Jeff Jordan: Entrepreneurship, Angel Investing and Life

Leaving FundingUniverse

2008-03-24T15:09:00.015-07:00

Today is my last day at FundingUniverse.

It makes me think of my first day at FundingUniverse -- in my bedroom office talking on the phone with some character named Trent Miskin, trying to figure out how in the world we were going to make money off a website with 30,000 pageviews/month and a not-so-well-thought-out "We'll just sell ads off of the hordes of traffic we'll get!" business model.

I loved those times. Anna and I were living in a home with a disabled man whose parents paid us to care for him. It was the ideal setup for an entrepreneur who wasn't going to get paid for the next six months.

Two years and as many business models later, FundingUniverse is much more than the naive dreams of a few rookie entrepreneurs. While we still have a lot to learn, Brock, Trent and I have watched a great team build our company into a growing, viable business that is providing real value to the world.

The future at FundingUniverse is bright. We just tripled our sales force and our subscription is converting at an average of about 3.5% with an average purchase price of about $200. The foundation for a great future has been laid.

I'm sure you're wondering why I am leaving if everything is going so well.

First, I'll say that it has nothing to do with the people I work with, or the strategic direction of the company. Brock, Trent, Josh, Michael, Matt, Lindsey and the rest of the crew are like family to me. They're smart, fun and the right people to take the company to the next level. There hasn't been a "falling out" a "philosophical difference" or any of those ridiculous phrases that mean, "We hate each other's guts."

My reasons for leaving have more to do with my desire, and doing what I love most.

After serving in many roles at FundingUniverse, I now spend most of my time managing the consulting arm of the company. The good news is that this part of our business is our biggest revenue generator right now, and it's growing every month. The bad news (for me, at least) is that consulting isn't very fun for me.

I've hired a few people who love consulting. They'll do a much better job than I could ever do because they're smarter than me and they love what they do. In the end, that's better for FundingUniverse, those who will take my place, and me.

What does get me excited is technology, and I was recently offered a product manager position with the baddest, illest, nastiest technology company in Utah. I've admired this company for a while now, and I feel like the timing is right to make a move.

The decision was a tough one for me to make. But, after soliciting advice from a few smart people, researching the careers of a few great entrepreneurs and some good ol' fashioned talking to God, I believe I've made the right choice.

Moving forward, I will remain an active and passionate evangelist of the FundingUniverse cause as an advisory board member. I'm looking forward to watching from the sidelines as FundingUniverse fulfills its potential as the place to find startup capital.

In the meantime, I'm pumped to tackle a new challenge and (hopefully) wreck shop in a new environment! I attended the Omniture Summit a few weeks ago and got a first-hand look at why nearly all of the Fortune 100 companies use Omniture software to optimize their web offerings.

Omniture is deeply, passionately focused on pleasing its customers and overwhelming its competition. It's the only "large" company in Utah where I could go and not miss out on the intense, yet fun environment that one feels when he is part of a smaller, more nimble company. Not to mention the fact that there is a gang of very smart people working there, many of whom will be collaborating with me on a daily basis. Working in that kind of environment will make me a better businessman and, more specifically, a better entrepreneur.

So here's to a great three years at FundingUniverse and a bright future at Omniture! This is going to be fun ...

My Digital Footprint

2007-10-25T11:21:00.000-07:00

It feels like ages since my personal blog has been part of my routine, but I'm still leaving my footprint on the web.

Here are a few ways you can follow what I'm up to:

My Twitter Account -- I tweet a few times each day. If you have a Twitter account and I'm not following you, let me know.
My Facebook -- Shoot me a friend request and I'll respond asap.
FundingUniverse Blog -- I usually blog here at least once a week on entrepreneurship and/or tech
My LinkedIn Profile -- Info on where I work and what I do there

FundingUniverse Speedpitching Video

2007-04-25T16:54:00.000-07:00

If you haven't been to a FundingUniverse Speedpitching luncheon, Joe Grover and the crew at Digital Mind Studios put together a killer video clip that is as much an advertisement for Digital Mind as it is a great depiction of the event. Great work, Joe!

Feeling the Crunch

2007-04-12T08:43:00.000-07:00

I've spent the past two months watching the FundingUniverse AngelReady programs ramp up extremely quickly. While the process has been nothing short of exhilarating, I find myself faced with a growing challenge -- a pressing, urgent, gut-wrenching responsibility to serve the explosively increasing number of entrepreneurs who are paying us to help them raise money.

