David LaPlante

Notes from Silver & Gold Venture Capital Conference and Investor Dinner...Investors Hungry for Deals

Last night was the welcoming reception for the Silver Gold Venture Capital Conference. My oh my! What a difference two years makes in investor confidence! The conference is packed and full of energy. It's BACK ON BABY!

Right up front here's the statistic that matters: Northern Nevada has 13 companies on the roster of 30 presenting companies.

That's up from 5 last year and almost 50% of the field. This is very very good news.

Presenting companies like Rudi Wiedemann's Biodiesel Solutions and Arthur Neumann's Free Water are not only killer concepts, but up-and-operating, clean, renewable energy-oriented businesses that will have global impact. I wish I was on the Board for these businesses!

Chuck Alvey of EDAWN did a wonderful job of kicking off the event by highlighting how well northern Nevada is performing in diversifying our economy...and yet not glossing over the challenges we face to continue that growth. The Target 2010 study they've released with Angelou Economics DEAD ON.(Of special note: Susan Voyles' article in today's RGJ on median-income buyers in the Reno area being priced out of the market is one of the better articles to grace the front page in weeks.)

Bob Goff of the Sierra Angels and the founder/former Chairman of Nevada's Center for Entrepreneurship & Technology kicked off a private investor dinner later on in the evening in which I was lucky to attend.

The "keynote" presentation was from Susan Preston of Seraph Capital Forum, and Entrepreneur-in-Residence, Kauffman Foundation for Entrepreneurial Leadership on new proposed Federal tax legislation for private equity investing.

Susan talked about her work on the The Access to Capital for Entrepreneurs (ACE) Act of 2006 (HR 5198) which she was the main architect. The ACE Act fills a TREMENDOUS gap in current equity funding between venture capitalists and angel investors. This bill addresses that gap by encouraging accredited investors to increase equity investments in certain qualified small businesses through the creation of a 25% tax credit for accredited investors and certain partnerships (including angel investment pools if all are accredited investors) that invest cash or cash equivalents at an arm's length in a qualified small business (as defined by the Small Business Act).

Please write to our Senators (particularly Harry Reid and John Ensign) and support this Act.

What does it mean to local entrepreneurs? It means that all these wealthy Californians that relocate to Nevada for our tax benefits are incentives to take a chance on us entrepreneurs instead of sticking it in stocks and mutual funds. (Sorry to be blunt, but that's what counts.)

That means more small businesses get funded in this state through experienced private equity, and that's a VERY GOOD THING. Banks, despite their prolific full-page ads of their CEOs smiling and touting how "small business friendly" they are actually SUCK when it comes to start-up capital. Credit cards are better sources of start-up capital than you local bank. Angels are better, but they need an incentive like this.

The Dinner Panel topic was Venture Capital Fund-of-Funds: Insights for Emerging Fund Managers.

While I thought I was in for a real snoozer, it was actually a fairly insightful discussion of how well California's pension fund managers are performing and their secrets to success. (Note: CalPERS and CalSTRS are in good hands.) Panelists included Jesus Arguelles, Investment Officer II, CalPERS Solange Brooks, Investment Officer, CalSTRS Guillermo Borda, Managing Director, Banc of America Capital Access Funds Charles Merritt, Parish Capital Jeff Mills, Probitas Partners Amit Tiwari, INVESCO.

Perhaps the strongest message I heard repeated was that "fund managers invest in people". While everyone wants to methodologize the formula of success in to track records, years of experience, business plans, etc., PEOPLE trusting and investing in PEOPLE was the consensus. So what does that mean for any entrepreneur out there: focus on your poeple skills.

You can have a better technology, a better education, a better business plan, a better business plan and still lose to the guy who can work a room.

  Technorati : ACE, ACE Act of 2006, Biodiesel, Bob Goff, EDAWN, HR 5198, Target 2010, angel, angel investing, entrepreneurs, investors, nevada, reno, vc, venture capital

Excellent article on why relationship messaging with email is a struggle

Daniel Enemark wrote an outstanding article on email and its challenges in relationship messaging. In "It's all about me: Why e-mails are so easily misunderstood", he highlights that researchers are consistently pointing to the difficulty of expressing and conveying emotion as the chief culprit in misunderstood or ineffective dialog. (This applies to any text-based communication. SMS is often worse. IM at least has embedded emoticons.)

I am particularly aware of this from experience within my own inbox and the experiences of customers as they struggle with using email effectively in their marketing. Read a post of mine from May 3, 2004 on Bad Email Habits Observed.

