Founder Math for VC Money to Make Sense

Founder Math for VC Money to Make Sense

FEBRUARY 10, 2012 By David Cummings @ 10,000 Start-up Hours

Today I was talking to a journalist who asked a variety of questions about my startup. One of the things he was surprised by was that we’d gotten to our decent size without raising money from VCs. Normally, people mention that it’s unusual and then move on to the next question. Well, he legitimately wanted to know why we didn’t raise money. I quickly explained that it didn’t make sense for 99.9% of startups to raise institutional money for a variety of reasons.

When entrepreneurs ask me about raising money I like to ask them: what’s your founder math for VC money to make sense? I believe entrepreneurs should build their business to last with no exit strategy, but if you do have a goal of selling it in 5-10 years some founder math related to equity is in order. If you take a look at founder equity at time of IPO you’ll see it’s in the 4-15% range and only 5-10% of companies that raise VC money exit for more than $100 million.

So, owning 10% of something worth $100M, which would be a phenomenal outcome, and happens a tiny fraction of the time for VC-backed companies (a very high bar), nets you $10M. $10M is a huge amount of money, but what amount of effort and luck is required to make $10M without VC money. To make $10M you could build a business with $6M in revenue, $2M in profit, and sell it for 5x profit for a total of $10M. The “small” exit is 100x more likely of a scenario than the big exit.

It takes a special situation for the founder math to make sense to raise VC money. It exists, but is rare.

What else? What do you think of the founder math for VC money to make sense?

http://davidcummings.org/2012/02/10/founder-math-for-vc-money-to-make-sense/

Tech Hiring trends (Infographics)

Outsourcing in 2012: Adapting Your Sales and Marketing Work Force to Suit the Macro Environment

Outsourcing in 2012: Adapting Your Sales and Marketing Work Force to Suit the Macro Environment 

Often the success of a commercial idea or business innovation is dependent on its timing, or more specifically its potential to dovetail with any number of prevailing social and economic factors. Consider outsourcing as a particularly relevant example, as it is a concept that has thrived in the last decade against a backdrop of global economic uncertainty and a constantly evolving technological landscape. Rather than succumb to these factors it has actually thrived within several market niches, allowing I.T, sales and marketing work forces in particular to be adapted to suit an unpredictable macro environment.

Outsourcing and Independent Contracting: The Facts and Figures

Outsourcing as a whole is a now a global phenomenon, and one that grown significantly over the course of the last 6 years. 2011 saw a 10% increase in growth for outsourcing services, which is a sharp increase on the 7.1% rise recorded during the 12 months between 2009 and 2010. Within the industry itself, there was a marked increase in the number of sales, marketing and human resource jobs that were assigned to independent service providers, with 31% of all outsourced tasks existing in these fields. As a combined total, this even superseded the 28% of outsourced jobs belonging to the technology sector.

Even with this in mind, outsourcing would not exist but for the efforts of willing and highly skilled contractors, and fortunately the supply of independent workers has increased simultaneously to help fulfil demand. Again the growing popularity of freelancing is prevalent across the globe, and though it is North American contractors that make up more that 50% of the flexible global work force, the method of remote and independent working has never been more popular in the UK, Europe and South America. In fact, the number of UK citizens who offered freelance services rose to more than 1.4 million in 2011, which was the highest volume of independent contractors ever recorded.

The Economic Climate: Driving Employers to Create Targeted Sales and Marketing Teams

Despite the fact that the global recession ended during the summer months of 2010, the subsequent recovery has been painstakingly slow. In fact, although several leading economies (including the U.S. and the UK) have shown signs of recovery during the tail end of 2011, the threat of double dip recession continues to threaten any semblance of sustained or tangible growth. This perpetual gloom has forced employers to carefully address their business models and methods of operation, with a view to tightening their financial belts and maximizing the sum of their existing revenue streams.

Outsourcing has emerged as a viable solution, and while this concept is nothing new its increasing influence on sales and marketing roles suggests that employers are now strategically identifying which areas of their business can benefit from the skills of a flexible workforce. Given that sales and marketing tasks are often influenced by demand and relevant to specific projects, they provide employers with an excellent opportunity to create a targeted labor force consisting of talented independent contractors. This minimizes a firms financial liability, both in terms of long term salary commitments and expenditure on business infrastructure.

Aside from these financial considerations, it should also be remembered that sales and marketing both have a significant impact on how businesses fair during an economic slump. An ability to create and market a particular brand is key to acquiring new customers, while retaining them depends on the level of communication and customer service delivered by a firm. This ensures that sales and marketing skills are in great demand as businesses look to consolidate or grow tentatively in 2012, and outsourcing allows them to select their staff from a global pool of recognized industry talent.

