Week 18: Kansas City Radio and WinHEC 2007 in LA

This weeks the highlights for me have been attending the WinHEC 2007 conference in Los Angeles and being on Kansas City radio with 2 other of the scholars: Simon Phelps and Devin Cheevers.

You can listen to a podcast of the talk here. The show was broadcast live on Hot Talk 1510 AM Kansas City Radio and hosted by Joe Liberman of Spidertel a local web entrepreneur. The talk was part of a weekly series of interviews with entrepreneurs (or in our case aspiring entrepreneurs) about the business and the internet. We spoke about our uses of the internet in marketing and promoting our businesses, our business ideas and plan and differences between the US and UK in terms of entrepreneurship. It was my first time on the radio and I found it fun and interesting to be a part of. Although a few attempts at British humor did not go down well.


I also attended WinHEC 2007 in Los Angeles. WinHEC is a 3 day yearly event held by Microsoft aimed at hardware developers. Throughout the conference there are multiple sessions on various subjects. The most notable sessions I attended, for me, were about Virtualization.

Definition of virtualization: "Decoupling of aspects of the computer which are normally very closely coupled". Think of an old fashioned PC, the hard drive, the Operating System and the Applications are all in the same box, on top of the box is a screen connected only to the box. Every part of the PC is in the same place, but why should it be?

With virtualization I can decouple the presentation layer - by accessing a computer remotely only the user interface of the computer is on the machine I am using. The rest is located else where across the network or the internet.

Application Virtualization - The application, for example Microsoft Word, from the users point of view appears to be on their computer. The user can interact with it in all the usual ways, they can open files on the application which are stored on their computer. However with a virtualized application the program can be stored elsewhere and only the parts of the program that the computer is using are streamed to the computer.

Server Virtualization - conventionally 1 server Operating System was located on 1 physical machine. A small businesses may typically have 4 servers each in a different box, each has a different use. This is very inefficient, at any given time 1 server may have a huge usage while an other has a very low usage. With virtualization I can combine all 4 servers onto one physical machine which may have multiple processors and other devices. A virtual server runs as if it is the only server on the operating system, however a layer below the OS controls which server is given which resources at any one time. This allows for much greater efficiencies. Also if a physical part of the machine breaks, with the right equipment the virtual servers will stay running on another part of the machine while the dysfunctional part is replaced. 0 down time.

Client PC Virtualization - An employee may have his/her own laptop which they use in work and home. This can lead to some conflicts. Space on the laptop is limited, the laptop will have both work and home information on it, which could lead to a compromise of work information on an unsecure home network. With Client PC virtualization the employee may use his laptop for home use, when he/she arrives in work he can 'tap into' (words like 'load' and 'install' don't seem to apply in this situation) their work virtual PC from their laptop. Information stays in the work environment and the employee has their own laptop environment too.
As an added bonus administration of such networks is much easier because admins just need to install new software on 1 virtual server template and then all employees can access new software.

Week 16: Netchemia and MIT Sloan Sales Conference

This week I have been working in Netchemia, spoke with an IP attorney and attended the 'MIT Sloan Sales Conference' in Boston.

There is a lot to write about so I will split it up into 3 short posts

Thoughts on IP

My Sales 101 learning

Takeaways from the MIT Sloan Sales Conference

hope you find it as interesting as I have

Week 15: American Work Ethic

This week I have been working in Netchemia. What I have slowly come to notice while working here, and hearing stories from other internship students, is the work ethic in American business.

The average working day is 8am-5pm. Often though I have found that many people are in the office before 8 and these same people are still in the office after 5. Compare this to the UK where office hours are 9am-5pm and workers stick to these hours quite rigidly. In previous companies I have worked for in the UK I found that as soon as 5PM comes the office is suddenly deserted.

Does this lead to higher productivity? I am not sure. In America the general practice is to take 1 hour for lunch; in the UK I have found lunch to usually be 30 minutes. I don't feel 30 minutes gives the same amount of down time to relax and unwind as an hour for lunch. This lack of unwinding means that the UK worker doesn't get the same chance to 'disconnect' from their work, which could in turn affect productivity.

