skymarkventures-blog

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Landing a Good Job in a Tough Economy - Getting the Decisive Job Search Advantage

A successful job search begins with figuring out how to show off your personal strengths and what you can contribute to the organization in terms of accomplishment. Whether you are beginning your career, seeking re-employment or considering more a satisfying occupation, taking a good look at who you are and what you have done will give you the decisive advantage over other job-seekers.

The two essential elements in landing a good job, especially in a tough economy are first, showing off the strengths and benefits of your personality and second, your developed talent and skill.

Show 'em What You're Made of!

Key to landing a good job in which you will be successful, happy and fulfilled is to know your strengths, accentuate them and to overcome weaknesses that are holding you back. The use of personality tests in the hiring process are gaining popularity. While I don't think the results of any of these tests is the holy grail, I do think they can give you an idea about how you may show off your personal strengths as well as areas in which you may further develop yourself.

It seems the simplest to understand of these personality models and tests is the Myers-Briggs Personality indicator, www.personalitypathways.com and David Keirsey's Temperament Sorter at www.keirsey.com .

Also, there is available an informative article outlining the difference between temperament and personality. It delineates the strengths and weaknesses of the four basic types as well as how to use this information in everyday life. You can find it at www.selfgrowth.com . The article is entitled, "Temperament and Personality by Hal Warfield".

Knowledge is truly power and knowledge of yourself is empowerment. The bottom line is, to land a job in a tough economy you will want to avail yourself of every advantage possible to communicate who you really are.

Show 'em What You Can Do!

Making a list of your accomplishments (including what you seem to have a natural aptitude for learning) will give you clues to what your talents are and what kinds of work to look for. We all have talent and aptitude for something, the key is not to take who you are and your unique talents and abilities for granted!

Talent comes naturally, what you do to develop it through study and practice is what I call working knowledge and consummate skill. While your temperament and personality determines the level of fulfillment you gain from a particular job, the level to which you have developed natural talent will determine the accomplishments you may show off to the prospective employer.

Here's some resources to help determine how best to develop your talent and to continue doing so:

Resources for determining your learning style and how to use that information to your advantage is available at www.Ldpride.net . A free ebook to help you improving how quickly and efficiently you learn is available under the 'Learning Styles' link.

Learning Styles Online features a free test plus descriptions of 7 different learning styles, www.learning-styles-online.com .

Additionally, you may download a free guidebook about finding your gifts and talents under 'Guidebooks' at www.manifestyourpotential.com

No matter economic conditions or your own circumstances, you have two potent tools for landing the job you want, who you are and the talents you have developed and are developing right now. From these spring every other implement of the successful job search including your resume and interviewing.

If you found this job search article useful and are interested in an accounting career in New York, check our Vested website.

[skymarkventures-blog]

We’re about Financial Education

At a recent engagement with a client, we were asked why we maintain a financial blog. For us, it’s about financial education to empower our clients to help them make better decisions and avoid financial scams, like this Thumbtack scam uncovered by one of our co-founders.

The biggest reason why startups fail at whatever they do is because of improper planning. They get all excited about their product, and its revolutionary properties. They get money from friends and family and devote all their time to product development.

However, it’s important to also have a business plan in place or a blueprint in executing that great idea. In many startup journals, it’s often said the technology space is filled with great ideas. However, ideas are only worth something if the originator of said idea can execute on it.

Hence, we take pride in our ability to help companies like Bulldog London Dry Gin to achieve successful exits. For several years now, we have helped various companies like Bulldog to achieve financial success because we understand entrepreneurship is hard.

We’re excited to announce that we will be launching our Vested application soon. We understand that starting a business is hard, and it takes more than co-founders to get a successful idea off the ground. It will take a whole team. We’ve helped scale up businesses in New York, and we feel we can provide a better HR solution through our Vested platform.

Recruiting 2.0 is coming. Through our Vested platform, we’re going to be a part of it.

Written by Reggie Beltran

[skymarkventures-blog]

Address These Strategy Issues Up Front

In every meeting with a client, we often use this infographic (downloadable here) in our meetings. The client is almost always excited to get started on building accounting close models, five-year strategy models, ROIC models, ROI models, pitch decks... Well, you get the idea.

Every wide-eyed entrepreneur we’ve met are in various stages of growth. Some of them are quite ready for the full-blown, cornucopia of finance solutions from Skymark Ventures. However, we are more often than not surprised that a lot of startups have not worked on the basics, and they are definitely not ready to meet the players in the VC industry.

First, before any business can even think about funding or product launch, they ought to address important issues up front:

Who’s in charge? - Most startups these days consist of several founders who have specific skills. Some are great sales people; others have amazing technical skills. However, only one of them should be in charge and everybody else should stick to their specialties. Ideally, the “CEO” should be the best salesperson in the group. It’s the CEO’s job to constantly sell: sell products to customers, sell the vision to the employees, sell the promise of an IPO to investors and sell the sexiness of the product or service to the media. Of course, you can’t go wrong with a technical founder (i.e. Bill Gates, Zuckerberg).

Ownership splits - Founders often have to leave their full-time jobs to pursue entrepreneurship full-time. They are often giving up a lot in salary and compensation. So they need incentives to keep them at their positions. However, the share must be equitable. The founders might be all jolly, good friends, while building a “cool idea” in their dorm rooms. But when it blows up and money is involved, you don’t want this kind of scene:

When someone leaves - Let’s face it. People could come up with other ideas and decide to leave the company. Or perhaps, the jolly, good friends end up in a “divorce” like the guys in Social Network. It’s better to discuss and iron out the succession plan.

Put everything in writing - This is obvious. When your company blows up to be the next Silicon darling, you don’t want to be in courts discussing who owes who, how much is something worth... If you believe in the product and the team, put it all in writing.

These are such basic things, yet we’re astounded at the number of startups that don’t have these basics in place. There’s cost effective legal solutions to help get the house in order. 

