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​Youth isn’t always wasted on the young.

There has been a very interesting trend – some might say a paradigm shift – in the importance of “youth” in the world of business. Thirty five years ago, when I started my first company, I was an anomaly at 24 years of age! It was a challenge to get bankers, venture capitalists, landlords, and customers to take me seriously as I had “no experience”. It was further complicated by the fact that my team – management and Board members – consisted mainly of folks who were at least twice my age and had, on average, two decades more business experience than I did. Even so, I learned very early on to trust my own instincts. Some of my worst decisions came about because I was convinced that I should listen to my elders and negate my own conclusions!

A lot had changed since the 1980s and some of the world’s most successful and highly valued companies were founded by twenty- and thirty-somethings. While the easy examples are in the tech community – Mark Zuckerberg of Facebook, Jerry Yang of Yahoo, Larry Page and Sergey Brin of Google, and others – the trend has spilled over into many other sectors including biomedical, cleantech, and consumer products.

The InVentures Group has had the distinct pleasure of working with a number of young entrepreneurs including the founders of OnCore Golf, BLinc Ideas, the WorldWide App, CrowdBouncer, and, most recently, we’ve begun to assist the AAT Project. The AAT Project provides assistance of all sorts to teenage entrepreneurs, many of whom are bringing incredible innovations to the market. One of these inventors is Ann Makosinski who invented a hand-held flashlight powered solely by the heat of your hand and the e-drink – a coffee mug that recharges small electronics using the waste heat from a beverage. Ann has appeared twice on The Tonight Show with Jimmy Fallon and is just one of the exciting and amazing teen entrepreneurs being helped by The AAT Project and now The InVentures Group!

While those of us with grey hair and decades of business experience tend to think that high school science fairs and aspiring teenage inventors are a long way from having world-class ideas or commercially viable products, I’ve come to learn from my own association with these individuals that nothing could be further from the truth. Our kids hold the key to our future in their hands and in their heads, and I marvel at how much they have to offer. Maybe youth isn’t wasted on the young after all!

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"You're Fired!"

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"You're Fired!"

Ruth Marcus of the Washington Post was on Meet The Press last month and made the comment that Carly Fiorina shouldn't be taken seriously because she is "..a failed business leader & a failed political candidate..". Seriously? In what universe does being fired from the CEO position at one of the world's largest technology companies make you a failure?  It is an unfortunate perception, I suppose, that if you were fired from your job, it must reflect poorly on you, your performance in that job, your skill set, or something else negative.  And of course, no one LIKES getting fired, unless they have an amazing severance package and were really hoping to be terminated I suppose!  But after hearing Ms. Marcus's comments, which hit a nerve with me because I've been fired several times, I thought it might be helpful to others to know what being fired has meant to me and a few other entrepreneurs of note.  

Let me start with my own experience.  In 1981, I left the security of a Fortune 500 company to start my own business.  I had no personal wealth at the time, a pregnant wife who was substitute teaching, three kids to support, and a business plan that was not much more than 28 pages of ideas and projections.  Fortunately, I was able to get it funded and, over the next twenty years, grew it to become one of the more successful advanced materials companies in the US - supplying companies like Motorola, Mitsubishi, General Motors, Exxon, Siemens, and others with critical materials and components for telecom, nuclear power, transportation, electronic, and other markets.  The company attracted the attention of a $40 billion conglomerate in 2001 who eventually acquired us and, within 30 minutes of being acquired, I was called into my own office by the lawyer who handled the deal for the other side and I was fired!  I have to say, it was not entirely unexpected.  Being fired as part of a corporate acquisition is hardly unusual (or personal). Most acquisition deals done by large companies wind up eliminating the top management in order to (a) save money, (b) instill "loyal" management teams already part of the big company, and/or (c) create a fresh approach.   Less than 10 years later, another company that I had founded was struggling to survive from the financial turmoil of 2008.  While I continued to travel around the world seeking financing partners to ride out the storm, my senior management team convinced the Board of Directors that those efforts were futile and that a change in the face of the company was needed to attract new investors.  Without warning, I was asked by the Board to step down and, not wanting to create even more challenges than the company was already facing, I agreed.  It was a desperate act in desperate times and not something that I took personally.  Two months later, the Board and management team came to the conclusion that a "new" face wasn't the solution but it was too late and the company had to file for liquidation.  

