Light, Motion and Magic

This time in mid-August I always become acutely aware that summer is drawing to an end. It is darker in the morning, dusk falls earlier. The cicadas’ drone brings back a lifetime of memories of back-to-school shopping and State Fair visits. A familiar dread of the march of time towards winter takes hold.

In the work/life balance of things, I give special weight to the life part now, and try to grab hold of every moment possible. So enjoy this beautiful poem, and try to take time in the next few weeks to savor this singular, sweet, fleeting time of year.

THE END OF SUMMER

The summer days are fading, as they must
From endless hours to short and fleeting light
The bird’s once bright, immortal tune, now cries
A melancholy aura to the dusk
The children fiercely climb, and dream, and race
Before their wild and unchained days depart
And yet beneath the zeal lies a half heart
For there isn’t time, there’s only enough space
The sun seems low, a hazy orange sphere
Now reminiscing sweetly of the days
When endlessly before you summer lay
And as in the deep, crimson dusk you stir
Your soul joins with the birds in wistful brood
Crying for lost summer days, for childhood

by Shannon Georgia Schaubroeck

Tags:balancing act, end of summer, Shannon Georgia Schaubroeck

Having gone to all three sessions of 2008 Summer Venture Camp put on by The Collaborative, I want to summarize the most important lessons that I took away from among all the information, expertise and advice given.

My business niche as a woman entrepreneur with Miri Market was not the primary target of most of the panel discussions, which seemed focused on med/tech start-up companies needing millions in venture capital. The Minneapolis/St. Paul area is especially strong in this industry, being home to Medtronic, St. Jude and Guidant, plus we have a world-class University that makes strong contributions in med/tech research. But the same things that make a strong candidate for getting venture capital makes a strong start-up company of any size, in any industry.

In the last venture camp session it was mentioned that you have to give people a message 9 times for it to stick. Much of what I focus on here are universal elements that were mentioned again and again - maybe not 9 times, but said by enough different people, enough times over the three sessions, that they “stuck” with me. The rest seems like just helpful good sense, to keep in mind as I build my company. So here they are:

1. Successful entrepreneurs need to be really FLEXIBLE. They also need to be completely dedicated; open to input; enthusiastic, but willing to learn; open to criticism; easy to work with; prepared.

2. Be sure to communicate to everyone - your employees, your board, your investors - IT’S ALL GOING TO CHANGE. You need to continually re-evaluate ideas, employee performance, compensation, priorities for spending - with the constant goal of making money and liquidity. Continually set up the expectation that things will be changing.

3. The saying, “Find a need, and fill it” is true. If you start with one idea in mind, and find that your customers are taking it in another direction or asking for some changes, go with it! Due diligence, market research, patent searches and understanding the competitive landscape can also help point you to the void that needs filling.

4. The main things to have down, which you must be able to communicate in a few, concise sentences, are:
-What’s your unique thing, your proprietary property/technology?
-How big is your market opportunity, your universe of buyers?
-What is the benefit customers receive from using your product? Will people pay for it?
-Management team. Management team. Management team.

5. When writing your business plan, make sure you have your above “story” together. Often a power point with supporting schedules will suffice, along with an excellent executive summary.

6. Hire people that are smarter than you. If you don’t have the knowledge and experience to get your company where it needs to be, find someone who does.

7. If you want to attract talent and have them work above and beyond for your success, give ownership as incentive - the earlier, the better. It’s difficult to lose key employees when you’re growing.

8. Don’t give up too much, too soon to your management team. Make sure they earn it, that no one is “dead weight,” then reward generously.

9. Be clear about the different components of your benefits package, and what long-term components reward as opposed to base pay.

10. If incentives are dependent on profit, put out the numbers so the employees know how they’re doing.

11. Consider that benefits have different value to different employees. Also think about the intangibles of your company that might help keep your employees. Create the right benefits and atmosphere for the employees you want to hire and keep.

12. Communicate, communicate, communicate - to employees, investors, public.

13. The right management team means having the right people at each stage. For example, having a bookkeeper –> having a comptroller –> having a CFO. Each time you add the right person, you’re adding value, even though the cash hit can be difficult at the time.

14. Constantly stay on top of cash flow. Check every day so you don’t have surprises.

15. Qualify your new customers. Set payment terms and credit limits. Follow up on slow payers. Offer discounts to get customers to pay more quickly. Offer credit card payment. Impose finance charges for late payments (and also use as leverage.) You can sometimes renegotiate terms with your manufacturers, suppliers. Convert sales as quickly as possible into cash in the bank.

16. Take the time to organize your board. Over time try to increase its sophistication to one that’s informed, and will take action when necessary.