Once you’ve got these basics down, then it’s time to talk product launch, cohort curves, automated accounting close packages and scaling business operations. We all know why entrepreneurship is hard: there’s so much to do yet so little time and money. Hence, there’s no excuse to do the above as it doesn’t take long to put everything in writing and to iron out the long-term structure of your startup.

[skymarkventures-blog]

Congrats to Bulldog London Dry Gin on the $55 Mil acquisition! Another successful Skymark Ventures client. Visit us here to learn about our financial planning solutions for entrepreneurs and startups.

The official acquisition news can be found here:

http://www.prnewswire.com/news-releases/gruppo-campari-acquires-super-premium-bulldog-gin-300401458.html

Corporate video directed & droduced by 2Bridges Productions, a New York City video production company.

[skymarkventures-blog]

Why is Entrepreneurship Hard

“I can’t possibly do that,” quipped the bartender. “Entrepreneurship is hard.”

After coming back from my consulting engagement in Madrid, I settled down to have a cerveza at my favorite tapas bar in Barcelona. Yoda’s words still echoed in my mind, and on the plane back to Barcelona, I sketched out my business idea on a piece of napkin.

“Muy duro, my friend. Muy duro.” He smiled politely and went back to cheer on the local soccer team with the rest of the crowd.

I held onto that napkin, which had the greatest idea in the world for a startup - at least in my mind. But this bartender thinks it’s too hard. Why bother?

I pocketed that idea of mine. Sipping my beer, I watched the crowds go “ooh” and “ahh” at the soccer match between F.C. Barcelona and Real Madrid. Not only was Yoda’s Spanish voice ringing in my ears, but now it got me thinking:

Why do we think Entrepreneurship is sooo hard?

I get that there’s a lot of financial and business risks to entrepreneurship, especially when you have to quit a good paying job:

But it’s like anything else we think at that moment is hard. Once upon a time, I really thought it was hard to get up and take my first step as a baby. Once upon a time, I really, really thought, writing a 500 word essay for 4th period English was hard. Once upon a time, I thought leaving New York to study and work in a Spanish-speaking country (when I didn’t speak the language) was sooo hard. But guess what? I did it.

According to a published work in the Forum for Research in Empirical International Trade (FREIT), we develop a biased perception of entrepreneurs. Non-entrepreneurs “maintain laudatory portraits of ‘entrepreneurs’,” when in fact they are like everybody else. Hence, we develop this self-defeating attitude of “why me?”

I kept sipping my beer and watched the crowd cheer the local team. Questions in my mind only led to more questions:

Is entrepreneurship really any different? Why are we afraid of change?

Formal education breeds conformists

“Things were getting to me. Just how people are. How they always expect you to be a certain way…” 

-- High schooler Angela Chase from My So-Called Life (1994)

Rise and shine honey - it’s time for school. Eat your bacon and eggs. Don’t forget your bologna sandwich! Don’t be late. Come home right after. Do your homework! No more TV after 8:00. Goodnight, sweetie.

Sound familiar? It’s a typical day in a student’s life in America. Kids all over America are thought to wake up at a particular hour in morning, be at school at 8:30 and leave at 3:30. Yearbook activities from 4:00 to 5:00. Go home. Then homework. Dinner at 6:30ish. Bed. Wash, rinse, repeat. You can’t blame the parents - they’re even more predictable:

Wake up the kids. Drive kids to schoolwork. Work at desk job from 9:00 to 5:00. Pick up kids. Make them do homework and cook dinner. Eat. Seinfeld and Friends. Turn off TV. Sleep.

We are taught as kids and as adults that there are grave consequences if we deviate. If you don’t get an A, you won’t get anywhere. If you don’t show your face from 9:00 to 5:00, then how can you possibly retire by age 65? You have to be a lawyer. You have to be a doctor. Why don’t you want to be a doctor? Do you wanna be poor?!

According to the New York Times, education is a path to conformity. Pre-college kids are programmed for twelve-hour days, and taught that going to Harvard and having the initials M.D. at the end of one’s name are the ONLY keys to success. Parents ignore how Bill Gates, Steve Jobs, and Michael Dell boot-strapped billion dollar businesses from their garage.

Granted, Gates and Jobs are exceptional thought leaders. But the first step - even for Jobs and Gates - was a mental one. They told themselves: I can do this.

I won’t critique how to fix the American educational system, as that would take a research paper that would rival War and Peace. But what we can start doing is telling and believing these four words:

I can do this.

It starts with breaking from that hive mentality from 4th grade. Success is NOT linear.

“The secret of life is to fall seven times and to get up eight times.” 

-- Paulo Coelho

We fear the unknown

We laud entrepreneurs because they are fearless. I can’t possibly do that!

Our fear of the unknown stems from our fear of the dark. There’s an evolutionary reason why we fear the dark. Back in the age of cave people, men and women didn’t have flashlights and iPhones, and they had to hunt for a living. This meant hunting in dark forests, where bigger predators could be hiding in a dark corner.

Moreover, as humans we have five main senses - sight is one of them. Darkness impairs our ability to see; hence, we fear anything that blinds us from assessing our environment.

In psychology, Sigmund Freud posits our fear from darkness stems from the childhood trauma of separation anxiety. Parents would abandon their kids at night (to sleep in their own rooms), leaving their kids to sleep alone. This separation is why we invent monsters under the bed, or the boogie man that will jump out of the closet.

In history, explorers were afraid to sail west to reach India and China. They didn’t have established routes across the Atlantic making navigation difficult. It took the courage of Christopher Columbus (and the Vikings before him) to sail west and discover a whole New World.

We praise entrepreneurs for their fearlessness because of our inability to overcome our own fears. Hence, our own self-doubt leads us to this inevitable conclusion:

Entrepreurship is hard.

Just like we looked up to our big brother who would check the closet for the boogie monster. Just like we loved our mothers for checking under the bed for that oogly, boogly bed monster. In time, we learned how silly we were for having these fears because we learned this:

“Only thing we have to fear is fear itself.” -- Franklin Delano Roosevelt

Entrepreneurs are no different from you or I. We all have the same five senses. 

Why am I special?

