Strategies for Bootstrapping When One Co-Founder Has Greater Financial Assets Than the Other

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

What is your best advice to startup co-founders who plan to bootstrap their business, but one has greater financial assets to contribute than the other?

 

1. Offset Cash Contributions With Additional Labor 

Charles MoscoeI’ve entered into founder agreements where different founders offer a different level of capital contribution, but that can be offset by additional responsibilities. For instance, for a startup that I am involved in now, I am financing the majority of the capital spend with the understanding that I will recoup my investment first, but my time commitment as a result is substantially less. – Charles MoscoeSkinCare.net 

 

2. Draft an Operating Agreement and Plan for the Worst 

jeff epsteinYou should draft an operating agreement that accounts for all the assets (and time plus energy) contributed to the business. The reality is many partnerships don’t last — planning for the worst (a breakup) will allow all parties to have full transparency on the range of outcomes and a full understanding of how to calculate the value of their contributions. – Jeff EpsteinAmbassador 

 

3. Keep It Equal 

Jared BrownIt doesn’t matter whether one founder has a million to invest and the other just has ,000. If the business can succeed with just ,000 from each founder, keep it equal. It makes things much simpler and is better for overall accountability. If the business needs more funding, the extra money should be considered a loan, not an investment. – Jared BrownHubstaff 

 

4. Distribute Equity Fairly, Not Equally 

Nicole MunozThis may be counterintuitive, but splitting equity 50/50 isn’t the best solution for co-founders. Because each founder brings a unique set of skills, resources and assets to the table, equity should be divided based on those attributes rather than equally. Careful consideration now about how to divide the company fairly will eliminate many headaches and unnecessary battles down the road. – Nicole MunozStart Ranking Now 

 

5. Put Together a Spreadsheet 

Andy KaruzaYou need to put together a spreadsheet that adds weight to each person’s contribution. We devised a spreadsheet that places weighted values on how much a founder brings to the company in terms of cash, hours, intangibles, ideas, resources and unique management processes/documentation created. Agree to the value of these inputs collectively; then use it to determine fair equity compensation. – Andy KaruzaFenSens 

 

6. Balance Equity 

john ramptonBalance equity and cash put into the business. If one person is putting in equal time but more money he should get more of the pie over the other person. Paul Graham put together a very simple equation for startup founders bootstrapping. 1/(1 – n). In the general case, if n is the fraction of the company you’re giving up, the deal is a good one if it makes the company worth more than 1/(1 – n). – John RamptonDue 

 

7. Think in the Opposite Direction 

Blair ThomasWhether one founder has more capital than the other shouldn’t matter as much as what does the business actually require? If a founder can invest 10 times more than another, that doesn’t mean they should. Find the lowest capital commitment required to get the business off the ground so that founders can garner equity equal to the expectations they had in place while bootstrapping the company. – Blair ThomasFirst American Merchant 

 

8. Differentiate Between Financial Capital and Sweat Equity 

Ross BeyelerWhen posed with a situation where one partner can contribute more (financially) than another, consider creating two classes of stock and treating financial investments in the company different than ‘sweat’ investments. Split the business as desired based on your partnership structure, and then treat whatever investment is made by one partner the same as you would an external investor. – Ross BeyelerGrowth Spark 

 

9. Hire a Lawyer 

Kristy SammisUse whatever extra assets one of you has to hire a very good lawyer. In all seriousness, expert legal guidance is critical and always worth it in the long run. No one ever said, “Gee, I wish our working agreement had been less clear.” Whatever arrangement you come to, it’s not enough to get an agreement in writing; get a fantastic, ironclad agreement in writing. – Kristy SammisClever Girls Collective, Inc. 

 

10. Allot 20 Percent to Each Area: Finance, Operations, Sales/Marketing, Founder and Product 

Erik HubermanSplit equity according to which aspect(s) each co-founder contributes. If you can’t have a fair conversation on equity, don’t go into business together. If one finances the entire thing, that 20 percent is his. Split the percent for Founder evenly. It comes down to why you’re partners. Who’s the “product person?” Who’s got sales? How do you divide the work? – Erik HubermanHawke Media 

 

11. Have Active and Passive Roles 

- Engelo RumoraOver the years I have seen (and been involved in myself) way too many business relationships that go south due to someone not pulling their weight. The best way to go about this is to always have one person doing all of the work and the other person being more passive but investing most if not all of the funds. This keeps things simple with everyone knowing what is needed from them. – Engelo RumoraList’n Sell Realty 

 

12. Deferr Payouts 

Dan GoldenIf you’re keen on keeping a 50-50 split amongst co-founders, consider a deferred payout for the co-founder with greater financial assets. This lets one of the co-founders take larger draws upfront, and then even out the payouts once the company has grown beyond the early bootstrapping days. Sure, there’s some risk, but startups need cash to hire and scale. – Dan GoldenBe Found Online 

 

