“My whole career has been in startups. My background is fire, fire, fire, fire, fire. That has left me with a lot of scars.”
The program includes some very relevant and authoritative experts on the topic of new business startup. The day began with break-out sessions on market validation and entrepreneurial law. Lunch speaker was Brett Hurt, founder and CEO of BazaareVoice. Afternoon sessions covered social media and capitalizing a start-up. Concluding speaker was Kenneth Losch, CEO and president of Advanced Green Technologies. Participants included area entrepreneurs, faculty members of McCombs School of Business and many first- and second-year MBA students.
Panel Session I (10:30AM-12:00PM)
Program Description: Do you have a great start up idea? Learn how to size the market for your product or service and test its commercial viability. Entrepreneurs on this panel have successfully turned their ideas into products and will guide you in determining whether your concept has the same potential.
Rob Adams (Moderator), Professor, McCombs School of Business
Melissa Simpler, CEO, Affinegy
Troy Lanier, CTO, DadLabs.com
Kevin Koym, Founding Partner, TechRanchAustin
Jay Whitchurch, Co-founder & CEO, Campus2Careers
Mark McClain, Senior VP Sales & Marketing, Waveset Technologies
About 80 participants in this session.
Photos by session attendee Ariana Vincent.
Rob Adams: Panelists will be giving good examples of market validation in real-world application, and sometimes bad examples are informative as well.
Ready, fire, fire, fire, aim, is a typical market validation process. Put your foot on the gas and start out the door. If you look at academic and real-world studies you will see that companies that do this will fail at a rate of about 85%.
Troy Lanier: We saw a huge societal shift regarding dads. We jumped right in, did no market validation, and produced 2 DVDs for dads, and we’re still trying to recoup the costs of that. What we learned is that dads don’t want to sit through 2 hours of DVDs. So, we learned more about what dads want, and adjusted our model. We now are actually having conversations with our customers, and getting immediate feedback. I can tell when our customers are actually watching, when they start to fast forward, and when they stop.
Jay Witchurch: We’re trying to connect college students to small and medium-size businesses. Most small and mid-size businesses want to recruit students but don’t really know how. It is hard to bridge the gap between smaller biz and the university. Market validation has been crucial to us. Understanding what your customer’s alternatives are, and understanding why they are using those alternatives. Due to market validation our product development has stayed largely on track. And secondly, it has given us a lot of confidence to launch. You may be excited about your new product and think you know a lot about the potential audience, but I promise you don’t.
Kevin Koym: My whole career has been in startups. My background is fire, fire, fire, fire, fire. That has left me with a lot of scars. These days you have to bootstrap no matter what. Finding your niche is important. In one instance we saved a company $10,000 just by identifying the niche correctly. And it cost a little more than a dollar to find out this information that completely changed the product path. The key thing is discovery and then evolving from there.
Melissa Simpler: My early experience at Motorola was a good example of how not to do market validation. We had a history of building products just because we knew how. Later we learned to find the customer “pain” and to qualify them into different market segments. And then you begin to quantify what it is worth to the consumer to avoid that pain. One thing that is true for all of us is that the market moves, and it moves quickly. I like Jay’s goal of talking to 3-4 customers each day, and then responding rapidly. Sometimes we have to push back on our channel, because they may not be getting the same level of market feedback.
Mark McClain: I went straight to IBM after undergrad, then to HP, and eventually came to Austin at Tivoli. Raised a bunch of venture money to launch a new enterprise. We ended up selling that company for $150 million a few years later, which sounds great today but felt pretty crappy at the time. Today you would be happy to get $20 million. That’s a change in perspective.
Nobody would have created Facebook by doing market research. Sometimes you just catch the market right.
The goal is to search for 1) urgent, 2) pervasive, and 3) willing to pay. And talking to your roommate in college is not market validation. Talk to both secondary and primary audiences.
Rob Adams: Everyone is always hoping to find some easy way to validate the market, but that is never possible. I always tell new entrepreneurs, “Talk to me after you’ve talked to 100 potential customers.”
Questions from Audience:
How do you really find the right potential customer base?
Jay Whitchurch: Don’t underestimate the power of just talking to people.
Rob Adams: Just about every target market has an affinity group, with a targeted publication they read. Tradeshows are good to attend, and then get the list of attendees. A lot of affinity groups list all of their members. If you still have a UT affiliation there are lists available through the library.
How do you use academic research, if you do?
Troy Lanier: Academics get a bad rap, because they live in an ivory tower. But actually sociologists have done a lot of studies that were relevant to what we were doing at DadLabs. LexusNexus is great.
How do you eliminate your own bias in market validation?
Jay Whitchurch: You have to be very careful about segmenting the market. We found early on that it wasn’t just about targeting students, that we had to target others on campus, educators, administrators, etc.
Rob Adams: Your job is to figure that out. There is no easy way to get this done, to aggressively seek out a balanced view, picking up the phone and being brave.
Melissa Simpler: Find the analysts in the market that are following your segment. They narrowly focus on your market, but also do primary and secondary research related to those markets. Sometimes the analyst conferences are a little bit more expensive, but when you consider the value of the information it is worth it.