Both of those experiences taught me that being fired was not the end of the world. In fact, after each occurrence, I found myself energized and looking forward to creating my next opportunity - and ultimately that led to focusing 100% of my time and energy on The InVentures Group which has been highly satisfying.  But my "second acts" pale in comparison to what some others achieved after being fired.  Here are a few examples that I am sure you'll enjoy.

   In 1919, Walt Disney was fired from the Kansas City Star. According to his editor, he "lacked imagination and had no good ideas."  Solid assessment by that guy!

    

   Michael Bloomberg was a partner at Salomon Brothers, an investment bank. In 1998, they were bought out by the company that eventually became Citigroup. Bloomberg was let go but not before receiving a hefty severance check. 

   Vogue Editor Anna Wintour's started her career in New York as a junior fashion editor at Harper's Bazaar. She made waves for her innovative shoots, but editor Tony Mazalla thought they were a little too edgy. She got canned after a mere 9 months.

    Bill Belichick has led the New England Patriots to numerous Super Bowl appearances and wins, but in 1995, he was fired from his first head coaching job with the Cleveland Browns by their owner Art Modell who apparently didn't think he had what it took to be a head coach in the NFL.  Good call Art!

   Lee Iaccoca rose to the top of the Ford Motor Company but he clashed with Henry Ford Jr., company's then-CEO and chairman. After a string of unused and bad ideas (including the Ford Pinto), Iacocca was let go.   Lee landed at then-struggling Chrysler and wound up saving them from bankruptcy at the time.

   Bernie Marcus and Arthur Blank were working for a company called Handy Dan - an home-improvement chain, when a corporate raider fired both of them.  The two men decided to start their own home-improvement store based on an idea they'd had while at Handy Dan: an entire store of discounts. They called it Home Depot. In less than a decade, they'd opened over 100 stores and made over $2.7 billion in sales.  Oops!

   And Thomas Edison got canned from Western Union for spilling acid on the floor one evening while conducting experiments.  He decided to pursue inventing full-time.  And we all know how that turned out!

The bottom line is that hearing the words "You're Fired" is hardly a sign of failure, as Ms. Marcus seems to think it is.  It's a chance to start anew - and do things even better! 

 

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How Technology and Innovation Will Save Golf!

How Technology and Innovation Will Save Golf!

In the past few months, there has been a lot of media attention paid to the “demise” of golf.  Part of the reason is that several companies in the golf industry have released earnings reports that have not been particularly strong.  Dick’s Sporting Goods dropped more than 500 golf professionals that serviced their retail stores.  The 2014 Master’s TV viewership was down 28% over the previous year and the US Open viewership was off by 46%.  So no surprise that there is a certain level of “doom and gloom” reporting in the media.  

That said, golf remains an extremely popular sport and industry leaders like Mark King, TaylorMade’s CEO, are exploring ways to make the game more attractive to the younger demographic and retain the current players.  Over the summer, Mark did an interview with Bryant Gumbel on HBO’s Real Sports talking about their “Hack Golf” initiative and some of their ideas on how to reinvigorate the game.   

So, the question is:  “What is wrong with golf and why isn’t it growing?”

There are lots of possible answers. Most players enjoy the challenge of golf; it is not an easy game to master and more than one skill is needed.  Being a long ball driver doesn’t guarantee a low score nor does being a genius at reading greens.  Competency on every type of shot is necessary.  Strategy plays into the game as well with club and shot selection and there is a mental toughness required to be successful.  

But nearly everyone that I talk to says the same thing – it takes too long to play.   Courses have gotten longer to keep pace with the increased distance that new drivers can achieve off the tee and they are narrower to create an even greater challenge.  What often results are lengthy delays while one of your foursome searches for an errant shot in the high grass, brush, or trees lining the fairways. 

