According to Tige Young, Founder and CEO of Tui Tai Expeditions, entrepreneurs should de-emphasize ROI and focus on a more accurate measure of wealth, Return On Life.

I became acquainted with Tige, when I was researching examples of exemplary online customer service. In the resulting article, I describe Tige's deft handling of online trolls via the deft use of social media. My subsequent correspondence with Tige led me and my 13-year-old son to Fiji, where we experienced the Tui Tai firsthand.

As luck would have it, a large group cancelled their reservation at the last minute. As such, my son and I had the boat essentially to ourselves. Fortuitously, Tige's children were on school holiday, so he and his family joined us for several days.

As I got to know Tige, I became intrigued with his story. How did an American software engineer come to own an adventure travel company cited by National Geographic as, "one of the best adventure travel companies on earth?"

If you haven't already subscribed yet,
subscribe now for free weekly Infochachkie articles!

According to Tige, it all started when he fell in love with a woman from Fiji. In Tige's words,“(It) started off falling in love with a girl who happened to be from Fiji. So we were dating, living together, (and) we were both in tech. We both lived in the city (San Francisco), she was in event marketing and I was a software engineer. But we both kind of shared a passion for being outdoors, going snowboarding, hiking, mountain biking, everything.

So she organized a trip down to Fiji with me and a whole bunch of friends. And we came down and just had this kind of epiphany type trip. We all learned to scuba dive and then we chartered this boat called the Tui Tai, which at the time was just sort of a day cruise boat. And we went exploring through all these islands and, it just blew everyone's minds, you know, it was just like, 'Man, this is possible?'How beautiful these islands are, they're undeveloped. The people are amazing. You know, the scuba diving, the surfing, everything. Just, 'Wow.'”

You can watch/listen to my twenty-minute discussion with Tige below:

Unlike most people who take an epic vacation and then resign themselves to working like a maniac for another year to earn two more weeks off, Tige could not shake the enchantment of his Fijian experience. According to Tige,“(We went) back to Silicon Valley, back to the tech world, and grinding away, grinding away. Going up and down 280 and 101 everyday and sitting in traffic and thinking about this Fiji trip, and a little bit later we go for a family reunion and then we get married, we had our wedding in Fiji.

By that time, Fiji was just really grabbing us... and we came to that point where family planning and thinking about having kids and thinking about life and how long can we continue with this lifestyle in Silicon Valley? You know, you like the job and it's good money, but where are the life experiences? A lot of times we're tied up and can't even get out for a weekend because there's a deadline due or a release date.

(It came down to) what really matters in life, you know? If I can't go to a kid's soccer game because I've gotta come into work all weekend and things like that, it just doesn't, it doesn't sound right. So we both kind of had that shift and that moment where Fiji's there. We have these connections there. We can start something. We've got this incredible idea that really matches up taking the Tui Tai and making this amazing expedition adventure cruise product. And being able to have a lifestyle were we own a business, something we enjoy, but also a lifestyle where there's more higher quality of life, more time with family, a bit more slowed down, not so much of the running on the treadmill type of thing.”

Return On Life

"Money Doesn’t Lead To Happiness, But Happiness Can Lead To Money."

Mark Douglas, Co-Founder and CEO of SteelHouse

While on board the Tui Tai, Tige shared with me his desire to maximize his return on life, rather than solely focus on his financial return. I would have been less impressed with this approach if he were running an unprofessional, second-rate company. However, his comments resonated, because his unconventional philosophy has clearly not impacted his ability to deliver his customers a world-class adventure experience.

I asked Tige to define Return On Life, “Any good investor looks at return on investment, which is generally just dollars. Return On Life is (the pursuit of) experiences... that really last. You have one life, one chance to do things. And as you get older and look back, what are the things you're gonna remember that were like, 'Boy, that was a great decision, I'm really glad I did that.'

Business accomplishments are great..., but they're really not the only ones (that matter). Sometimes it's just spending a few extra minutes with family or grandmother or child... simple things. Others can be more amazing, like your trip on the Tui Tai... spending time together in an amazing place. Those are all life experiences, and those are what count on the ROL meter.”

Doing Well By Doing Good, Fiji Style

Tige's story of a Silicon Valley entrepreneur who creates a renowned business in Fiji is pretty epic on its face. However, I was even more impressed when I learned about the philanthropic assistance that he has incorporated into the Tui Tai's itinerary. Passengers visit authentic, remote Fijian villages, and make connections with the locals by sharing with them school and medical supplies. The experience is not a Disneyesque Hawaiian luau. In contrast, it is a real-world encounter with people who are quite happy to live the life of their ancestors, despite lacking most of the material possessions we take for granted.

Tige's passengers have provided a variety of aid over the years, including building a library for a rural school. In another instance, a doctor who happened to be on board the Tui Tai resolved a blood clot that had kept a new mom bedridden for the previous five months. The remedy was simply a dosage of ibuprofen.

In another instance, Tige and his wife adopted a gifted 14-year old girl who was stifled at her one room rural school. She moved into their household, which allowed her to complete her studies at the more resource rich High School on Savu Savu. She then went on to earn a scholarship to the University of the South Pacific.

I was curious if the Tui Tai's mission always included this philanthropic component. “I'm not sure if it was there right from the beginning, but it evolved and became a part rather quickly, and it goes back to ROL, Return On Life. Meaning that giving back is really something where you... get as much as giving to the people. Just the look in their eye, knowing when you're helping someone out.

Probably one of the first ones early on was a cyclone hit Fiji and we were relatively unharmed but a couple of islands got hit very hard. Had guests who were scheduled on board...so we made the kind of spontaneous move of let's just not stick to our normal itinerary. Let's make a change, we're going to go visit these people. And for everyone on board it became a great experience. That's one of the things I really liked about Fiji... there's this constant opportunity to be spontaneous. You can take advantage of these really amazing, life changing experiences.”

Culture Clashes

Every startup is difficult, but founding a company in a remote locale results in additional, unique challenges. With this in mind, I asked Tige if there were any culture clashes which western entrepreneurs might learn from.“One of our early trips and we were struggling, we had this real kind of ambitious goal of activities everyday, we're snorkeling, diving, and then we've got a big trip to the waterfalls. And we want to take a packed lunch there... but the chef was struggling getting everything. He was getting really frustrated and I was still a little bit of Silicon Valley, I wanted everything going (on time).

So, (I tell the cook),'We're going to make it really simple. Lunch has got to be ready on time. We're just going to make sandwiches, okay? Yeah, so peanut butter and jelly, egg salad, tuna sandwich, okay, just sandwiches. Got it?'Yeah? Okay, great.

(The) next day... I stay behind on the boat, take a bite (of one of the sandwiches) it's got peanut butter and jelly, tuna fish, and egg salad, all in the same sandwich. There goes the truck, and there goes all the guests to the waterfalls.

So they all laughed, they all thought it was hilarious and ended up being one of the trip highlights. Every meal after that was sort of like, what kind of crazy recipe are we gonna get tomorrow?”

May Your Memories Live Up To Your Dreams

I concluded our talk by asking Tige if he had any advice for someone considering a life based on ROL, but doesn't have the courage to take the first step."(Being an entrepreneur) can be a really good thing for ROL. Owning your own business... if it's done correctly, can give you more freedom. More time to spend on things that you want, whereas just working for someone else..., you're sort of locked in. But the flip side is you can go the entrepreneur route and just become a workaholic and sort of (get) married to the business and that's all you do. And you forget about the things that really matter... the life experiences you want to have looking back when you get older.

