Planning, Startups, Stories

The Harder You Work, the Luckier You Get

I'm sorry, that's an old cliché, but the thing about clichés is that they so often become that because they hug the truth. Consider this quote, from Nate Alder of Klymit Technology. He's talking about how his team approached venture competitions.

In preparation for each event we would spend our nights at the hotel refining our presentation based off of practice round judges feedback and stay up rehearsing our presentation as opposed to going out late drinking with the rest of the students from other schools.

We have always treated this as a serious business from the beginning and not just an extracurricular activity we do for fun on the weekends but we have sacrificed a lot of personal time, social life, entertainment, grades, and even other job opportunities to make this company a success.

We just have so much fun with it that it makes up for all our other sacrifices. Before each event we always made sure we had gotten plenty of sleep, ate a health meal, always avoiding alcohol, tobacco, or any other substance that could impact our minds or bodies. All these things combined really helped us stay relaxed and focused to perform well and have a lot of fun doing so.   

Hmmm ... I think we've got something there. Work hard? Success? Correlation.

I saw Klymit three times last month in my month of judging venture contests. They took second place at Rice University, tied for first at the University of Oregon, and second place again at Moot Corp (University of Texas) in Austin. Klymit has innovative new technology that uses inert (as in complete harmless, already in the atmosphere) gases as insulation in ski jackets. The insulation is adjustable, so as the day warms, you can set your jacket to cool. The company has an impressive management team, and agreements already in place with major clothing vendors. It's an exciting new venture. The team, by the way, comes from Brigham Young University. And the business plan started (can't resist adding this) with Business Plan Pro.

Nate's quote is part of the behind-the-scenes detail of A conversation with Klymit Technology, in which he's interviewed by 'Chelle Parmele over at Business in General.

And the plot (or the cliché) thickens too, with the fact that NeuroBank, from Carnegie Mellon, won the Moot Corp in Austin. NeuroBank took third at Rice University in early April with a combination of a new technique to harvest brain stem cells from the spine (instead of drilling a hole in the head) and a cell bank storage offering borrowed from techniques used to store human eggs, etc. Between the Rice contest in the first week in April, and the Moot Corp in the first week of May, NeuroBank went out and developed a waiting list of people ready to subscribe as soon as the service is available.

So there's that same theme: work, luck, reward, and all that.

Customer Service

It's hard to write about customer service. Most of the blog posts I see talk about what it isn't, not what it is. Most of my posts on the topic are bad examples. Negative examples are more fun. And easier to come by.

Paul Brown's Toolkit column, a regular in The New York Times' Small Business webpage, focuses on For Customer Service this week.

This one caught my attention this morning because it actually includes, of all outrageous things, a definition of what customer service is:

Writing on sbinfocanada.about.com, which offers resources for small-business owners, Doug Howardell of ACA Group, an alliance of consultants, says his group defines customer service as “the ability of an organization to constantly and consistently give the customer what they want and need.”

He also cites some additional positive suggestions from allbusiness.com about how to do it.

When You Need Valuation Numbers

The best readily-available valuation of business consulting services is 1.12 times annual sales. For automotive repair shops, it's .41 times annual sales. Physical fitness facilities are going for .66 times gross annual profit. Grocery stores are going for .28 times annual sales, and sporting goods stores for .34 times annual sales.

There's a valuation report in Inc Magazine's April issue that turned me on to Business Valuation Resources, which sells information like the above, culled from data on actual transactions.  I registered (free) to get a free download of a complex chart -- sophisticated, innovative, imaginative, but really hard to read. And I gather that the underlying data isn't cheap, because I can't find anywhere to send you for a link to the data table, industry by industry, that I used to do the snippets in my first paragraph. 

Conclusion: if you're dealing with valuation, this could be a good resource. Valuation information is something like insurance account numbers: you don't need it very often, but when you need it, you really need it. Like when you want to sell your company, or sell part of your company, or predict valuation as part of an investment negotiation, or when there's a divorce, and ... well, you get it.

Gripe: once they've published the data and put it out into the world as hard copy, can I get it online somewhere? Oh yeah, I get it, there's value to the data. Tough call for BVR, how much do you give away to promote your data?