So, the enjoyment factor plummets while the time commitment increases – not a good combination.  And the number of players either giving up on the game or just not taking it up to begin with becomes increasingly greater.  So, what’s the solution?  Like almost everything else, we think it’s technology.  There are a number of innovations that already exist or could be brought into the game in the near future that would significantly enhance the interest and enjoyment of the sport.  Just a few examples include:

Smartphone apps to arrange your golf outing are now appearing.  Want to golf but can’t organize a foursome at your local course?  No worries.  Log onto Golfalong or other similar apps and let folks in your area know when you’re available and it will match you up.

Driving ranges are boring – admit it – so practicing the game isn’t a lot of fun.  That is, unless you are talking about a driving range like TopGolf where you can eat, drink, be merry AND hit RFID-tagged golf balls that allow you to see how well you’re hitting and even compete against other golfers at the driving range.   And while there are only a few of these in existence, more are coming along with new technologies to make this even better.

How about a GoogleGlass app that tells you what your distance to the pin is, wind conditions, and recommends club selection based on how you played this hole last time around?  There are several in development and, by the way, it will probably be able to record your performance, send videos of that monster drive or eagle putt, and order lunch at the clubhouse as well. 

What about a ball with a GPS chip embedded in it so you never lose your ball?  Not only can it save you time in the woods looking for it, but coupled to the right software, you can go home and “replay” your game and see where things went awry!

Last, but not least, how about a USGA conforming ball that, by the physics of its construction, is 30% more accurate than the best balls on the market without sacrificing distance?  Hitting more fairways, putting truer on the green, and lowering your score while improving pace of play seems like a really good idea, right?!  The OnCore MA-1.0 is available now, does all that and more!

Okay, that last bullet was a shameless plug for one of our portfolio companies but the truth is that innovation and technology are what will “save” the great game of golf.  Our hope is that the governing bodies, the professionals who play the game, and all of the businessmen whose livelihood depends on the health of the sport realize that embracing change is a good thing and doesn’t threaten the stature or tradition of the game.  

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An Open Letter to Angel Investors

An Open Letter To Angel Investors

In the past few years, there has been a lot of positive press about the increase in angel investing here in the United States.  The passage of the JOBS Act and the potential for increased crowdfunding activities has created a surge in the number of angel groups around the country, web-based portals promoting deals that appeal to the angel community, and investment opportunities – deals – that are visible and available to investors who want to risk smaller amounts of money than are typically required to participate in venture capital funds.

As both an “angel” who invests in early stage companies and as an entrepreneur who occasionally seeks angel investors for my own activities or for client companies, I have a perspective that may be unusual but which I think is more “360” than most.  With that in mind, I want to offer you, Mr. or Mrs. Angel Investor, some advice and suggestions that will make things better for both of us!

1.    Look in the mirror.  Are you really an angel investor or do you just like how that sounds at cocktail parties?   The key word is “investor”.  I have met hundreds of individuals at various angel forums, clubs, organizations, and meetings who have never invested a dime.  They are looking for opportunities for themselves – to provide legal, accounting, sales, or other services to the start up, but not invest their own capital.   There’s nothing wrong with that so long as you don’t tell me you’re an angel investor and have me spending time pitching you when there is no hope of you investing in my company.

2.    Know Your Limit.  If your personal circumstances are such that you have a comfort level that you don’t want to exceed, and that pretty much applies to everyone at some point, figure it out before we get serious.  I need to know if you are able to participate at a meaningful enough level that it’s worth my time to educate you about the company and its prospects or negotiate the term sheet with you assuming that you’re going to be my lead or my sole investor.  If I’m looking to raise $250,000 and your limit is $10,000 per investment, then find an angel investing club that you can participate in at that level but which aggregates other angels like you in order to provide start-up companies with a meaningful slug of what they are after.  There are lots of those around.

