Lucky You?

I often mention that luck plays an important role in the success or failure of new enterprises, and have previously pointed out that Sergey Brin, co-founder of Google, has acknowledged that luck was the most important factor in Google's early success. I recently read a quote attributed to Jim Balsillie, co-CEO of RIM (BlackBerry) and heavily involved in its early success. A recent article in Business Week about the rise and fall of BlackBerry ascribes to Balsillie the following statement: "A lot of people who are involved in building a $60 billion company like to look back and attribute their success to smart moves along the way. What I'm going to tell you is a story about luck--and extraordinary luck at key moments along the way." My goal in emphasizing the critical importance of luck in your success is this: You will experience both good luck and bad luck along the way. If you let the bad luck put you under, you will not be there when the good luck would have later come along. This is a primary reason why persistence matters!

BaseCamp Business Calendar Widget Now on Blog

I have added a widget for highlights from BaseCamp Business events calendar, which you will find in the right sidebar column of this blog.  It covers events in PA, NJ, DE, MD, and TN hosted by a number of entities, all targeted to entrepreneurs and especially technology entrepreneurs.  Clicking on a listed item will take you to the BaseCamp Business Events Calendar site for more information.

I hope you find this helpful!

Who's That Following You???

If you jump on the bandwagon--as I have--and set up a Twitter account, you may be pleasantly surprised to find that very quickly several people start following you.  Followers are good, but you should realize that not all of them are real.

Millions of fake Twitter accounts (up to 20 million by one estimate) are for sale, and millions of Twitter accounts are fraudulently used for the sole purpose of inflating the number of "followers" of a legitimate account.

Because having numerous followers is so valuable in increasing "standing" in the Twitterverse, many operators have sprung up that will generate numerous fake Twitter accounts for a client and then program those fake accounts to follow the client's legitimate Twitter account.

In another scam, these fake accounts can be made to re-tweet from legitimate accounts, also increasing prominence of the legit account.

Further still, illicit software is for sale that allows scammers to cause legitimate Twitter accounts to randomly follow thousands of other Twitter accounts.  And this is where you come in with your newly created Twitter account.  When you get that software-generated "follow" of your brand spanking new account, you are naturally inclined to accept the invitation to reciprocate by following the account that just followed you.  Bingo... the account that used a software program to follow you just got a legitimate follower in return!

Marketing Vs. Product: And The Winner Is...

...Marketing, of course!  (Okay, next time I'll try to give you a harder one.)

It seems that SolarCity Inc. has recently provided us with a prime example of the fact that innovative marketing can produce results far greater than innovations of the technologies to be marketed.  Taken to its next logical conclusion, the lesson here is once again that a combination of innovative technologies and innovative marketing can produce results that are quite spectacular.

SolarCity installs solar panels on residential housing units... nothing so technologically advanced about that these days, although advances in materials, etc. are indeed important in the solar panel business.

SolarCity recently announced that is will begin selling asset-backed securities that are based on its leases to its residential customers.  SolarCity's stock price surged more than 12% on the news, bringing its stock price to nearly six times what it was one year ago.

This phenomenal success is largely due to SolarCity's business model, which entails leasing its solar equipment to homeowners rather than trying to sell the expensive installations at a time when homeowners are hard-pressed to get loans.  Now, the newly created asset-backed securities present another means for SolarCity to make money... SolarCity has essentially created a lucrative new product for sale, which is bundled leases of SolarCity installations, sold as securities!

It of course remains to be seen how these securities perform for purchasers in the long term, but SolarCity is making out quite nicely in the meantime. 

I am not suggesting that you enter the risky world of high-finance, but I am suggesting that you consider implementing innovative marketing if you really want to bust out!

Freebie for Global Entrepreneurship Week!

In recognition of Global Entrepreneurship Week, I am making available a free electronic version of my book Mastering Technology Commercialization. Use coupon code PG58N to get a free copy at Smashwords.com.  Enjoy!

A Little Political Rant

Well, since the political environment is crucial in determining whether entrepreneurs thrive, from time to time I will throw in some political commentary here.

Yesterday I saw a show on PBS (of all places!) that enlightened me to the difference between economic democracy and economic freedom.  We know that many times a majority of the people will vote to take from the rich and give to the poor... this is economic democracy, not economic freedom.  Greece, Spain, Italy, Venezuela, and other economic "powerlouses" come to mind here.  Economic freedom, in contrast, is a system whereby the producers are allowed to keep the bulk of their earnings and thus keep producing. 

The PBS show quoted a study showing that the poorest citizens in countries with highest economic freedom have 10 times the income of the poorest citizens in countries with the lowest economic freedom!