Effective use of email in relationships management is a science. This article and the researchers it cites corroborates why we -- Twelve Horses that is -- went from being an email-centric business in 2002 to a relationship marketing and messaging management company where email is one of multiple channels of communication. We simply couldn't ignore the fact that sometimes a follow-up phone call is what it took to make an effective email campaign convert at a higher rate.

The article cites this at the bottom of the story:

So if you want to buy something on Craig's List, Morris says, "make a brief phone call, even if it's not practical to do the whole negotiation by phone. You can establish a favorable bias with someone and then proceed in a less rich medium, but it's very hard to just get right into the negotiation on a medium that isn't rich."

Email is extremely effective when used at the right time (T), with the right relevance (R), delivered to the appropriate location (L) and used with permission (P). TRL+P is the formula for any communication.  As is any communication. The KEY is to recognize that it can't always be about email. Sometimes a phone call, a text message, a fax, a letter, or even in in-person meeting makes the difference.

My favorite quote out of the article:

Though e-mail is a powerful and convenient medium, researchers have identified three major problems. First and foremost, e-mail lacks cues like facial expression and tone of voice. That makes it difficult for recipients to decode meaning well. Second, the prospect of instantaneous communication creates an urgency that pressures e-mailers to think and write quickly, which can lead to carelessness. Finally, the inability to develop personal rapport over e-mail makes relationships fragile in the face of conflict.

Bingo. Could not have written it better. Here's a link to the study by Profs. Justin Kruger of New York University and Nicholas Epley of the University of Chicago that the article cites.

On Executive Interviewing: Some Do's & Don'ts; A Few Reflections on Interviewing a Batch of Highly Successful Candidates

A short while back I had the unique and rewarding experience to participate in panel interviews to assist in the selection of a new CEO to head up a large public enterprise. Finalist candidates from all over the nation were brought in and plunked down in front of a bunch of us “community folk” and slow-roasted about until cooked medium-well.

It was interesting, amusing, maddening, informative, creative and above all – educational -- to say the least. Unfortunately I am bound by an NDA which prevents me from disclosing anything really juicy! [Side note on this process: Actually – there’s not much to tell despite what the mainstream media trying to sell papers may want you to believe. And despite what the hyperbole-mongrels of community conspiracy theory would have you believe, there isn’t anything going on behind closed doors other than giving some decent folks from out of town a little privacy, respect and comfort.]

Since I am a student of the “personal branding” and “relationship marketing”, I enjoyed dissecting relationship development under the stress of an executive interview. I managed to keep some notes in the margins of these interviews that are “general enough” that they should be of assistance to any executive in the hotseat interviewing for a leadership position:

1. Understand the rules and expectations of the “game”. Understand how much time you have for the interview and establish the goals of the interviewees. Only one candidate out the gate asked up front what I hoped to accomplish in the interview and that stood out positively.
2. Pay attention to the time. Take the time available and divide it in to 4 parts and query the interviewer “how am I doing, how’s the pace?” If given an hour, query at 15 minute intervals. Two reasons: One, this ensures that the pace is correct and that everyone will get to ask the questions that are most important to them. Second, this gives you an opportunity to get some feedback on how you’re doing. Forcing an interviewer to say, “You’re doing great!” reinforces that you are doing just that…great!
3. Answer in thirds. Give a 33% condensed and to the point answer. Solicit feedback on whether that covers it. If favorable, then proceed to embellish the answer with a STORY or EXPERIENCE for the next 33%. If the panel/interviewers are still interested in more, give additional perspective or dialog or extend to hypothetical situations you may encounter.
4. Tell stories. (Here we go again, David LaPlante wanting you to use stories!) Entertain. But know the moral of the story you tell. Anyone who knows me knows that I believe life is about making and telling stories. The best answers to questions are told from a story.
5. Be conversant. Be humble. Speak from EXPERIENCE not OPINION. OPINION = BAD: “I think this community should pave the parks!.” EXPERIENCE = GOOD: “It’s been my experience that when we paved our community park we enjoyed a substantial cost reduction lawn trimming services.”
6. Dress for success and don’t be afraid to stand out. But don’t go overboard. MEN: A loud pinstripe suit may be OK if it’s New York and you’re interviewing at Goldman Sachs. Once you get the job, the pinstripe is a good thing. Pinstripes have ego. This can be dangerous. Someone with a very strong and overpowering personality may actually want to choose for something more subtle. The opposite is true. Wear sharp solid suit and embellish it with bright colors in the short – not the tie. If you’re interviewing for a job that pays over $100,000 a year, you can afford to wear a suit made in the last freakin’ decade! In fact, it would be your best bet to buy a new suit.
7. Stage presence. Practice your stage presence.
8. Hedge your criticisms with your reasoning and explore the other alternatives. Example: “From the knowledge and experience I have, this is my observation. It’s not an effective campaign. However, I’ve been a leader long enough to know that in any organization with smart folks that my observation may not be drawn hastily. There’s reasoning for everything and usually more to the story than what meets the eye.”
9. Body language does not lie! Make frequent eye contact. Say people’s names. Get their attention and keep it. I kept chickenscratch notes on eye contact alone. My “strongest” candidate made eye contact with me almost 3x more than the second. The worst interviewee ranked only made eye contact 6 times. That’s only 10% of the “average”. Crazy yet amazing and true!
10. AND FOR GOD’S SAKE SMILE! 8-)