Tags:2008 Summer Venture Camp, Business lessons, start-up, The Collaborative, Woman entrepreneur

The third and final Summer Venture Camp took place on Thursday morning at the University of Minnesota. You can read my blog posts about Session 1 and Session 2.

Put on by The Collaborative, the intent of the Summer Venture Camp panel discussions was to, “… help fuel and inform the ‘next generation’ of innovators while also following The Collaborative trademark of providing information and networking to help entrepreneurs grow their businesses.”

Here is a list of the final four topics and the main points emphasized:

Equity Structure, Termsheets, NDA’s, Capitalization Tables, Employee Agreements and more

• When seeking financing, you have to have a plan on how much you need, how you’re going to spend it and when you think you’ll need to go back for another round. But flexibility is key: your investors will be dictating the terms.
• Once you get to the point of getting a term sheet, it’s a signal that your investors are very serious and there’s a doable deal. The term sheet will be a road map.
• Using equity to incentivize key employees is perhaps THE most important issue in high-growth companies. It’s really difficult to lose a key employee when you’re growing.
• Cash is scarce for these companies, but if you want to attract talent and have them work above and beyond for your success, you usually give ownership as incentive - the earlier the better.
• Keep incentive plans simple. Investor doesn’t want it too complicated but does want to see something in place. Requires regular review to make sure they’re effective as things change.
• Don’t give up too much, too soon to your management team. Make sure they earn it, that you don’t have “dead weight”, and then reward generously.
• Stock options, restricted stock or stock appreciation rates are most common; a pool of 7% - 15% of equity for employees.
• Worst thing is to get your valuation wrong - overstating or overvaluing. You will pay a real price later on if you don’t get it right.

The Role of Intellectual Property Issues in Financing

• Having a strong Intellectual Property (IP) strategy is critical for getting funding.
• Your first questions should be: Can I patent my idea? What is your strategy compared to the landscape of your industry? Then you should ask: How can I stay on top of it? What is my competition doing? What steps can I take to handle the changing environment?
• Pay attention to what Universities have published in your area. Do your own due diligence, because professors often forget what they’ve done! And don’t forget to take a look at basic public patents.
• Your CEO should be actively engaged in seeing what the competitive patent landscape is so he/she understands the context of what you’re doing. Will build a better business model because of it.
• You want to spend your scarce funds in an area where you have the most leeway and freedom. Patent research can help you find that niche.
• Make your patent application RIGHT AWAY. Make your patent AS BROAD AS YOU CAN. KEEP UPDATING your patent.
• The patent office is getting further and futher behind; patents are taking longer and longer to get.
• Engineering log books are critical. A good, old-fashioned paper trail is vital: a bound log book, dated and numbered and counter-signed by a non-scientist/inventor.

Trends in Talent, Compensation and Benefit

• Some basic security around health is vital. Pre-tax plans can be foundation for small business. As you grow larger you may have to compete with plans of larger companies.
• Benefits often begin with long-term planning, like 401K. There’s a trade-off between cash bonuses and long-term leverage. Maybe you can take the short term bonus and use it in a plan that will provide longer-term benefit.
• Be clear about the different components of your benefits package, and what outcomes are connected to them. You don’t want your employees to be confused about what the long-term components reward as opposed to their base pay. Communicate that BENEFITS ARE PAY.
• Some private companies don’t want to dilute ownership/equity, so are turning to 401K-like plans that are performance based.
• If an incentive is dependent on profit, put out the numbers so the employees know how they’re doing.
• Be sure your communication works with your employees. Studies show you have to give people a message 9 times for it to stick: give it 9 different ways.
• Companies are moving to defined CONTRIBUTION plans, rather than defined COMPENSATION plans - keeps the company from becoming buried by obligations.
• New study showing that younger employees now give companies about 6 months to prove they are what they say, and that there’s opportunity for them. If not, they move on.
• Benefits have different value to different generations: flexibility, telecommuting, compressed work week might be more attractive to younger workers.
• Think about what intangibles of your company keep your employees. Think about non-equity compensation.