A Technological Evolution: Changing the Face of Both Sales and Marketing Roles

Another factor that has encouraged firms to outsource their sales and marketing roles is technology, and more specifically the way in which it has changed the application of these principles in business. For example, just as CRM (customer relationship management) software has created a single and remotely accessible resource for individual consumer data, so too the mechanics of SEM (search engine marketing) have changed the methods used to promote and advertise a business. As a result both sales and marketing tasks now rely heavily on evolving technology, and therefore call for an entirely new set of employee skills and knowledge.

So with sales and marketing techniques subject to continual innovation, employers with a traditional workforce run the risk of either failing to meet their clients demands or being forced to invest vast sums of revenue into staff training and development. Outsourcing this workload negates both of these issues, and creates a labor force that is flexible and able to adapt to individual client requirements. This cannot be underestimated in a competitive market place, where affordable technology has created a level playing field for a series of small and medium service providers.

In addition to this changeable demand, it should also remembered that CRM and other examples of SaaS (Software as a Service) have been designed to help businesses streamline their operations. Relevant business and consumer documents can now be accessed remotely through cloud technology, which enables employers to share information with their contractors as easily as if they were sitting alongside them. The development of mobile media devices and improved computing speeds have also elevated online communication to an art form, so that sales and marketing freelancers can converse easily with colleagues from anywhere in the world.

The Bottom Line:

While outsourcing has always been especially prominent within the technology industry, 2011 saw employers take a far more open minded and considered approach to its application. By addressing individual areas of business and understanding where flexible working practices can be most beneficial, businesses have been able to adapt their sales and marketing teams to create a specific and task orientated workforce. This not only affords organizations a greater control over their long term financial planning, but also creates a streamlined business model that improves both the quality and sustainability of sales and marketing activities.

( By: InterConnecta Guest Blogger- Mr. Lewis R. Humphries)

10 questions to ask everyday

10 Questions That Create Success
Want help focusing on what really matters? Ask yourself these on a daily basis.

By Geoffrey James |  @Sales_Source   | Jan 23, 2012
 
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Today’s Editor’s Picks

Only 2 Things That Matter for Your Start-up
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It’s OK: Put Your Personal Life Online
10 Questions That Create Success
Best Place for Young Entrepreneurs?
Think that success means making lots of money?  Think again.

Pictures of dead presidents have never made anybody happy. And how can you be successful if you’re not happy? And buying things with that all money isn’t much better. A new car, for instance, might tickle your fancy for a day or two–but pride of ownership is temporary.

Real success comes from the quality of your relationships and the emotions that you experience each day. That’s where these 10 questions come in.

Ask them at the end of each day and I absolutely guarantee that you’ll become more successful. Here they are:

1. Have I made certain that those I love feel loved?

2. Have I done something today that improved the world?

3. Have I conditioned my body to be more strong flexible and resilient?

4. Have I reviewed and honed my plans for the future?

5. Have I acted in private with the same integrity I exhibit in public?

6. Have I avoided unkind words and deeds?

7. Have I accomplished something worthwhile?

8. Have I helped someone less fortunate?

9. Have I collected some wonderful memories?

10. Have I felt grateful for the incredible gift of being alive?

Here’s the thing.  The questions you ask yourself on a daily basis determine your focus, and your focus determines your results.

These questions force you to focus on what’s really important. Take heed of them and rest of your life—especially your work—will quickly fall into place.

If you found this post helpful, click one of the “like” buttons or sign up for the Sales Source “insider” newsletter.

Read more:
14 Easy Ways to Get Insanely Motivated
10 Surprising Brand Winners of 2011
Top 5 LinkedIn Profile Mistakes

Geoffrey James
Geoffrey James is an award-winning journalist and author of Inc.com’s Sales Source column. Previously, he wrote Sales Machine, the world’s most-visited sales-oriented blog. James has written hundreds of articles on sales and marketing for publications like Technology Marketing and SellingPower, and has helped thousands of sales professionals communicate more effectively with customers. To get column updates, sign up for his weekly “insider” newsletter or his @Sales_Source Twitter feed. James’ newly published book is How to Say It: Business to Business Selling.

