Growthink Blog

Raising Capital Through Lobbying: An Interview with Jack Burkman


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I recently had the opportunity to interview Jack Burkman, the founder and president of Burkman Associates LLC.

You may have heard of Burkman since he appears frequently on ABC, CNBC, MSNBC, ESPN, and many other networks. He was also a former FOX News political analyst.

Jack Burkman has been raising capital for companies using an extremely rare technique - government lobbying.

According to Burkman, money for many types of companies can be raised from congress and government agencies (e.g., Department of Energy, Department of Homeland Security, etc.).

An Interview with Renaud Laplanche, Founder & CEO, Lending Club


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I recently had the opportunity to speak with expert entrepreneur and founder/CEO of Lending Club, Renaud Laplanche.

Renaud is an expert in raising capital, as he has successfully raised multiple rounds of venture and other capital -- totaling over $50 million for both Lending Club and Triple Hop Technologies, of which he was also the founder.

So I was excited to ask him questions about raising capital for one's business and how LendingClub can help individuals and entrepreneurs. In the interview we covered:

  • How LendingClub works
  • The importance of your FICO score in getting a peer to peer loan
  • How your track record of success factors into a successful capital raise
  • That factor matters the most in selecting a VC
  • Renaud's single most important tip for those looking to raise funding


Click below to hear excerpts from the interview:

 

 

To download the full interview and/or transcript click here.


Keys To Hiring & Retaining The Best Employees


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If you are managing an early stage or growing company, it typically means that you are cash restrained.

And, as a result, you are often unable to pay employees salaries commensurate with what they would earn at larger organizations.

So, how do you manage this and hire and retain the best staff?

In order to do this, you need to understand and manage the four core factors that effect an employee's satisfaction and thus willingness to join your company and/or stay with you.

The first key factor is financial compensation, which includes the employee's salary plus benefits such as healthcare, and any significant perks. For the most part, early stage companies can't compete with larger entities when it comes to these salaries.

However, with stock options and/or profit sharing, smaller companies can better motivate employees and give them the potential to earn even more money then their large organization counterparts should the company succeed.

The second key factor effecting employee satisfaction is lifestyle. Specifically, how does your organization accommodate the employee's lifestyle? Do you offer daycare? Flexible schedules? For some employees, the ability of the employer to accommodate their lifestyle is of critical importance.

The third key factor that employees consider when assessing whether to stay with a company is how much they enjoy their jobs and coming to work every day. Clearly there are millions of workers that hate their jobs. But, for the most part, these aren't the best workers. If they were, they would have lots of other job opportunities.

It is up to the small business owner to create an environment whereby employees enjoy their work. They must enjoy working with the other members of the company, the types of work they are doing, and their work conditions. They must feel that they are a part of the overall company culture. They must get along with their co-workers, and feel their boss appreciates them and treats all employees equally and fairly. And they must receive adequate communications as to company policies and decision-making.

The final factor with regards to satisfying your employees is to ensure that they are learning and developing skills that will further their careers, whether or not their futures lie with your organization or with another organization (preferably they see advancement opportunities within your organization).

Employees need to be continuously trained and have the ability to continually learn so that they become more valuable assets. This training can be formal, and/or it can include learning from trying new tasks and projects.

It is up to the business owner to ensure that employees are given training and projects that expand and improve their skills.

As an entrepreneur and/or business owner, it is your duty to hire and retain the best staff. Since, no one person has the ability to grow a massive empire with the help of others. In building your teams, consider and constantly revisit these four key factors and make sure you create and foster and environment that gives your firm a competitive advantage in each of these areas. In doing so, you will maximize your chances of building a truly superstar company.

How Seeking Out Failure Can Lead to Your Success


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I read a very interesting blog post the other day about "survivor bias," an important statistical principle that could greatly affect your future success.

In brief, survivor bias occurs when an analysis excludes information since that information no longer exists.

Let me give you an example...

The English forces, during World War II, sent planes each day to bomb the Germans. As you might expect, several of these planes were shot down. And, the ones that did come back typically returned with multiple bullet holes.

Now, the English obviously wanted to maximize the chances of its planes and soldiers returning home. So English engineers studied the planes that returned. In doing so, they found patterns among the bullet holes. Specifically they found lots of holes on the wings and tail of the plan, but few in the cockpit or fuel tanks.

As a result, the English added armored plating to the wings and tail.

As you might have already concluded, this was the wrong thing to do. The better decision would have been to add armored plating to the cockpit and fuel tanks. For, the planes that were shot in those places were the planes that were shot down and never returned.

