DealHorizon - the faster, easier way to create and share business plans

While browsing in an airport bookstore, I recently came across a copy of Business Model Generation - a Wiley publication written by Alexander Osterwalder and Yves Pigneur. If you're looking for an inspiring thought-starter when writing your next business plan or presentation, especially if your business is a start-up, you'd be hard-pressed to find a better source of tinder.

One of the things I particularly like about the way the book is laid out is the clear focus on the sales side of the equation, including how to identify and structure your sales channels.

A lot of entrepreneurs seem to think that raising money is about having a whiz-bang technology. I'm increasingly of the opposite view - I think regardless of age, the more time you spend in management and on boards, the more focused you become on sales and marketing strategy - and the strength of the relationships you're going to need to build the business.

Want an example? Three centuries of superior technology have failed to suppress the Afghans - the Brits tried, then the Russians tried, and now the US - plus a coterie of hi-tech partners - has tried, and, despite the PR to the contrary, failed. You can throw all the sophisticated weaponry you like at the place - the local relationships are just too strong for it to have any effect.

Most technologies, when it comes down to it, don't enable a business on their own - very few businesses create entirely new revenue streams. In fact, most startups simply enable commerce to be created on the basis of a slightly better way of doing something - a provable level of efficiency or performance enhancement.

Business Model Generation does an excellent job of asking its reader to define the precise sales channel and marketing strategy that will best enable adoption of the technology. It isn't a "by the numbers" approach, it's an approach that asks to conceptualize the information you and your investors are going to need to be successful.

Well worth the money.

When you really boil it down, there are only two ways people fall in love - the love-at-first-sight version ("I knew he was my soulmate the instant we met - it was like lightning struck and all I could see were his eyes, looking at me through the crowd..."), and the no-less successful, if you believe the statistics, ("well, he kind of grew on me, and then the next thing you know we were living together, and then we got married and, well, here we are.")

I believe it's exactly the same with venture investing. Either you walk into the room holding lightning in a bottle (a radically cheap way of engineering touch-screens, a combustion engine that uses half the gas yet provides twice the power*), and it's obvious in the investor's reactions ("what are you doing later today?") or it's not ("let us talk it over internally and get back to you.")

There's another level too - hate at first sight. For the purposes of this post, let's assume you're somewhere north of that, but still someplace south of the "bells pealing in the village square" rhapsodic embrace.

A lot of people who find themselves in this situation simply don't know what to do. They either give up, or do "what the book says" - tweak the plan and send a new copy, answer some follow-up questions, have the lawyer/banker/finder call, etc - anything, but bug the guys with the money directly.

This, as any successful long-term lover will tell you, is entirely the wrong approach.

The first thing? Don't become discouraged. Forget about the fact that the "love at first sight" guys can afford to dress like shit and behave like complete assholes and still get their money - you can't, end of story, so you need to put that thought behind you.

In fact, like the jilted lovers in our opening story, the best way of looking at things is: you've got a lot of work ahead of you, but it may be worth it in the end.

The second thing? Somehow, you need to get the investor to invest some time in getting to know you. Maybe you're not an easy person to know. Maybe your technology is complex, or hasn't been explained well. Maybe your marketing plan didn't come across the right way. Maybe you actually need some help and advice from someone that's done it.

Whatever - you need to get some time together, andthe only way you can do that is to use your contacts to engineer some time alone in a room. Or beside him/her at dinner. Or (and this the an absolute "least you must do" strategy), you need to get your prospective investment partner to sit with you on the other end of a phone, or a Skype call.

No face/phone time? Again, unless you're holding lightning in a bottle, no deal.

I once spent two hours every night for almost three weeks on my cell phone with a US investor, from Singapore, while walking around and around the garden at the Hyatt (I imagine the path I wore is probably still visible from the upper floors!) Without those long conversations, there is no way we would have gotten to know each other to the extent necessary to build an investment case - and close our deal.

Another time, while selling software in Dubai, I checked into the Embassy Suites in Sharjah and stayed a month - because if I hadn't done that, I would have been just another guy coming in and out for a day and a half with a briefcase. I wanted to be around long enough for people to understand who I was - or for me to understand them.

In both cases. we successfully concluded our business, but more importantly, we created some great and lasting relationships. These, in my opinion, are the lasting things of business. Your aim should not be to die in a room full of money - it should be to die in a room decorated by friends. Relationships represent the midpoint of a path in that direction.

A side story: the father of a good friend of mind who grew up in Kuwait was a Sudanese diplomat. One day, he saw a magazine advertisement from a 19 year old German woman living in Hamburg who had broken her leg quiet badly, and wanted to spend her time while recuperating learning English. He became her writing partner. They communicated for months, then finally agreed to meet up, in London.

The first meeting went badly. But he pursued her with such zeal, and over such a long period of time, that eventually, she gave in. They fell in love, got married, and went on to have three great children, one of whom was my friend (who, sadly, like his father, is no longer with us).

I know you're thinking, I have the lightning. The investors are just having trouble seeing it. That might be the case. Spend some time with them. It might be that your special kind of lightning takes a special kind of relationship for it to become visible.

*Note: Re these two investment examples, two of the CEOs I'm helping out right now really do have these "lightning in a bottle" technologies. Good for them - they can probably safely ignore the above advice.

Many years ago, I was offered several million dollars by a syndicate of investors as part of a first-round funding for a media company we planned to build. This was my first ever venture deal. At the stage the offer came, I had everything at risk, right down to our newly-purchased house. Everything was flashing red. We need this deal to close, and fast.

Then, at the last moment, during an investment committee meeting to approve the financing, one of the investors placed a condition on the funding. The condition was, I had to remove one of my three partners (there were four founders in total.) He was not permitted to be part of the venture.

Apparently, at some point, my co-founder had slept with the investor's wife, sister, or mother - or perhaps lost him some money (that part was never made clear.) Whatever it was, it was clear from the tone of the demand that it was an issue of historic proportions, would never be forgiven, and 100% non-negotiable. It was "lose your co-founder, or kiss our money goodbye."

It was my call. But I didn't have to think about it long. I decided to keep my co-founder.

My co-founder had been instrumental in building and funding the business. He was a good friend and had done nothing wrong. I told them I wasn't interested in screwing over one of my partners because of some personal baggage between him and them and put down the phone. I called my partners and told them the funding was not coming. Then I called the bankers and told them to get busy finding someone new.

[They did: Six weeks later, we had a new group in place, and closed on a multiple of the original ask at the same valuation - our group of four partners intact. Two years later, the four of us sold our stake for five times our initial investment. A nice fairy-tale ending.]

In that scenario, not killing my co-founder was smart business sense and the right thing to do. He'd done nothing wrong by the group (quite the opposite, he'd been fantastic), and he deserved our support. And in the end, that loyalty would be repaid, and result in a terrific exit.

But not every story can have such a happy ending. In The Social Network, there's a point where one of the co-founders decides to cut off funding to the rest of the group to make a personal point, placing the business at considerable risk of collapse. He was killed off. It was the right decision.

A few years later, on another project, I was faced with a similar situation. One of my co-founders had placed our business at risk by continuing to develop our technology using an approach (and programming language) that many felt would not meet our future customer needs.

Our equity and the professional lives of several dozen staff were at risk. There had been several attempts at mitigation, several tries at placing people alongside the guy, placing books on different programming languages plumb center on his desk. None had worked.

When it finally came down to it (after a few weeks of walking around the issue, we finally sat down over a curry dinner at my house and agreed a plan), he was upset, but gracious. He recognized the issue was bigger than him, and that we probably needed someone with a different skill-set.

