Monday March 1st – Dallas Startup Happy Hour

The first Monday means Startup Happy Hour. The Dallas Startup Happy Hour is the talk of the startup community in Dallas. Check out the coverage in the Dallas Morning News here. As a result of the events, several startups have found a) employees, b) co-founders, c) angel investors and d) had a few free drinks.
Monday March 1, 2010 from 5:00pm – 8:00pm
High Tech Bar at the INFOMART
1950 Stemmons Freeway
Dallas, Texas
Sponsored by Architel – you are invited to attend.
RSVP HERE.

Wednesday March 3rd – Ignite Dallas

Fast-paced, fun, thought-provoking, social, local, global—Ignite is all of these and more. It’s a high-energy evening of 5-minute talks by people who have an idea—and the guts to get onstage and share it with their hometown crowd.
Wednesday March 3rd
Doors Open at 6:00pm
Pre-show game starts 6:30pm
First speaker begins 7:30pm

At the: Granada Theater
Buy Tickets

Friday March 5th – Find a Founder

Dallas-based microseed fund and business accelerator, Tech Wildcatters, is hosting a Find a Founder night. Show up on Friday, 5pm-7pm, at 2211 Commerce St, 2nd floor, Dallas, TX. Read what the Dallas Morning News had to say about Tech Wildcatters here.

After next week, it seems like all my clients will be headed down toSXSW. And then Startup Weekend visits Dallas April 16-18.

Last year Ethan decided to commemorate his first belt advancement in Judo by building a Judo car. It, unlike his current mountain was very fast. Check it out:

Ethan’s first car was a patriotic car that included flags from all 50 states. Check it out:

5.30-5.45 Networking and Dinner
5.45-6.00 Introduction
6.00-6.20 Alexander Muse – Why this is a great time for startups in DFW
6.20-6.40 Ryan Robers – Thestartuplawyer.com – Startup legal matters
6.40-7.00 Mike Merrill – Marketing and sales through Social media
7.00-7.15 Break
7.15-7.45 Entrepreneur Roundtable – Hear from DFW entrepreneurs
7.45-8.05 Gabriella Draney - Tech WildCatters – Microseed Fund in DFW
8.05-8.25 Nick Lawrence – Alternate sources of funding

I was quoted in the paper today as saying that my biggest challenge was, “focus[ing] on what we’re doing, not what our competitors are doing. If I focus on my competitors, I can’t sleep, I get physically sick and I’m apparently a nightmare to live with.” While I actually believe this, I think it is worth a blog post explaining what I mean.

In 2010 Scott and I decided to spend our time on our two most important initiatives - Architel and ShopSavvy. In both cases we have serious competitors. On the Architel side Scott is dealing with a competitor who plays dirty. Their sales people call our clients regularly suggesting that Architel is facing financial difficulties despite the fact that we are experiencing the best year in our company’s history. They use a quote that I gave to the Dallas Morning News back in 2009 as proof that their claims are true. Additionally since our pricing model is ‘one-size-fits-all’ they simply offer a 30-40% discount over our standard price - of course clients learn the services are not apples-to-apples only AFTER they sign up.

Before the new year, Scott and I had several meetings with our team to come up with a strategy to beat our competitor at their own game. We had a million ideas, but they all had one minor problem - they were about our competitor. Scott turned out to be the voice of reason. “Why not focus on how Architel could be a better company?”, he asked. Of course that was a target we wouldn’t mind hitting. To that end, our 2010 strategy includes a) internal systems improvements, b) service mix update, c) community outreach and d) employee development. We would combat our competitor by simply getting better and telling current and future customers about it.

Ironically, our competitor deserves some of the credit. Without their actions I am not sure we would have decided to revamp our entire company for 2010. Would we have changed our online backup system to use the latest technology? Would we have outsourced our trouble ticket system to experts? Would we have expanded our help desk in the US? Would we have sponsored Fight Night, Chiapas or help send a surgeon to Haiti? To be honest, I doubt it.

So my advice is to focus on your competitors long enough to help you understand how you can make your company better. Take an honest appraisal of your competitor’s offering and then your own and get to work making your offering better. If you keep your eye on your competitor instead of your own business they will likely run you over.

