Written by Troy Centazzo on Thursday, March 26, 2009
This is the first article in our “Bottom Line” series focused on the $787 billion plan, where we analyze the spending bill's significance as a stimulus for U.S. entrepreneurs and emerging businesses.
The figures are mind boggling. A few billion dollars there, $50 billion there. And how about the $165 million from the Troubled Asset Relief Program (TARP) that made its way to the executives of bailed-out AIG in the form of bonuses? The unprecedented amount of public funds being spent to save and spur the economy through recent programs certainly includes a bunch of life vests for those failed companies that are “too big to fail,” but what about for the Entrepreneurial Economy?
But we’ve also seen frustration on the front lines when we’ve spoken and worked directly with leaders of promising businesses in those targeted sectors. How do I apply for the funding? Am I eligible? Where do I even find the information?
The next article in our Bottom Line Series will focus on stimulus funds available for entrepreneurial companies in the healthcare sector.
Written by Dave Lavinsky on Tuesday, March 24, 2009
I recently wrote a blog post about Kiva and all the good it is doing worldwide.
As you may recall, Kiva is "the world's first person-to-person micro-lending website, empowering individuals to lend directly to unique entrepreneurs in the developing world." Specifically, on their website, individuals who need small loans to start or grow their businesses request funding. And, other individuals from around the world offer this funding in increments as low as $25. To date, nearly 500,000 users have lent almost $65 million, interest-free, to developing-world entrepreneurs through Kiva.org. $3.5 million was distributed last month alone.
Not surprisingly, since the majority of you are based here in the United States, in response to my email about Kiva I received lots of emails saying that Kiva should launch in the United States. I agreed.
And now, a few weeks later, Fortune Magazine is reporting that Kiva plans to launch in the United States within a few months. This could be a HUGE funding opportunity for American entrepreneurs!
Importantly, while the highest loan amount for entrepreneurs in the developing world is $1200, in the United States, it will be $10,000. One issue that hasn't been fully resolved is vetting. In the developing world, Kiva "uses microfinance institution partners to vet entrepreneurs before allowing them to solicit funding. By asking a series of questions to assess roots in the community and the legitimacy of a business, Kiva is able to establish a risk profile for each entrepreneur. Before offering money to, say, the proprietor of a Dominican fruit stand, any lender can read the entrepreneur¹s profile, history of defaults, and a bit about the business."
In the United States, Kiva says that they are "signing on microfinance partners in the Bay Area and in the Northeast," but have not released who these partners will be or how the vetting process will work.
In any case, this is GREAT news for American entrepreneurs.
You can read the full Fortune article here.
Written by Jay Turo on Monday, March 23, 2009
In my last column, I wrote about how to measure risk in a startup and/or emerging company. In today's column, I go deeper into what is by far the biggest factor driving this risk - namely the "people," or execution risk of a company.
It is extremely hard to identify a management team of a smaller company (or any company, for that matter) with the right combination of small business and corporate smarts, integrity, and work ethic to build and exit a company for themselves and their investors.
In my 10 years at Growthink, I have had both the benefit and the misfortune of not only investing in and advising a lot of companies that were successful in executing their growth plans, but also a lot of them that weren't. And it has been in the comparison between the two that has informed my thinking as to what to look for.
Here are 7 managerial attributes that I have found present in virtually all of the successful companies with which I have worked, and which were lacking in those that failed:
7. They are, in fact, a Team. This may seem obvious, but all great companies are not simply the by-product of a visionary and/or charismatic founder and chief executive, but rather of a multi-disciplinary, multi-faceted, and well-meshed leadership team. Great companies have cultures of achievement. The tone of this culture might be, and usually is, set by by a charismatic founder. But its enduring success is dependent on how it can replicate and maintain that culture as the company grows, and as its founder's role becomes less pronounced.
6. It is clear who is in charge. This may seem contradictory to the above, but all well-led companies have clear and final points of decision-making. There are many effective styles of leadership, from greatly autocratic to fundamentally consensual, but all of them share the fact that in them there is one person at whose desk the "buck" truly stops.
5. They have small business discipline. To paraphrase Guy Kawasaki -- one of the most informed and battle-tested entrepreneurial commentators out there -- the worst folks to run a startup or an emerging company are a group of ex-Microsoft executives. Entrepreneurial companies are first and foremost small businesses. As such, their management must a) fervently guard cash flow and manage with a cult-like intensity and b) always make decisions with the mindset that they only have so many "arrows in the quiver" in terms of time and capital to pursue initiatives.
