Our Startup Story

i saw this and thought it was it an interesting list. With very little budget, beyond what I spend on Google adwords (Not a huge pay off, but does get a few registrations) and some moo cards from time to time, the marketing budget for 360|Conferences is very much bootstrapped.

The twitter rule is a big one. I manage about 7 twitter accounts. tweeting discount codes, RT’ing things I think the communities those accounts care about would be interested in, etc. It’s damn near a fulltime job on it’s own. but it does pay off over time. It’s not huge, or fast, but when looked at cumulatively, it’s a steady building wave. The more I tweet, the more people RT, the more widespread the message gets. For events, it’s especially important to leverage the network effect. the 360flex account has about 1500 followers, each of those has their own number, etc. so each person who helps spread the word, has near infinite reach.

#5 is something I need to do better at. I’ve got awesome friends, who introduce me to new people when we’re out. They do a great job of talking up the particular conference they’re tied to, but then it’s my turn and I nod, agree with their statements, and maybe add something boring. I’m working on that aspect. Not quite an elevator pitch, but a short burst of “Why you should be attending as well”

#6 is timely. We started video taping sessions this past spring. They’re very successful, each is $3.50 there’s currently a buy 5 get 1 free deal, and they’re selling pretty well. Not paying my phone bill, but covering hosting, etc and giving me lunch and beer money. Which is great since even if I’m at an even keel, that’s better than spending what little I have. We’re already planning to increase the video quality for the fall events, by buying some HD flip cams. Not everything this time will be HD, but we’re phasing out SD.

We’re also going to get more testimonial, man on the floor type video this fall, to produce some fun/cool videos to show people why they should be at 360|events.

#7 I think we came close to pioneering :) We reach out to our speakers to help get the word out. We don’t demand it, but we ask each one to help make noise, help raise awareness, etc. After all people pay more attention to the speakers, they’re big names in the communities, well connected, etc. When they speak people listen. It works really well. Leveraging their names, and fame to help increase attention on the event, is a big boost.

#10 is a tough one for me. As a developer and person who’s on lots of lists, every email campaign I create I have a mental block to get past of “is this too much?” For the most part, and this was awesome advice from Liz.. Go just past your comfort zone on sending emails. If you think you’re getting close to annoying, you can probly send one more email. Our own filters are naturally strong, so it’s tough to reach past them. But it’s true. My mailing lists for the most part grow weekly/monthly as I send out more and more interesting things.

What works for you? Leave a comment, share your thoughts.

Some dude I’ve never heard of, has 8 words that are the secret of success. They’re below with my thoughts on them. I found them over on Small Biz Bee.

1. Passion – Duh. If you’re not passionate about what you’re doing, why are you doing it. I’ve found (although i never would have guessed it) that I’m passionate about bringing people together, helping people meet, creating an atmosphere were great things are born.

2. Work – Yeah it’s work. Doing what you love feels less like work, but it’s still work, it’s still hard. Possibly harder than a “job” since failure is on you, you don’t just punch a clock go home, and not care.

3. Focus – This is hard. Tom and I have struggled with this. We’ve been lured to Europe earlier than we probably should have (though we learned good lessons there). We’ve tried to expand into things without looking, etc. Focus is important it’s something I’m trying to get a better grasp on.

4. Persist – I can’t agree more. It’s hard, at least weekly I wonder if I should fold up. Do our last two events and try to find a job. It’s hard, we’re not making much right now, though I feel that’s on the verge of changing, i know it is, but i’m in the now financially, which is tough. I know though, if I persist and work hard and as Gary Vee would say, “Crush It” I’ll succeed.

5. Ideas - This is the fun part. I’m usually not short on ideas. Ditching paper surveys, USB Drives instead of CDs, an AIR app for surveys, etc. It’s fun to think of ways to 1. be a better company, and 2. innovate the completely whacked out, old school conference business. Some ideas are awesome, some, not so much. Tom and I are at our absolute best when we’re throwing ideas at each other, sharing the “Ah snap! That’s awesome!” moments.

