MINDdrift - inside the mind of an entrepreneur - David Hauser

With the advent of so many awesome resources for entrepreneurs, there's no lack of advice out there for the smart and enterprising entrepreneur. But after you've heard from the thought leaders, advisors, board members, family, friends and maybe even the person you sit next to on the plane, what do you DO with all of it, and how do you even know if you should take advice? I like to tell people that entrepreneurship isn't one-size-fits-all. You've got to find what works for you after a lot of hard lessons and figure out what you'll do with the information. Here are a few tips to get you going.

• Listen, listen and keep listening
  No matter what you think you know, you should continue to listen to what others have to say. You don't have to follow all of their advice (or any of it), but hearing what they have to say expands your mind and forces you to think differently--and that's what will clear the way for your next "big idea."
• Filter
  As any successful entrepreneur knows, you must filter the sources of advice you seek. It might be helpful to think of all of the advice you get as belonging to separate categories. If you're really conscientious, you can file the good information you receive into groups like, "start-up phase," "hiring," "getting focused," and so on. When you want to return to these areas later, you can do so easily. It just creates a reservoir of information you can return to again and again.
• Look for advice from people who have actual experience
  It seems like a no-brainer--look for advice about entrepreneurship from actual entrepreneurs--but nowadays, a lot of people pass themselves off as "experts" in subjects about which they've no first-hand knowledge. Many "experts" on entrepreneurship gather their "data" from other people's anecdotes and experiences. That's not what you need. The best advice comes from real life personal experience, plain and simple.
• Have passion, but also rock-solid core values
  No matter what, you must follow your passion and core values. This is to say that no matter what advice you receive about running your business, ask yourself, "Does this fit with my core values? How so?" Not everyone's advice will work for you or take into account your particular passion. So don't think there is only one way to do things--there isn't. Even if you get advice from one of your personal entrepreneur icons, always ask yourself if it fits with what you're trying to achieve. As I've said, entrepreneurship isn't one-size-fits-all.

Every entrepreneur should listen to all the advice out there, filter it and then select what best matches your passion and values. Never forget valuable, experienced-based advice. Seek out mentors and surround yourself with people that have been there and done that.

We often hear about how tough the airline industry is and how so many of the large U.S. carriers struggle with everything from union issues to a drop in travel. However, the more I fly, the more it is clear to me that the worst airlines might in fact be impacted by all those issues, but what they really struggle with is a culture of mediocrity, which creates inefficient and ineffective processes.

What finally convinced me was what should have been a simple non-stop flight from Dallas Fort Worth (DFW) to Boston Logan (BOS). I was scheduled to leave at 8:10am Saturday morning, but the night before as I had finished meetings early, I tried to take a late flight out of Dallas, which was nowhere near full. However, instead of putting me on this flight and filling a seat for a reasonable price, AA would only put me on $1000, even three hours before it was scheduled to leave (and not full). I went to sleep thinking, "That's kind of silly, I would have paid a little more to change--maybe not $1000, but a reasonable amount. And the seat was available so it would have been efficient for them to fill it, and it would've made me a happy customer."

At 4:23am on Saturday morning, I got a call from an automated AA system saying my flight was cancelled, and I would have to fly through Washington, DC, back to Boston. Half-asleep, I pressed a button to talk to an operator, and was informed my flight was cancelled because of "equipment failure." Luckily, I was able to get on a 6:40am flight non-stop to Boston, but I had little time to get ready and get to the airport. So I got dressed, packed, and made my way downstairs to get a cab to the airport, 30 minutes away.

As both an entrepreneur and unhappy traveler, at this point, the questions start to pop up in my head:

• Why not put a passenger on an empty flight a few hours before it is set to take off, maybe even make $150-250 extra? If the seat's just going to remain empty anyways, it's a good move.
• Why schedule two daily flights at 6:40am and 8:10am, rather than splitting the difference and running just one?

The last question was answered for me when I got on the plane. One of the flight attendants was talking to a passenger and said that almost every day AA will cancel one of the two morning flights depending on which is "less empty." The interesting thing is the Federal Aviation Administration (FAA) specifically forbids airlines from doing this-- by law, they must fly scheduled routes unless there is something called "equipment failure." So what does AA do? They file "equipment failure" each time they cancel a morning flight with fewer passengers.

