Tag: 9WSearch

FBombs, The Startup Week Panel on Failure

Reporter with Silicon Hills News

Chris J. Snook,  9WSearch’s Susan Strausberg, Denver area Entrepreneur Gabriella Krista Morgan, co-founder of P2BInvestor and Denver Management Consultant Allen W. Duck, photo by Susan Lahey

Chris J. Snook, 9WSearch’s Susan Strausberg, Denver area Entrepreneur Gabriella Krista Morgan, co-founder of P2BInvestor and Denver Management Consultant Allen W. Duck, photo by Susan Lahey

In a panel dedicated to failure in starting up a business, the audience seemed to be most focused on one thing—the risks inherent in picking a co-founder.

Panelists shared stories about enormous, botched business deals thanks to people they trusted, horrible lawsuits, embezzlement, and then the more common scenarios of just having to work through a challenging decision with a co-founder…or greet an ex-co-founder amicably when you run into him or her.

Fort Collins, Colorado, entrepreneur, investor and speaker Chris J. Snook moderated the panel that included 9WSearch’s Susan Strausberg, Denver area management consultant Allen W. Duck and Denver entrepreneur Gabriella Krista Morgan, co-founder of P2BInvestor.

The Ugly Breakups

Snook told about a publishing company he started with a co-founder who, one night, sent Snook a drunken email, saying he wanted out of the business. When the co-founder had a change of heart, Snook welcomed him back. Several months later Snook was served with a lawsuit, filed by his co-founder, alleging numerous breaches and illegalities.

Snook felt suddenly under siege. “We had 42 authors,” he said, “I had no idea if any of them were in on it, no idea if he was setting up shop. He didn’t really ask for anything,” but Snook bought his way out of the suit with roughly a quarter of a million dollars. “I was blown away, and it was shocking and hurtful, and it happens.”

Others told of business deals that went awry. Duck told a story about buying a financial planning company and keeping the seller on for the last three years before retirement.

“Within six months it was pretty clear things weren’t going according to plan,” he said. He flew up to the company—which was in Connecticut—and the seller told him he wanted to leave. Next thing he knew, he learned that the seller had been embezzling from the company and had started another company where he was re-signing all his original clients. Ducks company won a judgment against the man but it took three years to bring to trial. The day of the trial, Duck was meeting with the lawyer who was looking over papers and suddenly went white. It turned out the seller had declared bankruptcy.

“For us, it was a pointed battle. We needed to win this,” Duck said. But the company almost went broke doing it. “The judiciary works very well,” he said. “But it works really slowly, and you can go out of money quickly in pursuit of vengeance. You have to be very astute.”

When she ran Edgar Online, Strausberg said, MarketWatch offered the buy the company. Everybody was in favor of the deal and Strausberg empowered her CFO and president to handle it. Meanwhile, as she had amicable phone chats over a bottle of wine with Larry Kramer, founder of MarketWatch, her underlings were unraveling the deal without her knowledge. It died over the terms of the president’s contract. That wasn’t a co-founder issue though. Strausberg’s co-founder has always been her husband, Marc Strausberg.

Even when there’s no malintent, co-founders sometimes have to part ways over differences in vision.

One advantage to having her father as her co-founder, Morgan said, creates a level of trust and also a bond that has to be preserved. So it causes them to work through issues more carefully than they might if they were less connected.

But if things do go wrong, Duck said, “You will never get chastised for holding the moral high ground.” Disparaging previous founders only reflects badly on you.

The Biggest Mistake

Unfortunately, the entrepreneurs said, you rarely see a mistake as it’s happening. It’s only in retrospect. Morgan wishes she had spent less time raising funding and more effort getting to revenue. Duck had taken a subsidiary of a Finnish company from near bankruptcy to such financial success that it was supporting the parent company, by changing the culture and marketing tactics to those that would appeal more to Americans. One day parent company executives called and told him they needed $1 million to pay down debt. Duck believed the returns would be better if they kept the money in the company. When he told them so, they hung up on him.

Several days later, he said, there were six Finns in his office. “Finns don’t leave Finland,” he joked. “Ever. No one wants to see them and they don’t leave.”

Duck was let go and eighteen months later, the company was closed.

“It had become so personal for me…” he said. “If I could take that decision back, if I had humbly sent them the million dollars, that company would still be in Colorado. That haunts me. It was nothing more than ego that precluded me from making the different choice. Thirty five people lost their jobs, and they didn’t need to.”

Ultimately though, he said “The biggest fuckup for any business is to procrastinate. Everybody has seen the S curve of a company’s life cycle. If you procrastinate you limit the creativity of the organization to a point where it stagnates, boils back to inactivity…making a bad decision and then having to change course is better than not making a decision.”

