The Lowdown on Why Denver's So High on the Startup Scene Hotlist

Denver has been hovering in Boulder's startup-scene shadow, but the "little sister" city has been drawing its own star power of late.
"It feels like it's in the new frontier of the entrepreneurial hot spots," says Chris Myers, co-founder of BodeTree, a venture-backed startup that provides financial analysis and reporting tools for small businesses. Myers had been living in Phoenix up until recently, when he relocated to join his business partner in Denver. The company's headquarters are located in downtown Denver in a building originally constructed in 1865.
Denver is home to the consumer product innovation company UrgentRx and health-care application iTriage. And according to a recent ranking by the Kauffman foundation, Denver has moved from the 9th most popular startup scene to the 4th from 1990 to 2010. Also, on Monday, the city's second annual Denver Startup Week kicks off.

Quality of life. Part of what makes Denver so popular is the undeniable quality of life benefits that come with living in the foothills of the Rocky Mountains. Biking to work. Hiking on weekends. An hour and ten minute drive to Vail for skiing in the winter.

Fewer distractions for talent. For tech startups in Denver, the less concentrated startup density tends to draw a more committed employee. "When you look at hiring talent and bringing people on, especially for a tech startup, you know, the story has always been, 'It has got to be the Bay, or it has got to be in Flatiron [New York City],' or something like that. And there is great talent there, no question about it. But it is just a different dynamic," says Myers. In The Valley and New York, "you have a lot of people bouncing from one thing to the next to the next to the next."

"Been-there-done-that" sentiment. The laid-back, outdoor oriented, environmentally-friendly culture of Denver is extremely attractive to burned-out, overworked employees. "You get the people who have 'been-there-and-done-that' in the Valley and New York, and they are ready for just a change of pace," says Myers. "You are still getting top notch talent, but you know, you move quickly in those areas, and people want a different pace of life."

Developing entrepreneurship community. "It is getting there," says Myers. And that it is not already there is precisely one of the benefits to being part of it. In Palo Alto or Mountain View, Calif., "there is an established community, which is good and bad. Breaking into that community can be hard. It is like cliques in high school. There is an unspoken set of rules of how to interact and things. I think there are benefits with that, but a lot of times there are drawbacks," says Myers.

Constantly working to position yourself can be distracting. "You are not really focused on the business that you are building, you are focused on how you fit into this ecosystem of startups and VC's and who is cool and who is not and who is growing and who is not," says Myers, who also in the same breath added that he was not disavowing that there are benefits of a developed and sophisticated entrepreneurship community.

Launching a startup in the bucolic greens of Denver does come with some handicaps, too. Here is a look at some of the negatives:

It can be harder to get money than if you were on a coast. BodeTree closed a $1.4 million round of venture capital in April with a couple of Denver-based VCs, but it's harder to prove your chops to venture capitalists and investors in New York and San Francisco from the middle of the country. "When you are talking to them and you are giving them your pitch and you are telling them your story, invariably it always comes up, 'Oh so you are not in The Valley? Oh, so we don't really invest in businesses outside of The Valley,'" says Myers. "Now, a good idea will always get funded. But you don't have that same face-to-face, 'Hey lets go grab drinks.'"

If your startup builds upon the infrastructure of a tech-giant, it could be hard to be in Denver. "If you are a social app that ties into Facebook, you are going to want to be by Facebook. If you are a real, youth-oriented type of solution, you are going to want to be in those hotspots," says Myers. But if you're startup like BodeTree that caters to a demographic not tied to companies in the Valley or in New York, being in Denver may be a boon, because you are embedded with your customers more directly.

The Denver airport is in the middle of nowhereseville. If you are inking deals on a regular basis, you spend a lot of time in the air. The Denver airport is not conveniently located to the center of town, says Myers. "It is about a million miles away from the downtown," says Myers. It's actually about 30 miles. But once you hit the exit for the airport, you have to go another nine miles to get to the airport. "I have no idea why they put it out there."

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Twitter IPO Deserves the Hype, If Not the Investment

No matter where Twitter ends its first day of trading – or its first year or decade for that matter – it deserves the hype.
Forget valuation, which is a red herring anyway. Forget the questions about business models, revenue projections, talk of bubbles and complaints about 140 characters. Twitter's emergence as a public company is worthy of a moment to sit back and see the magic of the free markets in this nation and the uniqueness of our American entrepreneurial experience.
Haters gonna hate, and Twitter has faced its share of opprobrium over the years. The idea of 140 characters was too limiting, too much a sign of the decay of our culture, where we sacrifice good grammar and usage for text-like chatter that gets no one anything but a wrap on the knuckles from the nun who taught us in second grade. Strunk and White are turning over in their graves.
Twitter also faced questions about revenue models. Sure, Rihanna and Miley love you, but how do you book revenue on them loving you? And how do you make profit from that revenue in a way that doesn't drive away your user base? Evan Williams, Biz Stone and Jack Dorsey were derided as terrible managers with their heads more in the clouds than in the books.
Yes, seldom is heard an encouraging word about Twitter. That negative buzz has only gotten louder as Twitter approached its bell-ringing at the corner of Broad and Wall. Twitter, according to thousands of tweets from the financial chatterati, isn't worth the price.
Maybe or maybe not. But Twitter needs to be celebrated by entrepreneurs everywhere. This is what hundreds of companies in Silicon Valley, Silicon Alley, Silicon Gulch and anywhere in between want to be when they grow up. Little girls dress as Cinderella because they want to be Princess Kate. Twitter's rise is Cinderella for geeks and innovators and risk-takers. Events like today's market debut are what entrepreneurs dream about, even if, during waking hours, they give lip service to just wanting to solve people's problems or save sea lions. Deep down, they want success and wealth, and that's OK.
Twitter didn't solve a problem. No one lamented how difficult it was to communicate in 140-character constraints. Instead, it started a revolution in communication, allowed us to share information more efficiently and made us call a pound sign a hashtag.
And, while we hear that so few people use it, so the IPO isn't worth the money, we forget that, well, so many people use it. For Christ's sake, @Pontifex is saving souls with it. (And posting selfies, for which the aforementioned second-grade nuns would probably make him kneel on No. 2 pencils for an hour as penance.)
Anyone who has ever started a company knows how hard it is to reach a day like this. You have an idea, build code around it, discard the code you built, throw out one of your founding partners, give up, then come back and write new code. And all that happens before your first venture round.

