Growthink Blog

Exclusive Interview: Mark DiPaola, President of D3 Ventures


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Recently, I had the great fortune of interviewing Mark DiPaola, an extremely accomplished entrepreneur.

As the founder of Vantage Media Corp., Mark raised a $70 million Series A financing, which is still on record as one of the largest Series A raises in history. And in 2007, his company generated $68 million in revenues.

As president of D3 Ventures, Mark also functions as an investor.

As a person with such success on both sides of the table - investing in growing businesses, and actually founding and growing businesses himself, I couldn't wait to interview him about entrepreneurship and raising capital.

During the interview, Mark went into great detail as he recounted his own experiences on raising capital for Vantage Media. One thing he emphasized was how important it is to know your business inside and out, and how this knowledge impacts not only your ability to grow your business, but also to achieve sales breakthroughs and get the attention of investors.

Mark revealed one website for job postings which helped him assemble a 35 -person team that brought in $40 million/year in revenue -- and it's not the website you might think!  We discussed hiring strategies, the number one factor to look for in job candidates, and when it's time to bring in a highly-experienced management team.

Regarding his role as an angel investor, Mark shared the qualities he looks for in a company before making an angel investment, and why it's important that entrepreneurs are referred to investors.

Growthink University members can listen to the interview here:

http://www.growthinkuniversity.com/members/291.cfm

For those who have not yet joined, you can listen to the first five minutes by clicking the blue triangle below:

 


What Investors Really Mean When They Say They Don’t Need a Business Plan


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It is common knowledge that companies need business plans.

Business plans are critical for setting goals and mapping out your plan to achieve those goals. They are also critical in order to raise capital. Whether you are seeking a bank loan, or capital from angel investors, venture capitalists or corporate investors, a formal business plan is simply a requirement.

However, there are some investors that say they don’t need a business plan. Rather, they just want to see a company slide presentation and/or a 1-3 page Executive Summary.

So, at this point you are probably asking yourself, “So, do I, or do I not, need a business plan?”

The answer is a resounding “YES.” Let me explain.

To begin, the types of investors that typically do not want to see a formal business plan are an extremely unique bunch. They are typically the top 1% of angel investors or venture capitalists. These are the investors that see so many deals that they don’t have the time to read through business plans.

Perhaps more importantly, these are the investors that focus on investments that could be worth billions of dollars within a few short years.

They invest in companies like Facebook or Twitter; companies that have massive potential but which may not even have a real revenue model in place yet. For companies like these, that are potential “game-changers,” creating financial projections or analyzing the current marketplace are much less important than for other businesses. As such, formal business plans with this information is less important.

Another key reason for creating a formal business plan is the knowledge that comes out of it. Specifically, the business plan process forces you to make a lot of key decisions about your business. For instance, writing down your marketing plan forces you to determine the marketing tactics you will employ.

Likewise, the business plan development process forces you to assess your market, identify customer segments and customer needs, and determine the strengths and weaknesses of your competitors. This is all critical information that you need to successfully operate your business.

The U.S. Small Business Administration, in a study called “The Small Business Economy,” found a direct correlation between a business’ success and its creation of a formal business plan. That’s because the business plan development process forces you to really think through the business and make informed decisions.

Likewise, the business plan development process gives you the information that you need to include in your investor slide presentation and Executive Summary. For example, one slide needs to include your financial projections and uses of funding. Another slide must talk about your marketing plan. All of this information comes directly from your business plan.

And what about information that is in your business plan, but which you omit from your slide presentation -- is that wasted information? NO. Before they invest, investors will bombard you with questions about your business, your market, your customers, your competition and so on.

Having completed, read and re-read your business plan, you will be able to quickly and correctly answer all of these questions.

So, when investors say they don’t need a business plan, they are NOT saying that they don’t want you to create a formal business plan. Rather, they are saying that the way they want you to communicate your vision and concept to them is not through a long written document, but via another format, mainly a slide presentation and/or 1-3 page Executive Summary.

So, learn the format of business plan and complete your formal business plan. It will give you the information you need to create a winning business strategy and attract investors. And, in addition to your full business plan, create an Executive Summary (which should be the first section of your full business plan anyway) and a slide presentation, since these documents will be required in the capital-raising process.