That doesn't mean it didn't hurt. I really liked the guy. But, unlike the first story, killing him was necessary. There was no alternate way forward for the business. He didn't want to work to the plan. We had an urgent need for a scaleable technology that matched our business requirements. We were required to act to save the company, the staff, our customer relationships, and our investment capital.

It was the right thing to do.

So therein, for me, lies the difference. To me, killing a co-founder for personal or bullshit reasons is akin to gunning down a fellow soldier in the trenches. If the guy is carrying his weight, and has his eye firmly on the enemy, then you need to shovel your personal stuff in a sack and stick together.

But if the guy is asleep at his post, or withholding supplies from the troops, or sitting on the plans you need to create your super-protective force-shield - or just isn't prepared to do what the business needs him to - then there's no argument as to what to do at that point: you need to kill your co-founder.

My advice? Do it nicely, over dinner.

We had a nice night out last night at the home of a former pro poker player now living in Singapore. Over pre-dinner drinks with some of the other couples, we discussed the hassles of moving across oceans. I found myself scanning my host's book/CD/movie collection as we chatted.

I've found over the years that the media wall in a home provides fascinating reading - lots of Lonely Planet guides and you host is probably an experienced traveller. Lots of medical texts, either they are in the health profession or someone in their family is having an issue. Lots of books on law - if they're not a lawyer, you probably don't want to know. Lots of books on gambling? You're probably in for a good night out.

The media wall at my host's house was of pretty typical size and range for the average male of his age, but my aim in writing this is not to expose what is in his bookcase but to imagine the impact ofdigitization on his young kids (and mine), from the point of view or collecting, storing and moving stuff - and what the invisibility of our media choices might mean in the future.

Think about it - 90% of the crap in my house that I've collected over the years (and says that I personally live here) exists in the form of dozens of hard copies of some type of media: Books, DVDs, CDs, cartridges (and, embarrassingly, several boxes of DATs, videotapes, D1s, cassette tapes and laser discs).

When you come into our place, it's possible to get a quick read on what my interests are - it's right there in the book case. In the living room of the future, none of this will exist. There will be no "man cave bookcases" or 'media wall' - and, apart from the server under the stairs, no library.

Newspapers and magazines? Please. The TMZ-like remnants of those failed beasts will be streaming onto whatever we end up calling tablets.

There will be no comic collection or photo albums or watch collection (who the hell needs a watch when you have a cell phone that is a) better looking, and b) linked to Network Time Protocol?) I'm already moving that direction fast - as most people are. There will soon be more stuff loaded on my iPhone than in my shelves. There's already more photos than I can view.

Sure, there will be a big-screen TV/computer display in every room - but aside from the rotating art choices, nothing about the surroundings will provide any hint of your media preferences. Walking through a person's home will like entering an abstract mystery, with literature (and other, decidedly non-lit) choices hidden from view. Will the kid's room have posters on the wall, or a 60" live gaming environment.

As the price of displays continues to drop to the floor, I wouldn't hold out hope for the survival of the poster industry - or any industry involved in hard copies of media.

It's not just media industries that are going to be affected by this shift. Movers, take note - when it next comes time for us to move across oceans, at least half the heavy stuff you loaded in our last move won't be in the next one.

Okay, when it comes to my personal stuff? Make that 80% - and 100% of the heavy stuff.Good luck making money without that.

A few years ago, myself and a couple of friends played the role of angel investors and invested a small amount of money in a start-up that was building a system to enable easy administration and updating of advertising rate cards for media companies.

The short story? The team was terrific, the product was good, their timing was off, we lost our money. The total cost to each angel? $25k. What happened next is a study in human nature - and in letting history and raw emotions guide your decision-making.

• My friend got extremely angry about losing his money. He vowed he would never speak to the entrepreneur again (and, years later, he hasn't, so far as I know), and he never let an opportunity to bad-mouth him go by. This 25k loss made him an unhappier human being.
• I was invited to share a sushi lunch by the entrepreneur and invest in a new version of the idea that had just failed. I wished him well, and we had a very nice lunch (I'm not of the view that you should toss people off the cliff if they try hard but lose you money), but I declined to reinvest.
• The entrepreneur rounded up the money from a new bunch of angels, worked hard to improve the model, and ended up selling the company for three hundred million dollars.

I can't think of a better summation of the risks and rewards of angel investing than this little story.

One guy invested without understanding the fundamental law of angel investing - unless you get lucky*, you are more likely to lose money than make money - and was way too attached to his cash. His angel activities literally turned him into a demon. He lost much more than his cash - he lost a friend - and he also lost his good humor. Tragic.

The second guy - me - was way too attached to history - to his perceptions of what the entrepreneur was capable of. Sure, I was nice enough to the guy, but I didn't exactly rush in to his next investment idea. Why not? It's not like the idea was any less attractive, and the guy was still the same hard-working person I'd invested in before. So while I didn't really lose anything, I didn't exactly gain anything either.

The third guy? He remained unfaltering true to his vision, and ended up one of the lucky ones - the vision was sound, his timing was perfect (the second time around), and he made a ton of money. He's now an angel in his own right, capable of investing not only money but some really sound, practical advice.

*If you haven't read Fooled By Randomness or The Black Swan yet, you probably should. Untamed luck is the critical factor in many investments, and many, many startups. Allowing bad luck to turn you from an angel to a demon is tantamount to allowing a car accident that you didn't cause turn you off driving.

My advice? Take that car to the body shop, get it fixed, and get back behind the wheel. The world needs you, angel.

So you're about to go meet with a VC. Here's some free advice from someone who has had a few of those: at a certain point in the meeting, approximately one third of the way into your allotted time, you will need to do something that may feel quite alien to you: You will need to shut up.

I know, it's hard. We all think we have the best and greatest new thing, and as our spouses are well aware, we can talk for hours on the subject. But in the context of an investor meeting, at a certain point, it's not about what you think of the idea that is important, it's what the investor thinks - and might propose to do next.

Which is why having a game plan is important. The plan I propose? Let's call it the 20:20:20 rule:

1. First 20 Minutes: Talk/Present
2. Next 20 Minutes: Discuss/Demo
3. Last 20 Minutes: Agree actions/date of next meeting

This sounds like a pretty obviously smart move, right? Unfortunately, those of us who've been in a number of these VC meetings know how quickly that time goes by. Talk too much, and before you know it there are five minutes left and you're flipping through your final slides and talking like Daffy Duck - and two of the key guys you were presenting to are looking at their watches and heading for the door, without a follow-up secured.

And that really is the key point. The most common outcome of a rushed meeting is a lack of discussion about follow-up - which is fine if you're using professional placement guys, or know someone on the team, but not fine if you're doing this yourself.

My advice? Structure the meeting. Appoint someone on the team as the timekeeper. Agree a "code phrase" that anyone on the team can use to substitute for "okay, they get it - let's move it along" (the best code phrase I've heard used in this context is "should we skip to the next slide?")

If you're moving too fast, the guys the other side of the table will be sure to let you know (most VCs are, with few exceptions, usually too polite to indicate that you've moving too slowly.)

Above all, make sure you have time to plan next steps. Take control of the last 20 minutes. Use this time to a) ask them what their process is for evaluating opportunities, b) talk about the timeframe you're looking at for closing, c) find out if there are any investment committee people in the room, and d) discuss and agree what needs to be shared in order for them to get to a decision re investment.

So that's it - the 20:20:20 rule of getting to the next meeting. Good luck!

If you're like me, you're probably tired of receiving boring emails from social network marketing departments with static subjects like "Facebook Weekly Update" and "Twitter Development Group Update", etc. Static titles like these do nothing by clog up your inbox and devalue the next missive sent. Which is why LinkedIn's data-driven email alert this morning was so refreshing:

First of all, that is one rather interesting piece of information. I have ~650 connections on Linkedin. The fact that 17.6% of my business contacts changed jobs during 2010 came as quite a surprise to me. And so yes, I clicked on the email.

