Tag Archives: Challenge

7 TIPS FROM A WINNER

Funding Feeding Frenzy – Part 5

VERBATIM by Loop Lonagan – Investor and man about town,

as told to John Jonelis

FFF LogoLoop Lonagan here. I’m gonna go full circle at dis Funding Feeding Frenzy.

No, I ain’t drunk—well maybe I am by now—but what I mean is, I’m goin’ back to the start o’ this event. After all that stuff I already talked about, I’m finally gettin’ ‘round to the first speaker at the FFF—Palette App—the company that won last time.

Like I said, I seen the pitch before. I also seen them at BNC Venture Capital and later at their corporate offices. Research. A guy’s gotta check stuff out fer himself.  Anyhow, here I am at the FFF in the Chopin Theater to hear what he has to say.  And as it turns out, I’m very glad I to be here.

Chopin Theater Lobby

Lobby – courtesy Chopin Theater

The speaker is Jerry Freeman, founder of Palette App, and the guy’s real smart. He’s doin’ his pitch fer us as a demo—to break the ice before all the poor slobs face the judges.

So I’m sittin’ here next to Jay Kinzie, a colleague o’ mine from Mastermind Advisory Board in this cushy seat in the Chopin Theater. Rong Mayhem ain’t gonna wheel up behind me and start yellin’ like he did at that car barn they held this thing at last time. And the noisy crowd is banished to the trough downstairs.

Feeding Trough

Feeding Trough

That means I’m free. Free to concentrate on findin’ the companies I wanna follow up on. But first comes Jerry Freeman. He starts by giving his own pitch. I know it by heart so I’ll paraphrase:

.

Da Pitch

Palette App logoPalette App helps architects and designers do their job better, faster, cheaper. (Jerry doesn’t actually say better, faster, cheaper, but that’s what it amounts to.)

They take away them old-fashioned sample binders that designers and architects been blowin’ their money on for 150 years. They hand ‘em this beautiful digital palette. It’s easier to put together, better organized and more efficient to use. You can make changes fer free! That’s a big deal in this industry.

Palette App

Palette App

It saves a designer about 30 business days a year. That’s alotta man hours. And that kinda time’s worth a few bucks. The digital palette’s better for the client too. That’s why I been excited ‘bout this company right from the first.

Palette

Palette

The software usta be just on iPad ‘cause that’s what designers and them kinda people use. But now it’s on Android too. There’s a version for architectural design schools, which turns out to be a big deal. You can read all about it at https://chicagoventuremagazine.com/2012/07/16/150-years-of-waste-meets-technology/

The company is up-and-running and generating revenue. They already got 35,000 products loaded in their system. They got multiple profit centers. They make money whenever a designer orders a sample. And they make money through subscriptions.

Far as capital goes, they already raised $700K and the first round is gonna close pretty quick. 70% of that came from the last FFF. You can read about that at https://chicagoventuremagazine.com/2012/11/23/shark-tank-meets-the-apprentice/

.

Da Interview

So after his sample pitch which I kinda butchered—but hey—how ya gonna spoil something as good as that? Anyhow, Jerry sits down with David Culver and does an interview about what it’s like to run a startup. This is good stuff and I learn something.

Jerry Freeman and David Culver

Jerry Freeman interviewed by David Culver

Raising Money

This seems to be the biggest question on ever’body’s minds. Jerry says, keep pitching at every event you can ‘cause it’s the best way to get connections to lotsa investors. Raising money is a full time job. As CEO, raising capital turns out to be his #1 job.

Then there’s cold calling. You start by pitching on the phone to some junior-level gatekeeper. Then to the next one up, then the next. Then maybe you gets a face-to-face with a decision-maker, fly way out somewheres and run up the old expense account.

All that takes months. Then maybe you get a commitment. Whoa—the money ain’t in the bank yet, fella. Gotta go thru due diligence. Paperwork. It takes six months to get the check, if it comes at all. People drop out. Meanwhile, how you gonna pay yer staff? So you gotta watch yer cash flow real close.

So he says to keep entertaining small investors till the big checks come through—just to pay the bills. The little guys come through quicker.

.