6. Good – This is important. Tom is a bible thumper :) I’m not, but I do believe in Karma, and we both agreed, even before we had money to give that we’d make sure we gave 20% of each event’s profit to charity. Whether it’s a check, or service, or something else. We agreed, and as Tom moves on I intend to continue the tradition, that 10% goes to the community out event serves, and 10% will be to a charity making the world a better place. I firmly believe that any business not doing good for the world around it, isn’t doing enough. We haven’t always been in a position to write a check, and it makes us sad, but when we are, it’s the best feeling on Earth.

7. Push – This is tough. My wife pushes me. She pushes me because she wants to see me succeed, and she pushes me because she wants the company to make money so we can pay the bills. Both are incredibly important. I also push myself, for both of those reasons, but also I push myself (And I push Tom for a few more months) because I think we’re doing a good thing, and I want to continue to do that good thing.

8. Serve – Easy. Tom and I have never lost sight of who we serve. We serve two masters; sponsors, and attendees. Sponsors pay us to get in front of our attendees, to meet them, to introduce them to their product or service. Sometimes they sponsor just to help the community. But we owe it to them to make the event the best it can be, have the most attendees we can, etc. The attendees on the other hand, pay us to see and hear the speakers, to meet the rest of the community, and to learn. We owe it to them to make sure the event delivers all that and more. It’s not always easy, but we’ve never lost sight of why we do events. We do them to serve the community with something we believe it lacked. We’ll continue to serve them, until they tell us otherwise :)

I’m not sure these were necessarily secrets, but they’re truths for sure. At least in my opinion. What do you think? Are there more? Are there other ‘secrets’ you think valuable?

Watch the video it’s a good use of 3 minutes. My take away. Success is charging people $4000 to attend an event, that they they have to be invited to… ok it’s not, but damn talk about reinforcing “A fool and his money…”

Jeff tweeted about this, and I had to write a post about it.

I had no idea this group/organization existed, but Philly Startup Leaders has a video  series (6 deep at the moment)

I just started watching the videos, which I plan to rip and put on my iPod (sorry youtube, but these are gonna be gold mines I’ll want offline), but what’s nice it’s not your typical tech startup schmoes talking about how great they are, how hard it is, how cash flow something to worry about tomorrow, etc.

These videos talk about real entrepreneurship (IMO), not just the sexy tech startup stuff.

Great find Jeff!

I love creating things, writing software was for a long time very fulfilling. The thought however of doing a software startup, doesn’t do much for me now. Or rather, me being the code writer doesn’t. Which poses interesting problems.

360|Conferences, Corp is a purely service business. Our offering is our abilities, our community, and ourselves. That’s it. No app, no website, no SAAS, nothing that can be bought, sold, or processed. (bonus points if you got that)

We can’t attract investment capital in the traditional tech start up way, since we don’t have any ‘out’ or clear return. To quote David Cohen (whom I hope to meet in person one day!) “i think raising money right now, especially for a business that doesn’t have the best scale economics, is just tough. there’s not much debt money available. ”

Our business however, works like any other, we require capital to continue, we’re bootstrapping, and that get’s us sorta kinda by, but the reality is we need capital like any other start up business that needs to expand it’s offerings. It’s quite the conundrum to be sure.

It’s one of those weird start up problems, that I never really thought about in starting on this adventure. We figured bootstrapping would be just fine, but in actually executing on our business we’ve found that we’re at a place where we can’t easily do more events without the free time of paying ourselves, but we can’t pay ourselves full time (or even part time) without doing more events.

I re-stumbled across this blog post and it gave me some hope, I think our ’13 months’ is a bit longer than 13 real calendar months since our events are spaced apart and there’s low periods.

I think 360|Confferences is at this tipping point right now, we just have to hold on. Hope we can.

Lemme rephrase that title:  Starting up for over 2+ years is hard for a tinkerer.

