The law will create very few jobs, the name is purely political, but has huge implications for entrepreneurial funding.  I think what excites me the most is that from now the excuse “I can’t find funding” is mute!  Funding is now so much easier to get, maybe too easy!  Can we say “invitation to fraud”?  And “You got funding for that?”

The big change is the formalization and government blessing for crowdfunding.  Crowdfunding opens startup investing to almost all individuals (is that good I wonder? The Hope Scholarship here in Georgia makes college much easier for all, and has hurt education I would argue!) and gives young companies more funding opportunities.  Companies can sell securities to non-accredited investors using the various crowdfunding platforms.  Websites such as Indiegogo.com, Kiva.com, and Kickstarter.com allow entrepreneurs to post business plans for thousands to read and possibly invest.  Instead of fighting to get meeting with pretentious venture capitalists and angels, entrepreneurs can get capital from willing small investors just by posting online.  Individuals making less than $40,000 a year will only be able to invest 2 percent of their annual income in startups. Those earning more than $100,000 can invest up to 5 percent.

The biggest change perhaps is the so-called 500 rule.  It becomes the 2,000 rule, meaning that certain SEC reporting is delayed until the company has 2,000 shareholders.  This extra room allows companies to sell shares to 1,500 extra people, the crowd.

For more advanced companies, they have greater flexibility in filing to enter the public markets, hopefully making it easier to IPO.  By allowing general solicitation, companies raising money will operate under new rules, which should make it easier.  But like the rest of the bill, the final implementation lies up to the rule-writing SEC.  Some VCs opposed this easing, arguing that going public is supposed to be hard.

The effect of all this?  Some crappy companies will get funded for sure. Fraud will go up, and the cheated will be the poorest, even though they are supposedly protected. The number of jobs will certainly NOT go up.  Nothing in the bill does that.

This is the most important aspect: funding should become much, much easier, even for bad ideas.  I predict that for awhile, 2-3 years, this sort of investing will be cool, in vogue.  Crappy ideas will get funded.  Everyone should list their young companies and see how much money they can get off the table.  Reduce risk, see how much Kickstarter money you can get.  I plan to.

The host of the show is Alan Butler.  Alan is most famous for popularizing Gutter Guard.  He did not invent it, but as is so often the case, he is the one that made money from it.  Gutter Guard was invented in Sandy Springs, on Harleston Street, just a block from the Punch Line. Alan saw it in the inventor’s garage, licensed it, and began selling it when he was 20.  He rode the growth of Home Depot, and he eventually sold 48 different products into the home improvement space.  Today, he is a gold and precious metal junkie and shares his southern Lewis Grizzard-like humor with Atlanta everyday on Atlanta’s best business show.

Jason Riddle is the co-host and was my connection to the show.  He went to UGA and then worked as a consultant for Protiviti, one of those big, expensive consultant places.  As the show producer, his job is to get top level guests and to organize all logistic aspects of the show.  Jason and I will be doing a series on “How to get on the radio as a free guest” soon down at the Metro Atlanta Chamber.

As the third wheel, my job is to lighten Friday up a little and bring some entrepreneurial focus to the show.  We have had fun already exploring some of Alan’s incredible stories. I asked him about Ted Turner the other day and Alan defending Ted say, “He was one of my first customers.  I put Gutter Guards on his house myself, his place on Columns Drive.”  Anyway listen for us all on Fridays!

I also wanted to share a radio story with you.  I have done about 50 interviews in the last months promoting the book and am starting to collect some good stories.  My second favorite: I did a show with 2 hosts, both fairly famous, you have seen them both on Fox and CNN.  I had submitted possible questions to them in advance, and during the first segment, one host asked 3 questions.  After the commercial, the other host asked the exact same 3 questions, in the same order.  No one caught it.  I was apparently the only one paying attention. Me and a bunch of confused listeners!

My favorite radio story?  Another day…..

Certainly not for every business, but for many businesses the whole point of marketing should be collecting email addresses and repeatedly marketing to those addresses.  If you have ever purchased anything from Omaha Steak, you know what I mean.  They take it to the extreme by emailing me 4,539 times a day, but the philosophy is good.  Once you buy from a company, you are very likely to buy again.  That whole 20% of your customers account for 80% of your sales thing.  Collecting customer email addresses should be a focus of your business.  And collecting email addresses of potential customers or people that could potentially help your career should also be a priority.

Collecting email addresses of customers is easy.  Getting potential email addresses is much harder, for two reasons, how do you target them and then how do you get their addresses?  Purchasing them is one possibility, but I have found it worthless.  Let me tell you about an experiment I am doing….