3.    A Quick “No” is Preferable to a Lingering “Maybe”.  Don’t keep me hanging.  If you aren’t excited about the investment from the get-go, you probably aren’t going to invest.  Do us both a big favor and say no right away if that’s your reaction.  Don’t keep me thinking that there is hope only to be disappointed after wasting time and energy following up innumerable times with calls and emails checking in on the status of your analysis.  You aren’t going to miss the opportunity.  If you say no and then something changes your mind, I’ll probably be happy to hear from you that you’d like to participate.  Fund raising for small companies is pretty much a never-ending process so the door probably won’t be closed and locked!

4.      Death By Due Diligence.  I need capital to move my business forward.   And I probably needed it yesterday.  Waiting for you to complete four months of due diligence before making a decision or starting the negotiation on a term sheet is something I am willing to do if you’re going to invest $5 million, but since this is an angel round and the figure is probably two orders of magnitude less than that, please don’t kill me with your due diligence process.  If the investment capital is that precious to you, then you probably shouldn’t be investing it anyway.  If you don’t have faith in what I’ve told you about the business or in my integrity, then you definitely should not be investing in my company or in me.  This is a partnership so ask the critical questions that you need to understand and which I can quickly answer but don’t drag this out or create a committee of four people to see what issues you can find.  All early stage companies have challenges.  Mine is no different.  Either you believe I can manage through them with your capital and your help, or you don’t.     

5.    Just Do It.  Yes, that is Nike’s slogan but it should be yours as well.  If you like the opportunity, you like the leadership, you have the capital and aren’t going to starve if you lose it, then just do it.  Make the leap and get things going.  Don’t ask your lawyers and accountants to generate a term sheet or investment document that is going to take us weeks to agree on.  Don’t tell me you’ve got the cash and then make me wait while you figure out how you’re actually going to do the investment.  Let’s get things started and see if we can’t make some exciting stuff happen and, if we’re lucky, makes some money in the process.

Thanks.

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Get set....

Last September, I wrote about the reasons that The InVentures Group was excited to be operating here in Western New York, the fact that there were a lot of terrific companies, technologies, and entrepreneurs.  And while the region has not been known, at least in the past 50 years, as a center of economic vitality, that is definitely starting to change.  In the interest of full disclosure, I am a native of the area, having spent over half a century here, I am a lifetime Buffalo Bills and Sabres fan, as hard as that can be at times, and I opted to attend the University of Buffalo instead of some prestigious East and West Coast schools that were willing to take me!  So I can be accused of having a bias, but I think that the evidence and actions speak louder than words.  Here is what’s happening within a few miles of the IVG headquarters:

 

  • There are construction cranes everywhere as the UB Medical School, Coventus, Innovation Center, and Buffalo Manufacturing Works all set up shop on the Buffalo Niagara Medical Campus which already is home to the Hauptmann Woodward Research Institute, Roswell Park Cancer Institute, the UB Center of Excellence in Bioinformatics, the Jacobs Institute, and many other leading scientific and educational entities. 
  • Over a billion dollars of investment and thousands of jobs are being created between the Buffalo Niagara Medical Campus and Riverbend – a NY State initiative that will bring Elon Musk’s most recent acquisition in the solar energy world to WNY along with Soraa, a major innovator in the LED lighting space backed by Vinod Khosla and others.  
  • In October, Buffalo will host the finalists of 43North – the world’s largest business plan – and eleven winners of $5 million of cash along with additional awards of space and services will be selected.

 

The InVentures Group is excited to be in the mix of nearly all of this exciting development.  We have provided services, support, and investment capital to several companies located on the BNMC campus, we’re working closely with the University of Buffalo to assist them in their technology transfer efforts through mentoring, lecturing, and seminars, we’re working with several companies hoping to participate in Riverbend, and we were a founding member of Buffalo Manufacturing Works.  In addition, we assisted three companies in preparing their submissions to 43North and all three recently learned that they have been selected as semifinalists.  Of nearly 7,000 initial submissions, only 113 survived – roughly 1.5% - so batting three out of three was a huge win for InVentures and our clients.

 

It may not be Silicon Valley, but from where we sit, Buffalo is the place to be right now.  

