Tag Archives: entrepreneur

Dec 12

Oh how I love the city by the Bay

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On November 29 I ventured to San Francisco for 5 days. My time was great combination of work, fun, spending time with people I care about, eating great food, & exploring the city.

Tuesday I left Michigan for a brief layover in Las Vegas (my first time in Vegas & enough time to play my first slot machine). I arrived in San Fran after 9 pm Cali time & by the time I went to bed I had been awake for 23 hours straight!

I put $1 in the Red, White, & Blue slot machine at the Las Vegas Airport

I didn't win. Boo!

Wednesday morning I walked to the office of one of our portfolio companies, Giftly. It was a beautiful walk & a great way to start the day. Sunny, crisp air, & lots of activity downtown. Giftly’s offices are a great example of a fun & open workplace. Lots of windows. Open tables. A large conference room. Dogs. & Giftly spirit. Marc (RPM Partner) & I met with Giftly CEO Timothy Bentley, & we also got a chance to meet some of the Giftly team – Dan, Mills, Nish.

After meeting with Giftly Marc & I drove down to Redwood City for an Xtime board meeting. Going from meeting with Giftly, a company at a very early stage, to meeting with Xtime, a company that is at a much different stage, was really interesting. It was quite a contrast in looking at what the key areas of focus are, where time is being spent, & what the needs & concerns of the businesses are. The board meeting went long, a result of great discussion & lots to talk about. It was dark when we left to return to San Francisco, & I had planned to go explore the city that evening, but ended up falling asleep at my hotel as soon as my head hit the bed. The results of a long & full day!

Thursday morning I went for a run around the city. I stayed in the Chancellor Hotel on Powell Street in Union Square & for my run I decided to go to Lombard & make a big loop. That put me going straight uphill for the first part of my run. Great workout – definitely challenging!

Union Square!

After my morning run I got ready & headed out to walk to my first meeting of the day…a early stage company located on Townsend Street. It was between a 1 & 1.5 mile walk. I stopped at Bio (aka Crepe o Chocolat) on O’Farrell Street to pick up a morning snack. I got some soup (so I could drink it as I walked) & some chocolate. They had a lot of sweets to choose from, as well as juices & tea. I was not impressed by the service. In fact, it almost drove me away to stop by Starbucks or another cafe instead. *Note: I am a customer service snob.* I was in a hurry though, so I grabbed my food & was on my way. I enjoyed walking & seeing the city by foot. On my way I saw a billboard for Huddle.  Billboards for tech companies…a sign of the times.  The meeting went well – another example of an early stage company with a cool office vibe. Less open environment, like Giftly, but the team was friendly & there was a lot of windows. No dogs, that I saw.

After that meeting I took a cab to a board meeting near the Embarcadero. The cab driver that took me from point A to B was the first cab driver I have ever met that actually knew about venture capital. Only in San Francisco.

The board meeting for Mirror.me went well. I enjoy working with this company because it’s early & there’s still a lot to figure out. Lots of creation & lots of opportunity for my involvement. If you haven’t figured it out already, working with the portfolio is one of my favorite things about working at RPM.

After the board meeting, Tony (RPM Partner) & I headed to visit with a friend & entrepreneur at his office. Marc met us there, so it was like we were meeting back in Ann Arbor…except in San Francisco in a beautiful office with glass tables, lots of windows, well decorated, & great location. Drool. It was so great to catch up, meet the folks there, & then visit more across the street at Rickhouse.

That evening I went to dinner with two friends at Anchor & Hope on Minna Street. I honestly don’t remember what exactly I got to eat…I know I had a salad first & then a nice filet of fish served over sautéed brussel sprouts. Tasty!

