Karen Geier

Starting Up Again: Photo-Sharing for Doctors

2013-06-03T17:13:12-04:00

There are those who are at home in a start-up environment, and those who are ONLY at home in a start-up environment. I met Richard Penner when we were both working for a company which, when we joined, employed about 70 people, and during our tenure, grew to over 300. That staggering amount of growth allows you to experience an accelerated life cycle of a company. It also helps you put into perspective how you'd like to shape your career.

Richard found himself in a situation where he wanted to get his hands dirty by starting again from the ground up. He and his two co-founders then created Figure 1, a medical application for smartphones which allows doctors to share photos.

I spoke to Richard about his journey from salary man to start up co-founder.

A lot of people, especially in the wake of Dragon's Den and movies like The Social Network, dream about packing it in, and starting up their own company. Talk to us about why you made that decision.
"Up to this point in my career I've been torn between management and development. On the one hand, I really enjoy software development and will keep writing code for as long as I can. But I've also had an increasing interest in how businesses are run: everything from finances to building a user base.

Previous to this start-up I found myself in a great management position at a great company, but I needed more. Movable Science has given me the chance, with the help of an amazing team, to learn how to build something out of nothing. That's what we've done with our first product, Figure 1, a photo sharing app for healthcare professionals."

You made your own apps for a while before moving on to Figure 1. How did that help you when you eventually made the move?
"After doing apps independently, software development comes naturally to me. But one of the benefits of working with a team is that I've learned a lot about business and a lot about healthcare, an industry increasingly ready to embrace innovation. My skills in development are new to this field and that's exciting."

Explain where the idea for forming Figure 1 started.
"The idea actually started with my partner, Dr. Joshua Landy. Josh is a practicing physician specializing in internal medicine and critical care. He recognized that a lot of young physicians are taking pictures on their phones of interesting and representative cases and sharing them with small groups of colleagues, their medical school classmates, or other physicians to learn from. He saw a need to make it easy to share these images (in a privacy safe way) with the broader healthcare community. This way they could harness all of the medical knowledge that is currently being lost to anyone not involved in those conversations. I told him that it would be quick to build a prototype of this app, and our third co-founder said he thought he could make a business out of it. So the three of us set to work, and not even 2 months later we found ourselves at the Ryerson Digital Media Zone (a startup accelerator) building the product full time."

Karen: When did you decide to go the accelerator route?
"Joining the Digital Media Zone at Ryerson University was an early decision. We were given a tour of the place and it was bustling with a lot of smart people and interesting products, so we were eager to join."

How has your accelerator experience been? Any surprises?
"By far the best part of any accelerator is the people we meet. It's a regular occurrence to have short conversations about specific problems and solutions that somebody has already gone through the pain of experiencing. We've even had people from other companies jump in and help us with in areas where they have skills that we don't. There's a really nice collaborative spirit here. We have weekly meetings with advisers and check-ins to hear about other companies successes and struggles. We get to see new products launching regularly, and we can follow the story from the inside. And one of the biggest benefits is our amazing office space. It's actually Google's old office. We definitely could not have afforded this space otherwise!"

What was the biggest change you had to make going from a large company to a company with three cofounders?
"Definitely being taken out of my comfort zone. There's a good chance that at a large company you're doing exactly what you're best at, and won't often get a chance to jump into something entirely new. I'm comfortable with writing apps, but deploying servers and keeping them running was new to me. Additionally, I love being involved in key decisions about the company and learning from the amazing team we've created."

Were there any bumps along the way?
"We shipped our app with a small but important bug that was overlooked during testing. It was our first time dealing with a 'production problem,' and it was stressful for all of us. Thankfully, the update to the app was approved within a week and in time for our official launch."

What was the biggest surprise?
"For me the biggest surprise is how supportive people around you are when you put yourself out there. Everyone from our friends, families, investors and even our users have been incredibly supportive, and that's encouraging when you have so much work to do."

Did you have a learning curve when doing things like marketing your product directly or securing press?
"When I was an independent app developer, this was a huge learning curve for me. I couldn't quite crack it. Thankfully, now I have people on this team with different skills and we're learning from each other. We're only just starting our marketing efforts now, so it still remains to be seen how successful we are, but things are looking good."

How crucial was it for you to get your pitch perfect, and your pitch materials in order?
"We're dealing with healthcare and photo sharing, so it's really important to us to explain Figure 1 correctly to people and emphasize the care we took in making this legal and safe for physicians and their patients. Luckily, we're finding that physicians have responded really well and we've been encouraged by that. We've even had some physicians become investors because they believe in this idea. So yes, it was really important for us to explain our product in the right way."

Are you an agile company? Explain your reasoning for this choice.
"Overall, we are an agile company, but I'm a skeptic of any practice that doesn't evolve or adapt enough to its surroundings. There are a lot of people who feel compelled to follow the textbook version of Agile, but I think a strong team can perform well taking and leaving some of the key principles."

What has been the most rewarding thing about having your own company?
"Doing something that I love has always been incredibly important to me. Coming from a development background and running this company with my two co-founders gives me a chance to learn the 'business side.' Everyone on the team brings something very different and valuable to the table and together we're greater than the sum of our parts."

What is next for Figure 1?
"Our vision is for doctors around the world to interact with one another, so in keeping with that, we're looking to expand globally. Beyond that, we're already designing new features for Figure 1's next release.

It's been really interesting to learn about medicine and healthcare from Josh. Healthcare can be traditionally conservative, but we are starting to see innovation put down roots (particularly in mobile health). I'm excited that Figure 1 is part of this movement. Coming from a big company that is now quite established, it's invigorating to create something from the ground up."

How to Secure Follow-on Funding for Your Start-Up Business

2013-05-28T07:58:13-04:00

There is a very real issue facing funded companies getting to the next level in their growth. Sometimes, companies who are reaching a successful peak do so just as they are in need of another round of funding. Where do you go? Angel investors are rarely in a position to provide a full round of funding on their own, and not everyone has access to venture capitals.

Recently I spoke with Jeffrey Steiner, President of the Network of Angel Organizations. An investor himself, he has experience both introducing companies to VCs for them to procure follow-on funding, and with the NAO has facilitated follow-on funding events for companies in this unique position.

How long has the NAO been working on follow-on investment programs?
In 2007 the Ontario government started funding the Angel Network Program in order to address the investment gap faced by early-stage technology companies in the province. Now that these efforts have borne fruit, companies are ascending to a new level of growth. For this reason, NAO-Ontario organizes an annual event presenting follow-on investment opportunities brought forward by Angel groups. The first Follow-on Investment Forum took place in 2008 and we organize a new opportunity each year for angel investors to network and find companies that represent growth opportunities.

I spoke to Bruce Croxon earlier this year, and he mentioned a lack of follow-on funding in Canada. Can you explain more about this problem?
Often a gap still exists between the Series A round that Angels (working in small groups) have the ability to complete and larger investments by venture capital firms. So a further round of angel funding might be required. Also it is often a best-practice for angel investors to keep ready some capital for later use in their portfolio of companies; successful ones grow, but consequently need more capital.

How do angels and VCs fit into the various stages of funding?
Angels typically invest at the Seed or Series A round, when the company is just about to or has just starting selling and earning revenues; Venture capital firms typically invest a bit later, in companies with strong growth potential and have established a track record of sales. Often millions of additional capital will be required to realize on a sustainable growth pattern. Venture capitalists want to be sure that the entrepreneurs can scale-up their business to higher sales revenues and eventual net profits.

Can you explain a bit about how Angels exit when follow-on funding happens?
Angels can stay in, or be bought out when the next round of investment happens. A realistic valuation of the company at the outset will hopefully ensure that they secure gains on their investment from subsequent investors. When all parties are realistic about the valuation of an early-stage business, then it's a good basis to grow. Angel investors bring more than just their money -- its also their experience and judgment which are valuable assets for the entrepreneurs to tap into.

What's happening at this event?
Ontario's community interested in innovative companies and early-stage investment will convene at the Follow-On Investment Forum at the Arcadian Loft in downtown Toronto on Tuesday, June 18th, 2013, showcasing how Angels' experience, passion and capital are indispensable catalysts of economic growth. The forum is being held exclusively for accredited investors who are interested in next-step start-ups on the cusp of global growth, as it will showcase at least eight pitches from carefully selected Angel-backed companies seeking subsequent rounds of finance. There will also be networking and sessions sharing expert views on exits from thought leaders of our community.

Speakers and special guests include John Ruffolo, Chief Executive Officer, OMERS Ventures and Parker MacDonell, Founding Member, Ohio TechAngel Fund & Board Member-Elect, Angel Capital Association

The complete list is here. You can register today at and benefit from a significant discount by using code, NAOEARLYBIRD by May 31.

What has been the outcome in years past? Can you share some stories?
Stories from past events are usually subject to the confidentiality requirements of the companies and their investors. At a minimum, companies presenting have raised awareness among very well-networked investors attending, with unpredictably positive results including investment, new markets, new board directors, and new mentors.

What non-monetary support do you offer to companies in a position for follow-on funding?

We also provide pitch coaching.

How does the relationship between founders and investors change as they go from Angel funding through to follow-on funding? How do the roles and responsibilities change?
We expect that an informal and close relationship will usually give way, to some degree, to a more formal and structured relationship as the amount invested increases. Milestones would become even more specific and time-bound. Usually the CEO would become more focused on business growth issues and less on product-development concerns, more formal investor-relations materials and systems might be developed, and balancing the interests of different sets of investors becomes a greater concern than ever as all parties share in the company's growth.

What is the ultimate goal of the NAO in hosting this forum?
Early-stage companies still rely heavily on the private-sector for the capital and expertise needed to commercialize. Government helps this stage of company formation by supporting angel groups as part of Ontario's Network of Entrepreneurs (the ONE Network). The Follow-On Investment Forum will celebrate our network's economic impact, and provide entrepreneurs their best chance to capture growth capital from a province-wide audience of accredited investors and select venture capital firms.

Any other advice to those in need of either Angel round or follow-on funding?
We encourage individuals who are interested in getting involved in growth companies to join at an early stage. Some readers of the Huffington Post may be accredited investors, and want to learn more and meet other like-minded people in the community. There is strength in numbers, so we encourage interested people to join an angel investment group by contacting the Network of Angel Organizations in Ontario at www.nao-Ontario.ca and join us in Toronto on June 18th.

The Most Important Concept for Entrepreneurs

2013-05-16T12:04:47-04:00

During the course of this series, there have been many buzzwords coined and repeated. These all have a time and a place, and can be useful to help you figure out key concepts of entrepreneurship, but there is one thing which stands above all of these on the scale of importance: FOLLOW THROUGH.

It's incredibly easy when you're the "boss" to get tunnel vision, and not see details orbiting the thing you're concentrating on. It's also easy to let certain to-do items slip, because you're not being held accountable to someone else day-to-day.

However, if there's one thing which will grow your business faster than anything else, it's follow through.

It's easy enough to say, but much harder in practice. Large corporations are guilty. Business titans are guilty. But if you do nothing else when building your business, make sure you clearly articulate what you're going to do, and meet or exceed that expectation, every time. This means everything from returning phone calls of companies interested in you in a timely fashion to setting up realistic expectations with clients, customers, and partners, and consistently delivering to those expectations.

Internally, this means meeting your deadlines. If you can't for some unforeseen problems, it means owning your problem, making amends, and getting buy-in on another course of action. Make sure you close the loop.

Externally, this means making your communications with others as clear, concise, and regular as possible to maintain a high level of trust, and to prove to the other stakeholders that you are a trustworthy person.

When you are starting out, anyone who's going to visit your website, become a vendor, or a partner is taking a leap working with you. You are not necessarily established. When you're not in the power position, you need to be better. How you get better and build credibility is by doing what you say.