BTW, this is a good time to point out that JFK was a conservative, not a liberal as the liberals would like us to believe.  See a great book by Ira Stoll entitled JFK, Conservative.

Public Solicitation of Investments

As some of you are aware, in September it technically became legal for entrepreneurs to publicly solicit investments through advertising, social media, etc.  However, the SEC has yet to set final rules for doing so.  For instance: what disclosures must be made and when, etc.  For this reason, wise entrepreneurs will approach the process cautiously and retain competent legal advice prior to any such solicitation.

Due to the change allowing public solicitation, (aka general solicitation), AngelList created a means for public fundraising through its site.  AngelList says that 3,000 entrepreneurs have signed up and have raised over $8MM, although not all of the money was through the new public-fundraising option.

This is worth checking out if you are in the fundraising mode.

The Myth of America's Decline--and the Reason is: You

We all hear the scare stories about China on the rise and America in decline.

I'm not old enough to recall the 1950s predictions about the Soviet's communist economy overtaking ours, but I recall very clearly the huge wave of hysteria in the 1980s and 1990s about the Japanese burying us.

Well, of course the Soviets bit the dustheap and the Japanese have mired in stagnation for over two decades.  Can anyone think of one innovative new product category that the Japanese created? 

Well, now comes along a great read that examines America's competitive position in the world: The Myth of America's Decline:Politics, Economics, and a Half Century of False Prophecies, by German newspaper editor Joseph Joffe.

The greatest reason for America's strength is that here innovators like you have been able to thrive... and drive our economy forward.  The Soviet, Japanese, and Chinese economies tellingly have this in common: Massive state interference in the economy and near-total domination by large manufacturers.  Ditto South Korea, by the way.

America's large manufacturers have declined in significance, but due to relatively lower interference by our government, new businesses step in, fill the gap, and build in its place a mountain.  America's competitive strength can be lost through erosion over time, however; it's not a "given."  We need to remember this when choosing our leaders! 

Joffe's book will give you plenty of "ammunition" when you find yourself in your next discussion on the government's role in your business.

AdWords Metrics in a Multichannel World

Those of you who drive website traffic using Google AdWords should consider that social media have affected online behaviors, bringing much more complexity in determining the effectiveness of your use of various online marketing tools.  It is no longer a given that all traffic coming in through your AdWords campaign originated due to that campaign.

A great example of this was recently elaborated by Larry Freed, CEO of analytics firm ForSee.  Consider Mr. Freed's company-published remarks below:

"Ours is a multichannel, multi-device world.  As consumers move across channels, many metrics fall apart.  Consider conversion rate ...the percentage of people who come to your website and take the desired action, such as purchasing something. 

"Let's say a friend tweets about a great Samsung smart TV they bought at Target.  You read the tweet, but since your friend didn't include a URL, you go to Google and enter: "Samsung smart TV Target."  Up pops a pay-per-click ad and you click on it.  Target may look at this and say: "Great, my AdWords campaign is really converting."  But even though the ad was the last click, what really made the transaction happen was that a satisfied customer posted a recommendation via social media."

"This is just one of the factors that makes effective analytics challenging.  ...Trying to simplify your efforts to measure [customer] behavior and attitudes is dangerous."

This is just one more example for readers of my blog regarding the complexity of marketing and the fact that in your marketing analytics you must find out how your ecosystem works and then you must go deep!

AIA and Patent Trolls

A White House report estimates that in 2012 patent trolls threatened over 100,000 companies with infringement suits.

The America Invents Act gives patent holders a new weapon against the trolls, but it is not without drawbacks.  The AIA allows entities to challenge the validity of patents through the USPTO within nine months of issue (except for certain business method patents). 

This can be beneficial if you are a target of patent trolls but scary if you obtain a patent, because it is now easier to invalidate!

Reports are that entities have a better chance of winning a USPTO challenge than winning in court, and it is less expensive--about $300K vs. $650K through the courts. 

However, as the law now stands, when an entity uses the USPTO challenge, they may forfeit their ability to challenge the patent in court.  This is due to a mistake in the way the law was written, and legislation has been introduced by House Judiciary Committee Chairman Bob Goodlatte to allow subsequent use of the courts if an entity loses the challenge.

The details of the challenge process and other post-grant changes are too lengthy for a blog post, but a great summary can be found at the Pillsbury Law firm website.

Patent-troll Protection for the Little Guys!

I have found that many small companies are unaware that Google and NetApp in April of this year developed a service, Unified Patents, to help small-entity patent-holders pool resources with large companies in the battle against non-practicing entities (NPEs), or "patent trolls." 