The English engineers' analysis missed this data because these were the planes that they were unable to examine. This is "survivor bias"-- their inability to include this critical data in their analysis since it was unavailable or didn't "survive."

So why does this matter to you?

It matters because as you start and/or grow your businesses, you will have to hire service providers and staff. And naturally, you will want to hire those with a track record of success.

But, when you hire staff who have only worked at successful companies, you may fall victim to survivor bias. That is, they have not learned many of the lessons that individuals and companies learn when they fail.

Likewise, when you hire a service provider that claims that every one of their clients has been successful, maybe they haven't learned from client failures.

They say that you learn more from failure than from success.

While that can be debated, from personal experience I can say that I've learned a ton from both failure and success. From successes, I have learned principles and formulas that worked. The ones I strive to replicate on a daily basis.

And from failures, I have learned things to avoid. I have learned flaws in my thinking. But importantly, many of my successes have come out of failure. From tinkering ideas and plans that weren't quite working. And making them work. And, these new ideas would never have come to me had I not failed first.

Now, clearly my advice is not to hire failures or those with a habit of failure. But, likewise, it's not to hire staff or service providers who claim to always succeed. Since a balance between success and failure often provides that winning combination of wisdom.

So, the next time you are interviewing a key hire or service provider, make sure to ask about their failures. Ask about tasks and jobs that they or their companies failed at. And find out what they learned from that failure.

Ideally they are the types of candidates that learned a lot from their failures and were able to overcome them. This is because the vast majority of growing companies fail at things over and over again. It is their ability to constantly modify and improve their businesses that enables them to excel. Surround yourself with people that have this ability.

Be Like Mike...In Your Investor Meetings


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According to the book "How To Be Like Mike: Life Lessons About Basketball's Best," Jordan's practice habits and conditioning regimen amounted to an "almost alarming harshness."

In fact, many experts, such as Florida State University professor K. Anders Ericsson, argue that practice continually trumps talent. Prominent examples of success attributed to continuous practice besides Jordan include:

  • Bobby Fischer: yes, he became a chess grandmaster at the ripe age of 16. But, he had nine years of intensive study and practice before this.
  • Warren Buffet: who is known for his extreme discipline and the significant time he devotes to analyzing the financial statements of organizations he considers investing in.
  • Winston Churchill: who is widely considered one of the 20th century's best speakers; it is said that he compulsively practiced his speeches.
  • Tiger Woods: who developed rigorous practice routines from an extremely young age. He continues to devote hours upon hours each day to conditioning and practice in order to improve his performance.

These same practicing principles apply when you are selling your company and your products/services to investors, customers, partners and/or employees.

With regards to your elevator pitch, which is often your opening communications with all outside constituents, practice it over and over again until it flows from your mouth and causes prospects to nod in agreement and understanding each and every time.

With regards to your investor presentations, you should practice them over and over again. And when you practice them, you should think about the goals of your presentation and simulate the questions you might be asked.

For example, you should be thinking:

  • What is the outcome of the meeting that I am seeking?
  • What questions about my business will the investor have, and how will I most quickly and easily answer them?
  • What investment objections might the investor have and how will I overcome them?
  • What will be the signs that my presentation is going well, and how will I adapt if it is not?

By practicing your presentation over and over, you will get better and better at it. Just hearing yourself saying the words out loud will help. You will hear what sounds good and what doesn't.

Likewise, you should practice your presentation on real people -- your advisors, friends or family members. And after these mock presentations, ask them to recite back to you the key points you made. Importantly, make sure they recall the key points that you want to convey. If not, continue to improve your presentation content and your delivery until it reaches perfection.

A Great Tactic for Both Pitching Investors & Thriving On Twitter


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I attended a great online marketing conference a few months ago and learned a lot about marketing your business via Twitter.

The key Twitter advice that was given was to treat Twitter interactions just as if they were offline in the "real world."  That is, act just like you'd act as if you were meeting at a cocktail party.

For example, at a cocktail party you wouldn't go up to someone and start screaming "this is what I do" and "buy my product now." (A lot of people do this on Twitter.)

Rather, you would get to know the person, ask them some questions, and hopefully provide some valuable information and advice. This process builds rapport, shows them that you care about them, and positions them to reciprocate in the form of wanting to learn more about and support your business.

So, how does this relate to pitching investors?