The biggest error worthy of correction was with the time line. My first venture backed company did fail and I did raise $4MM to buy it out of bankruptcy on September 12th 2001, it didn’t sell to Switch and Data until late 2003 early 2004.  The deal to raise the money and buy the assets closed on September 12th 2001 (one day after 9-11).  It took a few years to turn my failure into a success. There were a few other errors, but what the article missed was how my partnership with other entrepreneurs have been key, I have never been ’soley’ responsible for my success.

The article touched on my reliance on partners by suggesting, “I’m more effective being part of a leadership team than THE leader.” First and foremost most people don’t realize that my wife, Michele, is perhaps my most important partner (seen to the right). Without her I wouldn’t have had the guts to quit that first job years ago to start living my dream of being an entrepreneur. Michele has been at the heart of every major decision in my personal and business life. To forget to include her ‘partnership’ would be to miss most of the story.

When I put the deal together to turn around LayerOne I became business partners with my lawyer Brandon Freeman. Without his help I doubt I would have had the stomach to guide the company through Chapter 11 and out the other side. While Brandon and I weren’t perfect partners the work we did together built an amazing business in the end.

My partnership with Brandon ended in 2003 when I bought his interest in Architel. It was then when I became partners with Scott Ryan (as seen in the photo above). Brandon and I had invested in Architel along with Scott back in 2001, but it wasn’t until after we began working together on a daily basis that I figured out that Scott and I had a winning combination. We are very different. We share almost none of the same strengths or weaknesses. Our diversity is perhaps our strongest asset.

Over the last seven years Scott Ryan and I have operated Architel, produced a television series, bought a few businesses, invested in several failed startups, started perhaps a dozen companies including Fancast, ServiceGuy, WhiteBox, Big in Japan and ShopSavvy. I am 100% confident that without Scott’s partnership none of this would have been possible. For his name not to appear in the story is a pretty big omission.

Back in 2008 everyone I knew was feeling wealthy. The housing market was frothy, the venture capital market was exploding and everyone seemed to have money in their pockets ready to burn. I was not immune at the time, but now with all the problems going on today (Haiti, Economy, Unemployment, Deficit) my story sounds  pretty stupid. In the summer of 2008 I was invited to a sales pitch for the yet-to-be-built Cowboy’s stadium.  After a tour and a free steak the salesperson convinced me that it would be smart to buy a suite. It was only $240,000 per year for 21 seats. I explained that while I would love to get the suite, I couldn’t really justify spending $240,000 per year for 20 years.  But then she suggested that if I could find nine friends who were similarly interested I could set up a partnership to buy the suite. Each of us would only have to spend $24,000 per year - still expensive, but great for entertaining clients. After recruiting a few business acquaintances I went ahead and created the partnership and paid the $24,000 deposit on the suite.

Before the stadium was completed I got the bill for the full $240,000 and while I was ready to fork over my $24,000, my friends weren’t so excited anymore. Several were unable to pay due to the unexpected turn the economy had taken, others were scared that the economy might get significantly worse. Unfortunately, all of my previously ‘wealthy’ friends were suddenly acting very rational (too bad we all weren’t as rational back in 2008). I was pretty frustrated because I was about to a) lose the $24,000 deposit and b) miss the opening season at the new stadium.

I called our salesperson and explained the situation. She was understanding and agreed to give me more time to put together a new group so I wouldn’t lose my deposit.  I spent weeks calling, sending emails, tweeting, blogging and posting facebook pleas to find a new group of Cowboys fans to join me. Surprisingly, I did find replacements and even got some of them to send checks. However, before I had collected all of the checks the Cowboy’s salesperson convinced the ringleader of my new group that there was a better suite available and she convinced them to sign a second agreement. It took a few weeks, but I finally found out what had happened and when I did I was livid.  I demanded the Cowboy’s return my deposit and while the salesperson’s manager did apologize, his best offer was to allow me to trade my suite in for a couple of founders seats.  I didn’t agree, I wanted my money back. The salesperson had put my group into another suite leaving me without enough time to put a third group together - the Cowboys got their suite sale, but still wanted to keep my deposit. Eventually I emailed their lawyers, explained the situation and requested a full refund.