Kevin Koym: Six times in my career I have put my money at risk, put my worth at risk in order to launch the next thing. It is the same time and time again and there is only one answer, you need to put yourself in front of the bus.
What do you do when founders are hesitant to share information about market validation?
Kevin Koym: At TechRanch we don’t sign NDAs. I’ve found that more entrepreneurs in the Bay Area are beginning to understand this. The founder isn’t at risk about the idea, but about execution. The fear you need to present to the founder is, “You’re going to miss the window.”
Mark McClain: A lot of startup founders get very focused on refining the idea, but you just have to get in there and execute. If you’ve had an idea I can guarantee that 10 other people have had the same idea.
Rob Adams: Protecting an idea that isn’t making any money is a waste of time. Protecting a company that is executing an idea is what it is all about.
What about social media?
Troy Lanier: The most important thing for us is integrity, to protect our reputation. To ask honest questions and get honest answers.
How do you know whether the market knows what they want?
Mark McClain: That is why it is a risky business. Sometimes you don’t know. I’m not a “moon shot” guy, but at some level you can’t eliminate risk in a startup. That kind of question may mean you aren’t ready to be an entrepreneur.
Does market validation guide how you are going to make revenue?
Troy Lanier: When we started we weren’t sure how we were going to make money. We began inserting advertisers into the actual videos themselves, kind of the old radio model, and we found that our advertisers liked that. It has a really long tail. Advertisers want social engagement with a long tail. We built our idea around that.
Jay Whitchurch: We started by talking about the five revenue streams we hoped we would get, but you have to narrow it to one. You have to figure out your primary revenue stream and figure out the others later. It is about focus.
What do you do with a new technology that doesn’t yet have a problem to solve?
Jay Whitchurch: Don’t.
Rob Adams: There are a lot of great technologies looking for a market. But you need to start with a market and build on that.
Mark McClain: Make sure there is a marketing thinker on your team. People will not buy a product because it is elegant technology. There are plenty of examples of where the best technology doesn’t win.
Kevin Koym: I’ve got the engineering mindset, and the scar tissue to prove it. You can use what is called effectual thinking, which is about looking at your tools and then thinking, what can I do with this? So while I agree with what the others have said, you can begin with a technology and then try effectual thinking to find the market. But be careful, because the bus can crush you.
What about the Austin entrepreneurship culture in the next five years?
Mark McClain: I think I’m the dinosaur. Raising a bunch of money to go launch a venture is dead. So I worry. In the next five years it will be incredibly difficult to do that kind of venture. Bootstrapping, finding your first customer who will pay to develop an idea, etc. may work. But doing it like I did is dying.
Melissa Simpler: It is pleasing to see TechRanch, Capital Factory and others. There is a shift away from the silicon industry. Seeing Austin companies begin to target consumers is exciting.
Troy Lanier: The angel investment picture is changing. Bootstrapping and being willing to jump in front of the bus is important.
Jay Whitchurch: I’m very impressed with the Austin startup environment. There are great outlets like TechRanch Austin.
Kevin Koym: I’ve hung out in the Bay Area in the old days, and there was so much money you could walk into a bar and launch a new venture in 10 minutes. Austin is a different scene. But there is a change happening here in Austin. There is this sharing attitude, I would call it Austin friendly, there is more sharing of resources and ideas. I think this can become very compelling in the next few years.
What about validation exercise, B2B vs. B2C?
Mark McClain: It is easier to find potential customers in B2B but it is more difficult to get to them. You have to start each conversation with “I’m not trying to sell you something.”
Melissa Simpler: They are extremely different. In B2B your buyer is split into multiple functional areas, and each has a very different dimension. In B2C the customer has all of these various interests rolled into one.
Thanks to Elayne Crain (Twitter @highered_red) who has provided notes for the next session, which I did not attend.
Program Description: Entrepreneurs face a host of legal issues from formation to exit. Learn how you can protect both your personal assets and innovative ideas as you bring your business concept to life from a panel of experts in the legal field.
John Doggett (Moderator), Professor, McCombs School of Business
Paul Hurdlow, Chair of Emerging Growth & Venture Capital Group, Partner, DLA Piper
Paul Huggins, Associate, Wilson, Sonsini, Goodrich & Rosati
Charles Moster, Senior Partner & Co-founder, Moster Wynne Ressler
Matt Lyons, Partner, Andrews Kurth LLP
• This is your chance to speak with a group of lawyers without being billed.
• Half the lawyers in the U.S., if you polled them, would tell you that they do not enjoy practicing law.
• What do lawyers do besides bill you? What is the most important thing a lawyer will do for you?
• Does it make sense in this environment to incorporate in Delaware and operate in Texas?
• NOLO.com turns out books on almost any subject, written by lawyers…the point is not necessarily to do it yourself, but so that you become a smarter client…understand enough so that you know what you don’t understand…
• The “lawyer answer” – it depends.
• Would I have this guy on my outside board of directors? Is he/she that kind of advisor that I want them in my boardroom?
• Can they connect me to sources of capital?
• It is possible to reincorporate if you start in Texas and want to later move to Delaware…
• Someday…it will be staggering the amount of money you pay your lawyer. But the issue is, does your lawyer add value? If she’s really good at what she does, you won’t mind…
• They ought to entitle every employee handbook, “You Can’t Do That.”