It is shocking how few companies in their infancy adhere to this credo, and over the course of the last 9 months, my company, Shyndyg, has had to deal with our share of promises from partners which weren't kept. Most of these weren't maliciously not followed-through, rather, a product of a lack of organization on the part of the individuals responsible. It's detrimental to small businesses to behave this way, because, while you might "get away" with not having fulfilled your end of the bargain (and you never do -- it's just that the other person didn't take the time to tell you they were displeased), you have still missed an opportunity to actually do good business with a strategic partner

So, how do you stay on top of what might start out manageable, but becomes a 99-headed hydra?

There are many ways to get things done (and many excellent books which can help you if you didn't grow up in a house run like the military) but all you really need is a checklist of every promise you make, and the deadline.

How do you keep track of everything? For me, I use Siri, and I dictate orders to her all day long. She reminds me which appointments I have, when projects are due, and what is required. This isn't for everyone, but it's how I stay honest and on track.

The older system I used before Siri became available was the Post-It Note method: colour coded, and arranged in a grid pattern, stuck to my desk, arranged in order of urgency. This system survived for a long time because of the excitement of ripping one of those notes off the desk, crumpling it, and sending it to the recycling bin.

It really doesn't matter HOW you achieve it, you just need to make a commitment to putting paid to the business moves you set in motion.

Woody Allen once said "90% of success is showing up," but what's true for entrepreneurs is that 90% of success is following through.

The Great American Pitchfest: Q &A with founder, Signe Olynyk

2013-04-23T09:36:21-04:00

Most industries have been completely transformed by the internet. Where at one point, you needed to "know a guy" to get the best plumber or brakes specialist, there are now sites like Homestars and Gigpark. If you needed to reach out to a huge company to raise a complaint, you needed to do a lot of research. Now, a 10-second search will yield you not only the company's contact info, but the information of several executives who can help you with your question.

But there's still one industry which hasn't been made more open because of the web: show business.

This comes down to two reasons: firstly, content creators have naturally been worried about potential losses from the internet, so it's not always a favoured method of doing business. Secondly, the way business has been done in the past in the entertainment industry (just like venture capital) is by personal introductions. You still have to know a guy.

Signe Olynyk was a producer who saw the need to get "the guys" into rooms with new writers. She saw incredible upside for both parties: It allowed writers to up their pitching game, and get comfortable with the protocol of pitching, but for the studios and agents, they had access to a new stream of talent, and fresh ideas, and when you trade in ideas, being ahead of your competition is a powerful draw.

Karen: Where did the idea for Pitchfest come from?

Signe: The idea for the Great American PitchFest was born out of frustration, and a feeling that writers were being taken advantage of. I was in line at another event, waiting to sign up for pitches. It was an extremely long, disorganized, and arduous process that left everyone involved very unhappy. Everyone there was a writer with a script who wanted access to industry execs, and the idea behind that was a good one. But it wasn't being executed well. It was at some point during the many hours I was waiting in that line that I thought, "someone should do this in Canada, and do it better." And then, after doing the first one in Canada, I thought "someone should do this in the US and do it better than it is being done." That's how it became a Canadian and a US event.

Karen: Some would say that being a writer is the ultimate entrepreneurial experience, since, to start, everything is on spec, and you're constantly pitching. What can writers teach entrepreneurs? What can entrepreneurs teach writers?

Signe: Wow. Great question. When you are a writer, you need to be a creative thinker. You also need to be able to organize those thoughts, communicate them clearly on the page, and then market your work, sometimes self-publish and distribute it yourself, network with others, and pitch yourself and your writing through every step of the process. As a creative being, you have to constantly think of new ways to not only create great, original work, but also in how to reach your fans, your audiences, and ultimately, the buyers of your work. To be a writer is to be an entrepreneur, and vice versa. You must have, or develop, the skills to be both.

Karen: Why did you choose to disrupt an industry which is extremely analog (you need to make many connections to be successful)?

Signe: My only reasons for starting the pitchfest were because I wanted to help others to get their films and tv shows off the ground. I had already been writing and producing for a few years, but I was frustrated by the process and wanted to help make it a little bit easier for others to do what I was also trying to do. I didn't have any connections in Los Angeles when I started this, but I picked up the phone and started emailing people, and made those connections. It's like that with any business. You need to make connections for you and your business to grow.

Karen: How did you originally pitch this new method to decision makers?

Signe: If you are in the film and television business, you are familiar with pitching. Since the industry was already familiar with the process, and had only experienced the disorganized and less professional versions of pitching events, it was really just a matter of doing it right. For example, other events didn't give maps or directions to execs, or provide parking. They didn't have coffee or schedule breaks. The execs were promised payments, but then had to chase organizers to fulfill their commitments. Perhaps the biggest thing we had to overcome was the reputation of other pitching events, but once execs gave our event a try, it essentially raised the bar for all pitching events. Those execs then told other execs, and word spread. We have never had a problem with executives wanting to attend our event. Our word of mouth for executives and for the delegates who attend is our biggest and best advertising.

Karen: Did you have a lot of push back in the beginning?

Signe: I think there was some mistrust initially, but that was before people experienced it. The writers who attend, the executives who hear pitches, the guest speakers, panelists and special guests all have a tremendous experience, and many come back each year. We have always approached this event as 'what would we want' as writers, and essentially, we created an event that we wanted to go to. We feel we provide an important service for the writing community that we are part of.

Karen: How did you know the Pitchfest was successful?

Signe: Success to me is measured by the overwhelming appreciation that the people who experience our event express to me and my team. I constantly run into people at airports and film festivals, and they gush about what the event means to them. Executives tell me about writers who they hire for projects that they met at our event. Writers whose scripts are optioned after pitching to execs at the pitchfest. Agents and Managers who sign writers who pitched to them at the pitchfest. At each event, there are 500 writers and 120 execs. With each meeting being approximately five minutes in length, there are literally thousands of meetings that occur in just a few hours. Those thousands of meetings result in relationships, and those relationships are crucial to building a career. We know what it is like to have dreams of having our movie and tv scripts produced because those are dreams we share with our attendees. We take those dreams very seriously.

Karen: What was your biggest obstacle along the way? Your biggest lesson?

Signe: The biggest lesson I learned about Hollywood is about trying to identify who is 'real'. There is so much talk in this business, and one day, I started to notice that the people who were telling me about big deals for their projects were still telling those same stories two years later. They weren't progressing, and they had a tendency to cling to the excitement of their 'old news' because their projects weren't really going anywhere. Yet, their stories made it all sound so promising and exciting, as if they were right on the verge of major studio success. I came to learn that many people in this industry are happy to live on that cusp, and really, they are more excited about being on the periphery of the business than they are in actually doing the hard work of being in the business and getting their movies made.

Karen: What advice would you give to first-time entrepreneurs?

Signe: Doing what I do takes everything I've got, and it has to also become a big part of your lifestyle. If you have a business that you feel that passionate about, go for it. But if you can develop a business that also gives you more of a balance so you can also enjoy and experience your life, and make a decent living at, you owe it to yourself and your loved ones to do that instead.

Karen: What pitching advice have you learned along the way?

Signe: Pitching is something that intimidates so many of us, but in actuality, it is something most of us do every day without realizing it. When you go to a job interview, you are pitching yourself. When you convince your friends to see the latest Val Kilmer movie, you are pitching. When your kids barter with you to stay up late or do their homework later, well, they are pitching you. It is a necessary skill to get what you want, and to effectively communicate with others. Pitching is conversational, and it is always about building a relationship. Selling is a secondary goal. Always.

Karen: What else would you like people to know about the Pitchfest?

Signe: The Great American PitchFest is celebrating ten years of helping to connect writers and executives. It is the only event run by writers for writers, and we are very proud of the work we put into this event. We do it because we care about other writers, and we feel we make a difference. We provide a valuable service to the community that we are very proud to be part of, including dozens of excellent free classes on screenwriting, how to break in, how to pitch, how to write a screenplay, etc. Your readers can learn more at www.pitchfest.com or by emailing me directly with any questions at info@pitchfest.com.

Your Start-Up Business: Behind the Scenes of Dragon's Den

2013-04-02T17:00:12-04:00

This week, I spoke with an entrepreneur who has achieved the Canadian Dream. In 2010, Barb Stegemann walked onto a soundstage on the 10th floor of the CBC building in Toronto to pitch her business: a perfume company which sourced its ingredients from Afghanistan. It was an idea which confused many of the Dragons, one of whom, Kevin O'Leary, didn't even give Barb the time of day.

But, Barb secured an investment from W. Brett Wilson, and she has been full-steam ahead on The 7 Virtues, ever since.

Karen: I interviewed Dragon Bruce Croxon earlier this year, and he was very clear to point out there is a different reality to the 7 minutes you see on screen. Talk to me about what it's like in the run up to the show actually airing.

Barb: Bruce is right! A whole lot of work happens between the day you film and the day it airs! As soon as you tape, if you get a deal then the due diligence begins and it's intense. The Dragon Investors want to know you are what you said you were during taping.

Passing due diligence was the easy part for me. Not telling my friends for the nine months between taping and airing was the hardest thing I ever had to do! It was killing me not to tell my friends. Everyone knew I went on the Den. Then they wanted to know how I did. And I wasn't allowed to say! But it was so important not to say a word for the effect when it aired. It paid off!

It's really tough too when you are going to W. Brett Wilson's Garden party (well the party is not tough, best party of the year) but your kids are wondering why you are heading to Brett's house across the country and they can't tell anyone. My kids think Brett is the coolest and they are right. My son and his friends did a launch of our Middle East Peace fragrance with him and we did photos and Brett drew moustaches all over their faces on their photos. So like guys, they banter back and forth and now they want me to take them to Calgary to see his cars.

Karen: Everyone's curious about what happens after the Den. In your case, you made a deal. Can you talk about what happened next?

Barb: A lot goes on behind the scenes. I was seeking a mentor. At the end of our clip, when they asked if we had a deal, I said, "Do I get your wisdom and counsel?" And Brett said, "You'll have a hard time ignoring us!" He was right. He became my dream mentor immediately. He had me booked to present in front of groups within 24 hours.

He and his team at Prairie Merchant gave me their undivided attention. His VP Dave Waslen spent hours on the phone hours after taping. So I went with Brett as my investor. He has grown into my mentor and friend. He pushes me and challenges me and we share the same philosophy of economic empowerment. He also got me connected with my speakers' bureau, Speaker's Spotlight. Here is the coolest part, we bring The Hudson's Bay stores to my talks and they set up a "pop up" store and our retailer sells hundreds of bottles of fragrance. It's a whole new way to do retail. So I may not be a giant company, but I bring new things to the table and get to really know our retail partners.

Karen: You received some additional awards and notoriety soon after closing your deal. How did that come about?

Barb: I had been giving talks with my book, The 7 Virtues of a Philosopher Queen for a couple of years before the fragrance launch. Then I spoke on the 100th anniversary of International Women's Day at 14 Wing Greenwood, Canadian Forces Base. I shared the message that we as citizens and businesses must not expect government and military to do all of the heavy lifting alone.

I shared that I am on a mission to see a cavalry of businesses coming to do trade with nations rebuilding. When a farmer can buy books and shoes for his children in Afghanstan or Haiti or the Middle East because of the essential oils we purchase, then his children won't be taken by oppressors who promise literacy and deliver nothing but oppression to people who just want an education and economic freedom.

After my talk, the Commanding Officer asked me to be the first female Honorary Colonel for their base. As the first woman to land a deal on CBC's Dragons' Den from Atlantic Canada it's really important for me to remain in my community to prove it can be done. We can be the change. It was an honour to win the WXN Top 100 Most Powerful Women in Canada, especially since I was born with a hearing impairment and raised in humble roots, many years on welfare when we were young in rural Nova Scotia.

Our fragrance line won Chatelaine Beauty 100 Award, ranked top five fragrances in Canada! That was big. It meant we went beyond this great story and are now officially a stand alone exquisite fragrance. This year I was the only woman on the stage (out of 8 winners) to receive the Ernst & Young Entrepreneur of the Year Award in Atlantic Canada. And as a result my son will study at Ashridge School of business this summer in London, England! The program is for children of the EYA winners! How cool is that! And it was an honour to be named Top 30 Cool & Fabulous Canadian Entrepreneurs by Profit Magazine this past year.

