Arianna Huffington's Top 10 Lessons for Entrepreneurs

http://www.huffingtonpost.com/peter-diamandis/arianna-huffingtons-top-1_b_2742705.html
 

Quickread

By Peter Diamandis

 

1. Think differently from other entrepreneurs by accepting failure and learning from it. "There are a lot of failures along the way," Arianna said. "I always stress that. I have two daughters, one just graduated from college, the other a junior, whom I always talk to about my failures." Entrepreneurs need to address the possibility of failure, she said, "because so often, I think, the difference between success and failure is perseverance and not giving up after one or two or three failures. Just keep connecting to that place where failure doesn't matter," Arianna said. "If we become so dependent on things always being a success, then we're in a very vulnerable position -- because we're not in control of how the world is going to receive something," she said. "I'm reading Marcus Aurelius, who was a Roman emperor and a Stoic, about how to get to the place where bad things can happen and you are not affected by them. This is now my ambition because I think that from that place then you can act so much more effectively."


2. Pick something you are passionate about that aligns with the zeitgeist. "For me, the most successful enterprises are always when the entrepreneur's passion matches something happening in the zeitgeist... There is a spirit of the times," Arianna said. "There are things that are happening, that have the wind on their backs and when we tap into them and when our passion converges with what is happening in the world then magic happens. It doesn't mean there's no hard work, but definitely entrepreneurs have the wind on their back. For me the Huffington Post was something like that. I mean, being Greek I was always about connections and conversations. The beginning of the Huffington Post was actually, then, just taking those conversations and moving them online. I could see that the important national conversations were moving online."


3. Relax in order to get your best ideas. "I'm very interested in how people get their ideas." Arianna said. "A lot of my ideas come in moments of peace, relaxation, hiking and reading. Something completely unrelated. Not in moments of dealing with my email or cleaning out my inbox," she said. "There is a great book by Arthur Koestler called The Act of Creation that tracks where great scientists get their ideas, not just the ones that we all know about. Again and again you come across the fact that creative ideas come in moments of relaxation, not in moments of stress. That's why if you talk to the people who've achieved great breakthroughs, whether it's Bill Gates or Jeff Bezos, they all talk about how they manage their life. Bill Gates taking time to go in a cabin away from everything and read."


4. Never tolerate a toxic person in your organization. "I heard Jeff Bezos say it best," said Arianna. "He said that he will not allow anybody in the company who comes to his attention who is toxic person, however talented, to stay in the company. I'm a big believer in that. Zero tolerance for toxic people. I would rather have somebody much less brilliant and who's a team player, who's straightforward, than somebody who is very brilliant and toxic."


5. When hiring, trust your feelings. "When AOL acquired the Huffington Post and we had more resources, one of the hardest things I had to do was staff up rapidly. We're now almost at 700 employees," Arianna said. "I would spend weekends in hiring sessions that were like speed dating. Time is so precious, so I set up a system where I would have other people in the interview with me. I would participate for the first 10 minutes, and then leave them with editors to talk. In interviewing a candidate you know almost immediately if it's a 'no.' There's no need to spend more than that initial time."
   "You also know if it's a yes," she added, "that moment of falling in love. You know it's a yes 100 percent. The hard thing is in between. If there is any slight doubt about it, my answer is no. I don't proceed if I have any doubt because the hardest thing is hiring somebody who turns about not to be the right fit -- that mistake is very costly. We've all done it. It's problematic. So, 'If in doubt: Don't,' is a very good rule for me, whether in relationships or in hiring people."