I’ll be honest, because I’m a horrible liar.  Conferences are fun.  Conference planning is even more fun.  However, I will never see myself as a professional conference planner, no matter how many shows I do.  It’s just not in my makeup.  Yeah, I like the social aspects of it.  Yeah, I like tracking the money in and money out.  However, when it comes down to it.  I really just like the people and making sure they’re taken care of.

I’ve been working the biz for 2 years now.  I’ve also worked a FT job during that same time frame.  In addition to these 2 FT jobs, I have 2 boys to raise, a wife to love and a faith to keep active in.  As you can imagine, that doesn’t leave much time to tinker.

Last week, I had an internal breakdown.  No one knew about it.  Not my business partner, though it shouldn’t have been a surprise.  My wife found out a few days later.  Only a close friend of mine, Daniel Brunk, knows the full details of what went down.  The gist of it was though, my spirit cracked.  Not my religious spirit or ghost like thing floating inside me.  No, no, I mean more like “the little 3 yr old inside me that likes to tinker” spirit.

You see, a lot of stuff happened this past 2 months, personal stuff that just left me with no free time at all.  I’ve had 0 time to tinker and for me, that’s rough.  Very, very rough.  So rough in fact, that I was very close to walking away from the biz.  Mentally, I was minutes away from walking away and not looking back.

It seems sorta silly now looking back, and surely for those of you looking in from the outside.  But for those of you in my situation, I can see that spark of understanding in your eyes.  I can feel you relating to my pain. It seems odd that a thing like tinkering can break an entrepreneur’s spirit more so than finances, inventory, products, or any of the countless other facets of business.

So how did I overcome it?  At the moment of breaking, I played loud music really loud on the headphones.  LOL  In the following days though, I worked my tinkering into the business.  Some businesses expand for global dominance.  Some expand to take out competition.  We’re expanding for more steady income.  Now though, more importantly, we’re also expanding so I can tinker.

The Kindle of my tinkering

John and I have Kindles now.  (Well, actually, I have both, but I’ll give John his tomorrow.)  I’m a huge book guy, so I wasn’t sure I was going to like it.  I have to admit though, I LOVE it.  It’s been allowing me to satisfy my desire to tinker as well as use my time exploring new business ideas.  (You can read my personal post on the Kindle experience for more details.)

Some may see the $800 as wasteful spending on eToys for two geeky founders ($400 per person for a kindle and case).  I’m sure there is some truth to that.  We do have plans that may include the Kindle though, so it’s not pure fun.  More importantly though, this $800 has probably saved the company, because a disgruntled founder is not a productive one.  When 1/2 of a 2 man team putters out, you can rest assured that no good will come of that.

Therefore, if your a tinkerer (like me) and have been starting up for a few years (like me), look for ways to expand.  Don’t go waaaay off course.  Find something that makes sense for your business, but is something fresh.  Then go ahead and spend a little cash to let you tinker.  Trust me, it’ll be worth every penny you spend.  If you check out and possibly get a Kindle, click here and support a struggling entrepeneur.  :)

I moved the first of February.  I had this dream:  I’ll get to Arizona, setup shop in about a week and then I can get cranking.  I’ll be able to work on the business, doing the stuff we’ve always wanted to do, while moonlighting on some Flex projects.

Life is funny.  Business is funny.  Neither really seem to care much about plans.

In the past 2 months, I’ve met and hired an attorney, moved homes twice and gone to the courthouse 3 times before settling a case with our slumlord.  That was just the life side of things.

My moonlighting didn’t really happen as quickly as I would’ve liked.  There was a learning curve, that was hampered by the fact that I was thinking a Jira assigned to me was in one area of the app, while I was being told it was in another area.  (That turned out to be a good thing though, as I learned more of the app than I would’ve if we were in sync.)  I finally got some good time to finish getting up to speed, when I did a 4 day on-site pit stop before our March event.  Once I got back home, I pulled off my first 16-hour day in a looooong time, working until like 2 am even.  The result: the project is fun but life and unforeseen business work detracted from my planned arrangement.

