companies submit information to them. The site claims 1,000+ startups receiving funding from the site annually. The site is very feature rich, which in my opinion is drawback for an entrepreneur and rather an advantage to investors using the site because it allows for more customization around specific details one might want to see from a potential investment target.  I see it as a drawback, because an entrepreneur might have to fill-out numerous fields thus creating a much more time consuming process than AngelList, which can be setup and filled out completely in under an hour. Gust, however based on the number of investor groups being submitted too can take well over an hour if not three hours based on the amount of information already created for the fund raising process

Regardless of the time commitment both sites should be maximized by anyone seeking funding. Main points for AngelList is to be active and post frequently about company updates and build-up as many references you have on the site. On Gust spend time searching out groups that do not charge a fee to present. I have found and heard from others the “fee” based pitches are both a barrier to entry for entrepreneurs and most normally have a less sophisticated and less active group of investors. This is from my experience and surely could be different outside of Florida.

Editor’s note: Doug Smith is the founder of Headsdown providing business strategy, M&A, strategic project, marketing, and finance consulting

A question poped into my head after a discussion with a peer about a comical idea that I pitched at a recent Startup Weekend event in Tampa. The discussion about the idea led me on the journey  to see how much it would cost and how long would it take to build a fully functional branded and customized eCommerce store that was live and accepting orders.

Surprising it took basically no time, roughly a hour excluding the time waiting on hosting. My initial stop was Shopify, a turnkey ecommerce site that handles store hosting, shopping carts, payments, and almost everything you would need. The base packages  start at $29.99 a month and earlier in the weak I  read about Shopify’s Build-A-Business Competition. Shopify pitches the competition as ”Come up with a product to sell, open your online store and pick a mentor. Our community and your mentor will give you great advice and guidance along the way. At the end of the competition, the four stores that sell the most over a two month period will each win a $50,000 investment from their mentor.”

The competition’s most recent winners include million dollar companies:

•  Coffee Joulies - Maker of a metallic jewel like items that cool and maintain hot liquids at optimal drinking temperature for long periods of time

• DODOcase - Marketer and designer of iPad cases that utilize actual book bindings.

The competition also came with several perks including; a free Dotco hosted site, $100 Google AdWords, $100 MailChimp credits.  I selected this as my eCommerce solution, but did not go with a Dotco site, rather I selected 1&1, which offers the first year hosting for .com sites for a mere $3.99. I purchased the hosting and spent the rest of the time waiting for it to go live tweaking my Shopify site and getting images loaded up.

Review-Shopify is very intuitive and surprising rich with features. I would characterize the difficulty to be comprable to that of writing a blog on WordPress. 1&1 is very straightforward and I liked the expierecne more than I do GoDaddy’s. I would say for $35 the first month an $29 a month thereafter it is a no brainer for someone that currently doesn’t have an eCommerce store.

So for those wondering what the comical idea was. Well it is called LiquorDogs, an online store that sells liquor injected and marinated hotdogs, bratwurst, sausages, and beef franks. The idea came from an ice-breaker done at Startup Weekend where dozens of nouns were written on a white board and one individual from a team selected two nouns. The teams then had five minutes to come up with a business based around the name and pitch it.  LiquorDogs was everything from liquor flavored dog treats, a malt beverage company that’s bottle was shaped like a dog bone, and a dog park that has a bar attached, which in hindsight is a nice idea with anyone with a bar and or vacant land in suburban or urban area. All of these ideas were pretty solid considering the time allotted, but the liquor injected meat somehow won over the team of a dozen twenty to thirty year olds males. Unfortunately the launch of LiquorDogs is still to be determined based off some more research in potential regulatory issues and finalization of beta tasting.

WFSEN is looking for guest writers to write articles such as this on their insights into entrepreneurship or other relevant topics. Please contact Doug Smith (05′) at douglasmithfl@gmail.com if interested in being a guest writer.

Editor’s note: Doug Smith is the founder of Headsdown providing consulting for business strategy, M&A, strategic projects, marketing, and finance.

Anyone thinking of raising money or selling their business might want take sometime and address these potential questions. I have been on numerous calls on both buy-side and sell-side transactions without fail they come up 100% of the time. Thus, I have outlined them here as an entrepreneur you need to minimally be able to speak about the following things in length:

• Brief pitch of the company one minute in length
• What is the problem the company addresses
• What is the solution the company provides
• What is the business model
• What is the magic sauce of the company (Technology, Team, etc)
• The backgrounds of the management team
• What is your market and size
• What is your focus or vertical(s) inside of the market
• Financial status (Burn-Rate, Revenue, Profit, Net Income)
• What is the sells process
• What does your client base look like
• What is the capital need for the company near-term and long-term
• What type of capital is being sought debt or equity
• What % of the company is up for sell (Avoid valuation discussion if possible)
• Use of funds and what the exit strategy is for an investor

On a side note many entrepreneurs and especially small business entrepreneurs need to make sure they are gleaning as much value out of their company when valuing it. One fatal mistake is not discounting compensation and other perks you as the entrepreneur are taking out  ”Owners Compensation”.