Of course the other day I heard on the news that Jerry was suing a bunch of companies who defaulted on their suite agreements - including the partnership I set up. I guess they decided not to return my deposit.  Unfortunately (or stupidly), when I set up the partnership I used a name that was very similar to the name of one of my other companies. People might assume that the other company that I co-own was somehow involved in my debacle with the Cowboys. I got a call from the newspaper asking me to explain how the two entities were related. Of course the Cowboys didn’t bother to realize the difference and named one of my business partners in the suit (instead of me) - despite the fact that he wasn’t part of partnership. Let me just say he wasn’t too thrilled when he found out.

As I clarified in the newspaper, Scott Ryan and Architel Holdings LLC (i.e. IT company we co-own) are 100% unrelated to the partnership I set up to license the suite at the Cowboy’s stadium. I had intended to use my two seats to entertain Architel clients and the name similarities are now clearly unfortunate - I should have called the partnership “Da Boys Inc.” or something similarly unrelated to avoid any sort of confusion. Regardless of the outcome of the suit my lawyers insist Scott and Architel will be unaffected.  I believe that the Cowboy’s suit is merit-less and my lawyers will respond with a counter suit very shortly. Finally, the Cowboy’s lawyer was quoted as saying a few things that weren’t accurate including a) that we had stopped paying for the suite - we never paid for the suite nor did we ever take delivery of the suite or use it at anytime, b) that we had not responded to their correspondence - I was in direct conversations with both the Cowboys and their lawyers up until they filed this suit and c) that the suite was dark during the season - there is LOTS of video proving that the suite was occupied for each game, it was not dark. While this entire affair has left a bad taste in my mouth, I am still a fan of the Cowboys and actually have a lot of admiration for Jerry Jones - I suspect he had no idea what his salespeople were doing to sell his new stadium.

Koby Radonsky from youngStartup sent several emails to various people at Big in Japan offering to feature ShopSavvy as one of the ‘20 Top Wireless Innovators‘ at the 2010 Mobile Venture Summit later this year.  He suggested that if we attended we might be able to meet potential investors.  He dropped the names of a bunch of investors including: John Balen, Woody Benson, David Blumberg, Dominic Endicot, Austin Hill, Todd Hixon, Seth Levine, Sean Marsh, Mark McDowell, Ted Mocarski, Ryan Moore, Patrice Peyret, Deepak Sindwani, Miles Spencer, Roger Walton, Sharon Wienbar and Dave Zilberman.

I emailed Koby back suggesting that we were pretty busy, but that if our participation could help his event we would send someone to Boston in April to present. We don’t usually turn down a good PR event.  Koby emailed back and suggested that I would need to pay $4,500 to present and be recognized as one of the ‘20 Top Wirless Innovators’.  I’ll be honest, I suspected this was a ‘pay-to-pitch’ scheme when I offered to participate. After getting Koby’s second email I let him know about my feelings about ‘pay-to-pitch’ programs.

If I have said it once I have said it a million times - ‘deal flow is the currency of the venture capital community - without it they would fail.’  Imagine inviting a cow to dinner, requiring him to pay and then serving him to your guests.  In my view that is exactly what youngStartup is doing.  Koby didn’t agree explaining:

“I hear what you’re saying but I don’t agree nor do the many companies who pay to present at our many summits and have secured serious funding. For startups looking to grow into million$ companies and then get bought out for more, which is just about every startups dream, 4500 is chump change. If you calculate the time , costs, traveling, meetings, rejections and aggravation a startup has to incur until he connects with the correct VC partner, your way past 4500 not to mention a little burnt out. Our summits put all the correct people in one room and gives the startup his chance to raise capital in one place, one day, in addition to becoming more knowledgeable in the industry, and great networking opportunities. I’m not sure you’re looking at this objectively.”

I think the whole concept of ‘paying-to-pitch’ takes advantage of entrepreneurs. Clearly Koby and his team are not going to get the ‘20 Top Wireless Innovators’, instead they will get the ‘20 Wireless Companies Willing to Pay $4,500′. Wouldn’t the investors be better served by youngStartup to have the ACTUAL ‘20 Top Innovators’ regardless of whether or not they were willing to pay to pitch? While this is likely an select group, it certainly isn’t exclusive. I wonder if youngStartup is charging the VCs to attend as well or are they getting in for free?