13. Be Balanced and Fair 

Julian MillerJust because a contribution isn’t financial, doesn’t mean it isn’t valuable. I was at a well-paid corporate job and my co-founder was five years into a Ph.D. when we met. His contribution was potentially giving up five years of work to bet on our company. Because we aligned on what it meant to contribute from where we were, it was easy to build a solid, equitable base for our company. – Julian MillerLearnmetrics 

 

14. Have Skin in The Game 

Bryanne LawlessMake sure both partners have skin in the game, whatever it may be. If both partners aren’t equally invested into the company, where both need to be held accountable, the partnership will be uneven and the work-relationship could end poorly. – Bryanne LawlessBLND Public Relations 

14 Pros and Cons of Having a More Involved Relationship With Your Investor

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

What is one pro (or con) of having a more involved relationship with your investor where you actively seek or get advice?

1. You Get Brutal Honesty

Angela RuthWhile this can be a pro or con, a person who knows you better will tend to be more brutally honest about how they see things. The advice will hit at a much more personal level for this reason. While it may not always be something you want to hear, it is most likely something you need to hear. The tough love of a closer relationship with an investor can be what helps create change.

– Angela RutheCash

2. They Have Seen It Before

jeff epsteinGreat investors are happy to share advice from other portfolio companies. We’re fortunate to have a great relationship with our lead investors and provide insights from experiencing many of the issues we face. From high-level strategy to tactics, we can leverage to push forward as fast as possible.

– Jeff EpsteinAmbassador

3. They Want to Run Your Business

Blair ThomasInvestor advice is almost always welcome; so long as there’s a boundary between what is acceptable and what is not. It is important that an investor offers you advice in his or her area of expertise, but sometimes an investor can mistakenly feel that they know how to run your business, offering insight where it’s not needed, which could be detrimental to your operations.

– Blair ThomasFirst American Merchant

4. They Can Help You Network

Adam SteeleInvolved investors are probably the kind who have been working in your industry for a while. Their experience may have involved working with some of the biggest leaders in your field, and it’s possible that they’re willing to help put you in touch with them. The most experienced investors are often networking goldmines, and if you don’t know who you need to talk to, they likely do.

– Adam SteeleThe Magistrate

5. You Can Overshare

Miles JenningsAlthough its great to have a close relationship with your investor, you want to try and be sure not to overshare too much while seeking advice and being open with this individual. This doesn’t mean you need to hide things from them, but you shouldn’t be stressing your investors out with every little detail and up and down within your business. Keep conversation focused on your relationship.

– Miles JenningsRecruiter.com

6. They Support You During Tough Times

Nicolas GremionWe keep our investors updated in both the good and the not-so-good times. And while I was anxious to report bad news at first, I’ve learned that our investors are truly supportive. So don’t be shy to reach out to them in tough times. They may prove to be the help you need.

– Nicolas GremionFree-eBooks.net

7. You Might Take the Wrong Advice

Brian SmithSome advice you pay for, and some advice you’re paid to take. Taking good advice from an investor may make the next round easier to raise. But take the wrong advice and the next round may not happen. There’s a reason you have (or should!) set aside equity for advisors and board members. Surround yourself with smart guidance, not just rich advice.

– Brian SmithS Brian Smith Group

8. They May Know Too Much

Derek CapoSometimes it may be best that they don’t know everything. For example, if they get a sense that you aren’t getting along with your co-founders that may scare them from investing in the next round, especially if that said co-founder was a major reason for investing in the company. In a case like this, if they already know the issue, be transparent and ask for advice on what you’re struggling with.

– Derek CapoeFin

9. They Can Provide an Outside Perspective

Corey NorthcuttWe tend to be blind to ourselves. Nobody ever thinks they have an ugly baby. More than just an investor, any outside perspective helps, and getting feedback on how you’re doing from more angles is always a good thing.

– Corey NorthcuttNorthcutt Inbound Marketing

 

10. They Think About You in Their Off-Hours

Brennan WhiteGetting investor feedback is usually a great thing. However, the more powerful thing about a close relationship with an investor is that they are more actively thinking about you in their off-hours. For us, the investors we talk to most are constantly bringing leads, making introductions, and helping move the mission forward. They’re subconsciously working on the project at all times.

– Brennan WhiteCortex

11. They Help You Stay Focused

Brandon StapperI want investors to know that I do not operate in a vacuum and that seeking advice is part of my job. However, I tend to stay more focused dealing with investor input. I know what I want, get my questions answered, and then go back to work.

– Brandon Stapper858 Graphics

 

12. They Feel More Ownership Over the Investment

Andy KaruzaOne good reason to involve your investor by seeking advice is that they feel more ownership over their investment. This is one of the top two most important concepts for any investor. If they feel more involved, they will be more at ease and will trust you to make the right decisions. They will also be more likely to help you lead on your next round if they have a personal stake in the company.

– Andy KaruzaFenSens

13. They Don’t Have All the Context

Matt DoyleAn investor, as close as they may be, is still someone who has their livelihood to protect. You need to be very, very careful about venting about things that they may not be able to put in the proper context. You could accidentally leave them feeling threatened or conflicted about their investment even if there isn’t a real danger.