We watch movies and read tall tales about Bill Gates, displacing IBM in the 1990s. Then we watch movies of how Steve Jobs resurrected Apple, Inc. to become the world’s most valuable company. We watch Social Network, and wonder in awe at Zuckerberg’s development of Facebook.

Indeed, these entrepreneurs had exceptional skills. Gates was great at software. Jobs is a legend in design. Zuckerberg had the technical know-how to build a social network. Non-entrepreneurs create self-doubt because they think they have no skills.

I can’t possibly do that!

Consider this guy with a niche for reviewing fast food.

In today’s Youtube and Pinterest world, you can do almost anything and build an entire business around it. You can be a Star Wars channel, an SEO blogger, or a fashion maven on instagram. What’s the common theme in all these successful entrepreneurs?

They found their niche.

Do you think your ability to put on make-up without using your hands is silly? If done right, a video on this unique ability could go viral on Vine or Youtube. Do you like eating decades old military rations? Guess what - there is someone out there making money on it.

In this blog article for Skymark Ventures titled “What Startups can learn from ‘shock’ Donald Trump win,” the section ‘Know your market’ details Trump’s path to electoral victory. Peter Thiel suggests “start small and scale upwards.” In other words, Trump picked a niche (populism for middle-America and blue collar workers) and built an entire marketing campaign around it. He didn’t care about the liberals on the east and west coast; he used populism to win the battleground states that helped him secure a victory in the November elections.

Lack of knowledge is no longer an excuse in today’s world. There is a WEALTH of information in how to take action steps to build a business around your niche. How to build a website? Try this. Need SEO help? Go here. How to budget and raise money? Try Skymark Ventures’ FREE budget tools.

At one point in their lives, Steve Jobs, Bill Gates, and Mark Zuckerberg were just like you and I. For them, it just clicked. They identified what they’re good at, what they’re interested in and had the courage to build it.

In short, they had dreams like everybody else. Do you have dreams?

As I sip my beer in that fateful day in Barcelona, thoughts of dreams, fears and wants swirled in my mind, like cream melting in an expresso.

I watched the crowd in that bar go “ooh” and “ahh,” even though the game was at a stalemate at 0-0. THEN - almost at once - everybody stood up...

Barcelona star Lionel Messi broke free from the pack. He zig zagged down the field… Twisted around a defender… Shot a fastball past the goalkeeper for the winning goal. It was a beautiful display of finesse and courage.

Indeed, not everyone can be Lionel Messi. But once upon a time, Messi was just a little boy, like everybody else. He had hopes and dreams, like everyone around him. He had a unique talent, like you and I. He believed in himself.

That last part is muy duro.

In a world, where we’re taught to be like everybody else… where we’re all expected to get Harvard degrees and have the initials M.D. at the end of our name… where we’re expected to go 9-5 for forty years until we collect social security… It’s hard to think we can be different.

This is why we laud entrepreneurs. They think different. They actually believe!

To enact change in one’s life, it’s first important to believe you can be different. You have a unique talent that’s waiting for a global audience. Consider these words from Jobs in a PBS documentary:

“When you grow up you tend to get told the world is the way it is and your job is just to live your life inside the world. Try not to bash into the walls too much. Try to have a nice family life, have fun, save a little money.

That’s a very limited life. Life can be much broader once you discover one simple fact, and that is - everything around you that you call life, was made up by people that were no smarter than you. And you can change it, you can influence it, you can build your own things that other people can use.

The minute that you understand that you can poke life and actually something will, you know if you push in, something will pop out the other side, that you can change it, you can mold it. That’s maybe the most important thing. It’s to shake off this erroneous notion that life is there and you’re just gonna live in it, versus embrace it, change it, improve it, make your mark upon it.

I think that’s very important and however you learn that, once you learn it, you’ll want to change life and make it better, cause it’s kind of messed up, in a lot of ways. Once you learn that, you’ll never be the same again.”

I finished my beer and said my goodbyes to the bartender. I walked out of that bar, and realized the napkin was still in my hand. I looked at it again, thinking it was the greatest idea in the world.

I glanced up at the Spanish sun. I remember thinking: here I am, a New York native, living and thriving in a non-English world.

Who’d have thunk it?

Why is entrepreneurship hard? I guess I’m about to find out.

[skymarkventures-blog]

3 Key Metrics to Make a Killer Investor Presentation

Whether or not you decide to bootstrap your business, creating an investor presentation and meeting with investors are good ideas. The exercise alone will help you understand the strengths, weaknesses, opportunities, and threats surrounding your business plan. You’ll have written down and memorized answers that could arise when someone asks you about your idea. Thus, when you DO get a chance to defend your idea in front of a potential investor, you’ll be prepared to swat away all kinds of questions regarding your plan to change the world.

If you are actually soliciting investment, you will likely get rejected more often than not.  Don’t be discouraged.  It’s very much part of the process and at this point, you should believe in your mission enough to not be deterred.

Once you have spent the requisite time on your financial model, we are going to show you the important financial metrics you should present in your investor presentation.

We’d suggest a couple of things after reading through hundreds of investor presentations collectively:

Keep your language concise and impactful.

Keep the presentation under 15 pages – you probably have other things to walk through, but please put them into an appendix

3 Key Financial Metrics To Present to your Investors

We’d recommend three slides to present to investors:

Use of Cash

Now that you have completed your 2-Year Budget Model you should have a good idea (as good as can be at this stage) of what your cash needs over the next two years will be.  This will generally be your fund raise “ask”.  What this means is that if you are going out to investors and asking for $2 or $3 million, then you need a plan to spend that million over the next couple of years.  

5-year projections

This is pretty straightforward.  Investors want to see that the business will be a large enough to take on the risk of investing in a start-up.  One note of caution – we’ve seen too many businesses that are looking to raise a million of seed capital and expect to grow to $100 million in revenues after two years. �� That’s just not realistic and you’ll be asked to revisit your marketing and headcount assumptions.  Stress test your assumptions – it’s a lot harder to defend an assumption that implies your cost of acquisition is pennies on the dollar than a predicted retention rate for your business.