• Being an entrepreneur is very scary…for me, as an attorney, it galvanized my knowledge of business…
• I found I didn’t really understand business or being an entrepreneur until I was one
• The best thing a lawyer can do for you is to really understand business and your industry…whether its software, retail, whatever.
• As lawyers, we are trained to be reductionist; but that’s not how business works.
• If you go to a doctor’s office, you are not expected to diagnose yourself…but for some reason, people are often expected to know what questions you are supposed to ask a lawyer. Look for a lawyer who understands business.
• Unless you are going to be a multi, multi-million dollar company, Texas is probably just fine
• You should know about the Texas Margin Tax: you get taxed on your gross on your income (not on your net)
• Watch out for arrogance…there is nothing that makes a business lawyer smarter than you, it’s just that they have experience
• I would want somebody that has my back, in the trench…
• About 20% of litigation we have is related to that very issue (re: working full-time while doing a start-up…worries about problems re: confidentiality agreements or conflicts of interests…)
• Think about the industry before you select what sort of entity to go with (LLC, etc.)
• We don’t tell our clients, No, we don’t do that…the answer is, let’s find a way to get there.
• In early stage of a startup, the corporate lawyer generally will act as a General Council…and that GC had better have a business background.
• So much of this [his work in law] is helping businesses get off the ground.
• It can be very difficult for you when your clients are having difficulties, because you are heavily invested in them.
• To speak to you as a business person, not to sit there and Harrumph at you like an 18th century judge.
• Delaware has a very good and very rapid court system to handle disputes. No matter what state you are from, every corporate attorney knows the Delaware laws.
• (After John Doggett says…”these guys are friggin’ expensive”)…It’s much cheaper to pay for great work from the beginning than to come to us later with a big mess from a bad lawyer.
• Do not use anything you are currently working on…a true entrepreneur will normally leave the company early…
• With Texas community property law, your spouse is going to have to sign any legal document that you do.
• The ability to put a particular provision or structure into context.
• Should you even incorporate? Or should it be an LLC, or s-corp?
Brett Hurt, Founder & CEO, Bazaarvoice
Program Description: Brett is the Founder and CEO of Bazaarvoice, where he is responsible for guiding the company’s strategy and overseeing day-to-day operations. Brett is a seasoned executive widely recognized throughout the online industry for turning groundbreaking ideas into leading businesses.
Brett has extensive experience in the online marketing arena, especially as it pertains to the eCommerce industry. He founded Coremetrics in February 1999 after spending 10 years developing Internet-based software. Brett helped grow Coremetrics into the leading marketing analytics solution for the eCommerce industry, servicing more than 1,000 clients today. Forrester Research eventually rated Coremetrics #1 in the industry. Prior to Coremetrics, Brett was the founder and CEO of Hurt Technology Consulting and BodyMatrix, an online retailer of sports nutrition products, which he sold. Before that, he was a consultant at Deloitte Consulting and Andersen Consulting (now Accenture). Brett has more than 15 years of Internet programming experience and has developed multiple software applications, including Internet marketing analysis solutions, eCommerce platforms, Web-based classroom management applications, virtual communities, multiplayer online games, and Bulletin Board System (BBS) software. He started programming when he was seven years old, launched a BBS on a 110-baud modem when he was ten, and created one of the first Internet-based multiplayer games in 1990. Brett holds an MBA in High-Tech Entrepreneurship from the Wharton School at the University of Pennsylvania and a BBA in Management Information Systems from the University of Texas at Austin.
Brett was named Entrepreneur of the Year for Austin in 2009. He serves on the Board of Directors of Shop.org, the leading non-profit industry association for retailers online and a division of the National Retail Federation, the largest trade organization for retailers. This is his second term on the Shop.org board, where he previously served for two years. He also serves as an Entrepreneur-in-Residence at the Wharton School and served as a Board of Advisors member to the non-profit Web Analytics Association. Brett actively advises several early-stage technology companies. He is an inventor (US Patent #7,050,989) and a regular speaker at various industry events and universities.
Highlights of Brett’s comments:
I’m one of the very few at BazaareVoice who was born and raised in Austin. I was given an amazing gift while young, when my mother bought me a computer at age 7, and then she learned programming alongside me. Growing up as a computer geek during that time was a great way to get your a– kicked. (Laughter from audience)
She would drop me off at users groups, and I would think, “Wow, those people are really nerdy.”
I very quickly decided I wanted to be an entrepreneur. My mother was a lifestyle entrepreneur, but I’m a “hair on fire” entrepreneur.
I was bored out of my mind with consulting, and wondered how I was going to get out of it. Deloitte would pay for my tuition at Wharton, and I was off and running starting my business right away while still in school. I would work until 2 or 3 in the morning, and I made as much progress as I could in that very safe environment. Believe me, school is a safe environment. When you have kids you’ll really appreciate how much time you have in school.
I’ve had many ideas for business, but I wanted a BIG idea. I started by selling power bars online. Out of that business I decided that I really needed web analytics. I wanted to observe behavior, just as my parents could do in their store.
That was the genesis of Coremetrics.
