Andy Sperry

Should you try to raise money for your new startup business?

2011-09-20T12:19:00.001-05:00

Having raised money for several startup businesses this is a question I get asked all the time. While I don't claim to be an expert on the subject matter I can certainly speak to my experience. I also need to say that this is an exhaustive topic that takes far more than a simple blog post to cover. That being the case, I'd like to address just a small piece of the puzzle today, what I call the TWO ENTREPRENEURIAL PRESSURES.

TWO ENTREPRENEURIAL PRESSURES

Pressure 1: Customers

As an entrepreneur you will always be dealing with customer pressure. And as the business founder you will never be far from the front lines. I've heard a number of business owners refer to the feeling of always being "on call" for their customers on nights, weekends and even during vacations. Been there, done that. Like it or not, that's real, unavoidable pressure for every entrepreneur.

Pressure 2: Investors

While Pressure 1 is unavoidable (or you'll quickly find yourself out of business), Pressure 2 is optional. I don't want to spend time here today discussing how to decide whether or not you need to take on an investment for your business, but I do want to point out that once you go down that road you have opened up pressure from a whole new dimension... Investors. It turns out that investors don't invest in your business because they like your idea or like you as an entrepreneur, although those are preliminary requirements. Investors give you money because they like money and believe you can make them MORE! If you meet or exceed your business plan you'll hear little to nothing from most experienced investors as they'll be confortable that you're hitting the goals you proposed on the front end which means they're on track for the returns they expected when they made the investment. However, when things don't go according to plan, an lets face it - they rarely do, your investors are going to demand (and deserve) an explanation and demand (and deserve) a revised plan and demand (and deserve) up-to-the-minute play-by-play until you get back on track.

SUMMARY

This post is not meant to suggest that taking on an investment in your business is either good or bad. As a matter of fact my personal experience is that the right investor brings far more than money to the table and far more good than bad to the table (see this post for details). The main point I'd like to make here is that as you consider taking on an investment for your business keep in mind that the pressure you now feel from you CUSTOMERS will potentially now be bookended by new pressure you will feel from INVESTORS. Many entrepreneurs start businesses because they believe they can build products and provide services better than anyone else in the market and don't need anyone pressure from anyone to tell then how to do it right. When you start "working" for an INVESTOR you potentially compromise that ideal scenario.

Can you get on the next season of Shark Tank?

2010-03-18T09:03:00.000-05:00

Since my national InkFlip TV debut (which also happened to be my national TV finale) I often get asked by other entrepreneurs about both the PROCESS of getting onto Shark Tank and the LIKELIHOOD that there will be another season.

PROCESS
Personally I found the process of getting on the show for InkFlip.com to be relatively painless. Here's how it went.

In early July of 2009 I was told by a friend that she heard about a show for entrepreneurs that ABC was filming and that they were still taking applications. I believe she said, "You've always got all these crazy ideas - you'd be perfect for them".
Not knowing anything other than what she told me I went to the ABC web site, found the Shark Tank section and clicked on the Casting link.
On this page I found the following information - which is still there as I make this blog post:

I typed up an email, included the photo below, and, as I was about to press send literally said, OUT LOUD, "This is going off into hyperspace, I just wasted a bunch of time."

In less than 24 hours my phone range and I was being interviewed for 20 - 30 minutes by a representative from Mark Burnett Productions. I was STUNNED!
24 hours later I was asked to submit an official application which included signing a lengthy legal agreement and submitting a home-made video. The video included me both giving my "pitch" in 2 - 3 minutes and answering a number of questions (posed by an off-camera neighbor).
Within a week of submitting my official application and video I was interviewed several additional times on the phone and then told that I was a "finalist" which meant there was a good chance I would be receiving a plane ticket to Hollywood.
Three weeks later my plane touched down at LAX... and the rest is history.

All in all the application and interview process was pretty simple and pretty low stress. I would absolutely do it again and I would absolutely encourage anyone thinking about applying to hit the send button and see what happens!

LIKELIHOOD
Before you apply, however, you may want to consider that there has been NO CONFIRMATION THAT THERE WILL BE ANOTHER SEASON OF SHARK TANK. ABC has not said yes or no, they simply have not said anything. Just the same, there may be an alternative worth considering.