Customer funnel / LTV

This is a complicated concept that we will explain soon.  This is where you will really stand out amongst your peers if you can walk investors through the customer experience and really demonstrate the financial implications of customer acquisition costs, discounting, retention and upsell.

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Make This One New Year’s Resolution to Change Your Life

It’s that time of the year again when the average Joe becomes inspired by champagne to make lists for the New Year. According to Time magazine, the most common ones are:

Lose Weight and Get fit

Quit Smoking

Learn Something New

Eat Healthier and Diet

Get Out of Debt and Save Money

Spend More Time with Family

Travel to New Places

Be Less Stressed

Volunteer

Drink Less

What’s curious about this list is what’s NOT on it. As a team of entrepreneurs at Skymark, we’re shocked that “start a business” did not make the list. Being independent and living the entrepreneur life solves all the root issues that inspire the Average Joe to make any or all of the New Year resolutions from Time’s list. In the long run, entrepreneurs take control of their destiny, which results in happier and more fulfilling lives.

Everyone has ideas - whether it’s creating a one-touch remote to order pizza or perhaps a social networking site for pets. In today’s world, there’s a good chance someone out there probably had the same idea (which validates it’s marketable and commercial), but that should not deter you from taking the entrepreneurial plunge. If fear of an incumbent is keeping you from acting on that “next big thing,” we’ll share with you the not-so-secret recipe of success in the startup industry: startups don’t fail on ideas; they fail on execution.

The first will be last and the last will be first

In Peter Thiel’s book on startups, he cites how the “first-mover advantage” can reap benefits first, but cautions that it’s actually better to start slowly and identify clear goals. This is what’s called the “Second-Mover Advantage”.

First movers will benefit from lack of competition and early market penetration. However, it will be a rocky road for them because they are testing business tactics that have little to no historical reference. They’ll spend a lot of their time A/B testing, and scaling business processes to match the pace of growth.

While the first mover fine tunes their strategy, a second mover can study their competitor -- their pitfalls and successes -- and revolutionize the category. A great example is the emergence of the Google search engine.

Innovate to dominate

In the 1990s, the search engine industry was dominated by the likes of AltaVista and Yahoo. The challenge was how to gain market share and monetize the search engine. Both AltaVista and Yahoo took the route of ads on their sites, and in the age of 56K connection, many users became annoyed at all the GIFs and blatant marketing.

Then Google came out with their now infamous minimalist design for their search engine. They had the search bar with the company logo on top, and the classic white background. No bells and whistles - just search. We all know what happened.

Google is a classic innovative late mover. What AltaVista and Yahoo didn’t understand at the time was the importance of call-to-action on a web page. If you have a thousand different things going on in a web page, the chances of a first time user using the core interface (the search bar) drops. Especially in the age of 56K download speeds, no one wanted to open a web page filled with GIFS and cheesy marketing. Today, minimalism and the emphasis on call-to-action have been copied over and over by the world’s top tech companies.

Finally, Google’s original mission was much grander at the time. While Yahoo and AltaVista primarily focused on monetization, Google’s mission was to index the world’s information. Thus, they spent all their time developing a top-notch algorithm that would beat the incumbents. Combined with the minimalist design, no other site could match Google search engine’s speed and efficacy.

“You can observe a lot by just watching.” -- Yogi Berra

Piggyback your way to success

When the cost of imitating a product is cheap, a late mover has a competitive advantage. In today’s world, it’s very easy to go on Weebly, Wix or Squarespace and develop a website. Lack of technical knowledge (you still need some but not an engineering degree) is no longer an excuse to get started.

Once your website is completed, it’s time to generate traffic to your website. One way is to read all the cheap (Hint: FREE) information about your competitor on the Internet. Know their ups and downs; identify their strengths and weaknesses. Then create a business plan of your own to differentiate and to dominate. Also, if you haven’t heard, there are cool, smart guys at Skymark who have business models to get you started (Hint: FREE).

Finally, you can even piggyback on your competitor’s site to generate users. Consider the case of Airbnb.

In the beginning, Airbnb struggled to get users to their site. In early 2010, Airbnb came up with the idea of Craigslist integration. Whenever someone posted a listing on Airbnb, a duplicate posting was made on Craigslist. When an interested user clicked on an Airbnb listing on Craigslist, he or she was redirected to the Airbnb website. Craigslist had a massive user base, and by using this “growth hack,” Airbnb catapulted themselves from anonymity to darlings of the tech industry.

“Water shapes its course according to the nature of the ground over which it flows; the soldier works out his victory in relation to the foe whom he is facing.”-- Sun Tzu

Granted, starting a business is hard. It’s not as trivial as committing oneself to lose those ten pounds from too much eggnog. If you’ve been procrastinating this long to get started, don’t fret that others may have the same idea. It’s all in the execution. Just read up on Google’s history. Read up on the cell phone Apple invented in 2007. Not knowing enough/what to do are no longer acceptable excuses; everything you need to know is out there for FREE.

As for those who do have an idea that’s never been done before… Well… What are you waiting for?

Written by Reggie Beltran

[skymarkventures-blog]

What startups can learn from Donald Trump win

Snow would have to fall in the Sahara desert, before tabloid billionaire Donald Trump could be president. Every political pundit, every pollster, every academic, every celebrity – claimed it would not be possible. From SNL’s Kate McKinnon to Seth Meyers, they all cried “No way Jose… Trump will never build a wall!” But on November 8, 2016, the biggest political “coup” -- since Dewey allegedly defeated Truman -- occurred. Donald John Trump became the 45th president of the United States… And snow fell on the Sahara desert on December 21 for the first time in decades.

Regardless of one’s political tendencies, there are definitely key takeaways from Trump’s historic “upset.” In particular, entrepreneurs can learn a lot from Trump’s campaign:

Content marketing works

According to Bloomberg, 19.4 million tweets posted between November 1 and November 9.  Messages used various hash tags from #MakeAmericaGreatAgain to #Election2016. A lot of these tweets, especially in Trump’s campaign, were automated. 18 percent of all Twitter traffic about the election were automated, and most of them were pro-Trump.