How Dare You Susan Boyle!


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I hope you're not a Susan Boyle fan. Because I have a major bone to pick with her. If you don't know who Susan Boyle is, she's the 48-year old British woman who gained international fame upon singing on the reality TV show "Britain's Got Talent" in April 2009.

So why am I so mad at her?

Because for 48 years she kept her talent to herself. She was too afraid to take a shot. To use her natural abilities and training to achieve real success.

I say "how dare she do this!" Is this fair to the millions, if not billions, of other people in the world who don't have this talent? Or who live in places where they have no ability to use their talent? And is this fair to the billions of others worldwide who have missed out on hearing her beautiful voice for the past four decades?

NO.

Now what really gets under my skin is when I compare Susan Boyle to an entrepreneur, which she essentially is.  How many natural entrepreneurs are out there who are letting their talent waste away? Who have tons of ideas and abilities, but are working in their same, boring jobs and not using them?

Why do I care?

Because they are failing to create wealth for themselves and their families. And worse, they are killing our economy. Because entrepreneurs like them are supposed to be creating great companies- companies which provide jobs, great products and services for the rest of us, and a tax base that feeds our government. Yes, they are failing themselves and their countries.

So why is this happening? I think it's because they are too afraid. Like Susan Boyle was for many, many years.  And unfortunately, in many cases, these entrepreneurs simply haven't gotten the kick in the pants that they needed.

Like entrepreneur Mark DiPaola who I spoke with the other day. Mark graduated from college and got a cushy job at a consulting firm. He worked there for a couple of years, and may have worked there for decades if he kept getting promoted.

But thank goodness, Mark got laid off. And then he went to work at a startup. And thank goodness, the startup failed. Because it was those two experiences which prompted Mark to start his own company.

Which he did. And which was a massive success. The company, Vantage Media, generated $68 million in revenue in 2007. In March of that year, venture capitalists and private equity firms put $70 million into the company and Mark was able to cash out and leave the company at the age of 30. And retire. And start a foundation to give back. Now that's what I call success.

Are you the next Susan Boyle? Do you have entrepreneurial talent, but are keeping it to  yourself? Have you not started your own company yet? Or failed to really grow your company? Well, I'm willing to bet that you have more talent than you let on and that you could be more successful than you currently are.

And, I also know what's probably holding you back.

MONEY.

That's right. Most entrepreneurs start their companies or grow them properly because of money. Which is odd, since successful entrepreneurs make tons of money. But, to become a successful entrepreneur, you often have to leave your current job and current income.

To solve this problem, many entrepreneurs, like Google AdSense founder Eytan Elbaz who I spoke with the other day, raise capital BEFORE formally launching their companies. They continue to work at their current jobs and develop their business plan and raise money. And then, once the money is in their bank account, they leave their current job and dive into their ventures full time.

And you can do this too! IF you know how to raise money for your business.

So, in addition to all the information that you buy and read on marketing, operations and other business disciplines, start investing in learning how to raise money for your business. Since that is the most essential skill for a successful entrepreneur.

You May Not Have to Quit Your Day Job


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If you haven't yet launched your new business, I have some advice for you.

It's actually not my advice. As I'm a little conflicted about it. Let me explain.

The advice is to start your new business as a project. What that means is that you don't quit your day job. You don't raise capital. You don't focus 100% of your effort on it.

Rather, you work on it as much as you can in your spare time until it either becomes something, or it doesn't.

The advice comes from Bambi Francisco, the co-founder and CEO of Vator.tv who I spoke with earlier this week. It's not only her advice having founded a company, but the advice given to her by Mark Pincus.

Pincus is the serial entrepreneur who founded Tribe in 2003 and sold it to Cisco Systems in 2007, and is now the founder and CEO of Zynga, a large social gaming company. You can watch Francisco's brief but informative interview of Pincus here.

So, the point is to start your new business as a project. Obviously, this depends on your choice of business. If it's a restaurant, there's not much of a project to be had. But if it's software, for example, you can start developing it and see if you are able to start creating features that people want.

