StartingBloc Presentation: A Vision for the World in 50 Years

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The last two Saturday mornings of my life have been spent on Powerpoint. But it was worth it.

So I’m standing in front of 150 social entrepreneurial peers at Yale on Saturday, attempting to set the scene for why I think we can actually end poverty, hunger, genocide, warfare, and preventable disease in our lifetimes.

First, I start with the challenges.

This is a continuation of the last post “The Great Challenge of our Generation.” The material comes from my StartingBloc presentation on Saturday, “The Immense Opportunity our Generation Has.”

First, let me take a step back and take a shot at some of the major the causes of this economic decline. Some of these causes may be controversial or debatable, but it’s a stab.

The Major Causes of the Economic Decline

1. De-regulation of financial industry in 1999 (Glass-Steagall)
2. Low interest rates to stem 2001-2002 recession
3. Easy credit to unqualified home buyers from 2002-2007
4. Lack of consumer savings in the U.S.
5. Over-leveraging of trading accounts
6. Over-derivitization of securities, de-linked from their underlying assets (CDOs, credit swaps, MBSs)
7. The collapse of key counterparties to risk

And the resulting effects of the declines…

The Effects of the Economic Decline

Mar 2008 – Forced Sale of Bear Sterns to JP Morgan
Jul 2008 – IndyMac Bank collapses
Sep 2008 – Bailout of Fannie Mae, Freddie Mac, and AIG, Forced Sale of Merrill Lynch and Wachovia, Collapse of Lehman Brothers
Oct 2008 – $700 billion U.S. government TARP
Feb 2009 – Unemployment rises to 7.6%, over 3.6 million jobs lost, DJIA down 50% from Oct 2007 peak, $787 billion U.S. government stimulus package

Finally, I listed the key global challenges we currently have:

Key Global Challenges

1. Extreme hunger and food distribution
2. Water sanitation and distribution
3. An $11 trillion U.S. government debt and unfunded liabilities in Medicare, Medicaid, and Social Security
4. Lack of access to childhood education
5. Infant mortality, Malaria, measles, TB, diarrhea, HIV/AIDS
6. Human rights violations and sex trafficking
7. Climate change causing increasing temperatures
8. Nuclear proliferation
9. Major conflicts in Congo, Palestine, Sudan, Afghanistan, Iraq
10. Lack of transparent leadership in Zimbabwe, N. Korea, Somalia

And finally listed all the great entrepreneurial opportunities there are in the world that entrepreneurs can work to solve–all of which could generate a billion dollar business…

Key Global Entrepreneurial Opportunities

1. Agricultural production yields
2. Food distribution and logistics
3. Water collection, sanitation and distribution
4. Wireless electricity distribution
5. Wireless mesh broadband networks
6. Ending conflict through trust and communication
7. Leadership transparency consulting
8. Improved education and reform
9. Improved preventative health care and reform
10. Clean tech/alternative fuel (the coming Green Revolution)

A Vision for the World

So, with these great challenges and opportunities in mind, I’d like to work with each and every one of you over the next fifty years to shape a world that addresses the great inequities of opportunity in the world all based on the principle that all human lives have equal value. A world in which…

1. There is no killing of humans on a mass scale (genocide or warfare)
2. All humans have access to the basic human needs of clean water, nutritious food, shelter, and primary education
3. We end preventable diseases like malaria, TB, and measles
4. We are environmentally sustainable

Is this possible?

Some may laugh.

But there’s no legitimate reason why humans have to kill thousands, tens of thousands of humans on a mass scale. Especially not in an age of increased communication and hopefully increased trust. Is there?

There’s no legitimate reason why if we have the logistical ability to get a package to Shanghai by the morning that we can’t create a system that enables basic, inexpensive food to be produced and distributed to starving children in the developing world, especially not in an age of increased grain yields. Is there?

There is no legitimate reason why preventable diseases can’t be prevented in the next 50 years. By definition. Is there?

And there is no legitimate reason why we cannot find alternative energies to fossil fuels that don’t destroy the world. Is there? We already have them. They’re just a bit more expensive per KWh than fossil fuels. This price doesn’t include the true cost of the externalities caused by the fossil fuels currently being paid by society. As Tom Friedman talks about in Hot, Flat, and Crowded, once we scale the usage of alternative energies, their price per KWh will quickly come down to be sustainable from an economic and environmental standpoint.

We’ve had bigger challenges before. In 1962 in the midst of the Cuban missile crisis. In 1943 in the midst of World War II. In 1930 in the middle of the Great Depression when unemployment was at 25%. These are challenges our generation can overcome if we make the right sacrifices and investments in education, infrastructure, leadership, and sustainability.

People laughed at Edison when he said he had a device that recorded sound.

People laughed at Marconi when he claimed had a device that wirelessly transmitted sound.

People laughed at Yunus when he said he could lend to poor women with no assets.

Your thoughts? Is this world possible?

Inside The White House Friday…

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On Sunday March 1 I got a voicemail. The call was from Elliott Bisnow. It said, “Come to The White House on Friday.”

Background on The Summit Series

I’ve written about Elliott before. He’s 23 and somehow, with an excellent team, has put together The Summit Series, designed to bring together the top entrepreneurs, social entrepreneurs, and innovators under 40 in the world. The group started in April 2008 in Utah wanting to bring together cool people. The purpose has evolved and strengthened as the group as grown.