Crowd Funding

Glenn Gottfried

Glenn Gottfried

Let’s talk about the new self-directed IRA. Lotsa baby boomers got millions stashed in their IRAs. All those add up fast. There’s five trillion in investment dollars hidden away in these accounts. That’s right—I said five TRILLION dollars—almost a third as big as the national debt! It dwarfs private capital. Blows it away! And deals like that close in thirty days—not six months like with VCs and Angels.

This is a form o’ crowd funding. Usta be only charities raised money that way. Now there’s brand-new laws that open it up to investors. So far it’s only for accredited types—people with a million bucks plus. That’s gonna change but the government is draggin’ its toes—nothin’ new about that.

So fer now, friends ‘n’ family ‘n’ Kick Starter is still the best way for small cash, then

Loren Minkus with Jay Kinzie

Loren Minkus with Jay Kinzie

millionairs with self-directed IRAs. Pretty soon we might see the dam burst on crowdfunding and money’ll flow all over the place.

Jerry gives 7 more tips on how to run a startup:

7 Tips

  1. “The shorter your pitch, the better,” says Jerry. If you think yer gonna get through it in eight minutes, cut it back ‘cause it’ll always take longer. “Practice 21 times,” he says, “so you’re not nervous.”
  2. “Simplify. If you’ve got twenty ideas, narrow it down to three,” he says. When Steve Jobs came back to Apple, he cut down their product line to about five. Now they’re huge.
  3. “Challenge is important.” He asks himself why he ain’t tripling his users every month. You gotta find creative ways to reach that target.
  4. “The dot bomb era is over.” Start raising revenue ASAP. That helps attract investors way better than flashing yer goofy projections on PowerPoint. “When you can say, We already started generating revenue, it puts you in a different pile from the rest.”
  5. “Crank up sales fast because sales sell. Get to risk mitigation ASAP.” That’s important ‘cause investors is more risk-averse than dey ever was before. And the banks ain’t lending. Actual sales sounds a lot less risky.
  6. “Keep your people motivated.” Use every success to get your people rejuvenated. Tell ‘em stories from the road. Celebrate small successes.
  7. An entrepreneur is somebody who goes from failure to failure to failure without getting discouraged.” It’s good to come from a sales background so yer already used to rejection. “If you’re a wallflower, get over it,” he says. Then David Culver follows that with, “The fortune is in the follow-up.”
Chopin Theater

Stage – courtesy Chopin Theater

Gotta Go

I gotta catch a cab to another meeting, so after plenty o’ good food ‘n’ drink, I say g’bye to the FFF kinda early. Two guys tag along to share the ride. One’s an investment banker, the other a VC.

And wouldn’t you know it—I trip on another pothole, right there on the sidewalk. Now my suit’s slashed in both knees. Neither o’ these guys helps me up like the bums did.

And when I drop ‘em off, neither offers to share the cab fare.

Happy New Year to all o’ youse out there.  Cheers from da merry land of Shark Tank Meets the Apprentice.  

NOTE TO JOHN – I seen your articles on a buncha sites.  One o’ dem usta be a real good tech jounal run by the Huffington Post.  It went through a buncha changes.  Now it’s runnin’ third-rate soft porn right along with da articles.  Don’t know what’s with that but thought you’d wanna know.

NOTE TO LOOP – Thanks for the heads-up.  I’ll check it out and maybe put a stop to it.

.

Continue to WHAT’S GOOD?

Go back to Part 1

.

Da Contacts

Palette App – www.paletteapp.com

Funding Feeding Frenzy – www.facebook.com/FundingFeedingFrenzy

The Chopin Theater – www.chopintheatre.com/event.php?id=2275&pageId=soon

.

Chicago Venture Magazine is a publication of Nathaniel Press www.ChicagoVentureMagazine.com Comments and re-posts in full or in part are welcomed and encouraged if accompanied by attribution and a web link . This is not investment advice. We do not guarantee accuracy. It’s not our fault if you lose money.

.Copyright © 2013 John Jonelis – All Rights Reserved

.
.