Well, I recently read an interesting blog post by Nic Brisbourne, a venture capitalist based on the UK. The key message of Brisbourne's post was that entrepreneurs should pitch him as if they were pitching their best friend.

In doing so, entrepreneurs should:

  • Give the information straight
  • Keep it interesting
  • Deliver it like a conversation rather than like a fire hose
  • Try to inject some humor
  • Do as much listening as talking
  • Focus on the areas that your friend wants to hear about
  • Adjust the length of the pitch to the level of interest

Like in your Twitter conversations, it's not all about you. You need to listen to the needs of your investor audience before you pitch them. You must develop rapport. And you can't pitch, pitch, pitch. You need to slow down and deliver your pitch in a more integrated fashion (such as giving some information, allowing the investor to ask questions, and responding as appropriate).

So, before you speak with your next prospective investor, you should create a checklist in your mind. Make sure you understand the needs of the investor, make sure you ask questions and do a lot of listening, and make sure that you effectively convey your message without being overbearing.

How To Make Your 33 Wishes Come True


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I came across a very interesting advertisement in my Sunday paper the other day.

The ad was from a psychic named Maria that promised to allow you to achieve up to seven of 33 possible wishes.

Now, before I go any further this seemed to be a scam, and in fact, upon checking online, this psychic unfortunately appears to have been scamming people around the world for many years.

However, what I found really interesting was the list of 33 wishes that the advertiser supplied.

I figured that these scammers (since they probably have spent millions in advertising) did some research to ensure that these 33 wishes were universal; that is, that they pretty much sum up the wishes of most people. From a marketing perspective, this is something I found very interesting.

Below are a handful of the wishes on the list that stood out to me the most.  Believe it or not, I firmly think that each of us CAN achieve each of these wishes. So, below each wish, I have provided my thoughts regarding how to achieve them  -- without psychic assistance.

1) Sell or set up my own business

Start learning now to start, finance, grow, and exit your company.

2) Have a monthly income of $5,000.00

Start a business. Work hard. Make it successful.  $5,000/month is nothing if you have a successful business.

3) Win enough money to never have to work again

Build a successful company. Sell it.

4) See my kids do really well in their studies

Work hard in starting and growing your successful company. Because you are the boss, you can spend more time with your kids helping them. Your hard work will also provide the funds to hire a tutor as needed.

5) Be on TV

Once you've started that successful company I've mentioned a couple of times- hire a good PR firm.

6) Attract men/women

Working hard and being successful will give you the confidence to better attract members of the opposite sex.

In fact, the majority of things on this "wish" list...

  • Finding a job which is enjoyable and pays well
  • Be able to stop working with a substantial monthly income
  • Solve my financial problems once and for all
  • Get a new car
  • Travel around the world
  • Have enough money to help out my family
  • Retire with enough money to have no worries
  • Buy a boat
  • Buy a house
  • Go on a cruise
  • Have a house in the country
  • Success in an important competition
  • Be the friend of wealthy people
  • Never have any more money problems



..can all be attained by starting and growing a successful business. Let me repeat that - You can have virtually everything you want if you work hard and start and/or grow a successful company.

It's that simple. Anyone who falls for Maria the Psychic's scam should be ashamed of themselves.  Success simply does not come without hard work.

I have, unfortunately, seen people work very hard for others and not achieve the success they wanted.  That is why starting your own company is so critical if you have not already done so.

Work hard. Work smart (I consider working "smart" as investing in expert information that allows you to choose and complete your tasks more effectively and efficiently). And most of those 33 wishes WILL come true.


Kirill Makharinsky & How To Predict A Startup's Success


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Several months ago, I came across YouNoodle, a website which offers tools and a platform to help startup companies succeed. What I was initially drawn to was their Startup Predictor tool. The idea of a tool that could help predict the success, or lack thereof, of a new company really intrigued me.

So, I contacted Kirill Makharinsky, one of YouNoodle's co-founders, to learn more. Kirill was gracious enough to do the interview and provided tons of valuable information.

I started by asking Kirill about the Startup Predictor, and specifically about what are the key indicators that a new business will be successful.

Kirill started by explaining that they created the startup predictor after looking at rich data on approximately 3,000 companies. From this data, they determined patterns between initial conditions (particularly in terms of the team and what their intentions were) and the end result.

The results found really strong indicators that the following three factors are key indicators of a venture's future success:

1. The quality of the team in terms their experience and accomplishments, and how well the team members know each other.


2. The amount of commitment the team has in terms of their opportunity cost - specifically how much they are giving up to be in the venture (e.g., leaving a steady, high-paying job) and how much skin they have in the game (e.g., how much of their personal funds have they committed).