– Matt DoyleExcel Builders

14. They Share More of the Experience

Obinna EkezieChances are your investor has experience in many aspects of building a successful business. Therefore, it makes sense to keep your investor as close as possible at all times, and actively seek advice when his or her experience can help you make the best decision. Building a business should not be a test. You should do everything within your power to succeed, and one way is to keep investors close.

– Obinna EkezieWakanow.com

15 Ways to Reach Potential Funders on Kickstarter or Indiegogo

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

What is the best way to reach potential funders when launching a Kickstarter or Indiegogo campaign?

1. Find Influences in Your Niche

Andrew ThomasIn the beginning of the campaign, I recommend reaching out to bloggers and influencers in your niche, either directly or through an early-stage PR firm. Find people who will join your mission and share it with their community. You want to focus on your niche and avoid casting too wide a net. This was a key part of our success — raising almost $600,000 on Indiegogo for our video doorbell.

– Andrew ThomasSkyBell Video Doorbell

2. Snowball Fast with Media Support

Jonathan LongSuccessful crowdfunding campaigns all have one thing in common: They launched with a bang. When sites like Mashable and TechCrunch write a story about a crowdfunding campaign, it creates instant credibility and the campaign snowballs into a funding monster. Establish media contacts well in advance and make sure your campaign has some major press ready to help you get it out there at launch.

– Jonathan LongMarket Domination Media

3. Work With a Strong Marketing and PR Company

Ken CauleyCrowdfunding is the future, no doubt about that. But success in crowdfunding is easier said than done. As this space continues tomature, startups will need to hire a qualified company to help manage the marketing and PR element of successfully raising capital.

Ken CauleyAdvanced Media

 

4. Start Early

Wei-Shin Lai, M.DWe funded in less than two hours, and it was because we did a lot of promotional activities before the campaign launched. We sent press releases to the local media, which put us on air and in the papers. We let our social media fans know, and we sent out emails to tell previous customers the exact hour of the launch. I exported my contacts from Gmail and sent most of them emails using the BCC field.

– Wei-Shin Lai, M.D.AcousticSheep LLC

 

5. Create a Video

Stanley MeytinCreate more content to encourage people to invest in your project. Consider creating videos like behind-the-scenes, inside the technology, or even a simple video that will update funders on the campaign progress. You want to create content that will make people excited about the product or service, leading them to share within their communities.

– Stanley MeytinTrue Film Production

6. Connect With Bloggers Who Reach Your Audience

Andy KaruzaGo after the major PR channels, but don’t count out the smaller, tier-two bloggers who still have a considerable following. It’s pretty easy to identify the audience they cater to based on their profile and the types of articles they write about. Many of them who would be happy to review and share your product with their followers without requiring a large budget to do it.

– Andy Karuzabrandbuddee

7. Launch An Event

RahulAn event already has a captive audience, press, influencers, bloggers and the potential for your product to go viral. The Pebble Watch, for instance, launched at SXSW. It surely helped Pebble get the word out there. They went on to have the most successful (potentially second highest grossing campaign) Kickstarter launch. You can even run an event-specific promotion for your campaign.

– Rahul VarshneyaArkenea LLC

8. Find Social Media Influencers

Marcela DeVivoUnless you are a social media rockstar already, leveraging your social circles won’t yield much visibility. An ideal way to gain massive exposure is to reach out to existing influencers on Youtube, Instagram and other channels and tell them about your campaign. Additionally, write for sites like Buzzfeed, Medium.com and Linkedin Voices to get instant visibility.

– Marcela DeVivoHomeselfe

9. Give Back

Miles JenningsAs an incentive for funders to put money into your Kickstarter campaign, give them something back for their donation and contribution toward your idea. You could give them anything from a branded T-shirt to a coupon to your products and/or services. You could even make them a part of your company in some way. This will push funders to get involved and even stay involved in the future.

– Miles JenningsRecruiter.com

10. Get Feedback

Andrew SchrageElicit feedback from potential donors and use this to improve your pitch and overall campaign. Folks will be more willing to invest when they’re engaged and involved.

– Andrew SchrageMoney Crashers Personal Finance

 

11. Spend to Get Started

Blair ThomasAlthough you‘re already looking for funding to help launch your business, spend some of that all important starting capital on hiring contractors to make your campaign a worthwhile endeavor. A well-designed, well-written page, with focused content and clear messaging, can go a long way — and it’s going to take a team of (part-time) professionals to ensure a win!

– Blair ThomasEMerchantBroker

 

12. Learn from Others

Clayton DeanCrowdfunding is a challenge and there’s no exact science to it, but you can start on the right foot by researching what other successful Kickstarter or Indigegogo campaigners have done to generate visibility. Better yet, find and connect with them on Twitter or Facebook and ask them. From my experience, most are more than happy to share their strategies and fundraising secrets.

