Up and Running:

The first time I took our company to exhibit in a trade show we brought along a big plastic fishbowl with a sign that said: “Free Drawing! Drop your business card in the bowl for a free copy of Business Plan Pro®.”

Three days later we had four fishbowls full of business cards. Business cards, business cards–and not a lead among them. Fortunately we typed in only a few hundred names and sampled the marketing results before we spent the resources to input thousands.

The list was useless. None of the people sampled wanted our product.

The following year we took the same product to the same trade show–and the same fishbowl, too. That second year, however, we put a sign by the bowl that said: “For more information about Business Plan Pro, drop your business card here.”

After that trade show we ended up with a few hundred good leads. We input the data and followed up and made some sales.

I’ve used this story often in teaching, seminars and managing my own company because to me it illustrates the importance of target marketing and focus.

In this example, quality of leads is much more important than quantity.

Thousands of bad leads are worth nothing, while a few hundred good leads have real value.

(Note: this is reposted with permission from Planning Startups Stories.)

When I started my business in 1983, money was my biggest obstacle. I had a good job, which I left on purpose, at a time when mine was our only income. We also had heavy debts left over from business school, plus four kids; the eldest was 10, the youngest was 1 year old.

There was also the biggest boost to starting a business: My wife said, “Go for it; you can do it.” And she meant it. At several key points along the way, she made it clear that we would take the risk together. There was never the threat of “I told you so, why did you leave a good job, you idiot?” What she said was, “If you fail, we’ll fail together, and then we’ll figure it out. We’ll be OK.”

If you’re starting a business and living a relationship, then think about that one. Call it a “make or break” factor.

(reposted from the original on Planning Startups Stories)

I suppose it should have been obvious, but still, I liked reading YouTube Videos Pull In Real Money last week in The New York Times.

The story puts up examples of several people bringing in very nice incomes and owning their own business, in effect, by working with YouTube, gaining an audience and living off the advertising revenue.

One year after YouTube, the online video powerhouse, invited members to become “partners” and added advertising to their videos, the most successful users are earning six-figure incomes from the website.

For some, like Michael Buckley, the self-taught host of a celebrity chatter show, filming funny videos is now a full-time job.

Buckley started on local public access cable TV but moved to YouTube when he saw the opportunity. He’s had 100 million views–and that was before the feature in The New York Times; and I’ll bet I’m not the only one to pick up on that.

Like so many other things, though, Buckley’s success doesn’t mean there’s an easy path for you or me. You have to be good, you have to get there early, you have to be (well, sort of, and usually) original.

Then there’s Cory Williams, 27, making $17,000 to $20,000 a month producing YouTube videos.

… he said his big break came in September 2007 with a music video parody called “The Mean Kitty Song.” The video, which introduces Mr. Williams’ evil feline companion, has been viewed more than 15 million times. Half of the profits come from YouTube’s advertisements, and the other half come from sponsorships and product placements within his videos, a model that he has borrowed from traditional media.

So there we go again. The business landscape changes, the cyber landscape changes and, if you can do something that people want, there’s money to be made.

But don’t copy these people. Do the next big thing. What you get from these people is the reminder that it’s out there.

This feels typical to me. One startup gone, one still struggling, one completely revamped and doing pretty well. Thanks for that to Brent Bowers of The New York Times, who first profiled the three startups about a year ago, again six months ago, and now with an update this week.

I feel like I was sufficiently cynical about the one that closed, which was the T-shirt company I posted about here a year ago. And cynical isn’t just my word; in this case, it’s the word founder Tina Ericson applied to my post in her comment the next day.

It’s sad that good intentions weren’t enough. Passion and perseverance weren’t enough. A year ago Tina wrote the following in her comment to my post:

what the article in the Times did not cover, as it was not germane to the topic, was the intention and the impetus for our venture. We hope to impact women in positive ways and to reinforce their authority over their own lives as mothers and women. The products are designed to be fun and hip but also carry a serious message. Our commitment to charities and philanthropy were the first seed of an idea. Our business goals may seem lofty, but I will assure you, sir, that you have never met a more dedicated team or a more driven collective work ethic than the Mamas.

That’s the kind of resolve we’d all like to see succeed. I rooted for her and, if you read that, you were probably rooting for her, too. But a year later, the business has closed.  Says the report:

she fell victim to a classic error of fledgling entrepreneurs, letting her enthusiasm overcome her judgment, according to Neal Thornberry, associate professor of business management at Babson College in Massachusetts. Still, he said, “I look at her experience as tuition,” learning hard business lessons firsthand rather than reading about them in a business course.

