Entrepreneurial

Q&A with Silicon Valley “Godfather” Steve Blank

For those who don’t have a Silicon Valley area code, Steve Blank likely doesn’t have much name recognition. But amongst the Apples, Googles and Facebooks of the world, Blank enjoys iconic status. Blank says he gets asked for autographs just walking down the street in Palo Alto, where he teaches entrepreneurship at Stanford. Some young entrepreneurs reverentially refer to the 59-year-old as: “The Godfather.”

How did Blank earn his celebrity status? First, he is a successful serial entrepreneur, having started eight venture-backed Silicon Valley companies, including software company E.piphany, which raised $66 million prior to going public in 1999. Second, Blank’s first book, “Four Steps to the Epiphany”, became a handbook for every budding tech entrepreneur and spawned the term “customer development” that sparked the “lean startup” movement.

Blank’s blog has become a must-read among entrepreneurs and is widely syndicated, regularly appearing on The Huffington Post. Recently, Blank launched an online version of his customer development course, called “The Lean LaunchPad”, which he says has more than 50,000 registered users.

The following is an abridged transcript of a recent interview Reuters did with Blank that covered everything from the definition of an “entrepreneur” to how people should use his latest book: “The Startup Owner’s Manual”.

In terms of a neophyte that is maybe a Stanford student or someone who is not even in an entrepreneurship course but just wants to start their own business, can they pick “The Startup Owner’s Manual” up and use it as a blueprint?

It’s kind of intended as an encyclopedia and a blueprint. This is 613 pages, so it’s not designed to be read as a novel or go read all this and go build Google or Facebook. It’s a reference manual. As you’re building your company you’ll go back and refer to these different sections. Hopefully it will not just be for the 1 percent – tech startups – but these same tools are applicable for the 99 percent, which includes small businesses.

You also break down the difference between a small business and a tech startup, why did you feel that was so important?

In this Q&A;, Silicon Valley “Godfather” Steve Blank discusses his new book “The Startup Owner’s Manual” and explains why would-be entrepreneurs should not worry about business plans. Join Discussion

Small tech CEOs say Romney better for the economy: survey

Regardless of who won the presidential debate, the majority of executives from small technology firms would feel better if Republican presidential candidate Mitt Romney wins next month’s general election.

Twice as many CEOs from small to medium-sized technology companies (57 percent) believe the U.S. economy would be better off under Romney, according to a poll conducted last month by Boston-based executive search firm Polachi.

Just 27 percent of executives polled thought President Barack Obama would do a better job guiding the economy.

“What they like about Romney is his background at Bain Capital, having created value for his investors and himself and his family,” said Charley Polachi, who co-founded the firm with his brother 10 years ago.

“These CEOs felt Romney has been in the business world, he’s been an investor and has been held accountable to his limited partners and investors and he can probably get the economy moving (faster than Obama).”

The poll garnered responses from 200 tech CEOs from companies ranging in size from $2 million to $500 million in annual revenues.

A separate flash poll of 314 small businesses immediately after the presidential debate, conducted by online consultancy firm Manta, found 78 percent of respondents felt Romney won the debate. Just 8 percent felt Obama was the winner. However, 85 percent said the debate would not change their vote.

Regardless of who won the presidential debate, the majority of executives from small technology firms would feel better if Republican presidential candidate Mitt Romney wins next month’s general election. Join Discussion

Women-owned small businesses on the rise, but obstacles remain

When Hedy Ratner started the Women’s Business Development Center in Chicago 25 years ago, women owned just 10 percent of U.S. businesses.

Although today that figure is close to 30 percent, Ratner hoped by now women would have leveled the playing field in the business world.

“We never expected to need to be in business 25 years later,” said Ratner, whose organization helps women start and grow their own businesses by offering training, mentorship and funding.

“We thought there would be equality, that women would have equal opportunity, but we don’t,” she added. “We’re struggling with building because there are still businesses that fail.”

October has been labeled National Women in Small Business Month by the Small Business Administration (SBA), which is hosting a series of weekly web chats focused on the issues facing female entrepreneurs.

According to the latest U.S. Census Bureau statistics, which are compiled every five years, there were 7.8 million women-owned firms in 2007 – 90 percent of which were small businesses.

In the decade from 1997 to 2007, women-owned companies grew at twice the rate (44 percent versus 22 percent) of male-owned enterprises, showed a 2010 report prepared by the Economics and Statistics Administration.

October has been labeled National Women in Small Business Month by the Small Business Administration (SBA), which is hosting a series of weekly web chats focused on the issues facing female entrepreneurs. Join Discussion

SBA says small business lending up, but some feeling left out

This week Small Business Administration chief Karen Mills gave America’s top banks a pat on the back for boosting their lending to small businesses over the last 12 months, while separate data showed that funding for the most needy small businesses actually contracted.