Hard at work: source

During the lunch hour American's tend to go out of the office to a restaurant or takeaway. This allows greater socializing with colleagues in a more informal environment. UK workers tend to sit at their desks or the canteen with sandwiches. This could be because of the time allowed for lunch or maybe because in America the number of options and the price of eating out is so much cheaper.

Looking at the figures, America's GDP per capita is $43,500 compared to the UK's of $31,400 (source CIA World Factbook) I wonder if the work ethic has anything to do with it. (Maybe its a direct effect of incentivized employee payment through commission and tips).

On a side note, the US Courts have just had a landmark patent case challenging the meaning of 'obviousness' in a ruling against Teleflex's patent for being to obvious. Maybe the system will now reform! (see Bloomberg coverage here).

Week 13: Netchemia Internship

This week I had a day off work to attend some lectures organized in part by Kauffman. This included 'Angel Investment Term Sheets' at 'Invest Midwest'. What made this talk so interesting was that the talk was being presented to Angel Investors by an Angel Investor to try and educate them on how to go about writing a term sheet.

The bottom line was this: What is good for the Entrepreneur is often the best terms for the Angel investor also. Wow! Not only was this good new for all entrepreneurs out there but also they backed this up with solid data.

To ensure the best return as an Angel Investor the lecturer talked about tee-ing up the Start-up company for the next round of investment: trying to make the terms and conditions as easy as possible to stomach for the next round investors. Often if the angel investor doesnt consider the next round and tries to give him/herself terms which are too ownerous on the entrepreneur then one of 3 things happens:

• the entrepreneur can't find an investor who can tolerate the terms of the previous round and so doesn't invest
• the next round investor says that they will invest ONLY if the terms which they dont find favorable are changed
• the entrepreneur must find an investor who has money but not much sense

The second talk was at the Kansas City branch of 'Polsinelli Shalton Welte Suelthaus' an IP attorney. The talk was by Rob Sweeney founder of TextCaster. Rob talked about his experiences in business and what he learned when founding a company. At the time he spoke to Ewing Marion Kauffman and asked him for advice. Kauffman replied:

"Find the best person you can in your field, hire them and pay them well"

What great advice. Rob's company textcaster has patented the concept of "Permission Based Text Messaging" (see Patent US7197324). At first I was amazed this was possible. The 2 key points about patents are that they are:

• original
• not obvious

And too me this seems to be neither of the above. Even more surprisingly to me was that the patent has been extended to Europe, as originally i assumed this would be a business process patent. Looks like nearly anything can be patented these days!

For Rob the patent is great news as it provides his business with at least theoretical protection against competitors copying him. But I would bet that there are many companies who have infringed either unknowingly or before Rob filled his patent. And what small company can afford a patent lawsuit? So the patent at least at a glance seems useless.

Week 12: Netchemia Internship

This week my main task has been to create a marketing survey for Netchemia's newest product. Then call the target prospects in Kansas and Missouri and get results to the survey. This is the first step in the 'Sales Funnel' which slowly whittles down the number of prospects till you find a prospect who wishes to buy the product. The funnel seems to involve about 5 main stages.

1. Survey
2. Indepth discussion
3. Product Demonstration
4. Pricing
5. Purchase

The number of potential prospects diminishes rapidly as the sales process continues; the potential value of each prospect increase.

Conversion funnels like this appear everywhere in business. Just do a quick Google image search for 'funnel' and you'll find:

• student enrollment funnel
• marketing funnel
• selling funnel
• Funnels occur in personal life: for example dating.
  

Ideas also create a funnel. And this leads to the product development funnel, for example: many product ideas, lots of computer designs, a few prototypes, one final product. And the product development funnel is just apart of a larger funnel, which is the consumers product choices in the market place.
The funnel is where entrepreneur's have both an advantage and disadvantage.

Advantage: entrepreneur can go with Gut instinct ignore many stages of the product development funnel and create the product which they feel will fill a niche best in the marketplace, this short circuits the funnel and gives the entrepreneur a huge time and money saving compared to well established companies, also allows entrepreneurs to create unconventional products.
Disadvantage: If the entrepreneur's instinct is wrong: the product fails in the market place, most likely their business will go bust. The large company can afford to fail and try again. The large company can also afford to invest more resources into the processes between the top and bottom of the funnel potential increase the value of the outcome.
In effect the entrepreneur funnel is very short bypassing many of the conventional big business process', leading to one offering: just like the big business.