6. Handle criticism and public scrutiny by refusing to doubt yourself. "I wrote a book called On Becoming Fearless where I talk about the voice in our head, that voice of doubt which is ultimately your worst enemy," Arianna said. "You can deal with everything outside. The hardest thing is dealing with what I call the obnoxious roommate living in our head. That voice that doubts us and learning to deal with that with a sense of humor or the way we're educating a child is also eliminating a huge drain from our lives."
   When the Huffington Post first began, Arianna added, it received negative reviews from some quarters. "In fact, if you'll go back to the first day, some of the reviews were not kind. I've learned one of them by heart. It was: 'The Huffington Post is an unsurvivable failure. It is the movie equivalent of Gigli, Ishtar and Heaven's Gate all rolled into one.' A year later the woman who wrote that review emailed me and said, 'I was clearly wrong, and I would now like to write for the Huffington Post, to blog for it.' I said absolutely -- and that's the other thing. You never hold grudges. It's really again part of living in abundance."


7. The truest drive comes from doing what you love. "I feel very blessed to be doing exactly what I love to do," Arianna said. "I feel very grateful. It doesn't mean that there aren't many things every day that happen that I wish didn't happen, challenges I'm dealing with, as we all are, but nevertheless the overwhelming sensation is one of gratitude."


8. It's important to step back from work to recharge. "One problem is learning to unplug and recharge," Arianna said. As somebody who loves what I'm doing I think we run the risk of forgetting to recharge ourselves. I have a lot of rules around sleep. One of my rules is I never charge my devices near my bed. It's really important because you may wake up for whatever reason in the middle of the night and be tempted to look at your data. There is medical evidence that if you do, even if you go back to sleep it's not the same recharging sleep. You know what? What is it that can't wait? The other thing is a lot of people say oh, I need my iPhone by my bed because it's my alarm clock. Eliminate your excuses. We all know there's nothing better than waking up recharged and nothing worse than going through your day like a zombie."


9. Find hope in the world by focusing on abundance. "I think the world is like watching a split screen. Depending on which side you are looking at you can be hopeful or despairing," Arianna said. "I focus on what gives me hope. It's key that we focus on abundance and surpluses rather than just our shortages. To that effect, I think, we in the media have not done a good job at spotlighting what is working. So, I think beginning to put a spotlight on what is working not just on what is not working is what gives me hope and we're doing a lot of that. On HuffPost we have a section dedicated to good news. We have a section called Impact, which is all about giving and what people are doing to transform the world."


10. Build a tribe that will support you. It's important to have a group of trusted friends, colleagues and family -- who will support your efforts. "For me the tribe always started with my mother and my sister, which is very Greek," she says. "What's important, is the combination of whomever it is that helps us connect with ourselves, our mission and passion."

Seven financial terms every serious entrepreneur should know

http://venturebeat.com/2013/06/08/startups-financial-terms/

By Jed Simon

There are brilliant technologists and business leaders in today’s tech world, but while startups have their own, great talents, we’re seeing one common weakness: lack of understanding elementary financial concepts.

This impacts long term financial strategy as well as ability to negotiate and set up basic cost structures within the company.

Blame it on business school drop outs, or general lack of exposure to financial principles for building that great idea. It’s a growing trend and even professionals outside financial institutions working with startups have taken note.

Angel Investor and chairman at HDI company, Mark Schwartz told us, “Most companies don’t have people that are finance savvy other than knowing what to put in a term sheet for an initial capital raise.”

Startups forgo hiring a controller to manage the books and create financial reports because of “lean principles.” But even if you aren’t a finance major or don’t employ one, it is every chief executive’s responsibility to understand basic finance principles and how they can affect your business’ bottom line.

Robyn Gould, senior associate at Cooley LLP, a law firm that works closely with start-ups, has also noticed this trend:

“A growing number of our startup clients have developed the most cutting-edge, disruptive technologies, but struggle with determining their monetization strategy and preparing financials for investor pitches – skills that are critical for their ability to raise capital and build a successful business. We hear about startups ‘pivoting’ all of the time – often the most important pivot can be in a company’s monetization strategy. Accordingly, understanding the financial principles underlying such decisions is essential to being able to make these shifts.”

To help get all you new and hoping-to-be CEOs started on the right financial footing to ensure confidence from your team and your investors, here are seven basic finance terms that every good entrepreneur knows. We’ve also included a few additional resources to brush up on your Finance 101.