Karen: What was the biggest surprise after securing your investment?

Barb: You have to move fast -- going from a few boutiques to 90 stores at The Hudson's Bay across Canada was rapid growth, but you really have to grow big otherwise you will never move the volume investors expect. So life changed overnight. Life became so busy I could not take the time required to drive to the gym and had to create a mini gym in the room beside my office so that I can get my run and weights in. Health is my priority when working this hard, you really learn to streamline your day to get everything you need in. I still get everything I need done, there is just no time wastage.

Karen: How hands-on is W. Brett Wilson?

Barb: Brett is incredibly hands-on I talk to him about everything from design on the fragrance packaging to expansion. He is a true mentor. He believes in me and I look up to him and have the greatest respect for his mind (and heart). He is so brilliant (and generous!). I stay at his home if I am in Calgary and he generously comes and shares the stage with me when I speak in his community.

We get a standing ovations together -- I think it's the chemistry. We joke around a lot. I get his humour. We can say anything to one another. Our retailers LOVE him. The Hudson's Bay team, Lord & Taylor and Air Canada Duty free all love how involved he is and they find him adorable. My daughter is 13 and she thinks it's pretty cool for her mom to have a mentor in business like Brett Wilson! It shows my kids that women can do anything with mentors. Brett and I always joke that out of the over 20 companies he has incubating, I am the loudest baby in the nursery with the red cheeks and the tears and my hands outstretched saying, "love me!"

Karen: 2 years on, how has your company changed? Is it the company you envisioned when you pitched it?

Barb: The 7 Virtues is really on a wild ride. And yet, we have followed the business plan I wrote. So in a sense it was all mapped out and planned. This is one of the most competitive industries with only four major companies running the fragrance industry. And yet, our little company is the #2 selling fragrance on Air Canada Duty free. Our fragrances rank in the top 50 per cent of the 125 prestige brands at The Hudson's Bay consistently, often in the top 10! Our highest was in January, we made #6 top selling fragrance. I told Shelley Rozenwald, the Chief Beauty Adventurer that we will make #1 one day! That's my goal, to be the #1 selling fragrance at The Hudson's Bay (even just for one week!)

The company is up against titans with huge advertising budgets that have been around for over half a century. The 7 Virtues is a new collection that is really an indie niche brand and yet it's out there in the commercial retail world competing with launch budgets in the millions. We boot strap it! Early days are all about pumping revenue back into production to make that next remarkable fragrance and story. So I live off of my book sales as I did before the fragrances and am able to use my skills as a journalist to share our story of economic empowerment. Leveraging everything we have to compete.

Karen: What's the biggest misconception about being funded?

Barb: I think people think you have to give away the farm. You don't. Brett invested $75,000 and got 15 per cent of my company. I think that was reasonable on both sides. We both won and I remain the majority shareholder.

Karen: What have you learned about business in the 2 years you've been working on the 7 virtues?

Barb: I have learned that mentorship is key. Build friendships with your suppliers and retailers. They become family. Follow your gut. Do your homework. Be passionate. You don't need to know everything. But you do have to be fearless and you do have to make a product so extraordinary that people can't do without it. Our fragrances are paraben free, phthalate free, vegan and made with essential oils that empower so they are good for the world and good for your skin. We have been dubbed the fragrance you can wear to work because our fragrances don't walk in the room ahead of you, they are light. I love when women tell me this is the first bottle of fragrance they have purchased in 15 years and they can wear The 7 Virtues. That makes me really happy. We are filling a need.

Karen: Any advice for those who want to go on the Dragon's Den, or who are seeking funding?

Barb: DO IT! Go and meet with venture capitalists in your community and practice on them first. I did! I met with an Angel Investment group and with Mickey MacDonald, considered to be the wisest person in retail in our community! Their wisdom and valuation gave me confidence. My company was only two months old! So there are things you can do to win! Just do your homework.

Karen: What else do you want people to know about The 7 Virtues?

Barb: It was an honour to be made the first woman to land a deal on Dragons' Den from Atlantic Canada. Then to go on and be named Top Game Changer in the history of the show for making a social impact in communities with our buying power was really a turning point. When Jim Treliving surprised me with a Ford Fusion (aired in Dec) for winning top Game Changer I was so touched, I cried. It's really wonderful to remain close with Jim and Arlene too. Arlene and I are both Honorary Colonels and we have shared the stage speaking.

I also like that our company is debunking old ideas and myths around capitalism and what it looks like. Two weeks ago I traveled to Haiti as a guest of President Clinton and the Clinton Foundation because of my work in doing trade with suppliers in Haiti. I know my business is not Kevin O'Leary's idea of capitalism, but I'll take President Clinton's idea of socially responsible capitalism any day over O'Leary's. There is room in the market for both of us.

I want all socially conscious entrepreneurs to know you don't have to be only about the money. You can make a difference and change lives of others while making money. I was awarded the Women's Innovator Award at the APEC Women and the Economy Summit for my business model. It was hosted by Hillary Clinton. We won because of our business model where the farmer makes money, the supplier makes money, the retailer makes money and we make money is what our global village needs right now. Everyone makes money. No one makes all the money.

You Can Bootstrap Your Start-Up: Tips from EventMobi

2013-03-26T15:14:06-04:00

My company, Shyndyg, is a bootstrapped start-up, and we've always noticed when we tell people we're bootstrapped, the reaction is almost one of pity. It's not always an option for every company, but there are distinct advantages to being a bootstrapped start-up: freedom, the ability to easily pivot or test business models without asking permission, and being completely removed from the "House of Cards"-esque roller coaster of always fundraising.

This week, I spoke to Bob Vaez, Co-Founder and CTO of EventMobi, a software which helps organize large events for corporations.

Karen: Walk us through your discovery process of creating your product. How did EventMobi come to be.

EventMobi came about in early 2009 after four other previous startup failures, and at a time when we realized we were on the brink of what would become the "mobile revolution."

I was previously working at Nvidia as a Product Engineer in the mobile chipset division when our CEO announced that our department -- building chips for future cell phones -- would be responsible for a significant portion of the company's revenues in just a few years. Hearing this and having just bought the very first iPhone (pre-app store) I knew I needed to be a part of this revolution.

I was playing around with a few ideas at the time but EventMobi made the most sense and seemed like the simplest idea to validate. I used to attend quite a few trade shows and really loved being at conferences but it was a pain carrying around bulky show guides, tote bags full of useless paper, and the inability to view my schedule on my phone. Our idea was to simply turn paper brochures and guidebooks at events into an interactive mobile experience.

Karen: You bootstrapped your company for a long one (presumably taking the profits and reinvesting them.) why did you make that decision?

Bob: It's easy to answer this question knowing things worked out for us bootstrapping, but at the time it was a really tough decision. Ultimately though, I truly believed my time was, and still is for that matter, better spent working with our clients than pitching to VCs. Raising money takes a lot of effort, time, and energy and it is almost impossible to raise funding at the idea stage of a company, especially if you are not going after the mass market. So we just focused on getting our basic product up and running, and we were lucky to have early paying customers to help keep us afloat.

We originally had a very humble vision for EventMobi. We thought we would stay as a small consulting company of 4-6 people in Silicon Valley and just churn out apps for clients. So raising money early on never really made sense. Being engineers, though, we quickly got tired of this repetitive and inefficient cycle of building a new app for each client.

We decided to automate this process and build a platform that would create these apps for us. We called it EventMobi. Another upside to this was that it created a much better experience for our clients, who were generally non-techie event planners, by giving them the power to create their own custom mobile event apps in a matter of minutes.

Building a product however is very different than consulting and we knew we had to staff up quickly and raise funding. And so to kick things off, I made the initial investment with my savings and by cashing in all of my RRSP and 401k retirement saving plans.

So we set clear milestones we needed to hit to keep going in terms of free trials, paid clients, and product development. Miraculously, as we neared every milestone and had pretty much run out of cash, we would get new paying clients to fund the next few months. So the question became, should we go out there and pitch to VCs, or spend that time focusing on our clients and growing the business? We chose the latter and I like to think our existence was decided by our clients' satisfaction; they were the ones that were funding us! I also strongly believe that this organic growth defined our culture around customer service and made us a stronger company.

It was definitely a long and bumpy road but we stuck it out. You need to have some thick skin to run a bootstrapped company month after month! We (the founders) didn't take salary for over two years and even now, we barely pay ourselves much. Every time we can do so, we always choose to grow the business instead of rewarding ourselves. We didn't start the company with an exit plan in mind but rather, to create an awesome company we would love to work in for years to come. There's a bigger picture here we're trying to achieve and now we're in complete control of our own destiny.

Karen: Did you follow Lean Startup principles? What did your first year look like?

Bob: Although we weren't aware of the 'Lean Startup' at the time, we definitely learned from our previous startup failures and applied these principles heavily. In fact sometimes lack of resources nurtures ingenuity, risk taking, and discipline. To stay lean, we focused on simplicity and building the product fast, taking it out for a spin and bringing it back with feedback from the street to build the next iteration. Nothing was constant in our company and we learned a lot by failure and trying different approaches.

We didn't make a single dollar in our first year and it was full of ups and downs, rejections, and hustling. Our first pitch was a simple PowerPoint presentation with screenshots. They loved the idea and we had just 30 days to build it and test the app live at their event! It was an amazingly intense period to get something running and while we missed the deadline, we developed a working prototype and ended up taking it to the event just to show people what we built and to gather feedback. We did this at two others events and got amazing feedback from attendees, event planners and their exhibitors. This gave me the validation I needed to quit my job, drop my MBA, and move from Silicon Valley back to Toronto to save money and ramp up the business.

Unfortunately as I decided to focus full time on EventMobi, one of our technical co-founders left us, as he wasn't able to manage the risk of the startup life along with his family obligations. It was a huge risk and none of us knew what was going to happen and how fast the product would be adopted by customers. The next eight months were filled with weekend hackathons with my brother Bijan who became the lead technical co-founder and a buddy of his from university. The first year was filled with tons of rejections and the daily fear of failure followed by surges in excitement and an optimistic future; it went back and forth like that for a while.

Karen: How did you get your first big client? What lessons did you learn from that experience?

Bob: It was around our one-year anniversary and we had a simple product page launched, a mention in an industry publication, and a few clients under our belt, our eventual first big client reached out to us with very specific needs. Not wanting to pass up on the opportunity, we worked closely with them to build out a product that would help solve their problems, knowing well that if we played this smartly, 90% of whatever we built was reusable for other clients in the future. Our dev team was feverishly trying to get as much built as we could to not disappoint them and this push would ultimately lead to us building out a majority of the base of what EventMobi is today.

And even though our growth and leads came primarily through online queries, our success early on was because we got in front of our clients and met them face-to-face at industry events. We talked to them about what their problems were, we discussed solutions, and through that, our team learned exactly what needed to be done. A good first big client is not the one you make a lot of money from, but one that turns into a collaborator to help define the product details, and respects you enough to become your biggest fan and advocate.

This was also how we got the word out. No marketing campaigns or pushy sales, we acted as a source of information, we built credibility, and always delivered more value than what our clients were expecting.

Karen: What was one thing you weren't prepared for?

Bob: With my previous failing startups and a lack of funding, I was always very cautious of premature growth. Our revenue was unpredictable the first 2 years so I was never sure if we had made it or not. After 2 years, our growth stabilized and in retrospect, I grew the sales and marketing team too late to take advantage of the mobile rush in the events industry. I don't regret any decisions though. Expanding a sales team too early can be disastrous, so it was better for us to stay on the safe side.

In hindsight this worked out beautifully. Having a small team of Account Managers who took the client from sales through support meant everyone at the company got valuable exposure to industry professionals. This way we were able to build quality relationships and expand our client base organically. We weren't prepared for the growth to come but we definitely made it work to our advantage in the long run.

