User Generated Content Conference & Expo

Adeo Resi of TheFunded.com shared his unique perspective on
fundraising with UGC focused entrepreneurs during an after hours,
impromptu session at User Generated Content Conference & Expo. Adeo packed a session room at the end of the day and held the
audience spellbound while he gestured with a Bud Light. Adeo advanced an agenda of recommending people move away from the venture capital investment model, citing the current economic crisis. Please see href="http://twitter.com/BetterPath">@BetterPath for live tweats,
and here are the highlights:

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Despite the dismal outlook of the economy and the changed landscape of venture capital funding for web-based companies, a new technology incubator program called Capital Factory is launching in Austin this week. Founded by local entrepreneurs Joshua Baer, Same Decker and Bryan Menell, the new incubator program is currently accepting applications for its first 10-week summer program. Beginning on May 22nd, the summer program for the chosen 10 startups ends in August with a live-streamed presentation from participants, so investors and others interested in the startups can see the culmination of Capital Factory’s first run at an incubator program.

There’s the expected emphasis on mentorship with the Capital Factory, but there’s also some cash rewards as well. Participating startups can receive up to $20,000 and office space, along with some basic IT infrastructure options and recruiting support, among other things.

And Austin is a good city for an incubator program focused on technology, as there’s already an established community of successful entrepreneurs and ready access to other necessary resources for the startup environment. Lucky for the Capital Factory, the deadline for accepting applications is shortly after SXSW, which is also based in Austin.
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When Y Combinator was started a few years back, I doubt they knew how successful they would be. The company has invested in numerous companies that have obtained future rounds of funding or have been acquired. If you follow the web technology space there’s a good chance that you’ve heard of most of their companies. Over the past year numerous Y Combinator copycats have sprung up around the country.

Techstars in Denver, LaunchBox Digital here in Washington, D.C., Dreamit Ventures in Philadelphia, and many others around the country have attempted to duplicate Y Combinator’s strategy with mixed success. Media companies are paying close attention to this model and considering that each startup doesn’t receive more than $10,000 to $30,000, it’s a cheap investment for most large media organizations.

Given that most media companies are suffering in the current environment, they are willing to try just about anything to spark innovation that can positively impact the company. One executive at a large media company in New York that I met with on Monday suggested that they are considering opening up their library of content to developers and will start writing checks to get “hackers” to build interesting applications.

Whether or not this model works has yet to be proven but for such a small investment it’s well worth the risk for most of these companies. Even some governments have taken to the model including Maryland which has its own small business incubator sponsored by the state government. At Internet Week New York last year, a number of organizations announced NYC Seed which was a $2 million fund for startups in the New York City area.

The trend continues and over the next 12 months my guess is we will see many more of these types of funds spring up around the country both from within organizations, governments, as well as organized by groups of individuals. One person after the other that I speak with is in some way related to the launch of one of these funds somewhere in the country.

Do you know of any other companies launching these types of funds? What do you think of the model?

With all the banks going under (or at least getting acquired) and Congress preparing to write a check for $700 billion to bail out the economy there is a lot to be pessimistic about. Honestly though there is always a reason to be pessimistic.

I’m Angry & Confused Too

It’s hard not to be a little angry (if not very angry) that a bunch of people that participated in making bad decisions are ultimately getting bailed out. It’s also hard to make sense of all the chaos when it’s going down. I spent all day Friday trying to figure out what exactly happened, why we got here and what’s being done (here’s what I’m reading on the issue).

I’ve felt the same emotions many times over the past 8 years though (September 11, the war in Iraq and more … go here to get your dose of negativity). The only thing that has ever worked for me is to read about it, be aware of what’s going on, and then get over it and press on. There’s really not much I can do and while it’s important to be educated on the issues, it’s kind of hard when there is little transparency about what’s taking place behind closed doors.

Now is the Best Time to Start!

I’m a little disappointed in Jason Calacanis who took what is ultimately a leadership position and gave everyone something to cry about. Negative sensationalism works though. Jason at least has a few positive notes, none of which were this: now is the best time to start. Ask any entrepreneur and if you can build a business (which means a company with revenue) now, then you will be able to thrive during the good times.