Bottom Line:

Net earnings and net income both fall under the “bottom line” description. You may hear people talk about “affecting the bottom line” of the company and this is simply any action that may increase or decrease the company’s net earnings, or overall profit. The term “bottom” is in reference to the typical location of the number on a company’s income statement, below both revenues (top line) and expenses. Needless to say, this is an important term to know.

Gross Margin:

Gross margin is expressed as a percentage and represents the percent of total sales revenue that a company keeps after subtracting the cost of producing its goods or services. The higher the percentage, the more the company keeps on each dollar of sales (that will eventually go toward paying its other costs and obligations). In simple terms, if a company’s gross margins are 25 percent, for every dollar of revenue that is generated, the company will retain $0.25 before paying its overhead, which includes salaries, rent, and more.

Fixed versus Variable Costs:

A fixed cost is exactly what is sounds like, a cost that does not change with increases or decreases in the volume of goods or services that are produced by your company. These costs are obviously the easiest to predict and plan for. Rent, salaries, and utilities all usually fall into this category.
Variable costs are just the opposite. They can vary depending on a what a company is producing (such as Amazon Web Services usage), and as a result are much harder to forecast.

Equity versus Debt:

The “equity versus debt” comparison may seem silly to some, but you would be surprised at how many people I have come across who have no idea what either really means. Equity is simply money obtained from investors in exchange for ownership of a company, while debt comes in the form of loans from banks that must be repaid over time. Both are necessary for growth, with their own pros and cons. Equity versus debt is a critical decision for any entrepreneur and it is important to know the difference as the future of your business may depend on it.

Leverage:

Leverage can be interpreted a couple different ways. In the financial world, leverage is most commonly known as the amount of debt that can be used to finance your business’ assets. In simple terms, the amount of money you borrowed to run your business. The balance you want to strike as an entrepreneur is that of your debt and equity. If you have way more debt than equity, you will be considered “highly leveraged” aka “very risky” to potential investors.

Capital Expenditures (CapEx):

Capital expenditures are any items purchased by your business that create future benefits. Basically, if something you bought is going to be useful to your business beyond the taxable year in which you purchased it, capitalize the item(s) as assets in your accounting. Examples include computers, property, or acquisitions.

Concentration:

Concentration is simply the measure (usually a percentage) of how much business you are doing with a specific client or partner. Relying on one or a couple of clients and partners to do business is a prime example of over-concentration. This is a losing strategy for any business because if something goes wrong with those limited relationships your business will be in serious trouble. Focus on keeping low concentrations for your accounts and investors will be impressed.

 

Zentila Raises $2.1 Mln in Series A Financing

http://www.pehub.com/208198/zentila-raises-2-1-mln-series-a-financing/

Zentila said on Wednesday that it has closed $2.1 million in a Series A financing round. The lead investor was Vocap Ventures. Based in Winter Garden, Florida, Zentila is an online meeting planning platform.

PRESS RELEASE

ORLANDO, Fla. — Zentila, the first online sourcing, booking and tracking solution for meetings and conventions, today announced the closing of a $2.1 million Series A investment led by Florida-based Vocap Ventures.

“Zentila excited us as an investment for a variety of reasons,” said Vinny Olmstead, managing director of Vocap Ventures. “The technology is disruptive in that it automates and simplifies a fairly complex process. This has enabled the company to enter a fragmented market with a clever solution that has the potential to capture a significant portion of a multi-billion dollar industry.”

Founded in 2011 by hospitality industry veteran Mike Mason, Zentila provides meeting planning solutions for companies and individuals through a free-to-use, highly intuitive strategic meetings management solution. Since November, the company’s 1,500 corporate users have sent meeting requests with an estimated value exceeding $4 million. Hotels are enjoying close rates more than five times the industry’s average, making Zentila one of the most efficient RFP channels in the market today. Zentila was also recently chosen by Northstar Travel Group, the world’s leading business-to-business media company serving the travel and meetings industry, to offer its dynamic sourcing and booking platform on Northstar’sSuccessful Meetings andMeetings and Conventions online facility search.