– Clayton DeanCirca Interactive

13. Facebook Ads

Andrew TorbaFacebook advertising is something you should consider experimenting with for crowdfunding campaigns. Set up a few small budget experiments to test out different target markets and see how well they convert. Start small and scale as you learn what works best. Facebook’s video ads are also great for creating awareness and driving traffic back to your campaign page itself.

– Andrew TorbaAutomate Ads

14. Build an Email List in Advance

Mattan GriffelBefore running a Kickstarter or Indiegogo campaign, it’s very important to build a potential audience to promote your launch to; ,otherwise. you‘re starting at zero. One of the best ways to do this is to set up a blog-style site using Weebly, Squarespace or WordPress, and start writing regularly. You should shoot to get to at least 1000 emails before launching any sort of crowdfunding campaign.

– Mattan GriffelOne Month

15. Ask Mom and Dad to “Kick Start” Your Campaign

Obinna EkezieSuccessful Kickstarter campaigns generate social proof by getting backers right out of the gate. The most tried and true way to get early backers is to start with first level connections. Family (mom and dad), friends, co-workers, whatever it takes. Kickstarter investors invest in companies with traction. Don’t launch a Kickstarter campaign without having early friends and family backers.

– Obinna EkezieWakanow.com

3 Reasons to Get Stoked on #CNX14 Morning

Photo Credit: @Scott_Thomas_ET

Photo Credit: @Scott_Thomas_ET

Ring the bell, Indy! It’s finally here. At long last, ExactTarget’s Connections Week is upon us. This week, the best and brightest in the marketing tech industry are going to converge on the Circle City  to put their moxy and know-how on center stage.

This event gets better every year and as the city turns orange, we’ll all be turning to the Convention Center for lessons learned.

“But Tim! I’m a startup! I don’t have the time or money to go to Connections!”

Good observation, rhetorical device! I totally get that. That’s why I’ve decided to give you a quick preview of what you can expect this year, plus a super cool offer that can help you grow your business without leaving your couch.

Here are the three reasons I’m so stoked today:

Mindy Kaling, Comedy Icon

As some of you may know, I have a comedy background and I think this can be overlooked in a marketing setting. That’s why it’s so encouraging to me to see a comedy icon giving the closing keynote at this year’s event.

You may know Mindy from her performances on The Office or The Mindy Project, but if you’re in the content marketing world, you should know her for her book Is Everyone Hanging Out Without Me? It’s no secret that Mindy is a hilarious actress and comedian, but her skill as a writer trumps even her funniest moments. Mindy’s ability to combine humor with thoughtful opinion, all wrapped under the sassy bow that is her own personal voice, is an inspiration to me as a content producer.

This interview on her struggles in Hollywood is a great illustration of her wit.

If you take yourself seriously as a content writer, I’d encourage you to study the voice behind Mindy’s writing. Don’t forget, a ticket to this week’s Verge event also buys your way into Connections to see Mindy! Get yours before they run out!

Let’s Workshop That

Conferences are all about self-improvement. Say hello to my theme song this week:

This year’s workshop lineup is great as always and I’m luck enough to have a full pass to this year’s conference. That’s why I’m thrilled to offer a great deal to anyone who’s interested.

If you can’t make the workshops or keynotes, I’m going to take some SUPER GOOD notes and send them out to anyone who’s interested! If you want my personal notes from this year’s workshops, or you just want to be my friend, let me know here!

Will.I.Am (L-L-Let the Beat Rock)

Hi, my name is Tim and I’m an early-2000’s junkie. I still remember bumping some Black Eyed Peas, driving to good ol’ Roncalli High School here in Indianapolis (I know, I know… I’m young.)

Anyway, as great as Will.I.Am is as an entertainer, you don’t get to where he is in life without some business savvy. I’m excited to hear the lessons that he learned from the music business that can be applied not just to marketing, but to the startup community as a whole.

Also, I’m so 3008, you’re so 2000 and late.

This year’s Connections conference is going to be bumping, and I hope to see you there! If you’re going, let me know! If not, drop a comment and let me know what workshop notes you’d like to see!

I’m stoked for this year’s Connections conference, and I hope you are, too. If you want to bum some notes off me, let me know here or follow me on Twitter and I’ll see you at this week’s event!

 

Why 11-year-old “Super Business Girl” Has an All-Star Pitch

“I’m asking for an eight dollar investment because not only are you investing into me, but you’re investing into my future and my business,” says 11-year-old Asia Newson. This kid has something that makes her pitch for her “Super Business Girl” business irresistible. See for yourself:

What!? OK, take my money.

I was in. The first time I heard Asia’s pitch on an episode of This American Life I knew this young lady had it. Young Newson has the most important part of any business pitch.

Asia Newson has conviction about Super Business Girl.

She is 100% committed to her product, her business, and herself. She believes in what she’s pitching and is able to convey this with conviction.

But where does this talent come from?

