Today is my birthday!

Friends and family took me to K1 Speedway. If in San Diego you should check it out. One of the best things about being an entrepreneur is that you can take time when you choose to. So today we raced.

A smart businessman said to me once, "Your goal as a entrepreneur is to replace yourself everyday." To take it a step further, you need to get rid of daily repeatable tasks. You need to focus on those things that are your strengths and that are unique to you, your value. This value is what makes your company different. It is tough to look at yourself and say that someone else can do this better than me. If they can do 90% of what you consider perfect, that is an "A" and you need to get rid of it.

Sometimes I might seem little preachy... but I love to pass along good advice that has worked for me.

Cheers,
Mike

Quiet on the home front:

This is the toughest time of year to get anything done. With all the holidays and peoples vacations, very little gets done. A friend, whom I respect, once told me, "Nothing gets done between thanksging and the end of the year."

Since things are so quiet, this is a great time to think about end of year expenses. Anything that you need to buy for your business should be purhcased for tax reasons. Also, many companies who are worried about meeting quaterly goals will defer income to the next calendar year. This strategy allows you not to have to pay taxes on the income for 14 months.

One of the main reasons business fail is due to lack of accounting and proper filing with the government. I can't say this enough. Get professional help. It is worth the dollars spent. A payroll company is imperitive. We use ADP.

Cheers,
Mike

Sometimes it's tough to figure out which way to go...

Trust you gut. Starting a business is a lot of ramming your head against a wall. You have to believe the wall doesn't exist and if you hit it just one more time your are going to have a breakthrough. Once this happens, everything starts happening really fast.

Books are a great way to make things make sense in your head. I recommend Good to Great.

We are having an Investor Summit in Lake Tahoe. The purpose is finish out the investment round. We home to have everyone signed up by the time we leave on January 2nd. This will allow me to focus on building the business.

Cheers,
Mike

Finally Solving the People Problem:

Met some great people today. I want to give props to the Conde Group, sending over some good resumes. I think we will be making a job offer. So now we have 5 staff members!

Another Question: How do I value my company for investors?

This is another tough questions. There is a delicate balance here. Giving up too much to early can reek havoc if you need more money later on. Not giving enough equity will limit your investment pool.

I have always thought that it has to be a win-win. These people may help you in a future business and you are their real investment. I feel that giving up 20-40% of a business before the first sale or product is fair. You also have to weigh chance of success with the overall potential upside. If you could invest in a company that has a chance at being the next google... you are willing to invest more and take less equity. A business in a smaller marketplace will require more equity for the same dollar invested.

Another way to value the company is upon predicted income streams. How much is the company predicted to make. This is generally based upon financials that are produced along with the business plan.

Ultimately, there is no way to predict what is going to happen in the future. There is no real science here, it is mostly throwing a dart at the dartboard.

Cheers,
Mike

Where do investors come from?

Someone asked, "where do I find investors?" This is tough one. When I was trying to raise money for financialaid.com, I called every venture capitalist that I could find on the web. I set up meetings with those who would take my call and ultimately I was turned down by 16 of the 17.
After that fiasco, we looked hard at our business plan (yes you need a solid one) and decided to boot strap it as much as we could. This worked out well for us in the end. The original three partners of financialaid.com owned 96.25% of the business when it was sold. We raised a small amount of money from friends and we were off the races. We didn't have money to burn, which kept our eye on the ball. We had to succeed.

Venture Capital works well for some people. The VC's are very bright people who can plug your business into a network of companies who will increase your chance of succeeding. This comes at price. That price is equity in your venture. And since they have money invested, they will be looking over your shoulder.

Angel Capital is another way that people raise money. These are typically groups of local successful business people who are interested in investing small amounts of money in several companies. They will typically meet once a month and have a series of new ventures that present their idea to the group.

Hope this helps.

Mike

Making things more difficult.

people are still our biggest hurdle. We are starting to get some great resumes, however, we have chosen a development framework called Ruby on Rails. This is a new object based framework which allows us to rapidly deploy products.... but we due to the fact that it is so new, we are having trouble finding people...

We have found that best way to find people is through user groups. WebSanDiego and Joe Crawford have been very helpful. We also have a grass roots effort going on.

Mike

Developer Help!

Shout out to Al Abut who put us in charge with the local Ruby on Rails Developer group. We are going to sponsor an event in January (free beer and food for members!)

Picked a great URL today for one of our products. Climber.com will be for people who are interested in increasing their income. Become an Alpha member by sending an email to Alpha@mingle.com and you will be the first to learn about this cool new tool.