“While we were approached by a number of venture capital firms, we opted to move forward with strategic investors who have deep experience in both the technology and hospitality spaces,” said Mason. “This new round of funding will enable us to further advance our offerings and continue to build market share.”

Other investors include Arsenal Venture Partners and venVelo, both of Winter Park, Fla., and Matt Avril, former hotel group president at Starwood Hotels and Resorts. Avril will also join Zentila’s Board of Directors.

“Un-bookable leads, or ‘RFP Spam,’ contributes to unproductive time for hotel sales forces globally,” said Avril. “ Zentila represents an ideal solution by helping hotels sell effectively while improving the experience and efficiency for meeting planners.”

“Zentila’s experienced management team is passionate about the meetings industry, and I share their enthusiasm for providing this new solution.” Avril said. “I am delighted to be a part of this dynamic group working to effect change in this critical way.”

The Seven Deadly Sins of Early-Stage Funding Requests

In The Art of Bootstrapping Guy Kawasaki said, “The probability of an entrepreneur getting venture capital is the same as getting struck by lightning while standing at the bottom of a swimming pool on a sunny day.” And bootstrapping is a viable funding mechanism only if you have boots to strap, i.e., you have the ability to fund your venture with your own money.

For those of you in need of external funding, Kawasaki’s math is daunting. There is a rule of thumb that for every 500 bona fide business plans submitted to sophisticated investors, about 50 will get some consideration, five will become pitch decks seen by investors, and one will get funded.

So, what can you do to increase your chances of getting funded?

Other than being able to convince investors that you have the passion, persistence, and plan to be a successful entrepreneur, you should also avoid the following all-too-common mistakes:

1.     Not Being Coachable

Miles Kington said, “Knowledge is knowing a tomato is a fruit. Wisdom is knowing never to put one in a fruit salad.” Investors want to believe that you are smarter than they are; it is a big reason they will listen to your pitch. But wisdom only comes with the experiences learned over a lifetime. Good investors can help you in many ways beyond just financially, but only if you are willing to listen and learn. Have an open mind to the opinions of those who have done it before. Be the expert in the product or service you are creating, but defer to those who know the many other critical pitfalls you must avoid in order to be successful. 

I recently reviewed a pitch deck that had many grammatical mistakes. I told the entrepreneur that some investors might take that as a sign he lacks attention to detail. His email reply was dismissive and ungrateful. Investors are generally betting on the jockey not the horse, so being a horse’s ass won’t help you get funded.

And it doesn’t stop when you cash the check. Continue to develop a relationship with your investors even after they invest. Everyone needs a boss, even the CEO. Employ an effective Board of Directors that questions your assumptions. Every top golfer has a swing coach because they are always trying to get better. Follow that example.

2.     Not a Scalable Business

Your neighborhood may desperately need a new salad restaurant on Main Street and it might be profitable some day with solid execution. But borrow the money from a bank or raise it from the Three Fs of early-stage investing: friends, family, and fools. Early-stage capital is a high-risk investment and the best investors in the business are wrong more than 50 percent of the time. So the wins need to be big wins or the model doesn’t work. You must demonstrate that investors can make a substantial return and that is only possible if your business scales and scales quickly.

3.     No or Low Barriers to Entry

In the must-read book Do More Faster, Tim Ferriss said, “Trust me, your idea is worthless.” An idea is not a business. A company’s success is much more dependent on management’s ability to execute than on the original idea. That said, if six high school students in Bangalore can replicate your app over a weekend, your business is in trouble. Patents are a barrier to entry, but they cost money, take a long time, and don’t protect what you’ve done – they just give you the right to sue someone who has infringed on your patent. In my view, the best barriers to entry are revenue-generating customers, robust sales and distribution channels, a management team with deep domain experience, and the ability to continue to innovate rapidly. As Will Rogers said, “Even if you're on the right track, you'll get run over if you just sit there.”