Example

ABC Corp. has $1,000,000 in sales and  gross profit of $300,000. The company has $250,000 in Selling, General, & Administrative (SG&A) expenses and the net income is $50,000.

The company is approached by Dewey, Cheatum, & Howe Capital and they are interested in purchasing the company. They understand the space and apply a EBITDA multiple from recent transactions in the space, which is 10x net income. In this case ABC Crop. would be valued at $500,000 .

Dewey, Cheatum & Howe Capital know after reviewing the audited financials of ABC Corp. (You should always have Audited Financials) find the company has $150,000 of owners expenses that are going to be removed posted the sell. Meaning the company has $200,000 in net income, four-times that of the stated financials and leading to the company’s value raising to $2,000,000 for Dewey, Cheatum & Howe Capital post transaction.

The wise entrepreneur would know this and subsequently rebuttal the $500,000 offer that Dewey, Cheatum, & Howe Capital will give the owner of ABC Corp. with an offer taking into account the owners compensation.

WFSEN is looking for guest writers to write articles such as this on their insights into entrepreneurship or other relevant topics. Please contact Doug Smith (05′) at douglasmithfl@gmail.com if interested in being a guest writer.

Editor’s note: Doug Smith is the founder of Headsdown Media and a consultant on business strategy, investment fundraising preparation, marketing, and finance.

A current WFS student Edward Bailey ’13 recently invented The Footprint, a device that collects electricity from the kinetic energy. The energy can be created from actions as little as walking. The Footprint has the ability charge cell phones, iPods, and other small electronics. A video of him explaining his invention on Youtube can be found here.

“Now under review for a provisional patent, The Footprint offers an environmentally friendly way to collect energy from anything that moves, be that a backpack, a purse, a car, or a truck, and power anything that can be plugged into a USB port. Edward hopes to attract investor interest in developing the idea into a consumer product. “There’s so much electricity that can be harnessed,” he remarks, “without using harmful means.” – Woodberry Forest School

This is very novel invention and very timely with nearly 234 million mobile devices walking around in the United States. There has also been a trend with venture capitalist seeking younger entrepreneurs and funding them. A prime example is Peter Thiel’s 20 Under 20 Fellowship Program to fund young college bound or current college students and have them put the books down and pursue their business idea. He gives each individual a $100,000 grant to pursue their dream for two years.

Regardless if Edward is awarded a patent. He has achieved a significant milestone that many individuals wish they had the ability to do. He utilized technology in a novel way to solve a person problem that many people care about. He has done one of the key things when launching a business solve a problem people care about. He hopefully will find a few Tigers to help as he hopes to “attract investor interest in developing the idea into a consumer product.”

WFSEN is looking for guest writers to write articles such as this on their insights into entrepreneurship or other relevant topics. Please contact Doug Smith (05′) at douglasmithfl@gmail.com if interested in being a guest writer.

Editor’s note: Doug Smith is the founder of Headsdown Media and a consultant on business strategy, investment fundraising preparation, marketing, and finance.

What do you get when you put 300 people from 11 cities on buses heading to Austin for SxSW in competition to build companies? Sixty web-technology prototypes and corresponding companies built in 72 hours with nearly 3,000 energy drinks consumed in that timeframe. The event is called StartupBus, a three day bustrip-hackathon with skilled web developers, graphic designers, and business development types pitching ideas and creating companies.

StartupBus began life as a joke in Australia: a roadtrip starting in San Francisco with friends, but with the twist of launching a startup on arrival in Austin in time for the SxSW technology conference. Somehow though, people thought Elias Bizannes (StartupBus Founder) was actually serious. A few unexpected blog articles and many emails later, he was stuck with having to now make good on his pub night promise.

A month before departure in March 2010, Elias hustled to find a bus with wifi, sponsors to cover the costs, and he also selected the original Buspreneurs. Those 25 people without realizing it set the tone, culture, and rituals that hundreds of other people have now experienced.

The 2010 buspreneurs hacked an engaging website with live bus tracking and even a game, designed the logo and even some merchandise. And so began the experiment: traveling at 60 miles an hour for three days on the road between San Francisco and Austin. The question was what could people produce under unique (and some would say extreme) time and resource constraints?

Six functional prototype web services were built and they were presented to a panel of high profile Austin investors. The inaugural event received a lot of exposure, the winning team was offered funding to turn their prototype into an actual business and a community of entrepreneurs who still work together was created. And over the next year, that experience proved to be life changing for many: moving countries, changing jobs and going in new directions in life all because of this experience.