It keeps me up at night. I have dreams that resemble a commercial from a few years back that featured a few people standing around a computer looking at an on-screen map as they launched a new product. At first, they celebrated as the first few orders popped up on the map. Then, as the number of orders on the map started popping up at an exponentially increasing rate, their celebration turned into panic as they rushed off to fill the orders. (If you can find the video, let me know so I can post it here.)

Fortunately, I believe we have the bandwidth to support the growth, so we're far from panic mode. However, I don't see an end in sight for this busy season at FundingUniverse. It's going to be a wild ride.

Pitching Angels: Sell Your Company, Not Your Product

2007-04-05T14:34:00.000-07:00

The next time you're pitching an investor -- whether it's in their office, at an event, on the phone -- repeat the following phrase 7 times before you walk in the door:

"I am selling my company, not my product."

Pitching an investor is not the same as pitching a customer. When you pitch a prospective buyer, you want them to buy your product or service. When you pitch investors, you want them to invest in your company.

As with a good sales pitch, you want to cover the strongest points of the product that you are selling. While pitching your company, the points that are most interesting to the vast majority of investors are the traction you've made (sales, patents, past rounds of capital, sales and sales), your management team, market size/need and your business model. If you can convince them that these four elements of your business are rock-solid, it doesn't matter what your product is. You're likely to find success raising money.

The tendency of most entrepreneurs is to spend the majority of their pitch telling the investor everything about his/her product -- how it works, how they thought of it, why it's better than the competition. Of course it's important to describe your product or service to investors, but it's should take up no more than 2/5 of your presentation.

Trent Miskin v. Jason Calacanis

2007-03-27T23:58:00.000-07:00

Just in case you missed it, Trent Miskin called out Jason Calacanis' critique of WeightLossWars and similar sites. His post prompted a defensive comment from the chief bloggerino himself.

Given that Trent and Chad are two of my best friends, I'm a little biased on the matter, so I won't chime in. However, I'd love to hear your thoughts.

D.A.M. Truck Tools Steals the Show!

2007-03-22T18:18:00.000-07:00

I get pretty excited about early-stage funding, but it's never moved me to tears until today.

Chris Culp, a Cedar City fix-it man without a high school diploma, won a $100,000 investment from an all-star panel of investors at today's Utah Economic Summit funding competition. Chris' simple concept, D.A.M. Truck Tools, went head to head with companies with millions in revenue, Harvard MBA/PhD leadership and stacks of patents. He won with passion, humility, elegant simplicity and good ol' fashioned Southern Utah charm.

He pitched his idea in a simple suite jacket and a pair of white cowboy boots. When angel investors asked him questions about his pre-money valuation, his go-to-market strategy and other semi-sophisticated terms, he answered with a simple, "I don't know.". He never tried to be anything more that what he was: a simple man with an extremely promising product and the humility to admit his weaknesses and ask for help.

After the event I spoke to a class at the Provo Labs Academy about raising money from angel investors where I relayed the story of what Chis had done. After I outlined the most important things an angel considers when looking into a deal a participant asked me how D.A.M. won despite appearing to be weak in many of the categories that are traditionally important to investors. Tough one to answer. I have never seen anything like this in my life.

I don't have any special insight form the investors, but here's what I think:

According to research, the most important element that angels look at in funding a deal is the passion and integrity of the entrepreneur. Chris clearly conveyed he had no hidden agendas. He repeatedly assured the investors that he had no business experience and was looking for a partner to handle all of the business side.
Because he has very little traction and showed a willingness to share his company, the investors recognized that they could get a lot of bang for their buck. They could have received 20% of a software company with $40 million exit potential or 60% of a company with $20 million exit potential.
His product is a slam dunk and the path to market is very clear cut. I think this was a huge factor. While the other companies were very strong, their path to revenue was less clear and that scares investors.
The white cowboy boots. 'Nuff said.

Before the event, I had several occasions to speak at length with Chris about his product and his story. The guy is solid gold and no one deserved it more than him. I look forward to following his progress and watching his American dream unfold.

Update: Here are a few stories from the local media on his success: SL Trib, Deseret News.

Utah Bloggers Conference Announced!