 

4.     Weak Sales / Marketing / Distribution Channels

This is number four on my list, but number one in my heart. The single biggest weakness I see over and over again is a failure to understand how to build an awareness of your product, then an interest in it, and ultimately consumers willing to pay for it. “Social media” is not enough of an answer to the awareness challenge. “If you build it, they will come” only works in the movies to get folks interested. And the “App Store” similarly is not enough of an answer as your distribution channel since yours will be among the million or so already free or for sale there.

One way to jump start this process is with Eric Reis’ Lean Startup approach to a minimally viable product (MVP). Find a client to demo your MVP product or service. You won’t get paid, but you will get great feedback and, more importantly, a reference on which to attract distributors and resellers (and investors). If you are not ready for 10,000 customers then don’t sell direct – find a channel where you have 10 customers and each of them have thousands of customers.

5.     Failing to Understand Resource Requirements

In engineering circles there is the Stanforth Rule that states, “There are only two kinds of problems in the world: those that violate the laws of physics and those that time and money can solve.” President Kennedy knew in 1961 that with enough money and enough time, the United States could land a man to the moon and return him safely back to earth. But he didn’t advocate landing a man on the sun. You shouldn’t either. If your idea doesn’t violate the laws of physics, don’t be afraid to explain how much money you are going to need to raise to achieve escape velocity. The ability to articulate that you understand that $500,000 in seed capital will not be your last raise is actually a huge positive. Remember the Rule of Twos: It will likely take you twice as long to raise half as much as you are looking for – budget accordingly.

6.     Inappropriate Use of Funds

Certainly you are not going to tell an investor that the first thing you plan to do with his money is buy $6,000 office chairs for everyone in your company. But knowing specifically how the money will be spent is an absolute must. A plan to spend that scales the business faster and/or increases the team responsible for sales / marketing / managing distribution channels will help your cause. Remember it is their money even after they invest it in your company. If you want to raise more from them, or raise money from others who will ask them if you spent the last round responsibly, treat it like you are bootstrapping. Resource efficiency is the trademark of a true entrepreneur.

7.     A Revenue Model, but No Profit Model

I’ve got a great idea for a business that will generate explosive revenue from day one: I’m going to stand on a busy street corner and sell hundred dollar bills for $90. My forecast has me grossing $9 million the first quarter and all I need is $10 million to get it launched.

 

Again, an idea is not a business. Don’t tell us how much money you are going to bring in; explain to us how much profit you are going to be able to retain, reinvest, and distribute.

Although not one of the Seven Sins, Not Doing Something Useful probably should be. Marcus Wohlsen of Wired magazine said, “The history of technology is littered with solutions to non-existent problems.” Investors want and need to make money and that fact drives most of their decisions. But, speaking only for myself, building something more than just a cool new restaurant finder or the like would sure help you capture my interest.

One final piece of advice to increase your chances of raising money: Be so good you can’t be ignored.

 

Allen H. Kupetz is the COO of venVelo, a Winter Park early-stage investment fund, and the Executive-in-Residence at the Crummer Graduate School of Business at Rollins College. venVelo has recently invested in three central Florida companies: flexReceipts, Row Sham Bow, and Zentila.

 

Looking to learn more about how to be a successful entrepreneur? The author recommends these books:

Blank, Seven. (2005). The Four Steps to the Epiphany: Successful Strategies for Products that Win.

Blank, Steven and Dorf, Bob. (2012). The Startup Owner's Manual: The Step-By-Step Guide for Building a Great Company.

Cohen, David and Feld, Brad. (2010). Do More Faster: TechStars Lessons to Accelerate Your Startup.

Duhigg, Charles. (2012). The Power of Habit: Why We Do What We Do in Life and Business.

Dyer, Jeff and Christensen, Clayton. (2011). The Innovator's DNA: Mastering the Five Skills of Disruptive Innovators.

Freid, Jason and Hansson, David. (2010). Rework.

Guillebeau, Chris. (2012). The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future.

Johansson, Frans. (2012). The Click Moment: Seizing Opportunity in an Unpredictable World.

