Featured in Entrepreneur and US News

One of our DreamIt teams, Beanstockd, was featured in an article in the August issue of Entrepreneur Magazine as well as the July 30th issue of US News. Congrats to Beanstockd and thanks for the DreamIt mention!

Busy Day - Gil Beyda, David Speers and Steve Barsh Visit

Steve Barsh, frequent visitor and mentor extraordinaire, spent the afternoon meeting with a number of the DreamIt companies while David Speers of Phillypreneurs conducted interviews. David will be posting a series of stories on Phillypreneurs featuring DreamIt Ventures and the companies currently involved in the program.

Gil Beyda, co-founder of Real Media (acquired by 24/7 in 2001), inventor of Open AdStream, and CTO of Tacoda (acquired last year by AOL), joined us in the evening to discuss Internet advertising, eCommerce and his perspective on pitching to seed stage venture groups. Gil is currently a managing partner of Genacast Ventures, a seed stage fund founded in partnership with Comcast Interactive Capital that specializes in new media, digital marketing, consumer Internet and web x.0 companies.

Gil was able to combine his experiences as a developer of technology, entrepreneur and investor in early stage companies to develop a series of “lessons learned” to share with our Innovators. His tips included how to select a strategic partner and raising capital/seeking an exit in difficult markets, recounting his experiences finding an exit as the “bubble burst” in 2000. The Innovators were particularly engaged as Gil described Tacoda and behavioral targeted online advertising. He described the shift that is occurring away from targeting pages toward targeting people. There is not enough diversity on a single site to get value. In his opinion, the value comes from tracking behavior over multiple sites. He also discussed how to monetize this information.

A self proclaimed “lover of technology,” Gil stated that technology is important for one reason—it should make you more capital efficient, creating value. In determining which technology to focus on, he recommended that Innovators focus their developers on “the nugget,” that aspect which is new, different and unique. It is that element which creates value.

The last part of his speech focused on his own journey of self-discovery that led him to the role of investor. After Tacoda and meeting with more than 30 start ups, Gil decided that he enjoyed figuring out who would be successful.

Thank you, Gil, for providing an opportunity to peek behind the curtain of online advertising and behavior.

No One Wants to Pitch Prematurely

As a special 2nd session this week, Steve Barsh, experienced CEO, entrepreneur and senior executive, led a discussion tonight on De-Risking Your Business Model. Steve is currently an entrepreneur in residence (EIR) at First Round Capital and an active Guru for several DreamIt Ventures companies.

Steve’s presentation was a how-to for de-risking your business; building upon the insights shared by many of our other speakers. According to Steve, entrepreneurs often seek capital before adequately de-risking their businesses. Investors consider the attractiveness of the business (return) as well as uncertainty (risk). For most investors, it is a balance act. He encouraged Innovators to think outside the box. For financing he offered bootstrapping, angels, and customers as alternatives to Venture Capital. “Customers financed many of my new products.” Not only did they provide real feedback; but they also required no equity.

To dissuade doubt, he recommends entrepreneurs stop waiving their hands and start pointing-- turning assumptions into facts. Two methods he recommends are hypothesis testing and use of proxies, a capital efficient method for de-risking. One company Steve is mentoring shared their experience with a recent product introduction. They were interested in determining how much someone would pay for their product.

The remainder of his presentation focused on types of risk and techniques he’s used to reduce uncertainty. Main areas to focus on include the management team, product development, competition, market size, customer/market demand, pricing, marketing, the sales cycle, capital demand, execution and exit value. Steve opined that programs like DreamIt Ventures help entrepreneurs in the de-risking process by providing an environment for providing feedback. One advantage is the exposure to other entrepreneurs and seasoned mentors who may all out assumptions. They provide an opportunity for unbiased brainstorming as well as challenges in a safe environment.

Thank you, Steve, for your continued insights. Click here to read Steve’s blog or review the presentation.

Jason Olim is Living the Dream

Founder and CEO of CDNOW, Jason Olim, joined us last night to discuss his experiences “living the dream” and the lessons he learned along the way.

Jason started CDNOW in 1994 with his brother in the basement of his parent’s house. By 1999, the company had grown to over $150M in revenues with more than 500 employees in a global operation. Since CDNOW, Jason has devoted much of his time to studying entrepreneurial psychology—what makes entrepreneurs unique—as well as continuing to start business, serve on boards and be an ardent supporter of start ups. His current project is the Freshman Fund.

Jason’s presentation involved polling our own Innovators and providing feedback. He began the evening by asking questions about what motivated the Innovators to start their own company, quickly leading into a discussion about team size and the role of the Founder(s) over time. Jason offered a simple, global definition of the role of the Founder. “In an early stage start up, the Founder is the person who must do whatever can’t get done by someone else.” However, as the organization grows, it was important for the Founder to take on a more specific role—that of mission/vision/culture keeper, strategist and motivator.

The group also discussed common characteristics of entrepreneurs. According to Jason’s research, studies have shown that entrepreneurs are actually more risk adverse than the average population. As one Innovator suggested, “I know and understand the risks of my business. I have the ability to actively address and diminish them.”

Other topics included advice for working with family; the importance of providing positive and negative feedback; and how hiring can impact a company’s culture.

When asked what his biggest regret was, Jason responded with a chuckle, “Sell books.” [Amazon offered a competing model and now owns CDNOW.]