How to Make Sure Your Business Gets Paid

The cornerstone of collecting accounts receivable on time is making sure invoices go out promptly and accurately.

If you sell a product, get the invoice out to the customer at the same time the shipment goes out. If you're in a service industry, track your billable hours daily or weekly, and bill as often as your contract or agreement with the client permits.
The sooner the invoice is in the mail, the sooner you get paid.
To eliminate any possibility of confusion, your invoice should contain several key pieces of information. First, make sure you date it accurately and clearly state when payment is due, as well as any penalties for late payment. Also specify any discounts, such as discounts for payment in 15 days or for payment in cash.

Each invoice should give a clear and accurate description of the goods or services the customer received. Inventory code numbers may make sense to your computer system, but they don't mean much to the customer unless they are accompanies by an item description.

It’s also important to use sequentially numbered invoices. This helps make things easier when you need to discuss a particular invoice with a customer and also makes it easier for your employees to keep track of invoices.

Before sending out an invoice, call the customer to ensure the price is correct, and check to make sure prices on invoices match those on purchase orders and/or contracts.

Know the industry norms when setting your payment schedules. While 30 days is the norm in most industries, in others, 45- or 60-day payment cycles are typical.

Learn your customers' payment practices, too. If they pay only once a month, for instance, make sure your invoice gets to them in plenty of time to hit that payment cycle. Also keep on top of industry trends and economic ups and downs that could affect customers' ability to pay.

Promptness is key not only in sending out invoices, but also in following up. If payment is due in 30 days, don't wait until the 60th day to call a customer. By the same token, however, don't be overeager and call on the 31st day.

Being too demanding can annoy customers, and this could result in you losing a valuable client. Knowledge of industry norms plus your customers' payment cycles will guide you in striking a middle ground.

Constant communication trains customers to pay bills promptly and leads to an efficient, professional relationship between you and them.

Usually, a polite telephone call to ask about a late payment will get the ball rolling, or at least tell you when you can expect a payment. If any problems exist that need to be resolved before payment can be issued, your phone call will let you know what they are so you can start clearing them up. It could be as something as simple as a missing packing slip or as major as a damaged shipment.

The first 15 to 20 seconds of the call are critical. Make sure to project good body language over the phone. Be professional and firm, not wimpy. Use a pleasant voice that conveys authority, and respect the other person's dignity.

What if payment still is not made after an initial phone call? Don't let things slide. Statistics show that the longer a debt goes unpaid, the more difficult it will be to collect and the greater chance that it will remain unpaid forever. Most experts recommend making additional phone calls rather than sending a series of past-due notices or collection letters.

If several phone calls fail to generate any response, a personal visit may be in order.

If the customer refuses to meet with you to discuss the issue or won't commit to a payment plan, you may be facing a bad debt situation and need to take further action.

There are two options: using the services or an attorney or employing a debt collection agency. Your lawyer can advise you on what is best to do.

The Lowdown on Why Denver's So High on the Startup Scene Hotlist

Denver has been hovering in Boulder's startup-scene shadow, but the "little sister" city has been drawing its own star power of late.

"It feels like it's in the new frontier of the entrepreneurial hot spots," says Chris Myers, co-founder of BodeTree, a venture-backed startup that provides financial analysis and reporting tools for small businesses. Myers had been living in Phoenix up until recently, when he relocated to join his business partner in Denver. The company's headquarters are located in downtown Denver in a building originally constructed in 1865.
Denver is home to the consumer product innovation company UrgentRx and health-care application iTriage. And according to a recent ranking by the Kauffman foundation, Denver has moved from the 9th most popular startup scene to the 4th from 1990 to 2010. Also, on Monday, the city's second annual Denver Startup Week kicks off.
Quality of life. Part of what makes Denver so popular is the undeniable quality of life benefits that come with living in the foothills of the Rocky Mountains. Biking to work. Hiking on weekends. An hour and ten minute drive to Vail for skiing in the winter.

Fewer distractions for talent. For tech startups in Denver, the less concentrated startup density tends to draw a more committed employee. "When you look at hiring talent and bringing people on, especially for a tech startup, you know, the story has always been, 'It has got to be the Bay, or it has got to be in Flatiron [New York City],' or something like that. And there is great talent there, no question about it. But it is just a different dynamic," says Myers. In The Valley and New York, "you have a lot of people bouncing from one thing to the next to the next to the next."

"Been-there-done-that" sentiment. The laid-back, outdoor oriented, environmentally-friendly culture of Denver is extremely attractive to burned-out, overworked employees. "You get the people who have 'been-there-and-done-that' in the Valley and New York, and they are ready for just a change of pace," says Myers. "You are still getting top notch talent, but you know, you move quickly in those areas, and people want a different pace of life."

Developing entrepreneurship community. "It is getting there," says Myers. And that it is not already there is precisely one of the benefits to being part of it. In Palo Alto or Mountain View, Calif., "there is an established community, which is good and bad. Breaking into that community can be hard. It is like cliques in high school. There is an unspoken set of rules of how to interact and things. I think there are benefits with that, but a lot of times there are drawbacks," says Myers.

Constantly working to position yourself can be distracting. "You are not really focused on the business that you are building, you are focused on how you fit into this ecosystem of startups and VC's and who is cool and who is not and who is growing and who is not," says Myers, who also in the same breath added that he was not disavowing that there are benefits of a developed and sophisticated entrepreneurship community.

Launching a startup in the bucolic greens of Denver does come with some handicaps, too. Here is a look at some of the negatives:

It can be harder to get money than if you were on a coast. BodeTree closed a $1.4 million round of venture capital in April with a couple of Denver-based VCs, but it's harder to prove your chops to venture capitalists and investors in New York and San Francisco from the middle of the country. "When you are talking to them and you are giving them your pitch and you are telling them your story, invariably it always comes up, 'Oh so you are not in The Valley? Oh, so we don't really invest in businesses outside of The Valley,'" says Myers. "Now, a good idea will always get funded. But you don't have that same face-to-face, 'Hey lets go grab drinks.'"

If your startup builds upon the infrastructure of a tech-giant, it could be hard to be in Denver. "If you are a social app that ties into Facebook, you are going to want to be by Facebook. If you are a real, youth-oriented type of solution, you are going to want to be in those hotspots," says Myers. But if you're startup like BodeTree that caters to a demographic not tied to companies in the Valley or in New York, being in Denver may be a boon, because you are embedded with your customers more directly.