“It’s my personality,” says Newson in her interview with MSNBC. I’m not 100% convinced. Look for yourself:

Somewhere along the way (probably from her father), Newson learned to use her whole voice and her body to present herself and her business, Super Business Girl. She learned to use her voice inflection and facial expressions to keep her pitch engaging.

She kept it short. She said what she had to say with conviction, and then she did something really important.

She made the ask.

So Asia Newson, age 11, has already put together 3 of the most important elements into her pitch:

  1. Present with conviction
  2. Keep it brief
  3. Make the ask

Do you follow these best practices in each and every pitch you give?

Asia Newson a.k.a. Super Business GirlWhy don’t you see for yourself? Here’s my challenge to you:

Turn the camera on yourself today. No one has to see this. It’s just for you.

Flip your phone camera to video mode and set it 10-15 feet across from you so you can see your whole body. Find a private space so you don’t scare your officemates or coworking buddies. Then, pitch your business or product like your life depended on it. Remember to:

  1. Present with conviction
  2. Keep it brief
  3. Make the ask

Then watch it. What did you do well? Then get real with yourself… What could use some fine tuning in your pitch?

The Overlooked Pitch – Your Online Presence

online-presence-will-ferrellToday’s post comes from Nick Wangler, a recent addition to DeveloperTown. Every two weeks, Nick will be sharing stories of DeveloperTown startups and the lessons we can learn from them. Today, he’s introducing us to the overlooked pitch – our online presence.

You know those videos where celebrities read angry tweets about themselves? If you haven’t seen them, imagine Will Ferrell sitting on a toilet reading tweets where he is heckled mercilessly and you’ve got the idea.

There’s something surreal about the moment when words clearly intended for the internet are heard in a different context. Read aloud and considered, what’s written online often takes on a new perspective.
For instance, imagine reading your LinkedIn profile from the stage of the next Verge event. Are you totally satisfied with how that would go? Would there even be anything to read? Would it be compelling? And if not, why? I know I’ve got work to do and I’m sure others do too.
Everything we write online is a pitch to the unseen yet seemingly ever present potential investor, partner, employee, and customer. A pitch for who you are, what you’re about, and how well you can communicate big ideas in constrained spaces.
What’s more, taking the time to write original thoughts with the constraints of a summary on LinkedIn or 140 characters on Twitter forces you to understand exactly what you want to convey and do it concisely. As author John Piper once said, “The effort to say is the path to seeing.”
While I’ve always paid attention to the way I communicate online, I hadn’t given this area as much thought as I should until a recent discussion with Jason Seiden made me reconsider. He said, “If you aren’t at least as compelling online as you are in person, you’re doing it wrong.”
When is the last time you read your LinkedIn profile from the perspective of a potential client? Or took the time to think through how to communicate an original thought in 140 characters rather than just sharing yet another blog post about your industry to appear knowledgable? (I’m guilty.)
Frequent writing and refining of original thoughts through online platforms doesn’t just broaden your reach, it strengthens your core ability to communicate. While design and development is (righfully) experiencing a huge boom, the need for good writing is as important as ever and will multiply the effectiveness of whatever position you find yourself in.
So go watch Will Ferrell read tweets on a toilet (somewhat nsfw, obv), check out one of my favorite resources for learning to write well, and then go write something.

To learn more about improving your online presence, make sure  you check out our September event with Connections!

Using Data to Change an Industry: The felix + iris Story

felix-and-irisWe live in an era where “big data” is more of a buzzword than a business tool, especially for a small or medium-sized team. Solving problems with data is a noble, if cumbersome, task and many teams just aren’t up for it.

The team at One Click Ventures, however, isn’t built like most teams.

As the founders of the online retailer, Randy and Angie Stocklin saw a problem. They were providing world-class eye wear to their customers, but their customers weren’t nearly as satisfied as Randy and Angie wanted. It was extremely difficult to ensure that customers were getting the exact right fit. They were providing a world-class product, but they weren’t providing a world-class experience.

Data to the rescue.

Introducing The felix + iris Brand

The problem that Randy and Angie were really observing is a lack of specificity. If I, a 20-something kid with great vision and impeccable sense of style, went to their product page, I’d see the exact same results that my sister, aunt, or mom would see. Sure, you can have customers self-select their product page based on a number of criteria, including gender and product type, but how can you get them to self-select their product page based on face shape or lifestyle?

felix + iris was introduced to solve this problem.

Their team built an online “Fit Profile.” This short quiz uses customer-specific data to create a customized online store for each individual user. So when I go to shop at felix + iris, I’d see a product page filled with glasses like this:

eyeglasses

If Hunckler went to shop at felix + iris, however, he’d probably see a product page filled with glasses like this:

dorky-eyeglasses

This is the future of E-Commerce. A lot of E-Commerce sites already use browsing, search, or social data to market, but few are customizing the entire customer view. This is a solution.