Hatsize Announces Surgient Migration Incentive Program

Hatsize Announces Surgient Migration Incentive Program

Hatsize, the leading cloud automation software provider for hands-on demos and training, today announced the Surgient Migration Incentive Program designed to help Surgient customers upgrade to an equivalent, cloud-based training or sales demo solution with Hatsize. This new Surgient Migration Incentive Program addresses concerns raised by Surgient customers, who recently indicated that Quest plans to end support for Surgient in 2012.

“Hatsize is offering Surgient customers a migration program plus an incentive to upgrade to a truly global and enterprise class cloud automation solution,” said Guy Hummel, Hatsize CEO. “We think this program will be very attractive to Surgient customers who want to establish a relationship with a company like Hatsize that is deeply committed to its customers.”

Hatsize’s Surgient Migration Incentive Program

Surgient customers can now get 10 FREE concurrent users for 6 months when they purchase 10 or more concurrent users with a one year Hatsize subscription.

Please note that this program is only available to current Surgient customers.

For more information, go to Hatsize’s Surgient Migration Incentive Offer.

“The scalability and flexibility of Hatsize enables customers to offer both self-paced and scheduled training and sales demos to anyone, anywhere in the world,” said Andy McBride, VP Operations. “Hatsize solutions run on a variety of virtual machines and operating environments and can be deployed in a customer’s own datacenter or using the Hatsize datacenters in Europe, Asia or North America.”

Published Wednesday, January 18, 2012 7:19 AM by David Marshall
Filed under: General News, Cloud

The SOPA protest is moving from the Internet to the streets.

The SOPA protest is moving from the Internet to the streets. The NY Tech Meetup community, an organization of more than 20,000 “geeks, investors, entrepreneurs, hackers, etc.,” sent out an unprecedented emergency email last week, in which they lit the proverbial geek batsignal:

“Join us to stop SOPA (Stop Online Piracy Act) and PIPA (Protect IP Act),” read the email.

The group of tech experts are holding a rally Wednesday afternoon from 12:30 to 2 p.m. ET outside the New York City offices of Sens. Chuck Schumer and Kirsten Gillibrand. More than 1,500 have already confirmed their attendance on the event page. There’s some heavy hitters on the attendance list, including Alexis Ohanian, co-founder of Reddit.

A smorgasbord of websites are censoring themselves today in protest, but this rally takes the anti-SOPA/PIPA fight offline and onto the streets. If you can’t make it to New York (Or Seattle or San Francisco, where simultaneous protests are being planned), but you still want to know what’s happening at the protest, you’re in luck.

SEE ALSO: SOPA Will Take Us Back to the Dark Ages | This Is the Internet After SOPA [PICS]
Mashable will be live tweeting from the scene of the New York City SOPA and PIPA protest. We’ll have updates, photos and short videos from the scene as the rally unfolds. Follow along here:

The New Worker’s Movement

Image via Wikipedia

How the 19th Century’s Occupy Wall Street Found a Message—and Won

By Sara Horowitz

The OWS protests are captivating, disjointed and showing signs of confused frustration — just like the late-1800′s Eight-Hour Day Movement that ultimately led to the Fair Labor Standards Act in 1938.

Corporate greed. Businesses amassing fortunes at the expense of workers. Frustrated, disgruntled, fed up masses. Protests, strikes, and violence.

Think I’m talking about Zuccotti Park? Actually, I’m describing the landscape in the 1880s during the height of the Industrial Revolution, but it sounds eerily familiar. At that time, workers were struggling with horrible work conditions: 14-hour workdays and six day work weeks, children laboring in factories, unhealthy and unsafe work conditions, and low pay.

The workers eventually hit a breaking point. They knew that their work environment was unhealthy and that their lifestyles were unsustainable. They were slaving away and making dismal pay, while the industrialists prospered like never before. They were at the losing end of extreme income inequality. They had a low standard of living, and no time for civic and community participation, due to their long hours. They were the 99% of the 19th century. And they were fed up.

And so, a movement was born. Not an organized, coordinated, political movement, but a messy, multi-pronged, social movement. Laborers took to the streets en masse: protests erupted. Some turned bloody and captured national attention. Into the 20th century, the movement unfolded in fits and starts across the county — at times loud and active, at other times quiet and dormant. Response from the public and business was mixed. Some unions threw their weight behind the movement, while others did not. The workers didn’t have a clear set of policy demands. They didn’t coordinate a cohesive messaging strategy. They were fueled by concerns about the mal-distribution of income, dismal working conditions, and their strength in numbers.