The Denver airport is in the middle of nowhereseville. If you are inking deals on a regular basis, you spend a lot of time in the air. The Denver airport is not conveniently located to the center of town, says Myers. "It is about a million miles away from the downtown," says Myers. It's actually about 30 miles. But once you hit the exit for the airport, you have to go another nine miles to get to the airport. "I have no idea why they put it out there."

When Business Names Confuse Consumers: The Basics of Trademark Law

Last month, a Florida judge granted an injunction against health club "FIT U" after rival club "YOU FIT" sued for trademark infringement.
A trademark is a brand indicator, letting consumers know the source of a good or service. Therefore, whether a consumer is (or could be) confused as to the origin of a product or service, is a key consideration in trademark lawsuit cases.
To determine whether consumers were confused (or were likely to be confused) by the businesses' names, the court considered seven factors. From there, the court performed a balancing test to decide whether the mark weighed in favor or against consumer confusion.
Here are the factors that they weighed that you might want to consider when naming your business:
1. The strength of the mark.
In trademark law, a business's trademark (the name word, symbol or design that identifies the business, product or service) is referred to simply as a mark. Marks range from weakest to strongest: generic, descriptive, suggestive and arbitrary. The stronger the mark, the more protection it receives under trademark law. For example, a generic mark like aspirin receives very little protection (because it's so widely used to mean many types of pain relief medications), while an arbitrary mark like Apple for computers (where the connection between the name and product isn't clear) receives more protection.
In this case, the court noted that the word "fit" had multiple meanings, and consumers would need to make an "imaginative leap" to associate the mark with a health club.
2. Commonality of the marks.
Whether a mark is commonly used by third parties is another consideration. In this case, the defendant submitted to the court a list of similar trade names with the words "You" and "Fit" used by businesses in several states. (The defendant also submitted a list of 4,342 trademarks registered with the U.S. Patent & Trademark Office with the word "Fit" in them as additional evidence.)
This factor helps the case against a finding of confusion, because the mark is "weakened" by the broad use of the words by other businesses.
3. Proof of actual confusion.
A Yelp review expressing confusion about the two gyms convinced the court that the potential for confusion existed, which weighed in favor of a likelihood of confusion.
4. Similarity of the marks.
"YOU FIT" and "FIT U" are very similar marks, in both sight and sound. In addition, both marks were used to market health clubs, further adding to potential confusion.
5. Similarity of services, service outlets and customers.
The court noted that both businesses were health clubs targeting the same customers: young, independent and frugal individuals. The court found the similarity of the marks in sight and sound, as well as the businesses were offering the same services, namely, health clubs, weigh in favor of a likelihood of confusion among consumers.
6. Similarity of the parties' advertising media.
Where the businesses advertise (television, newspaper, etc.) and their websites are factors courts generally consider, however, in this case, the evidence didn't favor either party, so this point was neutral for both parties.
The court said there wasn't enough evidence in the record to evaluate the parties' advertising media. In other cases, for example, a court could compare the businesses' websites (whether they are similar in design and color), and whether they run ads on television or radio, etc.
7. Defendant's intent.
A defendant's intent to cause confusion among consumers or copy another business is generally considered, however, the court couldn't find intent here so the factor was neutral.
A classic example of intent is when a business is either aware of infringing activity or is willfully blind to it. For example, a retailer was found liable for trademark infringement in January for importing and selling counterfeit Fendi bags. The trial court awarded Fendi more than $12 million in damages because the infringement was willful.
The court balanced the seven factors, finding that four weighed in favor of a likelihood of confusion among consumers, and issued an injunction against FIT U from using the mark in connection with the sale of goods or services.

How to Transform Your Passion into a Successful Business

Starting your own business is like jumping on an emotional rollercoaster with the highest of highs and lowest of lows -- all the while, wondering if the ride will come to a screeching halt. Anyone can start a business but it’s infinitely harder to grow and sustain it. When a company faces challenges and falls on hard times (and it always does), it’s your passion and commitment that ultimately get the business through to the other side. If you don’t have a true passion for your business, everyone can sense it: your customers, team, advisors and investors.
That's why focusing on your mission is of the utmost importance. This will enable you to make faster decisions and help you manage through the rollercoaster ride.
Here are three steps to help transform your passion into a successful business:
Do you know enough? If not, start asking. You have a passion and want to start a business! Do you know enough about the industry? With industry background and know-how, you’ll be ahead of the curve and can hit the ground running -- producing products, building a customer base and forging your company vision.
If you have a great idea, but aren’t familiar enough with the field to get started, use your network, speak with people who’ve started businesses in your industry to help you get up to speed quickly. This is like building an informal advisory board of people who’ve gone through a journey similar to the one you’re embarking upon.
When I started NatureBox with my college buddy, Ken Chen, food was a passion of ours, but we honestly didn’t know much about running a food business. We began networking and discussing our idea with seasoned industry innovators to glean insights and learn strategies, tips and tricks for successfully running a food company. Our big breakthrough came when we attended a food tradeshow and met a few suppliers who were willing to work with us. Until then, we didn’t know how to find manufacturing partners.
Jump in. There’s really no better way to start than diving in head-first. In the beginning, you may not have your exact plan mapped out, and you’ll likely make significant changes to your model. But the benefit of starting a business around a passion is that you know why you’re doing it and can more easily overcome barriers that come up along the way. It’s this deep-rooted drive and enthusiasm that will keep you motivated and engaged with the product you’re selling.
Ken and I held other full-time jobs when we built the first NatureBox website. We used product photos taken on our cell phones. We were testing whether there was a market for people who wanted nutritious snacks delivered to their door and immediately saw opportunity -- more than 100 people signed up in a weekend. Now we had to decide if we were going to send our first orders or simply refund the customers, writing this off as a successful first-run test. This is where taking the plunge, is so important. There really is no better time than now to just go for it.
Surround yourself with others who share your vision. It’s no coincidence that everyone at NatureBox has an interesting story about how food shaped their lives -- whether it’s a personal weight loss journey like myself, food experience from a previous professional career, or a background growing up in an agricultural environment. We hire based on these shared experiences because they help shape the business.
Because you can expect long work hours and hard days in the beginning, personal drive and shared similar values with your colleagues will see you through this time. This enthusiasm translates to a positive customer experience. And that's what will build your business.
Turning your passion into a successful business not only allows you to be profitable while doing something you love, it helps set you up for lasting success. Most importantly, passion is central to making decisions that are in the long-term interest of the customer and the company, which will help you establish sustainability and longevity for your brand.

