Want Media Exposure?


 

Most business owners crave media exposure.

Why wouldn't they?

If they get written up in the newspaper or magazine, or get featured on TV, they're sure to get a flood of new customers.

But what many entrepreneurs don't realize is that 1) you can get media exposure BEFORE you actually launch your company and 2) media exposure can help with raising money too.

Reporters are constantly doing stories and interviewing experts. If you have expertise that you will be using to start your company, you could be interviewed.

And in your interview, you can talk about your venture.

And while the interview may not get you a flood of new customers (if you're not yet selling a product or service), you may get lots of interest from investors, partners, distributors and prospective future customers.

Now the old way of getting press and getting interviewed was a lot of work. Mainly sending out media kits and press releases to tons of media sources.

But today, there's a much easier way to get PR by simply joining Reporter Connection.

You can join for free by clicking this link.

Reporter Connection works like this: every day, you'll receive a brief email with media opportunities ranging from interview requests from top magazines, newspapers and websites, to interviews on radio and TV shows.

If your expertise fits one of the requests, you simply fill out a brief form, and it gets sent to the reporter doing the story.

So join Reporter Connection today to start getting PR for your venture, and use it to gain funding and more current/prospective customers.

Finally, two other similar free PR services for you to check out are Help A Reporter, and PitchRate.

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Acting Like a Hoodlum & Gaining Customer Intelligence


 

Both my parents were schoolteachers, and when I was born, my mother temporarily stopped working to take care of my brother (2 years older than me) and I.

So, to earn some extra income, my father got a second job selling vacuums at a local department store.

One day, my father noticed a sketchy-looking guy in the store. The guy was dressed strangely and was walking around and touching a lot of the merchandise.

So, my father called the security guard over. The guard came over and my father pointed out the strange man. "You should keep an eye on that guy; he looks like a real hoodlum," my father said.

"That hoodlum's my boss," replied the security guard.

Clearly my father was pretty surprised to find that out.

It turns out that the head security guard would occasionally dress up like a hoodlum and roam through the stores. Because he looked non-threatening to "real" hoodlums, he was better able to catch those hoodlums shoplifting items.

What the head security guard was really doing was putting himself in his customers' shoes. In his case, the customers were bad guys trying to steal.

For most of us, our customers are folks that we want to buy our products or services. Or folks that we want to invest in our businesses.

The key to our success is to put ourselves in our customers' shoes and/or to essentially spy on them like the security guard did.

We need to do this to learn critical customer intelligence: What are their hot buttons? What drives their decision-making? What have they bought or invested in previously? What are their goals and how do they hope that we can help achieve them?

Particularly when searching for investors, many entrepreneurs fail to see things from their customers' perspective. They think too much about what's in it for them.  The key is always to find the win-win; the solution that allows your customers to win while you win too.

So, always spend time amongst your customers. And ideally, like the head security guard, you can blend in; so customers don't feel threatened, don't put up a guard, and give you the genuine answers you need to know.

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The Single Worst Thing You Can Do As An Entrepreneur


 

Recently, my wife and I were reminiscing about the TV shows we watched when we were kids.

We started talking about shows like Laverne & Shirley, The Monkees, and Happy Days.

We thought it would be fun to watch these shows with our kids, so we went on Netflix and rented the first season of each of them.

The shows brought back a lot of great memories. Particularly Happy Days...as The Fonz is one of the great TV characters of all time.

One of the Fonz's lines really struck me. As you may remember, the Fonz used the phrase "Sit on it" to essentially tell others to "buzz off."

It's a pretty funny phrase when you think about it -- sit on it -- as it's not really that derogatory.

But, it turns out that in entrepreneurship, it is one of the most derogatory phrases you can possibly use.

Let me give you an example. The other day, I spoke to an entrepreneur (let's call him Joe) with a neat idea. But there's no possible way Joe's going to be successful.

Why?

Because I met someone with the same idea two years ago at an angel network meeting. And that entrepreneur raised money for the idea and has been working on it and improving it every day since then.

So, even if Joe is the better product developer, marketer, leader, etc. he can't succeed. Since his competitor now has a 2-year advantage over him.

The WORST thing you can do as an entrepreneur is to "sit on it" or sit on your ideas. Rather, you must act on them. If not, someone else will. There are simply too many other entrepreneurs out there.