And a sadder but wiser Tina Ericson, who had been so full of hope, doesn’t seem so easily consoled by the tuition suggestion as a silver lining:

Ms. Ericson, 41, acknowledges that she had an inadequate grasp of the retail market and realizes her startup was too much of a distraction from her job with a financial publisher. Nevertheless, she holds out the slim possibility of resuscitating her venture.

“We have decided to put Mamaisms Gear to bed,” she said, “perhaps to be awakened another day.”

Not likely.

And the moral to this story is? More later …

(Note: I posted this earlier on Small Business Trends. I’m reposting here for the convenience of my readers at Entrepreneur.com. Tim)

A couple of weeks ago a well-known local restaurant with 40-some employees closed its doors on a Monday morning without telling anybody in advance. Employees arrived Monday to a sign saying the business had closed.

Last week a printing company with 85 employees did the same thing. The people arrived Monday morning to read signs that the company had closed.

That’s what everybody fears these days. Is it going to happen to me?

Nobody wants to be told not to worry when things are bad. If you are in charge, they want you to share your worry with them, treating them like adults.  If you do, they’re likely to feel part of the team, and pitch in and help.

And if you don’t, you have anger and resentment to deal with, as well as disappointment and worry. People who lose their job from one day to the next, without any advance notice, are very angry.

I learned this the only way there is to learn this, running a company during a recession. I laid off five of 33 people in one day in 2001. Our sales fell hard when the dotcom bubble burst. We were slow to react. When we finally did react, our people were relieved to see us taking steps. Everybody pitched in.

And it also seemed easier to lay off five people the same day than that hardest of all things an owner does, fire somebody who’s been trying but failing. At least when it’s five at once, which was about 15 percent of our work force back then, people understand that it’s a larger cause, not a personal failure.

This whatever-it-is (recession, depression or whatever) is a lot worse than 2001, but the principle still applies. If you’re running a company right now, your people want to know how you’re doing. Don’t tell them not to worry their pretty heads. They want to be part of the solution. It’s normal human nature: People naturally want to be included in things. When times are tough, they want to know.

I’ll bet every one of the 40-some employees in that closed-down restaurant situation wishes the eatery had seen the problem coming, cut costs, maybe laid off some employees but stayed in business. And I’ll bet every one of the 85 employees in the printing business wishes it had cut it to 60 or 50 or 40 employees but stayed in business.

And I’ll bet they are all angry at the surprise. Several were quoted in the newspaper. “Why weren’t we told?” they asked.

If you’re an owner, don’t think you’re doing anybody a favor by not sharing your worries.

Who says it’s not a good time to start a company?

“My phone is ringing off the hook,” said Roxanne Usleman, a psychic in Manhattan.

Ms. Usleman, who says she channels angels to advise her clients on interpersonal and financial matters, reported both a spike in traffic on her website and a significant surge in private consultations. She used to see comfortably 15 to 20 clients a week, she said. Now she meets with more than twice that number. “I’m having trouble squeezing in appointments,” she said.

That’s from Sunday’s New York Times, in a Style story called “Love, Jobs and 401(k)s.” See, it’s a blanket bad time for business; and it’s a matter of what business you have. The Times story also notes this about a Los Angeles psychic named Tori Hartman:

“In what is perhaps a sign of the times, the $70 moss-scented prosperity candle offered on her website has become her best seller, she said.”

She can’t make them fast enough.

Always the paradox. The best of times, the worst of times. Take a look at this chart: For several days now I’ve been trying to figure out how to tell this story. It would be a great story if it had a happy ending, and it still can. But it hasn’t yet. I really like Mike Glanz and HireaHelper.com, his startup business. That’s Hire a Helper’s ramp-up chart, actual numbers compared to projections showing here. I had a meeting with him in person two weeks ago Monday. I posted last year on his quest for financing through TheFunded.com.

He’s a straight talker, not well connected, hoping to build his business through a combination of taking an idea and implementing it with hard work. He likes programming, he likes his site, and he’s proud of what he’s done and how he and his partner have worked on it. He’s proud of how his wife supports the idea. That’s the taking-off side of the picture.

Then there’s the dark side: costs, particularly some unforeseen legal costs, going way over projections. Not getting financed. Living without enough money. Trying to hold on. Needing a good lawyer, and more company building savvy. One thing I particularly like about Mike, a soft-spoken college grad, is that he knows what he doesn’t know. He knows he wants advice.

That’s the world of startups. Mike and his wife and his partner are looking at it, as in the song written by Joni Mitchell “From Both Sides Now“. Great initial sales, lots of enthusiasm, sudden burst of unexpected costs, really needing to raise money.

BizEquity on valuation, from the Demo conference. Photo credits on Picasa Web albums. Google Gears for Apple’s Safari browser.