Dragon's Den, the Canadian version of the show, is now casting (Season 6) and, as best anyone can tell, it's open to all (i.e. not just Canadians). Here's a LINK if you're interested. The show is very similar in format to Shark Tank and even has two of the ABC Sharks on the panel - Kevin O'Leary and Robert Herjavec - who are both Canadian born. It seems that you can apply online like I did for Shark Tank or in person (ala American Idol) by looking at the Audition Cities and Locations tour schedule (follow link above). Auditions are currently in progress so if you're interested you'll need to move quickly.

Having no idea about the audition process for Dragon's Den I would say it's likely not the same as I described above for Shark Tank.

Should Shark Tank be picked up for another season I'm sure the application pool will be much larger and thus make it more difficult to get on the air. As I discovered through my Shark Tank experience however, if you've got a solid idea and an entertaining presentation (meaning really good OR bad - again think American Idol, specifically William Hung) you've got a shot and SHOULD take it.

Next thing you know you'll be writing your own blog - feel free to plug InkFlip.com!

Money Minus, Money, Money Plus

2010-03-11T11:00:00.000-06:00

I've been getting a lot of questions lately about raising money for InkFlip. Questions like:

Have you found an investor yet?
Are you still interested in taking on an investor?
What are you looking for in an investor?

Answers: No. Yes. See below.

I've been fortunate to have no lack of opportunity to speak with potential investors. While there are many ways I could categorize those I've spoken with (institutional investors, angels, tire kickers, sharks : ), etc.), in my mind I've now got them pretty well separated into 3 distinct groups - Money Minus, Money, and Money Plus.

Money Minus
Those in this group have the money. The problem is that their money comes with tremendous baggage. The inexperienced investors will have unrealistic expectations, very little patience and, based on their inexperience, bad advice they will not only want to give but see implemented to the detriment of the company. Then there's the, "I love this concept let me risk it all" investor who is likely to have zero patience and keep me up at night with phone calls and emails. It's one thing to watch your money, it's another thing completely to be watching you last few dollars. I simply don't want to be along for that ride. There are others in this category but I'm sure you see my point. This Money Minus group brings money and a side-order of negatives.

Money
This one is easy. This group is comprised of people who have the money to risk, are typically involved in a number of other investments, and are willing to financially support what I'm doing... from a distance. In other words, "Here's the check, let me know how it turns out". I know this sounds GREAT on the surface - no pressure, no strings - but the reality is that the right partner can bring wisdom, guidance and connections to the table that these money-only guys do not.

Money Plus
In this group I've found investors who are seasoned, savvy, and want to bring not only money but expertise and, in some cases, resources (marketing, sales, fulfillment, etc.) to the table along with that money. Money Plus is clearly where I want to be.

Maslow's Hierarchy of Needs
While you may have never studied it, Maslow's Hierarchy of Needs applies here. Maslow suggested that we all have basic needs that MUST be met (sleeping, breathing, eating, etc.) but we also have other needs that, if met, greatly enhance our quality of life (creativity, spontaneity, problem solving, etc.). Not having the "other" needs met won't kill us, but our life experience and chances of "success" as defined in our culture are severely diminished. So how does this apply to money?

First off, it's ALL green and it ALL spends well. However, when I survey the sources available the money is not equivalent across the board. Some actually does LESS than meet the basic need (Money Minus), some meets the need (Money), and some meets the need and provides a much greater chance of success (Money Plus).

Needless to say, I'm still talking to investors in all three groups - after all the basic need must be met. As you can imagine, now that I have this picture clear in my head, those in the Money Plus category are getting most of my attention. I write this today not just as an InkFlip update but as a reminder to all entrepreneurs that there is a higher goal in raising money than just getting a check in the bank. Maslow would say, "Get the check and, if you have a choice, get a blue-chip investor to write it!"

The Votes Are In!