The saying "the richest place in the world is the graveyard" is really applicable here. Why is it the graveyard? Because that's where the billions of ideas go that were in the heads of entrepreneurs who never acted on them.

If you have an idea for a new business, you must take the first step. Or you really can't call yourself an entrepreneur -- you're just a "dreamer." Sorry to be so blunt about this; but it's the truth.

So take the first step.

I believe the first step is to develop your business plan. The business planning process forces you to really think through your idea, prove it's viable (or not), and create an action plan for transforming your idea into reality starting now (not later).

So, if you've been sitting on an idea, STOP. Take action now. Don't let Fonzie say "sit on it" to you.

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The Affinity Formula for Raising Money


 

Let’s say you’ve developed a new type of stethoscope.

Who should you approach to invest in your company?

  • A local sports star?
  • The owner of a local grocery chain?
  • An executive at a local corporation?
  • A doctor?


Well, if you answered all of the above, you are correct.

But if you want the best bang for your buck…or the most investment dollars per time you spend raising money, clearly approaching doctors is your best route.

Doctors would clearly understand the benefits of your new stethoscope and be the most prone to invest in you.

Targeting doctors to invest in your product is classic affinity marketing, or targeting people based on their established buying patterns or trends.  Classic examples of affinity marketing include a university-branded credit card marketed to the university’s alumni. Or an insurance company working with a pet association to offer a pet insurance product.

You get the point. By targeting customers that have affinities (to their alma maters or pets in the above examples), you target folks that really understand and care about what you are offering.

In money raising, this is similar to “prospective customer financing,” which is asking your potential future customers to invest in your company now.

I’m a huge fan of prospective customer financing, because not only do you gain investors, but loyal customers who also help market your business through positive word of mouth.

So, how do you execute on affinity fundraising or prospective customer financing?

To begin, the best way to raise this type of money is through Crowdfunding. As you’ll learn in this Crowdfunding video, crowdfunding has tons of advantages. But in brief, crowdfunding will allow you to raise smaller amounts of money, and because it is neither debt nor equity, you avoid the legal and regulatory issues which will slow you down and cost you a lot of money.

Finally, let me give you some more examples of what to do:

Let’s say your venture targets the bird market. Well, you should be going on social networks, forums and websites serving this market. Join the conversation. Become a valued member of the community. And then tell other members about your venture, that you are raising money, and how they can contribute.

Or, let’s say your venture targets accountants. Do the same thing…..Find out where accountants congregate online. What accounting groups are there on LinkedIn? Where can you find them on Facebook? What accounting forums can you join? And once again, join the conversation. Become a trusted and valued member of the community. And then let your new friends know about your venture – something that will directly serve them – and how to contribute.

Once again, the best way to turn these affinity group members into investors is via Crowdfunding. So if you haven’t set up your Crowdfunding account yet, watch this video now.

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Entrepreneurs Must Keep Going Says Winston Churchill


 

Winston Churchill once said, "If you're going through hell, keep going."

This quote is really applicable to entrepreneurs.

Mainly because rarely, if ever, does the process of starting and growing a company go smoothly.

There are often lots of mis-starts and mistakes and course correction is nearly always required.

The way I see it, the fact that things don't always go smoothly or work at first is a good thing. It weeds out the weak entrepreneurs, which provide more opportunity for profits for us stronger entrepreneurs.

There are lots of times when entrepreneurs must "go through hell."  For example, when the entrepreneur is seeking capital, or looking for initial customers or distributors. Other things like hiring key team members or executing on a new marketing campaign can also be quite challenging.

But as Churchill pointed out, entrepreneurs must keep going. That's not to say that you should put your head down and try to bulldoze through whatever you're trying to accomplish. If things aren't going well, you need to consider alternatives.

Specifically, if something doesn't work at first, you must try, try again. But if it doesn't work a second time, you need to start rethinking and modifying your strategy.

Incremental changes often bring about significant results. And these incremental changes often result from trying something that didn't work at first, and continually modifying it until it does.

One example that comes to mind for me is raising venture capital. In my early days, I met with a lot of venture capitalists to try to raise money for my clients. And I encountered a lot of failure. Meeting after meeting after meeting, but no results. So, I started trying new things, and sure enough, after trying enough new tactics, I found ones that really worked.