And once you can prove that the project is developing into a viable business, you create a real company for it.

This "project" concept also reared its head when I recently spoke with Eytan Elbaz, co-founder of Oingo, the company which later would be purchased by Google and renamed as Google AdSense.

Elbaz and his co-founders were developing their novel software while still holding full-time jobs. After a little while, they were able to develop a working prototype. And then, Elbaz showed it to an angel investor (who interestingly was a client of his at his current job). It was only upon the angel investor writing them a check that they decided to leave their full-time jobs and really launch the company.

So why am I conflicted about this advice? Well, there's definitely something to be said for the entrepreneur that is so passionate about their business that they're willing to fully launch it from the get go.

To leave the comfort of their current job and take all the risk. In these cases, I like that the entrepreneur can't blame their current job for limiting their time. They fully immerse themselves in their business, and give it their best possible shot. And in many cases, this total commitment is what drives success.

The key here is probably that everyone's situation is different. The young entrepreneur might have an advantage in that it may be easier to leave their current position and jump 100% into their business. Conversely, the older entrepreneur with the family and mortgage may be less able to shoulder the risk of foregoing their current salary.

The choice is yours - take the leap fully or partially. Each can result in success.

The only choice that I truly hate is doing nothing. Too many people sit with great ideas in their heads but fail to act on them. And then, when someone else successfully executes on their idea, they say, "Hey, that was my idea."

To them I unfortunately say, "Who cares - it's the entrepreneur's willingness to commit and execute on the idea that really matters!"

Last Chance to "Get the Skinny" on Market Research for Your Business


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Have you ever heard of ZipSkinny.com?

If you go to the homepage of their site, you'll see a box that asks you to "enter your zip code to see U.S. Census data and comparisons with neighboring ZIPs."

Unless you're one of those people who gets excited about miscellaneous facts and figures, at first glance this might seem like an uneventful site.

But for those of you who provide products or services to local customers, the information available is *invaluable* in conducting market research for your business.

Once you type in your zip code and press enter, you'll see tons of great data on your local market. Such as the percentage of local residents who have graduate degrees or who are married. And, you’ll see economic indicators such as household income, and demographic information on race, age, and gender.  

As an example, I've just typed in 10549, the zip code of our office here in Mount Kisco, a suburban town  just outside of NYC. One fact that stands out to me right away is that 62.3% of residents have lived in the same home for 5+ years. Another is that the median household income is $75,761. Put these two statistics together, and you can deduce that this town is a fertile location for a business where both an affluent demographic and high customer retention are essential, such as a landscaping or cleaning business.

Whether you're looking to conduct preliminary market research before delving into a business, or examining markets into which you can expand your current venture, ZipSkinny is one of many tools that can help you with the process.

And in our recent report, "How to Quickly, Easily, & Expertly Conduct ZERO-COST Market Research For Your Business" I lay out this and several other tools to help you conduct the market research online at a level that is comparable the way it's done by experts with decades of experience.

As you might recall, I released this report at a STEEPLY discounted rate of one cent for each year of my wife's age, in honor of her birthday in March.  And that discount is about to disappear forever.  

On Thursday at midnight, the price is going up more than 100x, so as the subject of this blog post suggests, this is your last chance to get the information of market research experts for literally pennies.

If you are a Growthink University member, you can click here to grab your free copy of the report if you haven't done so already.

Otherwise to order now, click here. Or for more information, you can watch the brief video below:



How to Raise Capital as a First Time Entrepreneur: An Interview with Brad Feld


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Yesterday I had the opportunity to interview Brad Feld, who is considered among the elite investors in privately held companies.

For those of you who are not familiar with Brad, his background includes starting and selling his own software company, investing as an angel in 40 to 50 companies, and founding or co-founding three venture capital firms: Intensity Ventures, Mobius Venture Capital and Foundry Group, where he currently serves as Managing Director.

While there were several invaluable points for entrepreneurs seeking capital in the interview, I found the following to be most interesting:

1. Your VC firm is your partner.

Many first-time entrepreneurs view VCs simply as providers of capital. In actuality, VCs are partners. They exert control over your company. They have experience in product development or scaling companies, or both, and can provide significant value beyond the money they infuse in companies.