Kidder, David. (2013). The Startup Playbook: Secrets of the Fastest-Growing Startups from 42 Founders.

Lacy, Sarah. (2011). Brilliant, Crazy, Cocky: How the Top 1% of Entrepreneurs Profit from Global Chaos.

Moore, Geoffrey. (2002). Crossing the Chasm: Marketing and Selling Disruptive Products to Mainstream Customers.

Ries, Eric. (2011). The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses.

Tatum, Doug. (2008). No Man's Land: Where Growing Companies Fail.

Tjan, Anthony and Harrington, Richard. (2012). Heart, Smarts, Guts, and Luck: What It Takes to Be an Entrepreneur and Build a Great Business.

Wasserman, Noam. (2012). The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup.

10 startup fundraising tips from North Bridge VC Michael Skok

by Kyle Alspach

Boston Business Journal

http://m.bizjournals.com/boston/blog/startups/2013/03/startup-fundraising-michael-skok.html

Michael Skok, partner at North Bridge Venture Partners, on Tuesday evening continued the third edition of his popular "Startup Secrets" workshops with a session on "Raising Money from Seed to Exit."

After introducing the topic by saying that "raising money is like sex" — "everyone wants to know about it, but few people want to talk about it openly" — Skok and several guest speakers offered insights on how to think about raising funding for your startup.

Here are 10 takeaways from the event, held at the Harvard Innovation Lab in Allston:

1. In some cases you should not raise money. Great entrepreneurs, in many cases, don't even think about raising money until they've exhausted all of their own resources.

2. One great time to raise money is when you are brand new and have lots of potential. Startups are attractive at this stage if the opportunity seems exciting enough. Plus, there is nothing that can be disproved at this point. The key here is having the perfect pitch.

3. Another great time for fundraising is when you have proof. When investors do their due diligence on your company, and there is plenty of proof that the business is working, investment will be a no-brainer. Investors will often create their own theory about how your business will evolve at this point.

4. Validate the opportunity before raising seed. The worst thing you can do is spend months building a product, only to find that you haven't validated whether it meets a need or solves a problem — that is not a seed investment that's going to succeed.

5. Time intensity is more important than capital intensity up front. Entrepreneurs must be willing to put in the time early on to build a business before even thinking about raising money.

6. Decide how committed you really are before raising a Series A. Even if someone writes you a Series A check, you may not want to spend years of your life building that business. Typically it takes six to seven years to create real value in a company. Are you ready to go the distance?

7. Before working with a VC, decide what sort of attributes you want in them. Are you looking for somebody who has operating experience, or someone who's a pure investment professional? Do you want someone who is hands-on, or not? Will you be looking to them to help with team building or with removing roadblocks to your business?

8. Don't try to fit too much into the first meeting with an investor. Tell your story, but don't spew out your entire business plan in one mouthful — that can be tough for an investor to digest. Just tell the investor enough to get them interested and get to the next step.

9. Be wary of the term sheet that arrives before due diligence is done. This doesn't represent much of a commitment, because an investor's feelings can change after due diligence. A term sheet that arrives after due diligence, however, strongly suggests a deal is going to close.

10. Do a quick wrap-up with the investor at the end of each meeting. Ask them, was this a good meeting? And do you want to move forward? If you don't get a good sense that the investor wants to continue, it might be time to move on to someone else. Your biggest cost is your opportunity cost.

Read more: North Bridge VC Michael Skok on Boston's startup mentor gap (and how to close it)

Sh*t you should never say to a VC in a pitch

http://venturebeat.com/2013/03/20/sht-you-should-never-say-to-a-vc-in-a-pitch/

This is a guest post by Mucker Lab’s Will Hsu.

Raising money from venture capitalists can be a lot like dating. Certain topics are simply off-limits — like talking about why your ex left you. Venture capitalists are also expert pattern-matchers. They need to know a little about a lot of things. And because they see so many potential investment opportunities, it’s almost impossible for them to have the time and energy to conduct detailed market and customer due diligence to determine the viability of an idea.

