I am proud of Fetchnotes. They are participating in the highly selective TechStars Boston accelerator program. They will develop great connections and learn a lot. 

First, Fetchnotes is a good idea. We all have thoughts or notes we want to jot down…Todo items, blog ideas, grocery lists, urls, books we want to read, etc. I used to use notes in my iPhone, email myself, or make paper lists.  Fetchnotes has stepped in and made this simple, really simple.  If I need shampoo it is simple, I create a new item and type “Shampoo”.  I can organize by adding tags.  Maybe I get my shampoo at Target so I tag shampoo with #Target and #todo and any other tags that organize my life. Simple right?  Now here is the cherry on top.  It just so happens that my wife, Amanda, is the one who usually visits Target. Since we are linked (which in typical Fetchnotes fashion is simple to do) I can add it to her Fetchnotes too by adding @Amanda.  

“Shampoo #Target #todo @Amanda” …Simple and powerful. Shampoo is now on both of our lists.  A few weeks ago I was at Lowe’s getting some items and instead of calling me she just added it to my #Lowes list. Bam, it shows up on Fetchnotes and I bought it. It is just as a powerful tool for teams or organizing your list of great craft brew you want to try.

If you don’t use it, you should. 

I like the company but I’m a big fan of co-founders Alex and Chase, they are the right combination of hustler and hacker.  They are coachable and thirsty to learn.  I enjoy working with them and watching them grow.  When they asked me to join their board I was flattered and promptly accepted.  I think I caught Chase off guard when I said “yes” so quickly, but I had been watching them for a year.  

They are a product of the Ann Arbor/U-M ecosystem and benefited greatly from the TechArb and the Law School’s Entrepreneurship Clinic.  I will write about the ecosystem at another time.

Needless to say I am proud of the whole Fetchnotes team.

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Friday was a good day.  My friends over at Fetchnotes always seem to brighten my day.  The team is smart, energetic, coachable and has great hustle.  I expect big things from them and this will be confirmed by news in a couple weeks.  After lunch I was walking down the sidewalk, on my way to the bank to wire Fetchnotes money (full disclosure, I am on their board and an investor) and I was talking on my phone.  I’m completely in my own world.  I heard “Wes.”  Not sure if someone actually called out my name, I turned around and there was this young man.  He looked familiar but I couldn’t place him (plus my mind was on my phone call of which the person is still on the line.)  He introduced himself and thanked me for a mentoring session a while back.  He said he took my feedback, worked on his idea and he got a funded company interested and is working for them, developing his technology.  I asked him to email me so we could catch up later.

There is nothing more flattering than being stopped on the street and thanked for mentoring.

Young entrepreneurs often think that mentors want to work with them because their idea is so awesome, so compelling that they just want to be associated with the next Mark Zuckerberg.  Guess what?  The best technology or idea doesn’t win and the odds of your idea being the next Facebook are infinitely small.  I will not speak for all mentors but I advise startups because I just love working with entrepreneurs.  I like their energy and passion.  I enjoy helping them develop a sustainable business model.  In the best cases it is like that puzzle you can’t put down until you solve it.

I meet with a lot of entrepreneurs, and because of my background in software and affiliation with the University of Michigan, many of these entrepreneurs are students or quite young.  (For all you entrepreneurs out there - it is a great idea for you to have an experienced mentor or advisor to talk to about your startup.  See graphic on the right from the Startup Genome Report.)  

I fully appreciate that I am not Brad Feld or Fred Wilson, but many, certainly in Southeast Michigan, still seek out my advise on startups.  Getting that first meeting …and getting a second one is, to me, about being respectful in your interactions.  Mentors tolerate weak strategy, poor business models, etc. but if you remain coach-able and respectful you can develop a relationship. So here are some tips to help you show respect to a potential mentor/advisor.
 
Respect…
…your mentor’s time.
My time is valuable.  (Especially to me.)  If you schedule to meet with a mentor, show up.   Sounds obvious but I had 3 cases in 4 weeks.  This includes phone calls too.  I just blocked out time on my calendar that someone else could have actually used.  If I show up to a coffee shop and you don’t, it’s going to be a long time before we meet again.

Be on time.  I know everyone runs late.  I certainly have, but I pick places to meet that I know have wifi so you can let me know you are running late.  (P.S. 5 minutes is late. 15 minutes is disrespectful.)