Today, the purpose of The Summit Series is to bring future global leaders together to figure out how to make the world better. They’ve brought together people like Jessica Jackley, co-founder of Kiva, Scott Harrison, the founder of Charity Water, Eric Ryan and Adam Lowry, co-founders of environmentally-friendly soap maker Method, and Blake Mycoskie, CEO of TOM’s Shoes, who has given away tens of thousands of shoes to children in developing countries.

They’re working to build a community of the most influential young entrepreneurs, social entrepreneurs, and innovators to make a positive impact. It’s the Clinton Global Initiative, Davos, and TED for Generation Y.

At the next Summit Series in April in Aspen, the focus is on philanthropy. They’ll be bringing in Mikkel Vestergaard Frandsen (inventor of the LifeStraw) and Elizabeth Gore from Nothing But Nets, Lauren Bush from Feed Projects which sells bags that enable a contribution to feed a child for a year, Bobby Bailey from Invisible Children which works with child soldiers in Uganda, and Ethan Zohn from Grassroots Soccer, who took his $1 million from winning Survivor:Africa to set up soccer leagues in Africa that enable children there to get tested for HIV/AIDS.

In just one year, The Summit Series has grown through hustle, hard work, and word of month to 120 members, including some of the most well-known and respected ‘under-40? entrepreneurs and social entrepreneurs in the world.

This brings us to three weeks ago.

How The Meeting Transpired

On February 22, Elliott met David Washington and Yosi Sergant (the guy who launched the iconic HOPE poster) from the White House Office of Public Liaison at a DC event. Elliot told David and Yosi about Summit Series. They were interested in getting the message out on the Obama Administration’s efforts on job creation, the economy, energy, health care, transparency, and new media and building relationships over time with the attendees.

So it happened. David and Yosi told Elliot to find 30 people from Summit Series to come to a meeting at The White House on March 6th.

When someone calls to tell you to come to a meeting at The White House, you go. The White House has a “strong gravitational pull” as David Sutphen of Brunswick Group put it on Friday morning. And so I went.

Friday At The White House

So on Friday morning I flew to D.C. After getting a last minute haircut at an ‘old-school barbershop’ on 15th and H and running into my NASA-friend Stephanie Fibbs on the walk back, the Summit group met at 12pm at the Hay Adams Hotel for a reception.

At the reception I had a chance to meet Jake Nickell from Threadless, Evan Williams with Twitter, Mark Ecko from Ecko, Michael Chasen from Blackboard, and investor Chris Sacca from Lowercase Capital and reconnect with Tony Hsieh from Zappos, Aaron Patzer from Mint.com, Ben Kauffman from Kluster, and Josh Abramson from College Humor.

Lunch followed. At the table was Jessica Jackley from Kiva, Aaron from Mint, Ivanka Trump and her fiance Jared Kushner of the New York Observer, Catherine Levene of Daily Candy, and David Sutphen of Brunswick Group.

Setting Expectations

Prior to heading to The White House, David Sutphen and Phillipe Lanier of Eastbanc set expectations. We were not there to add on to the endless to-do list of the Administration. We were there to understand what was currently being done, ask questions, and build a long term relationship.

We heard that the Administration members we were about to meet were “drinking from a firehose” currently. They explained that we not there to give lots of ideas, but rather to learn what was happening so that we could be the entrepreneurial implementers and doers in our own communities working toward addressing critical needs. It wasn’t just about one day, but an ongoing relationship that started that day.

They shared that the Obama Administration saw us as one medium to communicate what they were working on to others via new media and as one filter of constituent thoughts and suggestions. With the CEOs of web firms Twitter, Zappos, iContact, Threadless, Mint, and Blackboard in the room we could certainly do that. They wanted to build a long term relationship with us and authentically wanted our contribution and ideas–just not all at once and in a usable ’summarized, bulletted form.’

So we walked over. We got our security passes at The Eisenhower Building and then went inside. We went up three floors and down a hallway to a room with thirty chairs and a table.

The Agenda from The Meeting

The meetings during the 90 minute session went as follows:

2:00pm – David Washington, Ph.D – Assoc. Director of the White House Office of Public Liaison and Michael Strautmanis – Chief of Staff to the Assistant to the President for Intergovernmental Relations and Public Liaison

2:15pm – Jason Furman – Deputy Director of the National Economic Council

2:30pm – Martha Coven, Special Assistant to the President for Mobility and Opportunity; Greg Nelson, White House Office of Public Liaison; and Heather Zichal, White House Office of Energy and Climate Change

2:50pm to 3:30pm – Macon Phillips, Director of New Media

Notes from The White House Meeting

Here are my rough notes from each session. All quotes are paraphrased and could be incorrectly attributed in some cases due to my sub-par note taking system

David Washington

• We want to know your ideas on how we can make government more transparent.
• We want examples of how the stimulus is helping–anecdotes and stories that you see.
• Our focus is creating jobs–but we need your help in doing this.

Michael Strautmanis

• Some of the stimulus may work. Some may not. We’re here for solutions not banter.
• When I met Michelle Robinson, she treated me as if I had value.
• President Obama challenged us to make government more transparent.
• From transparency comes legitimacy.
• The OMB is more transparent now. Longer explanations. Posting on Recovery.gov.
• As entrepreneurs, I want you to think creatively about the world of making the world a better place for our children.
• Only way to fix economy is to get on a sustainable path with fiscal responsibility.
• We have to create dynamism and energy. It takes heart.
• Other generations have had other challenges. Together we can meet these challenges.
• We are partners for creating a sustainable future.
• In response to question from Chris Sacca on will Obama start Twittering again: That is up to the Secret Service.