Because VCs are partners that exert control, you need to assess them much like you would other partners. Mainly, you need to make sure that there is a really good fit.

2. Angel investors are the friend of the first-time entrepreneur.

First time entrepreneurs should strongly consider angel investments prior to venture capital. Angel investors often have financing experience which can help entrepreneurs navigate the VC waters when they are ready (there are a ton of terms and issues involved with venture capital that most first-time entrepreneurs don't know about).

Angel investors also tend to have relationships with VCs. Also, angels often have the operational experience to help grow the entrepreneur's company. And finally, the angels' funding can help the company grow to a point where it is more suitable for venture capital.

However, when structuring angel deals, it is imperative to keep the pricing/valuation fair and the deal terms as simple as possible. If not, raising subsequent venture capital rounds becomes more challenging.

3. Don't look for investors who are not a good fit

Brad mentioned the 80/20 or even the 99/1 rule. Essentially, entrepreneurs should spend a ton of time on the 1% of investors who are a great fit. And not waste their effort on the other investors.

Two key aspects that Brad mentioned for ensuring a good fit are 1) geography (many VCs will only invest in certain geographic regions) and 2) sector (Foundry Group simply doesn't invest in Clean Tech; no matter how exciting the company looks). I would also add "stage" to this list as many VCs focus on companies at specific stages (e.g., some only want post-revenue companies, etc.)

You can listen to the full 30-minute interview by clicking the blue triangle on the audio player below:

 

Are you an entrepreneur looking to find angel investors for your deal?  Gain all the tips and advice you need with our Growthink's Angel Investor Guide.


PR Strategies for Your Business: An Interview with Richard Harris


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My recent interview with PR expert Richard Harris was enlightening. You may know that I owe a lot of Growthink's success to PR. A decade ago, I pitched the Los Angeles Times and they published a story on us. That day I received about a hundred phone calls, and at least that volume in emails. So, I focused the interview on figuring out how to replicate that success.

Richard serves as the founder and CEO of Momentum, which provides communications, strategy and placement agent services to private equity funds, investment banks, and selected early stage and non-profit companies. A 20+ year veteran of the public relations industry, Richard has not only an impressive client list (that includes The Girl Scouts of America, Polaris Venture Partners and Star Jones), but also a wealth of knowledge on this subject.

Some of the areas the Richard covered were:

  • Four ways to make your press release "newsworthy"
  • The three press release distribution sites that are worth using (and why you shouldn't use the other ones)
  • The different people you need to pitch if you are targeting websites and print publications versus television or radio media
  • The best time and day of the week to pitch journalists
  • What NOT to do if a journalist picks up your story


And many, many other critical points that every entrepreneur needs to know about if they want publicity for their businesses.

The full interview is available for members of Growthink University.

For non-members, you can listen to the first five minutes of the interview by clicking on the blue triangle on the player below. 


How to Build an Effective Sales Team: An Interview with Adam Shaivitz


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All entrepreneurs must be well-versed in sales.

We are always selling: Selling to employees as well as customers, investors as well as partners, etc. And those who excel at selling have a major competitive advantage.

To make sure that both you and I are in fact not only great at selling, but building an effective sales team, I recently interviewed sales whiz Adam Shaivitz.

If you're not familiar with Adam, Adam is the co-author of a best-selling book on selling called “Selling is Everyone's Business: What it Takes to Create a Great Salesperson.” He is also a sales consultant with Accelerate Performance who has consulted for Google, ADP, Pimco, Morgan Stanley, and many others.

Adam conveyed tons of great information. Two points that I especially liked were the following:

1. Make sure that you are properly motivating and solving the problems of your buyers.


The best salespeople are problem solvers who are able to sell the benefits of their offerings tailored to one or more of the six basic fundamentals that all of us as humans want:

  • Desire for gain
  • Fear of loss
  • Security and protection
  • Comfort and convenience
  • Pride of ownership
  • Satisfaction of some emotion like love or hate or ego


Great sales people understand which of these six motivators are most important to their prospects, and sell into them.

2. Spending time with your best sales performers.

Adam told us that too many business owners neglect their top sales performers. Rather, they tend to focus on improving their lowest performers.