This morning I reached out to a few of investors that I look up to (including Howard Lindzon and Brad Feld) to hear what their thoughts are on the economy and start-ups. So far the response has been positive. One of the investors has already funded eight start-ups in the past two months and four more closing next month. While there may be a recession, there is a massive opportunity to build something now.

I don’t remember who said it, but there is a phrase that is along the lines of “The bigger the hole that you dig, the greater the opportunity that you have at building something many times greater.” In essence every seed for failure comes with a greater seed of opportunity. Is the economy looking bad? Build a business! Your business will be much better prepared to thrive during the great times.

What Are You Building?

So now that we all know now is the best time to start a business, the only thing left is to figure out what you are building. What are you going to build? One important factor when building a business during these times is focusing on revenue generating activities. While investing in long-term and working on building value is important (through re-investing in your business), it’s important that a solid portion of that investment is in sales.

Aside from that, there is not much else to say! After spending a few days reading one negative article after the other, I’ve had enough. It’s time to get back to business and build something that’s valuable. There’s nothing else I’d choose to do … You should do the same thing too!

Over the past few months I have had numerous entrepreneurs approach me to ask if I know of any good investors. Others haven’t approached me but I’ve read of their trouble finding funding. Today, a friend of mine, Nate Westheimer, announced that he will no longer be pursuing his own startup. I’m sorry to hear that but I’m glad that he is looking forward with optimism. Only recently did I speak with another entrepreneur who was making the same decision.

Building a business is insanely challenging especially if it is in the internet industry. Personally, I’ve tried to develop countless startups. From a website called Frusic, which was the first social network that brought together musicians and fans to University Swap, which was a site that found the cheapest textbook on the web. I also tried things non-internet related including importing liquor from Brazil which was one of the most challenging companies I’ve started.

I’ve also worked at a number of startups which each died slow deaths. Each died for their own reason but pretty much all of them died. At this point you may be thinking to yourself: well I know who not to hire when I’m trying to build my startup! Aside from the fact that the first 5 or 10 businesses I was involved in all failed, I’ve learned a ton from each of these failures.

Entrepreneurs Can Become Excessively Attached

One thing that I’ve also had the opportunity to observe over the past couple years is the attachment that entrepreneurs have with their businesses. This attachment can have numerous side effects. For the purpose of this article, the primary issue with this attachment is that an entrepreneur will frequently try to build something that just isn’t a good idea.

When I say something isn’t a good idea, it means a lot of things including: it was the wrong timing for a product’s introduction, a poorly developed pitch or lack of access to the people that could make an idea work. Entrepreneurship involves a lot of luck and frequently it requires this magical mix of passionate and intelligent individuals combine with access to people that can spread an idea.

Bad Ideas are Simply Bad Ideas

Occasionally, I meet somebody that has a really horrendous idea and no matter how much marketing they put into it, it simply won’t work. Then again, nobody can tell you what really is a horrible idea but if you start hearing that your idea isn’t a great one from multiple people, you might want to question whether it’s worth following your current idea.

That was like the liquor I was preparing to import. The reality was that it tasted like crap. Years later, nobody has been able to figure out an effective way to market the distilled sugar cane to consumers. No matter how much marketing you put into something, some ideas were meant to die. One thing that nobody can take away from true entrepreneurs is passion and persistence.

No matter how many failures you have, you must make sure that you keep those two things. Most often, truly great ideas experience growth pretty early on. While it takes a variable amount of effort to get something off the ground, once you get something to launch, it should be able to gain traction with a little bit of effort.

Good Ideas Experience Traction Early On

The funny thing is that once your product or service starts gaining traction, you’ve only started. Enough of the rambling. What do I think the true test of a good product is? If you build a prototype, after a minor amount of adjusting, your product should be able to gain traction. If you find that it doesn’t gain traction after an extreme amount of effort, you might want to reconsider the future of your idea.

One final thought. Just because knowing when to quit is extremely important for an entrepreneur, there are no exact rules. Sometimes one customer is all you need and that is enough “traction.” In the end, the entrepreneur is the only person who can decide. What do you think are good tests of a product or idea? Do you have rules for knowing when to quit?