On the business side, our sites were hacked, so we tried everything under the sun to get them up and running.  The last ditch effort was to move off of our current cohost to another.  In addition to that, we switched from the blogger platform to the WordPress platform.  This entailed me learning how to write WP themes and converting our old themes so our customers wouldn’t notice anything.  I also had to wrap up our finances from 2008.  (One word of advice: avoid Google Checkout if you can cuz importing that data into Quickbooks is a pain in the butt.)

The one thing we did manage to do that we “wanted to do” was expand the business.  We launched 360|iDev, our iPhone/iTouch developer conference.  It was well-received by the iPhone development community.  By comparison, it was “easy” compared to the rest of what was going down in life.  Sadly, I was hedging that a potential partner was going to be coming on board.  They did…sorta, on the Friday before the show.  By then, it was too late so we never signed the contract.  The buzz I was looking for them to help gen never occurred and so we had a roughly $10K deficit.

Whether it’s life, hackers, prepping for taxes, or a partnership not coming through, you see that a bajillion things outside your control can and do affect your business.  It can be very disheartening.  From what I can tell though, it’s the norm.  LOL

Therefore, if you have a startup and are wondering if everyone’s non-biz stuff is as crazy as yours, I hope this proves it is.  Welcome to the party!  :)

Jeffrey posted his 7 sins of success, and they really hit home.

Gluttony

This one I find I’m ok with, mainly because I don’t take on too much. If there’s one thing I’m acutely aware of it’s my limitations, and how much I can take on. I find at 31 (hell at 21) I don’t have the energy for all nighters, and working like crazy all weekend. I’ve come to terms with it, and try to only take on what I can accimplish inhe hours I’m awake. So far so good.

Greed

This one I find myself struggling a bit with, but Jeffrey’s advice is spot on. My wife and I have an idea, and I’ve been trying to vet it to see if it actually makes sense. One opinion so far, that it doesn’t. I’m not 100% convinced yet, but open to feedback.

Sloth

This one Tom and I struggle mightily with. We seem to go in fits and starts, where one of us is super motivated for a week, firing emails like crazy, making calls, etc then there’s a lull of a week or two where the business seems to be the lowest thing on the priority list, sadly. I’m not a slow and steady person, but I am a moderately fast and steady person, so Tom and butt heads often as our two motivation/energy levels don’t often mesh.

Lust

Tom may see it differently but this is a big one. There’s tasks that each of us don’t like to do, and fall squarely to the other. It mostly works, until one of us suffers a Sloth moment, then that set of tasks doesn’t get done. Be it blogging, replying to emails, invoicing sponsors, paying vendors, etc. It sucks for sure.It’s frustrating when we don’t send invoices that will be net 30, or don’t follow up on emails and stuff, it’s one of my hugest pain points in our model.

Once we’re our own FTE’s I hope, this problem fades, my fingers are crossed.

Pride

Not a problem for us. It was earlier and who knows may come back, but right now, it’s not a proble. Italy taught us that “we are not as hot as we thought”. We thought our brand would precede us across the pond, and found that while a few knew who we were, most did not. The community wasn’t big enough or interested enough in us, and overall we just got our teeth kicked in. It was one of the best learning experiences we’ve had so far.

Wrath

Tom is a planner too. I’m not, not much at least. I’m more of a “set the larger plan, and move towards it”. Some of our biggest fights have been around this. Tom wants to plan, so he tries to extract a plan from me, which is about as easy as getting blood from a turnip. What sucks is without a plan, Tom get’s discouraged, and his work output drops to nil, and he’s in a funk.

I’m not complete anarchy mind you. I try to be about GTD, I use OmniFocus, but in general, for a phone call, I just do the call. If some new technology is available or something, i just try it. It’s the early adopter in me. Tom and I struggle with this since he’s more the “late, when it is free” adopter which I think doesn’t mesh much with being an entrepreneur. it’s tough some times.