Do some homework.  If I can name five companies doing exactly what you are pitching and you can’t, not cool.  Google it.  It’s not that hard.  I would also do your homework on your mentor.  You can find out a lot about me from my bio on this blog, my LinkedIn profile, my Tech Transfer bio, and a Google search.  A quick review would tell you that I am not the one to offer advise on the best regulatory path for your biologic.  You can also use you research to make a personal connection to you mentor.  A quick search for me will tell you I like beer, homebrewing, BBQ, and the Kansas City Chiefs.  If we have any of those in common, that is a great connection.

Know what you want to talk about.  Have a plan/agenda.  Good agendas include (but are not limited to): help figuring out how you can make money off your idea, help figuring out how to develop the technology, developing a team, etc.  Your plan should NOT be to pitch me a bunch of poorly thought through ideas until you get to one I think is interesting or “just getting to know me.”

If something changes don’t just keep the appointment.  I have been working with a startup (that is tackling a big problem) that had scheduled to meet me.  They sent me this message more than 24 hours before saying:

… We don’t want to waste your time and we realized that we need to have a group talk first.  Can we reschedule with you once we have a better grasp on our goals and timeline?

Hell yes.  Thanks for not wasting my time.  If all you did was postpone, this would be different.  In this case the team is very coach-able and respectful of my time.

Your mentor has a busy schedule.  My student mentees seem to work on a different time scale.  In most cases you cannot book my time later this week.  If you wanted tomorrow at 1:00, you should have asked (at least) 3 weeks ago.

..your mentor’s communication channels
If someone gave you my cell number (I’ll shoot the bastard) don’t text me as your first correspondence.  How the f*ck am I supposed to know who you are? Especially when you didn’t even give me your name. (This was not a U-M student for all you wolverines out there.)

Totally not cool.

…you mentor’s contacts
Yes.  I know a lot of venture capitalists, angel investors and entrepreneurs.  I value my contacts.  I’ve worked hard to develop those relationships.  I’m not going to give them to you because you ask.  I will not just introduce you.  By default, my introduction is an endorsement of your product/idea my.  The bar is high there so don’t get you hopes up.  I see hundreds of ideas in a year.  Investors know that and since I don’t pass them all along any connection/introduction becomes a qualifier.

If I offer a connection and you accept, follow up quickly.  It looks bad if I make an email introduction or I introduce you in person and you say you will get them some documentation and drop the ball.  You make me look bad.  If you are not ready to talk to that person, tell you mentor “I would love an introduction to Ms. Big, but at this point I need to do X before talking to her.  Can I contact you next week when I will be ready for the introduction?”

I know this might be an obvious blog post, especially for experienced entrepreneurs.  But given my personal experience as a mentor, I found that not all first-time or student entrepreneurs know how to engage with a mentor.

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As an MBA and someone who works with a bunch of MBA students who think they are entrepreneurs it is nice to see this from someone else….

(From Jason Freedman’s humbledMBA blog:

I have an MBA from Dartmouth’s Tuck School of Business.  It was some of the best experiences of my life.  I met fabulous friends, learned from incredible professors, and developed in many important my ways.  My entrepreneurship professor, Gregg Fairbrothers, is one of my all-time favorite teachers and he taught me a lot about doing start-ups right.  The professors and administrators at Tuck never claimed they were teaching me how to run a startup.  In fact, they were explicitly teaching general management curriculum to be applied towards larger businesses.

 

The problem that I see a lot now that I’ve been in startup land for 4 years is that too many MBAs think that their education in business can be applied directly to startups.  They forget that startups are not a smaller version of a larger company.  Applying a set of frameworks designed for success with larger companies is a good way to guarantee failure when dealing with start-ups.  Professors like Gregg Fairbrothers preach this all the time.  Yet, I still get calls regularly from MBA friends ready to do their first start-up, believing that their MBA education will give them the right tools.

 

The reality is, we MBAs come with a lot of baggage.  A good way to understand why MBAs are damaged goods for startups is to understand the actual curriculum.  

 Here are standard core courses at any business school: 

Strategy: 

 This is the most dangerous of all MBA courses.  In this course, you learn high level analysis, using the 3 C’s, the 4 P’s, and, of course, Porter’s Five Forces.  So, on a typical day, you read a 15-page case on a company’s mistakes and then apply one of these frameworks to think through how you would have done it differently.  Doesn’t sound so bad right??  Wrong!  This is all high-level business strategy for larger companies.  For a start-up, no one ever knows what will work and what won’t.  That’s why there’s such a focus on iteration in the lean startup methodology.  Great startups figure out what to do by building really fast, listening to customers, and iterating.  More like guess and check.  An MBA, fresh out of a Strategy course, will try to figure out everything on a white board, naively believing that they can think their way out of mistakes.