Then Google came out. When people can get all the information they need about a product, they will spend money. So it was the nerds who created the system for making big money, the kind of money where you can say, “Next I’ll go build a spaceship.”
But, I made a mess of it. I had never run a company before, and we spent our money like it was on fire. We really messed it up. But I stuck with it, and today it is a successful company. But it has had a tortured history.
BazaareVoice is my fifth business. We were looking for the next big disruption. User generated content was the area we settled on. Today we work with 50 of the top 100 retailers, and 25 of the top 50 retailers in the U.K.
In this world of social media people can come onto “your property” and talk negatively about your company, and it is a different perspective for these companies. There is a fear of negative reviews.
But the way to get them over that hump is to convince them that this is the way to make money.
At L.L. Bean there was a worry about negative reviews, but today the global average for global reviews is 4.3 out of 5. So that is very high.
It allows them to respond quickly People will suggest additional colors, they add those colors, and sales double.
Our timing was lucky, but the execution was not. You can have a thesis, and the thesis is usually wrong. We’ve been helped by Facebook, by blogging, Twitter, all of these forces help BazaareVoice.
Things I’ve learned over the years:
Number one is passion. When you are passionate about a business, and it is a big idea, that is exciting. It’s not the same as “I’ve got to wake up and sell paperclips and it will make me a billionaire.”
The opposite of that is that you have a great idea but the market valuation is only a million dollars, if you capture the whole market.
Passion is something you really have to look for in those you partner with and who you hire. It defines your culture, who your company is. We are relentless at BazaareVoice at testing our job candidates. We look for passion, execution, teamwork and openness. That testing is very important to us. We are trying to identify the passion.
Next is the idea. The best thing you can do for the idea is to partner, the power of two. My partner at BazaareVoice is my exact opposite, which complements my strengths and weaknesses.
Is it a really big idea? Are you personally scared of it? Read the book Innovator’s Dilemma and you’ll know what I mean.
What is your goal for the business? You may not know that starting out, you won’t have all the answers. It might be a lifestyle entrepreneur business, but that can still be a big business. Talk about your goals, thinking through it with your spouse or partner. But my philosophy is you only live once, so swing for the fence.
Let’s talk about funding. Do you bootstrap, and what does that mean? Read The Bootstrappers Bible by Seth Godin. It is free online, a great book. Read the Art of the Start by Guy Kawasaki. He is a genius, and the best pitch guy out there.
For funding, ask why. To feed your family is a legitimate need, but if it isn’t a big idea, don’t go to the VCs. Don’t waste your time unless it is a really big idea. They have a lot of money on the line and have to go for big hits. If you don’t need big money, go to angels or friends and family.
What kind of mentorship do I need?
We live in an exciting time for entrepreneurship in Austin. It is an historic time, and the next two years are going to be very exciting. There will be a lot of attention to where new business is growing.
Tech costs are going down, it is really just labor costs, so there isn’t as much need for capital. Yet there is big capital available.
BazaareVoice got voted the number one place to work in Austin. I’m very proud of that. We didn’t do anything to influence that, other than ask employees to fill out the survey. I care about culture because at the end of the day it drives performance. And in some ways it leads to self-preservation. As the CEO I care about the culture myself.
The first year of your business the main thing to think about is who you (the company) are, and that becomes very important to you in year two, three, etc. You will spend 70-80% of your waking hours at work, so culture matters.
Set up operating principles for your culture. Netflicks has a version of this and we have a version, teaching people what we expect of our culture.
We have quarterly feedback with every employee, combined with $1,000 per employee for training that is relevant to the job. We have no vacation policy, employees just take the time they need. It is a way to say to an employee “I trust you.” And, it says I trust my managers.
I’m writing a book on company culture called “How to make good companies suck less.”
One idea that will be in the book is simple. Whenever an employee has a big life event, getting married, or a baby shower or whatever, they get $300-$500 worth of gifts from BazaareVoice. You don’t do this to manipulate people, it is Karmic.
Keep the culture fresh. We meet every quarter as an executive team and we always talk about culture. We are always asking what will be new, what keeps it fresh. We debate every angle before we add something new.
Charity is incredibly important as you scale up. As you gain success you have a duty to share with society. It is a beautiful thing, particularly when your employees have hands on experience with it. The bigger you are the more of a duty you have. We have a foundation and we do a lot with that. A company has a soul. It is a collection of people that is viewed as an individual.
Legacy. When you leave do you want the organization to have a legacy of the qualities that are important to you?
Culture and performance are intimately linked.
Performance is all about persistence. The only thing successful entrepreneurs have in common is persistence.
Put everything on your calendar. If I make a commitment to a client I put it on my calendar while I’m in the meeting, and set a reminder a week later to call them back and check on what they think about it. People think I’m a genius, that I can keep track of everything, but I say, “I just put it on my calendar.” I learned this from Neal Kocurek. He called the calendar a miracle device.
Don’t have fierce conversations over e-mail. Don’t fire people over an e-mail or text message. Have the in-person conversation when it really counts. Never let an online conversation get between you and a client. Don’t phone it in with a client. If it is important be there in person. Or tell them you will call and show up in person instead, that can be powerful.