Envy

From time to time, I find myself envying another event. Mainly it’s for their having more funds, or being FTE. But I’m working on realizing that in every case, they’ve been around a bit longer than me, and in every case, their event costs more, and offers less of what is important to me (and Tom), so it’s not a fair comparison. That helps, but I agree with Jeffrey, envy is the fast track to losing focus.

I also think there’s reverse envy. “we’re already better than X so let’s slow down and not innovate as much” which goes against my grain. I know being over innovative (over engineering) isn’t good, but I also know that when you slow down, and rest on your past successes, you’re over taken.

So those are my thoughts, I linked to Jeffrey’s, what’re yours? Have you experienced any in your startup?

Part of my goal is to do an almost diary-like coverage of me doing the startup.  Until February, I’ll still be part time on the biz and full time on my developer job.  I did, however, get a taste of what’s to come last week.

When John and I decided to do 360|iDev, we figured we should go to Macworld for a day.  We agreed to do a show and then 3 days later, Apple announced it was pulling out of Macworld.  We saw this as a great opportunity to talk to sponsors and developers to let them know that there’s a new show in town: ours.  John and I reg’d for the expo and John bought his ticket for Cali.  Now we needed a plan.  What would we do at the show?

John and I do one offline marketing campaign per 360|Flex.  We print up a bunch of oversized postcards and mail them out to Flex User Group Managers.  They hand out the fliers and we give them a free pass or two to raffle in exchange for them hyping the event.  It works out great for us and for the UGs as well. Then that’s it for marketing. We never really go anywhere to promote our show.  We never really pound the pavement so to speak.  We’re blessed to have a community that loves us, so word of mouth pretty much takes over from there. With 360|iDev, we realize that wasn’t going to happen.

When we did 360|Flex Europe, we assumed our US brand would carry over and we’d have to do little work.  We were wrong.  It hurt to be wrong, but we learned a valuable lesson: Don’t think you’re brand is as recognizable as Mickey Mouse.  Success in one market does not in any way, shape or form guarantee success in another market.

Therefore, for 360|iDev, we realized we’d have to do more.  We put in our order for our traditional oversized postcards for attendees, but our Daneen, our marketing gal, got smart.  She pointed out that it would be better to print the sponsor cards in a matching fashion vs a ghetto inkjet print job done at home.  With these two pieces of collateral, this time we’d have to hit the streets and find people to give them too.  Find people who would not only attend the show, but also possibly speak or sponsor.

Last Thursday, John and I walked into the Moscone Center with a handful of general info cards and sponsor cards.  We were walking towards the main expo hall.  Along the way, we passed tables full of attendees awaiting to get into the expo hall.  Initially, we walked right by them.  LOL  Like I said, John and I are new to this in-person sales stuff.  :)  It hit me, “Crap, we need to be giving these people the attendee fliers.”  I make John pull over, grab the fliers and turned to the people.

Now, the people were oblivious to me.  I was just another goob in a conference shirt (a 360|Flex polo) standing with fliers looking in their general direction.  I probably looked no different than any other Apple Fanboy standing around.  Inside though, was a whole different story.  I so desperately wanted to turn to John and say, “Here’s the fliers.  Go give ‘em out!”  It was that initial fear of rejection we all have regardless of what the task is.  The butterflies were a fluttering and the sweat glands were in the process of dumping all moisture they had in reserve.  I’m sure if I stood there much longer and doted on it, I would’ve not done anything.  I would’ve talked myself out of doing what we came to do: “These people probably aren’t even iPhone developers.  They wouldn’t want one of my fliers. I bet some might even get mad for me spamming them in person!”