I am extremely happy to see an interesting phenomenon taking place in the web industry today: people are talking about money. It’s surprising to say something like that but it’s true. Web 2.0 was definitely somewhat of a bubble in the sense that there have been a number of venture capitalists that invest in ridiculous business concepts.

As a few of us concluded last night following Tech Cocktail DC, the source of this may just be the wild west mentality in which people have visions and dreams of success even though they don’t know how they’re going to get there. They have solutions to problems that only exist in the virtual world. The problem with this is when you start creating solutions for products that are already free. An example of this would be someone pitching, “I’m going to create a better version of Facebook.”

Somehow people have started thinking that these crazy ideas that occasionally attract large waves of traffic will suddenly turn into sustainable businesses. Unfortunately they are not and I am starting to see an increasing number of people that actually realize this. This is healthy but it also means that the days of throwing ridiculous parties involving drunken revelry as Caroline McCarthy calls it, may just be slowing.

We’ll all show up to a great party but it doesn’t mean that we are the ones that will fund it. As we read more articles about doom and gloom in the economy it wouldn’t be surprising to find less funding for parties and crazy ideas. The high risk VCs out west that will fund any Stanford grad with an idea are in for a surprise when funding dries up for their “investment fund.”

O.k. so enough of the doom and gloom. The best part of all of this is that people with real businesses are the ones getting funding. Now we can start talking about real entrepreneurship which is about managing cash flow, building client lists through business development and all the nitty gritty details about running a business. We can also talk about how are passions help get us through the hard times.

This is the real story behind entrepreneurship. People that manage to generate real businesses out of their passion. So what’s your passion and how are you going to make money from it?

Around the country people are discussing how they can build more entrepreneurial communities that in some ways represent what Silicon Valley has. While each city has its own uniqueness the bottom line is that we want companies and entrepreneurs with more funding, investors that are willing to take risks and media that boasts about the local companies. Frequently the only thing that’s lacking is an echo chamber that can amplify the signal of that city on a national scale.

So how can your city duplicate things that are going on in Silicon Valley and San Francisco while retaining its own personality? The answer is simple: build an echo chamber. So here is how you can build an echo chamber for your city and avoid businesses resembling the “web 2.0 social media eyeball-collecting applications,” that “don’t want to worry about boring details like revenues, and hope to either flip to Google for an early $20 million or get that Facebook billion-dollar valuation” as Robby Russel describes.

