Dot Com to Dot Bomb

I saw this last quarter when one of my classes visited your class at the end of the quarter (our teacher left early for a vacation). I thought the presentation was pretty good.

It is so crazy to think that the internet has only been a common part of society for just a decade. Yes, as we learned, it started earlier than that, but it's so weird to think that just back in high school no one had smartphones, very few had a laptop, and those who were online probably still had dial-up. What would it be like to be 90 years old and remember a time when there weren't even tv's! Cars were an emerging technology!

It's also funny how some of the original players on the net were Sears and H&R Block!

It's always easier to look back and see a bubble, but c'mon! Billion dollar IPOs for companies that haven't made a buck and even one company that technically didn't exist! Insane! The only explanation I can come up with is greed. No one could honestly have believed that some of these companies were worth their valuations, but invested anyway because they knew speculation would make them rich.

That sad truth is that it did make them rich - at the expense of many, many regular folk whos retirement accounts got hammered. Lame.

Anyway, the web is a crazy place and it will be interesting to see what happens with Google, Facebook, and Twitter. And my company!

Michelle Armstrong

Michelle Armstrong works for Vulcan in Seattle. Vulcan is Paul Allen's company.

They have many projects they work on ranging from real estate to green tech to sports and museums.

Michelle is in HR and makes many hiring decisions. One interesting thing she mentioned about hiring at Vulcan is that they do extensive background checks because Paul Allen is actively involved and they don't want any psychos getting near him.

Michelle gave us some good advice about interviewing. I'll list as much as I can remember:

1) Research the company

2) Know the company culture

3) Go into an interview with questions prepared

4) Overdress

5) Shake hands and smile

I also asked her a question I had about putting future experience on a resume. At the bottom of my resume I put "The next 6 months..." and listed skills and stuff that I would get during that time. She said that was fine and suggested I put it higher up on the resume depending on how much work experience I had.

I've averaged 2 questions per speaker.

Derek Young

Derek Young worked at REI for 10 years until he and a few friends and co-workers left to start their own company. They created a consulting business that helps big companies set policies for their own call centers. I think they also help with the IT infrastructure for those call centers and also offer legal advice. But they are quick to note that they're NOT lawyers and that often clients must consult with legal advisers.

He also mentioned how different privacy laws are in Europe compared to America and how it's been difficult learning how things are handled over there.

Derek also started a popular blog about Tacoma, but he's slowly turning that over to other writers.

Derek is also well-known in the area for Suite 133. This is a place for entrepreneurs and other folks who need nice shared office space.

They may expand because his new business is growing and kind of taking over the space. They also need a more private setting because their contracts require anonymity, yet they work in the middle of an open public space!

The presentation was cut short by a fire alarm, so I followed Derek out and asked some questions about REI.

He said it's a great place to work, and it should be - they win Fortune's Best Places to Work every year. With that he said the IT department is good, but very competitive to get into since the company is so popular.

I asked what technologies they use and he could only think about some IBM stuff. Didn't mention .Net.

Bruce Kendall

Bruce Kendall helps with economic development in Pierce County. He is a man with vision, which is refreshing in the Tacoma area. As Bruce would agree, Tacoma has lots of potential, and it's made tons of progress, but there is still a long way to go. I would say that distance just increased by the size of one global investment firm - Russell Investments. Tacoma needs them and three others just as big.

Bruce was interesting to listen to, but I wish he gave more details about what is actually being done to bring primary employers to Pierce County. And, iff no one is biting, how come? And what has been done to fix that?

John Dimmer

Recently John Dimmer from Firs Management spoke to our class about funding a new company.

John has many years of experience in banking and funding start-ups. He actually started his career as a repo-man. He was actually the most successful repo-man in the bank. Over time he moved up the ranks and eventually felt ready to move out on his own and start a business.

A cousin or brother or some friend of John's was selling a new technology called an internet browser. This was back when there was only 48 websites online - 48!!!! John had always wanted to start a business and this friend was thinking about starting one too. At the same time Andrew Fry was leaving Microsoft to get into multimedia. So John, his friend, and Andrew all decided to go into business together. They started an online media company called Free Range Media.

Free Range was sold and John now works for his father's investment company - FIRS Management.

John seemed to be very focused on the people in business. He places a priority on integrity (which is my number 1) and passion (which is my number 2). This reminded me of something a friend once said, "Employers don't hire people, they hire passion."