 

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Materials Are Sexy… Again.

Every ten years or so, we go through a phase in the financial markets where advanced materials are “hot”.  In the 1980’s, we had “Ceramic Fever” and the potential of super-efficient engines and high temperature superconductivity which was going to revolutionize all sorts of things – electrical transmission first and foremost.  There were a number of companies that went public around that time – American Superconductor and Ceramic Process Systems just to name two – and raised significant amounts of capital to finance their research into the applications of these exciting new materials.  There were big players making substantial investments in the space as well – Alcoa, DuPont, Corning, Dow, Englehard, GE, etc.  

In the 1990’s, a wave of excitement surrounding new ways to make diamond and diamond-like nanocarbon emerged and companies like Crystallume rode that wave to successful IPOs while big players including Monsanto and Air Products invested in start-ups, putting these materials onto products as mundane as sunglasses and scanner windows.

Then came the first decade of 2000 and the promise of carbon nanotubes (remember the Space Elevator pictures?), buckyballs and other nanomaterials.  There were hundreds of companies that came out of nowhere to pursue the commercial promise of these new materials – Nanosys, NanoDynamics, NanoOpto, NanoInk, Zyvex, Nanogate, and others – some of which are still around.  

Here we are today, in 2014, and one of the most intriguing new topics in the scientific community is graphene – a two dimensional form of carbon with one of the most exciting intrinsic set of properties around.  From electrical and thermal conductivity to strength and stiffness; graphene has them all!   In the past six months, we’ve seen successful capital raises of over $100 million on the London Alternative Investment Market and the Toronto Venture Exchange.  The companies pursuing this novel material range from pure start-ups and university spin-outs to established global players like Samsung, IBM, and Lockheed Martin.  

If you look at all of the products we take for granted today – electronics, batteries, industrial machinery, sporting goods, medical instruments, telecommunications gear, cars, planes, military and defense systems, and even construction materials – they have all been dramatically and positively impacted by the innovations in advanced materials.   

The take-away is that the progress that we can easily observe in the things we buy and use every day could not and would not have been achieved without these less-obvious advances in material science.  It’s one of the most important areas of innovation but most of the time, it remains hidden from view.  Those of us who have worked in the materials industry know that today’s discoveries won’t likely be in products for ten years or more, but that doesn’t make them less important or valuable.  Or sexy.

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Intelligence, energy, and integrity.

I recently read a quote attributed to Warren Buffet that went something like this: “Look for 3 things in a person – intelligence, energy, and integrity.   If they don’t have the last one, don’t even bother with the first two.”

I’ve come to realize that a tremendous amount of my time and energy was wasted attempting to help companies where the leadership did not have a strong moral compass or personal ethics.  Business is hard enough.  Add the uncertainty that comes with individuals who mislead their employees, customers, or partners and the bad strategic decisions that can result from that, and you have a recipe for disaster.  I had a boss once who said that he expected one thing from all of his direct reports – no negative surprises.  Bring the bad news, the setbacks, the challenges, and the mistakes to light early on and plans can be made to resolve them.  Or new directions taken.  Or further wasted investment in time, personnel, and capital avoided.

Good decisions and enthusiastic implementation are generally the signs of an organization or a team that has trust in each other, knows that co-workers, colleagues, and team members can be counted on, and that the risk of failure, while always there, is manageable because everyone is dealing with the right information and everyone is focused on the same objective.

Like most of his business decisions, Warren definitely got this one right.

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On Your Mark...