So why doesn't Facebook do this? YouTube? Twitter? Data-driven subject headers are almost always going to win over their boring static cousins. Facebook has more data that anyone on this planet - they could do a lot better job using it.

Score LinkedIn: 1, others: 0.*

*Except when it comes to APIs. LinkedIn's API development group is way behind the times when it comes to sharing - especially when it comes to sharing information about companies. Only Digg is worse. Facebook, FourSquare, Twitter earn top marks when it comes to ease of integration.

Jon Samsel, CEO of Heardable (disclaimer: I'm a co-founder) sent around some good news yesterday - after just ten months of operation, we've gone from a zero base to more than 50,000 uniques a month, for a total of 250,000 views.

The chart is rising like a rocket. Pretty impressive for a boot-strapped startup - and exactly on the path we set ourselves. Compete.com (incidentally the supplier of half of the above stats) hit this exact same mark at exactly the same time, on its way to becoming an industry standard analytics tool. We're determined to do the same thing - for the same result.

Closer to home, I checked out the stats for DealHorizon.com and last month was pretty remarkable for us as well - almost 17,000 unique visitors tried out our collaborative business planning tools, read our blogs, and used our Business Plan Generator (the most popular free tool was the Executive Summary Generator, but our free Sales Projections tool is growing fast in popularity also.)

That's us in blue - not bad! We've already passed Pitchbook.com, and we're almost tied with MasterPlans.com. I expect at this rate, our traffic will surpass MasterPlans.com and AngelSoft.net by the end of this quarter.

If you're one of our recent visitors, thank you!

Watching what is being decided and reported in the United States right now is frustrating on several levels - the most fundamental level being, I want the country to get back on its feet, and quickly.

It remains the largest driver of growth in the world. Too many American friends are suffering, and, it would appear, they are suffering needlessly - because of a distinct lack of strategic partnering between the States and the Feds, and a lack of focus on core data when it comes to the media.

First of all, the core data used by politicians to make decisions and left-wing media pundits to make their points is almost universally wrong (the unemployment rate in the US did not just dip below 10% - it is closer to 16.6% if you go by the "U6" rate - which counts those who have simply given up, plus those forced to take a part-time job instead of the full-time job they need.

Brett Arends of the WSJ provides a great argument about this in the piece he published on June 29th in MarketWatch.com, entitled the "Three Biggest Lies About the US Economy".

Second of all, the spin on the right is out of control. Francine and I don't have a television at home (by choice), which creates all sorts of confusion when we encounter one, in an airport terminal or a friend's house.

Why? Because when you don't have a TV, you tend to assimilate news from a wide array of sources, and assume everyone else is getting the core data too. When we make contact with Fox News in JFK, or CNN in ATL, it is like suddenly arriving on a different place or time.

Neither has it right - and in Hollywood fashion, the commentary increasingly has less to do with facts and more to do with fireworks (Fox is fun to watch - you have to admit). Most of it is pure Aristotelian Drama. But what am I telling you that you didn't already know? Back to the blog...

I saw a piece today from Robert Reich, former Labor Secretary, and one economist that I seriously wish had stayed in government. His analysis, entitled "Slouching Towards a Double-Dip or a Lousy Recovery at Best", provides a rational view on what is going on at a macro level. One of the paragraphs in his argument in particular caught my eye (and is the main reason I'm writing this post):

"The states are running an anti-stimulus program (raising taxes, cutting services, laying off teachers, firefighters, police and other employees) that's now bigger than the federal stimulus program."

Now there's a statement. If it's true, and I suspect it is, that statement should be being debated night and day by the media and politicians - a) because it's true: dial up the daily news in almost any county in the nation and you'll see evidence of what Reich is saying (massive layoffs that the county administartors are having to do to keep the wheels on), and; b) because the effect of this is nauseating bad on consumers - you're asking taxpayers to pay more taxes federally, while watching their neighbors get fired - neighbors who are also their customers/employers/homeowner association members.

Part of Brett Arends' article speaks of how the US government is working within its historical bounds, relative to the amount government spending makes up of the economy (25% under Obama, 23.5% under Reagan), and historical debt levels relative to GDP (materially unchanged for almost fifty years). Corporate profits in Q1 were the highest in forty years. Banks are stuffed with cash. Interest rates remain nominal.

So what is the looming crisis? The looming crisis is that the central government doesn't seem to be cognizant of the fact that we consumers spend >60% of our paychecks locally, not federally. Any stimulus plan that is met by a larger reduction in state services is counter-productive - see point (b) above.

Time for a governor's conference? Some core-data-driven media reactions? Some sanity? Certainly time to pay attention to the core data - including data that shows the efforts of the Feds are being canceled out by the poverty of the States.

Don't agree? Log in and post a reply - a healthy rebuttal to this argument would be most welcome!

One of my daily activities is checking house prices in Florida. Because right now, you can buy a lot of home for not a lot of cash.

Okay, let's cut the BS - I also look at it because the drama is such that you can't cover your eyes. Things have fallen too far. Check it out - here is a sample of a suburb taken at random. The green bits don't have any homes on them to sell - or else you'd find a few more Zillow icons there:

That's a typical neighborhood in Florida. Actually, I'm being kind. If you took a Zillow snapshot of a city on the west coast of Florida - a region that was already facing significant economic troubles prior to the BP oil spill - you may not see any free space at all.

When I looked at Miami last week, on the advice of William Fisher, an old friend who lived in Coconut Grove for several years, it was almost impossible to find a house on SoBe that wasn't for sale. Closer to where I live now, prices locally in Palm Beach Gardens have dipped (if "dip" is the right word) from a median of almost $400k to a median of almost $200k - and are staying put.

Another friend of mine recently bought an extremely nice house in West Palm Beach (we were just there for his one year old's birthday party) for $365k that was previously purchased for over $800k. There's a house just down the street that will go for almost half what the owner paid for it - and happily so.

If you're looking for data, the Case-Shiller index is the place to go. According to noted economist Robert Shiller, prices of homes (no one calls them "houses" anymore, because calling them that detracts from their perceived value) are still 36% above Shiller's benchmark 2000 value.

If you're looking for information on homes in Florida, or any of the other "sand states", check out zillow.com or trulia.com - and wait a few months. I don't think these prices are going up anytime soon - there were 21 sales last month in Palm Beach Gardens against 1750 available properties. That's a lot of burn-off that needs to happen.

The founder of a company I'm an adviser to recently asked me for tips on creating a PowerPoint presentation for his upcoming investor roadshow. He asked me to send him a copy of the best deck I've ever seen.

Wow. I've seen some really excellent presentations, but the best ever? His question let me on a search through my hard drive, my phone book, and the web - on a quest for the best investor presentation format.

Over the next few days, I'll be publishing the finalists - starting today with the "classic" plan format recommended by Sequoia Capital. Note: watch the video at the bottom of the page in conjunction with the slideshow above, and you'll get a great replay of Jim Goetz's presentation to Stanford students.

Sequoia Capital "Ten Slide" Format

There aren't many VCs that are as successful, well-resourced, and broadly-focused (i.e. across multiple industries) as Sequoia Capital. Here's their published list of what should go into your ten-slide deck (you should check out their excellent "Elements of Sustainable Companies" recommendations as well):

1. Company Purpose

• Define the company/business in a single declarative sentence (Important Note: Sequoia partner Jim Goetz says that only about 1 in every 15 entrepreneurs they see are able to do this successfully)

2. Problem

• Describe the pain of the customer (or the customer’s customer).
• Outline how the customer addresses the issue today.

3. Solution

• Demonstrate your company’s value proposition to make the customer’s life better.
• Show where your product physically sits.
• Provide use cases.