Jason Furman

• We’re working on unfreezing credit, bringing down the cost of health care, energy independence, the climate, education, and fiscal sustainability.
• In response to question on budget deficit from Aaron Patzer of Mint: Right now a fear is deflation. A deflationary spiral is the biggest nightmare for economists. The amount we’re borrowing today is small in comparison to our GDP and needed. Our economy can afford the deficit. We have a path to cut the [annual] deficit by 50% in 5 years. People are lending to the U.S. cheaply at 2.5%.
• We have 12.5M unemployed. Some banks may have negative net worth. Housing was overpriced.

Martha Coven

• We are working on creating green jobs.
• I want the best ideas from the private and social sector to bubble up to Federal Policy making.

Heather Zichal

• In response to question on solar power and home owners selling energy back to grid: We will think about homeowners selling electricity back to the grid.
• We are focused on energy and climate change.
• Administration making a commitment to CAFE standards and reducing dependency on foreign oil
• Cap and trade revenues to start in 2012 according to budget

Greg Nelson

• As business leaders you have a chance to redefine what the role of a business leader is.

Macon Phillips

• Creator of change.gov, whitehouse.gov, and recovery.gov
• We want to work with you on creating a PSA 2.0
• I love free dissemination
• We’ve made time for this because we want you to be empowered.
• Wants abilities to get mass response, but with usable outcomes. 8,000 comments can be unusable sometimes.

What They Asked of Us

Overall, I was very glad to participate. Each of the 30 attendees has been asked to do the following:

1. Act as a filter/community ambassador for the best ideas/suggestions/thoughts on what we can do on the economy, budget, energy, healthcare, education, and new media. Get feedback from your community and send the best to us from time-to-time in summarized, bulleted form.
2. Send any examples/anecdotes/stories that we hear of due to investments from the Stimulus making a positive impact in your community.
3. Send any ideas/suggestions/thoughts on how to make government more transparent and open.

Finally, they asked us to go back to our communities and work entrepreneurially to create positive change, address social needs, and create jobs. They said we must create a true partnership between the public, private, and non-profit sector for it to work.

My Thoughts on The Meeting

I very much appreciated the meeting. It was done with good intentions, and not as a media stunt. They shared with us what they were working on and how we could be part of it to increase the chance of success.

It was clear how smart, busy, and focused these people were. They were glad to meet us and we were certainly glad to meet them. They could be us and we could be them.

They gave us their direct email addresses and encouraged us to act as a filter for them for them on the best ideas. Finally, they invited us to build a long term relationship and explained that as we built trust over time, our influence as a group would grow.

After the Meeting

After the meeting, we all went to a local restaurant to discuss what we had experienced. We broke out into four groups to talk about our ideas and begin to refine them. The groups were:

1. Economy and the stimulus
2. Education and job creation
3. New media and transparency
4. Energy and the environment

I led the group on the economy and the stimulus. I’ll be writing up my notes and posting them soon.

Where It Goes from Here

So we’ve been asked to be one informal filter (of many) for these individuals in the Administration and Office of Public Liaison and help ensure they’re getting the best ideas from the best people filtered to them every few months in summarized form.

I’ll be holding an Entrepreneur & Social Entrepreneur Meetup at my house in Chapel Hill on Friday March 20th at 8pm at which I’ll present what we’ve been asked to do and start the discussion with the group.

We’ll likely hold a separate meetup (date TBA) in early April to discuss and debate ideas and policy proposals on the topics of: economy, budget, energy, healthcare, education, transparency, and new media. We’ll then filter the ideas and present a summarized form to our new contacts in the Obama Administration.

If you have any ideas or thoughts please post them below via the comment section.

The Tweets From The Meeting

Since Evan Williams, the founder of Twitter with 231,000 followers, Tony Hsieh of Zappos with 197,000 followers, and Chris Sacca with 132,000 followers were with us, we may have been in the most tweeted meeting at The White House in the history of the world.

The post-meeting Tweets were positive.

@ev wrote: “Lessons from today: Obama’s team: smart and committed. Learned a lot and was inspired.” and

@saaca wrote: “The folks from the White House are sharp. Obama made it cool once again for awesome people to serve in government.”

@tomsshoes wrote: “Just left the meeting – pretty inspirational. The administration really does want our input, each gave their personal email addresses and encouraged dialogue.

Feedback from Readers and Friends Prior to the Meeting

I was amazed at the response I got by soliciting feedback prior to and during the meeting on Facebook and Twitter. More comments flowed in than I’ve ever gotten before on a status update or Tweet.

I asked on Thursday night via Facebook and Twitter, “meeting at White House Friday to discuss ways to improve economy. Any suggestions?” I got 29 responses. Note that you’ll have to be my Facebook friend or in the UNC or Raleigh-Durham network to read them I believe.

I also asked on Friday, “just challenged by the Obama Administration to provide idea on how to make govt more transparent and open. Ideas?” I got 17 responses.

Comments Sought

What are your thoughts/ideas/policy proposals in the areas of economy, budget, energy, healthcare, education, transparency, and new media? Post and get the discussion going…

Welcome to Bengalaru…

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I arrived in Bangalore, known officially as Bengalaru, last night around 8pm. Bangalore is known as the Silicon Valley of India due to the large number of IT firms here including Wipro, Infosys, Tata, SAP, Talisma, and HP (many located in Electronics City 30 minutes to the south).

It’s Saturday afternoon here in Bangalore, the third largest city in India with a population of 6.2 million people (twice the population of Chicago). I’m watching “A Taste of Iran” on BBC World News. I’ve re-fallen in love with BBC News while here. I happened to come here on the weekend of the Aero Show 2009, the largest annual military air show in Asia. They are due to fly over at 4pm. I had enough time between my business meetings today to venture out.

