Thursday, March 31, 2011

Your Sources of Information & Inspiration

Ben Horowitz, co-founder of the awesome VC firm Andressen Horowitz (investments include Twitter, Facebook, FourSquare and Zynga), often has thought-provoking comments on his blog and Twitter page.  Today, he got my mind working with two separate ones…

The first, from Twitter – “@bhorowitz: I definitely listen to other genres, but hip hop is the only popular music that is pro business and deals with business as a topic."

I enjoyed that comment because I love many types of music and had never thought of it in that context before.  If you follow Mr. Horowitz, you’ll note that he starts all posts with a quote from a song.  I used to do the same thing when I was an editorial writer for my college newspaper, albeit I never pulled from hip hop.

Horowitz’s second comment is much more relevant to this blog and came from his guest-appearance on TechCrunch.  The assertion is that the most difficult CEO skill is “managing your own psychology” and the post offers techniques for doing so.  I found it insightful and you can read it here.

I share Horowitz’s comments partly because I found them interesting and partly to make a bigger point: 

As an entrepreneur, my encouragement is to have vast horizons for where you search for and find your information (and inspiration).

Followers of this blog know that I often draw from TechCrunch, VC blogs and so forth.  I’ve been asked about it.  On the surface, the world of tech entrepreneurship has little relevance to being a golf entrepreneur.  However, the qualities that make a great entrepreneur are not industry specific – and venture capitalists are THE experts on entrepreneurship.  Thus, I read and learn from them.  They give me gems like this Horowitz post on a daily basis, whereas you’ll be hard pressed to find this type of information in a Golf Digest.

In my opinion, the road to happy entrepreneuring includes daily detours from our industry tunnel.  I wish you the best of luck finding your information and inspiration down these unpaved paths.

Thursday, March 17, 2011

Anatomy of an Entrepreneur

My two favorite VC bloggers wrote on the topic of management teams today.   Both are worth reading.  Fred Wilson’s “AVC” post is linked here and Mark Suster’s “Both Sides of the Table” post is linked here.

I talk to aspiring entrepreneurs on a daily basis as the person responsible for selling franchises for TGA.  I also talk to existing entrepreneurs daily as the person responsible for then training and supporting these franchisees.  Thus, I work with folks before they start their business and I work with them afterwards.

Seeing the entrepreneurial process from this wide of a spectrum has given me a good idea of what indicators in the “before” stage lead to success/failure in the “afterwards.”  Astute franchise candidates often ask me about these indicators and my conclusion is the same as Wilson’s, Suster’s and most others who live within the entrepreneurial world:

Great businesses are made by great people, not great products. 

From my perspective, past business experience – especially in sales, project management or business development – is invaluable.  Industry experience doesn’t matter much at TGA due to our franchise model, but it is very important for businesses starting from scratch.

Ultimately, though, personality and tenacity sit atop the importance list.  Entrepreneurs who are smart, personable and hungry usually figure it out.  If you read Fred Wilson’s blog, note the story about Airbnb and Obama-O’s.

The reality is that “experience” can’t serve as an entrepreneur’s alarm clock.  It can’t work past 5pm for them.  It can’t keep them from throwing in the towel when things get tough. It doesn't put up road signs when the business requires a new direction.  It can’t pick up the phone and call their potential customers.  It doesn’t build their relationships.  It can’t keep them motivated long after the initial adrenaline of starting a business wears off and the grind sets in.

Before I had any entrepreneurial experience, I thought about start-ups almost entirely within the context of the “product.”  I’ve since learned that almost all start-ups are forced to modify, pivot and overhaul their product multiple times.  Thus, in my opinion, the question of “will the business be successful?” is really about whether the management team is the one capable of navigating these choppy waters.

Thursday, March 10, 2011

Your Company’s Public Relationship

TGA Premier Junior Golf has gotten some decent press recently – first in the LA Business Journal and then in Entrepreneur Magazine (article here and 2011 franchise rankings here).  These articles have been picked-up by many other media outlets.  This led to our best 1st Quarter in history (with 3 weeks left) and allowed us to reallocate a large percentage of our budgeted advertising dollars. 

All of this cost TGA solely what we pay our PR firm, which is less than what a monthly 1/3 page advertisement in Entrepreneur Magazine runs for.

As a result, I’m a big believer in the power of PR.  We’ve been effectively leveraging it at TGA since the beginning.  We’ve also been blessed with a heart-warming story to tell – youth development through golf.

In my entrepreneurial endeavors, I’ve found it challenging and daunting to figure out how to grow beyond the initial early-adopter customer base.  You can hire sales people to hit the pavement.  You can try to navigate the dizzying waters of the advertising world.  You can look for strategic partners who will promote you.