5 Comments

Filed under angel, angel capital, angel investor, App, big money, BNC Venture Capital, Bums, Characters, chicago, Chicago Venture Magazine, Chicago Ventures, chopin theater, Christmas, city, Conflict, CORE Insight Story, Entrepreneur, Entrepreneurship, Events, FFF, Funding Feeding Frenzy, Innovation, Internet, Internet Marketing, Invention, investor, loop lonagan, Marketing, Mastermind Advisory Board, Mobile, Mobile App, Mobile Marketing, new companies, pitch, Software, The City

THE DUEL

The Story of Ray Markman – Part 2

by John Jonelis

Ray Markman

Friday, 1:30 am

Ray Markman claims, ‘I never worked a day in my life.’ Now I wait for Alexander Harbinger and Loop Lonagan to give their analysis based on boxes of old documents and memories. The clock reads 1:30 when Loop and Alex finally file in. They each carry thick note pads and plunk down in soft chairs across from my desk. From the way Loop pats his belly, I know they’re straight from some heavy lunch spot.

Lonagan is first to speak. “Me and Alex want you should go first.”

“What?” I say. “There’s some problem?”

Harbinger responds in his heavy German accent. “Vee are at a point of disagreement. Perhaps, Yon, you vill set ze right tone for this meeting.”

I lick my lips. That sounds like trouble and I hesitate a moment wondering what’s under the surface. Each of us started with a bulging box of documents and I like what I found in mine. Finally: “Okay, I’ll kick it off.” I glance at my clipboard of notes. “Ray Markman is living one of the most interesting business careers I’ve ever researched. Right from an early age, I get the picture of an enthusiastic entrepreneur, just playing with the world. He attends Erasmus—first public high school in the country. Barbara Streisand is there. Ray sees Sid Luckman play high school football. Lainie Kazan, some Nobel prize winners, and other luminaries come out of that program. Ray runs the school paper. He figures he can get a scholarship to an Ivy League college but the faculty sells him on the University of Missouri—the first formal school of journalism in the world. Lots of illustrious figures go there. He sees Walter Cronkite. Meets the head of CBS, the head of NBC—all those guys. Connections that pay dividends later on.”

Harbinger shakes his head. “Zat is veak. You vill not prove your point based on such information. Have you nussing  from his vork life?”

“Well, yeah.” I turn a page. “This one’s interesting. He creates the Britannica Achievement in Life Award—you remember that. The award goes to people like Louis Armstrong, Hank Aaron, Ella Fitzgerald, Olympians, astronauts, singers, artists, athletes, academics, actors—it must be quite a rush doing that.”

Both men nod but nothing registers in their eyes. They’re still waiting.

Ray Markman

Is that Polly Bergen with Ray Markman?

I turn another page. “Okay, try this one. He finds out that National Geographic has lots of fantastic footage—reels and reels of film. Underwater clips of Jacques Cousteau, footage of Americans climbing Everest, Jane Goodall and the wild chimpanzees, even discovering the first Homo Sapiens. But they aren’t TV shows—just footage. So he gets John Allen and a team to help him create shows. Allen is the genius that got the Peanuts shows on prime time. So that’s how the National Geographic Series happens. Certainly you’ve seen that.”

“Yes, ziss I remember vell.”

“Well here’s where it gets good. They make the whole series on spec. Then Ray tells his client—Encyclopaedia Britannica, ‘We won’t sell it to you unless we get prime time.’ Wrap yourself around the moxie behind that. He doesn’t want it aired on Sunday afternoon the way Hallmark does at that time. He figures people are watching football that day and he’s right. After finishing the shows, he’s saying if they’re not a raging success, he’ll chuck ‘em. He’s taking a huge risk.”

Lonagan shakes his head and scowls. “A guy shouldn’t never oughta let his ass hang out dat far on a deal.”

“Maybe, but Ray doesn’t seem to have any fear in his makeup. So he takes the show to NBC. They turn it down. Same old story: They don’t know where it fits—it’s not news and it’s not a documentary. It’s a whole new genre. Always hard to sell a new genre. And ABC? Same story.

“Anyway, he realizes there’s only one man who’ll buy this show—the head of CBS—the king of the documentaries back then. So he spends a whole month and works up a super-detailed 30-minute presentation. All the visuals, the financial projections, the entire picture.”

I lean back and glance at my two guests. “So the big day finally arrives. Ray and the agency meet the head of the network face to face. Ray’s just three minutes into his presentation when the guy says ‘I got it. Let’s do it.’ Just like that.”

Lonagan nods. “I seen stuff like that happen.”