I just returned from a journey to buy Saffron (a spice) for a friend. I found it at the market on Brigade Road, a popular shopping area in town. After a stop by Bangalore Palace and the Karnataka High Court, I went to the Cottage Industries Exposition, where I learned all about traditional mountain rug making before coming back to write this post.

Here are some observations and pictures of Bangalore so far.

Bangalore has a new airport built one year ago that is very nice. It gives the impression that Bangalore is much more modern than Delhi. The National Highway 7 runs the 37km from the airport to the city, although it can still be congested at 9pm at night. The city seems to have much less litter than Delhi. There are millions of motorcycles, often with 3 or more riders. I was amused to see Iron Maiden concert ads everywhere. Also common are recruiting ads for the Indian Air Force.

The most amusing thing I’ve seen has to be the police, many of which wear cowboy hats as part of their uniforms. The car horns remain busy here and the traffic is just as chaotic as Delhi and Kampala. The city commission have made many of the roads one way to attempt to help congestion. There seems to be much less pollution than Beijing or Hong Kong.

There are so many brilliant people here in India. If they can get investments in rural education and infrastructure right, this country will boom.

Beware: The Beijing Tea Ceremony Scam

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The fireworks are blasting outside my window as I write. I happened to have arrived in Beijing on the night of the Festival of the Lanterns, which involves hours upon hours of continuous fireworks all over the city. Today is the 15th day after the Chinese New Year on January 26, and thus the fireworks. Here’s a photo from my hotel window about 20 minutes ago.

On the way from Chicago this afternoon, instead of flying West like I expected we would, our plane flew North to the North Pole, and then South down to China. Here’s a photo of what the map looked like from the video monitor on the plane seat. What an interesting way to view the Northern Hemisphere.

So after flying over Canada, the North Pole, Siberia, Russia, and Mongolia I landed in Beijing at 4:30pm this afternoon. I got into my hotel around 5:30pm and although tired decided I’d go out. I decided to go see Tienanmen Square and the Forbidden City and walk around a bit.

Here’s where the scam begins.

Walking right in front of the Forbidden City, two English speaking Chinese students came up to me and asked if they could practice their English with me. Having seen plenty of pickpocketing during planned distractions throughout travels in Europe (especially in front of the Coliseum in Rome), I was very aware and was skeptical of what these two young girls were after. They were dressed conservatively, so it didn’t seem like they were trying to sell themselves.

I said sure to them practicing their English. They explained they were in Beijing for two weeks studying English and had decided to come out to see Tiananmen. They asked lots of questions and gave lots of compliments. After about fifteen minutes of talking and them explaining the Festival of the Lanterns and their backgrounds they frankly had gained my trust. Seemed like they were actually two 22 year old college students named Jing Li and Ling studying English. Since I didn’t have anything to do until the morning I said yes when they asked me to get tea with them.

We walked for about ten minutes and ended up at the Si Zhu Xiang Tea House at 15 Nan He Yan Street in the Dong Cheng District. We were led into a room where 10 very small sample teas (less than an ounce) were poured (without ever being provided a menu). When I got the bill for my tea, it was of course in Yuan. I foolishly didn’t know the exchange rate. So I paid the bill thinking to myself, OK 10 small tea samples adding up to about one full cup of tea, this can’t be more than US$20.

When I got back to the hotel, I checked the exchange rate and found out $1 was equal to 6.7 Yuan. They had charged me 2112 Yuan or in U.S. Dollars, $308.90 for the tea.

I then Googled the name of the place, Si Zhu Xiang Tea House and found that I wasn’t even close to being the first to get taken by the now infamous Beijing Tea Ceremony Scam. Those “friendly college students wanting to work on their English” are paid by the tea house. It seems that ‘entrepreneurship’ is alive and well here.

Yep, I was taken on my first night in Beijing. In the very first hour too. Here’s to Visa’s fraud protection.

And hey, I even got a picture with Jing Li in front of the Forbidden City. Here she is, the girl who scammed me with a victory sign…

At least I’ve got a good story now. . Here’s to the Festival of the Lanterns and to “becoming a more experienced traveler.”

Tomorrow, the real work begins.

Quick Observations from Beijing, Hong Kong, and Delhi

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I got onto Air India 315 in Hong Kong and arrived in Delhi tonight around 10pm. After police checks, gates, and baggage screenings I arrived in my hotel around 11. I wanted to post some quick observations so far from Beijing, Hong Kong, and New Delhi…

Beijing

Spoken language is Mandarin. Written language is Simplified Chinese.
Need to know 3,000 characters to be literate.
13.3 million residents
Massive highways, drive on right side of road, steering wheel on left, road signs like America
Modern and developed in the business district
Few people know English. Taxi drivers mostly don’t. But numbers are growing.
Overexpanded airport due to Olympics, too much capacity
3G coming in May
Give and receive anything (especially business cards) with two hands
Pollution restricts view
Nuclear power plant visible from airport to downtown
Poor villages clearly purposely hidden from view from highway with new fences
Lots of luxury shopping, cafes for expats
Known for roasted duck
Free speech reduced, political speech against the government not allowed. You would likely be deported (as a foreigner) or arrested (as a local) if you held up a sign in Tienanmen Square saying, “I believe in Free Speech”
Newspapers very thin (4-6 pages), little actual analysis or transparency. Owned by State (Communist Party). Same exact picture of Wen Jiabao watering crops in drought-filled West was on front of every single newspaper.
Massive internet firewall stops anything even close to crude or anti-government on the Internet
Use pinyin (phonetic spelling in Western alphabet) and stylus character drawing to input text into cell phones and computers
Major websites are: 163.com, Sina.com, Tom.com, Baidu.com, Netease.com, Sohu.com, Google.cn, Joyo.com, Dangdang.com, Alibaba.com, TaoBao.com