Political strategists and pundits lambasted and mocked Trump’s use of Twitter, but this only fueled the fire as Trump kept using his Twitter campaign to spread his message and embolden his following. In fact, after the third and final debate (where most experts considered he lost), Trump (or rather his campaign handlers) tweeted: “HUGE 24 hours of online donations for @realDonaldTrump. 125,000+ unique donors grossing over $9,000,000! Thank you America! #MAGA.”

Not a bad way “to lose” the third debate.

Regardless of how one feels about Trump’s tweets, he used Twitter and various social platforms to raise funds and gather awareness for the “Trump brand.” Today, many businesses spend millions of dollars on SEM and pulling customers to their websites. They are willing to pay exorbitant amounts of CAC to drive GTV. According to eMarketer, TV ad spending will reach $72 billion and digital ad spending will reach $77 billion in 2017. That’s a lot of money to generate awareness for a brand or product.

What Trump has shown is that through the power of “content marketing” you can generate the same amount of awareness and publicity.

You don’t need a campaign staff, like Donald Trump. It’s FREE to start writing articles on LinkedIn. It’s FREE to post videos (shot from your 4K iPhone camera) on YouTube. It’s FREE to voice your opinion. This is America after all. It’s free to say something – just say something interesting.

Build your brand and they will spend.

It’s good to be the underdog

Throughout the presidential campaign, everyone mocked Trump’s tweets and disregarded them. Perhaps, this is why the Clinton campaign ignored Trump’s presence on Twitter. During the campaign, the top 20 accounts related to the presidential election tweeted 1,300 times a day, about 2,600 times the rate of the average account! In the first debate, there was four times the amount of automated tweets for Trump versus tweets about Clinton. By election day the split grew to five to one.

While everyone focused on poll numbers and laughed at comedic SNL skits about Trump’s Twitter account, Trump’s staff amassed a huge following from Twitter to Reddit forums. Everybody completely forgot or ignored Trump’s guerilla tactics in some of the world’s biggest social media platforms.

As an entrepreneur, you will often go against more established rivals. It can be intimidating. There will be many naysayers who will exclaim “No way, Jose… That is unthinkable!” Barnes and Noble said the same thing about books and Amazon. Tower Records said the same thing about music and Napster. Blockbuster laughed at the silly thought of renting DVDs by mail. As a small business, established rivals will ignore you… This is a good thing.

“Pretend inferiority and encourage [their] arrogance.” – Sun Tzu

Know your market

With the electoral college’s confirmation of Trump’s win, Hillary Clinton is officially the most popular presidential candidate to lose an election. Clinton outpaced Trump by almost 2.9 million votes. Despite being the greatest democracy on Earth, the American election is still governed by the electoral college system. It’s not about the popular vote; it’s about how many states can you win. Trump’s team knew this and launched their “Battleground Optimizer Path to Victory.”

The goal is not to be popular; the goal is to get 270 electoral votes. Trump’s team knew he would never win the liberal states of California and New York. They also knew that states like Texas and Mississippi would vote for Trump, regardless of his rhetoric. It was all about winning Ohio, Pennsylvania, Florida, Michigan, and Trump went to work.

In the states of Ohio, Michigan and Pennsylvania, Trump shouted, “Bring jobs back to America.” Despite the protestations of Nobel winning economists, Trump blasted free trade and made the word “China” synonymous with everything wrong about American industry. Indeed, these northern swing states were filled with empty factories and forlorn industries. For them, it’s like a Messiah coming down from Mount Olympus when Trump blasted “We will bring Jobs Back to America.” It didn’t’ help Hillary Clinton that it was Bill Clinton who signed the NAFTA agreement – a fact Trump kept reminding everyone.

In Florida, Trump won over the Jewish vote with tweets like “Just out: Neera Tanden, Hillary Clinton adviser said, “Israel is depressing.” I think Israel is inspiring!” He also emphasized the traditional Republican platform of tax cuts across the board. He knew what the rich, retired populace in Florida wanted to hear, and he told them exactly what they wanted to hear.

“Are right and wrong convertible terms, dependent upon popular opinion?” – William Lloyd Garrison

Trump was extremely unpopular in liberal circles. He didn’t care, and he didn’t have to. He only had to win the swing states, and said exactly the things they wanted to hear. Startups and small business can learn from this tactic.

As a small business, stop trying to be the next Amazon. Stop trying to be the next Facebook. Find a niche. Find your core. Even Peter Thiel suggests “start small and scale upwards.” 

Say anything and everything that will make you the go-to product or website for that niche -- whatever that may be. Win where it counts. 

What Trump has shown is that you can #growthhack your way into anything, including the presidency. Anyone can run a “Battleground Optimizer Path to Victory.” It starts by knowing your markets and using content marketing to build your brand.

Written by Reggie Beltran, Skymark Ventures a financial platform for startups.

[skymarkventures-blog]

5 Things to Consider When Choosing a City to Start Up a Startup

Although many technology startups opt for San Francisco and New York, an entrepreneur doesn’t have to follow the crowd. Entrepreneurs are what they are because they don’t follow a traditional set of rules. They think “outside the box.” So as an entrepreneur, why should you be limited to just New York and San Francisco? There are many valid reasons to start in these two iconic cities, but if you are thinking of starting up in a different city, here are a few points to think about.

Accounting, Tax and Legal Issues

A “business-friendly” system is essential to any business investment. Strong accounting standards, straightforward tax codes and sound commercial laws are necessary for businesses to thrive in a city. Outside the United States, countries can be theocratic, communist or totalitarian, and it would be hard to thrive as a business in those conditions. Some countries have a reputation for having corrupt government officials. A reliable government and business conditions are needed for a business to operate, and it’s also necessary to attract private equity investors. Venture capitalists would not want to pay bribes to local officials in order to invest in a local startup.