Friday morning I went for a longer run through the city. It was one of those great mind-clearing, thinking type runs that I didn’t even listen to music during the run. I soaked up the San Francisco sun, thought about life, & breathed heavily going up hills! After my run I checked out of my hotel & headed to meet a friend for lunch. We went to Paladar, a Cuban restaurant on Kearny St. So tasty! My friend & I shared Mariquitas & Mojo (house made plantain chips with garlic dipping sauce). I got a Five Green Salad & Yuca Al Mojo (yuca with garlic, lime, & olive oil). My friend got Ensalada de Camarones (shrimp salad sandwich). After lunch I walked around a little bit & then parked at Starbucks for the afternoon to get some work done. I find that I am more productive working in coffee shops than I am in an office. Not sure why.

That evening I met a friend & fellow University of Michigan alum at Nook for Happy Hour, followed by an improv show at Un-scripted on Sutter St. We saw “A Tale of Two Genres”, a play on Charles Dickens’ “A Tale of Two Cities” & the genre they did it in was the movie “Cocoon” (a movie my friend & I have not seen). It was pretty good. Long-form. I prefer short-form (think SNL skits). Still a great time & great visiting with my friend!

Saturday morning I made my way to the Ferry Building (I walked from Hyde Street, so about 1.5 to 2 miles, with my suitcase & backpack. It was a trek, but such a great walk through Chinatown & the Financial District. Chinatown was pretty cool in the morning…so much activity! A huge contrast from the dead Financial District. Right before getting to the Ferry Building I encountered the Occupy San Francisco there. Huge! Biggest one I’ve seen yet.

The Farmer’s Market was happening at the Ferry Building. Incredible! So much fresh produce, locally made products, & unique California treats from walnuts to persimmons. I got an apple, some plums, some persimmons, a pomelo (looks like a big grapefruit), some dried fruit & California walnuts, & other treats. and of course I sampled all sorts of tasty treats!

I met a friend & fellow UofM alum & we explored the market & Ferry Building shops. Blue Bottle Coffee had long lines the entire morning! We grabbed lunch at Ferry Plaza Seafood. We split a dungeness crab (we asked for a small one, but check out the size of that sucker!) & a steamed artichoke (one of my must have’s when I go to California). The crab was so fresh – it came straight from the boat & didn’t even make it to a tank before our table.

Then I made my way to my second lunch at The Slanted Door  with some friends. Still full from my first lunch I got a Grapefruit & Jicama salad with candied pecans. Pretty good. Fancy place. Glad I experienced it though.

The rest of the day I explored with a friend the Ferry Building & the Mission area. In the Mission we went to Bi-Rite Creamery, where I got chocolate coconut dairy-free ice cream & a strawberry pineapple popsicle. We also went to Tartine where I picked up some treats for my friends/hosts that night.

That night I went to dinner with some other friends at A16 on Chestnut St. in the Marina. Very tasty Italian food, but most importantly it was a great time visiting with friends!

Post-dinner I made my way to my friend’s apartment & we visited for awhile before going to bed. I called up an Uber in the morning & headed to the airport for a long day of travel. I was impressed with Uber.  The cab promptly arrived & the service was great.  And it was so convenient to pay via credit card before getting in the cab.  The morning was beautiful making it even more challenging to leave “The Golden State”

Thanks to my friends & RPM for making my time in the Bay Area great!

I found a penny today (heads up), so if it is lucky maybe I will be in California again soon!

Venture on,

MEL aka Venture Gal

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Nov 21

Lessons from the Foundry Group

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Last week I had the opportunity to listen to a Q&A session at the TechArb with the current TechArb companies & the Foundry Group Partners Jason Mendelson & Brad Feld.  Not surprisingly, a question about community came up and I thought their responses were particularly useful for Ann Arbor / Michigan to hear out.

1.  The entrepreneurial community needs to be started by entrepreneurs.  Seems pretty obvious, but honestly isn’t always the case.

2.  It is not one driving force.  There is not a single entrepreneurial community leader.  There is many.  By only respecting & acknowledging a leader you are disrespecting all the others who help the entrepreneurial community.  In my opinion, the hand/team analogy especially illustrates this point…Make a fist & then stick one finger out (choose wisely ;-)  It’s easier to crush your quasi-fist this way than if you just keep a fist.  A fist represents a team.  The lone finger is an individual.  Team is stronger.  Acknowledge & respect the team of people involved in your community.