We’d like to thank Jason for sharing his research and advice.

The Pitch Doctor Teaches

During two sessions on July 10th and July 17th, Steve Bowman, “The Pitch Doctor” and President/CEO of BizClarity Consulting, held presentation coaching sessions for the DreamIt companies. Steve is a professional writer, teacher, and public speaking coach that specializes in preparing entrepreneurs for pitches to angel investors and venture capitalists.

During his first session, Steve reviewed the “Three Deadly Sins” of presentations—or common mistakes entrepreneurs make when presenting to investors. He also shared the “Five Commandments for PowerPoint Slides” and general format so that the Innovators could begin to sharpen their pitches.

During his second session, Steve had three DreamIt teams with whom he’d previously worked present to the group to illustrate the evolution of the pitch as well as to show different styles. The discussion included a variety of topics including when to include product demonstrations versus screenshots and guidelines for showing revenue growth and business activity.

Next, Steve will meet with each team individually to refine their pitch.

Again, we’d like to that Morgan Lewis for sponsoring Steve.

Wooing Venture Capital - Insights from the Inside

On Tuesday, DreamIt Ventures was thrilled to host Albert Wenger of Union Square Ventures, Rob Adams of Next Stage Capital and Chris Fralic of First Round Capital - three early-stage venture funds focused on internet/technology companies. All are experienced entrepreneurs and business professionals who occasionally co-invest alongside each other. The group spent one-on-one time with each company, hearing their pitch and story. Afterward, they shared a panel presentation where they provided insights into attracting and working with VC firms.

Chris broke the ice with a “Top 10 List of Things You Should Know Do When Courting VCs,” including #1 Make it easy to contact you. Put your name, company name; email and phone number on all communications. Next, the conversation migrated to motivations and mechanisms of VC funds including the structure of the fund, who their clients are, the expectations of those clients and attributes they look for in emerging companies.

All three emphasized the importance of people in VC relationships. For VCs, they need to evaluate the people involved, not just technologies. All three agreed that it is better to wait three months to hire the right person for job than hire the wrong person now. Equally important, they felt entrepreneurs should expect support from VCs. As one attendee put it, VCs are not just checkbooks with faces. The management team of the VC (and their network) can often help emerging companies by providing advice, guidance and introductions.

Other questions related to the math of ownership with multiple rounds of capital (how IRR, % ownership, and market value can affect the amount of capital you can reasonably expect to raise) and the filter process (how many companies do they look at, how many progress (less than 1%), does the format change as you progress). One company member asked: “Do I have to show revenue to attract capital?” The panelists had different answers to this question with Albert offering that it was not necessary for his firm, and that they were comfortable with less developed plans. He pointed to Twitter as an example of focusing on the technology first.

It was a great session offering a unique insight into the world of Venture Capitalists and we thank Albert, Rob and Chris for their candid answers and advice.

Building User Friendly Products with Ed Watkeys

Last night, Ed Watkeys joined us as the speaker. Ed is currently the founder of Transmogrify, LLC and focuses on product design, user interface design, and software engineering. Ed has worked on product for Intuit and was part of Half.com when it exploded and was sold to eBay.

Ed spent the first part of the presentation speaking generally about design elements-- talking about things that please the eye and how traditional elements designed to be pleasing to the eye in the "brick and mortar" world translate into online design. He then spent some time talking more specifically about web page design and brought up some samples to show us his thinking. He also spent some time commenting on the web designs of our current teams and offered a series of suggestions.

Ed's information was well received and we are grateful for his time. Thank you, Ed.

Vincent Schiavone Shares Lessons Learned

Vincent Schiavone, angel investor and serial and parallel entrepreneur, visited today. Vince is currently a member of RobinHood Ventures and LORE Associates, both angel investor groups, and is currently the founder of Prioratus, LLC. Through Prioratus, Vince is involved in a number of start ups. He has previously founded and/or participated in 4Anything, ePrivacy Group, TurnTide, InfoSec Labs, Victor Voice Chart, and other entities.

Using a personal narrative, Vince recounted his experiences as an entrepreneur focusing on the development of TurnTide and ePrivacy Group. Vince also offered many lessons by sharing his successes and failures during his entrepreneurial career. Several steps generated questions from the DreamIt companies including pursuing patents prior to developing a product and attracting capital at a prerevenue stage.

Vince spent some time discussing exit strategies and valuations, offering information about knowing the relevant multipliers when considering an offer to sell. If an offer is competitive, he felt it should be considered. Waiting could be risky—the multiple could shrink, new entrants could affect attractiveness and potential acquirers could be hard to find.

Vince also offered his insights into Board composition, as well as dilution and control. Companies, in his experience, benefit when no single person, including the entrepreneur, makes decisions. He proffered that they usually benefit from the insights of multiple individuals.

Vince’s story illustrated parallel and serial entrepreneurship characteristics that can be applied to many of our companies. Thank you, Vince.

Pitch Doctor Hired for Teams

Steve Bowman, aka "The Pitch Doctor" and President/CEO of BizClarity, was hired to work with all of the teams in refining the funding pitch and presentation. Steve will begin by speaking one evening to overview his tips and techniques. He will then work individually with each team to build and refine their pitch. We want to thank Morgan Lewis for supporting DreamIt by sponsoring Steve's work with the teams.