2007-03-21T07:54:00.000-07:00

Phil Burns announced the second annual Utah Bloggers Conference to be held on July 28th and 29th, 2007. Featured speakers include Robert Scoble and Jeff Barr, with more speakers to be named as the event draws closer.

With Philbert and Money running the show, and headliners like Scoble and Barr, I have no doubt that the event will be off the chain, hook, charts and heezy.

Case study: Humility is good business

2007-03-20T17:42:00.000-07:00

Today, I proved myself a hypocrite once again.

Part I

I spoke with an entrepreneur today who really rubbed me the wrong way because of his lack of humility and tact. FundingUniverse offered him a favor that he didn't necessarily deserve and he basically threw the favor back in my face by asking me to "sell him" on why he should accept our favor.

As a result our offer was withdrawn and now it may be difficult for this entrepreneur to raise angel capital here in Utah because his reaction to our offer indirectly insults the leadership of every angel group in the state (It's a long story, but trust me, it does.). Perhaps raising money in Utah isn't his goal -- I don't know. Regardless, his reputation in this area will take a major hit. And that stinks because this guy is an great entrepreneur with tremendous potential.

Part II

Fast-forward about four hours in the day to an important conversation with a new FundingUniverse team member who gave me some critical feedback on our business model. To make a long story short, the conversation was very difficult for me. I found myself foolishly defending decisions that I had sharply criticized weeks earlier in FundingUniverse team meetings. Why did I defend our mistakes? I lacked the humility to just say, "You're right. We were wrong. What would you suggest we do to solve the problem?" Now I have damaged my credibility with a valuable team member and wasted good problem solving time defending a moot point.

Part III

Here I am writing this post feeling sheepish for being a hypocrite, while hoping that the employee that I spoke with this afternoon reads this post and forgives me. :)

I've also relearned that humility -- not to be confused with sheepishness, cowardliness, or weakness -- is a tremendous asset for entrepreneurs who don't have time to damage relationships and defend past mistakes because of foolish pride.

Killer App: The Boss Button

2007-03-16T16:39:00.000-07:00

I laughed out loud when I used the Boss Button (see picture below) at the bottom of cbssportsline.com's live stream of the NCAA Basketball Tournament games. When you click the button, the streaming video screen turns into a page of charts and graphs, saving you from any negative consequences that may come as a result of your watching the games on the job.

I really wouldn't have any use for it because I would never watch any of the UNLV v. Georgia Tech game during business hours, but some people might. ;)

Breaking news: Congrats to Five GOED Finalists!

2007-03-16T08:30:00.000-07:00

Big shout out to the five finalists who will be presenting at the Utah Economic Summit for a shot at a $100,000 investment:

An ultra-big big shout out to all of the semi-finalists who all easily could have made the finals:

If I'm an angel in Utah, I'm licking my chops right now. All of these companies are fundable, in my humble opinion -- yet not the kind of humble opinion that should be construed as a recommendation. :)

Disclosure: Brock and I are very small share holders in Rahster/OnCampusSports, one of the finalist companies. We went out of our way to offer no opinion or vote regarding OCS's selection into the finals or semi-finals. In the interest of avoiding a conflict of interest, neither of us voted for OCS in any round of the selection process.

Paid v. Free v. Freemium and Company-wide Multi-tasking

2007-03-13T07:43:00.000-07:00

A couple of blog posts that made me say "hmmmmm" last week:

Blog Post #1

Josh Kopleman of First Round Capital started a great conversation last week with this post. Here's the meat:

The truth is, scaling from $5 to $50 million is not the toughest part of a new venture - it's getting your users to pay you anything at all. The biggest gap in any venture is that between a service that is free and one that costs a penny. I can't think of a single premium service that has achieved truly viral distribution. Can you?

Since then, Anne from GigaOm, Jeremy, David, and others ave chimed in with their take on the matter. I've blogged too much about free v. paid v. freemium lately, so I'll just let you check out their stuff. I'd love to hear your thoughts on the matter.

Blog Post #2

Hummer Winblad's Will Price wrote a great piece on the tendency of entrepreneurs to make their companies "multi-task".