Entrepreneur and Investor Panel

• The more “disruptive” the idea for a company, the more likely it is to be a startup.
• Especially in tech/medical industry, a successful start-up needs 1) world-class technology 2) very experienced management 3) capital.
• Investors are looking to see that there’s a large and growing market, that there’s a very experienced management team (cross-function ability, execution focused, committed to change), that there’s patent protection, and a culture that embraces success - can meet milestones and communicate it.
• A new company should always focus on basics. Make your business profitable: don’t just wait for financing, move the ball forward!
• What comes with financing? Often expertise, strategic strengths, core expertise.
• Replacing management teams is #1 issue - it’s all about management. Experienced management knows how to get to making money and liquidity. The “idea” can’t be the goal; the idea doesn’t matter. Goals will change but experienced management will focus on making money, will meet milestones, put money in proper priorities.
• Get valuation right at the beginning. If you get it wrong, as painful as it is, make the correction.
• Venture capitalists are driven by greed. If there are problems in a promising venture, they’ll look to see if it can be cleaned up, but will probably give youa take-it-or-leave-it proposition.
• The right management team means having the right people at each stage. Ex: having a bookkeeper –> having a comptroller –> having a CFO. Each time you add the right person you’re adding value, even tho the cash hit can be difficult at the time.
• Bad boards can cost a company money, are too often less informed than they should be, are unwilling to take the action that they’re supposed to take: replacing the CEO.
• At what point is a company ready for financing? When you can see that with even just the 1st round of financing, it will make money.

The quality of the panels in this last session was more consistent than in the other sessions, and very good. Obviously there was an enormous amount of information, expertise and advice given during Summer Venture Camp, and in my next post I will summarize what I learned from attending.

Tags:Summer Venture Camp, The Collaborative

There certainly has been a lot of talk about oil and energy prices lately. It has been the topic of a lot of political debate. But it directly concerns me as a woman entrepreneur, and my business Miri Market, when the time comes to choose a manufacturer for my product: Where will I go to have my product made? What will be the most cost-effective manufacturing choice for my business? What will be the most environmentally responsible manufacturing choice?

As we all know, much consumer product manufacturing is now done in Asia. But there was an excellent article by Larry Rohter in the New York Times on Sunday, Shipping Costs Start To Crimp Globalization.

Cheap oil, the lubricant of quick, inexpensive transportation links across the world, may not return anytime soon, upsetting the logic of diffuse global supply chains that treat geography as a footnote in the pursuit of lower wages. Rising concern about global warming, the reaction against lost jobs in rich countries, worries about food safety and security, and the collapse of world trade talks in Geneva last week also signal that political and environmental concerns may make the calculus of globalization far more complex.

Three issues - higher shipping costs, sensitivity to the “green” concerns of energy efficiency and reducing carbon emissions, and a world political landscape shunning tariff reductions - may all be combining to push us towards “what some economists call a neighborhood effect — putting factories closer to components suppliers and to consumers.” But the article goes on to suggest:

As economists and business executives well know, shipping costs are only one factor in determining the flow of international trade. When companies decide where to invest in a new factory or from whom to buy a product, they also take into account exchange rates, consumer confidence, labor costs, government regulations and the availability of skilled managers.

A year ago when I was starting this venture, there was an automatic assumption in several conversations that my manufacturing would probably be done in China. The economic and energy landscape is changing fast as I edge nearer to those manufacturing decisions. I will have to decide where to manufacture my product based on many factors, but I will have no choice but to stay flexible and well-informed on energy and globalization trends. It remains true, as Jack Welch, 20-year Chairman and CEO of General Electric said, “An organization’s ability to learn, and translate that learning into action rapidly, is the ultimate advantage.”

Tags:globalization, Larry Rohter, manufacturing, neighborhood effect, New York Times, Shipping Costs Start To Crimp Globalization

Today I want to urge you to explore Alltop.

In it’s own words, “You can think of an Alltop site as a “digital magazine rack” of the Internet.” To understand more about the site, you can visit their about page.

As one example, check out Entrepreneurship. There are plenty of sites to keep you busy and informed on the topic of your choice.

Q. How do the Alltop sites work?

A. We import the stories of the top news websites and blogs for any given topic and display the headlines of the five most recent stories (except Moms.alltop which has fewer headlines because there are so many feeds). When you place the cursor over a headline, we display part of the story so that you can decide if you’d like to read it. To read the story, click on its title. To go to the home page of the site, click on its domain name.

Yesterday a new blog was launched, Alltop Watch - The world’s 1st unofficial blog designed solely to watch alltop.com grow. So THAT’S how much some people love this site.

Alltop will give you plenty to explore over the weekend!

Tags:Alltop, Business resources, entrepreneurship

I achieved a personal goal on Sunday. I completed my first triathlon.

Now you may expect that I’ll draw all the usual comparisons between sports and business, extol the value of perseverance, lay out the “10 things I learned about goal-setting,” blah blah blah.

I’m not.

It simply feels great to be in good shape, to feel fit, to feel strong. If you met me, “triathlon” would be just about the last association you’d make to this over-weight, over-50 person that I am. But I’m happy to report there were men and women of all ages, sizes and shapes at the triathlon, and I felt totally at ease at the event. I daresay most of us were happy with our achievement, most everyone already planning how to be fitter and faster next time.