Startup Advice from Serial Entrepreneurs in Austin

Founder Silicon Hills News
BKKg61ZCAAAkRCVStartup founders can learn a lot from entrepreneurs who have been there and done that.
And on Monday, three serial entrepreneurs in Austin shared some of the challenges they faced in building their companies and some tips on how others can succeed.
Sam Decker, co-founder of Mass Relevance, Carl Shepherd, co-founder of HomeAway and Susan Strausberg, co-founder of 9WSearch participated in a RISE lunch and learn entrepreneurship super panel moderated by Ellie Brett, founder of Media Bombshell. About 120 people attended the event held at Mass Relevance’s downtown headquarters and sponsored by Turnstone.
Decker’s entrepreneurial roots go back to fourth grade when he ran a go-kart repair business and that got him into fixing engines.
He started working for Apple out of college. Then he ran three failed startups in the Bay area before Dell called.
“Even at Dell I always sought out the entrepreneurial jobs,” Decker said.
BKNAHbXCcAAg6ckHe worked at turning Dell.com into a big business. But after seven years, he wanted to launch a startup again.
Decker left to work at Bazaarvoice, founded in 2005. After five years, Bazaarvoice had $50 million in revenue and 500 people.
“Any time you are making that move to the next journey you are stepping off a cliff,” Decker said.
He left Bazaarvoice to co-found Mass Relevance, a social media company focused on handling Twitter campaigns for TV, sports and media companies.
Today, Mass Relevance has 85 people and does half its work for brands and half for media and sports teams.
Strausberg grew up in an entrepreneurial family.
“One needed to be in control of one’s own life,” she said.
Over time, she became obsessed with computers. She worked in publishing and film. She founded a publishing company and co-produced BKNAUiBCEAAbSdr“It Came from Hollywood,” a Paramount Pictures film.
She earned the title of “Dot Com Diva” for launching EDGAR Online, a financial data company, in 1995 with her husband Marc Strausberg. They left the company in 2007 to pursue other interests. They moved to Austin a few years ago to launch 9W Search Inc., an advanced financial search engine aimed at mobile users.
Shepherd, co-founder of HomeAway, was not a born entrepreneur.
“I did not come to be an entrepreneur overnight,” he said. “I was a late bloomer.”
At first he worked as a consultant for what is now Accenture and he also worked for magazine publishers.
He cut his entrepreneurial teeth at Hoover’s Online, where he worked as chief operating officer. Hoover’s Online was an information research business and was one of the first successful subscription based companies on the Web. He took the company public in 1999 and stayed on for a few years and then he joined Austin Ventures. That’s where he met Brian Sharples. They had coffee at Starbucks, the one that’s across the street from what’s now HomeAway’s headquarters. At that Starbucks, they started brainstorming ideas for businesses. They came up with one for selling information on outsourcing. But they both settled on addressing the pain in the vacation rental market. They both had families who liked to stay in rental homes instead of hotels when they travelled.
“Renting a vacation home really sucked,” he said.
They set about to fix that problem and came up with HomeAway as a solution.
Today, HomeAway has 1,300 employees on six continents including 600 employees in Austin, Shepherd said.
Next, Brett with Media Bombshell asked the entrepreneurs a series of questions including what was their biggest surprise about being an entrepreneur.
“The biggest surprise is that really great ideas and wonderful people and the best possible teams fail,” said Shepherd.
“So few people understand and embrace innovation,” said Strausberg.
“The highs are higher and the lows are lower,” said Decker. “Every rejection is like a rejection. And every win is like we’re going to be huge.”
But over time, the volatility starts to shrink, Decker said.
The next question Brett asked was what was the toughest challenge the entrepreneurs faced and how did they get through it.
Strausberg said in 2003 Market Watch wanted to buy EDGAR Online but that fell through. They had to pivot the business and find another way to exit the business, she said.
At Hoover’s Online, Shepherd bought a company called Power Rise in August of 2001 and after September of 2001 they had to completely revamp the business and eventually close down Power Rise. They had to pivot Hoover’s Online to go back to a subscription model.
Coming up with a company name is one of the biggest challenges a startup faces, Decker said.
One of the big challenges Mass Relevance faced when it launched was securing an official partnership with Twitter, Decker said. He personally negotiated the rights to use Twitter’s data, which was a critical aspect of their platform.
The panel also discussed how they handled risk. Decker said a good entrepreneur does his best or her best to mitigate risk.
And Shepherd said he has gotten more tolerant of risk during the past five to seven years.
“I feel like I’ve been far more in control as an entrepreneur than I was as an employee,” he said. “And I’m far more aggressive today than I was five or six years ago.”
The panel also gave advice to entrepreneurs.
Don’t lie to the IRS, said Shepherd. He has a 28-year-old son who is running a startup in the Bay Area and that’s the advice he gave him.
“Surround yourself with people and advisors who know what they’re doing,” he said.
“I would say first of all, think twice, then think three times,” Strausberg said. Thoroughly investigate the market, the competition and the validity of the idea, she said. And make sure you’re ready to cope emotionally with the risk and uncertainty of running a startup, she said.
“Think bigger,” said Decker. Whatever you’re thinking about add a zero to it, he said.
“Push yourself,” he said.

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