Grade your management team and yourself. Every single one of us gets graded based on whether we are living the cultural values. As a result I have much better executives on board.
The last thing I’ll mention is renewing. To have periods of renewal. Yoga, working out, or whatever. Don’t let that devolve. Read constantly. Don’t have arrogance leaving school, you still need to learn.
Take vacation, or you aren’t delegating and empowering enough.
Be humble, have a mentor. There are a lot of mentors you can get, and they will make you better.
Great…time for questions?
How do you improve on execution?
Bring in people who fill in for your weaknesses. What Michael Dell did well, among many things, is he realized where he was weak and he brought in really, really good managers. There are lots of ways to get help. I once got five Wharton undergrads to work for six months for equity only, and these guys were really smart.
What recommendations would you give Dell on culture today?
Go to your people, survey them, and find out where your problems are, and what leaders are really good. CEOs can have an epiphony and change culture.
How do I get a job at BazaareVoice?
Absolute persistence. If you aren’t ready to start your own business, the best thing you can do is to work for a company that is on a rocket ship. A company like us. And we are doing a lot of hiring. Be relentless if you are really serious.
How involved are you personally in hiring?
Very involved for executives, somewhat involved for middle managers, and not very involved at all for others. As an entrepreneur you have to continually shift your priorities up in terms of the activities you are involved in.
What is your experience with venture capital?
Very good relationships, great firms. The VC industry is a crap shoot, but there are a lot of tools available. You have to pick carefully.
Panel Session II (2:15PM-3:45PM)
Marketing in the Digital Era
Program Description: With the proliferation of blogs, social media and review sites, customers are increasingly turning to their computers before making purchasing decisions. Listen to marketers who have been successful in harnessing these online resources to engage customers and encourage word of mouth referrals.
Ben Bentzin (Moderator), Professor, McCombs School of Business
Lori Kerrigan, VP of Sales, NaturallyCurly.com Inc
Kevin Newsum, Senior Community Manager, Yelp!
Bill Leake, CEO, Apogee Search
Brianna McKinney, PR Strategist, Penman PR
Ben Bentzin: (A marketing lecturer at McCombs. Before that was a marketer at Dell.) First question for the panel, directed to Kevin, is there some aspect of Yelp! that you consider a best practice today?
Kevin Newsum: Yes, I would say be authentic and transparent. If you are that, everything else is easier to manage.
Ben Bentzin: How do your users know whether it is authentic?
Kevin Newsum: They first have to understand how the tool works and then at Yelp! it is pretty easy to begin to evaluate who is providing valid feedback and the level of confidence you can have.
Ben Bentzin: What is NaturallyCurly doing to build relationships?
Lori Kerrigan: Well, we are a community and a site. So we interact with people on Facebook and Twitter, and people aren’t forced to come to our site. Every medium has its own strategy.
Ben: Brianna, what are some of your strategies?
Brianna McKinney: Don’t just start with a list of social media tools. First, evaluate what you want to do, and then pick the tools that fit and reach your target audiences.
Ben: The technologies change so quickly that it is hard for the university to keep up on what to train students. How do you keep up?
Brianna: In our company a lot of people turn to me. Ask someone who has the passion about it, someone who works closely with it. They can help you stay current.
Lori: Pinpoint the social media platforms that will work for your business. You have to funnel it down. Our audience is consumers, but that might not be the same for you.
Brianna: To add to that, pay attention to different demographics within your audience. And psychographics as well.
Ben: Bill, you use social media both for your clients and for your own firm.
Bill Leake: Well, I’m always under-investing in my own business, and my clients get all the goodies. But search is not our best form for lead generation. When you go to Google more and more of what you are seeing is user generated content. Search and social are blending. Which will make social media more measureable. The social media space is filled with failed marketers who are calling themselves social media experts. A lot of PR firms don’t do social media very well. If you have a story worth telling I can work magic for you with search, but if your story isn’t worth telling then it doesn’t work.
Ben: How do you quantify the impact?
Lori: We can quantify so much, because we can measure visits, page views, impressions. We measure it regularly, and one metric is 10% of our traffic comes from some form of social media.
Brianna: It is really difficult to measure right now, but I don’t know that anyone has discovered how to measure direct revenue from social media.
Kevin Newsum: We’ve been growing by about a million views a month. We try to remain relevant and the audience continues to show up and that is really nice. Be relevant to the audience that is going to show up.
Ben: What is the motivation for users to participate? What are the non-monetary rewards?
Kevin: I’ll answer with a question. If you go to a restaurant or go see a movie, you probably want to tell your friends about them. Why? If we tried to incentivize that in a way that isn’t organic it wouldn’t work.
Lori: It is that whole “15 minutes of fame” — so it is a place to express themselves. Everybody wants to be heard. So if you are a registered user you have a voice. That is the important part of community sites. They have a reason to talk, and we just create the platform to allow them to talk.
Bill: Communities aren’t always consumer to consumer. Cisco has done phenomenal things with social media. Apple has developed a personal relationship with their consumers. But Cisco tried a different take on that, and they created an incentive system that was different.
Ben: What about incentives?
Lori: We have contests, and we do incentivize, but the majority of the time they want to communicate anyway. It isn’t about a formal incentive. But in some channels you may have to incentivize.