Many of the entrepreneurs that we work with struggle with this issue, and I'd be lying if I said that FundingUniverse hasn't fought the tenancy to become all things to all people. Sometimes it's tough to focus when you're out to change the world, but it's imperative to do so when manpower, capital and time are scarce. Find the business model that provides the shortest distance between launch and cash flow, and stick with it.

" Oh yeah, I know him. I know him well."

2007-03-10T21:11:00.000-07:00

You've seen the "man law" commercials on T.V. where a group of ultra manly men declare the laws of manhood over bottles of brew. Well, I'd like to propose two "business laws":

1) Unless a person remembers your face, your name and your company, you are banned from using the phrase "I know him/her." in reference to said person.

2) Unless you regularly exchange email, have lunch regularly with or know the person on some sort of personal level, you are banned from saying that you know said person "very well".

I don't know how many times I hear people throw around the above phrases when the reality is the person they "know" is someone they shook hands with in a crowded room months ago.

All in favor ...

Traction Killed a Lot of GOED Applicants

2007-03-10T20:35:00.000-07:00

Trent, Brock and I spend a good part of our day today narrowing the list of $100,000 Funding Competition applicants from 100+ down to 20 finalists. I am amazed, but not surprised, by the number of quality businesses that applied for the competition. Congrats to everyone who applied!

A couple of observations from the selection process:

-- First and foremost, it is hard to overstate the importance of traction in raising capital from angels. Many of the applying companies had interesting ideas and capable management teams, but had made little or no progress towards making any part of their idea a reality. If you are raising money from angels, go out and do something -- sell a product, recruit a killer board of advisors, get a patent, raise money from your family and friends, get a beta tester, get commitments from a distributor, recruit a key team member ... you get the point. Your chances of raising capital will increase dramatically. All of the companies that made the final cut have done many of the these things.

-- If you are not a technology/biotech company, you can raise money from angel groups. One of the angels on the investment committee for the competition specifically stated that he and his group are looking for deals that aren't tech/bio. There are a lot more angels out there who fall into this set than you might think. Most of them have a little grey hair and made the money that they use to invest before the Internet existed. There are a significant number of finalists who don't fall into the traditional categories.

The final five will be chosen early next week. We'll announce the finalists in the FundingUniverse weekly newsletter next week.

A WeightLossWar is waged!

2007-03-08T08:58:00.000-07:00

My main man Chad Blodgett just launched WeightLossWars.com, a smokin' social network for people who are trying to stay fit and/or lose weight. It's already my favorite social network for several reasons:

1) Summer time is right around the corner and I need all of the help I can get to slim down to my 190 lb target weight. On WLW, I can ask my friends to help me lose weight by becoming my "motivators". That means that every day when I update my profile -- how long I worked out, how much I weigh, how far I ran, etc. -- they get an email that charts my progress.

2) I'm in sales and business development, so I love numbers. When I input my stats, WLW automatically generates a graph for me that charts my progress.

3) This is the first social network that I have convinced my wife to join. She's always been a hater of the 2.0 stuff, so this is a big step in our relationship. :)

If you want to get in on the comedy that is my attempt to lose weight, create a profile and send me a request for friendship. My profile name is jjordan.

Congrats to Chad, Blake and the Griffio team for teaming up to make this happen!

Devin Thorpe Gives a Little Love to my Home Town

2007-03-06T09:10:00.000-07:00

Devin Thorpe gave my home town -- Visalia, California -- a little love in his blog today. It's a shame that it's so expensive to fly there, because the San Joaquin Valley is home to some of the most agriculturally rich (and beautiful) country in the world. As I love to point out to my Floridian wife, in Central California we produce more cheese than Wisconsin and more oranges than Florida.

I'm also glad to see Devin visit my home town because that means there are a few Visalia "harvests" taking place somewhere other than the alfalfa fields. I'm actually good friends with the prospective client that Devin went to visit, and Devin will be sitting pretty if this prospective client becomes a success story. Good luck, Devin!

Does your seat float?

2007-03-02T00:16:00.000-07:00

I was trying to phase out the usual flight safety song and dance on my Delta flight to Denver tonight when I caught a very interesting piece of the presentation:

"Most of your seat cushions can be used as floatation devices ..."

Most of them? What are they going to say next -- "Most of your gas masks will work in the event that the cabin is filled with poisonous gas."? I spent a good portion of the flight looking at the passengers within sight of my seat thinking to myself, "I wonder if he's the one who's going to be mooching float time off of me and my seat if we crash into a body of water ..."