3.  Have a 20 year outlook.  It takes time to build a community, so think long term.

4.  Really great members do not expect anything in return.  They mentioned this in relation to TechStars.  Their mentors are not compensated and a lot of them have no interest in investing in the companies they are mentoring.  Sometimes mentors may change their mind about their interest in investing, but if they come in only to mentor because they want to invest, the program isn’t as strong.

Take note Ann Arbor.  Take note.

Venture on,

MEL aka Venture Gal
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Nov 03

Meeting Marathon

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The past couple weeks have been like a meeting marathon….in a relay marathon though.  Momentum builds up as you prepare for the big day (ie your turn to run) and then when it’s there your running as fast as you can, trying to do everything in your power to perform your best (ie you’re running).  As you finish the meeting the adrenaline still remains for a bit, but the momentum dies down and your energy slowly fades (ie you just finished your leg of the race and you handed the baton to the next runner) and once the entire race is over the entire team debriefs (ie celebrates & gets a massage) and is on to the next challenge.

I make that analogy because it does resemble this time of year at RPM Ventures.  In October we held our annual meeting and earlier this week we held our advisory board meeting.  Both are important but serve different purposes.  The former to update our investors and the latter to well…get advice.

In a previous post I explained why I enjoy our annual meeting!  In fact, I compared them to Christmas (I like the marathon relay a bit better).  Besides the points mentioned there, I also learn a lot at the annual meeting.  This year I was caught red handed taking lots of notes (part of my job, but also to record all the nuggets of wisdom).  Here are some of the things I learned and was reminded of at this year’s annual and advisory meetings:

  • VIP = Vesting In Peace (This article explains it simply as when someone “work(s) for (a) stable company increasing in value, and … doing as little as possible until … stock options are worth something”)
  • Go after businesses that are not obvious
  •  Find key influencers & have them do your marketing for you.
  • As an entrepreneur, share all news with your board.  Good & bad news.  As a VC, don’t overreact to bad news because that will drive entrepreneurs to stop sharing the bad news.
  • Please don’t buy billboard ad space for your tech company.
  • In a board meeting, include the most important topics first.
  • VCs have LPs.  This is an overlooked aspect of the VC industry, especially from the perspective of entrepreneurs.  Similar to how an entrepreneur has a responsibility to his/her VC investors, VCs have a responsibility to their investors as well.
  • Big companies have a lot of cash.  What they will do with that cash…time will tell (and maybe some really good fortune tellers).
  • “Jack of all trades & master of none”. To be or not to be?  Not for RPM.
  • When it comes to building successful companies it is all about the people.
  • Surround yourself with smart people, learn from them, & you might not need another degree.
  • “Take care of what’s in the cupboard now” before taking on new challenges.
What are some things you have learned at big meetings?
Venture on,
MEL

Sep 28

Board Meeting Today

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Board meetings are these mystical events that happen regularly, where all the investors in a company meet with the CEO and key leaders and discuss what is going on with the company.

 

A few rules of thumb for board meetings (for entrepreneurs):

1. All the work happens between board meetings

2. Be kind to your investors’ analyst, include data in your deck

3. There are no rules of thumb

 

Out of the board meetings I have been to no two have really been the same.  It depends on what is going with the company, what type of company it is, the stage, size, investors.

 

Some board meetings are more exciting and engaging than others.   Some lead investors to get bored at the board meeting.  Signs of this are…well think of what you did in class when you were bored.

 

Venture on,

 

MEL aka Venture Gal

Sep 22

How are companies organizing social?