Hong Kong

Spoken language is Cantonese. Written language is Traditional Chinese.
East meets west (eastern and western cultural melting pot)
Culture toward ‘making money’
Road signs like those in Britain
6.9 million residents
One country, two systems (same country as China but different currency, more political freedom)
Was under British rule until 1997
No internet filter like in the mainland
Drive on left side of road, steering wheel on right
Can get any type of food
Lots of high-rise condos
Safe to walk around
Double Decker buses
Ferries from Kowloon to Hong Kong Island
Lots of Karaoke clubs
Business dealings often happen late at night at Karaoke clubs
Waiters will not come to take your order or bring the check to you unless you ask them to come (the culture is ‘do not chase’)
Business dinners tend to occur in private rooms at restaurants
Lots of Tapas restaurants
Good dim sum (small Chinese plates)
Some roundabouts
Give and receive anything (especially business cards) with two hands
Lots of product sourcing expos (for every imaginable product, produced in Shenzhen or Guangzhou (The World’s Manufacturer) in SE China
Pollution haze ruins the beautiful view. Can barely see 300 yards in front of you.
Beautiful mountain behind the Hong Kong Island skyline
2nd largest skyline in the world after New York City
One of the most beautiful skylines in the world at night, at 8pm every night have light show, best viewed from Kowloon
Gets extremely excited, decorated for Chinese New Year
Billionaire Li Ka Shing seems to own half the city

New Delhi (early observations, only been here 3 hours and it’s night)

Official languages are Hindi and English
Hindi is written in Devan?gar? script
Men who are friends commonly hold hands like in Uganda
Men with rifles at car checkpoints leaving airport
11.9M residents
Main religion is Hinduism
So far, seems to be more like developing country than Hong Kong or Beijing (the chaos, dirt, and guns reminded me of Uganda), but will post more observations tomorrow once I can see the city in the light
Have to go through gate and metal detector and luggage screen to get into hotel
Lots of green and yellow rickshaws
Fewer highways (at least from airport to hotel)
LOTS of roundabouts, thanks Britain
Avoid touching anyone’s head, as it is sacred
Don’t shake the hand of a women unless she offers to shake yours. Instead say Namasté and bow with hands under chin
Namasté roughtly means, I honor the spirit in you which is also within me.

———————-

Comments/corrections/other observations are welcomed!

Oh, and go Tar Heels tonight!!

Reflections on South Dakota, Beijing, New Delhi, & Bangalore

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It all started with barbeque wings in a bowling alley in South Dakota. We were playing “dares” over drinks after a speech to the University of South Dakota on for their annual entrepreneurship event. So there he went, dared to do a swan dive onto the slick bowling lane. And then, she, dared to exchanged shirts with the guy at the table next to us. Next, he was given a dollar for every belt he could get from someone he didn’t know within 120 seconds. He got 6. Ahh it was fun to act my age for once.

After a late night of dancing and fried cheese balls in Vermillion, back to Omaha we went for a 4:30am arrival at the hotel. The next morning, I flew the common Omaha to Chicago and then Chicago to Beijing route.

7,000 miles and an Excedrin with caffeine later, I took a taxi to Tiananmen Square and the Forbidden City. I walked around, only to be duped and fooled by two Chinese students wanting to practice their English as they led me into a unexpected $300 tea ceremony.

Ego humbled, I had six meetings the next day in Beijing with some brilliant EO expats, only to hurry to the Olympic-sized overexpanded Beijing International TC3 terminal. Next stop: The most beautiful skyline in the east, Hong Kong Island.

I checked into my hotel in Kowloon at 10pm, just a Star Ferry ride away from HK proper. I met up with my old friend David Sui, who proceeded to show me what a traditional Chinese massage was (yes, they do step on you) and then what it was like to do business in Hong Kong. Yes, it involves lots of Karaoke.

After five meetings with customers and EO members and a three hour meal of Dim Sum, I was off to New Delhi, India.

The orphans in the dirt under the highway surprised me, but shouldn’t have. The beggars in beautiful Saris didn’t. The four person motorcycles and the green and yellow three-wheel taxis allowed three lanes to be made into five. The kid entrepreneurs in the streets were omnipresent. The hotel security at code red. And the chaos. It was expected, but not at that level. The roundabouts confused. The traffic was *almost* as crazy as Uganda—and nothing can hold a candle to Ugandan traffic.

The complex disparity of rich India and poor India was clear. Only clearer was the need for continued large investment in education and infrastructure and what was possible for India. The subcontinent was bursting with intellect and potential. Sachin Duggal of Nivio (the desktop OS in the cloud), Sanjay Gupta of Mobisolv, and Mohit Maheswari of New Media Guru represent the future of India. As does Raul Gandhi, the 37 year old future prime minister so many believe.

After seven meetings in New Delhi, off to Bangalore I went. From the old domestic airport of New Delhi to the shiny Bengalaru International. The Aero Show 2009 pierced supersonic while the horns chorused. The police protected in their cowboy hats. After meeting with Kunal David of Directory Maximizer and the brilliant young Sudeep Aditya, I was ready to sleep—but Kunal insisted we go out. It was Valentines Day, and we had to protest the banning of dancing in Bangalore clubs (yes, they actually have banned dancing in Bangalore pubs and clubs). The hip hop dancer in me shed a tear.