Karen: What was your biggest (positive) surprise?

Bob: You don't need a seasoned sales pro or marketing guru to get your product into the hands of potential clients. We were a team of stereotypical engineers but we knew that if this project was going to turn into a business, we would have to hit the pavement and pick up the phone.

What counted most was passion for our product and devotion to our clients. We kept our product extremely lean. We didn't have any nice-to-have features and to be honest we were missing a few must-haves but we compensated by going above and beyond to make sure our clients were successful. Passion shines through, and our customers could feel it.

Karen: Did you learn lessons about spending while you bootstrapped? What did you overspend/underspend on?

Bob: We were, to say the least, extremely frugal from day one. Spending money and time on the right things at the right time was a challenge and still is. Early on, we didn't devote much on operations and our sales would have improved if we hired a bigger team in the second year. As well, a seasoned graphic designer would have helped build the company's image early on. We ended up doing it ourselves and had to go through multiple revisions later on to refine our brand.

Early on, most of our resources went towards travel and events and while I look back at the amount of money spent, I don't regret the investment. It built our brand and established us a real player in the industry. Could it have been done more effectively? Perhaps.

Karen: What's the hardest part of your job now vs 3 years ago?

Bob: Hiring... I'm picky.

Three years ago, hiring was a challenge because we didn't have any money. Now it's difficult because we want to hire the best talent but at the same time, attitude and team fit are essential. As a growing startup, time becomes your most valuable resource and delegation becomes the best internal management strategy. So finding people who take initiative, add value, and are willing to learn every single day are the kind of people we look for. It's difficult but when you put together the right team, it pays off quickly.

Karen: What advice would you give to those starting out now where you were 3 years ago?

Bob: Get out there and try it. Forget the books, startup events, and "serial entrepreneur" blogs and just get out there. Get in front of your customers, talk to them, and show them how you can solve their problems with your product. Don't worry if your product is not perfect, after you talk to your customers, you'll learn everything your product is missing. Also, everyone in the company should know how to sell and support clients. Above all else, in the early days nothing is more important than strong relationships and focusing on client satisfaction. Happy clientele and word of mouth has a much higher conversion rate than a pretty landing page, especially when you are a small startup and no one knows who you are.

What's next for EventMobi?

Bob: We have options, all of which are being explored. We have a team nearing 25 now, and alongside our Toronto headquarters, we have opened offices in Berlin and Virginia to help aid our global expansion supporting 1500+ clients in 25 countries. Our approach to event technology is all about ease and simplicity for event planners. This strategy has worked brilliantly and we'll continue to introduce new tools to make our customers' lives easier when it comes to technology.

The world of online, mobile and cloud technology is also constantly advancing and we must continue to innovate to stay ahead of the game. As we become more profitable, we are dedicating a larger portion of our profits to engineering R&D and encouraging the whole team to question the status quo and take the same crazy risks we took three years ago that got us here.

We should talk in a year's time to see where EventMobi is at that point. We don't know where this ride will take us.

Karen: Any other advice to other founders?

Bob: There's a lot of noise in the startup world when it comes to who has raised funding or how many users they have or how much their company is worth. It seems as though cashing out or raising financing is considered "success" these days, over building a strong base and focusing on long term organic growth.

Growing your company, the decision to bootstrap or to raise funding is not an easy one. Take it step by step and know that it will require persistence and hard work to succeed either way! You need to be aware of sacrifices you have to make if you decide to bootstrap your company. Sometimes getting financial backing is the best way to go if you are unable to execute your business plan quickly, other times you're better off taking it slow and steady by bootstrapping your company. But if you are itching to make that idea in your head a reality, the worst thing you can do is think money will solve all your problems! Get out in front of clients, find passionate co-founders, and never compromise when hiring.

CORRECTION: A previous version of this blog stated that Bijan Vaez was interviewed for this piece. It was, in fact, his brother and co-founder, Bob.

Your Start-Up Business: Mixing Up the Business Model

2013-03-13T08:27:03-04:00

I first saw Robbie Whiting in 2012 at South by Southwest, where he gave a daring presentation on the death of the advertising agency model. At the time, he was Director of Creative Technology at Duncan/Channon, an agency which has applied a unique approach to attracting new business: Making things.

Robbie is an early adopter, and evangelist of the Maker Movement, a group of people who build anything and everything just to see if they can.

Robbie recently, with several partners who are legendary in the advertising scene, launched his own agency:Argonaut. Argonaut has a particular approach to courting business: courting the individuals who share the Argonaut philosophy, and the accounts follow.

Karen: Last year at SXSW, you made a presentation on how the agency model is dying, and how it is in great need of disruption. Do you still feel the same way?

Robbie: Yes. Digital has transformed the way brands interact with audiences, but also the way agencies function. For a long time, we've been obsessed with how digital has changed what we need to make, but very few agencies were challenging how we make things. That making process itself is something that has been completely disrupted from this linear model of strategy, creative, and production, to now, where making is a fundamental part of the creative strategic process.

Karen: Do you think the agency billing model in the digital age puts agencies at a disadvantage, because the onus is on billable hours?

Robbie: That's a real problem that we're facing right now. "How do agencies get paid for the value they bring?" I think the old model of simply churning out hours puts you at odds with getting to the solutions faster, which is really what agile is about. I think that's what we're all trying to figure out, what agility means in terms of how we charge for what we do. It's less about billable hours, and more about getting paid for value.

Karen: You're a proponent of Maker culture. How important is maker culture to businesses who want to innovate and lead?

Robbie: It is absolutely fundamental. Making is the heart of creativity. Making is thinking. Making is problem solving. We're in a three and often four dimensional medium. Advertising isn't just about putting words and pictures together. It's about putting together systems and applications, and to get to those things faster, you have to start making. Sometimes the entire creative process is making. Current advertising agencies don't have good systems for getting makers involved in the upfront creative, strategic process. There's a lot of talk on the back end about development and prototyping, but the idea of a collaboration model upfront with makers at the table is one that we hope to achieve.

Karen: You worked at an agency before which had a pretty defined approach to making. (Duncan/Channon has a record label and a bar, among other tangible items the agency has made.) Are you taking the best bits from your previous agency, and carrying them forward?

Robbie: Duncan/Channon was an agency which was very much about "If you can dream it, build it." Tapping into people's passions, and giving them license to do that is the essence of Argonaut. You are encouraged to "do." Your value is what you bring to the table, and what you do. We have a culture where if we wanted to, we could create a coffee shop if we really felt passionate about it. That comes from a maker's spirit. For me, tapping into the next generation of makers is going to be the salvation of this industry. The maker program at Duncan/Channon was all about getting people who wouldn't necessarily consider a career in advertising to whet their appetite by offering them an opportunity to come and work in our industry. It was very successful. We had a great run. We plan to implement something similar here at Argonaut.

Karen: When you work for an agency which has very few rules, and you are in a senior position, most people would take the safe bet. What made you decide to take the leap to start your own agency?

Robbie: There was no other option for me. I couldn't continue to be part of a system where I couldn't be in charge of a radical transformation. That's the maker in me. This agency fulfils a big part of my drive as a maker. I'm a junkie for adventure. There's definitely a feeling of "this is a great unknown." We all came from pretty respected positions in the industry, and to jump into something where we're rewriting the rules can be a little scary, but it's what we signed up for.

Karen: How do you feel about what has been described as "the intrapreneur's dilemma": people who are cutting edge and innovative, but exist within large corporations with heavy processes and entropy. Do you think there's hope for them?

Robbie: It all follows the money. As agencies see that it's in their best interests to begin to take more seriously different ways of working, whereby they collaborate with different types of people, you'll see a shift. We want to be on the forefront of that shift. All over North America, this movement exists in agencies, and it's being led from the bottom up. To me, it's a giant tidal wave waiting to happen.

Karen: So, how does Argonaut incorporate these ideas? How are you different?

Robbie: Argonaut is about making beautiful, useful things in a different way. Agility is at the core of what we do. We don't sacrifice the artistry and the craftsmanship that comes with these things. What we set out to do was to target the types of people we want to work with. Ultimately, the greatest work and the most effective work in the industry right now is being led by clients who know what they want. For us, it has been putting together a list of people we'd like to work with. We have to be more agile. We have to have a system which allows us to get to the right answers faster. Ultimately, our work isn't just going to be measured on its artistic merit, but also on its business merit. The world of data we're entering now as an agency is something we're really excited about, because we don't think enough people are harnessing the right types of data to make the work effective. It's agility and artistry, but tied to real performance.

Karen: You've worked with start-ups, and you've started quite a few yourself. How does a product-focused start-up differ from a service start-up?

Robbie: My experience in making products has prepared me for building our product (the agency.) A lot of things that go into developing a product go into developing our agency. Rapid prototyping, of collaboration models and structures, or an e-commerce engine, it's a lot of the same skills.

Karen: As more agencies adopt your type of model, do you see the end of the sizzle reel and the agency deck pitch?

Robbie: Absolutely, and it's going to come from clients. Clients are going to start demanding these ways of working. One of the advantages Argonaut will have is we've planned and worked this way since day one. Other agencies will have to turn a very giant ship. One thing that has always bothered me about big agencies is there's a lot of lip service paid to this way of working, but fundamentally, culturally, and financially, agencies aren't prepared to take these kinds of steps. As the world moves from gigantic, AOR contracts to more roster-based, project-based models, we'll be right there.

Karen: There's a lot of focus on building companies "culture first" right now. As Argonaut scales, will you be looking to hire for cultural fit, or more traditionally (Account Director, Copywriter. Etc.?)

Robbie: We decided from day one that culture is paramount. The interesting thing about culture is that you don't dictate it. Culture happens everybody lives and breathes that way. We purposely created a company where there are no departments, and no hierarchy. It's very flat that way. There will probably be some very diverse folks here. We're looking for multitalented makers.

Karen: What advice would you give to someone who is looking to follow your lead, and start their own business?

Robbie: Wherever you are in this process, you can fight this battle. You can start making, like I did, on the side. The best piece of advice I can give, though is to learn a programming language. To understand what can be accomplished digitally is a very empowering thing.

Gary Vaynerchuk on What Investors Get Wrong

2013-03-05T16:25:43-05:00

In January, we looked at different ways to fund a start up. We talked to people on all sides of this subject, from investors, to governmental agencies, to founders who funded in unique ways.

For those who are interested in Angel investment or a VC round, there is a lot of contradictory information. Some founders say Angels and VCs simply are unreachable. Other founders have broken through with seemingly no contacts.

Recently, I talked with Gary Vaynerchuk of WineLibrary and Vaynermedia about his experiences building his businesses, and also investing in some of the best known tech companies.

Karen: When you started taking over WineLibrary, you looked at it as a start up, even through it was an established family business. What made you take the business in a different direction?

Gary: When I was a senior in high school I started thinking about it, and I asked my dad to come up with discount codes. We started doing direct mail. I wanted to be on the offensive.

When we launched the WineLibrary website in 1996, I didn't even own a computer yet. I just understood that there was an opportunity here to market in a different way.

Karen: While you were building WineLibrary, you were often an early adopter of technology. Why did you go into social networks which were still new?

Gary: In 1996, we went dot com, which was super early for a local liquor store. In 1998, I'm doing e-mail marketing, which was super early, and we did it in a big way. In 1999, I'm doing Google AdWords, SEO/SEM. In 2003, I'm reaching out to bloggers, putting up banner ads or asking for advertorial placements. It all crescendos in 2005 when video hit, with Youtube, and I jumped all in. 2006, I started WineLibrary TV. To build WineLibrary TV, I started using Facebook, Tumblr, and Twitter in 2008.

Here's how I work: It's 2013, and most marketers are operating like it's 2009. I'm always trying to market like it's 2015, but not like it's 2020. A lot of my contemporaries who understand where the world is going, go too far out, and aren't practical. I have always prided myself on being visionary, with a heavy practicality.

Karen: You segued into actually hearing pitches and investing in companies early in their product development. Why become an investor?