(FYI, if you are currently seeking venture capital, I laid out these strategies in my Venture Capital Pitch Formula program - watch the video here.)

So, don't give up if you feel you are going through hell right now. Sure it's not fun. But if you keep going, chances are you'll come out a winner.

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Are You Chasing Rabbits?


 

I talk to a lot of entrepreneurs.

RabbitsWhich I love to do. I love hearing cool, new ideas. I love hearing the passion. And I love figuring out how I can help them successfully go from point A to point B.

But one thing that frustrates me is seeing entrepreneurs making the same mistake over and over and over again.

And the biggest mistake I see is a lack of focus.

This lack of focus is best summed up by the ancient Chinese proverb -- “man who chases two rabbits catches neither.”

In other words, if you try to pursue two entrepreneurial ideas, both will most likely elude you.

And I hear this all the time. Budding entrepreneurs telling me about their great idea. And then a moment later saying, “Oh…I have one other idea that I’m working on that I need to tell you about.”

I don’t usually say the Chinese proverb here, but I give my own line. Which is, “If you try to do 2 things, maybe you can do a B+ job at both.  But in today’s competitive market place, you need to do an A or A+ job to succeed. And to do that kind of job, you need to focus on just one opportunity.”

The Chinese version is better.

As an entrepreneur, you are inherently creative. If you haven’t launched your first venture, you must pick just one opportunity. Brainstorm and write down all of your ideas. And then judge them and figure out the one you want to pursue.

And once you decide you want to pursue that idea, forget the rest. Use all your creativity and brainstorming power on that one idea. Use it to figure out creative marketing plans, unique financing ideas, and ways to best lead your organization.

Entrepreneurs by definition work in a resource constrained environment (if resources weren’t constrained, the entrepreneurs would be the CEO of a Fortune 500 company). So, when resources are constrained, you can’t possibly divide the few resources you have into multiple opportunities. Rather, you absolutely must focus on just one opportunity, and put everything you have into achieving it.

So, make sure you focus all of your efforts on just one opportunity. And once you achieve success with that opportunity, you can focus on your other ideas and opportunities.

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Jumping Off the High Diving Board


 

Last weekend, friends of ours invited me and my family to their country club.

It was a beautiful club, and unlike other clubs in the area, had a big lake where everyone swam.

But immediately after gazing at the beauty of the lake, something else caught my eye.
High Dive Board
An old high diving board. I mean a really high one.

I knew my kids saw it too, so I turned to see their reactions.

My 8-year old daughter had a very calm reaction; for there was no way in her mind that she was going to jump off the board.

My 10-year old son, on the other hand, looked excited and nervous at the same time. Since he was already contemplating his dilemma.....jumping off it would be fun...but really scary.

As entrepreneurs, jumping off the high diving board is something we must do quite often. Sure, we are not physically climbing up a ladder and jumping into a pool of water. But we must often do things that are out of our comfort zone if we want to succeed.

What are some of these entrepreneurial “high dive” moments?

1. Starting your business plan. The first step in starting a business is always the hardest. It’s committing to yourself that you’re really going to go out on your own. Most folks dream about having their own company. But the first real step is putting your business idea down on paper as a business plan. (Note: for help with your business plan, watch this video.)

2. Getting advisors. When I interviewed Dr. Basil Peters, he told me that getting mentors and advisors is an entrepreneur's most controllable success factor. Yet, many entrepreneurs are afraid to find and ask advisors for help. Maybe it’s the fear of uncovering what we don’t know, or the fear of people we respect disagreeing with some of our ideas or assumptions. But if you want to succeed, you need these expert opinions and guidance.

3. Talking to customers. Many entrepreneurs don’t speak to their customers early enough. They come up with ideas that they think will work. But they don’t ask prospective customers if they will buy the products. Likewise, even when entrepreneurs successfully sell to customers, they are often fearful of asking for referrals.

4. Meeting with investors. A final entrepreneurial “high dive” moment that I wanted to mention is meeting with investors. This legitimately can be very frightening…it’s scary when you’re telling others about your entrepreneurial baby who have the ability to make (by funding you) or break you (by not funding you). Worse yet is the potential of the investors to be totally under-whelmed by you and/or your idea to an extent that you have to go back to the drawing board. (Note: to make sure you make every investor meeting a success, watch this video.)

