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Watch this great keynote from Steve Blank on what a startup really means, the transition to a large company and the power of teaching lean startup methods.

The embed code from Justin.tv is broken, so go here

My experience with Jordan's Furniture began when I visited the Framingham, MA, store a while back to find a sofa for my house. I thought I was headed into a typical furniture store, but instead, it was like stepping into a crazy alternate universe where there were big screen TVs and recliners at every turn. Jordan's doesn't feel quite like a store, but it doesn't feel quite like a casino--it's somewhere in between. Or perhaps it's both (storsino?). To make the experience even more fantastically bizarre, the interior is made to look like the French Quarter in New Orleans; there's even a sharply dressed mannequin moving to and fro in a rocking chair on one of the faux balconies (if my memory serves me correctly, he's even got a pipe). Haunting, yet strangely appealing. Throw in a Massachusetts staple like Kelly's Roast Beef for a post-shopping food fix, a few gumball machines for the kids, and you've got a one-of-a-kind retail experience designed to appeal to most people.

Shopping at Jordan's is truly a multi-sensory experience. So who thought shopping for furniture should feel more like visiting an amusement park? Eliot Tatelman and his brother, the entrepreneurs behind the chain that was purchased by Berkshire Hathaway in 1999. It was Eliot's idea to make shopping for furniture more fun. Curiously, it wasn't how he started out. Many years back, Eliot and his brother had taken over their grandfather's furniture store in Waltham, Massachusetts. Back then, there were no pipe-smoking mannequins in the entry or big screen TV's to captivate customers. However, there was great service, and knowledge of the furniture business. But Eliot wanted to make Jordan's stand out from the competition. So what did Eliot do? He looked outside of his industry for inspiration, and his gaze fell squarely on Las Vegas.

What does Las Vegas have to do with furniture? Nothing. But that was the whole point. Eliot wasn't trying to create the next Las Vegas; he was trying to use the same tactics to grow a chain called Jordan's by bringing people in the door for more than just furniture shopping. He wanted to make Jordan's a destination.

With everything from an amusement ride to huge IMAX theaters, each Jordan's location has an attraction, and it never has anything to do with furniture. It's all about the entertainment and experience. They purposely place the attractions in the middle so you have to walk through half of the store to go see the movie in 3D. Then when you leave, and walk through the other half, there are no signs telling you where to go. You get disoriented like you do in a Las Vegas casino and end up, well, shopping. It's brilliant.

The parallels with Vegas continue. Eliot followed the same business model Vegas did: once entertainment was not enough, he added food to the list of offerings at each location. Going one step further, one store now has a trapeze school.

Eliot's message at the EO event was simple: stop paying attention to your industry and competition and see what those outside of it doing to be successful. When competition gets fierce, don't lock your gaze inside of your own realm of experience--look outside of it to get inspired and make your business stand out.

I just love this infographic produced by Shane Snow showing how a tech startup is like a rock band. While I do not agree with steps five and seven it is an interesting comparison.

"How do I find a technical co-founder?" I get this question all the time, and quite frankly, there isn't an easy answer. However, it goes without saying that a technical co-founder is critical to the success of web startup. I went to Babson College, where everyone majors in business, but this environment is very similar to the real world in that many there was a separation between "business" people and "technical" people. While I was very lucky to be very technical and had done programming in high school, this is not common. So, as a marketing and business person with other business building skills, how do you find a technical co-founder?