A really good quote that... a local captain... lives by is, 'May your memories live up to your dreams.' That's what the return on life philosophy is all about... filling up the memory chests of great experiences."

If you are inspired by Tige's pursuit of happiness on his own terms, I strongly recommend that you check out Live Your Legend, which routinely cites the epic lives of people who are not afraid to create memories that live up to their dreams. By my humble estimation, the congruence of dreams and memories is the best gauge of Return On Life, which is ultimately the truest measure of your wealth.

Follow my startup-oriented Twitter feed here: @johngreathouse. I promise I will never Tweet about drinking too much Kava or that killer burrito I just ate.

Share and Enjoy

The post Entrepreneurs Should Forget ROI And Focus On Return On Life: The New Measure Of Wealth appeared first on infoChachkie.

With no industry connections or family ties, talent agent John Ferriter applied basic entrepreneurial principles to reach the pinnacle of Hollywood's elite.

You can watch John describe his surprising Hollywood journey in the following 20-minute excerpt from his recent talk at UC Santa Barbara.

If you haven't already subscribed yet,
subscribe now for free weekly Infochachkie articles!

John began his talk by explaining that, "All through life you're going to run into temporary people who make permanent decisions. Don't let them get in your way. When you run into those people and they (say), 'No, no, no, can't be done, no, no, no'. That means, 'No, they can't get it done.’ You have to turn a 'No' into a 'Yes.'"

Hippy Trapped In Corporate America

John continued his story by discussing his first job out of college, working at Delco. Although his performance was excellent, John rebelled against the rigid corporate culture, which dictated short hair and a suit and tie. His two year tenure at Delco (which was acquired by General Motors) finally came to a head when one of the executives confronted him and said, "'Look, you are either going to be a GM guy, and you're going to be a corporate guy and you're going to do what we tell you to do or you should really leave. I looked him in the eye and I said, 'I am not going to have a job where I have to wear a suit every day! '"

John then looked down at his suit, as the audience laughed and said, "So there's things we say when we are young that we really don't mean."

After leaving GM, John focused all of his attention on The Stingrays, his college band. Their careers soon flourished, touring with a number of headliners, including: Guns-n-Roses, REM and The Bangles.

The turning point for John was several years later when he ran into a former local rocker whom he once admired. John was 30 years old, whereas his local idol was in his forties. In John's words, "This van pulls up, it's the opening band. The door's not even affixed to the side of the van... (there's a) bungee cord and I thought, 'This is really terrible.'

These guys (then) roll out of the van and start setting up their gear and I go, 'OK. I am now 30 years old and the guy that's in the opening band, who is about 42 or 43, was the hottest musician in Santa Barbara when I first came up and all I wanted to do was be him. And I remember sitting there thinking, 'I don't want to be him. I don't want to be that guy, doing this (when I am his age.)'And I thought, 'I really need to get serious... I need to figure out business.'"

The Life-Changing Phone Call

John then described his journey from rock-n-roll to Hollywood. According to John, "I started looking at the talent agencies and... (everyone told me), 'You'd be a great agent.' I found out you had to have a college degree and... you had to have at least two years of experience in the company mailroom and that it could take three to four years to get promoted. So I sat there (and thought), 'That means I'll be 35 if everything is perfect. Okay. My philosophy is gonna be this, I will out work every person here and I will do this in record time."

Unable to secure a job at a talent agency, John accepted a clerical position at a temp agency. They told him they would try him out for six-months and if he did a good job within the agency, they would start sending him out on jobs. John short-circuited the temp agency’s plans in a bold and clever way. If you haven't watched the video yet, stop now and start the video at 5:45. John's comments earned him a rousing ovation from the class - you have to hear John tell the story to get the full impact.

On his first day at the temp firm, John arrived before anyone else. Little did he know that his life was about to change forever. In John's own words, "Long before 9-11... I just walked into the building and said, 'Hey, I work at this place now' to the security guard, 'Can you open the door?' and he did. I figured, my first day, I'm gonna make some coffee... and the phone rang. I answer the phone and the woman says, 'Hi, it's Liza Rivera from the William Morris Agency. We have a really difficult agent who can't keep an assistant. I need the most mature person you have who can deal with difficult people.' And in one of those ‘How To Succeed In Business Without Really Trying’ moments, I (said) 'His name is John Ferriter and I will send him over right now.' (applause) That was the first job I got for somebody. That job lasted nineteen and a half years."

The "I Only Know Two People In Hollywood" Interview

John rushed to William Morris before anyone at the temp agency could stop him and found himself sitting across from a veteran agent named Dick Howard. Sizing John up, Dick asked him, "'Who do you know in the entertainment industry? If I'm gonna make a call right now, who can I call who can vouch for you?' So I said, 'I know Tony Sheppard.' And he goes, 'I don't know Tony Sheppard.' The only other person I knew who was in the entertainment industry was Kim Shimmel's husband, (so) I said, 'And I know Mark Shimmel."

Mr. Howard then picked up the phone. John connection with Mark was tenuous. Mark was: John's girlfriend's brother's assistant's husband. As Mr. Howard was dialing the phone John thought, "I am out of here in 60 seconds and I am never coming back."

Mr. Howard then said, "'Mark, it's your cousin Dick. (laughter) I'm sitting with this guy, John Ferriter. I'm thinking of making him my assistant, should I do it?' And Mark Shimmel said, 'You absolutely should do it. He's hungry as hell, he's smart and he'll make your life easier.' (Mr. Howard) hung up the phone and I got the job."

Bagging Claudia Schiffer And Jerry Garcia

John then discussed how he made it out of William Morris’ mailroom in record time and began building his client roster. "I picked up a copy of Vanity Fair (magazine) and the 'it' girl of that moment was the Guess model named Claudia Schiffer. I found out she had no representation and I went down to a show (where she was appearing)... I talked my way onto the set and I met Claudia and three (guys) were hitting on her in the dressing room and she wanted them to leave. I just walked in and said, 'Hi. My names John, I represent Claudia and you have to leave.' And they all got up and left. I turned to her and I said... 'I'm John Ferriter. I'm an agent with the William Morris Agency and I should be your agent.' We talked for about 15 minutes (and) she signed with me."

Two days later, John called his sister. As they are casually chatting, she told him about a "weird" client of her law firm who was signing artwork in a nearby conference room. As they talked, John realized that the "weird" guy was Jerry Garcia of the Grateful Dead, so he asked his sister to put Jerry on the phone. "I said, 'Do you have an agent?' and he said, 'No.' I said, 'Okay, what are you doing tomorrow? Could I please come up and meet with you tomorrow? I'm gonna be there (in San Francisco). He goes, 'That's great. Come on in, you can meet me.' John signed Jerry the next day.

John then outlined one of the keys to his success, saying, "The phone isn't going to ring for you, you're going to make the phone ring and that's how you make your career take off. Here's the most important rule that I realized early on: Everybody is talking to somebody. They may not be talking to you, but they're talking to someone... they're having breakfast with someone, they're working out with someone, they're having lunch with someone, they're having dinner with someone. Since you know that they do (these things), you just have to figure out how you get in their rotation. They're talking to someone, so they might as well be talking to you."