After a few moments of inner arguing and turmoil, I said, “Oh shut up and suck it up will ya.  There’s work to do.”  With that I stepped to the nearest table and started handing out fliers.  I worked my way around to all the tables near the main expo hall.  There was maybe 40 of them spread about.  I walked up and dropped a handful of attendee fliers on the table.  I gave a smile to those that looked up at me.  You know what, not one person gave a bad vibe.  Quite a few actually said, “Thank you” as I put the fliers there.  “Thank you” is usually reserved for when you do something nice for a person, not when you’re trying to sell them something I thought.  Thing is though, if they are an iPhone developer or want to be one, they’d need some help getting their A-game on.  This conference of ours will help them do that.

I think that’s the aspect of sales I need to take more to heart.  Sales isn’t about being the sleazy used car salesman portrayed in movies.  Sales is all about attitude, which should one of helping.  John and I aren’t criminals taking people’s money and returning nothing in return.  In fact, we’re the opposite.  We take a lot less money than our competitors and we give as much, if not more, value than them in return.  We’re a value and we here to help our customers.  It is our duty as a business to make them aware of what we offer and how it can help them.  They, in turn, can then decide whether they see value in that offering.

After handing out the fliers to those on the tables, it become readily apparent to John and I that we grossly underestimated the amount of fliers we’d need.  Luckily, we had another 2800 back in John’s hotel room.  LOL  It was very cool to walk around and seeing people carrying/reading our postcards.  It gave a little more pep to our step as we hit the expo hall.

The expo would be a completely different beast.  Dropping the card on the tables involved a smile and fast movement.  In the expo hall, we’d need to sell the show.  Luckily, I had John with me.  I’m not quite sure how people start a business on their own. I’d be too scared to do most of the crap that’s needed.  John and I though, if nothing else, genuinely enjoy each others company.  We started out a bit timid.  As the day wore on though, we realized everyone was very positive about the show.  This lifted our spirits and helped us keep going after 6 hours of walkin around.  We did have two sour pusses: 1 – “What’s in it for me?” attitude from a marketing gal no less.  (I feel sorry for that company) and 1 – “Uh yeah, thanks.” as he folded up the flier to trash it.  The high points came when we approached vendors/dev shops and they already had our postcard from outside! w00t!!

By the end of the day, I was exhausted and exhilarated.  We talked to a ton of people and got the word out about 360|iDev.  It’s shaping up to be a great conference.  It was also a great preview of what’s to come for me.  Hitting a deadline for your FT job is a nice feeling, but nothing compares to working your butt off all day to support your own business.  If you haven’t tried it yet, you gotta do it.  I’m just sorta bummed I can’t do it again until the end of the month!

For those that have already forgotten, yeah that’s like everyone, Cuil launched in July 2008.

No one cared.

Cuil launched, and didn’t work, results sucked, the site went down, etc. As launches go, it was a dud.

Being stealth in general, is LAME, IMHO. No idea is that revolutionary, and hello! Cuil was a search engine! Stealth just raises the bar high, higher than you probably want. How about you embrace the web, stop being so secretive? Get the community behind you?

Techcrunch has a good write up on Cuil’s loserness.

From time to time Tom and I have thought to keep something underwraps, save it up for a big announcement, etc. It always blows up in our faces, without fail. Some one will call us out “I was going to blog about your event, but you had no sponsors up” or something like that, when in fact we had sponsors, but were waiting to announce on a certain day, whoops!

This is short and it’s my take, but don’t be stealth, and don’t be lame, and don’t rely on hype to define your value. Be worthwhile, and be something people will want to use. Don’t be a 33mil money trap, “Google killer”, don’t be an anything killer! Just be. Be good, be a venture that meets a need, not a venture looking for a problem.

Buh bye Cuil, it was an uneventful life, and you’ll be remembered… ok well you won’t, but thanks for all the fish.

This post is in response to a recent article on Businessweek, entitled “A Wrench in Silicon Valley’s Wealth Machine“.  It’s our first panel style post where we ask our startup contributors to give their views on a certain topic.  Let’s hope it works out. :)

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John’s Thoughts:

VC’s seem to be largely morons and most startups seem to be the perfect match.