Using Data to Solve Customer Problems

This really fits under a general theme. How do you use data to solve customer problems? What can your startup learn from felix + iris? Here are a few tips on how any business can replicate this approach:

Collect a Lot of Data

You can’t know solve problems with data unless you’re willing to collect it first. Whether it’s a survey, buying patterns, website flow, or demographic data, make sure you’re collecting as much data as you can get your hands on. The more systematic the approach is, the better.

Take an Objective Look at Your Customer’s Process

Randy and Angie had a world-class product. A bad ownership team would stop there. Randy and Angie didn’t settle for this, however. For them, they wanted a world-class buying experience, and that can be much more difficult to achieve. Don’t get blinded by your own biases. Make sure you understand the weaknesses in your offerings inside and out.

Start Small if Necessary

Not everyone needs a customized web store for each individual customers. Don’t think that you need to build something great and extravagant on day one. Use the lean startup approach and build something with what you have, even if it isn’t Earth shattering.

This Sounds Interesting, I Want To Learn More!

What a coincidence, you’re in luck!

We’ve already announced our big September event with Connections. What we haven’t announced is our big October event and what makes it so special.

As a premier brand for fashion eye wear, felix + iris is going to be launching in New York City for Fashion Week, but after talking to Randy and Angie, they want to take that magic and bring it back home to Indy. This October, One Click Ventures is going to be rolling out felix + iris on the Verge stage and teaching the community about solving consumer problems with data.  Between all the data nerds, fashionistas, and the awesome, secret downtown location this party is going to be bumping and you won’t want to miss it!

Mark your calendars for Wednesday, October 29th. More info to come.

In the meantime, tickets are going live for our September event this week! Keep an eye on your inbox. You won’t want to miss your Verge Connections Experience!

Save the Date: Verge Wants You to Get Connected

Connections13It feels like every month, there’s another big acquisition in the Indianapolis tech community. Hell, most times it’s a member of the Verge community getting acquired. As a tech entrepreneur, you can’t help but think about what that negotiation looks like. Personally, I do mock buy-out talks every morning in the shower.

I think if you look at the numbers, you’ll see that conditioner’s ability to restore hair and add volume could really help shampoo engage with new markets.

That’s why I’m so excited for this month’s event.

This month, we get the opportunity to learn first-hand lessons from a company that has been on both sides of the negotiation table. As a staple in the Indianapolis tech community, this company acquired Pardot, an Atlanta-based marketing automation company for over $95M and an Indy-based company (and former Verge pitch), iGoDigital for $21M. They also were acquired by Salesforce for $2.5 Billion.

You know who I’m talking about, right? If not, take a look downtown. They’re painting the whole place orange.

Every year, ExactTarget throws the world’s largest interactive marketing conference right here in Indianapolis. Connections is attended by the best and brightest in both marketing and technology from all around the world, and we get to host it in our back yard. This year, they’ve brought in a great lineup that is determined to educate, inform, and entertain the nearly sold out conference. This year’s event includes keynotes from:

  • Mark Benioff, Salesforce CEO
  • Scott McCorkle, ExactTarget CEO
  • Gabriel Stricker, Twitter CMO
  • Will.I.Am, Musician and Entrepreneur
  • John Green, Best Selling Author
  • Mindy Kaling, Actress, Comedian, and Tim Hickle’s celebrity crush
  • and MANY more!

“Right, but aren’t tickets to that thing like a bajillion dollars?”

No, rhetorical device, they’re not. In fact, we’re giving all Verge members a chance to attend the last day of the conference for free!

Save the Date: Thursday, September 25th

Verge is teaming up with Connections to bring you a Verge event unlike any you’ve seen before. We’ll start our day at Connections to catch two incredible keynotes. We’ll then be heading to an awesome location that’s been known to host bad ass Verge events in the past. Here we’ll be doing Verge over lunch, featuring a couple of awesome pitches that you’ll hear a lot more about next week and a fireside that will be the perfect capstone to our Connections experience.

Our last event sold out in less than a week, and these tickets are set to move a lot faster. Between free access to Connections and a Verge lunch, this is going to be an all-morning, hard-hitting event that no one in the tech space is going to want to miss.

Keep an eye on your inbox next week!

Tickets will be going live and we have a very fixed capacity. Occasionally we’re able to open up events to sell more tickets, but this is not one of those times, so it’s extra important that you get your tickets EARLY! 

I’ll also be sharing more about our pitches and fireside chat on the blog, and you won’t want to miss that. Can’t wait to see you all downtown!

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If you want to learn more about pitching without sounding sales-y, check out this awesome blog by Hunckler!

How NOT To Be An Email Spammer

email-spamPeople often ask Greg Kraios, Founder of 250ok: Why is there spam? He knows that the answer is simply “because it’s profitable…If it didn’t make money, people wouldn’t do it.”

Kraios spoke at the August Smartups event about the ins and outs of email marketing. He told of his days at ExactTarget and how spam filtering has evolved since. Back then, emails were content filtered, with words like “free,” “viagra,” and exclamation marks creating the basis for screening. Spammers were quickly able to game the system and be one step ahead of it.

