Creative Financing-Delayed Cap Notes

There are several ways to finance a startup at inception.  The traditional route is your own pocket and sweat equity or a “friends and family” round.  Seed investors like angels and angel groups come next along with seed funds.

Typically these rounds are no longer priced rounds but are valued as debt or convertible debt.  I have written about convertible debt in the past.  There are different kinds of notes.  The primary ones are capped and uncapped notes.

A capped note basically says to the world what you want your valuation to be.  VCs that come in next rounds will look at that cap and immediately anchor on it.  It’s not a smart way to fund a business over the long haul but I know they are in vogue.

An uncapped note is free money for the entrepreneur with all the risk being Continue reading "Creative Financing-Delayed Cap Notes"

Avoid The Perception, or Temptation of Any Impropriety. Get Deskpass!

The tally of sexual harassment offenders that have been outed in the past few months is too long to name.  High profile journalists, venture capitalists, businessmen, and politicians all have been implicated.  I am sort of surprised we haven’t seen anything in reverse where a powerful woman does something to a man.  When I was in college I had it happen to me once.  I put an end to it.  Had a male teacher in high school do the same thing.  Not cool.

I don’t want to go into the tawdry details.  As a father of daughters, I am shocked it still goes on.  A friend of mine was at a business conference last week and a potential customer shook her hand with a room key in it.  When it dropped to the floor he said, “Just joking.”  Screw him.  Continue reading "Avoid The Perception, or Temptation of Any Impropriety. Get Deskpass!"

Far Out Adjacencies

In Competitive Strategy, one of the things Porter looks at is potential competition to your business from companies adjacent to your business.  Adjacencies are getting a whole new meaning in the digital age.  I think that is what makes it tough to do SWOT analysis with absolute certainty.  Sometimes you have to consider something very outlandish like Amazon entering the food distribution space.

Even though companies are worth billions on paper and seem to have a mature business, it doesn’t mean they have it all figured out.  Uber is an example of one of those kinds of companies.  Uber experimented with UberEats for a while. I just saw this article where Uber’s French competitor, Blablacar, is thinking hard about entering the insurance brokerage market.

It makes some sense although like any business it’s all about the execution and economics.  The long-term value of the Continue reading "Far Out Adjacencies"

The Liquidity Crisis

There is a problem that is solvable when it comes to startups. It’s liquidity. Over the past couple of years, I have seen Fund of Fund managers like Chris Douvos, Michael Kim, and Lindel Eakman talk about this problem on their blogs. I have also seen funds like Calpers talk about the liquidity problem in articles and documents.

Why is it a problem?

If you put money in, and can’t get out, it’s going to disincentivize investing. That means less money flows to innovation. Less money into innovation and that means society doesn’t propel itself forward. In a capitalistic society, it is critical to have creative destruction.

It also means that ordinary people cannot invest their money in public companies that are innovative. They have to wait and that means they can’t build wealth as easily. This also might explain the ICO craze. Risk capital is being invested in it Continue reading "The Liquidity Crisis"

If You Are Selling, You Have to Integrate Cold Calling Into Your Day

One of the interesting things I have noticed about our new high tech generation is the lack of urgency to cold call when it comes to selling.   We like to sit behind our screen and do research on people hoping to find some sort of long lost connection.  Warm introductions are nice.  Testimonials are nice.  If you are going to grow your business you cannot be afraid to cold call.

Too often, we think of cold calling as a snake oil salesperson in a bad suit selling something to someone that they don’t need.  That’s not the case.

The cold sales call is one of the most intimidating things a person can do.  There is no guarantee anything will work out. It can turn into a very clumsy conversation.  It leads to a lot of rejection in some cases.  However, if you Continue reading "If You Are Selling, You Have to Integrate Cold Calling Into Your Day"

Phrasing Is Important

“It’s not what you say, but how you say it.”  How many times have you heard that old adage?  I consistently re-learn this.  After being on the trading floor for 25 years, my style of language is a lot different than a lot of people.  It’s not only because cuss words are subjects, predicates, nouns, prepositional phrases, modifiers, verbs, personal pronouns or any other part of traditional English language structure.  It’s because if you took more than a few seconds to make yourself clear, you lost money.  Traders spoke in 140 characters long before there was Twitter.  Emoji’s are like hand signals.

The thought on phrasing occurred to me several times over the past few days.

I first encountered it in the real world back in 2001.  Our house had been destroyed by water.  I was upset.  It was hard not

Continue reading "Phrasing Is Important"

Integrity

Saw this post from Techstars co-founder David Cohen and thought I’d explore it a little more deeply.  David talks about the moment of integrity.  Your life leads up to that moment.  Sometimes your family values it and so it’s deeply ingrained in you.  Sometimes it doesn’t.

Integrity is messy because even though there is a Webster’s definition, the human interpretation is pretty variable.

When I went to the US Air Force Academy I dropped off my bags and I toed a white line.  An upper-class cadet taught me how to stand at attention.  Then he backed up and uttered these words.  “From this moment on you will say five statements.”

  • Yes Sir/Ma’am
  • No Sir/Ma’am
  • Sir/Ma’am may I make a statement?
  • Sir/Ma’am, may I ask a question?
  • No excuse Sir/Ma’am

Here is a blog post by a West Point cadet on their similar ritual. Continue reading "Integrity"