Brianna: We worked with Microsoft on a co-branded community for teachers. One of the ways we got them involved was through a lesson plan contest. Winners got recognized online. People like to be recognized for what they are doing.
Kevin: People who do a great job as participants get a badge on their profile. It is recognition that they play well, provide good input, etc. It doesn’t cost us anything. We also have lots of lurkers, and that is a perfectly reasonable role. So don’t just think in terms of active participants.
Bill: Not everyone will contribute content.
Question from audience: What percentage of active visitors are contributors?
Kevin: I can’t tell you exactly. But I would say that active participants are no more than 15% of the visitors.
Bill: Be aware of selection bias. If you are trying to design products out of ratings reviews, beware because you are missing the mid-range, you only are hearing from the extremes.
Ben: What are doing to take advantage of the two-way conversation of digital media?
Lori: Twitter, Facebook or YouTube is what you think about. For us, we will throw something out there to stimulate response. We have experts who responds to questions, and users can e-mail directly to Curly Susie. You have to be creative to stimulate the two-way dialogue.
Bill: The metatrend is personal customization. The old nightly news approach was “Here is our message and deal with it.” Today, anyone can be a journalist or a blogger. It is a many-to-many feedback loop. Ad agencies understand paid media, but PR firms turned up their noses at paid media. The most powerful combination is integrating both paid and earned media.
How do you get participation that is actually useful?
Lori: We used to lump all of our reviews together, but then we learned that people would only read reviews from people with their own type of hair. We do other surveys on our site to get feedback like this, and we can react quickly.
Do you edit or delete reviews?
Lori: No we don’t delete reviews.
Bill: A lot of people do.
Kevin: Most our reviews tend to be pretty good. It is helpful to be able to look at people’s review profiles so you can see how they tend to review things. If you get people who are super opinionated those things tend to vet themselves out over time.
Lori: Your consumers will help decide who is credible or not.
Bill: A lot of user generated content is in its infancy, but it will look a lot different in 5-10 years. If someone is a professional griper then I don’t care what they have to say.
How do you deal with the companies that are angry because of bad reviews?
Kevin: We value the authenticity, and we try to walk the walk. We do everything to make sure the feedback can be trusted. The negative reviews tend to validate the good ones. They even out over time. We have a spam algorithm that helps cut out questionable reviewers.
Bill: Yelp! is far better than Google right now in terms of their review algorithms.
How have bloggers affected your industry.
Kevin: Yelp! is a lot like blogging about what you’ve done. So people that are blogging about food, for example, are often sharing those views on Yelp! as well.
Lori: Bloggers are very active, and are starting to build their own networks, and collect followings. We work with 150 bloggers, and 25 of them are core, and that is another way to publish what we call our “provocative” content.
Brianna: You can become a thought leader, but it is a time commitment. You have to have the time. But something like Yelp! allows you to express yourself without blogging constantly.
Bill: Start by commenting on other people’s blogs. And always end with a question. Build relationships and then you’ll start sharing content and it goes from there.
What are the tools for measuring what is being said about your brand?
Brianna: There are a lot of tools, and a really easy free one is just a Twitter search. And Google alerts.
What about reviewers who have built up an audience and trust?
Kevin: Anybody in this room is worthy of sharing your experience. But whether you are a professional food critic is another question. Our site is more like talking to your buddy.
Lori: We do occasionally incentivize our bloggers, and we embrace them. We don’t require anything of them, but we do reward them for performance. We do a “best of the best” recognition, for example.
How do you monetize this?
Lori: When we respond to a question we will include 15% discount, so that way we can link the sale to an interaction. But that isn’t the primary purpose of the discussion board.
What is your goal?
Lori: What we’ve found is that every social media platform is different, with own personality and it needs its own goal.
Bill: It is thinking through the marketing discipline. What is your goal, lead generation, brand awareness? What kind of business are you in, transactional or a relationship business. There are so many different aspects of social media.
Brianna: It all comes back to your business objectives. Before our PR firm became Penman we had two separate brands for two different audiences. We merged those brands, and we picked Twitter and LinkedIn to meet our brand awareness objectives. Not Facebook, because we are targeting businesses.
What about B2B?
Bill: LinkedIn is great. Facebook can work (but not Facebook ads). Social media has been around for a long time, we just had to do it face to face. Find where your business-2-business audience is already and then begin associating with them. But don’t ask for too much on the first date, let the relationship develop. E-mail lists will migrate into social media lists. E-mail is already perceived by young people as what they have to use to communicate with old people.
Brianna: Be transparent, open and authentic. Don’t just say “buy my product.”
Bill: Figure out what can you pay forward. Offer something of value, and be realistic in your expectations. Authenticity has its limits. We are here because somewhere down the road we want to sell our goods and services for more than it cost us. But don’t be jarring and obtrusive.
Kevin: Authenticity is huge. Be conversational and context is everything. Be real and organic.
Lori: Once you know your goals think about building your relationships. Be passionate.
Bill: And have fun!
Thanks again to Elayne Craine for the write-up of this next session, which I did not attend.