Gary: It was a way to scale. The first thing I ever invested in was Twitter. Blaine Cook, former CTO was leaving the company and asked me if I wanted to buy his stock. After that, I invested in Tumblr. I really believed in Tumblr. I thought it was disrupting Wordpress. Around that same time, I bought Facebook stock from Zuck's parents. All of those investments got really hot, and they got bigger and bigger. In order to scale this, it just seemed like Angel Investment seemed right. I got involved with companies like Buddy Media and Wildfire. That really paid off for me. I had worked with both companies through Vaynermedia and I knew they would be successful, and they were two very good exits for me last year.

Karen: What have you learned from both sides of the spectrum (being a start-up business owner to investor)?

Gary: I really sucked at investing after those first three. It took me about a year to realise I was looking at it through the wrong lens. I looked at it as if I was running the businesses. Not everyone is a skilled operator. What I learned was to invest in the people, not necessarily the idea.

In my own business, what I've learned is that no matter the idea, if you don't have buy in from up, down, left, and right, when you're not in control, you can't get things executed. So, I'm spending a lot of time getting things executed right now. Before, I didn't rely so much on "being Gary V" to get ideas sold through, but that's happening more now.

Karen: What are your primary criteria for choosing to invest now?

Gary: For me, my gut is grounded in two things: One, the personality of the person, so that even if something happens, they'll make chicken salad out of chicken shit. Two: Are they building something I understand, and can bring value to. Marketing to brands, eCommerce, Wine, the food space. Those are the places I know inside and out, and I bring real value.

Karen: Has that changed from when you started?

Gary: Yes. It's 80% about the person now.

Karen: Can you tell me about a time where you learned the most about the perils of start up investing?

Gary: 2 or 3 years ago, I started looking at it more like gambling, and I started rolling the dice. I've become more disciplined. After those first 3 investments, I thought I was really smart, but in reality, I was getting in later in the game, not in the idea phase. I used to throw around an investment on a phone call. It just became reckless.

Karen: Which companies did you wish you had invested in?

Gary: I had a chance to be involved in Foursquare and I missed that chance. Pinterest: I was super close to investing with them. I regret not flying out to meet the team. On the flip side, I'm really glad about how aggressive I was with Path.

Karen: What do you think the impact of Kickstarter-like campaigns will have on traditional VCs?

Gary: As Kickstarter grows, it's ironic that valuations have gone down, not up. It has had less of an impact than people may think. I think the long term effect will be there, but it's going to take a full cycle. When normal people start losing their $5,000 often, they're going to stop. It's the same thing that happened with SuperAngel investment. I was part of that crew. In 2005/06, a bunch of us were successful and became angels, and we made a lot of bad decisions.

Karen: What's the biggest mistake VCs are making right now?

Gary: VCs have been slow to react to the fact that people who are 19-24 years old who are driving innovation are more interested in getting investments from people who look like me, and Chris Sacca, and Kevin Rose. It's created a scenario where VCs can't get in early enough to get a big upside. Sandhill Road is just not that cool anymore.

Karen: What's the biggest mistake Angels are making right now?

Gary: Angel investors are just careless. We all made money, and we've just been throwing it around. I don't think our filter process has been strong enough.

Karen: Any advice for companies pitching you or other VCs to increase the chances of success?

Gary: Show a clear understanding of how you're going to make money. Everybody thinks differently. What makes Fred Wilson excited makes Kevin Rose not excited. You need to understand the audience you're going to, and have a very different message for each.

You can see Gary Vaynerchuk next at South by Southwest Interactive

Your Start-Up Business: Life After the Onion

2013-02-13T09:52:35-05:00

Some people just HAVE to create. These people create art, entertainment, provocative writing, or businesses.

This week, I spoke to Baratunde Thurston, who has managed to do all of that and more. Many know Baratunde from his role as Director of Digital for The Onion, where he once made a cameo in a piece about Barack Obama's Billy Carteresque half-brother.

Since then, Thurston has travelled the globe speaking about digital, and recently spoke at South by Southwest on the subject of the political power of comedy (were you expecting something lighter from a Harvard grad?)

Baratunde recently departed satirical newspaper to start, with two Co-Founders, Cultivated Wit. Cultivated Wit is a digital consultancy of sorts, which puts brands in touch with talented writers to create new digital experiences online.

Karen: A lot of people might not understand why you would make the leap from one of the most beloved places on the internet to your own start-up. Can you explain what made you take the leap?

Baratunde: I've been entrepreneurial all of my life. In fact, my first real business was when Windows 3.0 came out, I would work for my mom's friends, making flyers, brochures, because at the time, Word was like Indesign today. I took advantage of the fact that I understood it and they didn't and I did a lot of favours, and some business.

I also sold stuff in High School. I sold waterguns illicitly. That was one of my best businesses. It was a high margin, but risky business. I sold animal shaped water pistols. I also sold verb conjugation tables. I helped my fellow Spanish students with obscure conjugations. All of these businesses in some way took advantage of a digital component. They all made life easier, and they all had some creativity around them.

When I went to college, I thought I would be a computer science major. That didn't happen. I took a few CS classes, and then I became a philosophy major. When I left school, I thought I would be a journalist. I had written for our school paper. I thought I was going to be a teacher; I was going to go to grad school. Instead, I went into a tech-oriented consulting business in Boston. It was focused on telecoms and the internet.

I left that job after a year to start a business. That was my first adult foray into the world of entrepreneurship, and it was a miserable failure. I started it with 2 friends. I was just out of college, and they were still there. We decided to start a venture capital company. In the summer of 2000, which was the worst possible time for young people to do such a thing, because that is when the bubble burst. On the first day, one of my partners quit. We were scrimping. I took on a ton of debt to try to finance it. I learned a lot, but a year later, I went back to the consulting world.

My job at the Onion involved a lot of creativity as well as tech and I learned a lot while I was there. I learned how to build things. I learned how to assemble and manage teams. I learned how to experiment. We built fake businesses for SXSW. We live hate-tweeted the Twilight movies. We tried anything and anything to build the audience and engagement for the Onion.

The origin of Cultivated Wit is born out of all of those experiences. The heart of it is this intersection of digital opportunities and creativity.

Karen: Your keynote at South by Southwest focused on the politically transformative power of comedy. It seems like that has directly informed Cultivated Wit. Would you agree?

Baratunde: Absolutely. Humour is a great gateway to our humanity. It reminds us that we're people, that we have emotions, and a language that we can use to connect to each other across lines, whether they are political, or cultural. I wouldn't say the business is purely political, but using what we've learned to push those buttons on people and open their minds a little.

I'll give you one example: I wrote this book (How to be Black) and the way we rolled it out was also very digital. We built a virtual street team, I wrote a lot of the book online using screen sharing technologies, we built a tumblr for the book to have an ongoing conversation with the readers, to have an ongoing conversation with readers.

There's another product we're working on which touches on what you just mentioned which is a location-based racism app. The idea was born out of two things. One was Foursquare, and their local search feature, which they call explore, and using that search to find something you would not like to find in your area: racism!

Another thing was the police's stop and frisk behaviour. It's racial profiling, and targeting youth. Every stop the cops pull off is documented, and publicly available. What if we could build this heatmap, or forecast which allows you to plot these areas of historical police activity, and route yourselves around them in a way that is satirical? We're gauging peoples' interest at locationbasedracism.com

Karen: In the course of interviewing many tech personalities, I've found a lot of them talk the way comedians do about their craft. Since you're both, can you tell us if there are similarities between founders and comedians?

Baratunde: Tech culture and comedy have a lot of similarities, and you see it a lot. Tumblr is that. Animated GIFs, memes, there's an instant flare-up of soapboxes around cultural moment (like binders full of women.)

There are ways of thinking about the iterative process of joke writing for stand up which is about "releasing early and often" which is consistent with start-up mentality, and is a founder's obsession.

It has also become really fashionable lately in tech to do something which stand ups have no choice but to do: listen to your users. There's an obsession with analytics. There's been soft analytics in comedy since it began: It's called "reading the room."

But it goes deeper. Whether you're a founder or comedian, you've got to have some kind of vision. You've got to have focus, and a point of view. You've got to be relevant, and you've got to balance what the audience wants with what you want.

Karen: How important is having the right team?

Baratunde: Our team is really siloed in our skill set. There's not much duplication among us. I think it works best that way.

Karen: Even though you were used to start-ups, tell us about some of the stumbling blocks you've encountered

Baratunde: There's a lot of annoying little things you have to do when you start a business, like paperwork and process, and I hate it. Banking has been a huge headache. Our bank's business accounts don't work with their iPhone app, and it's a huge headache. You have these big ideas, and these grandiose plans, and all of that can be stopped by these dumb things.

We also haven't taken money from anyone. It has been offered, but there's still an open question as to whether we will. There is a cost to that. Not knowing how big this will be, never having dealt with investors and board meetings, there's a different level of pressure and influence on what [Cultivated Wit] could be. It's not just a win to take a cheque from someone. There's definitely a price to be paid for having someone pay you.

We decided to go down the path of self-funding and how we did that was through consulting. The world of consulting is SO SLOW, and so irritating. I consulted before for six years, but didn't have to participate in the politicking and the glad handing.

Karen: How did you know you were on to something?

Baratunde: Probably the success of Comedy Hack Day. We really didn't know if it was going to be so successful. It turned out great, and we're going to make the next one even bigger and better

Karen: What's your advice to others starting out on their own?

Baratunde: Be very clear with your team about expectations; who does what, who's responsible, how credit accrues, right up front. Once you are very clear on everyone's skills, and what they want to do, you will see gaps. You can fill in those gaps with other people.

In a similar spirit, be actively conscious of who you're working with and why. Be willing to change what you're doing. It's not the most original advice, but it's true.

Your Start-Up Business: Accelerating Your Success

2013-01-30T17:46:50-05:00

All January, I've been talking with experts about various ways to fund your company as you grow. Angels and Venture Capital aren't the only ways you can fund and grow your company, though.

Recently, I spoke with Roger Chabra of RHO Ventures and Extreme Startups about his perspective on the state of funding, accelerators, and start-ups in Canada.

Accelerators are like a "Boot Camp" for Start-Ups. You must apply to an accelerator, and you must meet certain requirements (which vary from accelerator to accelerator) to be considered. Once chosen, you are given resources and guidance to get your company to the next level (the resources also vary, but can include development resources, cash, marketing/PR services, and more.)

Accelerators aren't for everyone. If your Founders are seasoned veterans, or need a pure cash influx, you shouldn't apply. For other companies, like Canada's own ShopLocket, the accelerator is the first step toward future success.

Karen: You're involved in both accelerators and venture capital. Can you explain the best case scenarios where someone would successfully seek each?

Roger: In my experience, accelerators are great for first-time founders that may not have worked together in the past. Typically teams with little experience starting and running a startup can benefit the most from the things that a good accelerator provide -- time to work out chemistry with co-founders, pitch practice and honing, access to investors/mentors/lawyers/accountants, coworking spaces and the presence of other competitive teams around them as motivation. All great entrepreneurs had to start somewhere, and I bet a bunch of them wish accelerators were around to help them in the early days of their own startups.

VC, on the other hand, is the right fit for you when you have evidence of a differentiated product which fits in to a massive market opportunity (at least $1 billion) and/or you have a founder/team that has achieved success with a venture scale business in the past. There are many exceptions, but typically most VCs want to back traction and/or teams that have been there and done that before.

Karen: What's the most important thing a company looking to get into an accelerator should know?

Roger: Like anything else in business, you get out what you put in. Nothing will be handed to you. But if you choose the right accelerator, you will have access to a lot of resources including mentors, the program leaders, other teams in the cohort, sponsors, press etc. It's up to you to call on those resources early and often to shape your product, gain early customers and create meaningful traction for your company. You will need to out-hustle the teams in your cohort and compete for the time/attention of busy mentors, executives and investors.