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This morning I read through the Social Business Forecast: 2011 The Year of Integration presentation by Jeremiah Owyang at Altimeter.  The presentation explains how companies are integrating social media (from staffing to measuring impact). What I found most interesting about it is the breakdown of how companies are organizing and managing social initiatives.  The report points out 5 models:
  1. Centralized
  2. Decentralized
  3. Coordinated
  4. Hub & Spoke (and Multiple Hub & Spoke)
  5. Holistic

Each model has its pros and cons, and some are more applicable to certain types of companies.  For example, a company like Zappos has a culture that is conducive to a Holistic model, in which each employee is empowered.  The Holistic model probably wouldn’t work out so well with a company like Microsoft, so a Multiple Hub & Spoke model makes more sense (one hub/brand sets rules & procedures and business units undertake their own efforts).  Altimeter shares that most companies organize into Hub & Spoke or Centralized models.  I favor the Hub & Spoke model for a few reasons.  It gets more people involved.  People pick up & notice things that others may not.  And by empowering the business units to manage their own social media activities they are more invested in the success of those activities and stay more closely tied to the company.

I think it would be interesting to look more closely at how companies’ organizational social model changes over time.  When a company goes from 3 people to 30 people to 300 people to 3000 people, how does social media management grow with the company?

Altimeter discovered that as companies mature their total budget, team size, and organizational social model matures as well.  The evolution they found was from Centralized (with about 3 team members) to Hub & Spoke (with 8 team members), to Hub & Spoke or Multiple Hub & Spoke (with a larger budget and 20 team members).

It seems like Hub & Spoke is a scalable model, since as the organization grows, each new or growing unit can lead its own social initiatives.
The presentation also looks at what’s next…what are companies concerned about in 2011.  ROI is important and some of the common measurements companies are using include engagement data (like retweets, comments, fans, likes, etc), overall sentiment from followers and such, website traffic, conversions/leads, and customer satisfaction rates.
The last section of the presentation recommends where to invest in social media programs.  The 6 recommendations are:
  1. Hire folks with a track record of early tech adoption in their careers (and train for scale)
  2. Integrate social media on the website, aggregate, & curate
  3. Invest in advertising to leverage social graph & focus on clear metrics
  4. Build an unpaid army of advocates (let your customers do the work for you)
  5. Invest in scalable systems like social CRM and management tools
  6. Learn to measure ROI (Altimeter put together an ROI Pyramid to illustrate ways to measure ROI)

With early stage companies, just like setting a company culture is important, figuring out how social will be integrated early on will save time and headaches down the road when an unorganized, not thought out plan, creates chaos.  You could experiment with different models, and remember that the model may need to change as the company grows, since some models are more scalable than others.

Venture on,
MEL aka Venture Gal
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Sep 12

The Investor I Never Saw

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The title of this post is misleading because if you raise money, from anybody, expect to meet/speak with them.

This may seem obvious, but it’s not always well understood.  Whether you raise money from your parents or a venture capital firm you can expect that your investor will want regular updates.  With your family investors, you may have conversations around the dinner table about the company, or you may get a call every day, asking about how the business is progressing.

When an entrepreneur takes venture investment, there will be board meetings.  Even successful entrepreneurs that raise money regularly meet with their investors, so there is no reason why a first time CEO would not have regular meetings.  And believe it or not, meeting with your investors can actually be quite valuable (depending on who your investors are).  In particular,

  1. Investors are your partners.  When you’re raising additional capital, need an introduction, or are facing challenges you’d like advice about, investors are here to help.
  2. You have a responsibility to your investors.  Keeping your investors updated and in the know about what is going on at the company is a good way to eliminate surprises down the road.

If you don’t like an investor enough to have a conversation/meeting with her/him, then it’s probably not a good investor/investee relationship to begin with.  Think of it this way, would you date someone you never wanted to see?  Just saying…

As a VC analyst I am fortunate to get to meet/speak with the companies RPM has invested in and get a regular update about how things are going with the company. On the flip side, VCs also report back to their investors, so part of my job involves putting together written reports to our investors (aka LPs/Limited Partners) and preparing for our meetings.

Bottom line:  No one is too good to receive advice or help from their investors.

Venture on,

MEL aka Venture Gal

Jun 07

Warrants 101

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I cut this down so it’s quick and pretty simple.  There are links at the end if you are interested in reading more about warrants.

Who issues warrants?

Venture capital investors will issue warrants with a loan (“convertible note”) or preferred stock.