Startup Meme is a good place to look for news, rumors and tips on Internet startups. Yes, I know, there are a lot of others–techmeme, engadget and techcrunch, just to name a few leaders; but I’ve subscribed to this one, and I like its style. It’s focusing on Internet startups, and it gives me a lot of information quickly.

Yesterday it had 10 posts.

Sometimes things go even better than planned. And that can be really exciting.

This is a true story.

I thought I would tell it here now because of a dinner meeting last Monday night with someone who could be in a similar situation. That’s a maybe, unfortunately. He’s a nice guy; it’d be nice if he or I could be sure.

The turning point of this story was one Saturday morning in October. This was years ago, but the memory is still fresh.

We met in the company offices, three or four rooms over a Jaguar repair shop in Scotts Valley, California. Philippe Kahn was founder, president, CEO, marketing director, chief programmer and almost everything else of Borland International. The meeting included me, Philippe and at least two of the other three members of the board of directors.

In case the reference to board of directors sets you off, let me clarify that although it (and every other California corporation) had a board of directors, this was definitely not a big company. It was almost entirely Philippe. He had two, maybe three other people working there. Most of his programming talent was in Denmark.

I wasn’t happy about meeting on Saturday. We had four kids and I worked a lot, so I tried to keep Saturdays free. But Philippe hadn’t asked before as strongly as he did that time, so I thought it best to go.

I’d grown impatient with Philippe and Borland. When the company was formally set up as a California corporation in May of that year, the idea and the business plan were to move a menu system called Menu Master from the CP/M operating system to the DOS operating system. And throughout the months of that summer, every time I asked about progress, Philippe told me not to worry: “They’re writing a Pascal compiler.”

Now to be fair, in software, then as now, the normal interpretation of “they’re writing a compiler” to convert a software product from one operating system to another is “forget it, the programmers are lost in themselves, this is never going to work.” I hope you get my drift. It’s a big project. Writing a compiler is roughly equivalent to creating a new programming language. You don’t do that just to convert a software product to a different operating system.

So with that as background, you might understand why I may have been a little bit grumpy that Saturday morning when I had to drive an hour to go to that meeting.

And then Philippe showed us Turbo Pascal. The compiler his Danish programming team had written wasn’t just a means to convert Menu Master to DOS. No. Instead of that, it was a fabulous piece of software in itself, far better than Menu Master, one that hundreds of thousands of personal computer users would love to have.

Philippe gathered us around the computer and showed us Turbo Pascal. I don’t think Menu Master was ever mentioned again, at least not by anybody in that meeting. I don’t know for sure, but I guess the other three board members had been as impatient as I’d been. They, like me, saw instantly how good the somewhat accidental new product was.

Philippe never wavered. It was clear that he had seen it first and acted immediately.

Borland had no money. Philippe had borrowed $20,000 from his father to get it started. He’d done a deal or two for Menu Master to be built into some CP/M computers (an OEM deal with the manufacturer) to keep it going.

However, money or not, he pushed full speed ahead. He played telephone games with his one receptionist, tricking some ad salespeople to give him a couple of full-page ads (Byte Magazine and Dr. Dobb’s Journal) on credit. That was about $20,000 worth of advertising.

By the time we learned about it, it was already done. He bet the company on those ads. If they flopped, it was going to be hell to pay the bills.

But those ads produced more than $40,000 of immediate direct sales. The orders came pouring in. Philippe had to add people to take the calls.

So for the next month, he doubled the ad commitments to $80,000. And sales doubled again.

So there it is. Every so often it happens. A product takes off because people want it. And, wow, that’s exciting to watch.

That was in 1983. Borland International grew to more than $60 million in annual sales and went public before the end of 1986.

I’m watching the Kindle for several reasons. First, I own one, I use it and I like it. Second, it’s an interesting new venture: a big, powerful company moving into a new but contiguous market. Third, it’s an interesting product category: the e-reader. I’ve been interested in that idea for years, but it hasn’t (until now, maybe) been successful. Ebooks and ebook readers make sense to me. But why had they all failed, at least until this one?

Interesting data from Tech Crunch last week in We Know How Many Kindles Amazon Has Sold: 240,000:

The Kindle is such a small part of Amazon’s overall business that the company does not break out how many it’s sold. But we found out anyway: 240,000 Kindles have been shipped since November, according to a source with direct knowledge of the numbers.

Doing a little back-of-the-envelope math, that brings total sales of the device so far to between $86 million and $96 million (the price of the device was reduced to $360 from $400 last May). Then add the amounts spent on digital books, newspapers and blogs purchased to read on the device, and you get a business that has easily brought in [more than] $100 million so far. (Each $25 worth of digital reading material purchased per Kindle adds $6 million in total revenues).