John's advice for what to do after you get into someone's rotation is equally as powerful. "The first time you talk (with someone) don't waste their time."

Leveraging his first two clients, John tried to sign up actors and newscasters, only to be consistently rejected. Assessing his failure to expand his client roster, he said, "I'm gonna build my business in a different way. I called every single radio personality I could find. I said, 'Let me be your agent. You don't have to pay me on your radio deal, but if I get you TV, I get all of your business."

Leveraging this new strategy, John signed a number of radio personalities whom he helped launch significant television careers, including: Dr. Drew, Carson Daily, Jimmy Kimmel, Adam Carolla, Tom Green and Ryan Seacrest.

John’s inspiring story proves that you do not need connections, money or an Ivy League degree to succeed, even in the dog-eat-dog world of Hollywood.

Follow my startup-oriented Twitter feed here: @johngreathouse. I promise I will never tweet about Hollywood celebrities or that killer burrito I just ate.

Share and Enjoy

The post A Surprising Entrepreneurial Journey To The Pinnacle Of Hollywood appeared first on infoChachkie.

Jim Andelman, my Partner at Rincon Venture Partners, aptly describes the genesis of the Series A crunch, stating that: "Over the next 12-to-18 months,

a lot of good companies that have been Seed financed are going to have a tough time raising a Series 

A from a new outside lead. This is due to a fundamental disconnect between the increased activity of high-volume seed investors (that fill out lots of Seed rounds) and the relatively small number of Series A investors, who only make 1 or 2 investments, per partner, per year."

If you haven't already subscribed yet,
subscribe now for free weekly Infochachkie articles!

Turtle Eggs And Startups

I was in a board meeting recently at Connexity when Dave Gross, the company's Co-Founder and CEO, made an insightful observation regarding the shortage of Series A funds. He joked that it is akin to turtles hatching on a beach and running in mass toward the ocean. Thousands of turtles are hatched, but only a fraction evades the grasp of predatory birds and reach the safety of the water.

Once in the water, another significant percentage of the baby turtles is quickly devoured by hungry sea creatures. The nasty and brutish  deaths of the unfortunate turtles are disquieting , but the process ensures that  the survivors are (on average) strong, healthy and able to capitalize on the ecosystem's resources.

There is a similar Darwinian aspect to venture capital investing. Companies that exhibit the greatest prospects are those that attract the necessary capital to survive. Non-performing companies (unless they are artificially propped up by a Washington bureaucrat with tax dollars) are usually unable to garner adequate financing. Their demise, albeit painful in the short term, frees the employees (and in some cases the underlying technology) to pursue more productive opportunities.

There are no villains in the current Series A drama. The rapid growth of seed investments is the natural result of a number of industry trends, which continue to drive down the cost of launching and operating a web-based business. Some seed investors execute over one hundred investments per year, each in the $25k to $200k range. Paul Singh, a partner at the seed stage firm 500-Startups, effectively articulates the market forces driving this investment strategy in his Money Ball presentation.

The other primary factor contributing to the Series A shortfall is the concentration of venture capital funds in the hands of a shrinking number of large firms. This has been driven by venture partners' desire for larger and larger fees (which are a function of the amount of capital they manage) and institutional investors' allocation of funds to a handful of VC firms with long (but not necessarily stellar) legacies. This is the "no one ever got fired for buying IBM" approach to investing.

Due to their size, these legacy funds must invest relatively large amounts of capital in each of their deployments, which ill-equips them for participation in most Series A rounds. This flow of funds to large, mediocre VC firms has been widely discussed, usually under the heading, "Is Venture Capital Broken?"

According to Jim Andelman, "These market dynamics combine to leave good companies unfunded, even when they do not need 'much' more capital to achieve a good exit. If a venture does not have a reasonably high-perceived chance of a $250 million exit, most Series A investors are passing.  The crunch is especially acute outside of Silicon Valley, as the Bay Area VCs focus on their home market, and the relatively fewer Series A investors in other markets can thus afford to be especially picky."

Avoiding The Series A Crunch

Many of the unlucky baby turtles are healthy and speedy but still fail to reach the relative safety of the ocean. Similarly, companies with a viable value prop and promising future are finding it challenging to raise  adequate capital. Fortunately, there is a key difference between startups and baby turtles: entrepreneurs can make their own luck.

To this end, some of the tactics entrepreneurs can execute to avoid becoming a victim of the Series A crunch, include:

Take more money at the Seed stage - Although the incremental dilution will be painful, it is prudent to accept 30% - 50% more capital in your Seed round than you would historically, as it will give you a longer runway in which to create value in advance of seeking Series A funds.

Court Seed Investors with a demonstrated history of participating in a post-Seed rounds - As noted in Extracting More Than Cash From Your Angel Investors, there are a variety of parameters you should use to identify and target potential seed investors. Given the current paucity of Series A funds, the depth of an investor's pockets should be given special prioritization.

Be realistic about your Series A valuation - Although it may seem counterintuitive, the lack of equilibrium between Seed and Series A investors is causing valuation inflation. Per Mr. Andelman, "The Series A investors are now paying more for businesses they think will have outlier exits." These high-profile deals, which are covered extensively in the tech press and pursued by numerous investors, contribute to unrealistic expectations among rank and file entrepreneurs regarding a reasonable Series A market-rate.

If your company is not perceived to have the potential of a huge exit, do not expect a major uptick from your Seed valuation. If you are forced to accept a lower value, consider reducing the dilutive impact by raising a mix of equity and debt, as described more fully below.

Consider venture debt - If your business has a predictable, reliable cash stream and you have a high degree of confidence that you can reach sustaining profitability, it might be prudent to supplement a smaller Series A raise with debt. With current interest rates in the low-single digits, the cost of such capital has never been cheaper. Expect such debt to include a modest equity kicker component, in the form of warrant coverage. In addition, be on alert for camouflaged fees.

Customer dollars - Sophisticated entrepreneurs understand that the ideal source of capital is from customers’ wallets. Not only does revenue validate a startup’s value proposition, it results in zero dilution. The sooner you generate customer revenue and internalize paying customers' feedback, the shorter your path to self-sustainability.

If you follow these tips, you are not guaranteed to avoid the Series A crunch, but you will undoubtedly increase your odds of adequately funding your startup, through its Series A round and beyond.

Follow my startup-oriented Twitter feed here: @johngreathouse. I promise I will never tweet about double rainbows or that killer burrito I just ate.

Share and Enjoy

The post The Series A Crunch Is For Entrepreneurs Who Cannot Create Their Own Luck appeared first on infoChachkie.

For many small businesses, their online reputation is their passport to virtual word-of-mouth referrals. Unfortunately, an articulate and engaging negative review on Yelp!, TripAdvisor or Amazon can have an outsized impact on a small business.

You operate your business from a small boat in the remote waters of northern Fiji and your customers are spread across the globe, residing in the US, Europe and Asia. How can you protect your company's reputation when a rouge customer unjustly flames your startup?

In searching for world-class examples of public responses to irate customers' complaints, I found one that emanated from an unlikely place, Savusavu, Fiji. The respondent to the customer complaint was Tige Young, CEO and Owner of the Tui Tai Expeditions, cited by National Geographic as, "one of the best adventure travel companies on earth."

With an excellent online reputation, it would be understandable if Tige chose to disregard the occasional negative review. However, rather than ignore discontented customers, Tige does a masterful job of crafting rebuttals that are informative, appropriately deferential and amusing.  