1. Create a linking love fest - The first trick to building an echo chamber is to act like nothing goes on outside of your city. That’s why with every post you write, you should be linking to bloggers in your city. Create a list of all local bloggers that are in your city that talk about similar topics (even if not identical) and find a reason to start linking to them.
2. Make everyone blog - They say it takes a town to raise a child. I would say that it takes a city to create an echo chamber and the center of that echo chamber takes place on the blogs. How does this differentiate from a linking love fest? Not everybody blogs and it’s your community’s duty to make sure everyone starts writing so with every opportunity you have make sure that you find out what the people around you are blogging about and if they aren’t blogging make sure they begin.
3. Build central station - One of the largest challenges for cities looking to unite is the lack of unity. Building a central place with job listings, discussion, links to community members and resource guides is extremely important. If people outside of the city don’t have a single place to see what’s going on in your city, then there is no way to convince them that there is a lot going on.
4. Make up lingo - This is an awesome way to build buzz for somebody in your city while also putting your city on the map. Example: “Web 2.0″. People still have trouble describing what it is because it took Tim O’Reilly 5 pages and a chart to explain what it is. People still don’t know what it is but thousands of people still flock to Web 2.0 Expo and Web 2.0 Summit every year to find out more about it. Have one of your people come up with a phrase and have everyone in your city’s blogs start using the phrase on a regular basis. The more people use it, the more it becomes ubiquitous and finally your city has coined a phrase.
5. Make the media listen - If your local media companies aren’t paying attention to what’s going on in your community, make sure they start listening. Contact them at every opportunity and let them no what’s going on. If nobody is doing PR for your community then the mainstream outside of your community knows nothing about it.
6. Talk about your community - Publicity is the battle of noise and whoever is making the most noise frequently gets the attention of others. There are local companies that are creating new innovations everyday and while the same thing is going on in Silicon Valley, most people know about the Valley but don’t know what is going on in your community. Tell the world as much as possible about where you live and the companies that shape your community. It honestly doesn’t even matter what your opinion of those companies are it just matters that you are talking about them.
7. Promote local events - Is your city made up of a bunch of bloggers that sit behind their computer and write all day and have nothing else to do? No! There are events taking place around the city everyday and many of them pertain to your industry. Get out to as many events as possible and make sure that you promote them heavily. How do you this? Blog about the event, take photos, upload the photos to your blog, Flickr and Facebook. Put tags for all the pictures, etc and then go and bookmark those photos on social bookmarking sites. Everybody needs to know that if you are looking for a fun time, your city is where it’s going on. I can’t tell you how many times I’ve looked at photos of events going on in other cities and have wished I was there. The same thing happens to the people in other cities and they are going to want to come to come visit your community.
8. Make others feel like they missed out - Anytime something happens and people aren’t there, tell them they missed out. This way they have to come the next time. Even if the event had only two attendees, you need to make people feel like they are missing something. If you paint a picture of a community for others, then the community will slowly begin to build itself in their minds even if it doesn’t exist. Grab random people and take pictures with them, especially attractive people. Like I said in the last rule, you need to make people feel like they missed out on an awesome event. Take pictures of people having fun or looking like they are having fun and you are good to go!
9. Support Others - Even if you think somebody is wrong, it doesn’t matter how wrong they are as long as they say it convincingly. Promote those that you think that make convincing arguments even if you disagree. It shows connection within the community. It doesn’t matter if others think you and the people you are supporting are wrong, all that matters is that they hear you. Take every opportunity to support those in your community no matter how ridiculous their arguments are (this is for all communities outside of political communities).
10. Be a Superstar -Building the echo chamber requires that everybody in the community is a superstar in their own right. Be optimistic, help connect others and take every opportunity you have to support others when you can. Building an echo chamber requires the help of a city and everybody in it. That’s why you need to take every opportunity to help not to hurt. If you have nothing good to say then go move to a different city in another country far, far away (just joking). Seriously though it is your duty to help your city, so help it.

There are plenty of other ways to help but this is a great way to get a headstart. Once you begin living by the 10 commandments of an echo chamber city you are well on your way to helping build the next Silicon Valley in your town! While it won’t be the same as Silicon Valley, it will be a loud city that people around the country know about and that’s all that matters.

Two nights ago I had the opportunity to speak on a panel held by the entrepreneurial club at the Kogod School of Business. Big thanks to Robert Neelbauer for putting the event together. We had the opportunity to speak with a large group of entrepreneurs at the university and it was the first time that I was involved in a local university event. Following the event I was engaged in a number of discussions about how universities can play a larger role in building entrepreneurial communities and what role they should play.

Andrew Wright attended the event and told me about some of the challenges he had faced when working with one of the local universities in trying to build engaging events and getting the university to play a larger role in the community. Ultimately there is a conflict of interest that I see at universities. They frequently invest more heavily in the brand name of the university then in the students. Case and point: bringing large keynote speakers that students find it difficult to relate to.

In my own opinion it is best to have local universities involved with the local professional event producers to get jobs for students and to increase the likelihood of students finding mentors. While I’m not quite sure what the role of a local university is, I believe that investing in the students should be a priority over investing in the brand name of a university. When those students become talented individuals in the professional world, it will come back to benefit the university when those individuals return to speak.

How do you think local universities should be involved in building entrepreneurial communities?

Earlier this week I wrote a post asking if work/life balance exists for entrepreneurs. Well, for me, the balance doesn’t exist. 90-hour work weeks have become standard. My desk is around the corner from my bedroom (fortunately I have a large apartment but it’s still in the same relative space) and every morning I wake up and walk right over to it and start searching for more content to post about or find more emails to respond to.