I use LinkedIn like others (stress “others”!) use Match.com.  LinkedIn says you are only supposed to connect with people you know, or in other words, it is a historic device, not a marketing tool.  I use it to target people I want to know and then to

introduce myself to them, or as a marketing tool.  To find people you want to know, go to the current connect of yours with the most contacts, someone connected to over 500 people.  Click on their contact list and look at each person.  You will find people that are possible customers or are just people worth knowing.

Here is the secret sauce.  When you ask to connect with someone going through the normal process (using search to find all the salt salesmen in Miami, for example), LinkedIn counts the number of requests you make.  You are only allowed 75 a day.  And if you request connections with lots of people that say they do not know you (I am not sure how many), you get a warning (see screen shot) and eventually, if you keep getting denied, your account gets blocked.  Don’t ask me how I know, and yes, you can get reinstated, but that is another blog. Back to the sauce, remember that list of contacts?  When you ask to connect to a contact of a contact, USING A CONTACT LIST AS THE SOURCE, LinkedIn does not count how many requests you make and does not penalize you for requests that are denied.  Over the weekend, I went through 7 contacts and requested connections with over 1000 people, in 3-4 hours.  A week later, about 400 people have said yes, I have no idea how many rejected me, and I still have not had my account blocked, again.

Now, I use the email addresses and the information about the contact to market to them, directly, outside of LinkedIn.

One point of clarification, on the form to request a new contact, where you must mark how you know them, I always mark “Have done business together” and then in the form I acknowledge that I don’t know them, but am trying to build my list of contacts.  And, the 400 contacts that I have made so far is a great list….  I will let know what happens….

So, on the Friday before last Memorial Day weekend, I got some hate mail from a lawyer.  I was at my family vacation house, and told my entire family the story over breakfast.  My brother said he had read something similar in BusinessWeek recently, and might even have an article in his car.  This started step one, extensive research.  I spent most of the 3 day weekend on the internet researching stories similar to mine.  The amount of data was immense, especially once I found a starting point.  The popular media gave me several names of attorneys that were working in the relevant space.

Step two, get free advice by playing dumb, something I am good at!  I called each attorney, and several in town, and asked for a free consultation hour, to see if I wanted to hire them.  They all said yes, and I spent several hours, for free, getting great advice.  Some of each call was repetitious, but you have to ask some dumb, starter questions at first.  Soon, we had amassed enough knowledge to deal with the issues.  However, let me make one point very clear: we decided NOT fight this particular battle.  So, we never went to court, when we certainly would have needed real help.  But, I would bet that if we went to one lawyer in the beginning and paid him to get to us the same conclusion, it would have cost $10,000 at least.

I told a friend of mine about this, part of a couple adopting a 1 year old baby, child of a drug addict and multiple time felon.  The couple went to many lawyers and got several hours of free advice, one hour at a time.  They think they saved thousands too.

Another way to bootstrap…..

Briefly, you know that the only place left in America when your credit card leaves your hand is at restaurants.  And according to the Secret Service, 80% of identify theft starts at a restaurant.  We are selling a hand held credit card processing unit that the wait staff can bring directly to the table, allowing the patron to pay instantly and securely.  Diners love it because they get security and they get to leave faster, no waiting for your card to come back.  Staff love it because tips go up (from about 11% on average to 15% on average), they have less runs back to their station, and they get an extra table per night.  Owners love it because they get an extra table per busy night and their costs go down on credit card processing, saving them tens of thousands. Learn more about it here at our site, Dine Fraud Free.  We have already installed systems in about 70 restaurants mostly in Las Vegas and Texas. And, the new tech totally integrates into the restaurants existing point of sale system.

Most restaurants in Asia, Europe, and South America already feature this technology, you may have seen it on your travels.  Many restaurants tried it 5-7 years ago, and it failed.  Improvements in Bluetooth technology, increased awareness of fraud among consumers, and the new Durbin Law make this the perfect time.

For each restaurant I sell that you introduced me to, I can pay about $1,500, depending on size.  If you introduce me and I sell to a chain of 5, that’s a lot.  So I need intros to decision makers, owners or general managers.

Think about it for a few minutes.  Got any ideas to make us both money?

Thanks for reading all this.