In addition to utilizing reputation management services such as YellowBot, entrepreneurs must become proficient online advocates, defending their businesses against unjust and unfounded attacks. Left unattended, such attacks are detrimental. Inartfully handled, such reviews can be disastrous.

If you haven't already subscribed yet,
subscribe now for free weekly Infochachkie articles!

Bipolar Reviewers

The reality of customer reviews is that, in most cases, the people who take the time to share their thoughts online either had a euphoric experience or were extremely dissatisfied. Thus, online customer reviews tend to be either highly positive or grossly negative.

This pattern holds true for Tui Tai Expeditions. Of its 51 reviews on TripAdvisor, the large majority (40) award the company the top rating of five stars, while only three customers voice negative opinions.

I was particularly impressed with Tige's response to THIS irate customer's review, posted on TripAdvisor under the heading "Very Disappointing." This post drew my attention because of the deft manner in which Tige politely addressed the customer's concerns, while firmly supporting the veracity of his company's value proposition.

Below are some customer complaint rebuttal lessons entrepreneurs can draw from Tige's skillful approach.

Authentic, Not Corporate - When you read Tige's comments, you can picture him having a calm, polite conversation with the "very disappointed" honeymooners who wrote the negative review. His reply is not perfect, but neither are real people's conversations.

Startups should similarly communicate with an intimate and friendly tone and avoid the off-putting formality of a corporate spokesperson. Clearly, the relative degree of informality should be consistent with your company's marketing "voice." However, when dealing with angry customers, overt formality can be misinterpreted as bureaucratic insensitivity.

To gauge the degree to which your customer communications reek of corporate speak, read them out loud to your significant other and ask them if it sounds like something they would want to hear if they were an angry consumer. Hopefully your significant other won't tell you that your customer responses sound like text generated by a foreign call center agent,cut and pasted from an email template.

Pander, Don't Preach - When addressing complaints via social media, your intended audience is not the person who feels they were wronged. Rather, you should indirectly speak to the potential future customers who will consider the negative review, and your response, when assessing the purchase of your startup's product or service.

Counter, Don't Call Out - When a customer slanders your business with an outright lie, it is more effective to show an inconsistency between their complaint and their actions, rather than calling them out as a liar. In Tige's case, he notes that the disappointed honeymooners were offered, "the choice to disembark and move to any number of nearby resorts, OR to stay onboard for 2 additional days. The reviewer chose to stay onboard for 2 additional days. That did not strike us as an indication of dissatisfaction." 

Deferential, Not Defensive - No matter how rude or unsavory the negative comments, always treat your customers (even pissed off former customers) with deference and respect. Even when there is little chance of winning back their business, keep in mind that your conversation is being held in the public square and will be accessible for many years to come.

Break It Down, Never Rant - Tige addresses each aspect of the customer's complaint in a compartmentalized manner, just as a skilled lawyer refutes a hostile witnesses' adverse testimony. Rather than force the reader to dig through a dense rebuttal, he clearly outlines his counterarguments by using headings to denote his response to each topic raised by the dissatisfied customers.

Humorous, Not Humoring - Realizing that his primary audience are his future customers, Tige uses humor to undercut some of the more ludicrous aspects of the reviewer's diatribe. For instance, when responding to  a complaint about the weather, Tige notes, "That trip was indeed affected by heavy rain. Still, passengers were able to complete nearly every activity scheduled. Better weather certainly makes it a better experience, and try though we may, we haven’t found a way to control the weather : )." Yes, Tige included a smiley face in his response. 

Take Ownership, Not Umbrage - Although Tige cannot control the weather, he willingly claims ownership of the aspects of the honeymooner's trip that he could influence, stating, "As an owner, Service is one of those areas we can control (unlike the weather), and it’s the area I care about most." He then defends the quality of the service provided by stating the results of a contemporaneous survey, taken on board, at the end of the voyage, as described more fully below.

Facts, Not Flatulation - Whenever possible, counter a negative reviewer's comments with concrete facts. In Tige's case, he shares the collective numerical scores of the passengers who accompanied the honeymooners on their disappointing voyage. For instance, the honeymooners noted that the food did not meet their expectations, yet Tige notes that the cuisine was given a "9 out of 10" by all of the passengers, including the disenchanted honeymooners.

Channeling Tige

The next time you encounter a negative online comment about your startup from a disgruntled customer, resist the very natural temptation to write a hurried, angry reply. Instead, first pour yourself a large glass of pineapple juice (rum optional) and take a deep breath of an imaginary tropical breeze. If you then pretend you are sitting on the Tui Tai, calmly chatting with the disappointed customer, while surrounded by a multitude of your future customers (all of whom are listening intently to your response), you will no doubt craft responses that are as effective and engaging as Mr. Tige Young's social media missives.

Follow my startup-oriented Twitter feed here: @johngreathouse. I won't tweet a photo of a killer burrito I am about to devour - just startup stuff.

Share and Enjoy

The post Using Social Media To Deal With Customer Trolls appeared first on infoChachkie.

How did Sarah Penna create one of YouTube's most successful networks? Consistently working 14-to-16-hour days had something to do with it, along with a service-oriented mentality built upon a foundation of integrity.

You can watch Sarah tell her compelling story in the following 15-minute excerpt from her recent UC Santa Barbara talk. Note: I am indirectly a micro-investor in Big Frame through Rincon Venture Partners sponsorship of Launchpad LA.

If you haven't already subscribed yet,
subscribe now for free weekly Infochachkie articles!

As noted in YouTubers Come Of Age, YouTube has progressed from its initial incarnation as a repository of random videos to a number of vertically focused, professionally managed networks. Sarah is a Co-Founder of one of the most popular of these networks, Big Frame, which boasts some of YouTube's biggest stars, including: MysteryGuitarMan, Peter Chao and DeStorm.

Sarah began her talk by explaining that she has always had a service orientation. "When people would ask me when I was a little kid what I wanted to be when I grew up, I would tell them 'a waitress,' much to my mother's chagrin. What I really liked was serving people, I really liked helping people, and in my little seven-year-old mind, that meant being a waitress. It was that love of serving people that led me on my long journey of starting a company."

A Foundation Of Honorable Service

Sarah continued her story by describing her life growing up in an entrepreneurial household."I actually come from a long line of entrepreneurs. My mother and father started a little hardware company in Price, Utah and they turned it into a very, very successful construction company. I used to get up at 5:00 in the morning with my father and go to construction sites. From that young, very impressionable age... the one thing they always emphasized to me was integrity.

I took that lesson of integrity and brought it with me when I started my company. The fundamental backbone of Big Frame is integrity and that resonates throughout the people that I hire, the person I chose to co-found my company with and also the kind of content we work (with) and create."

From "Me At The Zoo" To Zombie Blood

Sarah then showed the students the first video uploaded to YouTube, entitled Me At The Zoo. Despite the fact that it only lasts for 19-seconds and is utterly boring, the video has accumulated nearly 10-million views and has been awarded over 68,000 "likes." According to Sarah, "It's not a very good video but it's a harbinger of things to come. That video is... what started it all."

In 2007, Sarah joined Current TV. Although she enjoyed the experience and gained television production skills, which she still uses today, the lack of viewership at Current was de-motivating. In Sarah's words, "I started reading a lot of articles... in 2007 (and) 2008 (and I realized) there is all this online video being consumed and it's not being consumed on Current. Where are all these people watching online video? I uncovered this world of YouTube and it blew my mind."