But from this inchoate, messy movement emerged a central demand: an eight-hour workday. And so the Eight-Hour Day Movement was born, with the rallying cry, “Eight hours for work, eight hours for rest, and eight hours for what you will.” And ultimately, after many years of somewhat chaotic activity, the movement secured clear results. The federal government passed the Fair Labor Standards Act as part of the New Deal in 1938, securing key protections for the labor force. So in retrospect, we see that these messy, untamed, and complicated protests evolved into a defined demand, which led to a specific policy agenda that ultimately secured federal legislation that protected workers and distributed wealth more evenly.

The similarities to Occupy Wall Street are striking. The sources of the two movements are almost the exact same: People feel the economy is no longer working for them. They see the effects cheap wages and expensive needs. They are frustrated with corporate and governmental irresponsibility. They believe that the country is not on a sustainable track and something significant must change. And the activity in each movement is also similar: Rallies are spreading across the country. Some are resulting in violence. Protestors don’t have a concise policy platform or message that they’re pushing. It’s a messy social movement, once again.

But, if history is any indication, this disorganized inception might be the path necessary to create real, lasting, change. Certainly some Occupy Wall Street protesters are out there solely because they’re unemployed and looking for work. But some of them are seeking something bigger, something more substantial: a change in the way we run our economy and treat our citizens. For the Eight-Hour Day Movement, that change was the Fair Labor Standards Act. It remains to be seen what becomes the policy cause of Occupy Wall Street.

Like the Eight-Hour Day Movement, Occupy Wall Street is pointing to the future of what our economy will look like. Protesters around the country are demonstrating that the future they want is based on mutualist solutions: people coming together and pooling their collective resources and skills to get their needs met. Instead of only standing against corporate greed, they are showing us what they support: building a community that takes care of its own, from medical assistance, to libraries, to food. Political action is not the only possible outcome of Occupy Wall Street; we will likely see an emergence of “new mutualism” as an alternative to relying on businesses and government to provide for the people.

For the Eight-Hour Day, as well as with all other labor movements, strength in numbers is what propelled the issue forward. The same applies to Zuccotti Park: their collective voice, no matter how disjointed and lacking in specificity right now, is the needed ingredient to push the country toward a sustainable and balanced solution. This voice of dissent will likely coalesce into a policy platform over time.

This article available online at the Atlantic Magazine:

http://www.theatlantic.com/business/archive/2011/11/how-the-19th-centurys-occupy-wall-street-found-a-message-and-won/248213/

InterConnecta – Business Developer’s for Technology

IT Purchase initiatives

In last months IT Purchase initiatives we reviewed how the leaders of your prospects enterprise IT groups come together with the business leaders of the corporation to reach a mutual understanding of business priorities. This starts the overall articulation of the IT purchase and build strategy.

How Are IT Purchase Initiatives Prioritized?

In this second stage, conducted largely by the CIO and the rest of the IT team, the functional IT purchase strategy is created. Priorities are assesed,  the gaps between current services and goals are reviewed, and the estimate,  benefits and costs for closing each of these gaps is determined.

During this time prospect enterprise accounts are reviewing and assessing their  IT portfolio, including every project for which you want to be involved  in  the current and next fiscal year.   Ranking is based normally on two criteria. The first criterion, based on stage one, is strategic importance: the extent to which these investments will be needed for the company’s distinctive capabilities.  Focus is placed on their relevance to the entire company, not to individual business units, products, or services.

The second criterion is value potential.  Prospect normally  assess each project’s anticipated return on investment, either through improved performance and reduced cost or through the value gained in fulfilling a strategic purpose. Given the pressure on capital, you will consider whether these investments are “self-funding”; in other words, whether they lead to near-term cash savings, to growth that covers the costs of the information technology investment, or to both. You don’t need to be aware of  All projects at prospect sites , but you do need enough detail to provide the most congruent sales presentation possible helping the prospect make  a cogent decisions about their IT  investment.

Simple cold calling will not help you determine when executives will be meeting on IT project reviews.  Interviewing just one prospect, within one line of business will not provide a holistic view of the “inner decision making strategies” currently being discussed or planned within a Key Prospect Account.   A  long term, steady. Tele based lead profiling campaign, interviewing executives periodically, maintaining detailed notes history in the CRM, combined with drip nurturing marketing campaigns is a proven method  help you get to the negotiation table.

InterConnecta provides access to experienced Enterprise IT Sales analyst with an average of 10 years of business experience. The team is trained in your solutions, and tasked with profiling key target accounts selected by you; with the ultimate goal of providing you insight as to the key target accounts, current and future IT project schedules, and potential purchases.