A fundamentalist conservative Hindu group called Sri Rama Sene led by Pramod Mutalik had attacked couples holding hands in public and trashed greeting card stores that day. They had already banned dancing and wanted to ban love. The 15 year old rebel with red hair inside wanted to start a protest with an organically organized street team.

The flight back from Bangalore to New Delhi was on the “Good Times” airline Kingfisher. But an unexpected challenge followed for me in Delhi. The flight from Bangalore arrived at the domestic terminal. I had to get to the International terminal and had four hours to do it. No big deal, right?

Unfortunately the International Terminal of Indira Gandhi International airport is 20 minutes away from the Domestic Terminal and they wouldn’t let me on the transfer shuttle as I didn’t yet have my ticket printed out and couldn’t as there wasn’t an American Airlines desk in the domestic terminal.

And so, back to the streets of Delhi I went with my ‘pre-paid taxi’ driver. This guy was exceptionally aggressive. You must know, these taxis in Delhi don’t have seatbelts, making the ride exceptionally adrenaline-filled. He in fact hit another car after running a red light and it didn’t seem to phase him.

After passing the sandbagged automatic rifled soldiers and machine gun turrets on top of armored vehicles, I attempted to enter the International Terminal, but they wouldn’t let me enter without a ticket, which I couldn’t get without going inside to get it. A logical circle of death. I wasn’t getting anywhere with this policeman.

They directed me to an office building across the street, to room number 23 in corridor number 2. I found a shut padlocked door. They told me to wait until the representative came back. I found this to be bad advice, so I kept asking and finally found the actual American Airlines office in another building, with a sign on the front that said open from 1000 to 2000 hrs. It was 9:30pm (2130 hrs of course), but they let me in and I finally got my ticket printed. I wonder how many people this happens to.

And so I sit, on the last hour of the 15 hour flight from American Airlines from New Delhi to Chicago, glad, yet somewhat nostalgic, that it will be some time before I ever again get asked for my meal choice, “Vegetarian or Non-Vegetarian?”

Ahh America, the land of non-roaming 3G and potable tap water.

Here’s to having a fuller perspective of two other cultures, appreciation of the complexity of life, and awareness of the great potential of these countries. They are two rocks held back in a giant slingshot.

The Great Challenge of Our Generation

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I write as my roommates watch the sci-fi movie Anti-Body through the amazing new Xbox/Netflix partnership in a cold and icy Chapel Hill…

This weekend I had the opportunity to speak at StartingBloc’s Greater New York Institute for Social Innovation at Yale University in New Haven. I had the chance to speak after Tom Szaky, the 27 year old CEO of TerraCycle, who is good work on upcycling waste into usable products.

In attendance were 150 of the smartest, most ambitious, and most caring individuals I’ve met, all from age 19 to 30. 25% were undergrads, 25% were grad students, and 50% were young professionals from firms like Goldman, JP Morgan, Acumen, Ashoka, McKinsey. They were all social entrepreneurs or future social entrepreneurs. If you’re under 30 and interested in social responsibility you should apply for their future Institutes in New York, Boston, or London.

StartingBloc has now reached 1000 fellows who have gone through their program. I first met their founder, the 27 year-old ebullient Kenyan Jo Opot last May in New York. She and their Director of Programs Taryn Miller-Stevens are examples of committed, driven, caring world changers.

I challenged the group to over the next 50 years, work together to create a world in which…

1. There is no killing of humans on a mass scale (genocide or warfare);
2. All humans have access to the basic human needs of clean water, nutritious food, shelter, and primary education;
3. We end preventable diseases like malaria, TB, and measles; and
4. We are environmentally sustainable

This challenge was based on the key simple principle from the Gates Foundation that all lives have equal value. I first shared the great challenges we face in the world including the most difficult economic news we’ve seen in our lifetimes, then the great opportunities (subsequent post on these coming soon) to frame the debate.

So, can we actually end genocide, warfare, starvation, and preventable disease in our lifetimes?

And can we actually provide accessible clean water, food, shelter, and primary education to every human in our lifetimes?

Your thoughts?

LocalTechWire Article on Nourish International Wine Tasting

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WRAL’s LocalTechWire ran a nice article today promoting the Nourish International “World Wines & Global Poverty” fundraiser. The Nourish International Event is Friday night (tonight) at 8pm with speaker Dan Ariely, author of Predictably Irrational.

If you’re in the Triangle, you should come!

Here’s an excerpt from the LTW article…

Nourishing Socially Responsible Entrepreneurship is Appetizing Goal for iContact CEOby Rick Smith

Durham, N.C. — Nourish International, a growing network of college students and entrepreneurs devoted to what they call “sustainable development,” has become a passion for Ryan Allis, chief executive officer of fast-growing e-mail marketing firm iContact.

Allis is one of many young tech executives who have embraced the concept of ‘giving back” to the world in which they live rather than take for personal gain. And Friday night at UNC-Chapel Hill, Allis will be among the hosts for a “World Wines and Global Poverty” fund-raiser.

To give back has been a calling for Allis, co-founder of Durham-based iContact, since his days as a youth. He and Aaron Houghton, iContact’s co-founder and chairman, launched the company as friends and students at UNC-CH. They recently were honored as entrepreneurs of the year by Ernst & Young, and their firm has won numerous awards while establishing an international customer base.

Allis and Houghton share a commitment to philanthropic efforts as well. And Allis told Local Tech Wire in an interview that Nourish strikes him as an especially appealing cause.