After leaving Current, Sarah did a stint as the Director of Distribution for a television production company. During her tenure, "A director came into our offices and pitched us a web-series idea. He said, 'I'm directing this thing for this YouTube channel called The Station, you should come check it out.' So I went and wound up being a zombie in the very first video that went on The Station... which evolved into the biggest YouTube network, called Maker Studios. 

There I met the biggest YouTube stars; Shane Dawson, Phil DeFranco, KassemG, Shaycarl... I went back that night, after cleaning all the zombie blood off my face and... these guys, even in 2007, had tens of millions of views. I was just blown away and I knew immediately that this was something big and massive and it was only going to get bigger, and I wanted in.

At the time, Phil (DeFranco) was the fifth most subscribed YouTuber in the world. He had just gotten a small grant from YouTube to start another channel and he needed a Producer. I got hired, broke up with my boyfriend, moved out of my apartment and quite my job, within 24-hours. I was very committed to making this work... I realized that I needed to... commit to it.

(Phil's channel) was called 'Like Totally Awesome,' which is a great thing to have on your resume, people really take you seriously. That's why I had to start my own company, (because the) last thing on my resume was, 'Like Totally Awesome.'"

Million Dollar Inaugural Year

Sarah went on to explain that her experiences producing shows for Like Totally Awesome inspired her to start her own company. "Originally, my company was called 'The Cloud Media.' I started it on my own and instinctively felt my way through the first six months. I am an English major, not an MBA, so... I had a lot of support, a lot of people guiding me through the first six months.

I started signing clients and that was a really amazing feeling. I started cold calling... people and saying, 'I know you don't know who I am, but I have done these things (for other YouTubers)... trust me... I won't lock you into a long contract, just let me show you what I can do.'

Those first six months were about... building my reputation, which to me is very, very important. I am very meticulous about my reputation. You can get so much more done when you have peoples' respect. That, to me, feels like success. When a client wants to sign with me because they know that I am going to take care of them.

In the first year (at The Cloud Media), just me alone, I did over a million dollars in brand deals. That was all (from) incoming calls... but I needed to scale... and I couldn't do it alone. For me, the version of scaling came from creating a network."

In addition to changing the company's name to Big Frame and taking on accomplished Co-Founder Steve Raymond, Sarah also received assistance from the startup incubator LaunchPad LA. "Now my company is 28-employees, we closed a round of three million dollars in May (2012).

Five Tips For Emerging Entrepreneurs

Sarah then discussed five areas of advice. She began by noting that, "I think that our generation is very, very scared of failure. For me, the thought of failure was almost unbearable. But when I accepted (that) I might fail... that freed me up to... take these huge risks. A certain amount of doubt is useful... but don't let doubt cripple you. You will fail if you doubt so much that you paralyze yourself.

Another really important piece of advice that I got was setting goals... give yourself attainable goals, that are short term. When I first started, I would say, 'Okay. I am going to give myself six months to keep this business going. I want to hire somebody in three months. I want to get incorporated in four months. I want to have payroll set up in five months.' Giving yourself very, very distinct set of goals that are ... month-to-month... helps you get up in the morning and know... this is exactly what I am going to do with my day."

Keep a journal... because, I go back and read those (early entries and say), 'Oh, Yes. I remember when I was in that place.' In the beginning, the mistakes can feel catastrophic, but being able to look back and reflect is really a useful tool. Also, when you become super, super successful and you want to write your book, it's helpful!"

Ms. Penna closed her remarks by emphasizing the importance of maintaining a balance between one's personal and professional lives. Her advice was pragmatic and realistic, reminding the students that, "It is a lot of work to start a company or to work at a startup, even if it's not your own company. But keeping a balance (is crucial). Sometimes I'll take meetings and I'll say, 'Let's go on a hike'... because I need some exercise, I haven't been out of the house in a week. Starting a company is more of a lifestyle, it is not a job. It is your life, but if it's something you love, it won't feel like (work). I do 14 to 16-hour days, but I have been able to get balance in my life."

On a number of occasions, I have echoed Sarah's closing sentiments, telling my students, "It ain't work, if you love what you're doing." After spending some time with Sarah, it is clear that she truly loves her integrated and balanced life of work and fun.

Follow my startup-oriented Twitter feed here: @johngreathouse. I promise I will never tweet about my trip to the zoo or that killer burrito I just ate.

Share and Enjoy

The post This 28 Year Old Woman Co-Founded One Of The Most Successful YouTube Networks appeared first on infoChachkie.

I recently had the pleasure of connecting with author, investor and serial entrepreneur Brad Feld. The forum was an LA dinner hosted by the good folks at Cross Campus and was attended by about a dozen of Southern California's most active institutional investors.

During our discussion of Brad's book, Startup Communities, the subject of Los Angeles becoming the next "Silicon Beach" was raised. Although the term was used tongue-in-cheek, Brad made it clear that no town should aspire to become the next "silicon" anything. Rather, he believes startup communities should focus on establishing a unique identity, based upon their endemic, "energy, activities and innovations."

If you haven't already subscribed yet,
subscribe now for free weekly Infochachkie articles!

Techtopia

A couple years ago, CNBC dubbed Santa Barbara "Techtopia," short for "technological utopia." I am one of Santa Barbara's biggest fans, so I won't argue with the utopia sentiment. However, the term always struck me as cheesy. As Brad points out, startup communities should rely on results, not silly names, to achieve notoriety.

Santa Barbara has solid startup roots, hatching a number of world-class tech startups during the past 15 years, including: ValueClick, RingRevenue, lynda.com, Commission Junction, FindTheBest, Expertcity (creator of GoToMeeting), Sonos, Eucalyptus, Software.com, QAD and RightScale.

In my recent conversation with Mark Suster on This Week In VC, I discussed some of the historical reasons why the Santa Barbara startup community is so vibrant. If you care to watch/listen to my comments regarding what makes Santa Barbara's startup community unique, you can do so in the video below (from about 2:45 - 9:40).

In a nutshell, we benefit from: (i) an aerospace legacy which trained thousands of world-class engineers, (ii) UC Santa Barbara's engineering school, ranked #11 in 2013 among public institutions, and (iii) one of the world's best climates, which attracts and retains talented, successful and affluent people who could live anywhere in world.

Leaders And Feeders

Brad advises that startup communities are best shaped by entrepreneurs, which he appropriately labels "leaders." He categorizes everyone else as "feeders." As you review this list of feeders, consider the relative health of your startup community and what can be done to bolster the effectiveness of your local feeders.

State & Local Governments - They are often well intentioned, but politicians are typically driven by the next election cycle and are thus ill equipped to perform the long-term planning required to appropriately foster a startup community.

Universities - Students are the most important aspect of University feeders, with professors a distant second. Brad believes that much of the innovation that occurs within an academic setting occurs outside of the business school.

His theory is consistent with many of the points raised in Why Entrepreneurs Hate (Most) MBAs. All too often, business students passively wait for innovation to fall into their laps, rather than exploring labs and computer science departments in search of promising advancements.

Investors - This group too often forgets that the entrepreneurs are the heroes of any startup community. Although local, value-added capital is certainly a catalyst within a startup community, local investors are not the community's lifeblood. Great ideas coupled with competent entrepreneurs will attract sufficient capital, as exemplified by AngelList's ability to match investors with great opportunities, the world over.