Of everything John shared this table was most interesting to me:

Company Evolution Concept Start-up Growth Phase Expansion

Financial Performance: Pre-revenue Nominal, Not Profitable Moderate, Break-even Profitable

Funding Sources: You Friends and family Angels VC

Amount Invested: As much as possible $25k - $150k $150 - $2,500k $4 million plus

Jon Goodman

The Goodman Commandments

1. Don't be nervous to share your idea
2. Take market research with a grain of salt
3. Research everything you can about good business processes
4. Get seasoned legal advice
5. Get a good accountant
6. Get a great BoD
7. Do not define your business in terms of your product - Does Nike identify itself as athletic equipment, basketball shoes, casual footwear, skate shoes, or lifestyle enhancers. A lifestyle enhancer can address each of those niches and serve them, whereas it would be hard for an all-cleats brand to try a new market.

Exit Strategies:

Class A

Run it until you die, give it to children (Kikkoman is on its 17th generation).

Run it until you die, sell it.

Class B

Grow it, sell it (know who you are growing it for).

Grow it, take it public.

Grow it super quick and bail. (Fads)

There is no such thing as an informal partnership. If you die, it is very possible that your informal partner formally ends up with EVERYTHING.

An S-Corp can't have foreign investors or passive income.

LLC is your best bet.

Do not do good business with bad people. Find good, honest, hard-working business partners.

The management of a company usually follows this path: you, a trustee manager, someone who can take it national and possibly go public.

Strengths and Weaknesses

I lost my notes, so I'll have to do this again.

Strengths

• I'm a leader
• I listen well
• Public speaking
• I can analyze anything and point out flaws or weaknesses in anything
• I see opportunities
• Persistent if there is a goal
• time-management if there is a goal

Weaknesses

• Sometimes the tone of my voice does not reflect what I mean to say
• I'm forgetful
• I lose interest and focus if there isn't a good plan and goal
• Math

Ron K.

5 Steps to Writing a Business Plan

1. Identify Your Audience - this would be investors, employees (big hires), partners, or banks
2. Outline the Plan - some or all of the following: company profile, problem, solution, market, competition, management team, financials
3. Write the Plan - write the plan, No miracles! If you require a miracle to cut a profit, your idea sucks
4. Review Plan - proofread and fix errors, also each topic gets similar weight - too much tech and too little market means you're a geek who doesn't understand
5. Update Plan - create a version control system and keep track of who has what version, also include a subtle NDA where you state their name and confidentiality of the content

A good indicator of your market: are they already buying? If so, how much and how often?

5 Business Ideas

1. SmartList - a super awesome and easy-to-use meal-planner.
2. Job Bidder - iPhone app for small and medium-sized construction businesses.
3. Chores Etc. - All-inclusive home/office service which includes regular lawn care, window washing, car washes, carpet cleaning and maid service. And meal-plans using SmartList!
4. Weezytron - heard it from a friend, this is a toy megaphone that makes you sound like Lil' Wayne when you talk into it. You could sell millions of these in the ghetto!
5. Flux Capacitator - the original alternative energy powertrain!

Failure-rates fail to accurately rate failing

Whenever the topic of small business and entrepreneurship comes up, someone always has to mention the failure-rates of those ventures. So when I picked up the The Technology Entrepreneur’s Guidebook and started reading the first article, I rolled my eyes when the author unsurprisingly started off with this mumbo-jumbo:

"Only 1 in 6,000,000 high-technology business ideas wind-up in an IPO"

High-technology business idea - that's a pretty general description! Are these real businesses? Or are they just ideas? If they're real, are we including every business in that number or just the ones that attempted an IPO and failed. There are a buttload of real businesses that were never meant to attempt an IPO, do we consider them a failure because they couldn't reach that size? Does having an IPO mean the business is awesome and profitable? No it doesn't. So what does 1 in 6,000,000 actually tell us? Squat! It means squat.

How about this one:

"Less than one percent of business plans received by venture capitalists get funded"

Really? Are we to assume that 99% of businesses are never funded? What about bootstrappers? What about angels? I'll bet they're double-counting here too. For example, entrepreneurs share their business plan with more than one VC, but may only accept an investment from one or are only offered an investment from just one. I also think there is enormous amount of deals that are done that never involve VCs. What about the businesses that would have succeeded had they been funded? This last question reminded me of something Jay Turo from Growthink, Inc. once explained regarding venture capitalists. He said,

"Venture capital funds are usually 7 - 10 year partnership structures whereby the general partners, the VC’s, manage the capital of the limited partners, usually institutions (endowments, pension funds, etc.). And at the end of the period, all profits and proceeds are distributed to the various partners on a pre-determined split. These splits are normally such that the general partner professional money managers need to obtain a “highwater” return for their limited partners before they, as the general partners, see any return. beyond their management fees In practice, this creates a huge incentive for the general partners to hold on for home runs, and to be reasonably indifferent regarding smaller (less than 3x returns). As a result, the VC will often block a portfolio company from harvesting a very attractive, but not a home run, investment return."

The next time entrepreneurship comes up in a conversation and some naysayer starts spouting off 'facts' about businesses failing, just tell them to [insert witty rebuttal here]. And that concludes my first blog assignment.