Artists Are Job-Creating Entrepreneurs, Too.

If you are looking for the heart of the entrepreneurial community in your town, don't bypass the artists.
Thanks to legendary startup stories from Silicon Valley, we tend to conflate the idea of “entrepreneur” with technology-driven, West Coast-located, hoodie-wearing young billionaires. We don’t often think about the painter, sculptor, dancer or theater professional.
But, truth be told, artists are self-employed at much higher rates than others in the workforce. About 34 percent of artists in the U.S. are self-employed, 3.5 times the national workforce average, according to a paper released today by small-business organization the Kauffman Foundation that cited research from the Census Bureau's 2011 American Community Survey.While cities have long looked to develop rich cultural communities to improve quality of life, attract new residents and cultivate tourism, there is new understanding among city leaders that artists are also entrepreneurs who bring in money, create jobs and give a boost to neighboring and related businesses, says Ann Markusen, director of the University of Minnesota Humphrey School of Public Affairs and author of the Kauffman report.
As cities become aware of the economic benefit of supporting artists entrepreneurs, their policy agendas need to develop, Markusen says. The publishing, advertising, music, design and architecture industries are all directly benefited by a thriving artistic community, the report says. Meanwhile, local small-business support programs often center on the manufacturing, service and retail industries.
“[Artists'] innovative challenges differ greatly from those faced by scientists and engineers. Artists and related cultural workers tend to fall through the cracks in traditional workforce and small business development programs,” Markusen says in her report.
To cater toward those creative entrepreneurs, city leaders should know who the artists in their community are, develop local space and equipment sharing facilities and create affordable artist studio options, Markusen suggests. Further, she says cities should develop local training and networking opportunities specifically for artists that involve regional faculty. Markusen also recommends having artist entrepreneurs present when city agendas are set for some departments including transit, tourism and public safety.
“The twenty-first century will belong to the distinctive city, and entrepreneurial artists and designers are key to that future,” Markusen says.

Incubator Helps Online Social-Recruitment Tool Take Off

The startup: RolePoint, an enterprise-level social-recruitment platform that helps companies find new talent through recommendations from current employees. The startup graduated in May 2012 from San Francisco accelerator AngelPad, which works mainly with web technology companies. AngelPad runs two sessions per year and accepts about 12 startups to each; the most recent program drew some 2,000 applicants.  
What it is: While working for a large investment bank in London, Chris Le Breton received an e-mail from a colleague seeking referrals for a new hire. Numerous messages on the subject went around internally, sparking Le Breton's "aha" moment: Companies aren't efficiently leveraging their own employee networks to fill job openings.
"Referrals are valued beyond any other hire in companies, and really not much work has been done around that to help the process or help people internally hire for their companies," says Le Breton, who now serves as RolePoint's CEO.
With RolePoint, companies circumvent time-consuming or expensive methods like recruitment agencies or traditional direct hiring. Instead, the online platform taps a company's employees to find candidates within their professional networks and refer them to the hiring manager.
Getting in: AngelPad was intrigued by RolePoint's technology and capacity for strong leadership among its four U.K.-based founders, but in large part the startup was accepted for what wasn't there. "We saw an incredible raw potential, and a big part of what was missing was this understanding of how to focus on building a really large company," says Thomas Korte, the AngelPad founder who mentored the RolePoint team. "Oftentimes for companies that have come from anywhere but Silicon Valley, business is very different. In the U.K., for example, there's a big focus on revenue very early, so it doesn't help founders look at the really big picture. [With RolePoint] we saw that if we help them see what they can do with this, it can be so much bigger."
The goods: AngelPad's 10-week program focuses on product development and market fit prior to launch, as well as fundraising. The small program's attention to detail was a draw for RolePoint. Le Breton appreciated the "focus on the quality rather than quantity," adding that many accelerators just push a gaggle of companies through and hope one takes off.
Lessons learned: Make sure your concept or company aims to solve a well-defined need or problem. "Be very clear on the value you're adding from day one," says Kes Thygesen, co-founder and head of product for RolePoint, which has relocated to Silicon Valley since completing the AngelPad program. "Really understand why a company would pay money for this; then you can concentrate on building a solution and validating that solution."
Adds Le Breton: "Demonstrate traction in the early stages, even if it's on a very small scale, and then let the investors extrapolate that."
Looking ahead: RolePoint closed a large seed round from Silicon Valley investors last October, and is working on scaling up the team and product.

How to Test Your Business Ideas

Many of the greatest inventors and entrepreneurs admit to having failed at some point in their careers, but Richard Christensen, entrepreneur and author of The Zig Zag Principle (McGraw-Hill, 2011)  says while failing may be a normal part of business and life, most of us are ill-equipped to fail efficiently.
He uses the analogy of skiing to teach entrepreneurs to take deliberate diversions on the road to achieving success to avoid the kind of catastrophic failures that can result in financial and personal ruin. "When we ski, we don't take our skis and point them directly down the mountain or we'll break our neck," says Christensen.
This approach is drastically different than what most business school graduates are taught to do. "In business, we're taught to do a performance analysis and set some big hairy goal and charge directly towards it and then we wonder why only one in ten small businesses achieve [what they set out to]," says Christensen.
Slowing down and altering your course rather than bulldozing your way towards a goal, a process which he calls zigging and zagging, not only helps achieve business success but ensures if the idea fails, it fails "efficiently." Here are his four tips to zigzag your way to success.
1. Think profitability first.
Christensen recommends new ventures begin by driving towards profitability. "Think about what's the fastest way to get to profitability, even if it's a slight diversion from your [overall] goal," says Christensen, who has now founded and co-founded 32 small businesses ventures, all with five to ten thousand dollars. Eleven of those businesses failed, while thirteen turned into million-dollar success stories. When deciding a set amount of resources you're willing to risk towards the venture, whether it’s a new business or trying out a new idea within your company, Christensen recommends devoting 65 percent of that capital towards the drive to profitability, 25 percent towards resources including staff and 10 percent towards scale.
2. Make failure efficient.
If profitability isn't achieved within the determined time frame, which for Christensen is typically three months, he calls the business idea a failure, although an "efficient" failure. Every business' time frame will be different depending on how much you’re willing to invest in the venture. "What most people do is they'll spend a year, five years, ten years with no definition chasing an idea, then they give up and they’ve wasted all that time and resources. At least if I don’t get to profitability right away, I haven’t spent a ton of money and years of dedication,” says Christensen.
3. Set your focus on goals.
After achieving profitability (the first zig), Christensen takes his business ventures on their first zag, allocating 65 percent of resources to staffing and structures and prodcedures, 25 percent to scale (expansion or franchising) and 10 percent to profitability. Zigging and zagging continues using this 65/25/10 resource allocation model, rotating through profitability, resources and scale, throughout the life of the business.
4. Slow down.
While Christensen admits companies who follow the zig zag principle will take longer to achieve their end goal, he says by setting clear goals on the amount of capital, time and people devoted to the venture, businesses are provided with greater stability and the slower speed may even reveal pleasant surprises. "You find all these hidden nuggets of gold along the way that turn into better businesses ideas than what you would have found [had you simply charged toward the goal]," says Christensen.