Which is better? Who can say. It comes down to in the individual entrepreneur, the individual company, luck, connections, the list goes on.

Most business seminars today, in any field, will be showing to the audience how to improve the process between the start and end of the funnel, be its Sales, Marketing, product development etc. etc. (and for personal seminars this could be dating ;o).

Week 11: Start of Internship at Netchemia: Sales

My new Internship is at Netchemia. A 6 year old start up with 20 employees and 4 person partnership at the top. Netchemia provides school districts with web based software which allows them to streamline office processes by making them paperless. These process' include recruitment and learning plans for students.

I've been placed in the Sales department, where I will learn about Sales, Marketing, a small amount of Technical Development and making proposals for potential clients (in the UK called a 'bid' or 'tender' in America called an RFP: Request For Proposal).
Having only been at Netchemia for week I feel this will be a really useful placement for me, and also like the Kauffman course so far has missed out on a very important subject: Sales. You don't have a business; you don't have a customer without first selling.

The course has covered pitching for investment. I feel this is different. In a pitch I already have the listeners permission to sell to them. In a sales office getting this is just one of many steps involved: getting the permission to speak to the right person. This is a difficult challenge and a very worthwhile skill any entrepreneur should learn.

No matter who you are selling to the first few steps of the process are the same:

1. Target the right company.
2. Contact the company.
3. By default be put through to the company's gatekeeper.
4. Get permission from the gatekeeper to speak with the target customer: the prospect.

Step 4. to me, is what defines one of the key differences between an average and a great salesman (there are many more key differences but this is the first important one). The gatekeeper is often a receptionist or special assistant to the prospect. One of the jobs of the gatekeeper is to shield the prospect from 'unsolicited calls'. So as a sales person, one of the gatekeepers jobs is to not let you past. The gatekeeper is an interesting position, they have all the power to block you, but not necessarily the understanding to know if you will benefit their boss or not. Trying to sell to the gatekeeper is often a waste of time: what influence do they have in the decision making process to buy? Probably none and yet you must convince them that their boss would appreciate speaking to you.

Heres a few basic tips I have learnt.

1. Don't have a set script: it makes you sound like another seller in a call centre (center).
2. Don't waste to much time trying to explain to the gatekeeper why you are calling: the longer you're on the phone with them the less chance you have to speak with the prospect. Often you get to a point in the conversation where the penny drops the can almost hear the gatekeepers thought process: "oh hang on this is a sales person I don't want them to waste any time of my boss".
3. Just say in a confident polite way "X Please" where X is just the first name of the prospect (as if you know then on a personal level).

Then your through to the prospect! The first call you make to a prospect is never a sales call, all you want is 5 minutes of their time to see how they are currently dealing with issue 'x' and whether they would benefit from your system. Try to see if your product and their needs are a fit. Then arrange an appointment to call: a next contact: where you take a step closer to the sale.

Hopefully as the weeks go by I'll be able to close a sale!

Week 10: Inbetween placements at Kauffman Foundation

This week I have been in between placements which has given me an excellent opportunity to work on my business idea. I have teamed up with one of the other Kauffman Scholars: Luke Jefferson (see his profile here). Together we are working to start a web company which will monetize social networks.

Why? For many reasons. Here's my take on the social networking:

1. Epitomized by the dot com bubble a lot of web start ups thought that if they could get enough page views they could figure out where the money would come from later. 'Eyeballs over earnings'. *
   
2. Just look at the number of websites on the internet and compare that to website revenue. I think the internet has a long tail of very low earners and maybe 100 winners (and then the anomaly Google).
3. Now narrow the market down to just Social networks. Of the top 100 sites on Alexa only 10 are true social networks. Compare that to the 10,000's of social network startups this year which have faded into obscurity.
   