In a blog posted on the SBA’s official website, Mills trumpeted that the U.S.’s top 13 biggest banks have increased loans to small businesses by a whopping $11 billion since last September as part of a commitment to boost lending by $20 billion by the end of 2014.

“The continued success of this commitment serves as an important example of what is possible when the public and private sectors work together to assist America’s small business owners and entrepreneurs,” Mills wrote.

While not disputing Mills’s arithmetic, small business funding expert Ami Kassar said the $11-billion figure “does not represent Main Street lending whatsoever.”

Kassar, whose Philadelphia-based company MultiFunding LLC helps small businesses get their hands on capital from a variety of lenders, said the SBA number covers loans made to businesses with as much as $20 million in revenue who tend to borrow in excess of $1 million.

He said a more accurate gauge of small business lending activity are loans of less than $1 million, which Kassar said represents “99 percent” of small business borrowing.

According to Kassar’s calculations from banking data gleaned from call reports, or balance sheet information, filed with the Federal Deposit Insurance Corporation – an independent regulatory body that overseas the banking industry – lending by the top 13 banks is down nearly $2 billion.

This week Small Business Administration chief Karen Mills gave America’s top banks a pat on the back for boosting their lending to small businesses over the last 12 months, while separate data showed that funding for the most needy small businesses actually contracted. Join Discussion

Small businesses likely to benefit from patent law overhaul

When new patent legislation was passed a year ago Alex Frommeyer was one of the first entrepreneurs to take advantage.

The Louisville, Kentucky-based inventor filed a provisional patent to protect the technology that went into making the Beam Brush – a toothbrush with a built-in sensor that records how long people spend brushing their teeth and relays the information to a mobile app that allows smart phone users to track their progress.

Before his provisional patent lapsed, Frommeyer recently filed two regular patent applications: one for the sensor technology and the other to cover the “infrastructure,” or system that allows the data to flow from the toothbrush and be displayed on a user’s phone.

Frommeyer said protecting that intellectual property (IP) was crucial to his plans for growing the business. “A small business or startup leans very heavily on its IP, at least in the tech sector,” he said. “It needs to have that IP in order to establish and demonstrate value for the company.”

Almost a year to the day he filed his provisional patent under the new America Invests Act (AIA), Frommeyer closed a venture capital round of less than $1 million, led by Louisville-based the Yearling Fund and several angel investors.

Securities lawyer Charley Moore, the founder of San Francisco-based legal services website Rocket Lawyer, expects the new legislation, enacted last September, to lead to a flood of patent applications by tech entrepreneurs like Frommeyer.

“Patents are really valuable assets,” said Moore, who noted U.S. patent law was amended to favor first-to-file applicants from the former first-to-invent system. “If you don’t file first you’re going to have a hard time saying you were the first one to invent something.”

When new patent legislation was passed a year ago Alex Frommeyer was one of the first entrepreneurs to take advantage. Join Discussion

from Felix Salmon:

Job creation: Where are the startups?

Tim Kane, at the Hudson Institute, has a new paper out with a simple title: "The Collapse of Startups in Job Creation". His paper is basically a slightly politicized version of the charts put out by the Bureau of Labor Statistics last month, under the headline "Entrepreneurship and the U.S. Economy". The first two charts are particularly striking. The first one looks at the number of startups in America -- companies less than one year old.

This shows a reasonably steady rise in entrepreneurship from 1994 to 2006, then a collapse as the housing bubble bursts, and -- most worryingly of all -- no recovery at all after the recession ends. Instead, we have significantly fewer startups right now than we did even at the depths of the recession.

If you look at the number of jobs at these startups, rather than the number of startups, the picture is equally bad, although the decline is older. This series peaked back in 2000, and has been declining ever since:

This doesn't make a lot of intuitive sense. As Kane writes,

Economic theory suggests that the modern economy offers a better environment for even more entrepreneurship. First, there is a wider technology frontier to explore. Second, a wealthier society enables more individuals to explore rather than merely work to survive. Third, the shift to services requires less startup capital than manufacturing or agriculture. In other words, the downward trend in the rate of entrepreneurship should, in theory, have rebounded by now.

Tim Kane, at the Hudson Institute, has a new paper out with a simple title: "The Collapse of Startups in Job Creation".

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Entrepreneur helps fight cancer with “hedge fund”

A tree nursery owner in Belgium has set up a nationwide recycling program to collect hedge trimmings used for cancer-fighting drugs.

Image: REUTERS/Screengrab

A tree nursery owner in Belgium has set up a nation wide recycling program to collect hedge trimmings used for cancer fighting drugs. Join Discussion

from Felix Salmon:

Annals of dubious statistics, crowdfunding edition

Are crowdfunding statistics the new counterfeiting statistics? Certainly they seem to have become a meme. If you know that crowdfunding is a big deal, it's probably because you read all about it in TechCrunch, in May ("these portals raised $1.5 billion and successfully funded more than 1 million campaigns in 2011"), USA Today, a few weeks later ("About $1.5 billion was raised in 2011 by about 450 crowd-sourcing Internet sites worldwide"), or maybe the Economist, a week after that ("$2.8 billion will be raised worldwide this year, up from $1.5 billion in 2011"). More recently, Forbes upped the ante even further: "This year alone, an estimated $3.2 billion dollars is expected to be raised through donation-based crowdfunding platforms like Kickstarter".