4. Why Now?

• Set-up the historical evolution of your category.
• Define recent trends that make your solution possible.

5. Market Size

• Identify/profile the customer you cater to.
• Calculate the TAM [Total Available Market] (top down), SAM [Served Available Market] (bottoms up) and SOM [Share of Market].

6. Competition

• List competitors
• List competitive advantages

7. Product

• Product line-up (form factor, functionality, features, architecture, intellectual property).
• Development roadmap.

8. Business Model

• Revenue model
• Pricing
• Average account size and/or lifetime value
• Sales & distribution model
• Customer/pipeline list

9. Team

• Founders & Management
• Board of Directors/Board of Advisors

10. Financials

• P&L
• Balance sheet
• Cash flow
• Cap table
• The deal

Pros: It's all in here. I love the focus that "a single declarative sentence" enforces. The business model elements in Slide 8 are nicely thought-out ("lifetime value" is something some entrepreneurs don't even consider - why would someone stop using my product?)

Cons: I personally think there are too many slides in this deck. I've presented using decks that follow this structure, and the problem with providing separate "Solution" and "Product" sections is you end up asking questions about the product in the earlier part of the presentation, so things get repetitive - and can easily stray offtrack. If I were in a room full of Sequoia partners, I would want to get a conversation going ASAP - this deck feels like it would take up the entire time.

Suggestions: If I decided to utilize this format, I would reverse the order of slides 4 and 5 - and talk about market size first, then why it's the right time for this product. If you're up for making wholesale changes, I would suggest you just go with slides 1, 2, 3, 5, 4, 8 (inc 10) - and keep the competitive analysis (6) and product architecture (7) for the appendix.

Learnings: Jim Goetz took some Stanford students through the whole process above - the video is only 17 minutes and well worth watching.

One of my partner investors in Heardable sent me along a link to a deck the other day from the Jordan Edmiston Group, Inc. (JEGI) that presents an extremely thorough picture of the user interest generation (social media) and user interest mining (online advertising) industries.

To give you some flavor of its findings, here's one - during one of the worst years in business ever, new media not only grew, but blew past its traditional rivals. According to the JEGI deck, during 2009, for the first time ever, consumer marketer spend on direct, promotional and digital marketing exceeded total ad spending in traditional measured media.

That is simply an astounding statement. My memory is still good enough to recall those old orange forecast booklets from Jupiter Research - I don't recall any of Jupiter's highly-paid analysts predicting in 2000 that the bulk of consumer adspend would be online by the end of 2009.

Page 18 shows a waterfall analysis that indicates data providers are getting 15% of the pie ($0.75 out of every $5.00 in sold CPM) - which is great news for Heardable and its competitors. I'll leave the slide that shows the EV (Enterprise Value) differential between BurstMedia and InterClick as a surprise.

If you're in any way involved in new media, check out this deck. If you're an owner in the right position in the value chain, it will bring a rosy glow to your cheek.

I just had a meeting with a buddy and he got mad at me because he felt that he'd crossed a threshold in terms of what his technology could achieve and, for whatever reason, I wasn't buying it (enough). It didn't help that the entire conversation was verbal.

Thinking back on the dialog with the benefit of a couple of hours (and a couple of Pinots), I think I'm just at a point in my life now where... I don't need to hear a bunch of words. I just want to see some cool stuff working.

Show me the demo.

Seriously. I really identified with something Fred Wilson said on his blog yesterday. His blog was about how when you're meeting with a VC, you should try and boil down what you want to say to six slides.

Within an hour of his post, there were like 173 comments on avc.com about whether six was the right number. Then in the middle of the argument, he said, look, if you can demo your idea over the Internet, I don't need six slides - in fact I don't need any slides. Just...

Show me the demo.

I guess that's where I'm at. You reach a point where the words form mountains and it becomes really difficult to get around them or over them to the place where the milk and honey is. Which is why it is so refreshing to be able to sit back and watch when someone comes in and slices through all the BS - and demonstrates something that is focused, valuable, fun - and reliable.

There's lots o folks out there that recommend you don't ever do a live demo - because you are risking your chance at getting funding. What a bunch of hooey. I suggest if you're serious about what you're doing and at least halfway competent, you should take this advice and shred it - by doing the best damn demo anyone has seen in ages.

Believe me, that will stand out from the pack.

While some basic budgeting is necessary for all corporations, I'm strongly of the opinion that the wrong kind of budgeting can seriously hamper growth, prevent the kind of returns needed by venture capital investors, and set a company on a path to at best, mediocrity, at worst, oblivion.

"If you're not failing every now and again, it's a sign you're not doing anything very innovative" - Woody Allen

Imagine for a moment you've just cleared a new drug through the FDA and insituted a profit-sharing/bonus scheme for all employees that is tied to the two most common outputs of a budget: sales revenue and EBITDA. Best case scenario for the employees is, the sales guys hit the revenue targets, and the operating guys control their costs. Everyone gets 100% of their bonus. Makes sense, right?

Sure - but unfortunately, this is not the best case for the company, or its shareholders. The best case for the company is that the sales guys hit their targets out of the park, and the operating guys still get their bonuses, despite all that new gear they had to buy and those new consultants they had to hire to support the massively higher sales number.

Operating guys hate it when sales guys threaten their bonuses. Sales guys hate it when the operating guys refuse to support them. The larger the company, the more solid the processes put in place to prevent these two teams from colliding. This isn't good for the owners. Could it be that budgets are to blame?

Venture-backed companies are supposed to be about high growth and the kind of performance that comes from too much Red Bull, nights out with your customers, and an insatiable desire to pick up the phone and sell. Yet how many budgets encourage that kind of behavior? Very few.

The sad thing is, there are plenty of successful analogies of a non-budgeted approach to achievment. These approaches don't ignore goals, they embrace them.

Takes sports teams, for example. Can you ever imagine a top-line sports coach saying to his players "okay gang, listen up - we're going to expend 1,500 calories each during this half of the game and stop once we have eighteen points on the board"? So why do we ask CEOs to do exactly this? Why not ask them instead to stretch a little?

The other problem with budgets is that they can easily give the illusion of control - while providing nothing of the sort. Take out the last budget someone handed you. Sure, the "actuals vs. budget" totals might match, but how many of the individual data points below match what was anticipated during the budgeting process, and how many of them occured by pure chance?

And how much were the totals influenced by a need to catch up to the goal? Which leads to the inevitable and much more important question of: How much could have the goal posts been moved back, if the budget had been based on maximum possible return, instead of a "most likely" mid-range data set?

This is not just an issue for startups - this is an issue that Fortune 500 companies wrestle with as well. Back in the years when Jack Welch was everyone's favorite CEO (i.e. before Steve Jobs inherited the title), Welch pretty-much single-handedly invented the Stretch - the concept that instead of budgeting, your should set "Stretch" goals and go after them with all your might.

According to Jefferey Krames and "The Lexicon of Leadership", Welch hated budgets. As Krames states, Welch operated more like a coach:

"He [Welch] preferred asking employees,“How good can you be?” and felt that Stretch targets rather than traditional budgets helped promote more boundaryless performance."

"How good can you be?" - that is an excellent starting out question for first-time - and even mature CEOs. I suspect many CEOs are not being asked that often enough by their coaches, directors, mentors, and investors.

Instead, they are asked :what's your budgeted goals", and end up settling a pat on the back for "achieving the budget" when they could be setting the world on fire.

Heardable's appointment of Jon Samsel as their new CEO counts as today's "Deal of the Day". There are very few guys out there that know what Jon knows about digital marketing, and fewer still that understand the interface between brands, the web, and the value of the new media relative to traditional media.