So, Internet Service Providers (ISPs) changed the game. It didn’t matter what the message is, but rather who the message is from. This created a structure based on reputation tied to an IP address. Now, companies (like Pfizer) that want to promote products (such as Viagra) legitimately finally can.

Once again, spammers figured out how to beat this system too. This brings us to how spam filters work today: reputation + engagement. ISPs look at engagement data from an IP address to find out how many people are opening an email, clicking a link, forwarding the message, replying to the sender. We all interact with emails from friends and family. But, this becomes a problem when it’s a marketing email.

How does a business get through the spam filters and get the user to open that email?

avoiding-spam-filters-email-marketing

Young companies are anxious to broadcast their message to large audience. And email has become an important tool for startup marketers for doing just that. But, they often think the best way to do that is to buy a list. To that, Kraios asks “would you share your customer list with anybody ever? I’ll take it if you guys are.”

Not only does buying an email list not work, but often times the addresses provided are invalid by the time you get to them (which counts against your reputation) – or they could be filled with “spam traps.” A spam trap is when an ISP creates an address that has never been used by a human being. The only way to get that email on your list is if it’s scraped off the internet. When that happens, ISPs flag you as a spammer because they caught you capturing addresses without permission.

For startups, Kraios recommends finding a partner company that has a subscriber base that might benefit from your product or service. Some businesses may ask for a fee for this. Others will do it because they want to help other companies. The key here is to get that company to promote you in their newsletter, to push people to a landing page, and get the permission yourself to have them on your mailing list.

Google has become really good at determining spam emails. More times than not, people go into their spam folder, find an email from a friend or family member with a link inside and think, Google messed up. Once the email is back in the inbox, they click on the link and are redirected to a malware site. It looks harmless – like their bank. So, they enter all their personal information. And, they’re phished!

To counter this, email providers have started deleting spam emails before the user can view them.

Another tactic bigger companies use is sending emails with a “no reply” for the sender. Email is about communication, having a conversation. Using “no reply” alienates the target audience – “just tells me you don’t care about me.” Realizing that replies can help get your email delivered changes the entire playing field – especially for startups. You’re the most accessible business owner the user will come in contact with. Why not use that to your advantage and include your own email as the sender?

Set Clear Expectations

You’re already familiar with implicit email permission. You’re about to buy your items at a store when you’re asked for your email address. You give it willingly – not realizing that you’ve been added to their email list. Kraios stresses the importance of obtaining explicit permission for someone’s email. This not only serves to let the potential customer know that they’re signing up for a newsletter or promotion, but also creates an expectancy phenomenon in their minds. They will look for your email in their inbox. They won’t ignore it. They won’t delete it. They won’t mark it as spam.

Be clear about what your subscribers are going to get. Like Kraios, you may have been surprised when you think you’ve signed up for one company’s emails, and then you start getting promotions from other companies. You click the unsubscribe button and are sent to their preference center only to find out you’ve got five different content items checked.

In order to prevent the user from associating this nightmare with your startup, it’s best to outline exactly what they’ve signed up for and stick to it. You’ll see better engagement rates from potential customers and get rewarded from ISPs (by not getting marked as a spammer).

Kraios believes there’s no right or wrong when it comes to frequency. If you tell people they’re going to receive a weekly newsletter, you should send the a weekly newsletter. Your email readers want to consume things differently. As long as you set an expectation and deliver on it, you’ll be in good shape. He evens offers Doug Karr’s newsletter as an example. Kraios likes the monthly digest because while he wants to stay on top of what’s new in marketing, he’s too busy to read the weekly newsletter. He loves that Karr gives him the option to do that.

So, take your cue from these marketing giants and go beyond setting an expectation for the frequency of your emails: give your subscribers options for frequency.

Tips For Successful Email Marketing

Track sources

Startups that don’t track where they’ve acquired an email address from – even if it’s from a tradeshow prize bowl – cannot tell what their highest performing source is in order to reinvest energy and effort into that. They also can’t tell where negative experiences are coming from. When people mark an email as spam, did you know they came from that tradeshow? from your website? from a partner?

Tracking the different sources allows you more control over the messaging and provides you clear direction on which channels are working best.

Collect actionable data

Turn your email campaign from broad to actionable by asking a few telling questions at the point of acquiring an email. By adding a zip code field to the email signup form, Kraios and then-ExactTarget team gave one large lawn care service provider the advantage in targeting customers by serving relevant emails based on location and grass type.

Don’t obsess over the subject line

When he sees marketers still focusing on things like putting “free” in the subject line, Kraios wishes they’d spend their energy on what their target audience are actually looking for. People aren’t looking for the word “free.” They’re not counting how many exclamation points you’ve typed. Knowing what your goals are and delivering personal, relevant, targeted content trumps a formulaic subject line any day.