Over the past several years, the InVentures Group (IVG) has worked with a number of exciting companies. When we decided to locate at the Innovation Center in Buffalo, our expectation was that it would provide us with a certain level of "deal flow" to examine. Knowing that Buffalo and Western New York were not exactly the center of the universe when it came to start-ups, entrepreneurial activity, and venture investing was not a deterrent. In fact, we saw it as an advantage. Very few companies existed to provide the unique combination of business services, expert consulting, and venture investing that IVG was offering. And that has proven to be the case. Our clients have included First Wave Technologies, Medical Acoustics, Advantage Home Telehealth, Ceno Technologies, HealtheSignals, OnCore Golf, and CrowdBouncer - among others - all of them early stage companies that were started in Western New York. Not surprisingly, given the stage of development that these companies were at, they all, at one point or another, have sought financing assistance from IVG as well. In some cases, this has involved introducing them to investment bankers in Boston, NYC, Washington DC, Chicago, and elsewhere. Other times, we've assisted the companies in achieving funding through contractual means - generating profitable revenue streams including licenses, technology sales, product development contracts, and so on - that allowed them to avoid or minimize the amount of equity capital they had to raise. And in other situations, IVG has invested directly in the companies - providing critical capital quickly and allowing the companies to focus their time and attention on more pressing matters - like production and sales!

The success of our business and our business model has been such that we are now ready to take it to the next level. For the first time in over a decade, IVG will soon offer outsiders an opportunity to participate in our exciting business and investment operation. Due to securities laws, we will have to limit our offering to accredited investors and (as the lawyers will want us to point out), this blog post is not an offering to sell securities!

But stay tuned. It's time to crank this business up, increase the resources and investment capital that we can deploy to assist start-ups and early stage companies in WNY and beyond, and see what happens. We think the time is right, the opportunities abound, and the impact is going to be significant.

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The Butterfly Effect & Osama bin-Laden

We've all heard about the "butterfly effect" - a butterfly flaps its wings in South America and there is a causal (but chaotic) relationship to the tornado that touches down in Oklahoma a few days or weeks later.  Minor perturbations can be multiplied or magnified and have profound implications.  So it was with great interest that I saw on page 72 of "No Easy Day" - the story of the Navy Seal's termination of Osama Bin-Laden - a reference to EOTech.  Specifically, "My primary weapon that I used daily was a suppressed Heckler & Koch 416 with the ten-inch barrel and an EOTech optical red dot sight witht a 3X magnifier."  

Why did I find that interesting?  Well, the reason is that EOTech was one of The InVentures Group's first clients - back in 2003 - and was one of the best examples of how "venture investing" ought to be done, in my opinion.  We were hired originally to do the due diligence on the technology and then later participated in organizing the capital raise while assisting in negotiating an acquisition of the company.  After the deal closed, one of IVG's partners was asked to serve as the "hand's-on" President of EOTech in order to turn the business around (it was hemorraging cash), optimize the manufacturing process (yields were awful and capacity was constrained), create a product that the military and police forces would be interested in (reliable, affordable, and rugged), and create a network of customers, partners, advisors, and board members that could be helpful to the company.  Without all of this, EOTech would most likely have folded in 2003 and the product might never have seen the light of day - or in the case of the Navy Seals, the dark of night!

 

IVG's central role in turning the company around over a three year assignment led to the product finding its way into law enforcement and military hands where it became the weapons-site of choice for many and ultimately led to the acquisition of the company by L3 Communications - a leading defense contractor.  Incidentally, the company was sold for roughly thirty times what we had paid for it three years earlier.

 

So, in some small but not insignificant way, I'd like to think that The InVentures Group contributed to our military's success against one of our most hated enemies.  You never know where your efforts may lead!

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Ethics

In the past few months, we've had a lot of examples or reminders about the lack of integrity and ethics in sports, politics, and life in general - from the lack of new entrants into Major League Baseball's Hall of Fame due to the steroid scandal to Lance Armstrong's admission to doping. These are the "newsworthy" stories that we're subjected to almost without end. What was almost completely overlooked was the December 2nd story about Basque athlete Ivan Fernandez Anaya who was competing in a cross country race in Burlada, Navarre. He was running a distant second behind Abel Mutai, a Kenyan who mistakenly pulled up about 10 meters short of the finish line, believing he had already crossed it. Anaya quickly caught up with him but instead of passing him and taking first place, he stayed behind Mutai and used gestures to guide the Kenyan to the finish line and finish first.