“Well Ray’s not done. He tells them there’s one caveat. ‘We gotta have prime time.’ Seems to me he’s pressing his luck but the guy says, ‘Done. You got early prime time four times a year.’ So Ray goes ahead and gets Britannica to sponsor it for four years. Great show. I don’t think I missed a single episode.”

Lonagan leans across my beat-up desk. “I got somethin’ even better.” That close to my face, his breath stinks of corned beef and beer.  Smells worse than a cheap cigar. I roll my chair back, away from the stench and put my feet on the desk. “Fire away.”

He cracks a malicious grin. “Ray’s one o’ them born entrepreneurs. He loves every part of it.”

Then Harbinger barges in. “Ze man spent his career in advertising, not as an entrepreneur.”

Lonagan reels on him. “Listen, you candy-assed school boy. Everything he does, he goes at like an entrepreneur. It’s impossible to figure out where his corporate work stops and his entrepreneurship begins. When he ain’t bettin’ his dough, he’s bettin’ his job.”

Once I watched a debate between Loop Lonagan and Alexander Harbinger almost escalate to blows and I need to head that off quick. “You guys are off on a tangent. Entrepreneurship isn’t the question on the table. I’m looking to prove or disprove his statement that he never worked a day in his life.”

“No John, yer wrong,” says Lonagan. “Bein’ an entrepreneur’s the heart of it all. In da mindset of an entrepreneur work ain’t work. It’s doin’ what you love for the love of it. It’s creatin’ somethin’ new, then creatin’ somethin’ else that’s new. That’s why Ray makes that statement—‘cause that’s how he lives his whole life. Don’t matter if yer workin’ in a startup or a big organization. If you got enough freedom and love what you do, you’re an entrepreneur. Ray’s a serial entrepreneur. Anybody says different don’t know his keister from a hole in the ground.”

Harbinger scowls. “I cannot agree wiss you. Your premise—it iss badly flawed.”

I’m keeping a close eye on Loop’s reaction. He doesn’t respond immediately and his face slowly swells purple. If they start swinging, I sure hope they take it outside.

Then Lonagan blurts out, “Ever hear of a little thing called a hedge? That’s how the smart guys do it. A paying job’s nothin’ but a ‘covered call.’ It counters da capital risk on all dem companies he starts. That’s a real smart setup if you got the energy to pull it off.” He raises his voice. “But then, you never been in the trading world riskin’ real money. You hang out at that college and teach bullshit like ‘random walk theory.’ You don’t know nothin’ about business, you lousy Kraut.”

Harbinger rises from his chair. Stands erect like a soldier.  Dignified—all six foot five of him in his impeccable gray handmade suit. “I cannot accept such personal abuse—zis slur on my nationality—and ziss from an inarticulate, uneducated, and ignorant man. I demand an immediate apology.”

Lonagan jumps to his feet, pulls off his sports jacket, and throws it to the floor. “Apology nothin’. And whadaya mean, callin’ me ‘little’?” Standing in a crouch with his fists raised, he cranes his neck to meet Harbinger’s eyes. “You kin cram that where the sun don’t shine, mister.”

Harbinger looks down his nose at Lonagan and hands him a card. “Zen I vill have satisfaction. Ze Union League Club. Vee meet at Five p.m.”

I can hardly believe it. I am witnessing the preamble to a formal duel. The only thing missing is a slap to the face or a glove hurled down. Will it be pistols or foils?

“Okay, Mr. PhD.” Loop flashes an evil grin. “You’re on. Boxing gloves. Three rounds. And make sure you show up.”

I let out a sigh of relief.

A boxing match.

And after a moment’s thought, I’m actually looking forward to it. But somehow I need to find a way to get these two back in their chairs and working on the subject at hand.

 

Continue to Part 3

Go back to Part 1

Comment on this article — Name and email optional

Find Chicago Venture Magazine at www.ChicagoVentureMagazine.com Comments and re-posts are welcomed and encouraged. This is not investment advice – do your own due diligence. I cannot guarantee accuracy but I give you my best.

Copyright © 2012 John Jonelis – All Rights Reserved

1 Comment

Filed under Biography, Characters, Chicago Venture Magazine, Chicago Ventures, Conflict, CORE Insight Story, Entrepreneurship, Financial Markets, Innovation, Nobel Prize