The aforementioned scheme does not work well for anyone, American Airlines, employees (flight attendants) and passengers (me). For the flight attendant who told us about the "equipment failure" scheme, it means that she's got to drive to DFW wondering which route she'll be flying, and if she'll get paid for both flights, or if AA will cancel one and she'll take home less pay. For passengers such as myself, we get the inconvenience of being held at the mercy of AA and other airlines that use deceptive practices, flout the FAA, and basically just do whatever they want.

This is all just a perfect example of the inefficiencies built into the airline industry, and the culture of mediocrity by everyone in it. End result? The airline industry lost many billions of dollars last year, flight attendants are not happy, passengers are not happy, and flights fly mostly empty. How is it possible in a world where there is so much innovation that we've settled for this poor excuse for an airline industry?

In case you've been living under a rock, there has been a lot of talk recently about Conan O'Brien and the fate of The Tonight Show, which he began hosting in May of 2009, just 8 months ago, and was abruptly pulled from by NBC due to supposed loss of viewership last week. Conan delivered his final show on Friday, January 22nd, and in the wake of his departure, many wondered whether NBC was right to pull the rug out from under Conan and throw Jay Leno back into his old time slot. After all, both Jay Leno and his predecessor, Johnny Carson, had been given the opportunity to develop their viewership over more than eight months, and managed to build large and loyal followings as time wore on. Many asked, Why wasn't Conan given the same chance to build a larger group of followers? The simple answer is "money."

Although what NBC did was ill-conceived at best, I can honestly say that I am relieved that he's no longer the host of The Tonight Show. Why? Because, at the end of the day, I do not care what network he is on and while I would prefer he were on earlier, late is fine, too. Now, I know at this point, he's not going to be on earlier or later (his contract with NBC doesn't permit him to host a new show until September 2010), but this gives him some time to think about his next move. Personally, what I would like is to be able to watch the funny Conan (not the white-washed, diluted Conan they created for mass appeal) as well as Triumph the Insult Dog, the "TwitterTracker" skit, or any of his other skits, anytime I want.

Do I think NBC did the right thing? It depends on their goals. Clearly if they need ratings and advertising dollars today, Leno had a larger audience, however, if they want a long term player that would draw more and more of a younger audience (as their mainstay, older audience goes to bed earlier and earlier), Conan is the clear winner. With my limited knowledge or experience about television I would have gone for the longer term play with Conan and a dedicated, growing and younger fan base (increasingly hard to target, but they spend a lot, which means advertising dollars in the end) compared with Leno, the figurehead for what I consider an aging audience that were not all that outspoken when he left, either.

The better question is what should Conan do with the $33M+ payoff he got to leave NBC?

My answer? Conan should sign with an online only network, start an online only network, or syndicate his show via one of the available online distribution channels.

It is clear that Conan has a vocal and committed fan base that is online, as demonstrated by Facebook campaigns like "I'm with COCO" as well as monopolizing Twitter with mentions and appearing as one of the top trending topics for days on end. He should capitalize on this online-savvy segment and provide content in the way they want to consume it, with iTunes downloads, Hulu and Boxee viewing.

With the $33M+ that Conan has, he could also create his own online network. He would have a long runway as the audience ramped up, but even if he did not want to create his own network, he could take advantage of Revision3's offer to have his show and monetize it, or the infrastructure that Boxee recently announced that allows content owners to collect payments.

Either way, as a Conan fan, I am here to say, "I'm with Coco" and I want to see him again, wherever he appears. It would be an added bonus to see him embrace the new content delivery mechanisms ahead of the curve (something that NBC is still unable to wrap its collective head around), which will only become more popular as time progresses.

Team Coco.

With lots of talk about "cloud-this" and "outsourced-that," it's becoming easier than ever for an entrepreneur to start their journey. While these tools are probably best suited to online or technology companies, many of these same things apply to any new business venture.