How many of us heard about this unselfish act of integrity? Very few. It has gotten a little play on the internet and Facebook sites, but the major media outlets don't (apparently) have much use for stories about the positive side of human nature when there is so much of the dark side available for examination.

It's no different in other aspects of our lives, including business. In the past several decades, I've had the unfortunate opportunity to observe first hand the lack of ethics and integrity in the corporate world. It's nothing new, of course. I sold my first business to Tyco International about three months before the news broke about the infamous Dennis Kozlowski (now serving time in prison for his actions). I've worked with Board members, company founders, and corporate executives who felt that there was nothing wrong lying to shareholders, to employees, to banks, or others. So long as they didn't get caught, they felt it was just part of the "game" of business. To me, it's like everything else. If you lie or cheat in order to "win", what have you accomplished? What have you really won? Your bank account might be a little bigger, but you have to live with the possibility that you'll be caught and all of that will be lost. You give others power over you by not being truthful because now you are forced to modify what you do, say, think, and how you act to protect the lie.

Let's make guys like Ivan Fernandez Anaya our role models and not the Lance Armstrong's and Dennis Kozlowski's of the world. He deserves it and we would do well to emulate him.

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Hey Boss...

I learned yesterday of the passing of a former employee of mine - Richard "Red" Dixon. Red was far too young to be leaving us and there are a lot of folks who will miss him. He was significant to me because Red was the first employee I ever hired. It was 1981 and I had just closed on my first company's start-up financing, moved into a somewhat dilapadated brick building along the Niagara River, and was in need of some production workers to get things up and moving. I don't know how Red learned about us and I don't remember what other folks I might have interviewed, but I do remember this. Red, who had no formal education beyond high school, sat across from me and without batting an eye said, "I can do anything." And for the next twenty years, he pretty much made good on that commitment. Red was not a chemical engineer, had no background in advanced ceramics, didn't know how to read a phase diagram or even an electrical schematic. But he was committed to the company and was always looking to do the best job at whatever task he was assigned. He was never shy about challenging the opinion or decisions of others, including me, if he didn't agree or didn't think we had considered everything. He was creative in approaching problems and challenges, cost-conscious, almost to a fault, and enthusiastic about whatever we were doing. As the company grew and hired PhDs, MBAs, CPAs, etc., it would have been easy for someone like Red, who remained something of a facilities/maintenance technician, to get lost or minimized. And yet, by force of personality and his absolute loyalty and dedication to the company, he was always an important voice in an increasingly large enterprise. Not a week went by, that I can recall, that Red wouldn't walk into my office or stop me as I was walking through the plant, to offer an opinion, ask a question, give a suggestion, or just chat.  

And every conversation began the same way.

 

"Hey Boss...".

 

Hey Red.  Thanks for everything.  The company wouldn't have been the same without you.  And neither would I.

 

 

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Not the news you wanted to hear!

The National Venture Capital Association issued its latest quarterly report on VC fundraising and the news for enterpreneurs isn't good.  Michael Greeley of Flybridge Capital Partners of Boston points out on his blog that 55 percent of the money raised went into the top five funds. He writes:

While I expected more rapid contraction of the industry, the amount of consolidation at the top of the pyramid is dramatic. Arguably this implies a more challenging time for entrepreneurs as there continues to be fewer robust VC franchises available to them.

That's one concern. Marcus said there's also cause for concern that such large funds won't be able to throw off the kind of cash investors associate with the high-risk, high-reward world of venture capital.  "I think it will be challenging for those managers to produce venture-like returns," he said.

 

As many of you know, the challenges of the past five years for start-ups, early-stage, and even growth companies in accessing the capital markets have been significant.  There are many folks saying that the traditional VC model is broken and, based on the recent report, it would appear that the market agrees.  Funding is down and diversification of funding sources is shrinking.  What is needed is a broader base of "not-so-risk-averse" capital sources that can be efficiently accessed.  Smaller funds with more hands-on managers, capable of moving companies along the continuum from start-up to commercial viable enterprise, but without destroying the entrepreneurial spirit and unique culture of these organizations.  Another $1 billion VC fund isn't going to be helpful.  Creating 50 funds each with $20 MM to deploy would be.  That's our view and in the coming months, we'll be looking to do exactly that.  Stay tuned.