Legal System

Many technology firms rely on proprietary data and products. In the United States, there are patent rules and regulations to incent entrepreneurs to create bigger, and better things. Moreover, there is a reliable judicial system in the U.S. to protect the rights of businesses. However, in other places, the judicial system or processes could be manipulated by outside interests. For example, many oil companies in Venezuela were at the mercy of Hugo Chavez for a very long time, when he was president. When selecting a city to start up your business, make sure you can rely on the local judicial system so you don’t get screwed down the road.

Public Markets for Exits

We’re all in it for the money, and in the startup world, the biggest bang for your buck is to make it to IPO heaven. Many firms have opted to New York and London because these cities are the home to reputable exchanges (i.e. Nasdaq, FTSE, NYSE). Hence, the IPO exit is clear. Win in New York and you get the IPO prize. Even if you build your business outside of the traditional financial hubs, you can still make it to IPO heaven. Bankers and venture capitalists are all looking for the same thing – the next great idea to revolutionize the world. If you’ve got, they’ll travel to Timbuktu to invest in your business.

Entrepreneurial Culture

Most startups have little to no money to start with so founders can’t offer much in cash compensation. They can only offer equity, and a chance to build something big. San Francisco has become a hub for technology because there are so many quality employees who understand the startup game. You work with a competent founder, get options for pennies, build the next Google and cash in on the IPO. There is a clear entrepreneurial vibe in San Francisco, and startups that have a great idea will find quality people to work for them.

The level of educational attainment in particular could be a good indicator of an entrepreneurial culture. Although we revere college dropouts like Bill Gates and Mark Zuckerberg, a large majority of entrepreneurs are college graduates. According to Entrepreneur.com and the 2011 Global Entrepreneurship Monitor, “college graduates and those with graduate-level education are more than twice as likely to be entrepreneurs as those without a high school education and almost 50 percent more likely than high school graduates.” 

Hence, it makes sense why San Francisco and New York are major hubs for tech entrepreneurs. San Francisco is near major educational institutions, like Stanford University and Berkeley. In San Francisco, 32.1% of of the population has a Bachelor’s degree in 2013, according to the San Francisco Center for Economic Development. In Manhattan, New York, 58.9% of the population has at least a Bachelors degree for anyone 25 and over for the period of 2009-2013. Thus, Manhattan has the highest educational attainment in New York State, and one of the highest in the country for a city. 

As a state, the District of Columbia leads all states in the Bachelors degree department. 54.6% of its population has a Bachelor’s degree, leading all states in the U.S. So perhaps, D.C. could be a hot spot for tech startups in the future.

There are some areas in the world that have lagged behind the U.S. in the startup game because they didn’t have a thriving entrepreneurial culture. In some areas of the world, people are expected to work for a big corporation for the next forty years and have a stable paycheck. Then after 40 years, they will rely on a pension to pay for retirement. However, this attitude is slowly changing in many parts of the world. Now, cities like Berlin, Barcelona and cities in China are building a thriving startup culture, as the local populace embraces the benefits of being an entrepreneur.

Availability of Experienced Investors

Again, San Francisco and New York are the major startup hubs because they have so many firms who have a lot of money. Venture capitalists swarm the San Francisco area, and big banks call New York their home. So it’s easy to select New York or San Francisco as a place to startup a business.

However, in the last decade, other cities are slowly catching up. For example, the presence of Rocket Internet has boosted the startup industry in Berlin. In China and India, there many people who have become billionaires from their country’s economic growth. They have the money, and are willing to invest in the next big thing.

Although New York and San Francisco are still the favored cities for starting up a business, many parts of the world have opened up for aspiring entrepreneurs. Be mindful of the points above, and know that world is your oyster.

Written by Reggie Beltran for Skymark Ventures, a startup consulting firm in New York City.

[skymarkventures-blog]

4 Types of Angel Investors

In the beginning, there are angels. These are the guys who invest $25,000 – 500,000 in the early stages of a start-up, usually in the “seed round.” They may band together to contribute money and time, and this “angel round” could be from $50,000 to $1.5M.

Like venture capital firms, angel investors can come in various forms with their own unique specialties.

The Player

Players are established angel investors who have started and sold one or several of their own businesses. Because of their business successes, they have money set aside to invest in interesting opportunities that come along. They invest, usually in the role of the co-investor together with a consortium of other angels or institutional investors and rarely as lead investors. As opportunistic investors, they spend less time on their portfolio companies than other angels. They get their regular reporting, and are satisfied with a passive role in the management of the company.

The Silent Investor

These investors have less business background than other players and are relatively inactive. They usually have a lot of money to invest in interesting opportunities, and are satisfied in handing over a check to an entrepreneur with the next big idea. They are hoping for financial returns (i.e. IPO, company sale) on their investment, and rarely actively contribute with their portfolio companies. Like the Players, they are opportunistic in nature and are nearly always co-investors.

The Hands-On Investor

These guys are usually independent management consultants or investment bankers who have sufficient funds to make angel investments. They usually invest alone or try to gather other angels for a co-investment if they lack sufficient funds to complete the round. They often take an active role in the company in management or as an advisor. Their impact depends on what skills they bring to the table and their contacts. Since they are active with their investments, their management style could lead to micro-management — so it’s key that the entrepreneur feels comfortable if he/she brings on a hands-on investor.

The Professional Angel

Professional Angels are both serial entrepreneurs and serial investors, and they spend a lot of their time in their investments. Unlike the Hands-on investor, they don’t have an interest in the day-to-day operational activities of the enterprise. They see themselves as coaches, who seek out excellent management teams who are open to having a coach or mentor. Professional Angels lend support to their investments by leveraging their networks to maximize the value of the company. They expect regular reporting from their portfolio companies, preferring to stay on the sidelines like a football coach on an NFL team. Professional Angels can come in as a lead investor and/or as a co-investor, if an interesting opportunity comes along. They usually have a larger stake in the enterprise than the other three types of angel investors.

When approaching an angel round, it’s important to identify who’s who. Are you dealing with a Hands-on Investor who wants to be part of the day-to-day operations? Are you comfortable in getting just the check but no mentorship from Silent Investors? If you’re dealing with a consortium, can you manage all the expectations from a diverse set of angels?