I’m happy that I achieved my goal and I feel great. I’ll be doing more, I’m sure.

In the end, it is just so dang fun to be able to say “I did a triathlon!”

Tags:triathlon

I was honored to be asked by Matt over at the Hill Library Blog to be interviewed by a guest blogger writing an article for them about online networking. I happily agreed!

I was contacted and interviewed by Michael Benidt at HiddenBusinessTreasures.com. We had a great conversation. He offered some solid tips on online networking, and I shared with him some of my experiences. The result is the article Your Blog Can Beat LinkedIn At The Networking Game.

The gist of the article is that maintaining a blog makes you a part of the online community, and gives you a legitimate reason for contacting anyone else with an online presence. Like networking at an in-person event, you just have to reach out and make the contact. And most of the time, Michael Benidt says, people are happy to respond! Although it’s very difficult to build a dedicated readership for your blog, it’s much more effective to concentrate on building your network through your blog.

Michael relayed one of my networking experiences this way:

Want another way to use your blog to make an initial contact with a big wig in your industry or topic area?

Anne Florenzano writes the blog Light, Motion and Magic. While starting her business she’s simultaneously tracing and documenting her own experiences as a way to help other women entrepreneurs benefit from her experiences.

Anne also happens to live in the Twin Cities, so she hangs out at the physical James J. Hill Library (yes, there is one) in St. Paul. Which just means that she’s pretty adept at finding people’s contact information.

One of the craftiest ways that Anne found to network using her blog was her To-Do List for Starting a Company. She read four top-notch entrepreneurial books and then collated the information from all four of them into an incredibly useful checklist.

You can probably guess what Anne did next. She contacted all four authors to let them know about her To-Do List and to ask permission to use the material. All four wrote back to her – including Guy Kawasaki and David Meerman Scott.

Now, I don’t know about you – but I haven’t written to Kawasaki or Meerman Scott lately. Anne has. And certainly, her contact with these famous authors is “brought to you in part” by her blog.

I left a comment on the article clarifying one point:

Thanks so much for mentioning me in this article! I must correct you on one small point, however. Contacting the four authors before posting my To-Do List For Starting A Company was not a “crafty” strategy. I contacted them with the honest intent of being totally transparent and to get permission to use their ideas from their books in my own way. I had no ulterior networking ambitions. Perhaps that is why they all did respond to me, and very kindly - because I was clearly being honest and straightforward. That being said, I agree very much that all the people we see online in blogs and forums - the well-known and the obscure - are just an email away. We just have to reach out to them.

I do think that Michael Benidt is on to something here. It’s true with online networking as it is in everything in life: we can’t just “sign up and sit back.” We’ll get poor results by waiting for something to happen or someone to come to us. We’ll get much better networking results by actively reaching out. I personally believe you need to have a very real and transparent reason for contacting people, but if you really do have a legitimate purpose, don’t hesitate. Networking is what this “blog” thing is all about, anyway!

Tags:Blogging, blogging community, HiddenBusinessTreasures.com, Hill Library Blog, Michael Benidt, networking, To-Do List for Starting a Company, Your Blog Can Beat LinkedIn At The Networking Game

I am still in prototype development, and am currently designing a survey to research reactions to initial designs for my product.

The first step, before even getting to the survey questions, is to determine what I want to find out from the survey-takers. I want to know:

1. What are your reactions to the various designs?
2. If you do NOT like a design, why? Would any specific changes make you like it better?
3. If you DO like a design, why? Could it be changed so you’d like it even more? If yes, what would you change?
4. Which of these designs do you prefer? Can you see yourself buying this product?
5. If you bought it, where would you put it in your home?
6. How would you describe your home decorating style?
7. What price would you expect to pay for this product?
8. Would you buy this product as a gift? If yes, for whom? What occasion?
9. Where else, other than your home, might you expect to see this product?
10. What is your age, gender and income level?

I need to be careful to ask the right questions for 2 and 3, to get usable feedback regarding like or dislike for a design. SurveyMonkey offers an excellent pdf on smart survey design at their Help Center, accessed on the upper right of the black toolbar on their website. Titled “Best Practices for Survey Design,” it contains a great description of a Likert scale:

Rating scales are popular ways of collecting subjective data where you want to measure a respondent’s ideas (e.g. opinions, knowledge, or feelings).