1. Find a local Ruby on Rails community and be social
   Part of finding a technical co-founder means putting yourself out there; find the meetups, events, groups and gatherings that are targeted to technical people and go. Do not worry about understanding the technical stuff-- use the opportunity to meet people that are technical and active in the community. While I picked Ruby on Rails (RoR) for a specific reason, you could do this same sort of networking and outreach in many different technical communities. The reason I picked Ruby on Rails is because it is the community with the most entrepreneurial developers, who understand lean startup, testing, and just get that style of starting a business. Not everyone totally understands this, but the concentration is much higher in the RoR community.
2. Get involved at colleges with very technical people
   Depending on where you live, there are great opportunities to get involved with colleges and universities that have super bright technical people. Boston is teaming with colleges and universities, but many schools in other parts of the country have technical people and organizations, and are looking for the other half of the startup equation. Inquire with schools about events to get people talking and interacting.
3. Founder "dating"
   This is a new trend and has started to appear in communities that have a lot of startups. The concept is really simple and pretty self-explanatory, bring people together that are all looking to start companies, already believe in the co-founder concept, and want to find the right person. Then let them "date" or interact in a number of settings in order to determine if they're the right fit. What's great about this is that everyone understands why they're doing it--to find a co-founder of any sort--and that makes everyone's expectations more or less realistic.

Just like networking to meet customers, or finding and hiring the best employees, you need to be creative and look for the places that bring together the type of person you are looking for, then get out there and talk.

How did you find your co-founder or what are some creative methods you've implemented in order to find that technical co-founder?

Having a co-founder comes with amazing benefits, as I outlined in the first post in this series. However, having a co-founder is not without some inherent risks. The good news is that when these risks are well managed, the relationship can be beneficial for everyone involved, and can drive your company towards success. As any project manager would tell you, the best way to mitigate risk is by identifying potential problems, and then creating a shared plan to address them. The following are the biggest risks that I have observed as an entrepreneur:

• Confusion about leadership
  Starting a company means making big decisions, and big decisions can sometimes be stressful. When there are two or more people in control, there's sometimes confusion about who the leader is in any given situation. People (employees) want to know who to turn to for answers, which quickly leads to the "mom and dad game" where people try to play the leaders off of each other. This can easily be solved by dividing up responsibilities, making this clear to everyone on the team, and always being on the same page with your co-founders by communicating the chain of command with regard to each task.
• Lack of alignment
  If co-founders have different long term goals that are not aligned, this will quickly cause problems. Decisions will become an area of stress because you'll continually have to address the fact that you're not headed in the same direction. How does this play out in real life? Imagine if one founder wanted to build a great company and the other wanted to build a company for quick sale--the decisions made with those divergent goals are vastly different. This is not to say that there will always be agreement about the future of your start-up, but if the long term goals are aligned, things roll along more smoothly. Be clear about your goals from the beginning so that you're all on the same page, and frequently "check-in" with each other to make sure you're in sync. Everything should be aboveboard.
• Questions about ownership
  This is a no-brainer: When you have co-founders, you will own less of the company than if you started it on your own. However, the benefits of having a co-founder far outweigh the fact that you'll own less of your company. Why? Because successful partnerships come from the shared mindset that owning a smaller amount of something bigger is better than owning a bigger amount of something small. Simple as that.
• Unclear expectations and rewards
  When a co-founder relationship is unbalanced, it's more likely to fail in the long term as these imbalances grow larger. This is not only about percentage of ownership, but more about the expectations for individual contribution, fair compensation and building an environment that rewards everyone.
• Your best friend is your co-founder
  Opinion is divided around starting a business with a friend, but my belief is that it should be avoided. When you go into business with someone, it's different than a friendship. You have to ask yourself if you're ok altering a friendship over your business. You have to ask yourself if you're ok getting into heated discussions and passionate debates with someone you normally have a beer with on the weekend, someone who knows you better than anyone else, can push your buttons and confuse emotional issues with matters of business. For many, it's a sticky situation, and for that reason, I don't recommend going into business with your friends. On the other hand, many people find a lot of positive aspects to going into business with friends; for example, some say that trust with friends is greater, so you know you're all in it through thick and thin. My feeling is you should 100% trust anyone you go into business with, and you don't have to find that person in your circle of friends. This doesn't mean you can't know the person ahead of time, or have worked with the person in the past, but I would not suggest starting a business with your best friend.

All of these risks can be managed, so there's no reason not to have a co-founder. From the start, building a better relationship with anyone which will lead to more success and more authenticity. So start the conversations with your co-founder(s) early, be open and honest, and make sure everyone can be successful.