Angels are a great source of funding for early-stage companies. But be mindful of who and what type of investors you’re bringing along. You’ll be partners with them for a long time.

Written by Reggie Beltran

[skymarkventures-blog]

Why Inverted Thinking is Essential to Your Business Success

Charlie Munger, Warren Buffett’s partner, is fond of the quote “Invert, always invert”; what he means is to think about a problem backwards in addition to the conventional “why will” or “how to” approach.  Here’s a simple, yet practical explanation from the Farnam Street Blog:

Think about what makes life good. Now invert the process and think about what would make life bad. Knowing what would make life bad gives you a shortlist of what to sidestep... Both thinking forwards and thinking backwards can result in action, however, despite your best intentions, thinking forward can in fact increase the odds that you’ll cause harm, while thinking backwards is actually less likely to cause harm – call it the avoiding stupidity filter.

One of our team members recently read this and made the following a discussion item at our all hands: “If we wake up in a year, why wouldn’t our business have grown meaningfully?”  We all went around the table and gave our top three reasons and tallied up the votes.  Here’s what we came back with (and for the sake of the discussion, I am making these slightly more generalized):

We lose focus, passion, or get frustrated.  In other words, we shoot ourselves in the foot and give up

We don’t attract as much business as we should

We overextend ourselves and become a jack of all trades and a master of none

Now that we had our list, we took things a step further and thought about preventative measures - what should we put in place today to avoid this miserable outcome?  Let’s go one-by-one:

We lose focus, passion, or get frustrated.  In other words, we shoot ourselves in the foot and give up

When building a business, especially just getting off the ground with limited resources, it’s perfectly normal that there will be setbacks.  To combat these lows, we have institutionalized ‘gratitude’ here at Skymark.  Before our weekly meetings, we each share something that we are thankful for - it could be business related, it could be personal.  While it may sound trivial there is plenty of evidence that shows giving gratitude stimulates internal happiness and we think it sets the tone to always look at the bright side of all situations - after all we are in the business of helping fantastic entrepreneurs build amazing businesses!

We don’t attract as much business as we should

It is one thing to believe in your product’s value proposition, but it is a whole different ballgame to convince someone to pay for it.  We constantly try to improve the communication of our value proposition - that’s product marketing.  But in parallel, we need to consistently talk to our clients, prospective clients, and our competitors on ways we need to improve.  We constantly get data on our product and where we can improve from both our clients and those that have passed on using us.  We think these lines of communication will help us get better and grow.

We overextend ourselves and become a jack of all trades and a master of none

Every business has the same version of an overexpansion story.  For us, it's moving out of our circle of competence and overpromising on our projects to our clients.  While we eventually want to offer an expansive array of services, we need to ensure that we do enough research and study systems before we expand.  We take our work seriously and don’t want to damage our trusted reputation with our clients by biting off more than we can chew.  We encourage you to carefully think about timing of your expansion plan.

We really had fun with this exercise, especially the inverted thinking and looking at the issues in a different way.  We think our list is general enough that it applies to many of our client businesses and thought it made sense to share. 

Connect to us at LinkedIn.

[skymarkventures-blog]

How to Create a Budget for Your Startup: A Step-by-Step Guide

Raising money is hard, but allocating your capital is even harder.  That’s why we suggest every founder create a budget model.  We recognize how tedious this exercise can be especially when you have an exciting product and team to build.  We’ve done an (unscientific) study of all of our clients and have found three tangible benefits for those who take the time to do this exercise.

#1: Exactly How Much Money Should I Raise?

The smart guy answer is “As much as you can get”.  But in reality, that’s not the way the world works - few entrepreneurs have that ability out the gates, and you don’t want to start with an easy money mindset - YOU will benefit immensely by keeping tight controls on deploying your cash.  We’ve seen companies that have this mentality early execute against a plan and are able to raise just the right amount of capital at each round preserving valuable ownership for founders.  The differences can be huge - imagine being three years in and your founding team owning 20% of the company vs. 50%!

Finally, you need to understand the concepts of pre-money valuation vs. post-money valuation. Pre-money is the value of your company prior to an investment or financing, and post-money valuation is the value of your company after the funding round is completed. In summation, you’ll want a higher valuation at the end of a funding round, or end up with a down round. You don’t want a down round because it has many negative effects for your startup.

Let’s look at this example to illustrate pre. vs. post. Assume your company “Great.com” was valued at $2,500,000 based on DCF or some other methodology like comparable company analysis. Then:

Pre-financing valuation (Vpre) = $2,500,000

If your consortium of angel investors wanted to invest $2,500,000 “C” then:

Post-financing valuation (Vpost) = Vpre + C = $2,500,000 + $2,500,000 = $5,000,000

Please note that both Vpre and the Vpost are implied valuations resulting from a financing transaction. They represent the values a particular group of investors are willing to invest in a startup. Why this matters to you as the entrepreneur is simple: you can calculate the percentage equity required (%E). The %E represents the percentage ownership that your investor will seek for their $2,500,000. The formula is:

%E = C / Vpost

In this example:

%E = $2,500,000 / $5,000,000 = 50%

Based on the example above, your investor will want 50% of the business for their investment of $2,500,000. This is where negotiation comes into play. You’ll either have to tweak your pre-money valuation (hint: it’s more valuable than $2,500,000), if you want to keep a majority share of your company.

Just to provide as an example, Mark Zuckerberg retains 26% of Facebook after going through several financing rounds AND an initial public offering. It’s hard to keep a large percentage of your company after many rounds, unless your company happens to be the next Facebook.

#2: Focus on Exactly What Your Investors Are Focused On

The one metric all investors are concerned with is your monthly cash burn.  You should know how many months of runway the current investment round provides you - give or take 18-months.  Remember fundraising is an important part of your journey but it’s EXTREMELY time-consuming - we often see slower growth during fundraise periods.  Make sure you have a roadmap of your major initiatives and key milestones matched against your monthly cash burn numbers - don’t be afraid if these numbers are lumpy; as long as you are budgeting for it, you’ll be fine.