Jim

james.beach at att.net – no spaces

I spoke with a businessman the other day who used to run a plant that manufactured socks. Whenever a problem came up where they weren’t meeting quota or they were wasting resources he would call in the supervisors and drill them only to come up with empty responses. He told me that he finally learned to go talk to the people on the production line. They saw where machinery was hurting rather than helping and where the people loading fabric were losing time. Just like anytime you are selling a product and you go to where the target market is, when you have a problem you need to go to where the people who have the most comprehensive assessment of the situation are.  You will never get a complete understanding from the person who sits behind the desk all day.

To truly understand the problems that companies are facing (and how you can fix them), get face-to-face with the people on the front lines. That might just be sitting down for coffee with someone who does the “dirty work” at a company, having lunch with someone’s secretary to understand the struggles their boss faces, or just listening to your neighbors who work in the blue collar areas of a company rather than in management positions. Never underestimate what people know and how their insights can benefit you. Who knows, their insights could be the spark for your next million dollar idea!

At this point, our daily routine was to arrive at work by 10 AM, at which time we all watched The Price Is Right and talked about where we would eat lunch that day. From 11 to 11:30 some work would usually happen, but around 11:30, we would get hungry and need to eat. Soon, someone would suggest El Azteca on Ponce, the one that killed someone with food poisoning  right around this time. Almost every day, we would find ourselves eating Mexican food. We would get home by one and swear that we were never eating at El Azteca again. On this fortuitous day, Caroline was left alone to answer the telephone. As luck would have it, this was the time that our credit card processing company called to ask some questions.

This business consisted of marketing and enrolling summer campers for nine months of the year and providing summer camps for kids for three months of the year. When a parent enrolled, we immediately charged their credit card for the full amount, which could be as much as seven or $8000. When parents enrolled their children the old-fashioned way with a form, they would include a $100 deposit and we would have to build them later. However, the credit card gave us the advantage of being able to hit them for the full amount immediately, and they never complained because they could pay it off however they chose to. The great part was that we collected interest on five or $6 million for as much as nine months.

I’ll never know what Caroline actually said to the credit card processor but when I got home from El Azteca, she suggested that I return the call. When I did, they inform me that Caroline had explained our policy to them, but that she had added she was not sure if this is the way it was working. They asked point blank if it was and I of course had no choice but to tell the truth. From then on they allowed us only to charge $100 per week deposit in advance and then to collect the final payment 1 June. That year our profit margin would have been almost equal to the amount we made from credit card interest, so I immediately recognized that my take-home pay was now seriously in jeopardy. I snapped and yelled at Caroline, “You cost me my salary, you are taking the food out of my babies’ mouth.” She burst into tears, ran out of the office, disappeared, and never came to collect her final check.

I don’t know if I’m right, but to this day, I believe that had I been on the phone from the beginning that I would have been able to the deflect the conversation, to figure out what was coming, and then have been able to position it better. I may be wrong, but I think the fact that I did not answer the phone cost me $300,000. The most important thing is that Caroline should not have been on the telephone answering questions with Visa in the first place. She should have been directing that call to the person who knew how to handle it. The fault was mine sense I had not told her to NOT be helpful on the telephone, and to only answer the questions to which she was party, which was basically nothing.

Leading me to another Caroline clause: instruct your employees to only answer questions that they are personally responsible and liable for. If they are not in charge of that part of the project, pass the telephone to the person that is or take a message.

Caroline, if you are reading this I would like to apologize for yelling at you. But your check was long-lost, sorry.

I told my wife that I wanted to write a blog on Ashley Madison and she got all upset. She wanted to know if I already had an account (I don’t), if I plan on getting one (I don’t), and if I had ever been on the website (I haven’t). She made me promise that I would not use my “research” as a justification to check the site out. But, for everyone else, you should probably do some “research” on the site yourself.

Ashley Madison was created by Canadian Noel Biderman in 2002. “Monogamy, in my opinion, is a failed experiment,” he says. Biderman was a sports agent and spent most of his time dealing with his clients wives and mistresses. When he discovered that 30% of on line daters are only pretending to be single, he saw a business opportunity. Biderman thought cheaters should have a website all their own. Interestingly, as he developed the first website, it was nearly impossible to get true focus group feedback on why people would commit adultery. Eventually he abandoned the research and went with his gut. Today, the company has expanded into several other niche dating markets and generates about $20 million in profit on $60 million in sales. He recently bought hotornot.com (I am not)  for $22 million and launched cougarlife.com.

