Early Stage Capital: A Necessary Ingredient?

Several weeks ago a group of city officials from Clarksville, TN visited our fair city of Durham to see what we were up to. They didn't expect to find a blossoming entrepreneurial ecosystem and wanted to know more.

Chris Heivly (Triangle Startup Factory), Bob Walker (8 Rivers Capital), and I were asked to spout off our thoughts on how things get done. As I sat there I wondered, "How many venture capital firms are in Clarksville, TN?" We all know the answer to that one. But does that mean all is lost for Clarksville and every other mid size city in America? Absolutely not. There is no relationship between early stage investors and an area's ability to innovate and make things happen.

Does capital help? Of course. But bootstrappers can stir the pot in any given city. May each of us go forth and do so.

When I grow up I want to be an entrepreneur...

As I was driving my 4 year old to school last week I asked the sometimes cliche question, "What do you want to be when you grow up?" Drew responded with, "A Durham Bulls baseball player."

This whole career discussion reminded me of conversations I had as a young man. Looking back it seemed I only had a few career options: doctor, lawyer, insurance agent (since that's what my Dad did). I'm not sure any one pulled me aside and said, "Have you ever thought about buying a business or starting your own?"

This will not be the case with my son. My goal is to teach him the skills to be in a position to have the flexibility and the smarts to "Do More Faster."

You might be an entrepreneur if....

1. You come home and convince your spouse that you are about to take over the world with your new venture and that she will need to work to support you

2. You wait until your potential investors leave the meeting so they don't see you push starting your car

3. You and your family eat black beans and rice most nights (the other nights it's black bean soup)

4. You work for no pay for a year

5. You wake up at 3AM with ideas and can't go to sleep unless you get up and put them on paper

6. You read books like Do More Faster and then realize you probably should read it again in order to apply the principles

7. You patiently wait for another update from Eric Ries's blog StartUp Lessons Learned

What's your Facemash?

Over the past few months I have listened to Randy Komisar's Getting to Plan B podcast from Stanford's Entrepreneur Thought Leaders many times. The principles are slowly sinking in. The ideas is that Plan A will fail and Plan B (or C, D or E) will be the success.

Almost all major success has followed this pattern. For example, right now I am watching CNBC's The Facebook Obsession and Mark first started Facemash, which was Plan A.

So what's your Facemash? It's time to start Plan A so that you will get to Plan B.

Inmates to Entrepreneurs

If you had 15 minutes to speak to 50 inmates at the Federal Prison Camp in Butner, North Carolina what would you tell them? This was the situation I found myself in today.

Several weeks ago I opened my Inc Magazine and read an article about the Inmates to Entrepreneurs program started by Brian Hamilton, CEO of Sageworks. Not only did the program seem interesting, I knew a little about Sageworks since they are in this area and we (KeySource Bank) use their financial software. So I attended a meeting about the program at the Sageworks office in Raleigh a couple months ago.

Then Amy at Sageworks invited me to attend a session at the prison led by Brian scheduled for today. I showed up at the appointed hour and found out that Brian was running behind. Here I was in front of 50 inmates who were waiting to be taught. Our prison contact turned to me and gave me the go ahead to speak. It was humbling to say the least.

After sharing some of my background and outlining my responsibilities of helping business owners sell their companies, I attempted to paint the picture of them entering the workforce upon release from prison. Getting a job in today's market is not easy even with a clean background check. Their greatest hope of success is to start their own small service business such as landscaping, painting, car detail, etc. Plus those that work hard have unlimited opportunities and will not be held back by the politics of companies. I seem to at least sparked some interest since several inmates began to ask questions and we had some discussion.

After about 15 minutes Brian showed up and spent the next 90 minutes outlining a plan that will change their life if they will follow it. As I looked into the eyes of these guys I felt hope that they can change and come back and add value to society and I look forward to helping.

As I look back I think all of us can relate to those inmates since 99% of the time corporations will never pay us what we are worth if we are good.

Mark Cuban, The Ultimate Bootstrapper

Mark Cuban is probably still in Durham right now since I just returned from meeting him. He exceeded my expectations and really impressed me with his bootstrapping, no credit card, teen entrepreneurship encouraging, advice. He reminded me of a book I am reading, The Bootstrapper Bible. Here are quotes from Mark:

"Best equity is sweat equity"

"VC = Vulture Capitalists" (this was funny since there were many venture capitalists in the room and they sponsored the event)

"Think like a student" (meaning live cheap so you can invest in yourself and ideas)

"What is the least expensive way to start a business" (Reminds me of lean startup ideas and getting to the minimum viable product)

"We are in the perfect environment to start a business since startup costs are so low"

"Sales cures all...founders have to sell"

"When I bought the Mavericks I walked in the first day, took a cheap desk from Office Depot right with the sales team and started calling season ticket holders"

"Ideas are the easy part..how hard are you willing to work to make it happen"

"They thought they had to move to Silicon Valley (from Pittsburg)"

"Live like a kid"

"Future of television is television...Internet is not designed for television"

"We can't help it..."

I attend lots of events and hear many speakers but last week Henry Kaestner from Bandwidth made an impression on me that I will not forget. While he did talk about business, he focused the Bandwidth prorities of faith, family, work, and fitness in that order. For example, everyone gets kicked out of the office at 12 noon to engage in some type of physical activity.

Perhaps the most poignant point Henry drove home was his faith. One attendee asked, "In a world that attempts to ban National Day of Prayer, how do you speak so openly about faith?" Henry responded, "We can't help it." It was not only the words he spoke but the way he said it. I could feel his conviction and it touched me deeply.

How many of us hesitate to share our deeply held beliefs? Even though I served a 2 year mission for The Church of Jesus Christ of Latter Day Saints and have been known to share my beliefs with those around me, I still left with a renewed desire to stand for what I believe.

Thanks Henry.