Want to Be an Entrepreneur? Here Are 3 Tips on Getting Started

  
Editor's Note: College Treps is a weekly column that puts the spotlight on college and graduate school-based entrepreneurs, as they tackle the tough task of starting up and going to school. Follow their daily struggles and this column on Twitter with the hashtag #CollegeTreps.

As a student at the University of San Diego, I have been learning about the fundamentals of business in class. While useful, it wasn't until I started going door-to-door selling mobile apps for my real estate tech startup Rivolix that I learned the real meaning of the word entrepreneurship. Synonyms for the word should be schlep, bottom feeder and hustler, because that is exactly what you are until you make it.

Yet, going around hawking my goods helped me gain valuable experience. I was able to gain a deep understanding of the problems my customers were facing, which led me to create mobile solutions that better addressed their needs. This insight can't be gained in school or through a business plan: The validity of your idea lies in the execution.

Think you have what it takes to be an entrepreneur? Here are three tips on getting started:

Related: 3 Steps to Deciding if Entrepreneurship Is Right For You

1. Get out there and sell door-to-door. Yes, I did just use the word door-to-door. While people are able to hide behind their computer screen and emails, meeting face-to-face with potential customers can help make you a stronger businessperson. It separates the haves and have nots, because when you get down to it, going door-to-door is an awful experience.

People don’t want to talk to you, and sometimes, they can be rude. Yet, if you persevere and don’t get discouraged, you will quickly learn what customers want.

Plus, going door-to-door also teaches you to be creative in gaining people’s attention. Call it bootcamp for your elevator pitch, because if you can get a customer to buy off a walk-in there is a good chance your product is fulfilling an unmet and in-demand need.

2. Start hustling. Entrepreneurship is a hustle, especially for those starting out. You are broke, you have done nothing and people don't take you seriously. You kind of have to hustle in order to survive and succeed.

Related: As a Student Entrepreneur, Expect Crunch Time All the Time

It also teaches you how to leave your ego at the door. People will be turned off from buying your products if you have a massive ego on all the time. There is a time and a place for that, but when meeting with potential customers be humble and work hard. People will respond positively to it.

What has helped me succeed in the hustle is creating a story around my business. People are more receptive to storytelling and engagement than a boring product brochure.

3. Do not rely on one stream of income. While you may want to dive into your new venture and go full force, I don't recommend it. Relying solely on income from your startup, can cause your company to die before it even gets off the ground. When you first launch, you are making almost no money and the little amount of revenue you are generating should be invested back into the startup, not put in your pocket.

Also, if you think an investor is going to save you, think again. Most startups are bootstrapped, and you will go crazy spending all your time looking for these magical investors.

As an aspiring entrepreneur, I believe you need about five different ways of making money. Sounds crazy but going down this route can help you hedge the risk of going completely broke. If one of the ventures takes off, even better.

Plus, it allows you to focus your attention on your passions rather than a boring day job. Developing a diverse skillset makes you that much more valuable to your company. For example, I was forced to learn Photoshop to save my startup money, and now that skillset is invaluable.

Another perk of not relying on one income channel is your network connections are much broader. You get to meet people of different backgrounds, which in the end, it all comes down to who you know anyway.

How 'Nightmare' Producer Tim Haskell Turned NYC's First Haunted House Into a Year-Round Business

Ten years ago, when Tim Haskell couldn't find a haunted house in New York City, he did the only thing a theatre producer would do – he opened his own. Today, Haskell runs Nightmare, a theatrical haunted house that draws in thousands of visitors each year around Halloween.
When Nightmare opened in 2003, it was widely thought that having a haunted house in New York City was, if not impossible, at least not profitable. Concerns over building permits, safety and profitability obstructed the creation of a haunted house. Even Haskell, who was working at the time as a publicist and producer, originally envisioned Nightmare as drawing an audience similar to an off-off-Broadway play.
"The first year, I told my wife, ‘If 100 people show up tonight, that'd be really awesome,' recalls Haskell. "The first night, it was literally over 1,000."
Since then, the endeavor has only grown. This year, 30,000 to 35,000 people are expected to walk through the event and tickets at $30 to $60 a piece. The event opened September 27 and will close on November 2.
Every year, Haskell invents a new theme that calls for a new layout, script and characters. This year's event – entitled "Killers2" – is the first year that a theme is being repeated, as Haskell says he had too many serial killers he wanted to represent to fit in last year's first "Killer" theme. Haskell has performed Nightmare in all five boroughs, opened a haunt in Miami and encountered interest for international ventures.
With growth comes a changing role for Haskell. "When I opened the door and there were a thousand people outside, I hated it and I loved it, because I had no idea how to deal with it," he says.
Today, his job has expanded far beyond that of a theatrical producer, as he oversees the planning of the rooms, acquires building permits and manages the 100 people involved in the production. "I wish I only had to worry about the creative, but now I don't," he says.
As Haskell balances the technical and the creative in his schedule, he also attempts to incorporate changes in Nightmare while sticking to its theatrical roots. "I think the theatricality part makes Nightmare scary as hell," says Haskell. Don't come to the haunted house expecting traditional scares of loud noises and masked villains. Instead, Haskell has remained committed to the idea that well-acted monologues are key to terrifying visitors -- though he's not above bloody hands grabbing guests from the shadows.
While September and October are "the craziest time of year" for Haskell, Nightmare has become a year-round job. Haskell continues to direct plays, but the business of Nightmare is a constant – and that's the way he likes it.
"If I could do this kind of stuff all year, I would be happy. It's really fun and artistically satisfying," he says. "I think more about this than any production, ever."
In response to Haskell's success, New York City has produced a growing number of haunted houses. During October, dozens of productions pop up, from trendy immersive theatre to burlesque cabaret. Time Scare operates year round, and not only has a haunted house, but also a "Crypt Café" and "Kill Bar."
However, Haskell's move toward year-round Nightmare is more dedicated to the idea of dark theatre than the traditional haunted house. Haskell already produces a Christmastime haunt, "The Experiment." Instead of a haunted house, individuals are selected to face their fears, whether they be gift-giving anxiety or rodent-induced disgust, in some creative manner as the audience watches with a mix of amusement and anxiety. Haskell says the show typically draws a smaller crowd than the Halloween event.
Someday, Haskell hopes to be scaring audiences every season. He's already working on Camp Nightmare, an overnight haunt in the woods, and if he can find a way to execute an Easter project in the spring, Nightmare would become a year-round terror in a very different way than most full-time haunted houses.