Social network + nice revenue stream idea = Shelfari

2007-03-01T10:10:00.000-07:00

Yesterday, I blogged about the fact that too many media companies, including social networks, launch with the fear of using something like a premium subscription model to augment their advertising revenue stream.

Shelfari, an Amazon backed soc. network, for book lovers, is a great example of a social network with a cool built-in revenue stream.

Users can post their "bookshelves" so other people can see what they have read and find other readers with common reading preferences. You can find reviews, post reviews, ask questions about books and ... drum roll please ... buy the books off of Amazon. Convenience for users, revenue for Shelfari. It's not rocket science, but it's cool.

As a user, I wish it was easier for me to buy books through Shelfari. I found a couple of books that I ended up purchasing, but it took me a while to find the place to buy. I want to be able to click on the picture of the book and have it take me straight to the page with opinions and the purchase button on the right. Otherwise, I love the site and look forward to helping them make money.

My profile name on Shelfari is jjordan. Feel free to find me on the site so I can learn about what you're reading.

Paul Allen has some Competition

2007-02-28T16:56:00.000-07:00

Paul once blogged that his core competency is his ability to type 55+ words per minute on his blackberry. He may have some competition in Bijan Sibet.

Fastest way to get to $50M?

2007-02-28T09:35:00.000-07:00

Jeremy Liew raised a great question on the Lightspeed Ventures blog this morning: What's the fastest way build an online media business to $50M in revenue?

Jeremy points out three strategies towards building enough traffic to reach $50M:

1) The Bebo.com/MySpace.com approach -- broad reach, not a lot of targeting.
2) The Facebook.com/Terra .com approach -- demographic targeting.
3) The Endemic Advertising approach -- create a website about cars that car companies would naturally want to advertise on, an electronics site for consumer electronics companies to advertise on, etc.

Jeremy I agree with Jeremy's ultimate suggestion that #3 is the best way to go of the three scenarios listed, but I think that the best way to get quick cash flow for an online media company is the subscription model.

I know it may be a little Web 1.0 to bring up subscriptions, but I don't know of another way for a media company to get to cash flow positive faster than with a subscription model. Augment your subscription service with a call center, and your conversions go through the roof and you're immediately bringing in cash.

In the long term, its all about automating the process so the call center fades out and margins go up. There's no reason to pay someone a commission on what a website alone can do. But if you want quick cash, subs with call support is where it's at. It also gives entrepreneurs something to help pay the bills while they build traffic and tweak their UI in order to generate more paid sign-ups and pageviews.

I'm not talking about a WSJ subscription model where you basically get no value out of the site unless you pay. I'm talking about a Pogo.com/espn.com/Skype model that gives you good service for free and great service for a monthly rate.

What do you think? Is the 1.0 subscription model broken, or are 2.0 junkies looking past a simple answer that has been under their noses all along?

Getting the Truth from Entrepreneurs

2007-02-23T16:03:00.000-07:00

Going to a networking event with entrepreneurs is a blast. As you go around the room, every entrepreneur that you talk to makes it sound as if their company is on the edge of world domination. "We're about ready to close a huge deal with ..." "Our partnership with so-and-so is starting to really pay off ..."

Of course, 90% of it is total garbage. Most entrepreneurs do not have the physical capability to say anything negative about their comapany. It's like asking a snake to tap dance.

If you want to hear the truth about a male entrepreneurs company, ask his wife. She'll give you the truth.

If you've ever been an entrepreneur leading a bootstrapped pre-cashflow company, you know what I'm talking about. Your buddy asks, "How's business?" You say, "We're stoked about what's happening and we're accomplishing some great things right now." Your wife says, "Yeah. He really likes it and he's having alot of fun. I just hope we get paid soon."

Nine times out of ten she isn't saying it maliciously, she's just telling the absolute truth without any of the fluff. When I began my carreer, Anna unknowingly did this to me a few times. I have since coached her on the art of entrepreneur-speak.

If I were an angel investor, I'd be on the phone with the spouse of every entrepreneur I was looking into financing.

Just in case a few VCs and angels read this and catch on to my idea ... all of you spouses out there, repeat with me, "Business is going very well. I'm excited about this month's revenue!"