What are warrants?

A warrant is essentially an option that gives an investor a right to buy a security at a specified “exercise price.”  They are also known as stock-purchase warrants and subscription warrants.

“Warrant coverage” is the number of shares issuable upon exercise of the warrant issued in connection with the loan or preferred shares.  This is expressed as a percentage of the principal amount of the note (e.g. 10% warrant coverage on a $100,000 convertible note)

When do warrants exercised?

They can be exercised anytime. They expire when the company is sold and typically when the company goes public.  If the warrant exercise price is less than the market price, the warrants are considered “in the money,” time when if the investor chooses to exercise the warrants he/she will get more value than the cost.

Why do investors use warrants?

Warrants act as a sweetener to the deal, and the amount of warrant coverage is tied to the amount of risk that the investor incurs.  Warrants are similar to conversion discounts, in that they compensate investors for risk.

How do I learn more about warrants?

Check out these sources and post questions in the comments or via twitter @melemmer.

VC Expert: Warrant

What Should the Terms of Bridge Loan Warrant Coverage Be

Seed Financing Options: Convertible Debt with Warrants

 

 

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May 16

Investors like Proven Jockeys & Top-Notch Thoroughbreds

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In spirit of my adventure to the Kentucky Derby last weekend, I’m going to write about what investors look for using an analogy I commonly bring up when an entrepreneur asks me what venture capitalists look for when making investment decisions – the horse racing analogy.

There are three key things investors look at – the product, the team, and the market.  In other words – the horse, the jockey, and the race.

To elaborate:

  • If a horse is lame, obviously there isn’t a good chance of winning the race.  If a product is lame, no one will buy it.  It’s as simple as that.  A stellar horse/product is eye-catching.
  • A horse with great bloodlines is worth a lot more.  Would you like to race Secretariat’s offspring?  A product with strong IP compared to one without is a similar case.
  • With the right jockey, a less impressive horse can race really well.  The team is so important.  What it comes down to is that people really matter…a lot!  A great product and market are nice, but without a team executing toward a common vision, it’s just not as compelling.
  • A jockey with a proven record of success gets more bets than the new gal or guy.  A team with a track record of success starting and exiting companies is a sure way to get an investor closer to putting his/her money down.
  • A jockey and a horse need to be the right fit.  Both could be top athletes, but they may not work well together.  For anyone who has been on a horse, you know when it just isn’t right.  In a startup, a great team and a great product can work out really well.  But if you have a talented team in the software industry and stick them with an awesome solar technology, it may not be the best fit.
  • You want to be in a big race (market).  Racing in the Kentucky Derby is a lot more interesting than some small local race.  Sometimes you need to race in the small races to train for the Triple Crown, but if there’s no potential for the Triple Crown that’s not exciting.
  • All three – the product, the team, and the market – are very important considerations for VCs when evaluating investment opportunities.  Sometimes having 2 out of the 3 (e.g. a great product and great market) is not a deal breaker – a team can be built – especially when the company is early stage.  Of course, the more complete the package, the more likely a VC is going to be interested!

Think about it…how would you place bets on a horse/jockey in a race?  What do you look for?  Previous success, pretty horse, cool name…these can all be compared to what a VC looks for in an investment opportunity – previous success, good looking product, catchy name…

When you’re evaluating opportunities to invest, or building your company and fundraising, think about whether or not you would bet on your horse and jockey in the race you’re running.  If not, why not?  What are you missing?  If you can bet on yourself it’s a lot easier to convince a VC to bet on you.

MEL

Aka Venture Gal

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Apr 06

Raising Money for Your Startup is like Dating

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Fundraising is a lot like dating.  You can raise money from different sources, just like you can date different types of people.  And there are different levels of commitment when dating, similar to the varying degrees of expectations set when raising money from different sources.

There are several sources of capital when raising money for your venture: self-funded; friends, family, and fools (the 3 F’s); banks; customers; angel investors; venture capitalists; and more.  Fairly often I see a lot of companies that are seeking to raise venture capital when they don’t really need to.  Only a small percentage of companies raise venture capital and there’s a lot more involved than many realize.