In March 2011, that community expanded this experiment into a competition and grew six-fold with buses departing from San Francisco, Silicon Valley, Chicago, Cleveland, New York, and Miami. Participating were 156 new ‘buspreneurs’ who produced 38 different products. In 2012 the community launched eleven buses leaving from Silicon Valley, Washington D.C., New York City, Boston, Baton Rouge, Los Angeles, Las Vegas, Tampa, Cincinnati, Mexico City, and Stanford University with 300 ‘buspreneurs’ aboard. StartupBus has evolved from an experiment to a competition and an international community of unique people.  They look to grow into a unique type of institution that leaves a lasting legacy on the entrepreneurial ecosystem.

This year I was selected to be on the bus leaving from Tampa, Florida. I joined up with Ryan Srofe, Shane Needham, Jon Hartmann, and Will Mitchell in building and pitching BumperCrop. The company is web-technology platform that allows for passionate home gardeners and conscious consumers the ability to Buy/Sell/Trade homegrown food in local communities. Future features include applications to help educate and increase productivity of home gardens. The company address a market of 46 million home food gardens in the United States that produce $18.5 billion worth of crops annually with as much as 30% going to waste.

The company was succesful at pitching the idea and was selected as Runner-up in the National StartupBus Competition at SxSw and was also selected as one of three of the most promising companies by Rackspace in the competition a few days before. The company was featured by numerous news and media outlets including CNN, Business Week, The Next Web, TechCrunch, and Creative Loafing among numerous others.

The company presented to thought leaders in the technology space and prominent venture capitalist on its road to coming up short to Silicon Valley’s Cerealize.me. Cerealize.me is a subscription service that allows a consumer to build their own custom cereal and packaging and have it delivered right to their door.

The Judges for the competition included:

• Robert Scoble, Rackspace
• David Cohen, TechStars founder
• Graham Weston, Co-Founder of Rackspace
• Naval Ravikant, Co-Founder AngelList
• Guy Kawasaki, Former Apple Chief Evangelist
• Dave McClure, 500 Startups
• Paul Signh, 500 Startups
• Luis Robles, Sequoia Capital
• Nicole Glaros, Techstars Boulder
• Elias Bizannes, Charles River Ventures (StartupBus Founder)
• Christine Herron, Intel Capital
• Katie Rae, TechStars Boston

The event can be simply described as the Iditarod race for entrepreneurs where an individual has to become one with their team to have a chance to succeed. A true principal in business that one must come to understand and trust their team and how better to do it than when the pressure is on. The circumstances being your team is made up of nearly all complete strangers trapped on a bus, sleep deprived, with less than 72 hours to build and prepare to present your idea to the public at an internationally televised live-streamed event in front of several hundred people and celebrities in the technology and venture capital space. A true test for any persons patience, stamina, and mental fortitude.

A key factor in BumperCrops success was the team which consisted of one professional in each category:

•  web-developer
•  graphic designer
•  interactive-marketing expert
•  social media expert
•  business development and planning specialist

This was an ideal team for our project. Each individual made the team exponentially stronger and combining this with a disruptive idea that tackled a defined problem, made the company very formidable. The team in this case was formed by shear chance, but events like StartupBus, Startup Weekend and other hackathon events facilitate teams and products such as BumperCrop to be formed. These events create a very uniquely productive environment, as it is rare you can interact with so many individuals involved in the startup space for an extended amount of time. Theses individuals can give you qualified critical feedback about product, strategy, technology, and in some cases facilitate introductions to potential partners/advisors and other vital resource contacts, such as money and the press.

The takeaway is that to increase your potential for success you need to have multiple elements working in unison. The elements being those listed below:

• Right idea
• Right time
• Right team
• Team chemistry
• Enough resources
• Right environment

All of these aligned well for our team as our idea resonated with people and the judges. Our timing was good as the whole local organic movement is gaining traction, especially in Austin were edible landscaping is taking hold. We had a we balanced team with strengths in multiple equally valuable areas. The team was well oriented with confident individuals with no personalities overshadowing or derailing the project. We had a fixed amount of time, this was a good thing in producing something, and we were self sufficient in terms of not needing capital to produce our minimally viable product. The environment was exactly what we needed as we were confined to sharing rooms and sitting with one another on the bus and the pressure of the competition kept everyone on task. We also benefited from the networking on the bus with other buspreneurs that gave of us the opportunity to get infront of the press and even pick up one high profile advisor from our space. Overall it was a great experience and I recommend any wanting to take interesting vacation next year to apply. Take a few extra days off after to recover. I had only about 20 hours of sleep from Tuesday to Sunday night.

WFSEN is looking for guest writers to write articles such as this on their insights into entrepreneurship or other relevant topics. Please contact Doug Smith (05′) at douglasmithfl@gmail.com if interested in being a guest writer.