Mentors and Advisors - Brad makes a distinction between these two groups, noting that "an advisor has an economic relationship with the company" she is helping, whereas mentors do not. Successful mentors "give before they get" - a theme which resonates throughout Startup Communities.

Service Providers - These folks are typically over-represented at startup events: lawyers, accountants and the dreaded consultants. Brad suggests that the formula for success for service providers is consistent with that of mentors - give of your time, attention and creativity freely and good things will follow, such as an equity slug in a hot startup.

Large Companies - Successful, established companies can contribute to a startup community by sponsoring and hosting entrepreneurial events and allowing their executives to mentor aspiring entrepreneurs. Such activities are not altogether altruistic, as allowing their employees to vicariously share in the excitement of startups will reduce the number who become bored and leave the big company to pursue an entrepreneurial venture.

Danger Will Robinson, Danger

Brad also highlights pitfalls he has seen repeated in the various startup communities he has visited. I found this list particularly instructive, as avoiding these common errors can jumpstart a nascent community, while running afoul of them may doom it. Some of the pitfalls I found particularly instructive include:

Patriarchs Ain't Your Daddy - Brad characterizes this challenge as the "old white-guy problem" in which a hierarchy of older, successful people is looked upon by the rest of the business community to "run the show."

Solution: Ignore the old guard and operate autonomous of any such hierarchies.

Newcomers Ain't Strangers - As the saying goes, "In a small town, you are no longer a stranger after 20 minutes, but you're still a newcomer after 20 years." Brad cautions against this mentality, encouraging leaders and feeders to reach out to new entrants to their startup communities.

Solution: In Santa Barbara, there is an unofficial "welcoming committee" of entrepreneurs who help newcomers become networked within our startup community. Step up and informally create such a welcoming committee in your hometown.

Incubating And Accelerating Success

Not surprisingly, Brad includes a chapter in Startup Communities regarding the appropriate roles of incubators and accelerators in a startup community. Brad and I discussed this lively topic when we chatted last year. You can hear Brad's thoughts in the following seven-minute excerpt from our discussion.

Brad elaborates on our discussion by encouraging startup communities to create accelerators and incubators that support all four tenets of the Boulder Thesis:

1. Entrepreneurs are the leaders

2. Leaders have a long-term view

3. Startup community is inclusive

4. Startup community consistently hosts activities that engage all members

Whether you are a real or an aspiring leader or feeder within your startup community, I strongly encourage you to use Startup Communities as your playbook.

Follow my startup-oriented Twitter feed here: @johngreathouse. I promise I will never tweet about "silicon anything" or that killer burrito I just ate.

Share and Enjoy

The post Santa Barbara Is NOT The Next Silicon Valley, Here Is Why appeared first on infoChachkie.

A version of this article previously appeared on Inc.

The worlds of standup comedy and business presentations are not as disparate as they may appear at first glance.

Comedians are entrepreneurs. They often write their own material, book their gigs, arrange their travel and negotiate and collect their compensation from club owners. In addition, both comedians and entrepreneurs must engage and entertain their demanding audiences. As such, there is much entrepreneurs can learn from their comic brethren.

If you haven't already subscribed yet,
subscribe now for free weekly Infochachkie articles!

Comedic Tips

The following characteristics of a successful comedy routine are also applicable to effective business presentations:

1. Strong Start – Grab your audience’s attention and tell them who you are and why they must listen.

Due to their limited stage time, comedians must quickly set the tone of their act. Often the success or failure of the opening joke determines how well a routine is received. When appropriate, open your business presentations with an anecdote or personal story that establishes affinity with your audience. Such a story should tell the audience, who you are, what your passion is and why they should share your passion.

2. Physical Humor – Use your voice, posture, gestures and physical appearance to establish the appropriate tenor.

Successful comedians are well aware that it is often not what they say, but how they say it, that has the greatest impact. Studies have shown that approximately 55% of a speaker’s communication during the first few minutes of a presentation is nonverbal, while an additional 38% is tone of voice. A mere 7% of a speaker’s initial communications comprise the words they utter.

3. Heckler Management – Do not alienate your audience by shutting down troublesome critics too quickly.

An audience has a group identity, even when they do not know each other or have any formal affiliation. This effectively creates an “us versus them” paradigm between the speaker and the audience.

Experienced comedians understand this dynamic. They know that if they prematurely shut down a heckler, they risk alienating the crowd. Instead, veteran comedians endure a heckler’s interruptions until it is clear that the audience is also annoyed, at which point the comedian shuts down the heckler with the audience’s implicit approval.

The success or failure of business presentations often rests upon the questions and answers following the formal pitch. An audience member who asks an irrelevant or nonsensical question is analogous to a heckler at a comedy show. The presenter must respond respectfully. If the questioner continues to ask off-base or overly pointed questions, the audience will eventually become agitated. Once their impatience is evident, the speaker should politely dismiss the questioner by indicating they will address their additional questions after the presentation has concluded.

4. Audience Repartee – Carefully orchestrate your audience interactions, especially questions and answers.

Comedians often ask their audience questions and make comments about peoples' wardrobes, dates, drinks, etc. If you pay close attention, you will notice that these comments are often not directed to anyone in particular. However, the audience assumes that the guy drinking the “girlie drink” in the back of the room really exists.

Entrepreneurs clearly are not well served by chiding or mocking their audience. However, soliciting their participation can help keep an audience engaged. If the crowd’s size is intimate, engage participants by using their first names and ask probing questions to uncover hidden concerns and objections. Comedians often ask questions to set up their punch lines. In business presentations, you can deploy the same approach to underscore your key selling points.

5. Rehearsed Spontaneity – Practice so thoroughly that your remarks seem fresh and spontaneous.

The documentary The Comedian chronicles Jerry Seinfeld’s effort to create a new comedy routine. It makes clear that even a talented comic's new material usually bombs. Comedy requires extensive trial and error to separate the bad bits from those that work. The same is true with business presentations.

The next time you attend a comedy show, watch the waitstaff. In most cases, they stoically move about the room, even when the audience is laughing uproariously. Why? Because they have heard the jokes over and over, in the same order and delivered in the same “spontaneous” way. Great comedy appears off-the-cuff and effortless, yet it is usually the result of painstaking practice.

When we took Computer Motion (NASDAQ: RBOT, sold to Intuitive Surgical) public, we conducted a three-week road show in which the executive team gave the same presentation day after day, often multiple times per day. Our most effective presentations were those in which our well-rehearsed “adlibbing” sounded spontaneous. If you prepare thoroughly, you can achieve the same rehearsed spontaneity that distinguishes professional comics from amateurs.

6. Segues – Make it easy for your audience to follow your story, especially when transitioning between its beginning, middle and end.

Proper pacing is of vital importance in comedy. Comedians must allow adequate time for the audience to comprehend each joke and react appropriately. At the same time, too many pauses make for a dull routine.

One way to ensure effective pacing is to establish segues that alert the audience when you move from one subject to another. In comedy, empty phrases such as, “Anyone here from New York?” or “Did you guys hear the news story about... ?” are often used to mark transitions between topics. Such verbal landmarks give the audience a chance to catch their breath, while guiding them to the next subject. Entrepreneurs should afford their audiences similar mental respites and clear transitions.