4. They are risk-takers. The proper goal of an entrepreneur with outside investors is not to run a small business in the common sense of the term. With the fear of sounding harsh, the best managers are minimally concerned with protecting their own "middle-class" lifestyles. Rather, they understand that to achieve greatly requires daring greatly. For investors, the worst outcome of an investment in a company is not necessarily a flame-out failure, but rather a muddling along driven by too conservative managerial decision-making influenced by the desire to preserve salaries. Companies run this way in fact usually require MORE money to be invested into them, and thus perversely are actually riskier than their harder-charging brethren.
3. They are Goldilocks-ish. While there are certainly outliers in this regard, the significant majority of the best entrepreneurial managers are not "too hot" nor "too cold." Again, not a hard and fast rule, but most venture firms prefer to back a management team where the key people are between the ages of 30 to 45, have had a few past successes and maybe a failure or two. They are now in that sweet spot between experience and wisdom, between youthful hunger and energy. They know what they know yet they still have the intellectual and emotional flexibility and curiousity to change and grow.
2. They are technologists. All successful emerging company investments are made in what are, at their essence, technology companies. This does not mean that they are all what would be considered as classic "emerging technology" companies (though the majority of them, in fact, are). Rather, well-run modern companies leverage technology -- from CRM and ERP to SEO and SEM to scenario-planning and simulation -- to "best practice" their business models. Their managers understand that "IT" is not just the domain of a geeky guy to call when computers can't boot up, but is rather the crucial skeleton of the organism of their business.
1. They are pig-headed, determined, and willing to sacrifice to be successful. More than anything else, great, modern managers work hard. As in very, very, very, very hard. They work nights. They work weekends. They take short vacations, if any. They work when they're sick. They work when they're tired. They work and work and work and then to paraphrase the great (and famously hard-working) golfer Gary Player, "The harder they work, the luckier they get."
Look for this quality above all others in leaders and managers -- it is almost always the best predictor of the presence of the other qualities on this list, and of entrepreneurs that make their investors a lot of money.
Written by Christiana Moffa on Thursday, March 19, 2009
It’s not often that we at Growthink get to see the fruits of our labors in person. In today’s virtual, global economy, we conduct business with many small companies whose executives we may never meet and whose base of operations we may never visit. However, we’ve served a vital purpose in growth planning and/or capital-raising for various clients who’ve paved the way in industry and innovation; and of that, we couldn’t be more proud. Well, perhaps we could if we were there to see the evolution before our own eyes… to witness a milestone.
Last week, I had the great honor (and luxury, if I might say!) to travel to Brazil with my colleague, Dave Fruhling, and to spend time with a client that is developing a technology with the support of the Brazilian government and its university system. For those who are not versed in emerging markets, Brazil is at the forefront of grant funding for the country’s entrepreneurial endeavors and inventions; the most notable of which has been airline manufacturer Embraer. Setting a phenomenal precedent for new developments and technologies, this success has brought credibility to emerging economies like Brazil and has stimulated interest in the incubation of other new companies via federal organizations like FINEP (Financiadora de Estudos e Projetos). More importantly, the university system (both public and private) provides a great deal of R&D for these companies, working collaboratively to provide validation and even certification of patented technologies. This is not dissimilar to the United States, but what we found was that the accessibility of IP transfers is much more conducive under the Brazilian structure than it is within our own First World processes.
In the time we spent meeting with university research departments, funding organizations, and client partners, we saw nothing less than enthusiasm for and belief in the company’s ability to be THE NEXT Brazilian technological phenomenon. It was contagious. I don’t consider myself a tech guru by any means, but I came away full of excitement about propulsion systems, motors, and velocity.
Is your interest piqued? It should be. This client is on the verge of international recognition over the next 3-5 years, and I had the opportunity to meet the people, see the research institutes, experience the test program, and live vicariously through the company’s champions; of which Dave and I now proclaim to be as well. Sure, we were leading project efforts from our offices; and doing so with diligence and interest – but this trip made us invest even more. Our team is dedicated to providing the best guidance to the client, to give them and ALL of their stakeholders a chance to be another Brazilian ‘success’ story.
Throughout all of the above, we wove in a mixture of cultural and team-building activities; most of which included eating, drinking, dancing, and even bowling. Yes, bowling. The latter – not surprisingly – is not very popular in Brazil, but the client knew of a club with lanes in the back; said lanes, which we graced until the wee hours. I witnessed several occasions where the beer consumption-to-score ratio was quite impressive, though for one of the engineers on the project there remains little hope of a professional league title.
At one particular festivity, I was introduced to the Brazilian drink of choice: the caipirinha. I was warned in advance that this sugar-cane drink was quite potent, so I consumed carefully with each one placed in front of me... Low and behold, a dancer then pulled me on stage to show his “prowess” and skill with spinning ropes, featuring heavy ball-like objects at the ends that could very well result in concussion or death if they made contact with my head. Despite the beverage intake, I managed to stand very still and exit the stage to applause and body intact. Of course, it was quite the demonstration from the client’s perspective – my “hazing”, if you will, that garnered many a laugh and ongoing witty remark.