2010-03-08T09:46:00.001-06:00

When Shark Tank aired I posted 2 survey questions on my blog. I promised to share the final results and, after 2 months, I'd say we've got enough votes to have reasonable conclusions. Here's how they finished:

Question #1: I believe InkFlip is...
Brilliant 311 (31%)
A Good Idea 594 (59%)
Stupid 92 (9%)
(total votes = 997)

Question #2: The Sharks decision on InkFlip was...
Wise 469 (53%)
Uneducated 217 (24%)
Ridiculous 83 (9%)
Stupid 110 (12%)
(total votes = 879)

You can, of course, draw your own conclusions from the results. From my perspective here is what I have taken away:

Question #1: The InkFlip service is a better (cheaper, more convenient, green) way to do something we've all been doing for a long time. It takes a proven fulfillment model (i.e. NetFlix) and applies it to a new industry. I believe the fact that 90% of voters classified InkFlip as either "Brilliant" or "A Good Idea" is a very positive boost for the business. Personally, as the guy who came up with it, I can tell you that it's very encouraging and I'm quite thankful. Entrepreneurs are like artists. We have ideas and visions. We build them out and then, those who are brave enough, put them on display for the world to see. It's the reaction to our creation that determines our success or failure. I'm more than pleased with this reaction.

Question #2: Based on my inability to answer the "customer acquisition cost" question I can't say I am at all surprised that 53% of voters felt that the Sharks made a wise decision to not invest in InkFlip. Since the other 47% felt their decision was either "Uneducated", "Ridiculous" or "Stupid" I guess the poll was pretty evenly split.

Overall, I find it interesting that 90% like InkFlip but better than 50% felt like the Sharks made the right decision to not invest. Today I am certainly glad I didn't give up any of my company to the Sharks - not that I had the option : ) It turns out that there was an additional vote... where America voted with it's hard-earned dollars. That vote is the only one that really counts and it's been an overwhelming YES on InkFlip.com. New customers are still coming on board every day, and every day I'm receiving re-orders in the mail. I can't thank you all enough!

Best - Andy

InkFlip Infomercial

2010-02-12T11:39:00.000-06:00

As you well know, the Shark Tank Sharks crushed me for not knowing my "customer acquisition cost". While you saw some of my discussion with them, I was actually in the "tank" a LONG time and part of what you did not see was our discussion about marketing. While I believe you can certainly make educated marketing guesses, at the end of the day they are still guesses and you don't really know what works or doesn't work until you've tested it. Thanks to my good friend Brian Seeliger, Nashville TV producer of The Country Vibe, I'm getting the opportunity to explore whether or not TV Infomercial marketing (DRTV) will be a cost-effective way for InkFlip to get new customers.

Before this goes live on TV I would appreciate you looking at, commenting on, and SHARING it (via Facebook, Twitter, email, Blog, etc.) so that I can get a better sense as to its effectiveness.Here it is...

Best - Andy

Andy Sperry
Flippin' CEO - InkFlip.com

InkFlip Coverage on FOX

2010-01-27T08:41:00.000-06:00

FOX did a fantastic story on InkFlip (http://www.inkflip.com) last night. It's almost impossible to explain the InkFlip concept any better than Stacy Case did. The moment it aired orders started coming in. Thanks for sharing this with others!

Best - Andy

Video Link is HERE:
WZTV FOX 17/Nashville

Interesting Statistics from Shark Tank Appearance

2010-01-19T15:56:00.000-06:00

Ever wonder what might happen if your little enterprise got some exposure on Prime Time National TV? Ever wonder if there really is no such thing as bad publicity? Well, I've got your answers in a statistical format. ABC (www.abc.com) was kind enough to air my foray into the Shark Tank (http://abc.go.com/shows/shark-tank/) just over a week ago and things have never been the same for InkFlip (http://www.InkFlip.com).

Google Analytics (http://www.google.com/analytics/) has been kind enough to record the following data for me:

Web site traffic UP 16,551.32% (Yes, that's 16 THOUSAND FIVE HUNDRED + PERCENT!!)
The initial spike in traffic CRASHED MY SERVER so, while the number of visitors was in the THOUSANDS, it's hard to say exactly how many people really visited in the 1st 24 hours.
I'm still averaging over 300 new & unique visitors to InkFlip.com PER DAY, none of which I've paid a dime for.
My customer base has TRIPLED.
I've shipped more ink cartridges in the last 10 days than I did from the day InkFlip.com went live up until I walked into the Shark Tank (ok, I actually walked into the Shark Tank last summer, but you know what I mean).
I've had dozens of investment-related inquiries and have already had several meetings related to that potential investment or acquisition.