7. Humor – Utilize tactful humor that is relevant to your story.

Deft use of humor is the greatest lesson entrepreneurs can learn from comedians. As described more fully in PowerPoint Presentations That Suck Less, business presentations do not have to be boring. Interjecting humor into your talks, when done judiciously, can make them more engaging, and thus, more impactful. Engaged people are persuadable people.

8. Fini – Close with impact and clearly communicate your call-to-action.

Comedians often deploy the bookend technique, in which they reference their opening joke at the conclusion of their show. This gives their performance a feeling of completion and symmetry. Entrepreneurs can utilize this approach as well, by referring to their opening personal story in their closing remarks.

Whatever closing technique you deploy, call upon your inner-comic and end your talk on an applause line that underscores a clear call to action.

Follow my startup-oriented Twitter feed here: @johngreathouse. I promise I will never tweet about standup comedy or that killer burrito I just ate.

Share and Enjoy

The post Serious Presentation Tips From Standup Comics appeared first on infoChachkie.

A version of this article previously appeared on Forbes.

How did a small, open source software company from Finland capture billions in market share from Oracle? Marten Mickos, CEO of Eucalyptus Systems, knows the answer and he delights in telling the story of how MySQL ate Oracle's lunch and dinner.

You can watch Marten tell his entertaining story in the following 15-minute excerpt from his UC Santa Barbara talk. Note: I am a micro-Angel investor in Eucalyptus.

If you haven't already subscribed yet,
subscribe now for free weekly Infochachkie articles!

Yet Another Overnight Success

Marten began his story by explaining that MySQL was originally founded as a research project and how it was a nascent startup for nearly a decade before he joined the team. Per Marten, "I joined in 2001, (but) I had known the founders since 1981... we'd been playing poker for many years. He (one of the founders) called me one day and said, 'Marten, we need a CEO and we think it's you' and I (initially) said, 'No.'"

"I started helping them with strategy in 2000 and then... I realized this could be a huge opportunity. There were twelve people... spread over three different companies (and) we brought it all together. I remember we closed a deal with Compaq... worth $15,000...  we celebrated for days. We felt it was huge."

Welcome To America

Marten continues his story by describing the company's first major challenge. A large US company filed a multimillion-dollar lawsuit against MySQL while the company was in the midst of raising its first round of funding. According to Marten, it was a demoralizing blow that would have spooked the investors, if MySQL had acquiesced to the US company's demands. Instead, Marten and his Chairman executed a clever strategy, "This company that didn't really even exist yet...we had practically no money and we got sued in the US by a publicly listed company. We were shocked. At that point MySQL could have died.

We went back to all the VCs and said, 'We have good news and bad news. The bad news, we've been sued in the US. Good news... we are cutting our valuation in half. And now dear investors,' (who are from Norway, Sweden and Finland)' the Nordic Pride is at stake. You must not pull out now. You must never let a big, fat American company do this to you.' They all invested.

We took an investment of 2M Euros. We spent 1.6M Euros on the lawsuit. And we won. It was the best marketing campaign ever. Everybody knew we were the small, nice guys from Scandinavia, unjustly attacked by this greedy company."

Drinking The Ocean Through A Straw

The second major challenged faced by MySQL was the surprise acquisition of one of its key partners, InnoDB, by Oracle. According to Marten, "Suddenly, when we were building our business and we thought that this very vital component of our product would be part of us, suddenly it was owned by one of our competitors. It was completely devastating."

Marten learned the news late on a Friday, "I was thinking, 'This business is over.' I was ready to give up... (but) my management team got me back on my feet." Marten's team strategized over the weekend and decided that, "attack is the best defense."

On the following Monday, Marten was besieged by the tech press. Fortunately, he was ready. Alluding to the company's dolphin logo, Marten told the press, "'Trying to kill MySQL by buying InnoDB is like trying to kill a dolphin by drinking the ocean.' That was such a powerful message; it went all over the world. It didn't take more than a few weeks and suddenly there were three other projects developing alternative technologies for MySQL. We realized that this was a decision we should have made...  and we managed over time to turn it (the acquisition) into a strength."

Keep Your Enemies Close... And Give Them A Prize

Marten noted that a year after Oracle acquired InnoDB, MySQL made an unexpected announcement at their annual Users Conference. In Marten's words, "Oracle never did any harm to us, but they didn't like to be shown as endorsing us. At our Users Conference we surprised them (Oracle) by announcing them (as) MySQL Partner of The Year. We forced them up on stage to receive the prize. (This) showed that we had the guts to play the game... and the business kept growing."

Mr. Mickos closed his comments by quoting an old saying, "'If it happens, it's good. If it doesn't happen it's better and whatever happens is best.' Meaning, you are influencing the world as much as you can. But once it's beyond your influence, you just must live with it.

You can start the day demanding a lot from yourself, but you must end the day being nice to yourself... because otherwise the next morning, when you wake up, you are not ready for the big challenges. When you have done your best, you have the right to be happy and content with yourself every night when you go to bed." In my humble opinion, this is advice young entrepreneurs cannot hear often enough.

If you enjoyed this talk, you can watch Marten describe his secrets to startup success HERE.

Follow my startup-oriented Twitter feed here: @johngreathouse. I promise I will never tweet about a surfing dog or that killer burrito I just ate.

Share and Enjoy

The post How This Startup Kicked Oracle’s A$$ appeared first on infoChachkie.

The words "failure" and "the Beatles" seldom appear in the same sentence. However, the Beatles' early career was a series of failures, culminating in their unsuccessful audition with the leading record company of their era, Decca Records. This particular failure nearly caused the band to breakup.

At the time of Decca's rebuff, the Beatles had been performing under various monikers for nearly five years. Most groups would have returned to Liverpool and continued to play occasional gigs while beginning their working class careers. Fortunately, the Beatles were not "most groups."

If you haven't already subscribed yet,
subscribe now for free weekly Infochachkie articles!

Failure Wasn't In Their Songbook

Entrepreneurs can draw a number of startup lessons from the manner in which the Beatles' addressed Decca's devastating rejection.

Wrong Product - The material for the audition was selected by the group's manager, Brian Epstein. Brian's musical "qualifications" were derived solely from the fact that he curated the record section within his father's furniture store. Of the thirteen songs, ten were uninspiring covers of American tunes, which the Beatles sang with exaggerated American accents.

Brian's intent was to showcase the group's multi-generational appeal by drawing upon mainstream songs, including Broadway show tunes. Brian only selected three Lennon and McCartney songs for inclusion in the audition. Notably, the Beatles subsequently never released these original compositions, as they were deemed inferior.

Lesson - Advisor input should not be unequivocally treated with reverence. Entrepreneurs must know when to listen to their advisors and when to reject errant advice. Suggestions drawn from an advisor’s expertise should be valued more highly than uniformed opinions masquerading as sage recommendations.

Wrong Audience - Per George Harrison, "It was unusual at that time to have a group where everybody did the singing. In those days, it was... one guy out front who sang." John's recollection is similar: "They were so dumb. When they listened to these audition tapes, they were listening for The Shadows. So they were not listening at all."

Lesson - Understand a potential investor's point of view (POV) and do not try to change it. Focus your time and attention wooing investors whose POV is aligned with your venture's value prop and ignore those with a contrary POV.

Wrong Team - The Beatles' ultimate lineup was incomplete at the time of their Decca audition. The affable, yet musically mediocre, Pete Best was the Beatles' drummer, rather than Ringo Starr.