Don't think that your small company is safe; according to a Boston University study, 50% of firms sued by trolls have revenue under $11 million.

Unified Patents provides a troll-monitoring news feed and also attempts to buy or license patents before the trolls get their hands on them, among other defensive strategies.

The Boston U. study put the cost of NPE activity at $29 billion in legal fees and settlement costs in 2011.  And this does not even include associated losses due to management distraction at the target firms.

The Unified Patents service is based on so-called Micro-Pools in key technology fields.  A company joins the Micro-Pool(s) to which their patent(s) pertain.  Subscription fees to Micro-Pools are based on revenue and may be free for startups or small companies.

Micro-Pools also provide intellectual property expertise and intelligence.  For patent holders, this service is definitely worth checking out!

Important Distinction in Crowdfunding Methods

It is important to understand when considering crowdfunding your business, that there are two very different means of raising the money. 

One is the existing method of pre-selling a product--taking paid orders for future delivery--and then using that money to fund your business and deliver the product.  This method has been around for years but has more recently gained greatly in popularity.  If you raise money in this manner, you are not selling equity (stock or membership units), the buyers are not investors in your business, and you are not subject to SEC and state securities laws.

However, the JOBS Act of 2012 allows for companies to raise up to $1 million per year through crowdfunding sites via equity investments.  This will be allowed once the SEC finalizes rules governing the process.  (See my post of October 24 for more details.)

Crowdfunding your business by selling equity will have far-reaching implications, and you should very carefully consider whether to do this.  The risks stem from the fact that you may end up with a large number of small investors, each of whom can become a pain in your side at a minimum and who have the right to sue you at a maximum.  Also, savvy future investors such as angels and VCs usually do not want to have to deal with a large number of co-owners of businesses in which they are invested.

Like almost every other decision, the decision whether to raise equity by crowdfunding is not a simple one.

My book Mastering Technology Commercialization has a long chapter on financing your business and will give you far more information to help you in your decision.

Finally... Some Movement on Crowdfunding Rules

The SEC yesterday proposed rules that would allow startups to raise capital online from small investors.  Congress in 2012 passed the JOBS Act allowing for such fundraising once the SEC finalized rules governing the process, but the deadline set by Congress for issuing those rules has long passed.

The rules proposed yesterday will be subject to public comment for 90 days after their publication in the Federal Register.  A few highlights are provided below, but you can go to the SEC website to get more complete information,

A company would be able to raise a maximum aggregate amount of $1 million through crowdfunding offerings in a 12-month period.

Investors over a 12-month period could to invest up to:

• $2,000 or 5 percent of their annual income or net worth, whichever is greater, if both their annual income and net worth are less than $100,000.
• 10 percent of their annual income or net worth, whichever is greater, if either their annual income or net worth is equal to or more than $100,000.  During the 12-month period, these investors would not be able to purchase more than $100,000 of securities through crowdfunding.

Securities purchased through crowdfunding could not be resold for one year.

Among the things the company would be required to disclose in its offering are:

• Information about officers and directors as well as owners of 20 percent or more of the company.
• A description of the company’s business and the use of proceeds from the offering.
• The price to the public of the securities being offered, the target offering amount, the deadline to reach the target offering amount, and whether the company will accept investments in excess of the target offering amount.
• Certain related-party transactions.
• A description of the financial condition of the company.
• Financial statements of the company that, depending on the amount offered and sold during a 12-month period, would have to be accompanied by a copy of the company’s tax returns or reviewed or audited by an independent public accountant or auditor.

Remember, that as I have pointed out several times previously, just because you CAN raise equity through crowdfunding does not mean that you SHOULD do so. 

Don't Say I Didn't Warn You!

If you have read my book Mastering Technology Commercialization, you know that in it I repeatedly pound home the message that sales and marketing are involved in every aspect of what you must achieve.  Well, in turn, the hard-science of persuasion (it’s not a fine art) is the crux of sales and marketing.

Now tell me: Would you attempt to develop a new technology if you did not understand the science behind that technology?  Of course you wouldn’t… not if you are like nearly every inventor I have ever worked with.

But would you attempt sales and marketing if you did not understand the science behind persuasion?  Of course you would… if you are like nearly every inventor I have ever worked with!

Take this as fair but friendly warning: You must understand and apply the science of persuasion if you are to succeed in commercializing your new technology.

Fortunately for you, there is an absolute “beast” of a book that clearly and concisely crams into your cranium the key concepts you desperately want to know.

The book is: “Yes!  50 Scientifically Proven Ways to Be Persuasive.”  It’s less than $12 from Amazon.  There… you’ve been warned; so if you die a failure with an extra $12 in your pocket, don’t come cryin’ to me!