Being an Entrepreneur - From the Entrepreneurs Guidebook

Being an Entrepreneur has its vast advantages and disadvantages. Entrepreneurship is a way of life. It is a key component that compels you to do more, move faster, and go farther than anyone else, even in the face of high risk and uncertain outcomes. Obviously, the rewards of entrepreneurship, especially in the technology realm, can have a high reward. But it is not an easy road to travel; the following facts were derived from the book:

1.     Only 1 in 6,000,000 high-technology business ideas wind-up in an IPO;

2.     Less than one percent of business plans received by venture capitalists get funded;

3.     Founder CEOs typically own less than 4 percent of their high tech companies after an IPO;

4.     60 percent of high tech companies that are funded by VCs go bankrupt; and

5.     Most high tech companies that succeed in having an IPO take between three and five years to get there.

Typically entrepreneurs in the tech field strive to solve a problem within the demesne of technology. Whether it means developing the next best game or solving world peace, a problem is always recognized and then with resources at hand it struggles to be deciphered. The book gives tips of how to write a good business plan and all the details that entail that aspect. Starts out with an executive summary, company description, market size, technology description, completion, sales/revenue generation, finances, and management. Interestingly enough, there’s a reason why this book was important because its shows you how to write your business plan which is required for this class.

The book also covers how to gain finances and capital and the different ways to approach financial need. It ties everything back to profitability and the finances your borrow for your company have to have a reward in order to receive a payout. Most importantly, the book discusses the legal issues for early entrepreneurs. It goes over extensive coverage of the difference between an LLC and C corporation and talk about the advantages/disadvantages.

John Dimmer

John Dimmer was one of my favorite, if not my favorite guest speaker we've had all quarter. First off, he's an angel investor which is probably the coolest job title I’ve ever heard so he get's automatic cool points. For noobs, John Dimmer is the managing member in a Tacoma-based private investment company, FIRS Management LLC.

He’s part of a large group of angel investors who take their money and invest it in startups and different companies which in turn they receive a return value.

During his presentation he talked to the class about how to get funding for your business. He mentioned several ways of receiving aid to ensure your business flourishes. The concept was mostly what we talked about in class, which includes the founding idea of a business, and how it’s carried out. There are different levels of funding; they include: self funding, friends and family, angel investors, first round, capital round, second round, mezzanine, and a public offer. We also discussed the different legal structures of a company. Some common legal structures include “C” Corporation and LLC’s.

The most important part of his lecture in my eyes was the discussion regarding equity. There are ways to sell ownership in your company by selling shares. In a sense equity has a larger magnitude because it’s a stake in your company that can be sold. Typically investors will expect a 10-time return over a 5-year period for any money they invest in your company. We also discusses the steps of equity investments:

·      Concept or idea à founders money

·      Proof of concept à friends and family money

·      Product design à angel money

·      Expansion à venture capital.

One the questions I asked in class was what the difference between an angel investor and a venture capitalist. Jokingly, Mr. dimmer mentioned venture capitalist file their teeth with a metal stick. The main difference is angels invest their own money, which sometimes isn’t the largest amount, where as VC’s invest millions in a company and expect an outrageous return value.

Jim Kastama

Jim Kastama, an US senator in Washington state came to speak to our class. Right off the bat, i was struck by how captivating his voice sounded. He got the class involved by asking us to share our business idea, and how much our product/service would cost. We also talked about small markets vs large markets and what the cost details entailed that matter. We explored the advantages of small markets; small markets have fewer sales and larger services. Larger markets would have small price points because of the way the market fluctuates and also affordability.

Mr. Kastama also talked about how to be marketable in this industry and the importance of following your business guide by staying motivated. The great thing about Mr. Kastama is his stage presence and frankly i've been amazed with all the guest speakers. They have a way to grasp the attention of the audience and really keep them in tuned. I was fascinated by his presentation and the tone of his voice is easy to listen to. We also discussed the different levels of funding and how to receive funding. He talked about the different groups he was involved in and how he contributed in to the success of other companies.

Bruce Kendall

Bruce Kendall was one of the most intriguing guest speakers we've had all quarter. He gave us an insight of what he did previously to what he does now. Taking a look at his website for the Economic Development Board for Tacoma-Pierce County, i gained a few pieces of information that i could apply later on to my career. I learned the importance of a business plan and how to effectively present an elevator speech. Strategic planning was also another topic we discussed during his visit, and how to effectively plan out all the intricate details of a business. During his presentation he gave us facts on the job market for small business here in tacoma. Between 2009 - 2013 there were 4948 jobs here in tacoma which equated out to $314 million in wages and $90 million in private capital investment. As we can see, there is a plethora of jobs here locally and companies looking for candidates to fill certain positions.