 

Accounting: 

In accounting class, you study the annual reports of big companies and learn about gross margin, cash flow statements, balance sheets.  You learn that assets=liabilities + equity and how to convert LIFO to FIFO.  This is all really, really useful if you have warehouse full of stuff and customers that pay on credit.  Pre-revenue start-ups usually have no Cost of Goods Sold, no revenue, none of that.  The only accounting you need is to know how many users are out there, how much it costs to acquire a user, and how much money you’ll have from that user.  That and a shoebox to store your receipts until you’re ready to pay someone to type them in and do your taxes for you.  An MBA will way-over complicate things with talk of deferred taxes, accrual basis, yada yada—and they forget that their gorgeous, complex set of spreadsheets fails the most basic axiom of all analysis: garbage in, garbage out.

 

Organizational Behavior:

OB was one of my favorite classes.  I would love to have a company big enough someday to implement some of the stuff on building great structure.  For startups with less than 10 people, all that stuff is irrelevant.  No one in OB tells you to let your top hacker work whenever or wherever he wants or that status meetings are best done standing up or that people are motivated more by technical challenge then by compensation.  To be fair, when you’re startup gets big enough (over ~20 people), it rocks to have an MBA come in and start to implement structure just as it’s really needed.  Too much structure before that gets in the way of the magic.

[more…]

First let me say that I DO NOT subscribe to the “you-have-have been-a-CEO-to-be-a-CEO” model you often hear from venture capitalist. I find it utterly ridiculous and if that were the case the pool of CEO candidates would get infinitely smaller. However, when I read the “experienced team” slide in a pitch deck or the management section of a business plan and no team members have no real experience you’ve lost my attention. Don’t embarrass yourself and loose credibility. I understand the MBAs see the pitch deck template and it says “Experience Management Team slide” and think, “Oh, I got into a good MBA program, that is definitely me.” Focus on what you do have and need regarding technical and business talent. If you have neither you need to create a team that does.

I know, everyone thinks the inexperienced label does not belong to them, but think twice before labeling yourself an “experienced Management team” or “fundable team” if any of the following statements are true:

• If you have never worked in the industry you are trying to enter. 
• If you don’t have deep contacts in your industry (preferably decision-makers that will take your call.)
• If you to make the claim of experienced entrepreneur and you are counting your childhood paper route.
• If you have never worked in a startup (or company with less than 50 people)
• If your management experience includes an undergraduate (or graduate) club/organization.
• If you are claiming technical knowledge because of an undergraduate degree you have yet to complete. (Software can be the exception, medical devices however, cannot.)
• If you claim to be fundable but have no connections to the angel/venture community.

Gain some credibility and state that you are a scrappy young team and you know your deficits. “We have little experience but we are going to leverage mentorship from Ms. Entrepreneur who is willing to help us…” or “we are looking to add talent to the team…” or “our advisory board is made up of…”

Remember, investors would rather invest in an A team with a B idea than a B team with an A idea.

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Because I work with early-stage startups and students I get this a lot.  Whether it is searching for venture capital or talking to a mentor/advisor/consultant everyone seems to be worried that someone will steal their idea and run with it.  Here is a reposting of my resopone on the University of Michigan’s entrepreneurial Ning site.

Are they going to steal my idea?

Posted by Matthew Russell on July 14, 2009 at 3:18pm

I came up with this brilliant idea, and I want to discuss it with a mentor, but I am afraid they might steal it. Do I need to get a non disclosure agreement? Should I even discuss the idea online? What about other people who aren’t mentors, should I tell them my idea?

Replies to This Discussion
Reply by Wesley Huffstutter on July 15, 2009 at 11:29am

I get this a lot and (sorry) there is no good answer. If you can talk about your idea without disclosing your “secret sauce,” go for it. Talk about your idea as a “black box”…input A and B and like magic, out pops C on the other end. However, this is often difficult in cases where the idea/market niche is what is unique (which is often the case for web 2.0 ideas.)

Generally speaking, those in the venture capital (or angel investing) community are safe. (Even though they will never sign Non-disclosure Agreements (NDA).) They have a reputation they would like to maintain and if they are branded as one who seals ideas from entrepreneurs, no one would bring them startup ideas (deals) and they could not make a living. The same can be true of mentors and consultants.

You can ask mentors to sign an NDA but don’t be shocked if they don’t. I don’t. Through my job at Tech Transfer, mentoring students and startups, advising investors, and sitting on boards and committees, I see a lot of technology. I hear lots of startup ideas. In fact, I have had two different groups pitch me the same basic idea. If I had signed an NDA, the liability would be on me to prove that I did not disclose information to the second company.