3. Having advisors. YouNoodle found that having the right advisors, even if they provide minimal amounts of time contributing to the business, strongly impact the future success of the business.

Kirill went on to discuss fundraising. He explained how allowing two advisors to take part in forming and modifying YouNoodle's business idea helped secure them as angel investors. He also gave a great case regarding why you should contact investors BEFORE you have a concrete business idea when raising funding.

Kirill also discussed why the quality of your business idea is over-rated, and provided a great answer to my question regarding the top 5 things entrepreneurs really need to know in order to be successful.

To listen to excerpts of this interview click the blue triangle on the player below.


To listen to the full interview and/or read the transcript, click here:  http://www.growthinkuniversity.com/members/326.cfm

To visit YouNoodle, click here.


The Creative Fundraising Strategy That Became a Successful Business


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I'll be the first to admit that this fundraising strategy isn't for me. But I have a wife and kids, so maybe, a few years back, I would have given this one a shot.

The strategy: renting out the extra space in my apartment or house to travelers on a budget.

For three entrepreneurs, this fundraising strategy took on a life of its own. The three entrepreneurs, Joe Gebbia, Brian Chesky, and Nathan Blecharczyk, used this creative fundraising strategy (renting out the extra space in their apartments) to generate revenue after they quit their jobs to become entrepreneurs.

But, interestingly, they found the strategy so successful, that that turned it into a business that is now thriving.

The business, Airbnb is essentially the "eBay of space." It works like this...People list their apartments and houses (if they aren't going to be home), and even spare guest rooms, futons, and couches on the site and set a price per night.  And then travelers who are looking for a place to stay search the listings for an accommodation that's right for them.

So, real estate owners and renters earn money, travelers get a discount, and Airbnb earns a 10% fee on all transactions. A true win-win-win. As you might imagine, Airbnb is doing very well, and is now in over 1150 cities in 82 countries.

My takeaways/lessons here are two-fold: first, if you have extra space or are traveling, you should consider listing your space on Airbnb to generate some revenues to invest in your business. Second, as this company illustrates, you can never be too creative in coming up with ideas to fund your business.

If you want to see a brief video of the Airbnb team, including their story of how Barry Manilow's drummer is one of their top users, here is a cool clip:

 

 

 


An Interview with Brette Simon, Partner at Jones Day


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The other day, I had the pleasure of interviewing Brette Simon.

Brette is a partner at Jones Day, a top tier law firm with offices in New York, Los Angeles, Silicon Valley, and several major international cities.

Brette advises companies and investors in private equity and venture capital financings, and is on the Venture Capital and Private Equity Committee of the American Bar Association.  She is also a member of the Los Angeles Venture Association.  And Brette was recently recognized by The Deal - a popular venture capital and private equity publication - as one of the top 13 dealmakers in the country. Very impressive.

So, naturally based on her background, I thought Brette would be the perfect person to interview about the legal aspects of raising capital.  I was right.

Brette started the interview by discussing the advantages and disadvantages of certain forms of incorporation, and noted that a C-Corporation is what most venture capitalists prefer. She did note, however, that there are many nuances with regards to the corporate structure with regards to tax treatment, so the choice of your type of entity could become more complex.

We then shifted topics and discussed how entrepreneurs can protect their business ideas and intellectual property. To this, Ms. Simon discussed non-disclosure and confidentiality agreements. She also made the key point that entrepreneurs must make sure to get their employees, consultants and vendors (and everybody else who may be working with them) to sign PIIAAs (Proprietary Information and Invention Assignment Agreements), in order to make sure that the company owns all the intellectual property that is being created.

Ms. Simon went on to discuss other items that can help protect one's intellectual property such as patents and staging diligence.

We then discussed several other key topics including:

* Some of the main laws and regulations that entrepreneurs need to know about and act in accordance with when raising capital
* The documentation needed to raise capital
* What you should be focusing on when you look at a VC's term sheet
* Misconceptions that entrepreneurs often have about the legal process
* The right time for the entrepreneur or management team to hire legal counsel during the process of raising capital

I really enjoyed conducting this interview. Brette Simon obviously knows the legal issues with regards to raising capital inside and out and is a wealth of knowledge!  This is definitely information that all entrepreneurs must know when raising funding, particularly venture capital.

To listen to excerpts of this interview click the blue triangle on the player below.


To listen to the full interview and/or read the transcript, click here.


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