Karen: Others I have interviewed for this column have described experiences of being on the venture capital hunt for up to 18 months. Is that a typical amount of time? How can a company with a need now enhance their chances to getting a deal?

Roger: The best entrepreneurs know that fundraising never stops. It's cliché, but absolutely true, in my experience. Sure, the amount of time an entrepreneur spends on fundraising will ebb and flow based on the milestones and cash needs of the business, but building relationships with investors is a constant activity. In terms of hunting for capital for 18 months, that feels like a long time to me. If you are developing relationships with investors as you formulate your ideas and communicating with them as you execute, you should be able to get feedback from a good sample of potential investors within weeks, not years. If it is taking that long, you need to take a honest look at yourself, your business and/or your approach to finding capital. The best advice I can give is to start conversations with potential investors early. Long before you really need the capital in the bank. In fact, you may find you have more leverage over investors, and even perhaps attract more interest, if you have the conversations when you don't need the money at all.

Karen: How do you feel about the role of movies (The Social Network) TV, (Dragon's Den and Silicon Valley) and the expectation businesses may have approaching venture capitalists?

Roger: Well, thanks to shows like Dragon's Den, my mom finally understands what I do for a living! Well, kind of. Media, movies and television romanticize entrepreneurship on the whole, and I think that is a net positive. In my opinion, it doesn't matter where potential entrepreneurs get the spark, just that they do get inspired to start something of their own, someway and somehow. Of course the downside is that these romance stories tend to gloss over the true challenges of building a successful business, focusing more on the highs than the inevitable lows. Building a business is tough and raising venture capital is also tough. I find most entrepreneurs do have their expectations in check though when I speak with them, despite what the media highlights.

Karen:How easy or hard do you think it is raising venture capital in Canada today?

Roger: It's certainly easier these days than it was a few years ago. There are a number of us, my firm (Rho Canada Ventures) included, who have recently raised new funds and are actively seeking out great founders to partner with.

Karen: What are the biggest trends you have noticed in the last year as they pertain to which companies have secured funding?

Roger: The most important trend in my opinion is that we are seeing more and more Canadian entrepreneurs who truly have global ambitions. They are thinking bigger than entrepreneurs ever have in the past. There are many examples coast to coast, and I can point to many examples within my own portfolio. For instance, Chris Sukornyk from Chango and Hicham Ratnani and Ethan Song from Frank & Oak, have visions to change the world, not just Canada. They understand that to do this, you need to constantly think strategically and you need to acquire customers, raise from the best investors and take on competitors in the Valley, Beijing and London, not just Toronto, Montreal or Vancouver. Outsmart competitors, outhire them and ultimately outflank them for the attention of the public markets or a premium paying acquirer.

At Rho, we've also noticed an increasing trend towards VC's funding first-time entrepreneurs. In fact, some of the best tech companies of our generation were founded by first-time entrepreneurs (e.g. Facebook, Google, Apple). This is true for our portfolio also. First-time founders run some of the best companies we are partnered with. I think if you want to invest in fast-changing sectors such as mobile, consumer services and next generation enterprise software you have no choice but to bet on fresh faces who have fresh ideas. There is so much disruption happening in those markets that existing skill sets and those with track records are disadvantaged in many cases, particularly at the earliest stages of building a startup.

Karen: Once a company is accepted into an accelerator, the 'real work' happens. What, in your experience are companies surprised by when they start at an accelerator?

Roger: Most of the teams I've mentored or worked with at accelerators are first-time teams, meaning they have never founded a startup before and/or they have never worked with their co-founder(s) before. The biggest surprise is usually centered on the need to develop positive founder team chemistry and dynamics. Many founders take for granted that they can work with their partner or that they can navigate daily highs and lows with someone, but that's a tough mandate in any scenario. On top of searching for product/market fit and gaining traction, founders have to deal with working with, and finding a way to succeed with, each other.

Karen: What do companies who have secured their first round need to know?

Roger: Entrepreneurs are pretty sophisticated theses days and that is a great thing. They know a lot about raising venture and what goes along with it. They know what they are getting into. One thing I might emphasize is that no matter how big or small the first round you raise, you need to involve your VCs in your business and communicate both good, indifferent and bad news on a regular schedule. Good VCs know there are ups and downs in a startup. Based on the information you share good VCs will help in situations where they feel they can be helpful and stay the heck out of the situations where they cannot be helpful in. So hopefully you've chosen the right VC partner. Once you have, keep them informed. It will help you build your business and will help you, if and when, it comes time to raise more money.

Karen: How does a funded company keep their investors and advisors happy, even when they hit bumps in the road?

Roger: Simple to say but harder to do in practice -- again I will emphasize to communicate and collaborate in both good times and bad. It's paramount for entrepreneurs to consistently share all types of opportunities, news and challenges with their advisors and board members. Entrepreneurs who only share selective and/or filtered information are destined to quickly lose the support of their partners.

Karen: How does a funded company broach the subject of a secondary round?

Roger: I am a big fan of secondary rounds in order to align everyone's interest in a big exit outcome for a company. First of, I would say it's important to recognize whether your company is a good candidate for a secondary round where founders or early management and investors "take some money off the table." There are exceptions, particularly in frothy markets and when a company has a lot of potential suitors (investors or acquirors), but typically a secondary round is right for companies who are at least at the Series B stage, and more typically, those who are beyond this stage.

The company needs to be significantly de-risked, executing well and everyone needs to feel there is the right makeup of product/team/market opportunity to have a billion-dollar-plus outcome for the company within a few years. From there, like any other major decision in a company it's important to be transparent about your desires with your current investors. If you intend to raise a round with a new investor leading the round, get your current investors on board with the idea first and make sure you target new investors who are comfortable with the idea and have a history of doing secondary rounds. Your existing investors may also be open to a secondary round without having a new lead investor, so that they can increase their ownership position in a company they believe strongly in. Again, communication and openness is the key.

Karen: How important are pitch decks, videos, and other collateral to selling an idea? Can you actually sell an idea from the back of a napkin in this climate in Canada?

Roger: The napkin is dead. In Canada. In New York. And in the Valley. Instead, smart entrepreneurs are building prototypes to take to investor meetings. Show, don't tell. Words to live by for both entrepreneurs and investors.

As for pitch decks, videos etc. -- they are important supporting materials and they have their place. But, ultimately, the team needs to sell their vision verbally and in person over a series of meetings with potential investors. There is no substitute for that.

Karen: Any advice for companies just starting out now about what they can do to increase their chances of getting funding for their business?

Roger: In terms of increasing your chances of getting funded, I would say, first off, make sure you are targeting the right investors for your stage of company. Don't pitch a later stage VC on a seed stage opportunity. Also, make sure to do your homework on the firm and individual you are meeting beforehand. And, tailor your pitch based on this information. You wouldn't walk into a customer meeting without having done your homework and tailoring your pitch to the needs of that individual customer. Personally, I look at meetings with entrepreneurs as a proxy for how they will act in front of customers, partners and when recruiting potential employees. Information is easily available these days and information is power. Use it to your advantage.

Extreme Startups is currently accepting applications for its third cohort. The deadline to apply is February 14, 2012

Your Start-Up Business: A Dragon's Tips on the Big Pitch

2013-01-22T12:26:41-05:00

Continuing our series on funding, I sat down with Bruce Croxon from Dragon's Den and Round 13 Capital to talk about his perspective on the state of funding.

Bruce was an entrepreneur in his own right: in the late 1980s he and a partner built Lavalife, a company which made millions, and for which Bruce made an exit in 2004. Since then, as the principal investor at Round 13 Capital, Bruce has sought out investible digital companies for seed, angel, and follow-on funding.

Karen: Can you explain a bit about the funding of Lavalife? When did you raise capital?

Bruce: A lot of people don't realise [Lavalife] started in the late '80s, long before the Internet. We had a brand called Telepersonals. When the Internet came about in 1996, we bought a company out of Manhattan called Webpersonals, and we rebranded both of those companies as Lavalife in 2000/2001.

One of the best things back then was that the barrier to entry for competition was pretty high from a cost and technology perspective. We grew the initial business, and the merged company rapidly without outside help right through to 1996. We decided at that time to take outside investment because we were undertaking a technology changeover, and it was ambitious. We took another round in 1998. We were lucky that for the most part, we had been able to fund our own growth.

Karen: Since you've been on both sides of the equation, what is the biggest misconception about venture capitalists?

Bruce: Like anything, to be good at it, it requires a lot more work and discipline than it may appear on a show like Dragon's Den. It looks like we're making an investment decision in seven minutes. The reality is, on average, we have 40 minutes with them, but you'd still be nuts to make an investment decision in 40 minutes. We spend months and months on due diligence to find out everything about the companies that we've shown an interest in. The biggest misconception for me is that I'm sitting on a pile of money, and you can get it out of me in seven minutes.

Karen: What are some of the biggest traps people fall into when pitching venture capitalists?

Bruce: You're selling, so once you've articulated what you're about, try and find out from the potential investor what they are looking for, and any questions they may have. You need to pivot your pitch on-the-fly to address what's on their mind. Investors want to know that you can have a conversation, and that you have a modicum of introspection. You need to be able to show that. At the end of the day, if the relationship doesn't work, the business partnership likely won't either.

Karen: Do you believe that companies can raise VC just on an idea?

Bruce: Absolutely. Just in the last nine months or so, there has been an uptick in seed, early round capital, and incubators. Extreme Labs, Communitech and GrowLabs are doing big business. It is possible to get a start. What we don't have in Canada is where you go after you've gotten your start. We're trying to address this at Round 13 with our FOunder's FUnd. Currently in Canada, follow-on funding isn't available. A lot of companies end up going down to the States.

Karen: In your opinion, what is the right way to approach venture capitalists?

Bruce: We get a tremendous amount of interest in Round 13, but the way to break through to us is to show that you're disrupting and innovating at an acceptable cost per user. Many VCs are available by email, but to break through, you have to show them you know what you're doing.

Be mindful that VCs see a lot of presentations. We've never seen a projection we didn't like. How you defend your thinking and how you behave goes a long way to determining whether VCs will do business with you.

Karen: We've heard in previous interviews that the best way to get VCs interested is to show traction, but every VC seems to identify traction differently What's a good rule of thumb?

Bruce: Twenty years ago, if you were thinking about an idea, someone else was likely thinking about it too, but that wasn't being shared instantly at the click of a mouse. Traction in and of itself is tricky, because you can be doing great things and getting good numbers, but in the same quarter, you could be beaten by the competition. You have to keep innovating. You need to test and show that you've got results in specific customer acquisition channels, so when you get money, you can put the pedal down and pump money into proven channels. Even if you only have 1,000 users, but you can sit down and show me your tested channels, and you're innovating or disrupting, you can get an investment.

Karen: Any other advice you'd like to share with entrepreneurs?

Bruce: For a person who is doing this full time on their own, I would say gather the support of friends and family. Spend some time gathering proof that people want to use the product you're making. If you're doing your business part-time, quit your day job and double down on the business. Things move way too fast for you to "part-time" anything, because someone else will scoop you, because they've been working on it 24-hours a day.

Dragon's Den airs Sunday Nights on CBC. Check your listings for times.

Your Start-Up Business: How to Find an Angel Investor

2013-01-10T08:14:34-05:00

It's a new year and a new chance to work towards your dreams. If your dream as an entrepreneur is to get funding from Angels, venture capitalists, or by other means, we're going to discuss how you can get closer to your dream this month.

This week, I spoke with Yasmine Kustec from the Network of Angel Organizations -- Ontario about early-stage funding for start-ups.

For many companies, the number one stumbling block to early growth can be lack of funding. Without connections, or a very supportive family (or very liberal bank manager,) many companies simply don't know where to start when it comes to finding a partner who believes in their idea enough to nurture it and help fund the initial stages of a company.

There is an overlooked group in this landscape waiting to be matched with interesting companies: Angel Investors.

Angel Investors can add valuable expertise and invest necessary seed capital for companies who are starting out and need guidance.