Lesson - As described in Be The Beatles, one of the keys to the Beatles' ultimate success was the creative tension and balance they achieved once Ringo joined the group. A startup can likewise ill afford to compromise when establishing its core team.

Wrong Time - Timing is everything in comedy and business. The Beatles were simply not ready at the time of their Decca tryout. According to Paul McCartney, "Listening to the tapes, I can understand why we failed the Decca audition. We weren't that good, though there were some quite interesting and original things."

Lesson - Startups have limited opportunities to secure key customers, investors and employees. It is very difficult (usually impossible) to recover from a negative first impression. As such, entrepreneurs must balance their desire to accelerate their path to success with their startup's capabilities.

Wrong Motives - Brian paid Decca £15 to record the session (equal to $42 at the time, and equivalent to $317 in 2013). Thus, it is unclear whether Decca's motivation was a sincere desire to evaluate the band or an opportunity to score a small payday by utilizing an otherwise empty studio.

Lesson - An entrepreneur's two most limited resources, time and money, must be strictly guarded. Thus, when a customer, investor or partner makes a request, their motives must be dispassionately explored. If their motives are not congruent with your goals, the opportunity should be ignored.

Wrong Expectations - According to John Lennon, "I think Decca expected us to be all polished, we were just doing a demo."

Lesson - Establishing appropriate expectations among a startup's stakeholders is imperative, as over-promising and under-delivering can be its death knell. For instance, if you deliver a prototype to a potential partner who is expecting a commercialized solution, the potential partnership may be irreparably damaged.

Wrong Critics - After the group achieved success, John Lennon recounted the numerous failed auditions of their early career, recalling that, "They used to keep telling us, 'It's too much like rock and roll and that's all over now,' because they all thought rock and roll was dead, but they were wrong."

Years later the Beatles recalled their rejection by Decca with bitter satisfaction.

George: "... they (Decca) signed Brian Poole and the Tremeloes instead. The head of Decca, Dick Rowe made a canny prediction: 'Guitar groups are on the way out...'"

Paul: "He must be kicking himself now."

John: "I hope he kicks himself to death."

Fortunately, the Beatles handled their failures like successful entrepreneurs. They ignored the alleged musical experts, internalized their failures and improved their value prop by working their asses off.

Entrepreneurs can take solace in the reality that everyone, including immensely successful people, suffer soul-searching failures. Setbacks on the path to success are inevitable. What matters is whether you allow them to build you up or tear you down.

Follow my startup-oriented Twitter feed here: @johngreathouse. I promise I will never tweet about the Tremeloes' latest reunion tour or that killer burrito I just ate.

Share and Enjoy

The post Startup Lessons From The Beatles’ Biggest Failure appeared first on infoChachkie.

A version of this article previously appeared on Forbes.

In order to extract value beyond your Angel investors' cash, you must first assess three important parameters: (i) the relative strength of their personal brand, (ii) their ability to add operational value, and (iii) the amount of care and feeding they will demand from you.

Angel investors are often the sole source of funding for startups at the critical pre-launch stage. Ideally, such early-stage investors should have the experiences and motivation to help their ventures establish a sustainable business model, rather than simply writing a check before moving on to their next investment.

If you haven't already subscribed yet,
subscribe now for free weekly Infochachkie articles!

Four Common Angel Archetypes

There are a variety of factors entrepreneurs should consider when evaluating a potential early-stage investor. Three criteria that impact an investor’s ability to add non-monetary value to your venture are: Brand, Tactical Impact and Overhead. Four distinct types of Angels emerge when they are evaluated per these parameters, as shown below.

Brand - Value on this axis is delivered by mere association with the Angel, in the form of social proof. Angels with a strong brand offer credibility and validation that influences other constituents of the startup ecosystem. Even if an Angel with a highly-visible, well respected brand never lifts a finger on your behalf after their cash hits your balance sheet, their association with your venture will continue to generate value, through (and potentially beyond), your first institutional funding round.

Warning: the more high profile and prolific an investor, the greater the demands on her time and thus the lower likelihood she will consistently be available to add value when you call upon her. Thus, even well-intentioned High-Profile Investors can inadvertently become disengaged over time.

Overhead - The second measure of an Angel's relative worth assesses the amount of energy the investor extracts from your venture. Energy can be drained by gratuitous updates, lengthy and unhelpful "strategy" conversations and time spent tracking down the investor for routine tasks, such as coordinating schedules or obtaining signatures.

Startup Founders always have more things to do than time to do them, so the last thing they need is an Angel who draws upon their time and energy and offers little in return beyond cash. Steer clear of High-Overhead Angels, whether they be interfering obstructionists or perpetually unavailable phantoms.

Impact - In this context, value-added is defined as worthwhile actions performed by an Angel on behalf of your venture, such as: introductions, executive recruiting, product feedback and strategic advice.

The Elusive Engaged, High-Profile Investor

An Angel who judiciously adds value, provides reputational validation and is a pleasure to interact with is ideal. In contrast, Hands-on Clueless Investors should be avoided, unless your company will imminently fail without their money and you have no other viable sources of cash. In such instances, take their money and work diligently to convert them into a disengaged investor.

Prioritize the remaining boxes as you see fit, depending on the particular needs of your venture. For example, if your team lacks solid UI/UX talent, a Hands-on Former Operator who shores up this weakness will be a great fit. Alternatively, if you have plenty of Engaged Angels, a Disengaged High-Profile Angel might be optimum.

Painfully Diligent Investors

Even though it can be painful and frustrating, Engaged and Hands-on investors may require to you expend significant energy helping them assess the veracity of your venture's prospects. This process is additive for all concerned when an informed investor appropriately challenges the entrepreneur's point of view regarding substantive issues, such as: positioning visa-vi competitors, the size and accessibility of proposed target markets, pricing mechanics, market trends and emerging technologies.

If an Angel's diligence focuses on a checklist of legal and administrative issues, you are likely dealing with a Clueless Investor. In such cases, the process will require little of your time or attention. Correspondingly, minimal value will result, as the investor will lack the necessary grounding of your business to offer meaningful input.

Yep, Sounds Good

Implicitly represented in the above matrix is a fifth Angel type that abides by the "Sounds Good" school of investing. If the pitch sounds good, they are "in." This approach allows such investors to rapidly deploy and diversity their capital.

The obvious downside of this strategy is that most pitches from experienced entrepreneurs "sound good." It is not until time and attention are applied to the entrepreneur's underlying assumptions that potential pitfalls become evident.

Similar to Clueless Investors who perform perfunctory diligence, the lack of thoughtful contemplation from "Sounds Good" investors often leaves them with an incomplete and inaccurate understanding of your business. Thus, absent a strong personal brand, a Sounds Good investor usually offers little value beyond their checkbook.

The Beauty Of Low Expectations

Without question, the more value you can derive from your Angel investors, the better. However, entrepreneurs frequently over-estimate the impact an investor will have on their venture. With this in mind, if you expect little value beyond your investors' cash, you will seldom be disappointed.

Note: This entry was based on this Quora answer posted by my brilliant Partner at Rincon, Jim Andelman.

Follow my startup-oriented Twitter feed here: @johngreathouse. I promise I will never tweet about the Clueless Angel Investors or tell you about that killer burrito I just ate. 

Share and Enjoy

The post Extracting More Than Cash From Your Angel Investors appeared first on infoChachkie.