Every company has different sales channels so there is no “right” or “wrong” promotional method.  However, if you’re in start-up land, my encouragement is that you consider investing in PR because it can be a cost-effective way to acquire new customers.

When I started at TGA, I knew nothing about PR.  I’ve learned some tidbits along the way, so this is my version of PR 101 for new/aspiring entrepreneurs:

Step 1 – Is PR a Good Fit?
PR is all about telling interesting stories.  Some companies have them and others don’t.  A good barometer for whether PR is a good fit for your venture is whether you have stories to tell that you’d be interested in reading if you weren’t the CEO.

Step 2 – Find a PR Person
Find someone in your network who is in the PR business with a robust distribution list in your industry.  Get them to work on a cheap monthly retainer and commit a few hours a week to your business.  Negotiate the rate by touting the potential future upside and pointing out the value your company can bring to their resume.  I've found people for as little as $500/month

Step 3 – Create Compelling Stories
Develop press releases that discuss meaningful and interesting things.  Think about your topic as an article in the paper – will people want to read it?  A good PR person will guide you through this.

Step 4 – Shop Your Story
Once you have the press release, your PR person should send it to your industry’s press wires (you’ll need to subscribe), any applicable media outlets, all relevant parties on their distribution list and anyone else who may be interested.  Make follow-up phone calls to strategically important outlets.  In the beginning, focus on the local media to get traction - tell them about the new, hot start-up in their community that just (insert newsworthy item here).  Avoid pay-for-play offers – they’re expensive and the easy way out.

Step 5 – Take it to the Next Level
Put every PR piece, whether it’s a press release or an article, onto your website and social media graph.  Ask your PR person to merchandise the media and provide a value for everything they have given you.  Get reprints from them for future distribution at conferences, etc.

Step 6 – Be Persistent
You’re an entrepreneur … persistence is in your blood! 

With that said, good luck building your relationship with the public.  I hope it provides a cost-effective shortcut on your path to happy entrepreneuring.

Friday, March 4, 2011

What Does All the Angel/VC Noise Mean?

AngelList has been all the rage in the venture capital / angel investor world over the last week.  It started when well-known VC Bryce Roberts publicly deleted his AngelList accountThe "kerfuffle" that followed was described well by Mark Suster (another well known VC) in this blog.

AngelList is a website where entrepreneurs can connect with angel investors who are looking to provide seed money for start-up companies.

This is just the latest chapter in a growing trend within the angel/VC world.

First, we heard about the huge valuations for social media companies – Facebook at $67 billion (33x revenue), Groupon at $15 billion, Twitter at $10 billion, LinkedIn at $3 billion.

Then, Yuri Milner and Ron Conway, two prominent Silicon Valley angel investors, announced that they would provide every Y Combinator company with $150,000 of seed capital.

Now, AngelList.  The result is that most experts agree we’re in the midst of a bubble in the start-up investment world.  The result is too much money chasing too few good investments, with higher valuations, shorter due diligence periods and riskier investments.  Fred Wilson described this environment really well a few months ago.

All of this can have a dizzying effect on entrepreneurs.  What does it mean?  Whether you're in the golf industry or any other, my view is that there are a few universal lessons.

The first is a reality check.  We're still seeing maybe 1% of the applications getting funded at the angel investment group I help.  Thus, don't get the idea that you can start up any old company and get funded.  For every success story you read on Tech Crunch there are 100 non-success stories.

Secondly, I don’t think angels can or will ever replace VC’s, which has been a main discussion point in the post-AngelList vs. Bryce Roberts break-up.  There are several reasons for this:
  • Generally speaking, angels have far less personal money to invest than pension/hedge/etc. funds do, and the latter need VC firms. 
  • Even at my well-respected angel group, most angels do this part-time.  Thus, it's nearly impossible for them to have extensive knowledge of all the industries, ecosystems and companies they encounter.  Thus, their reach cannot be as wide or deep as VC's who live and breathe this stuff 24/7. 
  • In my experience, it's been very difficult for angels to raise more than $500k for any one company, so they have to go to their syndicate VC partners when the raise is higher.  Angels are good for seed money but not the $2-$5MM expansionary capital that almost all fast-rising hotshot companies need.
Thus, if you’re an entrepreneur, my belief is that you need to view most of the news coming out of the VC/angel world as noise. 
What does it mean?  In my opinion, absolutely nothing.  Focus on your company like always and the rest will work out.
Why?  Because if you build a business that has a disruptive product in a growing market with strong IP, distinct competitive advantages, a scalable revenue model and a strong management team … you’ll be farther than most down the road to happy entrepreneuring.  And I promise, angels and VC’s will be standing on the sidewalk with their checkbooks hoping to take that journey with you, regardless of the investment environment.