• "Cloud" or "shared infrastructure"
  There's no need have a datacenter with fixed costs when you can pay for what you need when you need it "in the cloud". As an added bonus, working in the cloud allows you to make use of others' expertise in running what you need. Whether it's storage from Amazon AWS, or Ruby on Rails hosting from EngineYard, infrastructure can be a variable cost with little to no capital investment.
• Remote employees, worldwide
  Offshore resources have been available for a while, but Amazon Turk and oDesk have widened the market for remote employees and provided important systemization to the process. It is now possible to give tiny tasks to a massive worldwide workforce to complete almost anything. Assign automated tasks or hire developers from anywhere in the world. Scale your team up or down, the choice is yours. Some of these changes have also started to influence the testing or QA market place, another incredible advantage for building an "ultra light start up."
• Outsourced services
  Very similar to cloud resources, but these services have been around longer and just don't have the buzz word of cloud. Despite not being new, outsourced services still provide infrastructure at lower rates, and access to features not otherwise available. From phone systems and email to accounting.
• Crowdsourced design
  Despite their abundance, entrepreneurs still tell me they have a tough time coming up with logos or brand identities at good prices. Now, thanks to sites such as 99Designs and crowdSPRING, getting great logos, corporate identity and other design services are becoming much cheaper. While you may eventually need the design skills of a well-honed (and more expensive) design professional, if you're just starting out, crowdsourced design is the way to go.
• Community
  There is a growing community talking about how to quickly and profitably launch a startup with groups like Ultra Light Startups and lean startup movement with local meetups all over the world. Take advantage of these groups, concepts and lessons learned from people that have been there and done that.

With all these great resources, it's easier (and cheaper) than ever to start a business. It can be a side venture while you work another full-time position, or if you're ready for some sacrifice, you can pursue an "ultra light" venture full-time. The best part is that, moving forward, entrepreneurs have made traditionally fixed cost become variable, which only increases your ability to be profitable very quickly.

What resources do you use, or what is missing from the entrepreneurial toolkit?

Everyone has predictions for 2010; I've read many blog posts about the top M&A deals that will happen, what industries will be hot for VC money, and what will happen in social media. So I've decided to throw my hat into the ring and put out my own prediction:

2010, the first year of the new decade, will be the year of monetization.

Everyone is tired of gobbling up great ideas that are really just based in theory and not in practice. 2010 will be the year of practical application, and subsequently, monetization.

Why this sudden shift, you ask? Simple: times are tough and it has underscored the need for viable business ventures, not just pie-in-the-sky dreams. People don't want to be involved only in speculative ventures at the moment, and this feeling is fueling the move towards monetization. These sorts of things also seem to be cyclical and we're at a point in the cycle where we've already seen a lot of media mega-start-ups, big investments, and an entire book written on the freemium model. Now it's time to move forward. To put it simply, we're finally reaching the, "Crap, we need to actually make money!" stage.

Want proof? It seems that the struggling newspaper industry is finally realizing that giving away content for free on the web doesn't make any sense, and even though actual implementation of a paying model doesn't start until 2011, the move is beginning in 2010. The New York Times just announced, "Starting in early 2011, visitors to NYTimes.com will get a certain number of articles free every month before being asked to pay a flat fee for access." And this is just the beginning.

It may have taken a while for the Times to realize this, but the movement towards monetization won't be as delayed for other industries. As VCs get better valuations for themselves, tighter on deals (and hopefully smarter on them, too) we're going to see actual monetization occur more and more. The monetization of the Times is just the beginning. It's also the least exciting, in my book. What will be more interesting? The push for more bootstrapped companies, and for growing profitable ideas that actually charge customers money. Revolutionary concepts, huh?

With the shift towards monetization, we will see companies become agile and get a minimum viable product to market quickly while focusing on value generation. This is a movement I hope to contribute to with some of the companies I've founded. For example, with Chargify, we'll be giving companies of any size and stage an easy way to utilize a recurring billing or freemium model with managed billing.

I'm really looking forward to watching what happens this year, especially if we finally get to see some businesses that aren't just supported by advertising, but rather, real value and solid product offerings.

Goals and resolutions run rampant this time of year. For entrepreneurs, aspirations for our companies in the year ahead, and thoughts about how to get there, loom large. Sitting on the plane on the way back from a five day off-site executive planning retreat, I thought I would write about two great questions every entrepreneur should ask themselves, and their teams.