So the moral of the story is, given the choice to get your tail kicked on National TV or stay home where it's safe, take the whipping - it only hurts for a minute!

Best - Andy

P.S. Thank you immensely to all of you who are new (and still potential) customers. I'm indeed grateful!

Avalanche!!

2010-01-10T10:21:00.000-06:00

Thanks you for all of the emails and blog posts - some good, some not so favorable for me : ) but I believe everyone has the right to express their opinion so I'm not editing them.

Also thank you to SO MANY who are new customers. I'm going to do my best to get all new orders out in the next couple days but would ask for a small bit of grace given the unusual nature of the Shark Tank surge!

I haven't yet had time to get detailed web stats, which I do plan to share. What I can tell you is that it's been in the thousands upon thousands. I've also been fortunate to have several people contact me regarding an investment in InkFlip. I've not yet had any of those conversations in-depth as I'm trying to first serve new customers and answer emails but I'll let everyone know if and when InkFlip has a new investment partner.

For now InkFlip is alive and well thanks to Shark Tank and the incredible Internet buzz it has created thanks to folks like you following my story.

Best - Andy

The Rest of The Story

2010-01-09T00:56:00.000-06:00

For those of you who watched my national TV debut (and, likely, finale), you know that it didn't go so well for me in the Shark Tank. The irony of the "What's your customer acquisition cost?" question is simply that it can't possibly be answered for an early-stage company. The added irony is that the question could have been asked of ANY of the entrepreneurs who appeared on the show and NONE of them with early stage businesses could have answered it. It was truly frustrating to not be able to even get to the meat of my business because they got bogged down on the fact that I couldn't answer a question that simply had no answer prior to an investment in the business followed by time to test a variety of marketing methods and track results. Ugh.

It was clear to me in watching the entire Season 1 that the Sharks were truly doing nothing but looking for manna from heaven. They were only investing in businesses with proven history and stellar financials. I can't say I blame them for using these as the investment criteria, but that doesn't really make them "Angel" investors, which is how the show portrays them. That type of thinking really makes them something closer to Venture Capitalists, who have more of a mindset of putting money into proven business models to expedite growth rather than taking on the higher risks associates with true Angel investments.

Typically an Angel investor knows he or she is investing early without all of the answers and, as a result of the extra risk, gets rewarded with a larger % of ownership per dollar invested than a Venture Capitalist would expect in a later stage. The thing that really has made the Sharks, well, um, SHARKS, is the fact that they have evaluated investments like Venture Capitalists yet expected ownership like Angels. Cake. Eat. In this economy where entrepreneurs have had limited opportunities to raise money the phrase "Cash is King" is more true than ever and the Sharks have certainly taken advantage of that - not that I can blame them!

Having said all of that I'd also like to say that I went into the Shark Tank with several thoughts in mind - in this order:

1. Get on national TV and get the exposure for http://www.InkFlip.com - if America loves it what happens with the Sharks doesn't really matter.
2. Get an investment from the Sharks
3. If the Sharks pass, hope the exposure brings other investors to the table who have been following the show who want to fund or acquire the business.

Obviously #1 is done and now America gets to vote with the best voting tool they have - their wallets. At this point I'll either get a surge of business to validate the concept or I won't. Either way I've got a clear answer, something every entrepreneur wants so he or she can stay focused or move on. #2 clearly didn't happen. #3 is still on the table. Interested? I'm still looking for $ and, for the right price, the company is always for sale.

Stay tuned and I'll let you know what America thinks about InkFlip!