“Nourish International teaches entrepreneurship to college students who raise money through ventures to contribute and then visit social entrepreneurial projects that work to reduce hunger and poverty in the developing world,” he said “It’s a unique and effective model that Nourish is perfecting and then scaling to have a global impact. They need a bit of initial support in order to ’start-up’ so many chapters at once until the point where the chapters are profitable. They have chapters at 23 college campuses now–and it all started right here in Chapel Hill!”

Duke professor Dan Ariely, who wrote the New York Times best-seller “Predictably Irrational,” is the guest speaker at Friday’s event, which starts at 8 p.m. in the FedEx Global Center.

LTW asked Allis why he chose to be socially active as an entrepreneur.

“I grew up the son of two social entrepreneurs–an Episcopalian priest and a social worker,” he explained. “I was taught from a young age to care about helping others.

“When I was 17, I took a high school economics class from a teacher by the name of Robert Fletcher. Mr. Fletcher taught from a human and sociological perspective. Instead of focusing on teaching curves and math he often taught economics using stories. I learned from him that year that there were 2.7 billion human beings living on under $2 per day and that 49,000 people died needlessly each and every day from preventable diseases and starvation. Learning these facts got me on the path toward wanting to focus my life on addressing these issues.

“Over the past six years reading books like “The End of Poverty,” “The White Man’s Burden,” “Commonwealth,” “Confessions of An Economic Hitman,” “The Bottom Billion,” “Mountains Beyond Mountains,” and “Banker to The Poor” helped me learn more.

“The passing of Eve Carson in March, who was Co-Chair of Nourish International and such an amazing social entrepreneur to-be, caused me to further examine what I wanted to accomplish during my time here.

“Traveling to Uganda and Ethiopia in July cemented this lifelong focus on social entrepreneurship and making a positive impact in the area of education, healthcare, nutrition, clean water, human rights, and the environment. I am a firm believer that all companies must be socially responsible if we are going to create a sustainable world in which we can all prosper.

“With 3,000 children dying each day from a disease as preventable as malaria it’s hard not to wake up and realize we must work together as one. There is plenty of food in the world to feed everyone, yet more than 800 million people are chronically hungry due to lack of availability of food with adequate nutritious content. It just doesn’t make sense for such a problem (entrepreneurs see problems as opportunities) to exist in world of extravagance, waste, and overconsumption we live in.”

Allis’ service to Nourish International includes acting as its board chairman. He also sits on the board of Leadership Triangle, the Entrepreneurs’ Organization, and the Council for Entrepreneurial Development.

Read the full article and Q&A at Local Tech Wire

View the Nourish Documentary Video

The 50 Personal & Business Lessons I Learned in 2008

At the end of each year I post the business and personal lessons I learned that year. You can see the 2007 lessons here, the 2006 lessons here, and the 2005 Lessons here. Here are the 50 Personal and Business Lessons I learned in 2008.

The 25 Personal Lessons I Learned in 2008

1. Don’t Cheat on Your Wife. Don’t cheat on your wife, period. But especially don’t cheat on your wife if you’re planning to run for national office. I learned this lesson from John Edwards in August.
2. Don’t Hire a Prostitute. Don’t hire a prostitute, period. But especially don’t hire a prostitute if you’re already well-recognized and a Governor of a major U.S. state. Thank you Elliot Spitzer.
3. (Some) Women Can Get Very Jealous of Other Women – I am very careful not to over-generalize here. In my experience, some women can get very jealous of other women, especially those that you previously dated, even if there is no real reason for them to be. If you’re in a relationship with a woman that you care about, make every effort to make her feel like she is the only one. Make sure she understands she is the person you want to be with.
4. Women Have Amazing Natural Instincts. Remember when you were a kid and you thought you were getting away with something but your mom knew all along. I thought I had hid the bottle of Bacardi 151 safely in my closet and then one day it was gone without explanation. Yes, women have amazing instincts and will generally catch you at anything you get yourself up to. Be open, honest, up front, and transparent with them.
5. Don’t Fall For A Woman Until You Know Her Well. Don’t fall for what you think women are or who they are on paper, but rather who they actually are, whether they like you back, and how well you can communicate. I’ve made mistakes in this area a few times in the last two years–falling for women based on who I thought they were (or who I wanted them to be) rather than who they actually were, whether they liked me as well, or how we communicated.
6. Life Can End At Any Time. Live Fully And Don’t Wait to Make a Difference. On March 5, 2008 UNC Study Body President Eve Carson was killed in Chapel Hill by multiple gunshots to the head after being kidnapped from her home. I knew Eve when she was Co-Chair of Nourish International. I wrote this post at the time. The words of her father, Bob Carson, at her memorial service on March 9th will forever live with me…
   

   “I see a stunningly beautiful convergence of talent and caring in this, our children’s, generation. I believe that these kids, along with their peers around the globe, can reach reasoned solutions for mitigating violence and tacking many of the inequities of poverty, prejudice, inadequate healthcare, and under-education. This is no pie-in-the-sky-wish! These kids are smart. They’re so capable. They’re more productive because they collaborate and communicate like no generation before them… But I must tell you–even with an aching heart, and yet with such hope and love–that the friends of Eve, and their generation, will not be denied. They’ve got miles to go and missions to keep.”