Only a startup would exist and not have a plan to make money. Only a VC would give money (large, large sums of money) to a startup that would “Make money in the future”, if everything goes according to plan.

That’s not to say startups have to be profitable or even bringing in money when they start, but Digg is what? 2? 3 years old? And not making money still.

From Businessweek

Jay Adelson, Digg’s chief executive, says it’s clear the environment has changed for all startups. With venture money harder to come by, entrepreneurs have to concentrate on building their businesses. He says Digg is dialing back some expansion plans and trying to reach profitability as soon as possible. “All I care about is making sure the business foundation is solid,” Adelson says.

Really? Now the focus is on profitability? Now that they’re being seen for what they are? Just another over hyped startup with no clue how to make a dime, hoping that profitability will find them on its own.

What really amazes me is that all the Digg fanboys and gamers of the system singing Digg’s praise etc. are simply filling Digg’s DB with data that they [Digg] intends to sell. Sell for a retardedly over valuated price of 300m! Holy crap! Smooth move guys, give your meta data and attention to Digg so they can hope to sell it. NICE!

One reason may be that Digg’s public profile is much larger than its financial might. Last year the company lost $2.8 million on $4.8 million in revenue, according to Digg financial statements reviewed by BusinessWeek. In the first three quarters of 2008, Digg lost $4 million on $6.4 million in revenue. Adelson declined to comment on the figures.

Those better be some damn good Christmas parties, and some 70 and 80′s style whoring and coke snorting, I’m talking Studio 54 here. Lost 4 million? On what? It’s a site that people give content too, they don’t pay for it! Oh wait, Diggnation probably isn’t cheap to produce, that explains it.

As some one who runs a business completely in boot strap mode, it’s insane to imagine how some of these businesses can exist. Tom and I started ’08 owing 15k on our line of credit and were contemplating closing up shop rather than continue moving into debt. Startups seem to have mastered the art of spending money that isn’t theirs in exchange for retarded amounts of their company and probably a sizable chunk of soul.

Is it worth it guys? You couldn’t have done with out millions of someone else’s money?

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Tom’s Thoughts:

I wouldn’t say all VCs are morons, just the dumb ones.  :)  Perhaps that should read the greedy ones.  I understand VCs provide more than just capital.  Take a look at eBay.  It was successful, but Pierre realized that he didn’t have the knowledge needed to take the company to the next level.  VC investment helped him get Meg.  Then there are visionairies that have expensive visions but the visions have profits in mind ala Bezos.  Amazon took what, 4 years to reach profitability?  But Bezos had the system worked out in his head to reach profitability.  Heck, at least it was a goal for those 4 years.

Article Snippet 1: With venture money harder to come by, entrepreneurs have to concentrate on building their businesses.

Now, that could just be poor writing on the author vs something dumb Jay Adelson said, but that line just blows me away.  What the heck kind of statement is that?  What entrepreneur doesn’t concentrate on building a business?  And what kind of people give that entrepreneur millions of dollars?

I’ll be honest.  I thought about approaching investors to help us grow 360|Conferences in the early days.  However, I realized we had no street cred. We had never ran a conference before, much less a conference business.  Even now, John and I are contemplating approaching angel investors, but I still tell John, “We’re profitable, but I don’t think anyone will care.  We’re not trying to take on the world and we’re definitely not sexy.”  John and I have spent a lot of time making our business what it is.  Sure it’s been tough, but we went from no money investment on either of our parts to making some money in less than 2 years, part-time.  People think we put on the best conference they’ve ever been to and are shocked to find out it’s just John and I doing the biz, part time.

The reason I think we make money and why people love our events is because from day one, we’ve always concentrated on building our business.  John asked during year 1 of our biz,  “Why didn’t you quit this idea like you did many others in the past?”  My answer came swift and still rings true to this day, “Someone trusted me with their hard earned money and it is my duty to live up to that trust by providing them the very best service.”  The only way you can provide a great service is by building your business.