#3: Hold Yourself Accountable and Recalibrate Your Plans Opportunistically

When you first start out, expect to be both the CEO and the CFO of your company.  You have a budget that you’ve carefully laid out and now you need to hold yourself accountable on executing to that plan.  Let’s say you have exceeded your monthly budget, what now?  If you missed your target, do you need to readjust your monthly budget?   What tangible value you have gotten from your additional spend (i.e. key hires made or marketing tests earlier than expected, etc).  You may want to pull more spend forward if you are hitting your milestones quicker than you expected.  Bottom line is that you want a process to hold yourself to every month.

So How Do I Begin?

Here’s a simple 5-step to doing this:

Write out your key milestones for the next 12 - 18 months and determine what kind of team you need to execute on that vision at each stage.  Here’s an example (not a real one, but at least informative)

Month 3 – Hire UX/UI guy to optimize software Month 6 – Launch software beta Month 8 – Start testing paid acquisition channels Month 12 – Hit X number of customers Month 15 - Make key sales hire

Determine your fixed and variable costs.  Your fixed costs are things like rent, salaries (don’t forget to pay yourself), and insurance.  Your variable costs are usually marketing channels (Google most likely) that you will likely test - remember at this stage, you are making small test investments in variable channels and spending money on an expensive PR agency or buying any billboards!

Download the basic budget model here

Layer in by month when you think you will make your key hires and when you will be ready to test acquisition channels

Once you have completed the above, you’ll see in the summary tab how much money you will need to raise (at this stage, ensure you have at least a 25% buffer as you will likely need it as a contingency!)

A few observations - this is NOT a fancy strategic model.  We have not included a detailed revenue model on purpose (we will walk you through this next).  At this stage, the basic budget is the most practical model you should be using to make decisions off of for the next 18-months.  The important part of this mentality is that you accept that you don’t know what you don’t know, your monetization strategy will change and may even be delayed by 6+ months, your job is to make sure you don’t run out of cash before your product hits the market!

Written by Reggie Beltran for Skymark Ventures.

[skymarkventures-blog]

Putting Your 5-Year Strategic Model Together

Now that you have done your 2-year budget and Revenue Model, it’s time to put them both together and come up with a customized strategic model!  This is where you will chart all of the details in the course of your company for the next handful of years.  

Why Do a Strategic Model If I Know It Will Change?

Want to know the strange part about doing this exercise?  We have come across thousands of projection models created by so called ‘experts’ and only a handful have ever turned out in the same way as forecasted.  So why do we think that this is such a critical step in your company’s journey?  The biggest reason is this exercise will help you understand where to deploy your internal resources (e.g. your team, cash) to make the largest impact.  A detailed, complete financial model helps you understand the big picture (please download and use our 5-Year Strategic Model Template.  You will build upon your budget and revenue model).  Here are a few things you should have in mind as you get started.

Cash Flows – this is where most new businesses get into trouble.  You may recognize a $100,000 monthly profit but your cash balance erodes.  So what’s going on?  It’s the working capital that throws off timing of paper profits and cash profits.  In a consumer service business, your customers probably pay you via credit card and your service providers either get paid once or twice a month – that’s a good position to be in.  You will likely have cash flows that mimic your income statement.

On the other hand, if you sell your branded apparel on an e-commerce site, you are probably paying your manufacturing partners up-front and collecting only when you make sales.  If you sell to large retailers, they may pay you 60 – 90 days later which results in a massive cash need as you grow your business.  You need to look at monthly fluctuations to anticipate your needs over 12 to 18 months.

Modeling Your Cost Base

You can get very granular here and it’s a worthwhile exercise.  What are your costs of services and/or goods?  Is this generally based on a fixed margin to your revenue like a marketplace model or apparel company?  You’ve already done your opex model in the budget that you prepared – you can now predict rent fairly well or even executive headcount.  But how about categories like your customer service team or legal expenses?  These categories probably grow with your revenues – for a customer service team, you can get more granular if you model utilization vs. capacity.  You now should undertake the exercise to figure out what expenses grow with the business and which categories stay fixed - the concept is called operating leverage.  What’s your biggest variable cost?  Just take a look at #3 below.

What’s the Cost of Growth?

Take a look at this example from the kissmetrics blog.  

“Think about the Amazon purchase funnel. There are a few steps a visitor has to go through before they can purchase a product. Here’s how it looks:

They have to visit Amazon.com

They have to view a product

They have to add a product to the cart

They have to purchase”

At a bare minimum, you need to drive people to your e-commerce website - the top of the funnel.  From there, there’s some conversion to purchase (3% is standard for e-commerce).  While you should be able to drive people to your site at low levels initially for free (friends & family), you’ll eventually scale and need to spend money of Google ad-words.  Say you are able to get visitors at $2 per click and have a 3% conversion rate; it costs you $67 to acquire a paying customer, your Customer Acquisition Cost (CAC).  Now you can flow that dollar amount into your P&L and get a better picture of your variable marketing costs to grow your business.  These metrics will improve over time as your viral coefficient grows (i.e. word of mouth) and repeat user rate increases.

As your business evolves, it helps to automate your strategic model. We recently invited a McKinsey Consultant, who emphasized the need for going “digital.”

Your Masterpiece

Once you build your company’s financials, we are confident that you will have identified several new levers that you can allocate resources to have a real impact to your business.

We have created a basic template so you can get started.  The model is built for a technology services company so you may need to change the revenue build assumptions if you are in another type of business.  The end result is that you will have a model that you can share with your senior leaders, Board/potential investors and more importantly, yourself.  You will have a deeper understanding of the metrics that drive your business.

Please take this exercise seriously and spend the time to go through several iterations.  It will take at least 30 hours of time to create something on which you can base real hiring, resource allocation or funding decisions.  We promise you that this will be worth your time to nail down a solid strategic model for your business.  

Written by Reggie Beltran for Skymark Ventures - business planning for startups