I can’t imagine that John Balen from Canaan Partners would sit in a meeting he knew a startup paid $4,500 to attend.  Do you think he charged Blurb or Echopass $4,500 to pitch?  I doubt it. Doesn’t it seem like a conflict of interest? By being party to a ‘pay-to-pitch’ scheme does he have some sort of obligation to listen to pitches from all 20 companies?  Do you think his limited partners know that he is involved? Does he know Koby is using his name to convince startups to pay youngStartup $4,500?

I am specifically calling out youngStartup because a) they spammed ALL of our email addresses, b) my opinion that charging startups to pitch is just wrong and c) he said I wasn’t objective (just kidding about c).

Update (Jason’s comments):

Are you an entrepreneur? Do you work for a startup or small business?  Looking for a job?  Looking for a partner?  Looking for angel investment?  Come on by for a drink and some fellowship with like-minded folks from North Texas.  The event is in the INFOMART (1950 Stemmons Freeway) at the corner of Oak Lawn and I-35.  We get started around 5PM, hope to see you there.  Just RSVP here.

Nathan’s idea as described by Mark Whittington is to, “run a hose up to the stratosphere with balloons and using that hose to pump out enough sulfur particles to dim the sun’s heat just enough to counteract the effects of global warming.”  Al Gore can rest easy, Nathan can solve the global warming problem, but I am getting a little worried.  If the climate is so easy to manipulate what is going to stop nation states from manipulating the weather for their own purposes?

For example, Putin suggested that ‘global cooling’ effects need to be addressed promptly.  Russia has significant resources and could unilaterally decide to increase global temperatures by a few degrees.  What would we do about it?  Would we pay Nathan to reduce global temperatures to offset those increases?  What if Hugo Chavez decided to reduce global temperatures even more?  Would we increase them?  Maybe we would create a global market for temperature.  Each country could buy a temperature - the ultimate temperature would dictated by market forces.  I guess this wouldn’t be fair to poor countries and we would need some of offset to protect them from industrialized countries in cooler climates who sought to warm their shores.

I don’t have an answer, but I thought I would try to spark a conversation…

Of course we have a small advantage in these sort of internet based polls/votes - we have millions of users.  Any time we get into one of these online contests we ask our users to vote.  For example, we created a bit.ly link for the O’Reilly vote and sent it to a segment of our users via a push message.  We kept the message live for three days sending more than 61,000 voters to the O’Reilly website to vote.  Click here to check out the stats for yourself.  Ironically about 10% of these folks voted for our competitor because they viewed the request as ‘SPAM’ (which it sort of was, but hey the app is free so we should be able to ask a favor every few months).  Earlier today we got a note from O’Reilly explaining that they had taken down the poll (we were winning by about 80% or so).  Here is the note:

Thanks for your note and apologies for the confusion. We pulled the smackdown because there was lots of bot traffic skewing the results. It seems that our web team implemented the smackdowns with fairly naive, casual poll software. Votes are handled by simple <a> links with only modest cookie-based attempts to prevent multiple votes from the same machine, all of which means that they’re quite susceptible to skewed results via bots. In this case, it looks like a bot or spider stumbled into the page and kept pounding both vote links.  I’ve removed this smackdown from the site and will hold off on additional smackdowns until we find out more and/or get a more robust poll solution in place. We’ll give the smackdown another try then. Again, sorry for the trouble.

I suspect they weren’t used to so much traffic.  We reached out to them and shared the bit.ly stats so they could determine that the source of the traffic was most likely from actual voters.  Of course it is a little frustrating that we used our ‘goodwill’ to generate votes only to have those votes discarded.  I doubt we can ask these users to vote for us a second time for the same contest.

The CES Mobile App Showdown is still underway (8 days left).  We are currently in first place with 16,457 votes.  We have limited the number of users who have received a push request to vote for us so that we don’t swamp the CES servers.  I couldn’t help but feel that it was silly that we had to limit the number of requests so that we didn’t skew the votes too much in our favor (as we did in the O’Reilly vote).  As long as these sort of votes/polls persist we will happily participate, but I wouldn’t mind some sort of multilateral agreement whereby we would all agree not to have online votes/polls.  How about you?