Heardable, which measures online brand optimization, is, speaking from the unvarnished point of view of a co-founder and angel investor, the perfect home for the man.

You could see this coming a while ago. Back in the day (actually, twenty years ago), when the rest of us were hanging out in LA trying to get our hands on a cell phone that weighed less than three pounds, Samsel was busy authoring a book about multi-media and a little thing called the World Wide Web.

I believe this was 1993, or thereabouts. We watched on, hoping that whatever "the web" was, it wouldn't bring him down when it proved to be but a passing trend.

Happily, that didn't happen. And since those heady days in Los Angeles, Samsel has moved on to work with a large number of big brands, both as a web marketing consultant (first at Apple, where he helped develop their worldwide developer network, then later at Cognitative, based in San Francisco, where he worked for Oracle, Cisco, Sun, to name but a few of their clients).

Later still, he moved to the C-Level offices, becoming founder and entrepreneur of RoadLoans.com, a company that later became an integral part of Ford's online strategy. Then at Countrywide, Samsel went on to perfect his talent at growing online businesses, something he continued to do after the merger, at Bank of America.

Since his early days in LA, Jon has mentored students as an adjunct writing instructor at UCLA and UC Irvine where he has taught courses in multimedia, fiction and non-fiction writing. His book, ‘Dead Ahead: The Web Dilemma and the New Rules of Business,’ co-authored with Laurie Windham, predicted many of the changes the Internet has had on businesses and organizational processes.

I'm excited to be back working with Jon and I look forward to seeing what direction he decides to take Heardable in. We're already riding a wave of solid growth (from just 50 users in November, we're now up to over 25,000 unique visitors a month - a pretty amazing number, on par with the early days of Compete - and growing fast.)

For those of you that haven't taken Heardable for a test drive, please go and plug your brand/domain into the tool at Heardable.com and see where you rank. Want to know where you stand in a given NAICS category? We just launched that too - but you'll need to sign up to peek at that.

Congrats Jon and good luck - here's to your/our success.

If the entertainment media is driving you to despair with images of today's fathers as a bunch of lying, cheating, irrelevant (when it comes to parenting) no-goods, take heart - the same sentiment was present over 100 years ago, and was the driving force behind the creation of Father's Day by Spokane resident, Sonora Smart.

The inspiration is said to date back to a church service in 1908 in Spokane WA*, during which a priest rounded applauded mothers and critized fathers for their drunken lazy and non-caring natures - without a word of appreciation.

Ms. Smart, the child of a hard-working single father who doted on his kids, was ticked off. Why, she thought, should mothers get all the credit?

After the service, Ms. Smart had a word with the priest about the exclusion. Unsatisfied with the answer she received, she approached the Spokane YMCA with a request - that they help her establish a "Father's Day" in honor of her father, and others.

"I liked everything you said about motherhood," Sonora told the priest. "However, don't you think fathers deserve a place in the sun, too?"

The Spokane YMCA agreed and the first Father's Day was dutifully held eighteen months later - on Smart Senior's birthday (June 5th). According to reports at the time, fathers in church were given red roses, and people whose fathers were deceased wore white roses.

What happened next, with respect to Father's Day, is almost unbelievable, given today's emphasis on capitalism and market forces: Congress refused to recognize or ratify Father's Day, because of concern that it might lead to "commercialization" of the event (Wikipedia).

It took Ms. Smart until 1956 to get both houses of Congress to recogize Father's Day, and another sixteen years to get a sitting President to agree with Congress (Nixon may have been a bad dude on many levels, but give him this - he was the President that, in addition to opening up China, finally recognized that dads deserve some recognition too).

As luck would have it, Sonora Smart was around to see this happen and even gave an interview, from which several of the facts of this story were derived. She lived to the grand old age of 96, and is buried in Spokane - they are lucky to have her.

My own father's day was celebrated this year with a day about as nice as could be - a lazy morning playing, followed by brunch at the best hotel in town with Francine and JJ (and cards!), best wishes from Jordan in Tacoma, a drive home (with massively over-stuffed bellies), and a swim.

On behalf of fathers everywhere, thank you, Sonora.

*Note: Have visited Spokane, and am aware of its role in ski lift and tramway innovation. Have seen the square-wheeled tractor. But in my view, Father's Day ranks supreme as Spokane's neatest invention - and Sonora Dodd (nee Smart), it's most successful inventor.

Over the past twenty years, the folks behind this site have helped a number of entrepreneurs and startup companies raise tens of millions of dollars from venture investors. We've worked both sides of the table, as investors, and as struggling entrepreneurs.

We're about to share with you some highly-effective ways to create and distribute a business plan online. Most of the tools we're about to share have been used before to successfully raise venture capital - and some of our newer tools make it much faster and easier that ever before to do difficult, time-consuming tasks, such as creating multi-year financial projections, and a super-tight executive summary.

Want to know more about the process? We'll also be sharing some secrets, such as the best day *not* to contact a VC (Monday - partner meeting day), what VC's really think about your "conservative" projections (you're a wild-eyed optimist), and how much time to devote to presenting your pitch in a meeting (not more than 30%).

Hopefully, after reading this article, you'll learn some highly-effective ways to create and distribute your business plan, and have a better idea of the process. Not every tip in here is going to find agreement with every investor - there are exceptions to every rule - but that said, we've followed the advice here and successfully raised tens of millions of dollars in venture capital. Let's get started.

Tip 1. Stop Dreaming

Ideas are cheap. As an entrepreneur, your job is not to just dream up a new technology, product, service, or solution, but to build a business around the people that find your invention valuable. For this to happen, you need to roll up your sleeves and build a tangible expression of your idea - i.e. a working prototype that people can experience - then come up with a plan that will allow you to add the essential things required to build and maintain a business - branding, infrastructure, staff, a support team, a product and technology development team, marketing and distribution channels - and capital.

Add perspiration - The French mathematician Henri Poincare was once famously quoted as saying "the creative process moves through three stages - saturation, incubation, inspiration". Albert Einstein later quipped that Poincare had forgotten the fourth, most important stage - "perspiration". We think this story may provide a clue as to why "Einstein" is, today, a household name.

Tip 2. Create a Corporation

When an investor is approached by an entrepreneur, they assume they are being sold equity in a corporation. If you haven't incorporated yet, do so - today, it can cost less than $100 to set up a company, and often takes less than a day. Make sure you seek advice re the best structure from your accountant or other financial advisors - when it comes to investment, some business structures, such as an LLP partnership, may hamper investment efforts. Learn more at CorporateCreations.com.

Choosing a jurisdiction - many years ago, we tried to get funding from US investors for a startup based outside the US. Big mistake! Investors weren't interested in investing in our offshore-based startup. We quickly moved the company to Delaware, a state that offers considerable advantages to startups that incorporate there, and closed our deal.

Tip 3. Accrue Your Expenses

Many entrepreneurs spend considerable amounts of their own money getting to the post-prototype stage - but fail to formally keep track of these expenses. We strongly suggest you record every expense related to your new venture - doing so shows that you understand how to run a business, gives you a useful bargaining chip in the form of your accrued investment, and creates a company better-prepared for investor due diligence.

Fun accounting fact - "bookkeeping" is the only word in the English language that contains three double letters, back-to-back. On that subject, if you don't have bookkeeping software yet, we recommend Quickbooks. We recently used it for a startup that went from zero to several million a year in revenue. It didn't miss a beat.

Tip 4. Satisfy the Needs of Others

Compare your startup to other businesses and ask yourself if what you're doing has the power to satisfy the needs of others. It doesn't matter if you're also enjoying using your technology - many companies, such as Microsoft and Google, started out as personal curiosities. The important thing is that your business satisfy an extra-personal need - one that preferably a lot of other people have!