Last May I launched the AllFacebook blog and quickly experienced substantial success with the blog. It’s not the next Techcrunch, but for a few weeks (or a couple Months) I thought it would be. I was getting story leads, responding to all inquiries and traveling around the country to attend events where I thought more stories would be taking place. The site still does well but it’s not going to be the next Techcrunch. At least not anytime soon.

Secretly, I’ve come up with a solution to win while producing less content but I won’t share that now, that story will unfold on this site over the coming months. This afternoon Jason Calacanis wrote a less-sensational post about the New York Times article from last week. He struck a cord with me this time and it has led to the post I now write. When you are in the Tornado, a phase thoroughly described in Chrossing the Chasm (and a book I frequently refer back to), it’s easy to lose sight of things.

Think about what it would literally be like to be in a tornado and you start to get a picture of how organized things are. The key thing to success during the tornado is not running around and trying to grab ahold of all your scattered pieces. Instead, you should believe that the scattered pieces will eventually realign them self and things will be as you had planned in the end. Perhaps my analogy isn’t the most accurate, but a key lesson is learned and it is the lesson being described by Calacanis.

Balance in life is key. Trust me when I say that I understand how out of whack things can get when you are trying to keep your business under control and on the right path. In the market of breaking news, balance is practically impossible. Just look at Mike Arrington. Howard Lindzon recently tweeted that the breaking news market has become commoditized. I would have to agree.

When it comes to commodities, you make a lot if you have a lot. Adding up a million pennies eventually adds up to something. The problem with breaking news is that you are constantly running around trying to get the scoop or confirmation on stories. I was getting good at it for a little while but then I began to see myself burning out. If I had continued to try to focus on breaking news, I would have gone crazy. Fortunately for me, I’ve realized that the bottom doesn’t just drop out when you stop or slow the frequency of breaking stories. You are actually building a base.

Regardless of the future of blogs and breaking news, the story will be repeated across industries. Frequently we work continuously around the clock to try to build our projects of passion. Often times people think that we’re crazy for doing it but the entrepreneurs respect it. While everyone doesn’t build a business the same way, just as they wouldn’t build a desk the same way, there is one rule that stays the same no matter what:

If you put down the tools and walk away for a little bit, your project will be there just as you left it when you get back.

There may be some dust on it if you leave for too long but for the most part, it will still be there. Over the past 10 months I have found a way to create more stress for myself and then devise systems for managing the stress. Unfortunately my system has been flawed and part of it I have not tried to fix. While stress is necessary for a business, it isn’t necessary for you … at least not 24/7.

I had learned this lesson before and I used to live by it but by late in the summer last year I stopped living by my own rules. Fortunately, I’m not 5 years down the road and looking back at this. It’s a only a few months down but for some of you, I’m guessing that you are in a similar place and for others you are years in. There is never a better time to fix the problem then today.

While we can’t build our businesses, stress free, we need to regularly free ourselves from the stress. I am most definitely going to take the first step to removing some of the stress from my life by hitting the gym on a regular basis. What are you going to do?

This past week a news article in the New York Times circulated the blogosphere. The article, titled “In Web World of 24/7 Stress, Writers Blog Till They Drop,” discusses how technology blogging is ultimately bad for your health. My initial reaction was that I completely agree. To some of my friends, I’ve become a work-a-holic. To others, I’m simply living the life of an entrepreneur. I think Danah Boyd, says it right, “those who are passionate about what they do do it to extremes.”

I couldn’t agree more with Danah. I do on the other hand think that there is a point which is crossed which is when the thing you are most passionate about becomes an addiction. I think that workaholism has become embedded in our culture and while I see successful entrepreneurs build businesses while working 90 hours a week, I’ve seen others that launch businesses through partnerships and spend less time focusing on the day-to-day routine of things.

Honestly, I think it is different for each business and ultimately the life of an entrepreneur will always be challenging. For me, I always appear to be one step away from having a life free from the bondage of work but there is always another step ahead. I know this isn’t a good thing but sometimes it’s difficult not to be working on something that you want to grow. Then again if you feed a plant too much water it will drown, sometimes you may just have to watch it grow (and possibly hit the gym).

What do you do to handle work/life balance? Is there balance in your life? What techniques do you find useful for adding more balance?