Radio Interview

I had a good time on the Jim Blasingame show last Thursday, a nice break from vacation ... here's the audio:

Zen and the Art of Copying

How un-zen is copying somebody else's zen? Today I got an email invite to download a white paper titled "Zen and the Art of Disaster Recovery." What? Oh, it's just a joke. I think. Here's more:

What's Zen got to do with Disaster Recovery? Actual Zen Masters probably don't have the answer to that, but there are eight steps to data enlightenment that will help you shrink the burdens and costs of disaster recovery, and increase the accessibility, integrity and security of your data. Now that's peace of mind.

Is it just me, or is enough just plain enough with this. Zen and the Art of Motorcycle Maintenance, by Robert Pirsig, is a milestone book, first published way back in 1974 (with several new editions since). I'm sorry, I think Zen in general, and this book in particular deserve more respect than cute titles. We've established now that you can name anything "Zen and the art of ..." I did the Amazon.com search and came up with the art of happiness, the art of archery, and, my personal favorite (which doesn't mean I've read it), Zen and the Art of Faking It.

And I have to admit, I'm influenced, in this complaining post, by having spent several years now trying to figure out how to integrate Zen and business planning. Zen seems like the opposite of planning. Lately, however, having put a lot of thought to it, I think I've come up with the integration.  But that's for a different post. 

And I have a rant coming on the art of copying. Also for a different post, but, jeez, copying isn't art. How do people who copy other people's stuff find a way to feel proud of themselves? Books, movies, television shows, and -- here's where I've spent a lot of time -- software products. There can be Zen to a lot of things, but there's no art to copying.

Surprising Findings About Tech Entrepreneurs

Here's an interesting  surprise, from Education and Tech Entrepreneurship, a Kauffmann Center research paper published yesterday:

Twice as many U.S.-born tech entrepreneurs start ventures in their fifties as do those in their early twenties.

I think it's ironic that this should be a surprise; a generation ago it would have been a common assumption. Then came the successes of industry icons Bill Gates and Steve Jobs, both young college dropouts. And a lot of people like them. Or so it seemed. The young techies ruled the PC industry boom in the 1980s, and again, the dot-com boom in the 1990s, and the Web 2.0 boom right now.

And there is truth in that stereotype, of course. Where there's smoke, there's fire. But this latest research puts in a word for classic wisdom, experience, and education as well.

I picked this up from David Miller on Campus Entrepreneurship, who cites Ben Worthen's Tech Entrepreneurs Mostly Aren't Youngsters After All in the Wall Street Journal. He summarizes:

Instead, the average tech entrepreneur was 39-years old when the company was founded, says a survey released Thursday by the Kauffman Foundation. The survey asked questions of 652 U.S.-born execs at tech companies started between 1995 and 2005 and with revenues of at least $1 million. Not only was the average founder pushing middle age, but also nearly five times as many founders were over 45 (24%) as were younger than 25 (5%) when their companies got off the ground.

Only 8% of founders hadn’t completed a college degree, contrary to the image of the Bill-Gates-like college dropout. Forty percent had a masters degree or a PhD.

Some other interesting findings (quoting the study):

• Tech-company founders were four times as likely to have attended an Ivy League school than the public at large, 8% compared with 2%.
• The most common universities from which U.S.-born tech founders received their highest degrees in our sample are Harvard, MIT, Pennsylvania State
  University, Stanford, University of California-Berkeley, University of Missouri, University of Pennsylvania, University of Southern California, University of Texas, and University of Virginia.
• U.S.-born tech founders with Ivy League degrees tend to establish startups that produce higher revenue and employ more workers than the average.
• Startups founded by those with only high school education significantly underperform all others.
• Nearly half (45%) of the startups were established in the same state where U.S.-born tech founders received their education. Of the U.S.-born tech founders in our sample receiving degrees from California, 69% later created a startup in the state; Michigan, 58%; Texas, 53%; and Ohio, 52%. In contrast, Maryland retained only 15%; Indiana, 18%; and New York, 21%.
• And while they were more likely to have received a techical degree than the general population – they founded tech companies, after all – only 37% graduated from computer-science or engineering programs. (Only 3% received liberal arts degrees.)

And this last point, included in the summary of the study, is actually citing a different Kauffman Center study.  It looks like it was included because this study looked only at U.S.-born entrepreneurs. 