And then there was the barbeque.
Brazil is famous for its barbeque, or Churrasco, featuring grills the size of my apartment and meats seasoned then cooked to perfection. Note to self: make proper use of the “on” and “off” markers on the table, lest risk a protein overload. Topped off with mango mousse, it was all a little slice of heaven south of the equator!
On Friday the group dispersed and I explored Rio solo, reflecting upon the education I received from the experience and thanking a very tall statue of Jesus for the wonder of Brazilian people and culture. Looking out over the lush mountains and the curving coastline, I could understand how one becomes inspired by such a place; a place ripe with beauty, passion, gusto and Bossa Nova.
Finding myself back Stateside, I vow to return again to stimulate my palette and to witness the next leaps of our client into the broader South American marketplace.
Written by Dave Lavinsky on Tuesday, March 17, 2009
A few months back, a unique conference called "AngelConf" took place in Silicon Valley. The conference was organized for angel investors and its goal was to educate angel investors on how to invest in startups.
It was this last question that conference organizer Paul Graham from YCombinator agreed was the most important.
These smaller, short-term accomplishments which show investors that you can execute and that you are clearly not 'hapless' will massively improve your chances of getting them to invest in you.
Written by Jay Turo on Tuesday, March 10, 2009
Written by Jay Turo on Wednesday, March 4, 2009
I love Kiva. For those not familiar, Kiva is a person-to-person micro-lending site – allowing individuals, primarily from developed countries, to lend directly to entrepreneurs in the developing world. The borrowers are in places like Cambodia, Bolivia, Azerbaijan, Lebanon, Peru, and Tanzania – and primarily borrow to allow their very small businesses to expand and hire.
Written by Jay Turo on Tuesday, March 3, 2009
The old adage about the definition of insanity -- "Doing the same thing over and over again and expecting different results" -- has never been more applicable than it is right now with the crisis in our financial markets and our government's response thereto. The daily, depressing drama of the federal government's frenetic, "bailout flavor of the day" response mechanism would be comical if it wasn't so tragic, frustrating, and anger-inducing.
Sometimes I feel I went to bed one night in the United States of America and woke up in the U.S.S.R. in the midst of a "5-year plan." It is long-overdue time for Main Street America, for Small Business America, for Scientist's and Engineer's America, for Junior Achievement America, for Paper Route America, for Immigrant America, for eBay America, for Mary Kay America, for Franchise America, for Venture Capital America, for Startup America, for Entrepreneurial America to stand up and shout ENOUGH IS ENOUGH.
Because they built this country. Because they represent and embody its best and most admirable and most idealistic qualities. And because if the Washington bureaucrats would just let them be and get out of their way they can and will dig this country out of its current hole far quicker, cheaper, and more fairly than via the banana republic cronyism that masquerades as policy in Washington these days.
The funny thing is, Entrepreneurial America has never been more vibrant, more creative, more productivity-building, more value-creating, than it is right now. With the collapse of the "Blue Chips," the playing field has never been more level, the competitive arena never more wide open, the cost of key business inputs (labor, rents, technology) never less than it is right now for entrepreneurs.
What these firms need to succeed is not government handouts or "stimulus," but simply good old-fashioned growth capital. And for this capital, these companies -- in such dynamic growth arenas as alternative & green energy, healthcare & biotechnology, digital media, and software -- are priced at "end-of-the-world" levels. In other words, as long as the world does not end, they will make themselves and their investors money.
So my suggestion to all of those in Entrepreneurial America: make yourself heard. Call and write your congressperson and senator. Email essays like this to your family, friends, and colleagues. Support your local small business. If you see a website of a business you like, write the company and tell them to keep on keeping on. Blog. Twitter. Post on YouTube. Shout out on Facebook. Because this is a fight for private enterprise and economic freedom and one that Entrepreneurial America, and the world for that matter, cannot afford to lose.
Read Jay's second article in this series - Entrepreneurial America, Part 2.
Webinar: Keys to Successful Private Company Investing
Please join me on a live, interactive web conference where I will share with you my keys to successful private company investing including:
- How to utilize the Internet to source and research opportunities
To register, click here: http://www.growthink.com/livedeals
Written by Jay Turo on Wednesday, February 25, 2009
It is absolutely astounding how quickly the discussion around the appropriate government response to the economic crisis has morphed -- from one around whether it even makes sense, or is the proper thing to do, for government to bail out ailing financial and manufacturing firms -- to one simply around "how much," "how fast," and "how many."
Written by Andrew Bordeaux on Wednesday, February 11, 2009
Last week, we talked about how entrepreneurs, who serve a crucial role in growing an economy, have been shortchanged by the proposed stimulus package.
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