1. How do we double sales this year?
   A lot of people's response to this question is, "Spend more on marketing!" But that's the easy way out. I urge you entrepreneurs to consider another angle and think about approaching sales by looking at relationships and expectations. What can you do today that you are not doing, or even thinking about, that will have massive impact? Add an amazing new service that will enhance customer perception of your company? In your position of power as an entrepreneur and business owner, what new strategic relationships can you put in place that will benefit your customers? Make sure you remove all limitations of the current reality to get your thinking to the next level.
2. If you were starting a business that would compete with the one you currently run, what would you do to put YOURSELF out of business?
   Crazy concept, huh? But if you spend time thinking about it, answering this question can be an incredible tool for thinking about your goals in 2010. It forces you to think about what you're doing right as a company, and what you're doing wrong. I guarantee if you truly are honest with this question you will find amazing insights, both positive and negative.

I personally found these questions powerful, useful and the results very insightful over the past five days and so did the rest of the executive team.

I want to take this opportunity to thank Mark Moses, who facilitated and participated in our retreat. Mark challenged us to think about these questions and to be brutally honest with ourselves.

"We're looking for angel investment, who should we talk to?"

I get this question a lot (and I mean a lot). As a result, I thought it would be useful to write a post about the three main types of angel investors and how to figure out which one you want.

The other reason I'm writing this post is because way too many young entrepreneurs become obsessed with raising angel and venture capital (VC). When this happens, these folks lose sight of the real reason they became entrepreneurs: to launch and grow their company. It's pretty similar to what happened during the last tech bubble and it's bad news, unless you remember that raising money is not a sport. If you treat it like one, you'll undoubtedly end up on the losing side.

If you really have no option but to raise money, angels can be a good alternative to smaller VC rounds, but you want to make sure you're working with the right investor. How do you do it? Keep reading to find out the three main types of angel investors.

Angel Investor #1: "I like money and need more."
There are too many of these "professional angel investors" out there, and they're the worst. Their only goal is increasing their wealth. This type of investor is actually a person that wanted to be a VC, but couldn't raise enough capital. The reason they are so dangerous is that they have too much vested in the small amount of money they give to your business, which then leads to over-involvement and pressure on you for all the wrong reasons.

Angel Investor #2: "I have so much money, I don't know what to do with it."
Every entrepreneur has met one of these investors: it's the person who has already generated significant wealth and has no real need for more money, and can be a lot less selective in funding ventures. They're probably in the stage in life when they're giving back, and part of that can be angel investments. This type of investor is ok if you're looking for just money and maybe some general advice about the start-up process. But don't expect incredible moral support or stellar advice from this kind of investor on a regular basis--he or she is likely over-extended in that realm due to their involvement in multiple ventures.

Angel Investor #3: "I'm passionate about a specific industry, and have tons of connections in it."
This is the best angel investor, and a selective one, but the kind you should absolutely target. Why? Because this person already has money and isn't looking to get involved in angel investing to generate more wealth as the ultimate goal. Instead, they're hoping to serve as a true angel and really come through for your business by offering both funding and insight. Best of all, he or she has clear passion for the industry you're in, and probably the connections that will indirectly help you succeed. They'll also have something money can't buy: credibility in your industry and the connections to make good things happen.

My simple advice is to look for angels that fall into either #2 or #3. Stay away from #1 no matter how desperate you get.

Before you even begin to consider outside investment, consider how you can launch the company and get to revenue before you have to raise money. Although it seems hard in the short-term, it'll be better for you in the long-run in terms of your knowledge of the process, and building your own equity.

Doing a quick end of year cleanup while preparing for a great 2010 I found this video of a keynote I gave a few months ago in Pensacola, FL for the iTen Wired Summit 2009. A big thank you to Celia Hilton from Hilton Heads Productions for editing this to 5 minutes.

It's that time of the year when everyone publishes their "best of" lists, the year in review, top blog posts, and so on. Not one to buck the trend, I thought I would contribute to this flow of content with some clever and fun ads from 2009.

These are a few of my favorite ads from 2009 and ones that I could easily remember, meaning they stuck with me for some reason. What were your favorite ads?

Note: I would have included the Dos Equis commercial, Most Interesting Man in the World, but they do not have an official video you can embed. Social media FAIL.