Currently Mr. Kendall is the President & CEO of The Economic Development Board for Tacoma-Pierce County. Looking at his site, the name of his company matches his mission statement to increase the quality and number of jobs as well as capital investment within the county. His recent Successes include planning for Carlisle Construction Materials, Amazon, Niagara, and State Farm Insurance. He pressed on the importance of getting started early with a business plan and also strategically manipulating the plan as your business grows. 

Extra Credit: The $100 Startup

I read the recommendations made by Erik Hanberg called the $100 Startup by Chris Guillebeau which discussed the challenges of starting and growing an idea for a small business as well as offer solutions to overcome challenges with starting a company. The book discussed several key concepts regarding starting a business and things to consider. The book starts out with the initial stages of starting a business. The world is changing and technological advances allow products and services to be launched cheaper and faster. Guillebeau also expressed the importance of merging passion for a product or service with something others will value and pay for.

The book continues with strategic and marketing considerations and how an idea doesn’t have to be the next groundbreaking idea; just has to be a solution to a problem or something people are willing to pay for. Learning your customer base is important such as interests, passions, and values. Now once you’ve made your considerations, the book gives your tips on getting underway; the book emphasizes on how getting startup capital is not necessary and how you should try different things to figure out what you’re doing.  The funniest line I read in the book was on page 147, which said, “Advertising is like sex, only losers pay for it.”

The book goes on talking about getting sales and gaining revenue. Being able to connect your offer to customer’s benefits is extremely important because the customers are who make the product. The product sometimes sells itself but without clients, you have a product with no direction. The author interestingly talks about creating hype around launching a product and all the detail that entail that realm. Get out and mingle by presenting your product. The author stresses on the fact of working ON your business, not just IN it. The book also gives examples of a 140-character mission statement, which is basically a tweet. Being able to summarize the value and mission of your business in few words really shows the focus and dedication of your business.

Graham Evans

Graham Evans was one of my favorite guest speakers we've had all quarter long. He had a great insight fortified with experience and knowledge that we had the opportunity to partake in. He really knew how to work with the class and get the class involved to where everyone gave in their two cents (not to mention anymore in a british accent is always quite entertaining regardless of what they say). He gave us insight as to what entrepreneurship entailed and all the little intricate details that came along with having an idea.

He was had a unique way of getting the class involved. He asked us all to introduce ourselves and give one random unique fact about ourselves just to get the conversation started. once we were all acquainted with each other, our next task was to raise our hands and provide one of our business ideas. As directed we each raised our hands and as a class we voted on the best ideas where we all received two votes to each idea. Lucky enough, My idea happened to be the most liked by the class. The idea of electronic recycling has always fascinated me and i thought it'd be a good business plan to build around. So Mr. Evans proceeded to take this idea and shred it to tiny intricate details.

We were introduced to The Business Model Canvas. This model included several key attributes such as Key Partners, Key Activities, Key Resources, Value Propositions, Customer Relationships, Channels, Customer Segments, Cost Structure, and Revenue Streams. We were spilt in to groups of three and each group was assigned a category in this business model. As a class we managed to answer most of the questions but Mr. Evans pointed out a few things we could consider. Overall, I gained an insurmountable amount of information from Mr. Evans. He took a simple idea and and broken down into many small pieces that in 1 million years I would never have considered. I now have this tool at my disposal called the business model canvas that I can take parts of it and use it in my business plan.

Startup.com Documentary

Startup.com is a documentary about two childhood best friends Kaliel Tuzman and Tom Herman that had an idea to start a website during the dot-com boom. The website would be a portal that would allow you to pay parking tickets and handle other government related business over the internet. Starting this website called GovWorks.com wasn't going to be an easy task, in fact in the documentary Kaliel mentioned it was one of the hardest things he's ever had to do. The growth of the business was the most surprising factor to me, and how it was portrayed within the documentary. The company begins with eight employees and rockets to 233 employees and towards the end dips to an unbelievably low number.

There are a few valuable lessons i've learned from watching this documentary. I actually watched again when i got home that night on youtube. I learned that believing in an idea and running with it is the most important aspect in entrepreneurship. At first no one believed in their idea, but the persistency and drive those gentleman had was insurmountable, you can see that they really believed in the product and when no one else gave them a chance they kept on knocking on more doors. I learned the importance of valuing relationships and also where to draw the line between business and friendship. In the movie, Kaliel had to get rid of Tom because his part of the business wasn't performing and advancing the way the envisioned it should. In order to progress the business and move forward, Kaliel was faced with the toughest task of getting rid of his long time childhood friend Tom.

As the story progresses, we get to witness the rise and fall of this company. One key downfall that was interesting was when someone broke in to the building and ravaged the office and stole some confidential information. The suspect was never found, i for one, think that it was the competition that committed the crime because prior to the event taking place Kaliel invited the competitor to the office and gave him a tour of the facility. That idea would only make sense simply because no one else had an extensive overview of the office as much as the competitor did. Overall, it was a great film and i wouldn't mind watching it over and over again.