Capitalizing a Start Up
Program Description: In a time when funding is at a premium, meet entrepreneurs who were successful in getting funded and the individuals who took a chance on their idea. Panelists will discuss what it takes to score financial backing and debate which funding source is best for an entrepreneur.
Jim Nolen (Moderator), Professor, McCombs School of Business
Jamie Rhodes, Chairman, Central Texas Angels Network (CTAN)
Robin Curle, Board of Advisors, CTAN
Jeremy Bencken, Co-founder & Chairman, Buzzstream
Chris Eckerman, Director, Hunt Ventures
Capitalizing a Start-Up
• MasterCard is the biggest VC in the world. They may not know it. (laughter)
• There is no seminar on Raising Capital for the Family Farm. There is no exit strategy for that…VCs aren’t going to be interested.
• In ’99, we started building the site at home after hours; we’d work 9-7, eat dinner, and work from 8 until 2 a.m.
• Money can’t buy you critical mass. It takes time and elbow grease…
• Idea of staying at your day job until you have double the revenue from your startup that you need to live on…that way, if your revenue gets cut in half, you are still fine.
• Once you get to $10 million, you make more than your lawyer. (laughter)
• VCs would rather make fewer, higher dollar investments, rather than lots of smaller investments.
• First build value so that when you do go out for investment, you have a story. You’ll have a much better valuation and a better deal with investors.
• Far more companies fail because there are no customers for a built product than because they didn’t develop a product.
• People don’t tell me I can’t do something.
• The difference between VCs and angel investors…for VCs, it’s a numbers game…they’ll focus on the companies until they start to slide…angels use their own money…the reason they invest is because of return and ALSO because they want to experience the entrepreneurial process.
• Negotiate from a position of strength. You shouldn’t be getting money when you don’t have any.
• Keep in mind…you don’t have to get money in Texas. You can, but you don’t have to.
• Pick your VCs for a # of reasons…1) they have money, 2) they’ll give it to you, and 3) you want to be partners with them. You don’t want them to pull you out and give your thing to their guy to do.
• Defense money is free and there is a LOT of it. Don’t forget the government funding.
• Don’t forget, during a down economy everything is cheaper…rent is cheaper, labor is cheaper…don’t let a down economy sway you from starting your company.
• Don’t stop bootstrapping just because you get money. Don’t spend that money on a SuperBowl ad.
• Call a CEO of one of the portfolio. Then, call the previous CEO.
• The idea of bootstrapping is not new. What’s changed is the use of the term…
• You need to do as much due diligence on your investors as they are going to do on you.
• You will have to give up control to someone if you want to get outside money…that’s just a fact of life.
• You aren’t going to get money for product development [from VCs].
Closing Keynote Speakers
Kenneth Losch, Manager, CEO, and President, Advanced Green Technologies, LLC
Program Description: Mr. Losch has more than 25 years of executive management experience in both the United States and Canada. Mr. Losch is co-founder, manager, and CEO of Advanced Green Technologies, LLC – our Parent Company. Mr. Losch has maintained a life-long concern with building healthy environments and life-styles, as well as being an innovator in new community concepts for urban living. He is the co-founder and principal of two real estate companies in Tempe, Arizona – Trillium Residential, LLC, a builder and manager of award-winning, luxury Class A multi-family communities, and Avenue Communities, LLC, which designs and develops innovative urban living communities with a strong focus on unique lifestyle considerations. Using an integrated real estate approach, his companies have collectively purchased, developed, constructed, financed, and property managed close to 10,000 units and 2,000,000 square feet of commercial space, totaling more than $1.8 billion in aggregate value. Mr. Losch is an avid racer, and established Apex Racing Team in 2004 with the goal of building a winning race car team – having competed in the Indy Lights Pro Series and the Best in the Desert off-road racing series. Mr. Losch is dedicated to his community and surrounding area organizations. He is a founding board member of the TRACares Foundation, a non-profit entity that supports worthy causes locally and globally with the passion statement of “Empowering Community” – its most recent work has been in Ndola, Zambia in Africa in the operations of Kafakumba Training Center for education and the successful development of organic farming for community economic independence.
Ingrid Vanderveldt, Chief Synergy Officer, Advanced Green Technologies, LLC
Program Description: Ms. Vanderveldt brings to our Company over 15 years of experience in developing high level business relationships as a Chief Executive Officer and corporate “rainmaker” that have resulted in driving measurable investment, sales, and media opportunities for her endeavors. Ms. Vanderveldt has experience raising millions of dollars in both investments and sales and has previously attracted the attention of both national and international media. Ms. Vanderveldt is regularly featured in the media. Ms. Vanderveldt has previously hosted CNBC’s “American Made,” which provides a behind-the-scenes look at some of the world’s most successful entrepreneurs. Additionally, she is the host of the entrepreneurship show, “On The Road with iV”. Ms. Vanderveldt’s outside ventures and activities include: being a founding member of The Billionaire Girls Club; serving as an advisor to a number of start up companies; and serving as the annual emcee of the Moot Corp Competition – MOOT CORP. Ms. Vanderveldt has also founded the Austin Entrepreneurs Foundation and is a recipient of the 2001 Austin Under 40 Award for Technology, the Austin Business Journal’s “Profiles in Power” Award, and was previously recognized as one of the Austin American Statesman’s female “The Top 10 Tech Town’s Rising Stars to Watch.” Ms. Vanderveldt has previously served as the National Director for the American Institute of Architects, where she developed the first ever Women in Architecture video. Ms. Vanderveldt has a Masters degree in Architecture from the Savannah College of Art & Design and a Masters in Business Administration from the University of Texas at Austin.
