Burn Rate was a very interesting read for me, a guy who is making no money yet spending money on his business. Burn Rate chronicles Michael Wolff's short lived career as an entrepreneur during the .com boom. I thought it was really interesting when Wolff starts to describe how the internet went from a place where nerds congregated to talk to one another to when people realized the internet could be used to make huge profits. One thing I didn't appreciate too much about the book was that it seemed to be rather gossipy about the businesses it mentioned but then again Wolff is a writer. But I did appreciate the Wolff seems to be stating facts not opinions in his writer, so he's really letting the ready make the own interpretations about what was going on with internet businesses during the 90s. As I said earlier, Wolff didn't take a salary when he realized he didn't have enough money to continue day to day operations. But before everything is lost, he takes what is owed to him thus effectively bankrupting his business. It's hard to get behind what he did because of all the employees he screwed over by doing this. It takes a certain guy to write a book like this, and when you're done reading it you'll completely understand why running his company did not work out well for Wolff.
Thursday, March 16, 2017
Amazon came to campus today to discuss a grant program they have through UW's comotion labs called Amazon Catalyst. This was a great talk to attend because Amazon is looking to give $100,000 to entrepreneurs with a "novel idea." This is very exciting because I of course think my company is a novel idea trying to solve a very serious problem. Besides learning about the grant, I also had the opportunity to talk to some of the kids in class I don't normally get to interact with. This was a blessing in disguise for me because since talking to a classmate about the project I'm working, I've been offered a desk at UW's Startup Hall because of a simple introduction which was made on my behalf from Tarik. I'm not sure what will come of the grant process. I will need to look more into what rights I'd be giving away to Amazon by signing on with them if I were to win this award. But none the less coming to this talk has already had a huge impact on the direction of my business. The application is due on the 26th of March, so about two weeks from now, but the application was designed to be filled out in one sitting so I'm not too worried about getting it done.
Well, what is there to say about the documentary, Startup.com? Alot. The movie follows govworks.com, a company that was started during the .com boom, whose focus was to let people pay their traffic tickets and other state/federal fines online. The documentary starts off at the very beginning of the company's formation when Kaleil Tuzman quits his job at Goldman Sachs to start a company with his high school buddy, Tom Herman. Starting a business with a friend, what could go wrong? At first, not much at all. The company took off and raised 60 million dollars. But the company was built on bad programming practices and was not able to hold up at all when users tried to get online and use the system to pay their fines. As a result, the company is one of the most famous casualties of the .com bust. But the most important thing to focus on in the documentary is the relationship between Kaliel and Tom. While Kaliel had all the passion in the world, Tom was a guy with a family trying to make things work to do right by them. The documentary showcased the stresses of starting up your own company and what kind of strains it can put on the relationships of the people who are closest to you. The two partners eventually have a falling out before the company collapses and Tom is forced out of the company. And today Kaleil Tuzman is in jail for tax evasion. This documentary solidified for me the importance of knowing your role and staying in that lane.
Our guest lecturer for this week was the one and only Andrew Fry. This talk was especially interesting because Andrew found a way to cash out with his business while other companies tanked during this era of business. Andrew focused on the five stages of the .com to .bom era. Everything started off by people understanding the power of the internet and how they now had access to the entire world via the web. This was followed by the boom where companies started taking advantage of this and started popping up left and right because they were able to reach customers like never before. This of course leads to companies like InfoSpace getting an evaluation higher than Ford's and Boeings in an incredibly short amount of time. This then led to the bust in which company after company went bankrupt, because of bad business practices. And finally the fifth stage was when the dust started to settle and the the companies which had managed to survive kept things going and those who failed, the employees were able to gain employment at other companies. This lecture was important because it teaches the budding entrepreneur that if something is too good to be true, it likely is. And more importantly, this era is a clear example to would-be CEOs that if you don't have a viable and unique product, eventually it will catch up with you and your business will fail.
Shadrach White was this week's guest speaker. Shadrach's message for the talk was simple, understand money and what your bottom line is. At the time of his lecture, White is currently running his fourth business. He said that in the past he wasn't focused on the revenue and that was his downfall, he says the most important thing an entrepreneur can do is to be a revenue hog and always be managing/making money. White said that in order to keep your mind on the money, it is necessary to do a SWAT analysis quarterly. I found this to be a great idea because this ensures you always have a good grasp of what is going on within the company and you are aware of what is coming up on the horizon. Keeping up the theme of money, Shad gave some insight on how to price your product: give enough information on your product so you're not leaving money on the table, sometimes less is more. Another point White made was that when starting a company, do not cut any corners and make sure you get the right legal time from the get go. He told us about how he had been screwed over in the past by not understanding the finer details as to what he was signing. This really resonated with me because I have been using online templates for preliminary legal work. Since his talk, I have looked into working with the UW's entrepreneurial Law Clinic in order to receive free legal help.
John Dimmer was our guest lecturer for this week. I was very excited to learn John would be speaking to the class because I worked on one of his funded businesses in the past but was never able to meet him personally. In his talk, John said that the main job of a CEO is to raise money. This resonated with me because that is exactly what I've been trying to do for my company for the past few months. John made it clear that when it comes to funding, the first round is on you. Outside investors want to know you have money in your company. This was good to hear because I've been putting all of my internship money I've earned in the past towards my company. John said that funding comes from three sources, giving away equity, taking on debt or other sources such as a business plan competition or grants. He made it clear that the most expensive thing a business can do is to sell equity. But if you must give away equity, there are two critical numbers to consider, first, what is your company worth and secondly how much money do you really need? This again was important for me to consider because right now I am in talks to give away some of the equity in my company. Another important takeaway from John was hearing when to go get money from outside sources and from who. In John's opinion, he said that when a product is in the design phase, go show angels, and when you're ready to expand go show VCs and make sure that you are already making money. This was good to hear because I wasn't sure of the difference between the angels and VCs but this cleared that up for me. Overall, John put on a great talk for our class and hearing what a successful man like him has to say is invaluable.