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About Entrepreneur America (EA)
Before I can tell you about EA, I need to tell you a little about Ascend. I founded Ascend with three other co-founders and my wife in late 1988. Our original business plan was network customer premise equipment for a new ISDN digital phone service. In essence, we were going to be the on-ramp and off-ramp to the new service. We were funded by Kleiner Perkins and Greylock.
The only fly in the ointment was that ISDN was not being rolled out by the telephone companies, as planned. We re-invented ourselves
using a process I call "the Sunflower model" (My book "Smartups" has a good chapter devoted to the Sunflower. My blog is
previewing and soliciting user comments on the next book "The Sunflower model").
In any case, our re-invention had us doing the infrastructure equipment for the "inside of the Internet". In essence, we now became
the on-ramp and off-ramps onto the Internet. Our customers were the Internet providers, like MSN and AOL and the telephone
companies. These companies bought our concentrator on-ramps to the backbone Internet. Other customers were businesses and
consumers who bought a small Internet access box that came in different flavors based on communication lines.
Ascend grew to over two billion in sales, and we took it public in 1994 five years after starting it. Ascend was a Wall Street darling, splitting
three times in as many years. Ascend was sold to Lucent/AT&T in 1999 for a record 24 billion. I left in 1995 because I needed surgery and frankly
I was tired. After a short time recovering, I needed to give back. I still enjoyed entrepreneurs. I still had in the instincts and knowledge to
help young companies. So I started EA.
EA
I run EA from my Montana ranch, it is uniquely set up to run a boot camp for qualified entrepreneurs. In general there is one team at
a time at the ranch. EA is all about helping qualified entrepreneurs, not wanna bes (see chapter one of Smartups for all types of
wanna bes, if you are the guts and brains type I am all ears). EA doesn't need to make money unlike many other mentoring
organizations (I made plenty with Ascend, Ascend was sold for a record 24 billion to AT&T Lucent in 1999). EA isn't populated with
MBA's, consultants and other types who have never built or managed a company. I am EA. If you are one of the EA companies, you
have me.
What do I look for?
The short answer is I look for real entrepreneurs, people that already have an idea, they are building it, they are selling it, they have
some revenue and customers. Their product/service has a high value proposition (meaning it is measurable in dollars and is
significant). The founders are doers with the exact skills to implement their business. The competition is asleep at the wheel like
Ascend's competition had been. I don't want wanna bes, sorry it is a waste of time yours and mine. If you want a longer and more
detailed view of what I want (including an analysis of wanna be) buy and read the book "Smartups". No this is not an info
commercial for "Smartups", I don't need the book royalties and they go to Cornell in any case.
How do I apply?
I am loath to read Business plans because they are in general horrible. There are two good ways to present the Business material. The first is thru a good presentation (see Tips, war stories and tutorials). The second is thru a good executive summary which is 1-2 pages. If you followed the presentation and answered the questions posed in my tutorial then writing the 1-2 pager should be a breeze. Once you have a good presentation or executive summary, fill out an online application, or if you prefer not having to fill out an application you can just send us your executive summary.
What happens then?
After you send your online application, what can you expect? I try to read the submissions in a timely manner. If I am interested I will ask Tim to set up a phone meeting. If you don't hear from me or Tim that is probably due to the fact that I am not interested. If you are uncertain of your status, contact us. Please don't bug Tim it will not help and may hinder.
I am invited to Boot Camp--what happens there?
So you sent your executive summary or presentation, we had our phone conversation and you have been invited. You arrive in Missoula, Montana. You get there all on your own. You rent a car and drive down to the ranch. You stay in a cabin overlooking the river. Next morning, you meet with me at around 9 am. I will ask you what you want to accomplish and make note of same on the whiteboard. I will want you to present your business, if you use my presentation guide it should go well. Otherwise, we will abandon your stuff and ask you to give a simple whiteboard talk.
After that we generally look at the financial needs. I am a big fan of bootstrap companies. They have product, they have revenue, they understand the customer and well they are out doing the startup, which means sell, sell and more sell...
I generally try to map a plan for the startup, this could be a bootstrap attack, this could be an improved presentation or this could be a major remake of your business plan, using the "Sunflower model" (see Smartups).
We have lunch, we work more and then if the weather is nice we may ride or walk on the ranch. Later, Terry and I invite you to the main hours on the river for dinner, in a room overlooking the river. Hours later and some bottles of wine and a wonderful time for all, you head back to the guest house. Next morning, we meet early to finish up what was undone and to talk about whether we mutually have any interest in moving forward. If we both do, I will explain how I work.
You want to be an EA company, what can you expect?
As an Ea company, you have access to me. Tim tracks me down or schedules depending on need. I am very good at modeling a business
(see Sunflower model chapter in Smartups book). For example, let me take you through when I first met the NetCracker folks:
"
These guys, Netcracker, had a potential hot rod, but their marketing plan was a lemon. What they had was a network simulation package that ran on a PC. The database stored information on types of network equipment from various vendors. In the simulation, a user could select sample equipment from the database to build a model, then see if the parts were compatible and whether or not the whole system would work when actually hooked up.
These guys were Technoids with a capital “T.” They had a good database, but no understanding of the business model, product, or customer. The team droned on and on about licensing the software and database to corporations for simulating their in-house networks. I quickly interrupted. “The database is interesting,” I said. “But what you guys are planning to do with it is really boring.” They stared at me as I continued. “You need to focus on making money from the database right away, not the simulation,” I said. “Use the Web to do it.” Like telephone companies using it for network equipment inventory. Or a tool for network resellers to use in ordering equipment. Or maybe corporate clients could use it for purchasing and configuring equipment.
But the founders disagreed. They left my hotel room confused and didn’t do anything I suggested. Nine months later I got a phone call from the son of one of the founders-he had replaced his father as CEO (Dad became head of research and development). He wanted to go in exactly the direction I had recommended earlier. I invited him out to Entrepreneur America, and we started working together.
Now they’ve got four potential markets for this product, and they’re about to enter into trials with one of the largest network systems distributors and a large telephone company. Netcracker has done its customer homework. By landing $2 million contracts, it has created choices for itself. The company can raise venture capital money or build the company off cash flow.
The story illustrates a common mistake made early in the start-up process-namely, the company may have an interesting core ability or technology but frequently develops it into the wrong product and aims it at the wrong market."
-- Smartups - book by Rob Ryan - Chapter 2, p.g 35.
-- NetCracker was sold to NEC for over 300 million dollars in late 2008 - early 2009 --
Board of Directors
The chemistry of a Board is very delicate. Before I agree to be on anyone's Board, I want to talk or meet the BOD members. It is important that all Board members are comfortable with me and vice versa. Board members are typically compensated--that is true for me as well.
Compensation
Over the many startups I have helped, I have developed an algorithm that works for both the startup and myself. If you are invited to the ranch and choose to come, there are no costs--neither stock nor dollars. You will get yourself and your team out to the ranch on your own. If we decide to move forward, it is a mutual decision. At that point, we can talk about compensation. My compensation is always the right to buy stock, common and preferred. With respect to the common, the founders treat me as a founder although with far less holdings. With respect to preferred, my participation is always welcomed.
What will I do?
I will be a mentor to the CEO and founders. My responsibility as a Board member is to the investors, shareholders and the company. Often my help will result in changing the business model (often needed), personnel decisions, operational decisions, etc.
What I won't do
I will not be the CEO or the CEO's CEO. If there is a CEO/founder, I will do my best to help him/her become a great CEO.