Highlights of their comments:
(Ingrid comes to the stage with a burst of energy and enthusiasm!)
Passion and persistence are the two critical keys to success of all entrepreneurs I have interviewd.
Find a great mentor, and surround yourself with a great team. You will have things that won’t turn out like you think, but you won’t fail.
George Kozmetsky always told me, “Ingrid, never dream small, because it will take just as much time and energy to build something small as to build something big. So think big.”
When George passed away, I was fortunate to have Red McCombs call me and say, “I want to be your mentor.” One thing Red taught me is to be in service to others. Offer what other people really want and need. The second important principle Red taught was cash flow.
These are great lessons, and it has been invaluable in my career to learn from the likes of them.
When CNBC asked me to host a show I asked Red McCombs to be on the show, and he said no. But then I remembered that Red likes competition. So I said, “Okay, but Michael Eisner just got a show, too, and I can’t let him beat me.” And Red said, “Ingrid I’ll be on your show and I’ll help you get some guests.”
Again, its the power of great mentors and having great people on your team.
How often can you find a mentor like that who is still engaged in the game? That’s when I found Ken Losch. I decided then, if this guy ever comes after me to collaborate with him, I’ll do it.
And one day I get a phone call from Ken, and he said, “We are building a world class company, we are going from zero to $500 million in sales in two years. We could use you on this team.” Very soon after that I was working on his team.
Ken is the perfect example of someone who can dream big, put great people together, figure out how to be in service to others, and watch cash flow. I’m pleased to present Kenneth Losch.
(Ken began by talking about a personality test called Kolbe.)
My Kolbe index is 6383. This isn’t about putting myself in a box. It is about knowing what my genius is and what it isn’t.
My business partner who is a 3386, he bought a Porsche in five minutes. “I knew what I wanted, I researched on the internet, I bought it and got to my son’s baseball game.” Another member of my staff said it would have taken him a year to buy that Porsche. It isn’t about being right or wrong, it is about appreciating people for their strengths.
How many people here are retooling your lives in some way since September 15th? (Many hands are raised in the audience.)
We are all trying to retool, and we will all land in new places. Whenever I meet someone new I ask what is their genius.
Do we have issues, do we need to adjust, of course, but everyone in our organization is in the right place thanks to Kolbe. When I am dating the first thing I do is ask her to take Kolbe. (Laughter from audience.) It’s true.
My Passion Formula:
Research creates Knowledge
Knowledge creates Confidence
Confidence yields more Creativity
Plus Execution = Success
Execution is about building the correct teams. That is what I have noticed works for me. This is my formula, your formula for passion may be different, it may be organized in a different order.
In 1850 there was a recession in New York, and a bunch of entrepreneurs built 150 clipper ships, brought them to San Francisco filled full of shovels. And they sold the shovels for $192, which is about $10,000 today. They did that over and over for four years. And then they did the same thing in Australia.
The point is, we are looking for what we call Cones, but we are also looking for Sink Holes. So the Sink Hole was New York, but the Cone was San Franciscio.
Today the Gold Rush, the Cone, is government money. Federal, states and then cities and towns. Each one of these has opportunities to tap.
So we have a new product that we can build for less in Detroit, because Detroit is a Sink Hole right now, and sell it to governments.
The Green economic revolution will create more billionaires and millionaires than any other sectors of the economy in history.
“There is never a crowd on the leading edge.” Abraham Hicks in The Law of Attraction.
There are microscopes and telescopes, and both are useful at different times. Don’t get so focused on the details (microscope) that you lose track of the future vision (telescope).
If you don’t have audio books in your life, get with it. I am constantly listening to 2-3 books at a time. Crowd Sourcing says “Innovations require 90% new relationships…Innovations come mostly from new and obscure relationships.”
The reason to be an entrepreneur is to have an impact on the world, but you need the money first, which gives you the freedom and time to pursue your passion.
Our goal is to hit $500 million in 22 months. So we break that goal down into super-extraordinary actions. We want to make sure we line ourselves up so that all of our actions are super-extraordinary. We began by asking what are the ten reasons this isn’t going to work, and we took each one of those reasons and made a plan to attack those reasons.
One of the first things we identified is that we didn’t have enough technology. So my first task was simple, go find it. So the next problem is, I don’t have enough money, and the next task is go find the money.
So to get to the end goal of $500 million in sales we break it down to about a thousand super-extraordinary actions.
Find your experts. “Most people get excited by new technologies. I get excited about people’s capabilities.” Dan Sullivan, Strategic Coach.
The book Outliers by Malcolm Gladwell is an amazing book. I highly recommend it. “The Beatles played 1,000 small shows before their sound was amazing and took the world by storm.”
(Sorry, I didn’t finish this coverage as I’m about to lose my battery. Ken ending by talking about the genesis of his involvement in Real Estate.)