Let me tell you a little bit more about Biderman, or as Paul Harvey would have said, “The rest of the story.” Biderman is happily married and has two young children. Amanda, his wife, said “The business itself doesn’t match who he is as a person – it’s not our lifestyle, our value system or any of that. I’d love it if he were working on a cure for cancer. But it’s a business and that’s how we look at it.” On the day of the interview, Biderman planned to sneak out of work and to go to his son’s birthday party at school with a cake. I agree with Amanda. I wish I was working on a cure for cancer, but unfortunately that is not my skill set. I do not approve of adultery, of course, but I defend Biderman’s right to get rich running this very legal company. He sought a business opportunity and went after it, even though he himself would not be a customer of the service. I do not think that he has a passion for infidelity. He is simply getting rich in a way that makes many people think less of him. He has had great trouble attracting investors and says that most of his owners, a handful of rich investors and hedge funds, don’t want to be associated with him due to fear it may hurt their reputations. But they cash their checks every quarter I am sure! Passion is not part of his entrepreneurial equation.

I think entrepreneurship is about solving problems. One such problem is that I do not own a Porsche! Each of you can decide if you would run a business like Ashley Madison or not and just how far you are willing to go to make your millions. One word of warning: Ashley Madison’s busiest day of the year is the day after Valentine’s.

• the biggest problem is that successful Indian entrepreneur does not reinvest in India,
• the US system is 10 times older, only 4-5 years old in India,
• US education system promotes entrepreneurship better, especially in research, innovation,
• there is a innovation bottleneck in India,
• best time ever to raise money is now and its easier than ever before
• In the last 24 months, many Indians are starting to come home to invest in India and the slow US economy is  drives money back to India,
• VCs looking for non-tech entrepreneurship, it  was financial services 10 years ago,
• tech entrepreneurship is not the only way and tech startups have fewer exits, so plan for exit from beginning!
• there are significant regulatory issues here and government is not helping enough, the incubators are not good, there are tax issues here  (investments not tax free is in UK),
• it takes 45 days to set up a company in India, versus 2 days in China,
• there are 10,000 people worth $100m, mostly in real estate, but its not doing as well now, so people moving into other areas,
• bottlenecks to innovation include needing different enablers at different points such as accelerators and incubators, 50-100 incubators are needed still,
• Indians need inspiration by a “go to moon” type national project,
• Tata mentioned several times as not doing enough,
• back people not ideas,
• most business plans have an extremely poor idea of competition,
• and most have not actually gotten real customer feedback,
• entrepreneurs must create the value differentiation, as most are very poorly articulated,
• India biggest challenge is distribution and biggest potential,
• most important question is how will you get the first 100 customers?  and how will you keep them loyal?
• looking for billion dollar ideas, not million dollar ideas,And my favorite, and I have never heard this anywhere else, so I am not sure it is true, but I hope it is…

• over the life of the whole VC industry (50 years), all VCs are a net loss!!

And I wanted to congratulate Ayush Agrawal, my friend at IIT.  He was selected a co-chair for the eSummit next year, a huge honor!!  See a horrible pic of the ’12 team below.  This picture proves your iPhone camera is not worth using…..

The awards always make me think of my cousin-once-removed Caroline. For those of you who do not understand how the whole cousin system works let me interject for a second: the children of your first cousins are first cousins-once-removed, and  your children and your first cousin’s children are second cousins. So, Caroline is my cousin Joyce’s daughter. When she was applying for college, she applied for many scholarships, grants and awards. She even nominated herself for certain scholarships that required nominees. Her brother Daniel teased her and said that he thought it was unfair that she was nominating herself. Her response, “Well, someone has to win, it might as well be me.” Of course she was right and won many of the scholarships that she applied for, and just recently graduated after a highly successful college career.

Back over a decade ago, the business I was running, American Computer Experience, was in a growth mode and we decided to go and raise venture capital. This company had always relied on public relations marketing, and had been very successful with it. We learned that by packaging a theme for the media, we could place many articles in newspapers around the country that helped promote our brand. For example, one year we would talk about how our program was a huge benefit for young girls, and we would distribute bios and pictures of all of the girls that had attended our programs. The next year we would choose a different theme, something like disadvantaged kids or minority kids. But as the company grew, the public relations needed to reinforce the idea that the company was a good investment, and therefore the PR effort was changed to promote the founders, Doug and me. We hired a PR firm that literally asked me which awards I wanted to win and told me the cost to win certain awards. I selected the awards I thought would look cool, and wrote a check.

There is that old expression that the only way to get business is to ask for it. I 100% agree, and would like to point out that the only way to win an award is to get nominated for it. If you don’t have a Vice President of Communications to nominate you, realize it’s quite okay to nominate yourself for most awards. I’ve done it, and won some of them. First cousin-once-removed Caroline was right, “Someone has to win, it might as well be me.”

Gets those applications ready!