This said, good ideas turn into great ones by getting feedback from others. After all, two minds are better than one. It is too often that I see companies operate in “stealth mode” but why? It has been my experience that the reason they are in stealth mode is not that they have some ready to execute top secret plan, but rather they feel that they are not ready for the light of day, lack focus, or can’t figure out how to get to market. These are all things that would benefit from talking to someone. You might discover a flaw in your plan that would have cost you lots of money or time. So be careful about creating a product (or a company) in a vacuum. (By the way, I’m not saying you should not fly under the radar. Quite the contrary. I am, however, suggesting that an outside perspective can help you figure out if you actually have a business and may even speed your idea/technology/product to market.)

Still reluctant? What can you do? Do your homework. Find out about the people you would like to talk to. This website is a great place to start and remember, you are getting free advise.

Wes

Original link (with other comments):
http://alumnicfe.ning.com/forum/topics/are-they-going-to-steal-my

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I hear a lot of elevator pitches and read a lot of executive summaries, not to mention business plans.  When I work with students or mentor companies I often offer them this framework to help them think about their idea. It also translates well to an executive summary or elevator pitch.

You will hear that many venture capitalists will tell you that they read a business plan from the back to the front, starting with the financials (they want to know if the market is big enough to consider investment) and the management team. That’s fine.

Not me.  Maybe that is because I work with really early stage companies, in some cases concepts…way too early for VC investment.  Some of them have not even figured out themselves how to make money, or fully monetize their idea (i.e. “we’ll make money selling ads” followed by “oh yeah, your right. Our information has value too.”)  (I don’t advocate going to VCs before you have a well worked out plan.  Find a mentor to help you…you need it.)

Truth is, I know before I even look at your financials that they are bullshit.  Seriously, how can anyone truly predict the revenue of a company with a completely new/novel product? (You can’t.)  I want to know that A) you have thought it through and B) the market is big enough I should care.  In terms of thinking it through, make sure you tell me units.  I hate seeing we will sell $X,XXX,XXX in product.  I want to see the number of units you expect to sell and the sales growth.  I’ll judge how realistic it is.

And your team?  Well, the jackass in me will tell you that if I’m going to invest in your company, I can bring in the right people with my investment, or depending on valuation do it later.  Remember, management teams change.  Sergey and Larry don’t run Google. <edit 2011: Larry is now running the company again but you get the point.  Everyone looks at Bill Gates and Michael Dell but the truth is that many founders (especially technical founders) don’t run the company.>

So this gets me to the framework, which is what I want to hear in a pitch or see in an executive summary.  I like it when it funnels down in this order from the macro to the micro.


The Problem
First, I want to know the problem you are solving and that it is a real problem.  I need to know that you are selling pain killers not vitamins.  (You will hear this a lot in entrepreneurial circles.) What do I mean by that?

Do you take vitamins?
Sure every morning.
Do they work? 
Don’t know.
What if you don’t take your Flintstones™ today, do you feel any different? 
No.
How about a week? 
Nope.
Now change that with a Vicodin® because you blew out your knee.  What happens when you forget to take your pill? 
Ouch.
And when you take it?
Ahh, much better. 

Which is easier to convince someone to buy?  How do you know your idea is a pain killer?  Well, pain is measureable.  For most businesses that is either time or money (or both.)  When talking to potential customers (yes, you have to do that) do they say “that’s cool, I’d buy that” (vitamin) or “I/my company cannot live without that.”  “I’ll cut you a check right now if you solve this problem.”  “Can I be your beta tester right now?” (pain killer.)


Solution
Tell me how you are solving my pain.  This is a chance to tell me about your technology but be careful.  Don’t geek out on me and start talking bout the strength properties of your new nano-biomaterial or why you are using Python over PHP.  I don’t care yet.  Stick to making sure you are solving the problem.

Other things to think about as it relates to your solution: Are your creating barriers to entry?  Do you have intellectual property?  Why would I buy from you?

There is an old adage “No one got fired for buying IBM”  …maybe now it is GE. What it means is that if you are going head-to-head with an established player and Jane customer is looking for a solution at $100,000.  Her choices are you, at NewCo. startup with a cool technology or GE, with an inferior product but it comes from GE.  If she buys from you and you go under she frivolously wasted the company money on your product and thus is at risk of getting fired or she buys from GE and you turn out the be the next Google and she says “well I was conservative with the company money because GE was the safer choice” and keeps her job.