As Franklin D. Roosevelt said in his first inaugural address, “The only thing we have to fear is fear itself.” So jump off that high dive board, and achieve the success you deserve.

And as for my son….his first trip up the high dive ladder was slow and methodical. Then he stood at the edge of the board and thought for a while before his first jump.

After the jump, everything changed. When his head first emerged from the water, he had an enormous smile of joy, satisfaction and pride that he had faced his fears. And he must have gone off the diving board 20 more times after that!!!

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Divide & Conquer


 

My 10 year old son and 8-year old daughter tend to get along pretty well.

But, there's still times where they're at each others' throats.

The other day was one of those days.

So, my wife and I used our usual plan - divide and conquer.

The divide and conquer plan is pretty simple. She takes one of the kids. And I take the other.

The fighting stops instantly as our kids are separated, and each of our kids gets one-on-one time with one of their parents.

Now, even though we prefer to do things as a whole family, the plan works great. And either later that day, or the next day, we'll regroup and do something as a complete family.

The divide and conquer plan can also be used in your business. For example, clearly there are times when your whole company should meet to form company-wide bonds.

But many other times, you, as the leader, should divide. For example, you should spend time just with your marketing team. That team will then feel special. They will not be jockeying for attention against other parts of the company.

And you can use this time to really focus on that one area. To improve it. To set metrics for the team to perform against.

The leaders of sports teams divide and conquer all the time. A typical professional football coach will do lots of drills with his complete team. And then, like a business, will separate into functional areas led by specific coaches; like the linebackers coach, the wide receivers coach, the quarterbacks coach, and so on.

And then the head coach will circulate among each of these functional areas to add value, support them, and make sure they are getting in position to help the entire organization perform the best it can.

Divide and conquer is also a great technique if your business faces multiple challenges. It is typically most effective to overcome one challenge at a time. While multi-tasking often makes us feel that we are being productive, it often backfires with key tasks not getting done as quickly as they should.

So make sure that you constantly divide or separate your business challenges and functional areas, and conquer or devote the required time to nurture and solve them.

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Forget Venture Capital: Vringo Takes A Unique Approach to Raising $9.2 million


 

Last week, Vringo, a video ringtone company raised $9.2 million.

That’s a lot of money, particularly considering that Vringo only generated $20,000 in revenues last year.

What’s most interesting is how Vringo raised the money.

It didn’t raise the money from venture capitalists, angel investors, or any of the usual suspects. Which is particularly surprising since Vringo’s CEO and co-founder, Jon Medved, was formerly a venture capitalist himself.

And it’s surprising since Vringo had previously raised $17 million in venture capital.

So what did Vringo do instead?

Vringo decided to go public on the New York Stock Exchange.

Vringo sold 2.4 million shares at $4.60 per share for a total of $11 million. (The stock price has since decreased to $3.80 per share.)

In an interview with the New York Times, Medved sited a couple of key advantages of being a public company, including:

1. It gives credibility. This credibility is key to a small company, particularly if it is selling to big customers who might be skeptical of their ability to stay around long-term.

2. It helps with recruiting top management talent, particularly since the value of/likelihood of exercising employee stock options appears greater.

The huge negatives of going public however were the massive amount of time required to do the pre-IPO roadshow and the $1.8 MILLION in estimated offering fees.

That is a lot of money -- and unfortunately precludes most other entrepreneurs from taking this route.  But, I would imagine that with the right law firm, these fees could have been dramatically reduced, to half that amount or less. But which would still require an entrepreneur to raise an angel round to fund the expense of going public.

According to Medved in his NY Times interview, when asked about whether he would recommend going public to other smaller companies, he replied: “I would certainly tell them to think about it, and not to rule it out. It’s a mistake to rule it out from first moment. Most people don’t even think it’s possible. We proved it’s not only possible, but it works.”

Next week, I will be unveiling an even more creative funding source than taking your company public. With this brand new source, you’re not going to raise $9.2 million (it works for smaller amounts of money). But, you won’t need to spend a penny on fees, you can raise the money really quickly, it’s practically foolproof, and you don’t ever have to pay the money back….pretty exciting stuff.

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The #1 Mistake Investors Make (And What To Do About It)


 

How many times have you heard someone say, "Don't put all your eggs in one basket"?