It's called a "hobby" for a reason - just because you found programming it fun doesn't automatically mean that people will find your product/service/solution valuable too. To be successful, you need to to focus on meeting the needs of an identifiable, preferrably large, group of humans. Which brings us to...

Tip 5. Identify the Problem You Solve

Google organizes information so you don't have to. Amazon can track down any book (or product) on Earth. eBay and Craigslist can help you clear (or fill) your garage. Venture capitalists principally invest in innovations like these - inventions that have the potential to generate an exponential growth in value, by solving a problem that a large number of people have. To that end, VCs typically prefer to invest in technologies that:

• Create a useful, easily-adopted standard (Microsoft/Intel, Apple, Adobe, Twitter)
• Increase the efficiency of a material or process (Synthetic Genomics)
• Multiply the benefits of subscribing to a platform (Apple, Facebook, SalesForce)
• Redirect profits to a new, more-efficient network (Amazon, eBay, Google, Zillow), or
• Solve a health issue faced by a large segment of the population (Novartis, Roche)

Thoughts to ponder - what problem does your solution uniquely solve? Try coming up with different ways of saying "The problem we uniquely solve is..." until you're convinced that: a) your solution is indeed unique, and b) your target customer is so well-defined you can name three people who'll buy your solution. You'll then be ready to...

Tip 6. Calculate Your Maximum Market Potential

It's important to understand, as precisely as possible, the potential size of your market before putting together your sales projections. Not every business needs to target a massive market like NetFlix or Amazon - indeed, many highly profitable businesses tackle local needs and niche markets.

Key point - make sure you know your maximum potential market before meeting with investors. One excellent tool for doing this is the Google Adwords Keyword Tool. Our test keyword (vitamins) showed that 13,000,000 people entered this term into Google last month - along with an additional 9,000,000 searches for "vitamin". 20 million+ searches a month? That's a lot of market potential!

Tip 7. Demonstrate Your Business Can Scale

Scale is a word you'll hear a lot in VC meetings. What the investor is really asking if they ask you if your business can scale is one of four questions:

• Can you address your maximum potential market? - If your maximum potential market speaks Spanish and your product can't be translated (yeah, it's a dumb example, but stay with us...), then your addressable market (e.g. the market you can actually reach) is obviously much smaller than your maximum potential market. Better that you understand this before your investor meeting!
• Can your business handle an exponential increase in customers? - If you're a life consultant working one-on-one with clients, maybe not - unless you build a process based on what you know and reformat your business as an online forum
• Will your expanded customer base be as satisfied as your current customers are today? - MySpace managed to maintain the "Tom is my friend" relationship with its customers even as the service grew to millions of users
• Can you increase your profit margin as you increase your customer population? - Highly scalable businesses use the size of their customer base to their advantage - think Amazon customer reviews, eBay customer rankings
• Will scaling make your business better? - Many highly scalable businesses have figured out how to use the size of their customer base to their advantage - think Amazon customer reviews, eBay customer rankings, or LinkedIn job listings: the more the base grows, the better the business becomes

Automation rules - to really scale your business, you'd better be ready to automate, batch-process, take calls, and outsource. To show how you intend to do this, it's a good idea to write an Execution Plan that explains precisely what you plan to do - as it happens, we include an Execution Plan within our free (and automated!) Business Planning Tool.

Tip 8. Present a Profitable Business Model

Even "free" products need to be part of a path to revenue. And the easiest path to revenue is to price your products as high as the market will bear. Higher pricing means better margins and higher lifetime value - look for arguments from other markets that support the highest possible price for your solution (e.g. laser surgery costs 50% less than a single pair of glasses - and about the same as a year's worth of contact lenses) - and apply them to your startup.

The importance of pricing high - Once your "high water mark" is established, you can always create lower-cost "competing" brands and position them down-market from your "flagship" solution.

Tip 9. Create a Strong Competitive Defense

Many investors will insist that you show evidence that your solution has been protected prior to making an investment - but such steps can be costly. One approach often used is to include the cost of protection in your use of funds, and explain that one of the methods you will use ot create a return for the investor is to use their capital to better defend the intellectual property you've created.

Protecting Your IP (Intellectual Property) - If your solution involves a new technology, material, or process, you've probably already started down the path of patenting and/or trademarking your solution with the USPTO. If not, you should be prepared to explain how you intend to protect your solution from competitive threats in market.

Tip 10. Build a Strong Team

Many venture capitalists state on their web site that they invest in teams. If you've played team sports, you know why - it usually isn't possible to be an outstanding pitcher and a great batter (if you're from a cricket-loving nation, insert "bowler" and "batsman" here!)

Creating an "A" Team - as a future CEO, you should perhaps take to heart the hiring philosophy of (former Oakland A's manager) Billy Beane - and make sure your team includes cost-effective run-scorers, data-driven managers, uniquely-skilled pitchers, and a recruitment scoring system built on aptitude, not just good looks.

Tip 11. Get Your Family Behind You

Before you head off to meet with investors, you need to successfully pitch the most important partner your business will have - your spouse. If you're married, very likely, the first money into your business will come from them. You need convince them that monthly server bills are more important than dinners out or annual ski trips.

Landing your first investor - it's time to sit down with your partner and take them through your idea, soup to nuts. Make sure you successfully address their conerns - if they "invest", they will be putting a lot on the line. Work on your pitch until your partner thinks your idea has a shot - when that happens, you'll be ready to start building the case for venture investment in your business.

Tip 12. Form a Board of Advisers

Forming a technical board of advisers that meets once a month via Skype is easy. Advisers typically sign on for one to five years, in return for a promise of stock options, and are tapped for their specific expertise (e.g. scientific knowledge), contacts (e.g. a Rolodex of top-tier venture partners), or gravitas (e.g. status as a former government minister, international diplomat, inventor, sports star, celebrity, university dean, or person of similar standing.)

Not just gray hair... - a top-tier board of advisers can lend you and your team credibilty and give investors comfort that you are on the right path, and have access to good advice. Think of it as having your top five phone references together in one place, ready to be interviewed. And use these people - don't just list them on your web site.

Tip 13. Show the Dogs Eating the Dog Food

Yes, it's a bit of a disgusting image - but it's also one of the oldest axioms in seeking venture investment. You need to be able to show that someone values your product or service, and is willing to pay you money, either directly (e.g. via a shopping cart, or licensing deal) or indirectly (e.g. via advertising to your users). A business totally without customers - even beta users - will be a difficult sell to most investors.

When a customer buys your product or service, they are telling the investor that the problem you solve exists, and illustrating what they think of its value. Do this enough times (and with enough variables, such as pricing, positioning, etc), and you'll be able to show your investors a research case based entirely on your own product and customer experience.

Tip 14. Don't Run Out of Humans!

Many inexperienced entrepreneurs believe that customer adoption and exponential growth can occur quickly, and continue indefinitely. However, in most situations, product/service adoption is slow to begin. At the other end of the adoption curve, growth almost always slows as competitors rush in to attack your business and steal your customers. Finally, there is the "lack of humans" problem (with four billion cell phone users now calling, cell phone makers may soon run short of new customers).

The "S Curve" effect - to see the effect of attentuating exponential growth over time, sign up and try our free online business planning tools. The Five Year Sales Projections tool includes a month-by-month attenuation mechanism designed to arrest growth over time and approximate the more likely maturity curve your solution will experience in market.

Tip 15. Follow the "Kawasaki Rule"

Back in 2005, legendary venture investor and industry commentator Guy Kawasaki posted a blog to his site entitled The 10-20-30 Rule in which he made the following recommendation to entrepreneurs - ignore it at your peril:

The Kawasaki Rule: "A PowerPoint presentation should have ten slides, last no more than twenty minutes, and contain no font smaller than thirty points... this rule is applicable for any presentation to reach agreement: for example, raising capital, making a sale, forming a partnership, etc."