What are some of the other risks you have seen as an entrepreneur, and how did you manage past them? Share your story below.

Life is full of ups and downs. If you're an entrepreneur, there are a whole lot more of them. The ride many entrepreneurs take is so bumpy that many have dubbed it "the entrepreneur rollercoaster." As you struggle to launch and grow your business, you'll experience those highs and lows over and over again, sometimes with the same venture, and most definitely with each new business you launch. To give you just an idea of what an entrepreneur goes through, I brought together some resources to create this animated video, "The Entrepreneur Rollercoaster." It provides a brief snapshot into what life is like for an entrepreneur, and how cyclical the process is. Enjoy the ride.

Welcome to a series of posts on the subject of co-founders: why to have one, finding one, dangers or risks associated with co-founders, and then, finally, how to work with them. I am a firm believer in the value of having a co-founder, both from personal experience as well as talking to other entrepreneurs, many of whom had co-founders when growing their businesses, and some that did not. Even those who did not have co-founders later realized the value of having a partner with whom you could share the stress and success of running a business.

There are very few examples of super successful companies that have a single founder. Think about it... Microsoft (Bill Gates) comes to mind immediately, but then, not too many more. Yes, if you combed the annals of entrepreneur history, you'd likely come up with a few. Even Venture Hacks calls Mark Zuckerberg Facebook's only founder (under "The power of two" section, second paragraph), even though he arguably had quite a bit of help (remember that nasty lawsuit by three other Harvard students?).

Having a co-founder may be a crucial factor in the success of a company. But beyond that, as an entrepreneur, are there clear benefits to having a co-founder by your side? Yes. Here are a few:

A co-founder can:

• Fill in the skills gap
  You may have a well-rounded education and ample professional experience, but one person can't be an expert in everything. Everyone is missing important expertise, experience, and most importantly, management skills. What's more, as entrepreneurs, although we're willing to do any job to make our company successful, we do have interests and enjoy certain activities more than others. A co-founder can help complement your skills and fill in the skills gaps in a way you'll never be able to do on your own. Even if you think you can cover everything, why should you if you have a co-founder to lean on who can do it better than you? If they enjoy fulfilling a certain role more than you do, let them take responsibility over it. Something perhaps even more important than the skills gap is the difference in management style. If you've started and grown your own business before, you know that as time progresses, different management styles work better than others. Having a co-founder with a different skill set will likely mean he or she will also have a different management style. It's just one more weapon on your arsenal.
• Provide you with a real companion on the start-up journey
  Starting a business means a bumpy road may appear on the horizon at any point, and it can be a lot easier to handle those bumps (and have more fun) with a co-founder. Advisors, boardmembers and mentors are great, but there is nothing like being able to talk to someone that is going through the exact same process as you are, facing the same risk, the same problems, and the same potential reward: a successful venture.
• Serve as a backstop when you have an "off" day
  We all have those days when we are just not feeling it (and "it" can be any number of things with a start-up), and having a co-founder provides a backstop for those days, even for the simplest of matters. Need to go out of the office for a day or two after spending a week-long stretch glued to your computer, but need checks signed? Your co-founder can sign them. Have a big meeting scheduled when another prospect comes your way? If you have a co-founder, your company can be "present" at both meetings. Having someone you can trust, and is just as invested as you, makes what could be a huge worry just a little bit smaller.
• Balance the extremes
  Entrepreneurs just want to get things done, and they're always moving forward, but they can also face obstacles. It helps to have someone to balance the extremes we all face along the way.
• Point out blind spots
  We all have blind spots in how we manage, implement projects, and go through life. Having a co-founder gives you a peer that can point out these blind spots so you can improve. From personnel issues to how to launch a product, a co-founder will open your eyes to things you might not see.

I'm not trying to say having a co-founder is perfect all of the time. There are always bumps in the road, but the benefits outweigh the very, very small drawbacks. Up next: the risks of having a co-founder.

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.