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cover continued from page 7 determining the venture capital firm wasn’t the right partner. Solovic and her partners didn’t want to give up majority control. She knows the capital infusion would have allowed SBTV.com to grow more quickly, essentially by “pouring fuel on the fire.” “We already built a nice little company,” she says. “We can continue to grow it organically. Everything for us is a matter of manpower and resources. Capital could make that occur faster.” The experience taught her there’s little unanimity in what venture capitalists want. Venture capitalists on the West Coast wanted her to focus on building audience, with little care or concern about whether the site lost money, she says. Venture capitalists on the East Coast wanted to see bigger profits. For now, she’s content to continue building a brand that’s attracting 600,000 to 800,000 unique visitors a month. (SBTV.com’s peak month was 1.3 million visitors). She’ll do that by seeking out “critical partnerships,” such as one that soon will feature SBTV.com on the home page of Hoover’s, one of the nation’s major business intelligence firms. Solovic is a believer in advice given to her by Geraldine Laybourne, founder of Oxygen Network. Laybourne told her, “Ubiquity is the new exclusivity.” EvERyTHInG FoR uS IS A MATTER oF MAnPoWER AnD RESouRCES. CAPITAL CouLD MAkE THAT oCCuR FASTER. COO, Herold parachutes into entrepreneurial businesses to take care of operational issues most owners don’t have the skill or patience to tackle. He specializes in putting together systems and processes—the glue that holds together any successful business. “I’m like an architect who can reverse-engineer a homeowner’s dream home,” Herold says. Before becoming a manager for hire, Herold earned his reputation as second-in-command at 1-800-GOT-JUNK? During his six years as the Canadian company’s COO, it posted six consecutive years of 100 percent growth. It grew from revenues of $2 million a year to $105 million with no debt and no outside shareholders, Herold says. His expertise is “hyperfocus”—getting a company’s growth plan on the fast track by opening call centers, creating strategic plans, hiring people to execute the plans, franchising and building a culture that continually attracts talented workers. When he left 1-800-GOT-JUNK?, he did so because the company needed something that wasn’t in his skill set—a person who could slow down growth, break down silos and get consensus across the company. Today, he’s a one-man operation, choosing his assignments with an eye toward highgrowth companies with “fun entrepreneurs” at the helm. “They don’t know what to do next,” he says. “They struggle with delegating. They struggle with proper hiring decisions. That’s virtually all entrepreneurs need to get to the $100 million level.” Pent-up capital When the economy began to melt down in fall 2008, venture-backed initial public offerings slowed to a trickle. In the first three months of this year, the faucet turned off completely. Entrepreneurs who wanted that outside investment to take their companies to the next level had few, if any, options. Emily Mendell, spokeswoman for the National Venture Capital Association, says venture capitalists typically invest in companies with the goal of taking them public or selling them within five to 10 years. A healthy market generally records 150 IPOs annually. In the 1999 tech bubble, 269 companies went public. Last year, there were six. The economic slowdown meant companies scheduled to exit their venture capital-backed ownership weren’t able to do so, forcing venture capitalists to add unplanned capital to their portfolio companies, Mendell says. Most projections indicate the deal flow pipeline won’t begin to clear until 2010. The nation’s 880-plus venture capital firms continue to invest in companies, though initial funding rounds are down from $5 million a couple years ago to about $1.5 million today, Mendell says. The industry also is bracing for consolidation, as some venture capital firms will be unlikely to raise new money. “All of the innovations that should get funded will be funded, even if the industry contracts,” she said. “It’s not easy to get someone to hand you $5 million. But they’re still looking for good ideas.” e VOLUME 9 ISSUE 4 SUMMEr 2009 manager for hire Solovic recognized early that she needed operational expertise to carry out her vision. For entrepreneurs in that position, there are people like Cameron Herold, a chief operating officer for hire. As founder of Vancouver-based BackPocket at a crossroads? Time to reflect Thom Ruhe, director of entrepreneurship at the Kauffman Foundation, a Kansas Citybased nonprofit dedicated to entrepreneurship, offers five key considerations for founding entrepreneurs at the crossroads. • Know thyself. Take an honest inventory of your own strengths and weaknesses. • Get a thick skin. It’s not personal, and that applies to you as well. • Step outside your business and ask, do you have the right players in the right positions, including yourself? Are the people you have on board helping you get from A to B? • Be honest with your goals. Write them down and visit them frequently. • Be jealous with your time. As an entrepreneur, you can waste a lot of time, even if you have good intentions. There is an opportunity cost to everything, including your time. 8 n n

The Leading Edge - Summer 2009

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