All of these statistics, you won't be surprised to hear, come from the same place: a May report from Crowdfunding.org and its research arm, Massolution. The report lists -- by placing their logos on five successive pages of the report, so that their names can't be searched -- 135 different "participating companies", starting with Lending Club and Kiva, and ending with… um, hang on a sec. Lending Club and Kiva? Since when are they "crowdfunding platforms"?

It turns out, if you look at the definition of a "crowdfunding platform" that the report uses, it's incredibly broad: "an operator of a funding platform that facilitates monetary exchange between funders and fundraisers." Which turns out to include not only peer-to-peer lenders but also FirstGiving, a website which non-profits use to accept donations, and which claims to have moved $1 billion of funds through its system. For that matter, the definition doesn't even say that the crowdfunding platform needs to be online: I reckon that if anybody hosting a political fundraiser probably counts as a crowdfunding platform under this definition. Hell, the New York Stock Exchange would even qualify.

Oh, and guess what: if you add up all the money raised in 2011 from all 135 companies listed, it doesn't come to $1.47 billion at all. It comes to just $575 million. Where does the other $895 million come from? The report basically pulls it out of thin air, reckoning that since it didn't manage to get numbers from all of the crowdfunding companies in the world, it would try to extrapolate, somehow. Or, in the language of the report:

Each CFP was modelled individually based on key metrics, market growth dynamics and other characteristics for a number of large CFPs that did not provide data in order to estimate the total funds.

It's very hard to know what this means, but when it comes to crowdfunding platforms, all of the big ones, including Kickstarter, are already on the list. It beggars belief to assert that there's a whole bunch of other platforms out there which together raise more money than those 135 companies put together.

In any case, you won't find it in the abridged version of the report, but the key chart is this one:

Are crowdfunding statistics the new counterfeiting statistics?

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IDEO’s Tom Hulme on visualizing your business model

In this video, Tom Hulme, Design Director at IDEO and founder of OpenIDEO, introduces a tool that IDEO and HackFWD designed to help founders design and build startups. Although the focus is on tech startups, non-tech entrepreneurs will likely find some applicable lessons from Hulme’s 12-minute talk, including strategies to identify the “backbone of your business,” marketing and how to refine your business model.

HackFwd: Visualize Your Business Model in 15 Minutes Flat from IDEO on Vimeo.

In this video, Tom Hulme, Design Director at IDEO and founder of OpenIDEO, introduces a tool that IDEO and HackFWD designed to help founders design and build startups. Join Discussion

Q & A with Greg Damerow, athlete and adaptive bicycle builder

Greg Damerow is an athlete and small business owner. Damerow, based in Ohio, is the owner of Personalized Cycling Alternatives, which builds custom adaptive bicycles. He was attracted to handcycling after he became ill with ankylosing spondylitis, a severe form of arthritis that affects the body’s joints. The Hartford recently awarded Damerow with a small business grant, and he spoke with Reuters about competing and running a small business.

First off, can you tell me about your disability?

I was diagnosed with ankylosing spondylitis at 18 years old. It causes inflammation of the major joints. It’s a form of arthritis. It affects knees, ankles, shoulders. It was a very painful time for me. There are two forms that the disease can take. One is chronic and you lose function over years. The second form moves rapidly. This was the form I had and so I lost function over a matter of months. The major part of the disease burned itself out after about two years time. I was spared. I was essentially bedridden for two years time and as the major symptoms of the disease dissipated finally, I didn’t have any movement in my hip sockets and much secondary damage in the spine. I have limited neck rotation. Out of that experience I learned how to walk again using my knees and ankles.

Can you tell me about how you started your business? What was the attraction of the bike?

I had been working an active job at a small company as a plumber’s assistant and a salesman. I got promoted into dispatch which required a lot of time at a desk. I’ve always been skinny and the disease makes it difficult to stay strong and keep the weight on. When I sit still I don’t gain weight. So it was that promotion into that sedentary job that lead me to look for a way to build myself up.

Once day I was doing some research on the internet and I came across a YouTube video of a guy cranking a handcycle and I thought, “I could do that,” and “I could build that.” When I saw it I knew instantly that’s what I had to do. The first time I rode, I had such a sense of speed and freedom of movement, something I had missed for almost 20 years.

Once I got out in the handcycle racing world I saw that I could innovate. And that’s kind of the genesis of the company.

Greg Damerow is an athlete and small business owner. The Hartford recently awarded Damerow with a small business grant, and he spoke with Reuters about competing and running a small business. Join Discussion