There are two problems with this approach. First, working with and improving the performance of your best sales performers by only 10% may be easier and more beneficial than improving the performance of your lower sales performers by 25%. Secondly, your top sales performers are the ones that will be targeted by headhunters and other firms, and you can't afford to lose them.

A few of the other areas we covered were:

  • The keys to building a successful sales team
  • Adam's favorite ways to motivate a sales team
  • At what point can the entrepreneur or founder still run the sales organization and at what point should they bring in a dedicated sales manager
  • How to provide feedback, motivation, and inspiration for team members
  • How to transfer the skills of top performers to everyone else in the organization
  • How to create an environment that encourages improvement and performance

The full interview is available for members of Growthink University

To listen to the first few minutes of the interview, please click the blue triangle in the player below.


Building Your Management Team Might Be Easier Than You Think


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Yesterday I had the privilege of interviewing Matt Ocken, one of the founders of Kindred Partners.

Kindred Partners might be the best at recruiting executives for high-growth technology companies. In fact, some of the top venture capital firms continuously use Kindred to find executives for the companies they fund.

If that’s not enough, consider that Kindred was responsible for placing CEO Meg Whitman at eBay as well as key executives at Google, Amazon and Facebook.

So, Matt was obviously uniquely qualified to answer my questions about how to expertly build your company’s management team.

Matt started by going through the four tactics for building a great management team. Surprisingly, the first tactic was pretty simple and should be used by virtually all entrepreneurs.

The tactic? Figuring out who you already know that could be a good addition to your team. As Matt pointed out, there is a proven correlation between success and a team having worked together in the past. So, if you have successfully worked with someone in the past, your chances of successfully working together again are high. And investors know this and are keen to fund companies led by teams with history of successfully working together.

So, a first step is for the entrepreneur to do an audit of who they have worked with successfully in the past. You could have worked with them in school, at a job or at an organization. Create this list and then narrow it down to include the individuals you truly respect and would like to work with again in the future. Then, contact these individuals to see if they are interested in joining your team.

Note, Jay Turo, Growthink’s other co-founder, and I met at business school. We worked together successfully on a couple of projects during school and were friends. So, Jay was the first person I approached after I had the idea for Growthink. We’ve now run Growthink together for 10 years, so I can personally vouch to Matt’s approach!

Click here to download the interview as an MP3 file and the PDF transcript.

And here is a preview of the first few minutes of the interview (click the blue triangle to play):

 


How to Find Grants - The ONE Website You Need to Know About


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The sky is falling. The sky is falling. While that's the news the media is telling us everyday, it's not necessarily all true.

While the economy is clearly not doing so well, there is still tons of money available to organizations via loans, investments and grants.

In fact, with regards to grants, last year more than 75,000 U.S. foundations gave $45.6 billion to organizations and individuals, according to Foundation Growth and Giving Estimates: Current Outlook (2009 Edition). That's $45.6 BILLION!

Do you want a piece of that money? Well, if you do, there is one site that you MUST visit: FoundationCenter.org.  Right on FoundationCenter.org's homepage you can start searching thousands of foundations that provide grants. You can even search by factors such as your zip code and market sector to zero in on the most appropriate grants for you.

But, before you rush to give FoundationCenter.org a try, you need to know the one key fact about private grants that no one seems to tell you. Foundation grants are only for non-profit organizations.

So, if you are a non-profit organization, you should definitely stop what you're doing and go to FoundationCenter.org to see what grants might be available to you.

I know what you may be thinking right now...How does this help me? I'm running or starting a for-profit business.

I gotcha.  And fortunately, there are also billions of grant dollars available for you too. However, getting these dollars is a bit more tricky. Your business needs to be in certain sectors. You need to know where to look. You need to know how to apply and the secrets to making sure your application succeeds.

To answer these questions and make winning grants for your business a whole lot easier, my team and I just completed Growthink's "Step-by-Step Guide to Raising Capital for Your Business from Grants."

The guide is focused on teaching for-profit businesses how to raise capital via grants.  Growthink University members have already been sent their copy of this special report. Others can learn more and download it today by clicking here.


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