How do you find an Angel Investor? That's where the Network of Angel Organizations - Ontario comes in. the NAO-Ontario is a matchmaking service between companies in need of Angels, and Angels who are looking to expand their portfolio.

The NAO's goal is simple: to help build tomorrow's innovative companies by creating and growing non-profit Angel investor groups for all regions in Ontario.

Network of Angel Organizations - Ontario (NAO - Ontario) is the Administrator of Ontario's Angel Network Program (ANP) and helps spread the word among Angel investors and networks about funding that is available to them under the Federal Economic Development Agency for Southern Ontario's Investing in Business Innovation initiative.

Karen: Can you explain the impact of the programs NAO-Ontario administers?

Yasmine Kustec:
Since the start of both programs, the Angel community has grown significantly. As of October 2012, membership in our partnered networks has grown to over 600 in ANP-supported Angel investor groups and to 180 in other Angel networks listed for the IBI program. In total, members of these groups have invested in over 115 Ontario companies. We are happy to report that groups now operate across Ontario!

As a result of the ANP, Angel investment has been newly profiled in Ontario and validated as a source of finance and aspiration for early-stage entrepreneurs.

In addition, members of a partnered network qualify for the FedDev Ontario's IBI matching funds. This has helped attract potential Angels and Angels who invest outside of the network.

Karen: Have you had an increase in applications?
Yasmine Kustec: Yes. We reach out to entrepreneurs and help them become more aware of the Angel group in their community and the requirements needed to pursue Angels effectively.

Karen: What's the state of Angel funding in Ontario?
Yasmine Kustec: The ecosystem is growing; numbers of Angel investors are growing within our networks. More recently, networks are co-investing with each other, thus increasing the total amount invested in start-ups.

The networks working together not only helps ensure companies are not underfunded, but it also pools experiences and skillsets from a wide variety of backgrounds, which helps Angels invest outside of their comfort zones and increases managements' business acumen.

Karen: What's the number one stumbling block a company encounters when they embark on the money trail?
Yasmine Kustec: Entrepreneurs are in for a rude awakening when the fail to plan for capital from the start. Networking with Angels and advisors well before the company needs capital for growth, as well as ensuring documents are filed properly for due diligence play a vital role in their pursuit.
The pitch, identifying realistic valuations, and market traction are also weaknesses.

Karen: Describe the difference between Angel funding and traditional venture capital.
Yasmine Kustec: Angels invest their own money (accredited investors as defined by the Ontario Securities Commission's Rule 45-802 - National Instrument 45-106). They often take on a mentorship role and hands-on approach. Turning a profit is definitely at the top of their list for reasons they invest in start-ups, however most truly have a vested interest in entrepreneurship and the future of their community. Many of them are past and/or present entrepreneurs that have a few exits under their belt.

Karen: With sites like Kickstarter and indiegogo, has the landscape of Angel changed?
Yasmine Kustec: Angel investors provide more than just capital to start-ups. Mentorship, network (contacts) and experience they bring to the table are reasons entrepreneurs seek Angel capital. This value proposition..."smart money"

Karen: What do you need to have as a company (documentation, pitch deck, etc.) to be able to approach potential investors?
Yasmine Kustec:

A well-vetted business plan

Financial Plan

Presentation

1 page executive summary is essential

Video pitch is useful

Karen: How does NAO facilitate the relationship between start-ups and Angels?

Yasmine Kustec: We refer completed applications from our Gust account to Ontario Angel groups. We perform outreach activities - helping entrepreneurs become more aware of the networks in Ontario as viable sources of start-up financing.

Karen: What can entrepreneurs expect from the Angel-start-up relationship?
Yasmine Kustec:

A hands-on approach

Mentorship, guidance, etc.

Director position on the board

Capital

Karen: How can you find out which Angel investors are accepting pitches?
Yasmine Kustec:They accept applications all the time. Investment meetings occur between September - June, usually once a month.
It's a matter of involving them from inception. A company may not be "investment-ready", however it's never too early to network. Let them become familiar with your start-up from day one - before you need capital. Doing so increases your chances of receiving investment, builds trust, and invites in mentorship.

Karen: What kinds of information are Angel Investors likely to want from a company?
Yasmine Kustec:

Realistic valuations

Solid, credible plans for high growth (usually start-ups in the high tech sectors)

Early interest from or sales to customers

Credible, experienced management teams

Unique, defensible & saleable innovations

Significant yet reachable market

Investments of250,000 -750,000

For more information on the Network of Angel Organizations - Ontario, check out this video:

Angel Investing from NAO-Ontario on Vimeo.

Your Start-Up Business: Go With What You Know

2012-12-14T17:57:55-05:00

This week I spoke to Andrea Lown of SmartBride about her entrepreneurial journey. Regardless of how many television shows you watch, or magazines you read on the subject of weddings, you are never fully prepared for a wedding's impact on your time and your pocketbook.

It was Andrea Lown's own experience planning her wedding which led her to start a business helping brides lessen the burden. Andrea's enterprising idea caught on, and now SmartBride successfully matches up buyers and sellers every day to help their big day make good financial sense.

Karen: It's often said to "go with what you know." Can you explain how you came to create Smart Bride?

Andrea: I left it to the last minute to find a dress [for my wedding.] I had about two and a half months to do it. All the stores were turning me away saying that I needed six months to order a dress. They literally would not take the money I was trying to throw at them. I tried to find a dress on Craigslist, but had bad experiences because girls would not tell me that they significantly altered the dress, so I'd get there and not even be able to zip the gown up. The search functionality was terrible, and it felt dirty looking for a gown on craigslist simply because of the UI (user interface).

I set out to make an online boutique where it would be acceptable to buy and sell without so much stigma. As it turns out, people's perceptions have changed drastically since 2008 about wearing a used dress, or selling your gown after the wedding. The recession hit just at the right time to give bride's an extra financial nudge.

Karen: What was the original concept like? Did you fill out a business plan?

Andrea: I created a rough business plan -- certainly didn't follow any template. The most important piece is really the financial model which was entirely ad-based. We added different paid services for both individuals and retailers a year or so later, and are continuing to add other revenue streams. Weddings are a hyper-niche market where your customers are turning over every 12 months. The key to this game is a low cost of customer acquisition which makes your marketing strategies a key piece of the business plan.

Karen: Did you bootstrap Smart Bride on your own?

Andrea: Yes.

Karen: Did you ever take funding?

Andrea: Small friend and family loans -- almost negligible.

Karen: What was it like in the early days of SmartBride before other online fashion companies joined in?

Andrea: At first the concept of buying/selling used dresses seemed odd to people. But people's perceptions are really changing. People are coming around to the fact that a wedding day is really just the start of a marriage, and not all the emphasis should be placed on this one-day affair. I think weddings like Kim Kardashian's are really driving that point home. Before I started the company, I did a survey with 500+ Canadian women and 76 per cent of them said they would consider a used wedding dress provided they didn't have to sacrifice the designer or style they had chosen. There was a big gap in the market, but it was still a struggle to build because you have to grown both buyers and sellers in multiple cities across Canada and the U.S.

Karen: Many entrepreneurs we talk to describe the bumps in the road on the way to success. Can you tell us a story of a time when you experienced something unexpected.

Andrea: The most difficult period for SmartBride was actually the initial build process. Coming from being a product manager at AOL, you're used to having a team of designers and developers at your disposal. Sure, it always feels like you are strapped for resources even in a big company, but you definitely don't appreciate how much you can do on practically nothing until you start something yourself where every dollar counts.

As a non-technical founder, you rely entirely on your contractors to bring your idea to reality. The first 2-3 months the website was live were incredibly nerve-wracking. Generating your first 1,000 visitors to the website is much harder than the next 100,000. Now, I have other companies approaching me because they've seen the traction I've gained on a shoestring and want me to apply those same efficient strategies for them regardless of how big their budget is. What was excruciating at the time has now turned into one of my biggest strengths and assets.

Karen: How did you initially gain traction? What did you define as success early on?

Andrea: Word of mouth is huge for SmartBride. I knew that the key to building the business would helping brides sell their dress as fast as possible for the most money. If we helped them succeed, they'd refer us to their friends. So the site features were designed entirely around helping brides sell their gowns. In order to do that, you need to please buyers too -- so we concentrated heavily on making sure sellers gave all of the important information about their gown, educated them as to pricing and how to take/edit their photos and more to create a really compelling ad.

Early on you have to celebrate the little wins like an acquaintance telling you they heard someone on the streetcar telling their friend all about SmartBride. Or you receive an email from a bride who sold her dress and can't wait to tell all her friends.

Karen: Your business model has a hurdle, namely that you need a lot of inventory to keep the interest high. How easy was it for you to get interest going? Did you use traditional PR to get there?

Andrea: We've tried traditional PR, but it's hard to measure whether it's actually impacting our key metrics. In terms of attracting brides to sell their gowns, we do some paid search around selling wedding dresses, and partner with other wedding related websites that can recommend our services to their brides after the big day.

Throughout the life of the business, I've challenged myself to what I can the three foot rule. If someone comes within three feet of me, I'll find a way to tell them about SmartBride. Whether it's on the streetcar or in the line at the grocery store. With a start up, you are literally building awareness one person at a time any way possible.

Karen: What have you learned in your time running SmartBride?

Andrea: Running your own business, you are forced to learn a little bit about every area of the business. But I think the most important thing I learned was actually what motivates me.

Working at a startup, or owning your own business in a roller coaster ride each and every day. I get great satisfaction out of celebrating the successes, and am equally motivated by experiencing the lows because I love to solve problems. For some people, failure is crushing, and they'll do anything to avoid facing it by rationalizing. I like to face it head on, diagnose the cause of the problem and find a way to solve the problem and never repeat the mistake again. Over the years, I've had many people try to moderate my ups and downs, but experiencing the ups and downs is actually what makes me strive for excellence. Smoothing them out only kills my motivation.

Karen:What advice would you give to entrepreneurs at the beginning of their journey?

Andrea: Go and work for another entrepreneur who has experienced success and soak up everything you can learn from them.

Your Start-Up Business: Making Mistakes Faster

2012-12-03T17:03:37-05:00

This week I spoke with a group of seemingly unlikely entrepreneurs who have struck it big in the world of plush monsters. Adam Dunn and Rhya Tamasauskas of Monster Factory spoke to me recently about making a profitable company out of fabric, fibre fill, and a sewing machine.

If you've been to Toronto's One of a Kind Show and Sale, you have undoubtedly seen these curious characters stuffed into square cubbies waiting for a home. They're weird, they're cute, and most importantly, they are found in thousands of toy chests across North America and beyond, and on the shelf at your local Indigo.

Yet, Adam and Rhya did not set out originally to build monsters. They were both attending University in different disciplines when the idea for Monster Factory together.

Karen: How did the idea for monster factory first come about?

Adam: We actually came into being rather by accident. Years ago I worked with my now-business-partner, Rhya, on a short animation. The animation featured a small cast of monsters -- though not the monsters of Monster Factory. During this time she was working in textile arts, and while she was prototyping a soft sculpture for an upcoming art show she ended up with a stuffed form that resembled one of my illustrated characters. She put eyes and teeth on it and the first monster was born.

She followed this up with several other early monsters which she showed in local art galleries. Meanwhile, as a birthday present for a friend I tried my hand in sewing a similar plush monster -- with middling results -- and then followed that up by making some new characters. Rhya and I both enjoyed the design process of making these toys, so once we though we had something worth pursuing (as a project, at least) we asked the third Monster Factory founder, Bliss Man, to join in and show us how to make things properly. She has a background in fashion design which was vital to the development of our style.

Karen: When did you think you had a potential business?

Adam: Probably at the first One of a Kind show we attended. The response was great -- we had pretty much sold out by the fourth day of the 11-day show. At that time we really felt like there was potential for the monsters to be quite popular. We weren't necessarily looking to start a full time business at that point, so it took a couple of years to make Monster Factory more than a part time endeavour, but the seed was firmly planted.

Karen: Did you bootstrap the company yourself? What did the early days look like?