4. How much revenue do these sites make? There is very little solid evidence to confirm this as there are no published figures, the only real solid figures are the prices that the web companies were acquired for. (And theres only 1 big social network acquisition: Myspace by Newcorp for $580,000,000).

So it appears that most social networks don't wish to disclose earnings, and yet its very easy to find approximate page views (like Facebook's staggering 5.5+ BILLION page views per month and rising). It would seem like conversion of adverts into click-through/ sales is phenomenally small.

Despite this, businesses are still turning more and more to the internet to target their audiences. It would seem like internet advertising is either:

1. more successful than traditional media
2. potentially more successful than traditional media
   

Yes I agree targeting of the prospect in the right situation is much better on the internet than traditional media, but engaging the prospect to look at the advert and take it in is still very very difficult.

To combat this problem, and to exploit what Luke and I see as a huge gap in the internet advertising landscape, we aim to launch a new type of innovative advertising platform which will focus on earnings for the advertiser and ourselves from day 1. With our focus in the area of social networking.

---

*In a way I also think Google has spread this false model: "if we build it they will come: if they're here then we'll figure out how to make money" but what they have that no one else has is the best advertising platform on the earth. This huge financial security allows them to try and fail at many things until they hit another great idea (like Gmail). The founding entrepreneur simply doesn't have this money cushion.

Week 9: Start of 3 month internship

This week has been a very interesting one for me. All the Global Scholars have been placed on internships throughout America with leading high tech companies: often start up companies, where they can get an understanding of American business and entrepreneurship and contribute their skills to the company.

These internships have been careful chosen to suit the Scholars needs and that of the host company. I was placed in Black and Veatch a Kansas based Civil Engineering company which provides solutions to business and government for their power station, water works and building needs (amongst many other functions). This is a very well known company in Kansas, with offices worldwide and about 8000 employees.

However over the time on this course my expectations and aspirations had changed considerably. The business I want to found has changed to a different field, and the sheer quality of the course has lead me to want and expect a different focus of business activity. Myself and my boss at Black and Veatch came to the mutual agreement that what I was doing at Black and Veatch was no longer right for what I wanted to achieve. And I have to say Black and Veatch were very helpful in understanding my needs and helping me to find something else. They are a great company to work for who have real respect for their workforce.

Leaving Black and Veatch taught me some really valuable lessons:

• trust your instincts; if it doesn't feel right act on it
• Pursue your own goals as best you can: don't have regrets about not going for it
• In doing so people will respect your decisions and the outcome is more beneficial to both parties although sometimes it can be difficult to get to that point
  

In the meantime I have been back at the Kauffman Foundation who have been incredibly helpful in finding me another placement.

Week 5: Last week in Kansas City

This being the final week at the Kauffman Foundation, before we travel to California, we've been asked to prepare presentations on our business ideas; as a 15 minute pitch. So I thought it would be a good idea to introduce the rest of the Global Scholars and their business ideas.

Scholar	Business Idea
Aaron Mannis	A product to dramatically improve firearm safety.
Ade Bamidele	Web based platforms for Image Retrieval
Chris Mitchell	Automated sound genre classification system
Craig Hellen	Video design production company specialising on a new UK sport mountain boarding see www.fnkydesign.com
Daniel Currin	Patented and is now hoping to license/create company around an innovative balloon product
Devin Cheevers	Create mobile phone features to aid developing countries such as his home town in South Africa.
Georgios Diamantopoulos	An automated quality checker for Video Codec which creates a metric of image quality.
Gerhard Symons	Co-founder of CamStent: a bioscience company aimed at revolutionizing a particular surgical treatment for coronary artery disease.
Joshual Seal	Patented a energy saving product which reduces power consumption of devices in stand by.
Luke Jefferson	Assistive technologies for colour blind computer users.
Manu Bhardwaj	Funky wheelchair that has a novel folding mechanism
Scot Devlin	A non-destructive subsurface mapping provider that uses a unique 3D Ground-Penetrating-Radar system in the European construction industry
Simon Phelps	Started company ‘Fluvial innovations ‘ which is based on IP developed at university: a unique demountable flood barrier which can be constructed by one person. see more at www.fluvial-innovations.co.uk
Wasim Bhatti	Has a number of inventions which he wishes to develop under his own brand starting with an Unmanned Aviation Vehicle for the civilian market.
Will Griffiths	Has business Interests in social innovations focused on energy saving and green devices

So there was a brief introduction to all the other scholars. Next week I'll be in California and the heart of Silicon Valley: San Antonia.