Article Snippet 2: [Adelson] says Digg is dialing back some expansion plans and trying to reach profitability as soon as possible. “All I care about is making sure the business foundation is solid.”

Here’s where millions of someone else’s dollars makes you delusional.  Whereas Digg is now gonna focus on profitability vs expansion, John and I have been focused on profitabilty and are now looking at expansion.  I didn’t go to business school, so maybe that’s why I’m lost.  But don’t you usually test an idea out first to make sure it makes money?  Then once you’re profitable, you move on to expansion?  Like I’ve always told John, “Our profit model depends on x number of attendees per show.  If we don’t get those numbers, that means people don’t like our show.  We either need to change to get those numbers or leave the biz as our ideas obviously are all wrong.”  Now x is not in the millions or billions, we’re talkin roughly a few hundred.  But if there is no profit in sight, then you may have a good idea, but you surely don’t have a good business.

Article Snippet 3: In the first three quarters of 2008, Digg lost $4 million on $6.4 million in revenue.

Now, I won’t make accusations about what Digg did with that money.   John could be right, but I’m sure there’s some costs we’re just not seeing.  Some people accused us of throwing an “orgy” when we spent $90K on food, but after you realize a 6 oz soda costs $4.  You can see how fast things add up.  One thing companies should do is be more transparent.

I’m not saying throw your quickbooks file on the net. (Yes, I know they don’t use Quickboooks, just work with me will ya.)  But lay out what gets spent where.  Show people what you’re doing with the money.  If nothing else, your customers will tell you what your spending too much on.  Though I’m not sure that would work for Digg.  They have users and not customers, i.e. no one pays them to do a service.  Maybe that’s the problem then.

Can you be defined as a business if you don’t have customers?  Or more importantly can you be called a business if you don’t focus on profits?

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Andrew’s Thoughts:

My preference in starting a new business would be the conservative approach.  Save up money from a standard W2 job until you have a nice emergency fund before going for it.  Focus on those projects that get you to profitability the quickest.  Anytime you take money that you haven’t earned whether from a bank or from a VC, you’re giving up some control of how your business runs.  Unless the idea is truly revolutionary and needs to explode quickly, I’d stay away from taking VC or bank funds and doing it the old-fashioned way.  Having excess VC funds around is just plain distracting and a false sense of security.  It doesn’t make sense to have all those parties if you haven’t earned a dime.  Having a tight budget early on also forces you to find unique and cheaper ways of doing things.  One example would be a VC-funded startup throwing servers at a scalability problem whereas a self-funded startup would be forced to re-factor and optimize their code for maximum scalability.

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Jeffry’s Thoughts:

Are VCs Morons?  I don’t think so, but I do get the impression they only expect 1 in 10 of their ventures to be succesful; kind of like the traditional record company model.  That 1 success makes up for the 9 failures many times over.  With that in mind, I may consider factors other than the business plan when investing in companies such as enthusiasm and adaptability of the owners.

Cash flow is king, especially in a down economy.  Generating profit should always be a much higher focus than expansion.  Build your profit model right into the business from the start.  Think it through before you start coding or building the service.  Controlled growth is the best way to build.

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Ben’s Thoughts:

I have to say, I think this is a trick question. Let’s look at it this way, “What should a baby focus on: feeding itself or growing up?”. I guess the answer would be “yes”. Startups, like babies, require further growth by definition; otherwise you’re just running a business. So if a startup focuses solely on profit, it may never take the risks that are required to grow. By the same token if a startup focuses only on expansion fueled by VC money, it may not have legs to stand on when it needs to back up those extravagant claims it made (a la Digg). I’m not saying that VC is invalid or that projects with big ambitions (like mine) are dead, but I do think that inflated egos, hot-air pitches, and over-valued stocks are being market-corrected in short order. Hopefully that’s a good thing.