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Over the past three years I have been writing about entrepreneurship and startups and as a result I get to see hundreds of deals each year.  This afternoon  I was meeting with a local entrepreneur/investor and he showed me a deal for a ‘new’ social network he was considering investing in.  The deal was a prototypical ‘Dallas’ deal.  The team was stellar, lots of people with important titles from important companies like EDS, Nortel and Belo.  These guys simply need $5MM to build the next big social network.  What do they have to show us besides a PowerPoint and a business plan?  How about the social network - i.e. the site?  I wanted to touch and feel the site.  I wanted to ‘get’ why it was so important we fund their venture.  But I had nothing more than a few impressive resumes and hockey stick projections to review.  It was frustrating, but I have no doubt they will be able to raise capital (just not from me).

Had that same deal be located in San Francisco, New York or Boston, it would have likely included a link to the site and an extensive demo of the application.  We wonder why the vast majority of deals are done on either coast, but we fail to realize it is because we, as Dallas-based entrepreneurs, keep pitching the same crap over and over.  The same crap being, “give me your money and then I will build it!” Want to get funded?  My advice is to become a ‘maker’, become a ‘builder’ or if you can’t make or build find a partner who can.  Build something, show it to customers, get some traction and then raise money.  Quit paying $10,000 to a ‘broker’ to write your business plan and use that money to actually create whatever it is you want to build.  Stop sending business plans out like hotcakes before you have something to show potential investors.  Get it?  Sorry for the rant, but I sorted all of the plans I received in 2007 and my findings were startling:

In 2007 I received 230 business plans/pitch sheets.  Around 100 of these were for Dallas based startups and 130 of them were for Bay Area startups (I threw out the rest of the country for purposes of my research).  I classified each startup in two categories a) Green (i.e. there was no business, only a concept for a business) and b) Real (i.e. there was already a business or they had built the thing they needed money to grow).  Only 11 of the Dallas startups were real, out of 100 submitted.  The Bay Area numbers were completely reversed, with 121 real startups, out of 130 submitted.  What is wrong with this picture:

Money

…according to the wisdom of the crowd who reads Fred Wilson’s blog and who took the time to vote (I did along with 1,800 other folks with nothing better to do yesterday). Here is the chart from Fred’s blog:

Fred believes the stock will close at $26, but at $22 he thinks Yahoo is a steal (16x EBITDA). The pre-trading had YHOO around $22, but the stock is now trading around $23.29 as of 9:38AM EST.

Update: YHOO is recovering to around $24 on rumors that Microsoft may have called off the deal just to get YHOO back to the table.  The theory is that once YHOO’s stock tanks, Yang and team will get back in the game and get a deal done.  Hm…  Maybe? 

Politics

Gas prices have passed $124 per barrel and Gore won’t let us forget that global warming is putting our lives at risk.  We are enriching tyrants like Chavez, Putin and Ahmadinejad.  Billions of dollars are being raised and spent to develop more efficient cars, more efficient light bulbs and more efficient homes and offices. If your goal is to a) reduce global warming and b) reduce gas prices there are two very simple solutions.  It is so obvious you should ask yourself why we keep ’studying’ the problem and ‘researching’ new solutions when we can just solve the problem.

Step One: Begin building nuclear power plants across the United States.  We could reduce carbon emissions on the planet by more than 20% within a decade (not simply keep them from growing as the current Kyoto accords attempt).  We would also reduce reliance on natural gas, coal and fuel oil resulting in lower oil prices.  Pollution in this country would be significantly reduced and Chavez, Putin and Ahmadinejad won’t have as much hard currency to cause mayhem throughout the world.

Step Two: Exploit natural gas and oil reserves off of our coasts and in Alaska.  Allow refiners to build refineries in this country.  Within a decade we could reduce our reliance of foreign oil by more than 10% and as a result reduce prices by more than 15%.  Why are we letting the Russians take oil off of the coast of Key West, while we prevent our own companies from doing the same?

If you are a believer in global warming or a skeptic, we can all agree that reducing pollution (i.e. through reduction in the burning of fossil based fuels) is a positive goal.  It is a goal that will have the positive side effect of reducing the cost of fossil fuels.  China and France have figured this out, we invented nuclear power, but we haven’t build a single power generation plan in the U.S. since 1973 (two years after I was born).  Isn’t it time to start taking a step to a cleaner more peaceful world?

Personal

My first banker, Buck Horn, died today at Baylor Hospital.  Most recently, Buck was a client advisor and Senior Vice President for the Wealth Management Group at JP Morgan.  He served on various boards including the advisory board for UT Dallas Center for BrainHealth.

I recall one evening calling Buck around 11PM and asking him if he could open the bank (BankOne at the time) for an emergency transaction (this was before Internet banking).  He met me and a few investors at what is now the Chase building around midnight and saved my butt.  Buck will be missed.