Do you have any items/thoughts to add? I’d really like to get a thread going on this one!

A person who is nice to you but rude to the waiter, or to others, is not a nice person.

A wonderful article in USA Today on how CEOs look at how others treat waiters as a guage of character. This is true. And we all know it. I've made many mental notes on people based on this.

Growing up at a ski resort where Texans flush with oil money came to town by the hundreds taught me this lesson early in life. Working in my parent's ski shops getting mistreated by folks every night made quite an impression on me.

The article talks about Swanson's Rules. This is the first time I've heard of these but they are awesome. I see people blowing #18 every day in my email Inbox.

SWANSON'S UNWRITTEN RULES

1: Learn to say, "I don't know." If used when appropriate, it will be used often.
2: It is easier to get into something than to get out of it.
3: If you are not criticized, you may not be doing much
4: Look for what is missing. Many know how to improve what's there; few can see what isn't there.
5: Presentation rule: When something appears on a slide presentation, assume the world knows about it and deal with it accordingly.
6. Work for a boss to whom you can tell it like it is. Remember, you can't pick your family, but you can pick your boss.
7: Constantly review developments to make sure that the actual benefits are what they were supposed to be. Avoid Newton's Law.
8: However menial and trivial your early assignments may appear, give them your best effort.
9: Persistence or tenacity is the disposition to persevere in spite of difficulties, discouragement or indifference. Don't be known as a good starter but a poor finisher!
10: In doing your project, don't wait for others; go after them and make sure it gets done.
11: Confirm the instructions you give others, and their commitments, in writing. Don't assume it will get done.
12: Don't be timid: Speak up, express yourself and promote your ideas.
13: Practice shows that those who speak the most knowingly and confidently often end up with the assignment to get the job done.
14: Strive for brevity and clarity in oral and written reports.
15: Be extremely careful in the accuracy of your statements.
16: Don't overlook the fact that you are working for a boss. Keep him or her informed. Whatever the boss wants, within the bounds of integrity, takes top priority.
17: Promises, schedules and estimates are important instruments in a well-run business. You must make promises — don't lean on the often-used phrase: "I can't estimate it because it depends on many uncertain factors."
18: Never direct a complaint to the top; a serious offense is to "cc" a person's boss on a copy of a complaint before the person has a chance to respond to the complaint.
19: When interacting with people outside the company, remember that you are always representing the company. Be especially careful of your commitments.
20: Cultivate the habit of boiling matters down to the simplest terms: the proverbial "elevator speech" is the best way.
21: Don't get excited in engineering emergencies: Keep your feet on the ground.
22: Cultivate the habit of making quick, clean-cut decisions.
23: When making decisions, the "pros" are much easier to deal with than the "cons." Your boss wants to see both.
24: Don't ever lose your sense of humor.
25: Have fun at what you do. It will be reflected in you work. No one likes a grump except another grump!
26: Treat the name of you company as if it were your own.
27: Beg for the bad news.
28: You remember 1/3 of what you read, 1/2 of what people tell you, but 100% of what you feel.
29: You can't polish a sneaker.
30: When facing issues or problems that are becoming drawn-out, "short them to the ground."
31: When faced with decisions, try to look at them as if you were one level up in the organization. Your perspective will change quickly.
32: A person who is nice to you but rude to the waiter, or to others, is not a nice person. (This rule never fails).
33: Never be afraid to try something new. Remember, an amateur built an ark that survived a flood while a large group of professionals built the Titanic!
Postscript: The qualities of leadership boil down to confidence, dedication, integrity and love.