Is your product different from what is out there? I hear “my idea is 10x better” a lot.  My response is “who cares?”  If I told you the black pen on my desk writes 50x darker than any other pen on the market what would you say? …Who cares?!


How do you make money?
You have to tell me how you make money.  What are your margins?  If you don’t know - keep working until you solve this.  Things to think about once you figure out how you make money: Does you solution cause a fundamental shift in how things are bought and sold in your industry? (This can be both good and bad.)  What is the sales cycle? What is the product life?  How do these affect how you make money?  Does the way you make money affect the brand/image of your product? You get the picture.

I also want to know about your customer.  Is the buyer the same as the end user? Think: patient (end user), doctor (selector and implementer), and insurance company (payer) relationship.


Market
Tell me about your market.  Is it big enough that I care?  Is the market growing? What makes your customers alike? Can your dominate your market?  (If you tell me that “There are 1.3 billion Chinese in the world. If we just get 10% we’ll be rich” I just threw your executive summary/business plan in the trash. I need to know that you can carve out a niche, dominate it, then leverage that total domination to get into other markets.)  What is your addressable market?  Here is an (true) example on addressable market I gave in a lecture to MBA students in FIN/ES 629 Financing Research Commercialization class at Michigan (Ross.)

The University of Michigan invented a new device for Esophageal Atresia (EA).  EA is a birth defect where there is a faulty connection between the esophagus and the stomach.  Simple ones can be corrected with surgery.  Some EA cases are so called “long-gap” where there is a complete separation between the esophagus and the stomach and it is so long that it cannot be simply surgically repaired, instead requiring several surgeries over several months to slowly stretch the esophagus to the stomach. A gastric tube needs to be put in place.  It’s generally awful for the child and parent.  U-M invented a traction device to limit surgeries and avoid the feeding tube. So lets quickly review. Problem? Yes. Pain (Definitely. Babies in pain, complicated surgeries on tiny parts… who couldn’t sell this?) How do you make money?  Sell devices. Simple. It was even novel enough that a patent could be filed.  So how about the market?  Well, let’s do the math. EA occurs once in every 4,425 births. Roughly 14% are long gap. There are 136 Million live births a year. That is 30,734 cases of EA which translates to 4,302 long-gap cases worldwide (roughly 215 in the USA) and it is not growing. Sorry folks, no business here.

Many venture capitalist need to hear markets that are at least $1 Billion (I have heard Ken Pelowski of Pinnacle Ventures talk about the $1B magic number several times.)  If your market is not that big don’t fake it.  It doesn’t mean it is a bad idea.  Just find a smaller fund or angels.


Go-to-Market strategy
Tell me how you are going to introduce your product.  Do you need channel partners?  Who holds inventory?  Tell me about your supply-chain?  How do you get the word out?  How are they going to find your website? …and more specifically, how are you going to leverage social media since I usually get a two word response.  Why is Amazon.com or Wal-mart going to carry your product?


Team
I often tell companies I mentor that a good idea is necessary but not sufficient.  We all know the best technology doesn’t always win (think: Mac vs. PC adoption or Betamax vs. VHS). The best executing team wins.  Teams are often what investors back, not the idea.  Now, I don’t subscribe to the “you have been a CEO to be a CEO” model.  That logic only makes the CEO pool infinitely smaller.  That said, your team must have a business leader who has deep industry knowledge, who has a lot of contacts that she can call on to get deals to happen.  This most often comes with some time working in the industry.  The only exceptions to this rule appear to be in web 2.0.  The CEO needs to focus on the market and how the product gets to the customers.  If you have a technology based product the technical staff needs to have geek cred.  You don’t need the faculty who invented the technology, the recently minted Ph.D. student will do.  But they have to know your technology and competing technologies intimately. Be careful of a team that is made up of a bunch of friends. Great business partners make good friends, the inverse is not true.


Financials
Like I said earlier I know this is hocus-pocus.  Convince me that you have thought it through.  Tell me how many units you are going to sell.  Show me your predicted cash flows for 5 years.  The reader will call you a liar, just be able to back up your statements.  Oh and never say “this is a conservative estimate.”  They always are and they all seem to optimistically over shoot.


The Ask
If you are giving an elevator pitch let me know what you want.  If you need money tell me how much you need, what it is going towards and how long it will last.  If you are not asking for money, ask for the sale or ask the listener to join the team.  It is really the same pitch just different asks.

This is a big loss for A123 Systems but a boon for all the energy storage and green tech companies in and around Ann Arbor.  Maria is a smart and talented entrepreneur who continues to help the entrepreneurial community.

2010 Michigan Growth Capital Symposium.  (I’ll be there.)