• From 1995 through 2005, skilled immigrant founders established 25.6% of all the startups nationwide, and 52.3% of those in Silicon Valley. This group tended to be highly educated in science-, technology-, and engineering-related disciplines. The majority came to the United States to study and decided to stay.

Is any of this really surprising? That successful startups tended to correlate with experience and good education? I'm very happy to see research confirming some of the points that ought to be obvious but get disputed. I am surprised to see that fully 50% of successful Silicon Valley startups are established by immigrants, but, as I look around, maybe not so much. That one didn't come from this study, but it's a good reminder that our immigrant stereotypes are out of date as well.

Dealing with Idea Ghost Images

I find this fascinating:

"Yes, I think it's a really good idea, and everybody around here really likes it, but what I'm worried about is that when I talk about it everybody I'm talking to sees what they think I'm saying, what they want to be the idea, rather than the real idea."

I'm not going to cite the author of that quote, because it could embarrass him with the others on his team, but it was in a phone call last week.

It reminded me that what he's talking about is a common phenomenon. Until I find a better description, I'm referring to the misunderstood images of the original idea as Idea Ghost Images, a reference to the shadow images you get on television when you have problems with the antenna. They are a reflection of the original images, but they're off. And the more of them you have, the greater the problem.

Have you seen this happen in your business world? Where there's an idea being discussed but each person imagines something slightly (or maybe more than slightly) different? And sometimes companies will move forward and commit to budgets and tasks and strategy without realizing that each person is agreeing to something different. That can cause a whole lot of problems.

It's closely related to what we  call getting everybody on the same page. Maybe we should call it asynchronous idea management, but that's probably getting too techie with the language.

The solution, I think, is completely obvious. It's part of the normal planning process. Define the idea in a concrete way -- document, email, presentation, something that can be recorded and referred to later -- and manage it through that idea definition.

It's amazing, though, easy solution or not, how far we get sometimes without really dealing with those ghost images.  I think it's a common problem.

How Many Web Alliances are 10 Years Old?

I suspect a 13-year-old Internet alliance is a rare thing these days, because 13 years ago was 1995, before the dot-com boom, and a very different world from now. That makes me happy to report on a pleasant conversation I had last week with Raj Khera, founder of MoreBusiness.com, which has been an ally of Palo Alto Software and our business plans site at Bplans.com since 1996.

Raj and MoreBusiness.com joined up with Bplans.com in the very early days. It was one of our first business development contacts. That many years later, both sites are going strong.

I had a nice talk with Raj. It's a reminder how time passes. The initial contact was between Raj and my son Paul, then a sophomore at NYU developing Bplans.com at the same time, now a married father-of-two in his early 30s, CTO of Huffington Post. Raj and his wife have had two kids since that initial contact, now 4 and 7 years old.

Raj and his brother started website consulting in 1995, and MoreBusiness.com in 1995, and GovCon.com shortly thereafter. That second site, GovCon, became the market leader in information about government contracts for government contractors, and was sold for a nice sum shortly  before the dot-com crash.  Raj added some detail in an email:

When we started working together, I had also started another portal called GovCon.com for government contractors. It grew to be the largest business-to-government portal and was acquired in 1999 by VerticalNet, a then high-flying public dot-com.

They are still running MoreBusiness.com and also mailermailer.com which provides tools and information for email marketing campaigns.  Raj said "we compete with Constant Contact among others."

So that came up, and I enjoyed sharing. Some business relationships last.

And the Winner Is...

At lunch on Saturday, in the judges' room, Jeff Mullin of Ropes and Gray, suggested I not rule out NeuroBank.

"They've done a lot since the Rice competition," he said. "They've got a waiting list now."

Jeff, however, is an alum of Carnegie Mellon. And NeuroBank was the entry from Carnegie Mellon. And NeuroBank finished third at the Rice University Business Plan Competition, behind Qcue and Klymit (I posted on that last month). And Klymit tied for first at the University of Oregon New Venture Championship, a week after Rice (I also posted on that last month).

And the event last week was what they call the superbowl of venture contests: Moot Corp, in Austin, at the University of Texas. Every year since 1984. This year, eight divisions, 38 teams, each one a winner in some other major contest.

And this time NeuroBank took the prize. Klymit was second, and Qcue third.