Tip 16. Approach the Right Investor

Getting in front of the right decision-maker is important - as is knowing who you're meeting with. All VC partners/decision-makers have different ideas about what consitutes a good investment opportunity - and many have skills and experience that are specific to a particular area. Spend some time before your meeting on Google learning about your investor's past life and track record - you'll find this extremely useful when it comes to tailoring your presentation and providing examples.

Do not - under any circumstances - take a meeting with a VC firm unless you've thoroughly researched the firm and its partners. You might yourself in front of a group that has just invested in your main competitor (this happened to friends of our a few months ago - who, sadly, ignored our advice on this subject!) You might also find yourself pitching an web analytics idea to a bunch of solar energy experts. Do the research!

Tip 17. Presentation is 30% - Conversation is 70%

Imagine the following scenario: someone you've never met walks into your office and asks you for money. What might your reaction be? What kind of things might you want to know about this person before writing them a check? Would you prefer to sit wordlessly through a powerpoint or have a conversation with the person, face to face, about why they need the money?

This is one of most important tips: Keep your presentation (and demo, if you do one) short, so you can allow plenty of time in your meeting for conversation. Not only do your investors need to get to know you, but you need to get to know them, and answer all their questions. You can't do that if your powerpoint runs 59.5 minutes!

Tip 18. Be Yourself

Often, experienced VC partners will ask questions designed to elicit a better understanding of you - the founders of the business. These questions are usually designed to try and understand how you might operate in the presence of a large potential partner - or how you might react in a stressful situation. Be true to yourself and answer every question honestly (except questions related to "final product delivery date" - everyone in the room knows they're about to hear a half-truth when it comes to that!) The important thing is: you're here to build trust. The only way you can do that is to be true to yourself, and honest about your strengths, weaknesses, and beliefs.

"Don't Be Evil" - Google's famous "slogan", composed by (GMail creator) Paul Buchheit and Amit Patel, was originally created to informally guide internal policy - and a statement to the rest of the industry (and a not-so-subtle jab at a then-larger, more-established software company). It got Google a lot of attention, but also some respect as well.

Tip 19. Keep Your Emotions in Check

Not every investor is going to get your story. Robert Persig went to over 450 publishers with his classic "Zen and the Art of Motorcyle Maintenance." JK Rowling was forced to work as a part-time teacher after seeing "Harry Potter" rejected and settling for a measly $4,000 first advance. The key to handling rejection is understanding that often, the words "not interested", "not right", and "not ready" may not actually be criticisms of your business but statements about the investor's business, based on their Investment Criteria.

Investment Criteria: Many investment firms have strict rules about what kinds of businesses they can invest in. Don't take a "no" personally - your business might simply be too "early-stage" (i.e. not yet generating significant revenues), or outside the scope of the combined experience of the partners.

Tip 20. Have a Backup Plan For Everything in Your Meeting

In some cases (such as the Demo show, or Jim Breune's Finnovate conference), your allocated presentation time can be as short as a mere handful of minutes. Do not waste them. Make sure you are still able to present your business - even if the lights go out in the meeting room!

Bring the print-outs - we strongly recommend you take print-outs with you (but not distribute them, as some folks may flip ahead and miss important parts of your presentation) - and put together a canned demo of your technology, if your demo relies on Internet access, so you can quickly revert to it if something goes wrong.

Tip 21. Get The Math Right

We were recently shown a PowerPoint deck in which the balance sheet and income statements did not add up - literally! The entrepreneur showed little concern when we pointed this out, leading us to assume they would treat an investor's capital as unwisely as they treated their financial planning.

With great tools like DealHorizon Startup at your disposal, there is no reason for your financials not to be professional, and dollar-perfect. Take advantage of the models available here, and create a set of financial statements that you can be proud of.

Tip 22. Avoid the Word "Conservative"

VCs understand that many entrepreneurs build their financial projections on a "best-case" scenario - i.e. everything goes right, gets delivered on time, gets into the channel in sufficient quantities, and is supported to a level that generates high customer satisfaction (and higher customer lifetime value.) To an investor, such a scenario is probably overly optmistic. Which is why it is best not to describe such projections as "conservative" - doing so reduces credibility and could actually harm your investment chances.

Don't discount your plan - your job is to present the usage data and research that best supports your arguments, and leave it for the investors to decide if they agree (VCs and angel investors will almost always apply their own models to determine the likelihood of your business reaching your projected goals) - not to present a worst-case, "conservative" scenario.

Tip 23. Hire a Great Law Firm

Calling up your college buddy and asking him to represent you (because you just heard he passed the bar and needs the work) is a bad idea for first-time entrepreneurs. It's quite possible you might save a few bucks today, but unless you buddy knows what he's doing, you could be leaving millions on the table. Hire an experienced law firm.

Lawyers can provide advice and insights far beyond changes in drafting - and many lawyers are also well-connected in the VC community, know the lawyers on the opposing side, and can help you structure a better deal based on the knowledge gained of the particular investor through prior dealings.

Tip 24. Don't Discuss Valuation Terms Unless You Understand Them

We're fans of "Shark Tank" - the TV show in which investors put money into businesses that ordinary people pitch during the show. But few VC investments are structured as a simple percentage ownership (we suspect "Shark Tank" uses this approach because, well, it's a TV show - and a long conversation about how the investor will require a 2x participating liquidation preference might not play well on prime time!)

Without a solid understanding of valuation techniques, liquidation preferences and preference share structures, you can have the best idea in the world and lose 100% of your ownership, simply by making one or more common "first timer" mistakes. Leave valuation discussions to your lawyer, banker, or finder - or talk to folks that have navigated these waters before and bone up beforehand.

Tip 25. Only Use Licensed Finders

We've used finders over the years with varying degrees of success. In some cases, they have provided introductions to strategic investors that would have been tough to get an audience with otherwise. But generally, we avoid using finders unless they are licensed, and operate entirely on a "shared success" basis.

SEC Reg D - rules and regulations regarding finders have been reinterpreted more strictly by US courts in recent years. With few exceptions, any finder who asks for a commission on your fundraising needs to be licensed as a broker-dealer by the SEC. If they disagree with you on this based on a stated exemption, refer them to your law firm.

Tip 26. Request Enough Capital to Last 18 Months

Here's two good reasons why, as entrepreneurs, you should only plan on raising capital a maximum of once every eighteen months.

• Capital raising takes time - if you only raise enough for a few months, some of your key managers could find themselves back in fund-raising mode almost as soon as the first round is closed
• Capital raising involves selling - and in the case of many startups, the CEO is often "product salesperson in chief". Having the CEO take time out to sell equity instead of product is rarely a good thing.

Another good reason - Too little time between rounds can dilute your ownership by not allowing you time to execute your plan - by waiting longer, and giving your team members time to execute, you may get a higher valuation for your next round (assuming you still need capital, of course)

Tip 27. Compare Terms

The "term sheet" contains the basic terms an investor is willing to offer, in abbreviated form, and signifies a semi-official start to negotiations. Though usually non-binding, once issued, term-sheets are usually honored by most VCs and accredited investors. But that doesn't mean you shouldn't try for better terms - either from them, or from a difference capital source.

Looking at Term Sheets online - Wilson Sonsini Goodrich and Rosati, one of the top law firms in Silicon Valley, has created an excellent tool for startup entrepreneurs they call a Term Sheet Generator. Check it out at the Wilson Sonsini web site.

Tip 28. Close The Deal

The reason you're here is because when your father met your mother, at least one of them followed up! Treat your business - your baby - with the same care. Follow up and communicate daily with your investors through the due diligence period and up until the closing. This is the most important set of actions you will take.