Week 4: KC

Like the constant snow (I don't think I have seen the grass yet in Kansas City!) the quality of speakers has stayed at its incredibly high level with talks from David Aldridge, Bob Litan of Kauffman and Catherine Mann. As well as this we went on a visit to an established local entrepreneur: Danny O'Neil the Founder of the Roasterie a Kansas coffee supplier.

Bob Litan is one of the smartest people I have ever met (and this is after meeting the MIT and HBS lecturers) his background in Economics. Here is a quote from his biography on the Kauffman website:

"Litan has had a distinguished career in public service. He served on the staff of the Council of Economic Advisers (1977-79), as Deputy Assistant Attorney General in the Antitrust Division of the Justice Department (1993-95), and Associate Director of the Office and Management and Budget (1995-96). He also has been a consultant to the Treasury Department on financial policy issues."

And what he had to say to us in the 1 hour informal chat he had with our group was fascinating. Bob wrote an essay on what was required of the US to sustain and develop its Entrepreneurial economy in the future: effectively what were the primary concerns of an entrepreneur.

After a first draft of this essay he gave a talk on his findings to a audience of entrepreneurs and found that their thoughts on the issue compared to his and the governments were different.

"What would you expect an entrepreneurs primary concern is?.. Tax right?.. well it isn't, its the workforce"

After discussing this with these entrepreneurs and other he rewrote the essay and came to the following 4 concerns for a future entrepreneurial economy to be sustained and show growth:

1. Ensuring a skilled workforce
2. Reforming health care
   
3. Promoting Innovation
4. Limiting overly burdensome regulation and liability litigation

Interestingly 2 of these concerns, health care and litigation, aren't so important in the UK as health care is paid for by the state and litigation isn't so rife.

So why isnt the UK more entrepreneurial?

Weak 2: Kansas City

The snow just doesn't melt here in Kansas, the weather is so cold that it stays 5-6 inches deep all week. Which is great for snowball fights but not so good for learning my way around the city: everything looks the same: white and bland.
This is our first full week of lectures and visits. First I want to briefly introduce the Kauffman Foundation. The Kauffman Foundation was founded in the late 1960's by entrepreneur and philanthropist Ewing Marion Kauffman. Ewing set the vision of the Foundation to be:

"a society of economically independent individuals who are engaged citizens, contributing to the improvement of their communities."


Practically this means promoting entrepreneurship with a particular focus on youth. However this is only a small part of the Kauffman's reach in and around Kansas and America. Kauffman is one of the most prestigious foundations in America, employing many serial entrepreneurs, former Government advisor's and science magazine editors. One of the first things I noticed about Kauffman was the gravitas given to its name, speaking to Americans I met as I was out and about, they would ask what are you doing here in America and as soon as I mentioned Kauffman their eyebrows raised and I almost felt like i'd been given an extra level of respect just for associating myself with the name.

The most memorable speakers of the week were Ken Harrington, Howard Aldrich and Scott Shane.

Ken Harrington, who is the Managing Director at the Skandalaris Centre for Entrepreneurial studies, set us a task of evaluating our business based on scoring different aspects of our business development. For the whole lecture he put one slide up on the project- the slide showing the matrix of business aspects versus scores - and then we held a discussion on what it all meant. The interesting points which came out of this lecture were:

• There are 3 motivating factors for a business founder: Control, Impact and Money.
• It is good to first be aware of where you stand, which factor(s) motivate you the most to help determine what you want out of a business.
• Often the founder who likes control, creates a company which slowly but inevitable seeds control from him/her
• The Founder effectively creates a company he/she doesn't want to be a part of!

This is not a bad thing. There are different roles required of the company leader throughout the company's lifetime, and sometimes one leader isn't suited to all these roles.

This has really helped me re-evaluate why I want to start a company and what I want to get out of starting a company.