8 Mistakes to Avoid When Starting a Business From Home

Launching a business from home can provide tremendous flexibility and the kind of work-life balance that we all crave. But the reality is that home businesses bring their own set of challenges, says Caroline Daniels, lecturer for entrepreneurship and technology at Babson College in Wellesley, Mass. For example, "doing your business on your own from home can get stale. It's hard to keep feeding the imagination all on your own."
Here are eight mistakes to avoid when starting a business from home:
Spending Too Much Time at Home: Loneliness is the number one complaint from people who work at home, says Anne Alexander, a small-business coach in Brevard, N.C. "Many people are not prepared for the isolated working environment." While it may seem easier to do everything virtually, that isn't the best approach. Instead, take time away from your home office for face-to-face meetings that will help build your business. Plan lunch dates, attend networking groups or work from coffee shops to build a social element into your day, Alexander says
Keeping a 24-7 Work Schedule: When Leon Oks co-founded iCanvasART, an online seller of custom canvases, he and several employees spent day and night working from his dining room. It's a recipe for burnout. "You're feeling guilty that you're not working, and there's no disconnect," Oks says. Eventually, he asked employees to leave by 6 p.m. and made sure to schedule free time into his day. But this year, he moved his Niles, Ill.-based company to an office space because the growing business was becoming difficult to manage at home.
Related: Simple Time Management Tips When You're Overwhelmed
Allowing Interruptions: Without a boss breathing down your neck, it's easy to take a phone call or two from family and friends. But when you're constantly in "interrupt mode," it hurts your business focus, Daniels says. To combat disruptions, she recommends setting aside blocks of quiet time throughout the day when you don't allow phone calls or email alerts. You also need to be careful about getting pulled too often into distracting chores like laundry or childcare. Remind family members and babysitters of your work hours and explain you'll be answering only urgent requests.
Depending Too Much on Loved Ones: Without coworkers around, you can easily fall into a habit of talking out your business problems with your spouse or friends. But loved ones may get weary of talking about your business. What's more, they may not provide the best advice because they don't always understand your business, Alexander says. So, try to connect with others in your field to develop an informal network of advisors. "Build a mastermind group of others with home-based businesses," Alexander suggests.
Related: How to Stop Over Thinking and Get Things Done
Failing to Create a Separate Work Area: Even if you don't live in a huge home, set aside a space reserved almost entirely for work. Opt for a little-used room or even an empty corner of your living area to create a physical divide between work and home. If you must work in a common area of the house like the dining room or kitchen, put away personal objects to set a professional tone for the day, Daniels says. "Even if you don't have a separate space, you can create it."
Letting Employees Abuse Your Home: You risk damage to your home if you don't establish rules for how employees should behave there. For example, Oks got stressed out over how his workers would eat lunch in his living room, walk on his light-colored carpet with their shoes on, and tack notes onto the walls. Instead of scolding employees later, it's better to set expectations from the get go, Oks says. "Set up rules you're comfortable with." Oks began asking employees to take off their shoes and clean off their workspace at the end of the day so he could use his dining room table each evening.
Related: To Do More, First Slow Down
Getting too Busy to Stay Organized: As work piles up, it's easy to let organization slide, says Tata Harper, who started an eponymous skincare line at her home in Shoreham, Vt. "It is easy to succumb to disorganization when you are working in the same place that you live since it is a private space that you don't often share with" coworkers or other visitors, she says. Harper files papers away before they pile up and stores only business-related items there. In addition, she finds that decorating and brightly lighting her office motivates her to keep it clean.
Starting the Day Without a Plan: "Without conscious decisions about how to spend your time, your day can slip away without much to show for it," says Elaine Quinn, Chicago-based author of There's No Place Like Working From Home (Calloran Publishing, July 2011). Instead, give time to both short-term actions and long-term goals so you run your business in a more balanced manner. Create a schedule and stick to it. "Rather than making to-do lists, enter tasks directly into your [daily] planner," which allows you to set a specific deadline for completing each task, Quinn says. Also, make sure you leave unscheduled time in the day to deal with important but unexpected issues that crop up.