Funding the Business:

Every business need funds. Sometime you can do it by yourself and sometimes it makes sense to bring in some outside investors.

We choose to raise some outside money for several reasons:

• SmartMoney: there are people who add something to business besides just money. They bring a special talent. Their investment just keeps their attention.
• Spreading the Risk: Taking investors allows you to your risk. We still invested a good deal of money into mingle however, it is not the only investment.
• Commitment to Task: When you take someone's money, you have a higher level of commitment to deliver.
  

Cheers,
Mike

Ther Office Space Saga Continues:

We are very close to getting everything done. We are negociating our lease, which is never very fun. Make sure an attorney reads it. These docs are so boring that I can not finish them. My mind wanders to anything but the 50 page document in front of me. I don't think I have ever completed one. Very lucky to have a broker who is fighting for us.

We also started to look at cubes and desks. Tip: At financialaid.com we got our cubes , laser printers and servers from a failed .com. They had been in business for roughly a year. We paid .05 on the dollar. There are plenty of furniture outlets.

Cheers.. we are so close to office space, then the fun really begins.

Mike

Office Space:

Looked at 5 spaces in downtown San Diego. Love the feeling down here. Four did not fit our need and One was perfect.

We are going to take it. The address is 701 "B" Street, Suite 1150. Nothing feels better as a business than getting the address.

Cheers,
mike

A great look and feel makes the company.

Randy Provence has joined our company and is responsible for keeping all things looking nice and clean. After about 50 tries we finished with the current logo!

Here is some logo advise. Less is more. Sometimes people try to make a logo say more than it has to. It is fine to start with an idea that has many elements. But then you have got to cut it back. Keep it simple.

Great logos: Starbucks, Nike, Lucent, ebay

Mike

Great people make great companies... Do you know any?

So far the hardest obstacle what we have encountered is hiring people. It is so tough to find good people. We have used recruiters, we have used craigslist, monster, dice, hotjobs. You name it. But someone explained to me that the reason why there are so few good developers out there, here it is. When the tech bust happened and all the .coms were becoming .gones, people choosing majors in college stopped becoming software engineers and web developers. They choose instead to become mortgage brokers.. Anyway, it has created a vacuum.

So if you know of any good middle ware people please send them our way. Careers@mingle.com and check out Jobs.

Insurance... Paper Work Hell

Starting a business means a lot of paperwork. This no more true that trying to get insurance. By the way you will need at least three types of insurance. With potentially three different insurance companies. Advise: get a broker.

• Property and casualty (most buildings want $1mm in coverage)
  
• Employment (State Disability)
  
• Errors and Omissions
  

You can't hire people or move into your building until this is done!

Mike

Any new business needs a headquarters. It is one of the most exciting steps of starting a business. You get to look at space that might work... space that won't work and space that is just right. You never know how much space to get. You have an idea, you hope the business will do well and you will need more, but you don't want to over commit. More space means more dollars..

The other thing to watch out for about getting space is the length of the contact. Buildings want very long terms, 5 to 10 years. I believe in buying someone's misery, it usually comes cheap. Since in the begining, you don't know how much space you need it makes sense to sublet. You can usuallly get a 30% discount and much shorter terms. Also if you do not require TI's(tennant improvements) you canmove in very fast.

I would recomend using a broker that does not represent the building. If in San Diego, Mike Gallagher at Irving Hughes. Email me if you would like his contact information.

Mike
mingle.com

Legal Stuff..

This stuff is so important. Choosing what type of business structure you are going to use can affect you later on, especially if you hope to sell the business. You need to get an attorney now. In my last few businesses we have used DAK Law, talk to Richard Aaron (he is the "A" in DAK).

Types of Business Structure:

• Sole proprietor
• Partnership
• Limited Liability Corp LLC
  
• Corporation
  

At financialaid.com, a decision to be an LLC increased our tax burden when we sold the company. This cost us a huge amount of money, however, we would use the same structure again due to the ease of being an LLC. If you are profitable (we can only hope) money is passed through to you and only taxed once.

Also if you are raising capital for your business you will have to talk to CPA. Your attorney and CPA will help you decide what structure your business should be.

Cheers,
Mike

Starting a business is an exciting time. All the hopes and dreams of an idea coming to life. It is also a linear process of steps that need to be completed before the next task is undertaken. This blog will serve as a chronical of a new .com business.

Mike and Casey
www.mingle.com