When it comes to any kind of investing, this is very good advice.

But, if this is the case, why don’t investors in private equity diversify?

Unfortunately, most individual investors in private equity significantly under-diversify their portfolios -- investing in one or only a handful of companies.  By so doing, they both greatly increase their risk profile and greatly decrease their probabilities of seeing investment return.

Quite simply, investing in just one or a handful of private companies is way, way too risky for most investors and should be avoided at all costs. 

Rather, to leverage the dynamic returns in this sector – click here for a summary of 8 in-depth studies examining returns for the startup and emerging company (or "angel investing") asset class showing an average annual return reported across the studies of 27.3% - the only prudent approach is via a portfolio of positions.

Building a Portfolio - Problems With Current Solutions

Admittedly, a portfolio approach to private equity is much easier said than done for the individual investor.   The 3 traditional methods of early-stage private equity diversification all have significant drawbacks:

1.    Building a Portfolio One Company At A Time.   It is certainly possible to build a portfolio one company at a time.  Famed technology investors like Vinod Khosla and Ron Conway have taken this approach, with personal investment positions in literally dozens (if not more) of companies.  They, however, are both professional investors and technologists, and deeply networked into the core U.S. angel investor deal community - namely Silicon Valley.  And as they and other both admit in interviews, there are strong "hobbyist" and "philanthropic" aspects to their deal interests.  Vinod Khosla, in particular, has stated that he is motivated in his current investing as much by his desire to contribute to the development of eco-friendly technologies as he is to making money.

2.    Joining an Angel Group.  Increasingly in recent years, there have sprung up angel investor networking groups around the country.  Most are centered in the main entrepreneurial hubs - Silicon Valley, Los Angeles, Boston, New York, Austin, Phoenix, Salt Lake - among other locales, and generally involve groups of individual investors coming together to review and diligence deals in a group review format.   These groups have a lot of benefits - including networking and providing a forum for both less sophisticated investors and entrepreneurs to learn the basic process of private company investing.  Like Mr. Conway and Mr. Khosla, many of the angels in these groups are retired (or semi-retired) executives and businesspeople who participate in them as much from a hobbyist perspective as from a money-making one.   Not surprisingly, their general investment track records are mediocre at best, and there is a high likelihood of "negative selection bias," whereby the better companies and entrepreneurs are often loathe to approach them because of the inefficiencies of their investment processes and the somewhat "off" messaging and perspectives of many of their members.

3.    Becoming a Limited Partner Investor in a Venture Capital or Private Equity Fund.   While the biggest private equity and VC funds - the Blackstones and the Sequoias of the world - are, because of their size, off limits to all but the largest of individual investors ($50 million+), there are literally thousands of smaller venture capital and private equity funds that accept capital in smaller increments from individual investors.   Some of them have good track records of success (though relatively few in the current market), but as "portfolio plays" they have some core limitations:

o    All but the largest funds themselves only invest in a handful of deals.   It is unusual for the typical VC or private equity fund to do more than a few deals/year, and also have a tendency to concentrate their holdings in a single industry or stage of business.

o    Far more problematically, because of their traditional 2.5% (on average) management fee model, there has been a great propensity in recent years for the better funds to grow quite large.  It is unusual for a fund with quality managers with a track record of success to have less than $150 million under management.   This larger fund size, in turn, greatly defines the kinds of deals in which the fund can, for logistical purposes, invest.   It is unusual for a fund of this size to make an investment of less than $10 million into a single deal, thereby requiring them to invest mainly in later-stage technology and/or higher cash flowing middle market companies.   While there is nothing inherently wrong with these strategies, the problem is that in recent years there are have been literally more venture capital and private equity funds out there than actual operating companies in which to invest!   This reality has a) greatly driven down the number of deals that a typical fund has/can do in a particular year and is b) leading to a "dead man walking" fund phenomenon where funds sometimes go years without actually making investments.

So What To Do?

We strongly recommend that anyone evaluating earlier-stage, private company deal opportunities do so only in the context of significant advisory and diligence assistance from accounting, legal, IT services, and management consulting firms that specialize in working with startups and emerging companies.

Quite simply, as a wise old horseman once quipped - bet on the jockeys not the horses.

Jay Turo
CEO
Growthink, Inc.

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