Peter Kafka at Silicon Valley Insider adds, in Amazon May Have Actually Sold a Bunch of Kindles:

That number is more or less in line with Citi analyst Mark Mahaney’s estimates from May; Mark thinks the Kindle could be a $750 million business that accounts for 3 percent of Amazon’s sales by 2010. And by our thinking, it compares very nicely to Apple’s iPod introduction: Apple sold 376,000 units in the first year after introducing the MP3 player, in 2001. And the iPod, recall, didn’t require users to actually go out and purchase any music in order to use it–you could load up with music you already had bought, or had stolen. We’ve been skeptical about the Kindle’s prospects to date, but if these numbers prove out, we’ll be happy to reassess.

Interesting. So the Kindle makes it, while the ebook rocket, the Sony ebook reader and some other attempts didn’t. Were the others simply ahead of their time? Or maybe Amazon added a secret ingredient, like critical mass and market power? I’m not sure, and I don’t know that anybody can really be sure, but it’s bringing up some good questions to ask.

Fascinating startup: Add posterous.com to the mix of Twitter, Tumblr, new media and cool new websites. It’s like an instant blog platform, free and extremely easy to use. You just e-mail into it and, with your first e-mail, it sets up your site, automatically; then you can edit and tune it. I just heard about it in an instant message (see below) saying…

… posterous is going to find VC money in 5 seconds flat

For example, posterous lets you automatically post pictures into an instantly obvious and usable blog-like interface. and it has the quickest and easiest setup I’ve ever seen and, amazingly, it works.

Microblogging. This new instant small media, something that feels to me like instant messaging with a posting platform, seems all the rage. I’ve been on Twitter for a few weeks now, unable to decide whether it’s a gigantic waste of time or the next big thing. Twitter lets you post 140-character snippets. I’m finding some of my favorite people there, and they’re doing interesting things. There’s been a business plan contest and a poetry contest, I think, both limited to 140 characters. Think of the trade-offs.

Of course there’s the problem of attention span, as the instant messages interrupt my Twittering while I’m talking on my office phone, and then my cellphone rings, in between posting–drafting this post–and posting elsewhere at the same time.

Is it a good way to make money? I’m not really sure how or whether social media makes money, and I just finished posting (elsewhere) on an in-depth analysis of that in MIT Technology that is very much worth reading if you’re curious about that.

With respect to instant media and instant posting and a million interruptions, here’s the text of the instant message exchange about posterous.com this morning . . . my tip of the hat to the good side of instant interruptions.

Paul: http://www.posterous.com/
Paul: very interesting
Tim: OK I just tried it, with an e-mail. Interesting idea . . . I’ll see what happens . . .
Paul: yeah
Paul: it’s pretty impressive
Paul: great interesting and real startups
Paul: tumblr.com, posterous.com, twitter.com
Paul: http://www.newsweek.com/id/145216
Tim: hmm . . . btw, you know I’m on twitter?
Paul: yeah twitter is all the rage
Paul: it’s good to be them
Paul: posterous is going to find vc money in like 5 seconds flat
Tim: I don’t get it . . . why doesn’t posterous want me to register timberry.posterous.com?
Paul: oh it lets you bypass that
Tim: How do they know when I e-mail to them what site name I want to be?
Paul: but you can. you’ll see as soon as they e-mail you back. then it becomes clear.
Paul: The e-mail you got back should make it easy to switch that up to a domain you actually want.
Paul: it’s not so much your next blog–but the next trend in the path to microblogging
Tim: OK getting it now … timstuff.posterous.com
Paul: yeah, it’s clever
Tim: It is cool. You’re right.
Paul: check out what a nice slideshow it made for this post http://paul_8f3xz.posterous.com
Paul: just attaching 5 photos to e-mail and boom
Tim: wow
Paul: yeah that’s slick

So there you have it. Instant blogging, instant gratification, immediate interruptions and maybe VC money as well. I like this 21st century. Or at least I do this instant, until the next interruption changes my mind.

(Note: I posted this earlier on Huffington Post. Repeated here for my readers’ convenience on this blog.)

I’ve talked about this topic on my other blog, Planning Startups Stories. I don’t like the idea of retiring. I love what I do. And I’m 60 years old. But then, I recently changed what I do to focus on blogging, speaking, writing and teaching. And that gave me a new job.

Which made me take a personal interest in Brent Bowers’ New York Times piece about Early Retirees In New Ventures, Mostly for Fun. This is really cool, a great reminder that business–your own business, your startup–is supposed to be more than “just” business; it’s supposed to be new, exciting, challenging and fun.