Selling equity involves the same skills as selling product - Your approach to selling your equity will provide your investors with a strong indication of how well you will do selling your product, post-investment. Follow up. Provide additional info (including your latest customer sales figures). Be persistant. Don't give up.

Tip 29. Demand More Than Money

Most businesses succeed or fail based on the strength of their pricing, the energy and connections of the sales team, the uniqueness of their solution, the ability of their development teams to stay on schedule, and the ability of their operations staff to implement processes that enable the business to scale. VCs can help you plug strategic gaps in these critical areas and enhance your chances for success.

How VCs can add additional value - VCs can often help by suggesting ideas, vendors and strategies that have worked for other companies in their portfolio, by improving your board-level governance, and by adding folks to your management team on either a temporary or permanent basis. VCs can also be strong advocates for your product or service, via blog posts and/or conference appearances.

Tip 30. The VCs Need You

In one of our recent blogposts entitled Too Much Money, Not Enough Entrepreneurs we came to the conclusion that there is currently more money out there than there are good ideas to soak it up. That said, VCs rarely take chances on badly-formed or incomplete plans. You need a plan that demonstrates you can take their investment and provide a good return on it.

Remember, VC's can only earn money for their LPs (Limited Partners - the "fund of funds" folks that give them money to invest) if they say occassionally say "yes" to a deal. Use the tips and tools available here, and the advice available on the leading VC blogs, and you'll greatly improve your chances of landing that investment.

Tip 31. (Bonus Tip) Use DealHorizon

Yes, you've come to the "shameless plug" part of the page! But we really do think our tools can help you achieve your goals in less time, with less hassle. Sign up using the link at the top right of the page and take the site for a test-drive.

One of the benefits of being involved in several companies is you get to see a lot of individuals in action - managers, entrepreneurs, board members, technical advisors, investors, and customers. My takeaway from watching all this action can be summed up in three words: Shoot the Dinosaur.

First task: identification. Who is this dinosaur I refer to? The dinosaur is not necessarily the oldest person on your team (he may be the youngest.) The dinsoaur is simply that person on your team that places a drag on your organization by using technology or work practices from a different era (or planet).

• He's the guy that values experience over innovation
• He's the guy that views market disruption as "the wrong road to take"
• He's the guy that buys a video conferencing system when everyone else is on Skype
• He's the guy that thinks every change to your web site should go through a process
• He's the guy that insists on creating his own server farm because the telco's is "unreliable"
• He's the guy that thinks meetings are essential - but speed to market is not
• He's the guy that builds a web store from scratch (rather than renting at Yahoo)
• He's the guy that thinks employees should not work from home
• He's the guy that thinks customers/deals are a pain in the ass
• He's the guy that thinks your call center must be local

How much time and money does the dinosaur cost a startup? Heaps. Hell, I've seen dinosaurs have the same effect on a startup as the proverbial bull in a china shop. I've seen dinosaurs bring down companies that otherwise would have flourished. I've seen dinosaurs drain the life from an entrepreneur's idea by insisting on a three year path to market when a one year path was possible.

Can a dinosaur add value? Yes, but rarely. Possible exceptions are legal and financial advice - and sometimes, human and corporate relationships. Dinosaurs with solid financial and/or legal/deal-making credentials on their resume are worth keeping around.

But operations? Development? Marketing? If you must have a dinosaur at the table, keep them as far away from that stuff as you possibly can - because what a dinosaur (particularly a dinosaur with an MBA) thinks is a solid marketing strategy for today could bankrupt your business without returning your a cent in ROI.

Is there a more humane way of dealing with a dinosaur than shooting it? In my experience, no. The dinosaur resists re-education with the same vigor as a Republican resisting socialized medicine - once a dinosaur, always a dinosaur.

Shoot the dinosaur. Kill it. Don't wait. Your business will thank you for it.

A few years ago, at the Forbes CEO conference in Singapore, I asked Singapore's Prime Minister, Lee Hsien Loong, a question: what lessons could other third world countries take away from Singapore's rise to prominence?

The question came out a little wrong - obviously I was referring to Singapore's historical position (the position referred to in Lee Kuan Yew's memoir "From Third World to First"), not modern Singapore - but after we got past that, he gave an answer that essentially summed up Singapore's success formula: create a self-sustaining economy that supports fair dealing.

This is what Singapore has done from the beginning of its modern era. One of the first moves by singapore's founding father Lee Kuan Yew, was a radical increase in pay for the public sector, a strategy that over the course of five decades has resulted in an almost complete absence of corruption.

In Singapore, government ministers are paid extremely well for two excellent reasons - to ensure that really smart people make it into government, and to remove the need for "additional income". Citizens of other countries that complain about the high salaries of government officials are missing the point - there are benefits to ensuring that your public sector is well-paid.

A second innovation, the creation of an employee and employer-funded Central Provident Fund - a mandated superannuation facility designed to provide support for home ownership and retirement - has resulted in one of the highest home ownership rates in the world, and a self-funded social security system that is the envy of governments everywhere.

A third innovation (possibly the result of the race riots of the sixties) has been the successful mingling of races, religions, and business cultures through a policy of protecting each culture while ensuring that each public housing block or facility does not overly represent one particular group.

Given Singapore's success, it seems strange that more countries have not followed. As I travel, and listen to people from countries such as Argentina, Lebanon, Guatemala and Nigeria, I'm always astounded that more leaders do not seem to be paying attention to Singapore's example.

Singapore, you might say, has the advantage of being a small place. But while that presents an organizing advantage, it presents a huge disadvantage in terms of natural wealth. The path that Singapore has cut has not been easy - but the strategy has created enormous wealth for its people, and one of the best places to live, anywhere in the world.

Why can't/won't other countries do the same for their people?

Several years ago, while I was setting up and building out sales and distribution offices for a satellite company in China, Indonesia and India, I was given a briefing on marketing to these emerging giants of the Asian market by several senior executives from a local (Mumbai-based) ad agency.

Now, you would assume that boiling down the buying habits of three billion people is a difficult task - but these guys managed it with aplomb. Their secret? The cigaratte.

Don't like cigarettes? Think they smell toxic and are generally negative contributors to society when it comes to interpersonal gatherings and world health? So do I. But please read on - because what I learned from this presentation is that not only are cigarettes personally addictive, they have created a retail distribution system that is equalling compelling at every level of the value chain.

Consider the beginnings: when a cigaratte manufacturer ships its cigarattes, a non-perishable good, from America or Europe to Asia, it typically uses containers.

• A container can fit an average of 55,511 cartons of cigarettes
• A case typically fits 60 cartons of cigarettes
• A carton of cigarettes contains 10 packets of cigarettes
• A pack of cigarettes contains on average 20 cigarettes

So at one end, you have multiple containers packed with roughly a million bucks worth of cigarettes (55,511 x $20 (avg retail) = $1,110,220) each. They arrive, and the individual cases are then shipped off to subdistributors, who then split the cases into the first retail expression of the cigarette: the carton. The cartons are then further split into packs of cigarettes by the retailer, vending machine operator, etc.

At this point, however, the story goes an additional step further. While the retail chain typically stops at the point of the packet in the First World, in many countries, the retail chain goes much further - to the level of the single cigarette.

Cigarettes are sold individually at stop lights, small shops, movie theaters, bars, on the beach, to the people who cannot afford a pack, but can afford perhaps one to three cigarettes on an individual basis, and are willing to provide the middleman with a slight mark-up for that convenience.

Herein lies the genius of the cigarette distributors: they have come up with a hugely scalebale model. At the other end of the distribution chain is a massive container ship - at the other is a small retail village store, or teenage vendor weaving in and out of traffic, selling a cigarette.