My Under the Radar Picks for v100

2007-02-20T21:25:00.000-07:00

I got my link to the v100 voting page today. I love the v100. Going down the list of nominees is incredible. With all of the talent on the list, vSpring could easily make a v200 list.

I'd like to give a shout out to a few less-visible entrepreneurs who will be getting my vote. These guys might not be as visible as some of the usual suspects who will likely end up on this year's list, but are certainly deserving of attention.

Side note: I was looking at last year's list as I did my voting and I was a surprised to see so many VCs and prominent angels on the list. Something tells me that Alan Hall (one of the best entrepreneurs/investors in the state) won't be leaving Mercado Ventures, GUV or his board seat at MarketStar to " ... lead a successful venture as CEO or CTO in the next 5-7 years in IT or Biotech industries". I wonder if some of the voters understand the selection criteria. Sometimes the list looks a little more like a "Who's Who" list than what the criteria calls for.

Anyways, back to the guys I wanted to plug ...

Brigham Tomco -- The guy is a machine. He's a JD/MBA student at BYU, one of the editors of the law review, raising a VC fund for Cougar Capital, and all this while single-handedly building a company and a product that is gaining nationwide distribution. Once he gets out of school and focuses on one project, he's going to be a force to reckoned with.

Nick Mecham -- This recently wealthy technophile is one of the primary reasons that MaxStream is such a success. You won't find find him at a lot of networking events, but I'll bet you will find him as a CTO at a successful technology venture in the next 5-7 years.

Mick Hagen -- If you haven't heard of Zinch -- in the word's of my main man Stuart Scott -- you betta aksk sombody. Sharp young team and a killer concept. Even if Zinch doesn't fly like it has the potential to, Mick is a solid guy who will have his hands in successful ventures for a long time.

There are quite a few more entrepreneurs that I'd like to mention, but I don't want to give away all of my votes. Thanks to vSpring for making this happen!

David Cohen on the Boulder LivePitch

2007-02-20T21:07:00.000-07:00

David Cohen posted more info on the Boulder LivePitch. (We've changed the name because of the new format.)

Attendees in the audience will receive $100 of play money that they will use to “invest” in their favorite company pitch. Both the audience favorite and the investor favorite will receive prizes from sponsors like HRO and CTEK for their efforts. The big picture is that this is a great networking opportunity for investors, service providers, and entrepreneurs.

Speedpitching is Coming to Colorado!

2007-02-17T09:39:00.000-07:00

Had a great chat with Colorado mover-and-shaker David Cohen yesterday. David is part of the muscle behind TechStars and an active angel investor in companies like HyperSites and ClickCaster. I've been subscribed to David's blog since its inception and I'm a HUGE fan of the TechStars concept, which is why I'm glad that we'll be working with David to bring Speedpitching to Boulder in early March.

The event will be a variation on the Speedpitching luncheons we've held in Florida, Texas, California and Phoenix. It will be open to the public and anyone who has an business idea that wants to get feedback from a panel of real investors. There will also be some new crowd participation elements that will allow everyone in the room to "invest" in the ideas that they like the most.

As soon as we know who, what, when and where, we'll let you know. If you're an entrepreneur in or around or willing to drive to Boulder, register at FundingUniverse.com to receive email notification with event details.

Knowing When to Quit

2007-02-16T08:55:00.000-07:00

Will Price blogged a killer post that helps entrepreneurs and investors discover whether the source of their company's struggles is the market or the company. He points out a few ways that you can tell that your market is healthy:

Companies that are in healthy markets close enough business to:
develop a clear value proposition
build repeatable marketing, sales, and delivery models around common uses cases
know their top 2-3 competitors cold and see them in every account
are solicited for business
have real, active partners engaged in common customer accounts
have highly energetic cultures where the changes month to month are significant
can explain what they do so that almost anyone can understand
share a common mission that everyone in the company can articulate

When companies begin to fail, it's important for both the entrepreneur and the investor to determine whether or not the company can be saved. If failure is market based, no amount of money or resources or time can save it. Firing your VP Sales won't save it. It's best to just cut your losses and move on to another deal.

Perhaps this post will be most useful to those who are contemplating a startup and teetering on whether or not there is a market to sustain it. Be honest with yourself and let the numbers make the decision for you. No matter how passionate you are about your space, if there's no market, there's no customers. No customers, no company.