NeuroBank is built on two innovations: first, and most important, a better way to harvest brain stem cells, using a spinal tap instead of drilling into the brain. Developed and proven by a surgeon who is on the team. Second, less innovative perhaps, a system to save those brain stem cells so they can be used later. That's something that's being done with human eggs, sperm, other kinds of cells, but NeuroBank is the first to apply it to brain stem cells.

And I have to say that I have enjoyed this month of venture competitions immensely, judging first at Rice, then the University of Oregon, and last week at Moot Corp. Business plans have never looked better.

I've been judging venture contests for more than 10 years now, starting with the University of Oregon's in 1997. I've done them there, Rice, here in Austin, at USF, in Notre Dame, and in New York. This year's crop was the strongest I've seen.

I posted about Qcue last month after they won the contest at Rice University, in Houston. Fortune Small Business also covered that Qcue, from the University of Texas, complete with a video of their elevator speech. I also posted about Klymit, which is now calling its product "the holy grail of insulation." Looks like a great new idea in ski clothing. Klymit, from Brigham Young, came in second place at Rice, then tied for first at the University of Oregon contest.

The fourth finalist was OvaGuard, a patented natural egg coating technology developed in Thailand and developed into a venture plan by students at Thailand's Thammasat University. Disease outbreaks require the $177B egg industry to implement the washing and coating of eggs. OvaGuard offers breakthroughs in safety and performance.

There were some excellent ventures that didn't make it to the finals, but -- I'll bet -- will also make it to the real world. I judged semifinals, wildcard, and challenge round, and saw several other very interesting ventures:

TakeShape
University of Oregon
TakeShape will license a patented, 3D body scanner to sell to institutional sports teams and high-end fitness clubs. The scanner allows athletes to monitor important physical information and track progress towards fitness goals.

Orchid King
Thammasat University
Our OKlone micropropagation technology cultivates market dominating Phalaenopsis, growing these highly demanded orchids at 5,120% greater yield, while practically eliminating labor in this $1.5 billion segment.

ShellSwitching
London Business School
ShellSwitching is an online community that helps vacation home owners find trusted guests by filtering potential guests based on personal relationships, shared group affiliations and owner reviews.

MicroTransponder
University of Texas at Dallas
MicroTransponder is a medical device company commercializing wireless interfaces for the repair or enhancement of the nervous system.

AmWell
University of Utah
AmWell provides innovative vaginal drug delivery technologies to the pharmaceutical industry; products that empower women to protect themselves against sexually transmitted diseases.

PhotonWave Technologies
Indian School of Business
PhotonWave Technologies offers a Silicon Photonics & Nanotechnology-based patented innovation that will revolutionize fiber-optic communications through high performance, cost effective optic interconnects for FTTx/last-mile and high-performance computing markets.

AccelerEyes
Georgia Institute of Technology
AccelerEyes' solutions deliver up to 100x speed improvements for existing technical computing software by optimizing the software's use of desktop and laptop hardware.

ReTel Technologies
University of Chicago
ReTel's patent-pending solutions bring powerful online shopper analytics and dynamic pricing capabilities to offline retail environments.

X
University of Oxford
X is community-based sharing of Internet bandwidth via wireless medium. It's a really interesting idea; a community sharing project, something like Fon, but with some refinement.

Robin Williams Hijacks -- or maybe saves -- BBC Debate

The BBC reported it as

"Comedian Robin Williams performed an impromptu stand-up routine before the delayed recording of a BBC World debate on the future of news."

The TED blog added more detail:

During the BBC World Debate hosted at TED2008 last month, a brief technical delay threatened to become an awkward, show-stopping break. Then a heckler stood up in the crowd. As Wired's Epicenter reports:

... a voice behind me spoke up, presumably a heckler, and began speaking loudly as if he were conducting a live news feed, joking that he was reporting live from TED but ... was "wondering why at a technology conference everything is running so shittily" (at least that's the word I think he used; it was hard to hear the last word through the audience's laughter).

It was Robin Williams, and he ran onstage to do a 10-minute improv in front of Queen Noor, Sergey Brin and the rest of the BBC panelists. Video or it didn't happen, you say? Here's Robin Williams' improv, or 2+ minutes of it, from the BBC website.