Instead, they rely on how you explain your idea and match that to their past experiences to create a complete picture of the potential investment potential. As a result, an innocent sentence you throw in at the end of your presentation could trigger either great memories of their last successful investment or nightmares of their last $10 million down the drain. So sometimes, it’s the things you don’t say that are the most important.

While you might understand the basic topic points, such as revenue potential, market opportunity, and so on, it’s important to know what not to say on the periphery as well. Here are some of the things you definitely should not mention to a venture capitalist if you don’t want to trigger bad nightmares.

10. “Daily deals”: It may seem unfair given that consumers are still lapping up deals and businesses are issuing coupons like never before. But VCs have all moved on. The reality is that it just takes too much effort, time, and tongue-twisting for a VC to tell his buddies how his latest investment is better than all the other daily deal companies that came before. And it will take too much effort for you too.

9. “Big shots like A,B,C,D,E,F,G are advisers”: Simple rule. Being able to say “adviser and investor” is 10 times better than just having an adviser. It doesn’t mean you don’t want lots of advisers and mentors, because you obviously do. You want lots of helpful and passionate advisers, but just be careful thinking that all VCs will give a damn. As a VC, I care about your ability to convince important and influential people to help you build your business (and invest); I don’t really care who they are and how many there are. It’s not about who, it’s about you.

8. “… Uncapped Note … ”: If you’re a YC company, go for it. For the rest of us mortals, let’s get real and understand the point of investors is to have smart people with money on your side.

7. “I’m pretty sure my product will sell itself, and I’m not worried about customer acquisition”: Saying that you’re not worried about customer acquisition is like saying you’re not worried about driving a thousand miles and not running out of gas. If you are not concerned now, you will be eventually. Either have a really detailed customer acquisition plan or show some metrics that allay the fears that acquisition would be too expensive or will never scale. Even product purists care about acquisition.

6. “… SoLoMo … ”: Pick two out of three. Any two. And if you must, at least jumble up the sequence (“MoLoSo?” or “LoMoSo?”). Just don’t say “SoLoMo.” Every time I hear it, a tingle goes up my spine (not in a good way), and I’m pretty sure I’m not the only one.

5. “I don’t need to do market research because consumers are incapable of envisioning the future, you just have to give it to them”:An experienced VC could only respond, “I served with Steve Jobs. I knew Steve Jobs. Steve Jobs was a friend of mine. You, sir, are no Steve Jobs.”

4. “My product is naturally viral”: Every entrepreneur claims to have a “naturally viral” product. It’s like everyone believing they are an above-average driver. The fact remains that average CTR on Facebook news feed links are around 0.2 percent, which are about the same as banner ads, and certainly no one has ever claimed that banner ads are viral. Until a product has gone viral, it’s not viral.

3. “I’m Pinterest for X”: I cannot figure this one out. Apparently it is perfectly fine to be “AirBnB for X,” “ShoeDazzle for Z,” and “Dropbox for Y” … but the moment someone utters the word “Pinterest for … ,” everyone’s eyes just glaze over.

2. “I want to build a great user experience, I don’t care about monetization and revenue”: Only a handful of guys can say this: Zuckerberg, Dorsey, Page, Brin. The only reason they can say it is because they have proven abilities to build a large audience and eventually figure out a way to make lots of money. Unless your last name happens to be one of those, you need a plausible business model.

1. “My addressable market is $XXX billion”: Any market sizing higher than $100 billion (actually, I would really be careful starting around $50 billion) is simply not credible. It either means the entrepreneur has no idea how to analyze the market to find the initial target customer segment (and thus a smaller addressable market), or the entrepreneur has no idea how to tie his business model to a market-sizing calculation. For instance, if you are selling food trucks, you can’t say your addressable market is the total dollars for food sold by food trucks. Neither one builds confidence.

Will Hsu is a cofounder and managing partner of MuckerLab, a mentorship-driven startup accelerator focused on serving Internet software, services and media entrepreneurs in Los Angeles and broader Southern California.