How to Transform Your Passion into a Successful Business

Starting your own business is like jumping on an emotional rollercoaster with the highest of highs and lowest of lows -- all the while, wondering if the ride will come to a screeching halt. Anyone can start a business but it’s infinitely harder to grow and sustain it. When a company faces challenges and falls on hard times (and it always does), it’s your passion and commitment that ultimately get the business through to the other side. If you don’t have a true passion for your business, everyone can sense it: your customers, team, advisors and investors.
That's why focusing on your mission is of the utmost importance. This will enable you to make faster decisions and help you manage through the rollercoaster ride.
Here are three steps to help transform your passion into a successful business:
Do you know enough? If not, start asking. You have a passion and want to start a business! Do you know enough about the industry? With industry background and know-how, you’ll be ahead of the curve and can hit the ground running -- producing products, building a customer base and forging your company vision.
If you have a great idea, but aren’t familiar enough with the field to get started, use your network, speak with people who’ve started businesses in your industry to help you get up to speed quickly. This is like building an informal advisory board of people who’ve gone through a journey similar to the one you’re embarking upon.
When I started NatureBox with my college buddy, Ken Chen, food was a passion of ours, but we honestly didn’t know much about running a food business. We began networking and discussing our idea with seasoned industry innovators to glean insights and learn strategies, tips and tricks for successfully running a food company. Our big breakthrough came when we attended a food tradeshow and met a few suppliers who were willing to work with us. Until then, we didn’t know how to find manufacturing partners.
Jump in. There’s really no better way to start than diving in head-first. In the beginning, you may not have your exact plan mapped out, and you’ll likely make significant changes to your model. But the benefit of starting a business around a passion is that you know why you’re doing it and can more easily overcome barriers that come up along the way. It’s this deep-rooted drive and enthusiasm that will keep you motivated and engaged with the product you’re selling.
Ken and I held other full-time jobs when we built the first NatureBox website. We used product photos taken on our cell phones. We were testing whether there was a market for people who wanted nutritious snacks delivered to their door and immediately saw opportunity -- more than 100 people signed up in a weekend. Now we had to decide if we were going to send our first orders or simply refund the customers, writing this off as a successful first-run test. This is where taking the plunge, is so important. There really is no better time than now to just go for it.
Surround yourself with others who share your vision. It’s no coincidence that everyone at NatureBox has an interesting story about how food shaped their lives -- whether it’s a personal weight loss journey like myself, food experience from a previous professional career, or a background growing up in an agricultural environment. We hire based on these shared experiences because they help shape the business.
Because you can expect long work hours and hard days in the beginning, personal drive and shared similar values with your colleagues will see you through this time. This enthusiasm translates to a positive customer experience. And that's what will build your business.
Turning your passion into a successful business not only allows you to be profitable while doing something you love, it helps set you up for lasting success. Most importantly, passion is central to making decisions that are in the long-term interest of the customer and the company, which will help you establish sustainability and longevity for your brand.

Artists Are Job-Creating Entrepreneurs, Too.

If you are looking for the heart of the entrepreneurial community in your town, don't bypass the artists.
Thanks to legendary startup stories from Silicon Valley, we tend to conflate the idea of “entrepreneur” with technology-driven, West Coast-located, hoodie-wearing young billionaires. We don’t often think about the painter, sculptor, dancer or theater professional.
But, truth be told, artists are self-employed at much higher rates than others in the workforce. About 34 percent of artists in the U.S. are self-employed, 3.5 times the national workforce average, according to a paper released today by small-business organization the Kauffman Foundation that cited research from the Census Bureau's 2011 American Community Survey.
While cities have long looked to develop rich cultural communities to improve quality of life, attract new residents and cultivate tourism, there is new understanding among city leaders that artists are also entrepreneurs who bring in money, create jobs and give a boost to neighboring and related businesses, says Ann Markusen, director of the University of Minnesota Humphrey School of Public Affairs and author of the Kauffman report.
As cities become aware of the economic benefit of supporting artists entrepreneurs, their policy agendas need to develop, Markusen says. The publishing, advertising, music, design and architecture industries are all directly benefited by a thriving artistic community, the report says. Meanwhile, local small-business support programs often center on the manufacturing, service and retail industries.
“[Artists'] innovative challenges differ greatly from those faced by scientists and engineers. Artists and related cultural workers tend to fall through the cracks in traditional workforce and small business development programs,” Markusen says in her report.
To cater toward those creative entrepreneurs, city leaders should know who the artists in their community are, develop local space and equipment sharing facilities and create affordable artist studio options, Markusen suggests. Further, she says cities should develop local training and networking opportunities specifically for artists that involve regional faculty. Markusen also recommends having artist entrepreneurs present when city agendas are set for some departments including transit, tourism and public safety.
“The twenty-first century will belong to the distinctive city, and entrepreneurial artists and designers are key to that future,” Markusen says.

3 Things You Need to Know About Launching a Product Business

It is a golden-age for innovation with companies revamping the business of invention and democratizing the way we monetize new ideas. Think Kickstarter, Quirky and -- shameless plug of my own business -- Trident Design.
If you have an idea for a brilliant invention (you know you have at least one!) and are thinking about pursuing it, your options -- apart from suing people based on patents -- can be grouped into three categories: make and sell it yourself, license it or submit it to a crowdsourcing site.
How do you know which one of these paths is the right one for you and your idea? That can be a confusing question, and there is no “right” answer. Let's take a look at the first option: starting a company to make and sell your invention.
Making and selling a product yourself means setting up production, business systems and a sales team. It is exciting, challenging and a lot of work. It can’t really be done casually given that a normal manufacturing company can have many employees.
I have seen many lives made stressful by people underestimating the challenges of starting a product company. You should only pursue this path if you are so passionate about your product that you want to sleep with it under your pillow. It should be your undying dream to stand at the prow of a yacht with the name of your product on its side.
1. You can make (or lose) a whole bunch of money. The pro side of the equation is that starting a company can add up to bigger numbers for you and your business. If you build a successful product, you can sell a business rather than license intellectual property, which can have a much higher value.
Starting a business has the biggest potential payoff out of all the ways of commercializing your idea but you will need the wherewithal, ability to build a team and passion for your product. Be honest about your level of commitment to a product before you risk too much.
Despite what you might think from seeing “easy” Kickstarter successes, starting a business requires tremendous effort and investment. Once you have half of your life savings invested will you be able to walk away? Only go down this path if you can’t help but do it because you can’t not do it. If you can conceive of a world where you license the product, that is probably your best option -- at least at first.
2. It takes twice as long as you think to get to market. I have launched more than 70 products myself. Products take about twice as long and cost twice as much as people think they will, no matter how well you think you’ve planned. This means you need to be extra conservative when assessing what you can afford to risk in a product venture. I have seen many promising products fail because the inventor had to return to other employment in order to pay the bills.
3. You can't stop at just one product. Another thing to be aware of is that you will need to immediately start developing follow-up products in order for your company to survive. Very few companies survive on just one or two products. You have to keep adding new items every year in order to stay relevant and ahead of the innovation curve. If you don’t have ideas, you need to be considering where you are going to source them. They will cost money to develop and may need to be brought to market before the first product is fully developed in the marketplace.
I do not intend to sound discouraging. Making and selling your own products is a rush and we are getting ready to launch a couple of Kickstarter campaigns here at Trident for products we feel passionate about ourselves.
But go in with their eyes open, ready to smash all the obstacles that will present themselves and stick it out through the long slog to victory. I've met many inventors who unwittingly got in way over their heads and could have pursued a much lower risk path to commercialization, like licensing or submitting.
Take a look at your idea. Ask yourself the following questions and answer honestly:

• How much do I love this product and want to live and breathe it every day?
• Do I want to keep my day job?
• Am I in love with the industry of my idea, or do I just want to make money?
• How much do I love sleep?
• How much money can I access? How much will I need?
• What lifestyle do I want?
• According to experts, how big is the opportunity is this idea?