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Welcome to My World!

It’s an interesting exercise writing a blog.  I started one before and, frankly, no one aside from a few business associates and employees ever read it, so far as I know.  It also seems to be a little bit egotistical to think that what you have to say is going to be of that much interest to other people that they will follow your musings on a variety of topics.  But then you see the success of Facebook where folks post nearly non-stop about the most trivial aspects of their daily lives apparently convinced that the world is waiting to hear about what they are having for dinner, their latest accomplishment in Farmville, or that they hate being inside when it’s so beautiful out.  It’s a whole new world I guess.  

But my motivation this time is different.  The last time I was blogging, I was running a company and trying to communicate to the world all of the exciting new products and technologies that we were developing and commercializing.  In other words, I was selling.  And frankly, you can pretty quickly run out of things to say that don’t sound repetitive or highly self-serving so after a very short stint, it kind of ran out of steam.  This time, it’s different.  As the founder and Chairman of The InVentures Group, I have the great pleasure of working with exciting new companies and entrepreneurs, along with my own team of associates and partners, and my job isn’t to sell anything.  My job is to transfer some of the knowledge, experience, insight, and lessons that I have learned after thirty-plus years of being an entrepreneur.  I tell people that I have built companies from scratch, grown them to hundreds of employees with multiple locations – including international ventures – and managed all of the challenges and headaches that go with that.  Been there, done that, and got the t-shirt.  Now, I want to help the other guys who are interested in building their own companies do it as quickly and effectively as they can, retaining their own personal mark on the business’s culture and brand, and having fun in the process.  If it is financially rewarding for them, even better, but I warn nearly everyone that it should never be about the money.  It should be about the experience you seek and the impact you want to make.

 

As part of my job, I’ve begun to do a little thing called the Entrepreneurial Boot Camp.  Nothing earth-shattering, but it’s clear that to succeed in a start-up environment, there’s something of a new language that you need to learn.  Terms like “convertible preferred”,” incentive stock options”, “EBITDA”, “subordinated debt”, and others are part of the lexicon and what they mean and why you want to understand them is part of the curriculum that I spend time developing for my staff.  But it goes beyond just the financial stuff, to be sure.  I have shared war stories with my team to make sure they understand that growing a business is never a straight line.  The old adage that VCs “bet the jockey, not the horse” speaks directly to that.  You need to understand that there will be obstacles, there will be setbacks, there will be changes of plan, and the successful companies are the ones that can navigate these challenges, work through or around them, and continue to move forward – even if it means going sideways or even backing up for a bit.

 

Persistence and perseverance are critical and nothing makes that any clearer than the following story which was sent to me by one of my staff.   Enjoy and, as Winston Churchill said: “Never, never, never quit” (or something to that effect)!

 

Keith Blakely

All of the writing greats have stories of their work being rejected. They take great pride in saving those rejection slips in a folder to pull out once they become successful. In fact, here is a list of some of our better books and the amount of times they were rejected:

Auntie Mame, Patrick Dennis (15) Carrie, Stephen King (30) Chicken Soup for the Soul, Jack Canfeld and Mark Victor Hansen (140) Diary of Anne Frank (16) Dr. Seuss books (15) Dubliners, James Joyce (22) Dune, Frank Herbert (23) Gone with the Wind, Margaret Mitchell (38) Harry Potter book one, J. K. Rowling (9) Jonathan Livingston Seagull, Richard Bach (18) Kon-Tiki, Thor Heyerdahl (20) M*A*S*H, Richard Hooker (17) The Peter Principle, Laurence Peter (16) The Prncess Diaries, Meg Cabot (17) Watership Down, Richard Adams (26) A Wrinkle in Time, Madeleine L’Engle, (26)

Just think of the beauty in all those rejection slips - “Sorry J.K. Rowling, we don't think this will attract an audience.”       

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