The Silicon Valley Survival School

http://www.businessweek.com/articles/2013-02-21/the-university-of-heroes-trains-aspiring-entrepreneurs

By Ari Levy

Even by Silicon Valley standards, venture capitalist Tim Draper is an oddball. He co-owns a luxury resort in Tanzania, helped produce a Nickelodeon mockumentary series about his sister’s kids, and ends speeches by singing a five-minute ode to entrepreneurs called The Riskmaster. His latest passion is Draper University of Heroes, where students aged 18 to 26 discuss the future instead of history, play volleyball with two balls, and learn survival skills that include suturing and weapons training. Set to open in April, the program is a $7,500, eight-week crash course in entrepreneurship. “Other schools out there are focused on getting an A, which means don’t make any mistakes,” Draper says. “Our school was created to fail and fail big and succeed and succeed big.”

A typical University of Heroes morning will begin with a lecture from a well-known speaker. Zappos (AMZN) Chief Executive Officer Tony Hsieh and Elon Musk, co-founder of Tesla Motors and CEO of SpaceX, spoke during a pilot class Draper ran last year. The rest of the day will mix courses on urban survival training, finance, and sales as well as viral marketing and idea generation. There will be yoga, go-karting, and riflery. The Heroes version of baseball more closely resembles Calvinball from Calvin and Hobbes—players may run the wrong way around the bases or change positions after every pitch. And, yes, there will be karaoke.

Draper, 54, whose father and grandfather were also venture capitalists, has spent the past 28 years backing startups as founder and managing director of Draper Fisher Jurvetson, whose funds have raised more than $7 billion since 1985. He bet early on Hotmail, Skype (MSFT), Tesla, and Baidu (BIDU), but his once top-echelon firm has missed many of the big social media winners in recent years.

Now he’s bet $20 million of his personal wealth on his school. Some of that went toward acquiring a campus—the vacant 90-room Benjamin Franklin Hotel in downtown San Mateo, Calif., and a former antiques store across the street. Draper plans to host quarterly sessions with up to 180 attendees each. He’s working with universities to help students get class credit, similar to a study-abroad program.

Students who can’t afford the $7,500 tuition can promise Draper 2 percent of their income over the next 10 years, or they can propose another arrangement. For the term starting in April, he’s accepted two such proposals: A race-car driver will put the school’s logo, a shield, on her car during competitions, and two Egyptian students say they’ll write a book about the school in Arabic. “We’ve had some other offers that weren’t quite as good,” says Draper.

Christine Guibara, 27, a jewelry designer in Burlingame, Calif., took part in Draper’s 40-student pilot program last June. She says that though her business was already doing well, Heroes made her think bigger. She says she was inspired by a lecture by Ron Johnson, the J.C. Penney (JCP) CEO who previously led Apple’s retail operation, and has begun talking to possible partners about starting what she calls a retail incubator, a common sales space for up-and-coming jewelry designers. Like every Heroes student, she finished her program with a two-minute pitch to a panel of real investors. By that time, she says, she’d overcome her fear of public speaking through extensive pitch practice and other work. Camaraderie with her classmates also helped, she says: “Being uncomfortable almost every day and still looking forward to it makes you comfortable with the unknown.”

Draper expects Heroes to at least break even, and hopes alumni give Draper Fisher Jurvetson an early chance to invest in their projects. Draper says he expects to invest between $300,000 and $500,000 of his own money into a $4 million round of financing for nVision Medical, a devices company founded by Surbhi Sarna, 27, who attended the Heroes pilot program last year. Sarna says Heroes inspired her to broaden the company’s focus from female infertility to early detection of ovarian cancer as well.

Within about two years, she hopes to have an early detection device on the path to approval from the Food and Drug Administration. That’s the kind of risk Draper sings about on stage. As he says in his song: The riskmaster “skates on the edge of disaster.”

The bottom line: Third-generation VC Tim Draper has invested $20 million of his own money in a $7,500-a-pop boot camp for young entrepreneurs.