Likert Scales:

A likert scale is considered an “agree – disagree” scale. This setup gives respondents a series of attitude dimensions. For each dimension, the respondent is asked whether, and how strongly, they agree or disagree to each dimension using a point rating scale. Likert scales are given scores or assigned a weight to each scale, usually from 1 to 5. The purpose of the likert scale is to sum the scores for each respondent (the response average), and the intent of the likert is in that the statement will represent different aspects of the same attitude (Brace 2004, 86).

Now I know what answers I need, and how to get like/dislike feedback on the designs. SurveyMonkey has many other tips for putting together the right questions to get at the data I need. I also found out that I can use my design images in the survey. Now I will sign up for the $19.95/month membership and get to work on putting it all together!

Tags:Customers, likert scale, survey, SurveyMonkey.com

Metropolitan State University in St. Paul was the site of the second of three Summer Venture Camps on Thursday morning. You can read about the first one Jawed Karim And Paul Knapp Are Highlights Of Summer Venture Camp Session 1.

Put on by The Collaborative, the intent of these panel discussions is to, “… help fuel and inform the ‘next generation’ of innovators while also following The Collaborative trademark of providing information and networking to help entrepreneurs grow their businesses.”

Here is a list of the morning’s four topics and the main points emphasized:

Cash is King: Managing cash flow in emerging growth companies

• Profitability is great, but it doesn’t solve your cash flow problems.
• Best way to manage is to constantly stay on top of cash flow; check every day so you don’t have surprises. Larger companies have more complex cash flows, but the same principle applies.
• Qualify your new customers. Set payment terms and credit limits. Follow up on slow payers. Offer discounts to get customers to pay more quickly. Offer credit card payment. Impose finance charges for late payments (and also use as leverage.) Make every effort to convert a sale quickly into cash in the bank.
• If you need a business partner, find one to whom you are just as important as they are to you.
• Remember: your bank isn’t an investor or partner; their business is to minimize risk. Show them credibility and that you understand the whole financial picture.

Due Diligence

• When writing your business plan, make sure you have your “story” together. Often a power point with supporting schedules will suffice, along with an excellent executive summary.
• Main 3 things to have down: 1. What’s your unique thing, and will people pay for it? 2. How big is your market opportunity; who is your universe of buyers? 3. MANAGEMENT. Experience is often critical to getting financial backing.
• Regarding intellectual property, don’t put all your resources into first patent right away, because the design might change and you might need more money to pursue a different patent

Valuation and Negotiation

• The earlier the stage of a company, the more subjective the valuation process.
• Same main points are looked at as above: 1. MANAGEMENT TEAM. Make sure they have the experience needed to lead the company. 2. Your proprietary property/technology. 3. Value proposition: what is the benefit customers receive from using your product? You must be able to say this in one or two sentences. 4. Prove you have a large, and growing, market.
• Sit down and figure out where you want your company to be in the long term. Start with the end point in mind, and then work back from there. Know what you need to do, and when, to achieve your big goal. It will help you stay focused and on the right track.
• Whether raising capital or closing the sale, it is very helpful to really understand comparable companies. Help educate those in the process. Though difficult with emerging industries, it sometimes helps to find older companies and work back to when they were young to compare with where you’re at. Usually there’s some company that is in a comparable field.
• You can use terms to make venture capitalists more comfortable. Most like participating preferred stock plus share in proceeds.
• Make sure the differences in terms between rounds of financing don’t cause conflict.
• If you can get financing from yourself, friends and family, DO!

Economic Development and Venture Creation in the Twin Cities and Outstate

• This was not an interesting discussion. I didn’t get anything from it, and many people left.

For me, a woman entrepreneur, the Summer Venture Camp has been worthwhile. Not all the topics have been pertinent to me, but

1. It has been very good to see and hear the participating panel members, many of whom are leaders in the business community.
2. It is good to hear basic advice given, with slight variations, on how to present oneself capably to bankers and investors, and how to set up your company for success.
3. It is worthwhile to become familiar with the entrepreneur community and its support organizations in the Twin Cities.

The third and final session will be August 7 at the Humphrey Center at the University of Minnesota.

Tags:Summer Venture Camp, The Collaborative

Common Craft, the creative company that uses paper and video “to make complex ideas easy to understand,” has come out with another great video explaining the value of LinkedIn.

Go to the LinkedIn Learning Center to see the simple and elegant video.

Also, if you don’t use or understand Twitter, go to Common Craft and see Twitter in Plain English. I think you’ll get it!

If you want to be a “connection” to me on LinkedIn, look me up -Anne Florenzano- and invite me at anneflorenzano@gmail.com. And I hope you’ll follow me on Twitter, where you can find me as Anneflo.

Tags:Common Craft, LinkedIn, social networks, Twitter