Test Deliverability

“It’s never too early to be concerned about delivery….if you’re not getting (the email) to the inbox, all that work you’ve done doesn’t mean anything.” Some companies will provide you with a sender score based on your IP address. According to Kraios, that number is meaningless if you cannot drill down to the deliverability issue itself. That’s why he recommends a tool like 250ok where a test email is sent to a pre-defined set of email addresses. Then, you can exactly track where the email winds up. Combined with data on opens, clicks, conversions, bounces, and unsubscribes, you can start to understand why people are unsubscribing. “The story’s in your own data if you know what to look for and what you’re trying to figure out.”

Following these tips will get your emails in your customers inboxes – and get them loving your emails!

Three Essential Items Every Startup Needs to Value

chris palmer discusses startup values at Verge West LafayetteIf you’re in the loop with the Verge Startup family, you’ve probably gotten to know our buddy, Chris Palmer, pretty well. In addition to pitching on the Verge Indy stage and his presence at the Innovation Showcase, Chris won the Startup Chile pitch competition and was just named Techpoint’s “2014 Rising Star.”

Between Foxio and BoxFox, Chris has become a grizzly startup veteran, but he hasn’t forgotten his roots. Chris recently visited Verge West Lafayette to impart some wisdom to the young entrepreneurs in the crowd. After witnessing three student pitches, Chris delivered a  fireside chat that  nailed a few things that every entrepreneur should be focusing on when trying to build a company that will last. Here are three things that every startup needs to learn how to truly value, whether they’re in their initial stages or their IPO.

Valuing True Mentors

It’s easy to get caught up in the myth that young entrepreneurs can do it alone. Many young founders make the mistake of believing that, because they’re more well-versed in today’s technology than the next guy, they’re destined to succeed. This is patently false. Today’s technology will come and go, the underlying principles behind the technology – and more importantly, the business – will live forever. These are things that can only be learned through true mentorship from those who have been through the obstacle course of entrepreneurship before.

“The best mentorship is not an official relationship, it’s a more casual curiosity about what older generations have done before you.”

– Chris Palmer

By recognizing and embracing the value of true mentorship, you’re granting yourself access to a time machine. This is the only way that you can have access to advice from entrepreneurs just like you 5, 10, or 15 years in the future. This can help you mitigate risk and navigate the minefield that is entrepreneurship.

Chris’ Quick Tips For Finding Awesome Mentors

  • Meet a lot of people: Like Chris said above, the best mentors don’t come in the form of formal mentorship setups. They often more closely resemble friends than colleagues. When looking for mentors, you’re really just looking for friends who are immensely smarter than you. Approach meeting mentors the same way you’d approach meeting new friends.
  • Don’t come on too strong: Once again, this relationship doesn’t need to be official. Unless you really hit it off, it’s highly unlikely that the founder you met for the first time at the last Verge event is going to be stoked about you asking “Will you mentor me???” Take it slow. Treat it like a date. It’s easier to ask someone out to a networking event or for beer than it is to ask for some long-term commitment.

Valuing Collaboration

Innovation doesn’t happen in a vacuum. While some solo-preneurs have been successful, in Chris’ experience, they’re the minority. It’s far more common to see partnerships or teams of founders succeed. The reason behind this is simple, collaboration only makes you better. Differing and dissenting perspectives are essential in building a product that people will actually care about.

This isn’t limited to your founding team, though. When trying to get out there and find help, be it in the form of investment or talent, it’s essential that you don’t hide your idea under a bushel basket.

“Being vocal about your ideas really helps. The more you tell that story, the more your idea will spread.”

– Chris Palmer

At the end of the day, no one at a networking event is going to steal your idea. Even if they did, ideas are worth nothing. Ideas aren’t special, execution is. Collaboration and open discussion about your ideas can help vet the good ones so you know where you should be focusing your attention, allowing you to execute more effectively.

student entrepreneurs at the matchbox learn about core values for their startup

Valuing a Dollar

I don’t care whether you raised a $50M seed round or are bootstrapping, money is important. If your revenue model isn’t solid or your valuation is a house of cards, you should be concerned. At the end of the day, you’re building a business and a business’ only job is to make money. What most tech entrepreneurs overlook, however, is that the traditional approach of “I’ll build an audience and eventually, someone will pay me for access to it in the form of advertising!” is unlikely at best and misguided at worst. With many startups, the challenge is how can you generate revenue today – even if it won’t pay the bills – as a proof of concept?

“The biggest factor in our success has been flipping the traditional model of startup success on its head. I used to think that I’d just sit there and a big money idea would come to me and that would be it. What I’ve found is that the best way to go about entrepreneurship is to find ways to make small amounts of money. Eventually, you’ll learn how to take that and turn it into larger amounts of money.”

– Chris Palmer

That’s one thing that I personally have found to be remarkable about Indianapolis startups in general. The reason so many investors are hot on Indy right now is because of the massive movement in the midwest to build revenue-centric, no nonsense businesses as opposed to trying to chase short-term technology trends.

To learn more about other awesome Verge community members doing awesome things, make sure to check out this piece on how the community is focusing on reinvesting in Midwest startups.