I had the privilege of being invited to talk at LessConf in October and it was one of the best conferences I have been to in a while. The other speakers were amazing and I learned a ton. From thinking differently about design and conventions from the Contrast.ie guys to how Wufoo does support, it was an all-around awesome experience. I had a great time chatting with Mike from FreshBooks and even stole his customer dinner concept. Better than any of the speakers were the attendees and BarCamp the next day. Everyone there was doing interesting things, engaged in the community and super passionate. This is what makes a great conference.

While I am still not sure why the great guys (Allan and Steve) from LessEverything wanted me to talk, they did a great job recording and editing in my slides. Watch the full presentation below.

How many channels do you watch on TV? If you're like me, probably just a handful out of the hundreds of them that come with your cable package each month. But cable providers don't give you the option of selecting which channels you really want to see as part of your package, so you're forced to pay for content you're never going to watch. So what do people do if they don't want to waste money on cable channels they don't care about? Watch TV on Hulu for free instead.

A recent post on Mashable argues that with more and more viewers opting for TV-viewing through Hulu, cable providers may be more amenable to content distribution partnerships with Apple, and the new generation of non-traditional advertising streams, unlike in the past, when they were reluctant to jeopardize the traditional advertising model used by TV for years. But now, with Hulu changing the landscape, providers may be changing their tune, which could be great for consumers.

The Mashable article asks who'd be interested in paying $30 per month to get "TV content through Apple and iTunes?" Er, well, I would. A monthly subscription that would give me unlimited movies, popular TV programs, access to Discovery and History channels that I select, at any time I wanted, would be great. Add to that the option of viewing the most recent 11pm newscast from any major city on demand and you've got one very happy customer right here.

If I were a cable company, I would stop worrying about what will happen to TV because of the internet and start making the device that will take over where Apple and the PS3 have started. Think about it: the cable companies already have the subscribers, the technicians to install the device and service it, so why not own the device and the distribution channel?

It's not a question of whether the delivery of TV content will change, but when that change will take place. Content owners will be getting on board with those who have the desire and the ability to deliver programming fastest, so the time to innovate is now. Will it be Hulu? Apple? PS3? The cable companies? We'll have to wait and find out.

Here is a short video for your Monday, giving you a peak into the culture at Grasshopper. This was created by some team members last week for a Friday fun blog post.

What would you do if the plane you were on crashed into the snow-covered Andes, you survived the crash with an injury, but then you had to figure out how to survive a night in horribly cold and treacherous conditions? Imagine what that would be like--not having food, enough clothing, perhaps even injured, and never having seen or felt cold snow before.

Now imagine having to face those conditions for 72 days.

That was precisely Nando Parrado's experience in 1972 when his rugby team's plane crashed en route to a match in Chile. The movie "Alive" was based on the team's experience. I had the pleasure of hearing Parrado's powerful story a couple of weeks ago when he spoke at a joint EO Boston and YPO event at Mount Wachusett. It was nothing short of inspirational. He described how, after 60 days wasting away on the mountaintop, he and his friend, Roberto, decided they were going to leave the crash site and try to find help. It seemed like a foolish idea--after all, they were surrounded by hundreds of miles of mountains on either side of them, and had no idea where they were going. But to hear Parrado tell it, they had no other choice. He said he preferred to die trying to get out of that nightmare scenario rather than wait for death to come.

Parrado's presentation was filled with amazing lessons about the human spirit, but he also shared a lot of the wisdom he gained from the experience on the mountain in 1972. Although he survived, Parrado lost his mother and his sister in the crash--he and many other players had invited family on the trip because there were extra seats on the plane. In light of this, Parrado has a lot to teach people about life and about loss. I found what he had to say extremely valuable.

Key take-aways from Nando Parrado:

"If you look back, you get nothing more than a damn pain in your neck." When Parrado uttered these words, I took note. He was talking about looking back at that fateful flight and the loss of not only his teammates and friends, but his mother and sister, too. It was clear he'd suffered initially thinking about all of the "what-if" questions that pop up after a decimating loss like his. But in the end, it was his father--who lost his wife and daughter in the event, too--who told Nando that looking back only serves to paralyze you in the present. That's an important lesson.