Here’s how the analogy of common sources of capital and dating breaks down:

  • Bootstrapping. If you’re single, you’re essentially bootstrapping.  You are independent, report to yourself, own your schedule and own your company.  Sometimes the solo road can be tough, and you may experience the need to bring in more resources to grow your company or share your successes and challenges with.
  • The 3 F’s (Friends, Family, Fools). Kissing changes everything, and raising money from outside people changes everything.   It could be the death to a friendship, or the start to a deeper relationship.  The relationship may get better, or it may get worse.  Similarly, as soon as you take money, expectations change.  And taking money from friends or family can really change your relationships.  Instead of talking about work, current events, or food at the dinner table, you may be interrogated about the status of the company, and prodded about when the investment will be returned.  The 3 F’s may provide capital expecting a return or out of the goodness of their hearts because they believe in you.  That’s why it is important to communicate expectations, just as it is important to communicate expectations when dating.  Know what you are getting into before you take money from an F and before you go around kissing people.
  • Venture Capital. You’re in bed with a VC.  And you are living together.  The commitment is serious and you have high expectations to meet.  A good VC/Entrepreneur relationship will be a two way street – the entrepreneur will work his/her ass off to reach set milestones, and the VC will help out along the way (in the form of introductions or having their analyst work on projects for the company, for example).  Communication is key!  That means regular dialogue about what’s going on with the company.  There shouldn’t be big surprises at board meetings.  Similarly, communication is really important in building a successful relationship.  Lastly, the VC can fire the CEO and bring on a new CEO.  It may not be as simple of a “break up” as it would be in less committed relationships, but it sure is possible and it happens more than you may think.
  • Angels. The level is commitment is somewhere between the 3 F’s and VC.  I’ll let you use your imagination here…
  • Banks. You’re married to a bank.   If you get divorced, your spouse may take your house and/or your dog.  If you can’t pay back your debt, the bank takes your assets.  Simple as that.

There you have it.  You may not look at raising money or dating ever the same again.  I’ll take the blame for that.

What do you think?  Are there other similarities (or differences) that you notice?

Mary aka Venture Gal

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Mar 06

Learning about happiness from the CEO of Zappos

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Image representing Zappos as depicted in Crunc...

Image via CrunchBase

Learning about Happiness from the CEO of Zappos

I recently finished the book, Delivering Happiness, by Tony Hsieh, the founder and CEO of Zappos.  My interest in reading this book came from some of the anecdotes I heard about Zappos’ company culture, others’ recommendation of the book, and the success of Zappos (Amazon acquired Zappos for more than one billion dollars).

From my various work experiences I’ve learned that a fun place to work is more satisfying and does trickle down into the financial bottom line.  Working at Zingerman’s, a place that focuses on three bottom lines (food quality, service quality, financial results) really opened my eyes to how a company can be great for people and great for growth and financial return.

There are a few key things that I took away from Delivering Happiness, and summarized below:

1. People Matter. Employees and customers alike are REALLY important.  Zappos attributes much of its success to its investment into customer service, culture, and employee training and development – all of which focus on people.

2. Continuously Improve. Zappos asks employees to make at least one improvement every week that makes the company better reflect its core values. Not only does Zappos encourage continuous improvement within the company, but also encourages employees to improve themselves – recommending they wake up every day and ask themselves not only “what is the 1% improvement I can change to make the company better”, but also “what is the 1% improvement I can change to make MYSELF better personally & professionally.”  A company is only as strong as its team, and a company cannot grow unless the individuals grow as well.

3. Never Outsource your Core Competency. Zappos’ core competency is its customer service, so if the company had call centers run its customer service they do not control that experience and are not delivering their core competency.  You want to deliver your core competency…it’s key to your company and your position in the market.

It was challenging to narrow down my key takeaways to only three, so I also jotted down all of my notes, which you can check out here.

Have you read Delivering Happiness? What did you learn?

Venture on,

Mary AKA Venture Gal

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