If you are honest with yourself and still want to start a company, go for it! If I raise doubts in your mind, please, seriously consider other options.

Startup Entrepreneurs Have Confidence. Duh.

Pssst. Want to know a secret? Entrepreneurs are insanely confident.
Of all the data points released about the economy week after week, perhaps the least helpful nowadays is the Kauffman/LegalZoom Startup Confidence Index. With apologies in advance to the Ewing Marion Kauffman Foundation and online legal-advice company LegalZoom – both of which I have no doubt carry the best intentions and otherwise do good work – and, with an additional shout out to John Calvin, tracking startup confidence seems an exercise in predestination.
You will never, ever find a time when startup confidence, as measured by this survey, is not high. Ever. Startup owners are confident, so confident that, well, they started a company. One needn't waste human hours tallying numbers to express that.
Let's take a deeper dive into the numbers themselves, released this morning. Despite what the companies call “ceaseless uncertainties in Washington” and “mixed signals” on the economy, it turns out the confidence of owners of startups is at a new high of 86 percent.
Put aside that the “new high” isn't all that significant since the survey has only been tracking sentiment since the first quarter of last year. There are other, more significant problems with the survey and the results:
The life of the businesses surveyed is too short. In ordered to be surveyed, you had to have started a business within the past six months. This is the biggest problem with the data compiled: You are talking to people who felt optimistic enough about their own abilities to quit their jobs and start a business. It puts to mind what Reed Hastings said, that to be an entrepreneur “you have to feel like you can jump out of an airplane because you're confident that you'll catch a bird flying by.” Entrepreneurs may succeed or fail, but confidence never flags.
It asks the wrong question. The lead question is a simple one: “How confident are you that your business will be more profitable in the next 12 months than it is today?” Well, most businesses are not profitable in year one, let alone in the first six months. So, since you are asking people who are trying to turn losses into a viable business whether or not they think they will be more profitable, isn't the answer always “yes?” And, if not, does that matter? Many tech startups have multi-year business plans that call for many quarters in the red. That doesn't make them any less successful, particularly since they probably have raised a war chest of cash to burn.
The survey tracks respondents by age. According to the latest figures, 95 percent of 18-to-30-year-olds and 94 percent of 31-to-40-year-olds feel certain about near-term profitability. That the youngest group should feel more confident again shouldn't be a surprise, because they lack long-term experience in being able to judge consumer demand. There is some evidence that younger entrepreneurs are less successful than older ones.
It is not a predictor of future startup activity. One would think that entrepreneurial confidence would lead to a higher rate of startup creation among the younger demographic groups. In fact, it hasn't. Just look at Kauffman's own Index of Entrepreneurial Activity, which showed the share of startup activity by people between the ages of 20 and 34 fell from 34.8 percent in 1996 to 26.2 percent in 2012. At the same time, the share of companies started by people aged 55 to 64 rose from 14.3 percent to 23.4 percent. So, if confidence is higher among the younger entrepreneurs, why is the growth rate for new business creation so much higher among older entrepreneurs? Well, it is because the population is aging. It has little to do with changes in confidence.
It is reliant on LegalZoom's customers. This is an email survey sent only to those people who used LegalZoom products. LegalZoom has some fantastic tools for small businesses, allowing owners to save money on the reams of documents they need to file in starting or managing a business. But, as businesses grow, and the stakes get higher, businesses typically drop software for actual counsel (and curse incessantly over the concomitant billable hours). As a result, you are asking a very small subset of the overall entrepreneurial population – both in absolute terms and size of business – for opinions. Statistically and economically, that isn't a good enough sample off which to make any bolder a declaration than “LegalZoom customers agree...”
There is too much turnover in respondents. This is a quarterly survey of people within six months of starting their business. For those not good at math, that means that you are asking a lot of different people the same questions. Particularly when it comes to something as tough to measure as confidence, it is more helpful to hear how respondents' thinking evolves over time. Being a startup owner is great, but growing that business into a multinational, big-money enterprise is even better. That kind of experience is lost when you look at people's sentiment at just the starting line.
So, is looking at confidence a waste of time? Not at all. Consumer confidence is a nice way of judging potential sales. Looking at the customer – rather than your peers – has a bigger impact on business planning. And, even gauging sentiment among business owners is helpful when you are asking a wider range of questions to a bigger group of companies, as the National Federation of Independent Business does with its Small Business Optimism Index.
For its part, Kauffman, in a statement, says the report “helps illustrate the resilience of the American economy and the way in which new business creation constantly creates a new economic future, even as the surrounding economy appears stuck.”

Survey: 1 in 2 Angel Investors Regrets an Investment Made This Year

Angel investors sign up for risk. That’s part of the game. What really gets them frustrated, though, is being sold unreasonable financial projections and valuations.
Nearly one in two angel investors surveyed by Worthworm, a Scottsdale, Ariz.-based startup valuation company, reported having regretted an investment decision they made this year. The small-sample survey of 100 angel investors was conducted in July by market research firm OnePoll.
Of those angel investors who regretted an investment, almost half report that the problem was pie-in-the-sky financials -- entrepreneurs telling them that their company was going to be worth more than it was or that it would make more money than it ended up making.
To get an angel on board -- and keep him or her happy -- entrepreneurs need to have well thought out financial valuations and revenue projections they can deliver on.
“Our research clearly shows that angels believe the majority of entrepreneurs do not do their homework before stepping through the door,” says Alan Lobock, a co-founder of Worthworm, in a statement. “It is imperative that they put themselves in the investor’s shoes and prove that they can efficiently scale.”
Only a small percentage of angel investors say they are in the startup investing game for the pure thrill of it. Most angels say they are looking to either diversify their portfolio or are attracted by the potential for a high reward on their investment.
In addition to wanting well-researched and reasonable financial projections, angel investors' other top concerns when deciding where to lay their financial bets also include having a demonstrable sustainable competitive advantage and relevant previous experience on the resumes of the startup team.