Best - Andy

Appearance on ABCs Shark Tank - Friday Night

2010-01-05T15:01:00.000-06:00

I wanted to confirm a rumor many of you may have already heard... I am indeed making an appearance on ABCs Shark Tank this Friday night (9/8 Central) to promote www.InkFlip.com. If you're not yet familiar with the show, check it out here: http://abc.go.com/shows/shark-tank/

I was fortunate to be invited to the taping of the show last summer and after a long wait now get my moment in front of the Sharks revealed to America. Since ABC has already let it out of the can, let me go ahead and address part of what you'll see...

ABC has decided to peg me as "the guy who was unprepared". For those of you who know me I'm sure you're chuckling right now as I tend to be VERY hard to catch off guard. As a matter of fact I spent time in front of many highly successful local entrepreneurs and investors honing my "pitch" and getting prepared for the kinds of questions the Sharks would ultimately ask me. The Nashville business community is incredibly savvy when it comes to funding and launching start-up companies and, as a result of tapping into that knowledge base, I was ready for any reasonable question they threw my way. The problem was, the main question they wanted me to answer was one that anyone with any kind of business IQ would agree is impossible to answer without first raising money, which was why I was there in the first place. Indeed, this was a "chicken or egg" moment.

That's about all I can tell you before the show airs. Afterward, I've got plenty to say about my Shark Tank experience and will be posting follow up information to let you know what happens when an "unprepared" entrepreneur from Nashville gets his 15 minutes of fame!

Best - Andy

On My Deathbed

2009-07-30T07:19:00.006-05:00

A wise friend of mine once said to me, "Andy, when you're laying on your death bed you won't be wishing you'd spent more time in the office." This was said in the context of me launching my 3rd entrepreneurial start-up (this time into the printer ink cartridge business which I knew nothing about and, therefore, took more time to get up to speed) with a wife and two young kids at home craving my attention.

I had a booger in my nose (dedicating myself to building my business while my family fell apart) and, thankfully, someone was bold enough and kind enough to point it out by simply holding up a mirror and inviting me to look at my own life. While discovering a booger-on-display is always embarrassing, it's also a catalyst for change. In this case it caused me to not only change my current priorities but to also re-define the end. What would I be wishing I'd spent more time doing when I was on my death bed? I realized that if I could answer that question NOW I could set my life on a path that ended with no final regrets.

COMING NEXT: Redefining The End - How one booger changed my life

Redefining The End

2009-07-29T09:15:00.000-05:00

So what would I be wishing I'd spent more time doing when I was laying on my death bed? This question really stuck with me. As I contemplated the end I pictured myself in those last moments. Who would be there? What would they say to me regarding my life? Maybe more importantly, who wouldn't be there? Who had I left behind that would cause me great remorse in my final moments?

While I can't know for sure, what I can do today is re-define the way I want the end to look for me. And re-defining the end means I've got to re-define "success" in my life. After all, the way you define success will define your path, and the path you're on will determine your destination. For example, if you're travelling today and define success over the next 12 hours as getting from Ohio to Florida, your path will be defined as South (hopefully) and thus your destination will be determined by your path. However, if your path is ill-defined (i.e. North) you'll never get to your desired destination and you'll have regrets about the end.

To that end, I've redefined success in my life, which has redefined my path, which will ultimately determine my destination. Here goes...

SUCCESS: A wife who loves me, kids who know me, friends who need me.

COMING NEXT: Success Begins Today

It Ain't No Destination

2009-07-28T14:54:00.000-05:00

While I told you that the definition of success I've locked onto through many ups and downs in life is:

"A wife who love me, kids who know me and friends who need me..."

I've certainly been guilty of defining success as a destination - i.e. when I get THERE then I'll be successful. After all, that's the American way. Once we ACHIEVE something then we'll be "successful." The problem with that is that we've all achieved many things that we once defined as success - own a home, start a small business, become a manager, write a blog : ) - yet we don't feel successful. We're still waiting for that moment when we can kick up our heels, remove ourselves from the grind and bask in accomplishment.

But that moment doesn't come. We don't arrive - we just grind. Why? Because our measuring stick for success is all wrong. So here's the deal. Want to feel success? Give yourself a new metric to judge against and you can begin to feel successful every single day - heels kicked up, grind in the rear view mirror.

COMING NEXT: A New Measuring Stick