"Be a little irresponsible and love a little more. Enjoy life but never give up your family." Coming from a successful entrepreneur--Nando has launched many successful businesses in his lifetime--this really hit home. What Nando was saying was that he loved all the cushy things life had to offer, but if he had to choose between working all of the time to afford those things, and being able to spend time with his family, he'd always choose his family over working non-stop. By saying be more "irresponsible," he was asking the audience to slow down. Enjoy life and stop trying to think about how you're going to take over the universe. Live right now.

"Each day is a gift." Nothing we face as entrepreneurs will ever be as intense and cataclysmic as trying to survive in the Andes for 72 days. After the 60th day on the mountain, Nando and his friend set off to get help. They had no real food, and they weren't dressed for the snow. They climbed without equipment. And finally, after almost two weeks of climbing and walking, they got help. Each day after that, Nando said, was a gift. I think everyone could benefit from this kind of thinking.

If you're an entrepreneur--and even if you're not--no doubt you've gone through ups and downs in business, and in life. You may have regrets, you may even replay pivotal moments over in your head from time to time wondering how you could've done better in some way shape or form. Or, perhaps you get so passionate about your ideas that you have very little time for family or friends. If you've experienced either, you have something to learn from Parrado's advice. Learn to slow down and appreciate what life has to offer you. As Nando discovered after his harrowing ordeal in 1972, every day really is a gift and we all have to learn to appreciate it.

In between meetings, projects looming on the immediate horizon, and the rushed interactions of modern life, have you stopped to say thank you to the people who make everything happen? Not in a glib or half-hearted way, but really stopped and recognized all they do? If so, did you then express your gratitude in a meaningful way? I started thinking about this because I just finished reading The Carrot Principle on my Kindle (which is actually a pretty nice way to read) and it made me think about how we don't say "thank you" enough and really mean it, even when it can have such a profound impact on how we relate to others, and how they relate to you.

The Carrot Principle did a great job using massive amounts of data from surveys to explain critical points, showing the value of saying thank you, and how to systematize the process of expressing gratitude in a company. I would suggest any entrepreneur read the book, since most of us never look for or expect it when someone says "thanks." But not saying thank you doesn't mean you're a better leader or entrepreneur, and it certainly isn't what motivates your people. Be grateful for the work your employees do--and show it in obvious (calling out someone's awesome work) and not-so-obvious ways (respecting their time by not throwing last minute projects their way). No one wants to feel alienated from their work, and when you don't recognize what people do, they start to feel invisible.

After reading this book, I know that I personally need to do a better job of recognizing and celebrating more successes and saying thank you to people myself. Not only will it change my relationships, but it will also help build a culture of gratitude, which can only lead to more professional respect and a better team. Sure, it sounds cheesy, but the small thanks we share can make a huge impact on the people around us.

If you're in the web app startup space, no doubt you've heard the big news during TechCrunch50 that Mint was acquired for $170M. That's a very high return on a company that did a great job visualizing data from Yodlee. What is Mint? It's a great service that allows you to track all your accounts, expenses, budget and more. Many people, even ones that use the service, didn't know that Mint actually gets their data from Yodlee, which preforms all the heavy lifting and connecting with financial institutions.

What's even more interesting than the fact that Yodlee feeds all of the info into Mint.com, is the presentation that Aaron Patzer, founder of Mint.com, gave, which was subsequently released online for the Founder Institute. If you're interested in getting funded or curious about the process at all, I would strongly suggest watching the video and viewing the slides as Aaron walks through the process of funding the startup, his views around value contribution, as well as some original slides from investor presentations.

Aaron talks about and provides great insight into the typical angel-to-VC model for web apps, but why not talk about the other model where companies are bootstrapped and actually charge for their service from day one? I know, I know--it's "sexy" to say you've raised money and there certainly are many incubators, angels and others that support this perception, but we need to focus on value generation. There are way too many startups focused on social media, news aggregation, and crowd sourcing that have no real business model other than to raise money and hope to figure something out. Is that really a plan?

Getting funded can work for a few companies, and there will always be huge success stories like Twitter which didn't have a business model when they started, but there are far more failures sitting in the deadpool. I am all for innovation in any industry, and if you have a passion for social media, launch something there, but at least have some model for making money. The model may change, you may give the service away later, but put some value on it today.

Now that my mini-rant is over, watch the video and slides. It's well worth the 30 minutes of your time to gain some insight into an interesting process that might be right for your startup. What other great resources like this are there to get an education about startups online?