Adam: We did. Our initial investment was a whopping $2,500. From there we slowly grew along with the sales.

The early days were about as modest as you can imagine. We made our first monster prototypes in Rhya's dining room on her domestic sewing machine. We continued to work from our homes throughout the time that Monster Factory was a part time project for us. Eventually, once we decided to focus on building the company we moved into a small studio on King Street West, then a bigger one in that building, then a bigger one still, here on Richmond Street West. It's still a small operation (there are just eight of us in the studio today) which is nice because it fosters the same team spirit that we had when we got started.

Karen: When you decided to make a go of it, how did you go about gaining initial traction? Would you recommend things you did to others?

Adam: We more or less eased into 'making a go of it.' Because Monster Factory evolved from a very part time endeavour we didn't really make a big 'push' during the first few years. In retrospect, we probably should have. We would have been much better off to have raised money or found a partner to help us accelerate the process of broadening our market, but we were all new to business and probably more tentative than we should have been. What we did do right was to focus on the product, making sure we had a high standard for our designs and manufacturing. I think the creative aspects of our company have opened a number of doors for us because people really appreciate the monsters' designs and character.

For instance, we designed a mascot for the lollipop company, Chupa Chups. That project really helped fund our operations for a couple of years and only came about because of our exposure in the design world. To this day, the majority of our opportunities come from people or companies that really have a fondness for our characters.

Karen: You have been one of the most successful booths at the One Of A Kind show. Do you do any other shows? Describe your experiences between your first show and now.

Adam: Our first show was at the Distillery District here in Toronto. It was outdoors on a cold and damp weekend. Our tent display was decidedly homemade and the monsters themselves were... not up to our current standards. The show was fun and the response was encouraging enough to get us to do another one, so all-in-all it was a success. These days we are still at the One of Kind though it's getting harder to find the time for that show with everything else we've got going on. We still keep it on our schedule because it allows us to interact so directly with our customers.

As for other shows, this year upcoming we'll be seen at most of the major toy and gift trade shows in North America, distributing a new line of 12 mini monsters to retail stores. We're really excited about this. We will attend Toy Fair in New York, The Atlanta International Gift & Home Furnishings Market, the New York International Gift Fair, amongst others.

Karen: You scored a big commission with Indigo, a national retailer. Describe how that deal came together. Did you feel like you "arrived"?

Adam: The placement came through the efforts of a great partner of ours at the time, and the product was supplied through a U.S.-based licensee we were working with in 2010. It was certainly a kick a have our monsters in a retailer like Indigo, if for no other reason, we're all regular shoppers there ourselves. It wasn't exactly a "we've arrived" moment because it felt like just another step in a series of small steps forward. I think we had a greater feeling of making a big leap forward when we began working with our current business partner 9 Story Entertainment.

As of September, 2011, Monster Factory has been run as a join venture between it's founders and 9 Story Entertainment which is leading independent producer and distributor of television for young audiences. That's been a real success to this point as both companies have been able to bring complimentary skills to the venture. It's also been great for the Monster Factory team to learn from the experience of 9 Story's founders, Vince Commisso and Steven Jarosz, whom we work closely with.

Karen: You use social media quite a bit to great effect. Would you describe your average customer as belonging to your "tribe?" How had social media helped your sales?

Adam: Well, thinking of it as a 'tribe' might be a little optimistic, but we do really relish the ability to have the kinds of conversations with our customers that social media enables. The feedback is fantastic. And the creativity of our fans has been really inspirational to the direction in which our brand is developing. When we work on new characters or marketing ideas we are always focused on 'character, collectability, creativity and quality' and that focus is a direct reflection of what we're seeing as the most important aspects of our company in the eyes of our consumers.

It's also just really fun to see our characters as halloween costumes, or appearing in globetrotting photo essays, or as a young kid's favourite toy. Having our social media feedback is very rewarding, since we get to see people really enjoying our characters and having fun with them. Hopefully those monster fans that take part in our social conversations get a chance to engage with the brand in the same, rewarding way as we get to engage with them.

Karen: Did you make any mistakes along the way? Describe those experiences.

Adam: Yes. Many. We haven't had any major blunders, but in retrospect there are any number of little things that we would do differently now that we have the experience of building a company. First off, when starting a business it's probably not the best idea to have three partners with near identical experience and skill sets -- which is exactly what we did. We also moved too slowly at times for want of experience, and that experience was something we should have sought out from advisors or consultants.

We also started with nearly no capital. That's a mistake, as (believe it or not!) money is rather vital to the growth of a business -- who knew? Conversely, there were also times where we followed very sensible plans, for instance seeking out larger partners to help us grow in new ways, and those plans have not always worked due to factors beyond our control. At the same time there have likely been times when we made mistakes but everything worked out fine regardless. There's a real challenge in fully understanding the causes and effects of business success.

That's where experience comes in handy, but as a start up business experience wasn't always in great supply in our younger days. Since then we've made strides to shore up our team and have really adopted an attitude of accepting that mistakes will always happen, but that's not really a problem so long as you recognize them early and move on quickly. In the words of our partner, Vince Commisso, we're trying to 'make mistakes faster,' these days.

Karen: Did you have bumps in the road scaling?

Adam: The biggest bump we experienced was the transition from making a product locally to one that could be widely distributed. We've been fortunate that e-commerce and direct sales have allowed to us to make our Studio Edition monsters (which are still made here in Toronto) available at a reasonable price. But to sell through retailers we can't compete with the margins on overseas-made toys. Getting our new line of mini monsters (launching in spring of next year) was a challenge because the whole process was new to us and we couldn't afford to make mistakes. Again, it was something that came down to lack of experience, but we were able to get the right people in place to make this happen.

Given our high quality standards we've also found it difficult to work with other companies at times. It's a little tricky when you're asking someone to work to a standard that is different from the norm. That's caused a bump or two, but we're better focused now on ensuring that the companies we work with are like-minded in their priorities.

Karen: Was there anything you learned about your business you didn't know going in?

Adam: Yes. Pretty much everything. It's funny, when you start a business you get advice from everyone. It seems like there are armchair business people everywhere you go. And there's a reason for that: the broad strokes of running a business are fairly straightforward. And in that sense we haven't learned a great deal about what to do to run a successful company. But the 'what' of business is not the challenge. It's the 'how.' It's all the little details of how things work together: how your timing effects your numbers; how your competition effects your product line; how regional legislation effects your material costs; and how the different choices you make impact all the other aspects of the company. The entirety of running a business is a complex puzzle and the nuances of how it all comes together are what we've really learned over the years.

Karen: Do you have any advice for people just starting their own business?

Adam: Yes. Start with a balanced team. If you need to raise capital, do so. Know your numbers. Know how to close your sales. Find experienced people to work with or get advice from. Chart a very clear path as to how your company becomes profitable and do not stray from it, etc.

The advice I give is usually pretty straightforward. The trick is very clearly understanding where you want to go, what all the elements you need to get there are, and then putting it all together as efficiently as possible. Oh, and remember that the key to success usually lies in distribution. Without a distribution strategy you can't go anywhere. Figure this out first.

Your Start-Up Business: Scaling the Mountain

2012-11-22T17:44:33-05:00

This week, I spoke with Tara Hunt of Buyosphere about her experiences nurturing her company to life.

Tara has been a fixture in the start-up world and it only seemed natural that at some point, she would go out on her own and start her own business. She had the experience, and the connections, but she still had a rocky road to travel to get funded and beyond.

Karen: What did you think you knew about starting your own business based on your years working for other start-ups which didn't apply when you started your own company?

Tara: While working with startups, I got to be part of building and getting the word out, but I never understood the fundraising side of things. There really isn't anything that prepares you for that part. Pitching to investors is not at all like selling your startup concept to users. Nobody had taught me about term sheets and valuations and, really, there aren't any hard and fast rules in this area.

Karen: Did you think it helped or hindered to be a woman when you were raising money?

Tara: I don't think it helped at all, but being a woman wasn't the main reason I felt hindered when raising money. I think the main hinderance was what I already mentioned: no previous experience with raising money itself. The pitch is different, the terms are complicated and nuanced and the whole process fell way outside of anything I'd ever had experience with. I suspect that very few startup entrepreneurs have experience with this process, but the key is getting a great mentor.

I said being a woman wasn't the main reason, but I do think that being a woman (and doing a startup that serves women) puts an extra level of complexity into the process that doesn't help.

Karen: Can you describe your experience on the money trail? What lessons did you learn

Tara: I'm lucky because I'm pretty connected. I already knew lots of angels and VCs and I was one degree separated from many others. I didn't have to do any cold calling, so that already put me at an advantage. I think in total we pitched between 40 and 50 times, which I've heard isn't a crazy number, but it felt like it at the time! Raising money was my full-time job for a while and became incredibly distracting from building Buyosphere itself. I think of all of the lessons I learnt, these were my top five:

1. Yes means maybe. Maybe means no. And no? It could be the closest to yes you may come.
We ended up raising our seed money from investors who had turned us down. I came back to them with an improved idea and answered all of their previous doubts. Yes can fall apart quickly. And maybe is just someone just not wanting to turn you down flat.

2. Fundraising is distracting. Avoid it if you can.
If I could go back? I would have kept my speaking/writing career + consulting work while working on Buyosphere on the side for as long as possible. I quit everything that brought me an income because a VC I talked with early on told me it looked like I wasn't committed enough. He didn't end up giving us money and I ended up in a more desperate position.

3. Speaking of which, never be in a position where you can't walk away from the money
Once you are in a desperate position, you lose your bargaining power.

4. Get a mentor/advisor/coach who knows how to pitch
Pitch to her before anyone else and let her rip apart your deck. It'll be less painful than the future maybes and nos.

5. Don't raise too little or too much
I don't know the 'too much' first hand, but I've seen having too much money destroy focus for a company. But I do know the too little side of things. We never raised enough to give ourselves more than six months runway. That is not enough runway. It's a launch with feedback. You need a launch with feedback, time to implement that feedback and improve several times over. Eighteen months runway would be ideal, 24 months would be heaven.

Karen: Did you consider whether it was better to start up here in Canada or the U.S.? What influenced that decision?

Tara: It's still pretty much impossible for a Canadian to start a company in the U.S. I could have done it on an investor's visa, but that meant I needed to show I had $300-500k in the bank. I'm not that good at saving for a rainy day ;) I don't know if being in the U.S. in general would make a difference. Being in San Francisco I would have been closer to the money and lots of other good resources for startups, but you pay for that access. I think the ability to grow a startup outside of the Valley is pretty strong now.

Karen: What was your pitch deck like?

Tara: Which one? I had new versions for every meeting based on feedback and FAQs and who I was going to pitch (did my homework before meetings). I think I lost count at 42 versions. In general, though, it wasn't super long and focused on the problem we are trying to solve and how we are thinking of monetizing.

Karen: What has been your biggest learning curve so far?

Tara: My biggest learning curve has been the business of startups -- the fundraising, the term sheets, the valuations and the general complexities of the language: down rounds, cap tables, preferred shares, common stock, etc. I read whole books to try to get acquainted and it is still confusing.

Karen: If you could give advice to new entrepreneurs, what would it be?

Tara: Find ways to keep from hitting the fundraising trail as long as possible.

Karen: You have made a pivot and a redesign recently. Can you walk us through those decisions? Were they hard decisions to make?

Tara: We've only ever made one pivot and I don't completely feel it was a pivot: moving from data-driven to human-driven search. I don't consider it a pivot because we have always been trying to solve the same basic problem: shopping and fashion search is broken. It doesn't account for taste or preference. It doesn't account for quality or fit. At first we approached it with trying to create a personal data store of your favorite stores and brands, but that approach was the long way around. Last summer I had the epiphany that human beings understand taste inherently, so why not do people powered search like Quora?

Karen: What's next for Buyosphere?

Tara: There is so much on our roadmap right now, but we'll move in the direction our users lead us. I want to do this right, not rushed. I think we still have time. :)