7. Humor has great power. Jeff Dunham is absolutely hilarious. Achmed the dead terrorist is perhaps the funniest politically incorrect puppet in the history of puppets. “Silence! I kill you!”
8. When You’re Speaking to Middle Schoolers, Use Audience Interaction. In February I talked to 200 middle schoolers at Moore Museum Middle School in Raleigh. It was my first time talking to that age of audience. I learned a few key lessons regardless of your age. Don’t go more than 5 minutes without asking the audience some form of interactive question. Use vocabulary that is at their level. Do cool dances. Do not show vulnerability. Get your message tight and repeat it.
9. It’s Hard to Beat Oprah. On February 5th my book Zero to One Million launched from McGraw-Hill. It reached #2 on Amazon and made the Wall St. Journal Bestseller List after an aggressive launch through social media and friends of mine with large email newsletters. We reached 4 million people and sold about 4,500 copies that day via Amazon, more than the 2,500 books one has to sell on a normal day to reach #1. We would have reached #1 had it not been for Oprah promoting Eckhart Tolle’s new book A New Earth on her show that day causing it to sell 7,500 copies in a day.
10. You’ll Get Sick If You Sleep in the Cold. In January, after speaking at Fairmont State University in West Virginia, I slept in the Extreme Entrepreneurship Tour RV in a parking lot instead of getting an extra room at the hotel we were at. It was about 70 when I went to sleep at 1am but about 40 when I woke up at 9am. I didn’t know that the generator (and thus the heat) had been left off. I was sick for the next week. I learned that when you sleep in a place that gets below 50 degrees, you will more often than not get a cold as your body doesn’t have the heat to kill germs and infections.
11. Arrogance is Being Dismissive of Others Not Overconfidence. Growing up, I thought the definition of arrogance was having too much confidence. This was difficult for me to understand as I’ve always been an extremely confident person and knew that over-confidence was absolutely essential to any chance I had at succeeding at a young age. After a number of good conversations with my former girlfriend Erin I was able to learn the lesson that arrogance is not over-confidence, it’s being dismissive of others and not showing care toward them.
12. In Berlin, People Go Out Every Night of the Week. I was in Berlin in May with the Transatlantic 2020 program. The young people in Berlin tend to go out every night of the week including strange nights like Sunday, Monday, Tuesday, and Wednesday. I went to a Techno Club called Tresor in Berlin on a Tuesday night and it was absolutely packed.
13. In Dubai, You Can’t Get In a Nightclub Unless You Have a Woman With You. I was in Dubai for a night in July with my roommate Roey Rosenblith. We were on a stopover on our way to Uganda for a week. It was a Saturday night. We went out expecting to see the tales of the crazy Dubai we had read about in Rigged. The reality, two 23 and 26 year old Americans could not get into a nightclub in Dubai without a woman with us unless we bribed the bouncer with $30 each which we refused to do on principle. We should have found a woman to say she was with us.
14. In Uganda, The Driving is Insane. I’m not talking mildly insane or moderately crazy. I’m talking absolutely off-the-heezy psychotic. I remember riding in the passenger side of a van driving on a two-lane dirt road while our driving proceeded to pass a car that was already passing another truck, causing us to end up in the dusty shoulder of the other side of the road while a truck carrying about 35 people standing it its back rambled toward us.
15. There Are Tremendous Investment Opportunities in Africa. In Uganda there were so many business opportunities. Incorporating a business (which Roey did while there) took only 3 days versus 3 weeks in the U.S. There were 20 story skyscrapers, lawyers, and banks. Africa is by no means represented fully by the pictures of suffering children we so often see (which is also real). Much progress can be made in reducing poverty through socially responsible investing and entrepreneurship.
16. Seek to Understand The Other’s Perspective. One of the most valuable things I learned from Vanessa while dating her this year was how she was able to be so compassionate and universally loved. This seems so obvious in hindsight. I learned that she always first looked at things from the point of view of the other person.
17. Don’t Forget To Be Your Age from Time to Time. One of the lessons I’ve learned most from my friends James Forsyth and John Hinson this year is to open up, be real, and take life less seriously. To act my age from time to time rather than acting 40 all the time. Since taking this lesson to heart, I often can be seen dancing to Flo Rida, swimming on the floor of my office with deer or talking to my stuffed animals on a love seat . There may n ot be many CEOs who would do this, but wouldn’t the world be more enjoyable if they did?
18. It Takes 10 Years To Become Great at Anything. Here’s a key learning from Malcolm Gladwell. It takes about 10,000 hours (10 years at 4 hours per day) to become Great at anything. You can only become Great at 6 or 7 things in your life. Choose carefully.
19. Don’t Leave Your Blackberry in Your Pocket When You’re Making a Speech. Even if you’re phone is on silent, your phone will cause the microphone to go nuts when it rings due to interference.
20. If You Drop Your Blackberry in the Toilet, Get it Out Quickly and Remove the Battery. I did this in October at a EO retreat at Lake Gaston. I removed it quickly, dried it upside down, but was unable to save it from certain death. I later learned had I removed the battery right away and let the battery dry separately it would have had a chance due.
21. There Is A Lot of Crap in the World. Genocide, war, people getting hung, shot, run over, earthquakes, vitriol, people who don’t believe in you, murder, rape. Sometimes it’s difficult to cut through it all and believe that anything is possible. And yet, a driven, caring, passionate individual can make a huge positive difference.
22. The Value of a Human Life is Equal, But Most People Don’t Agree With Me. When you see Cyclone Nargis kill 146,000 people in May in Myanmar and an earthquake kill 69,000 in the Sichuan province of China just two weeks later and so few people talk about it or even remember eight months later, it definitely takes a toll on my human spirit. For some reason the value of lives is seen as different based on which nation-state someone is from. When 200 Americans are killed it’s the biggest story for three months. When 100,000 Asians are killed no one remembers 90 days later. What the f? To me a human is a human regardless of where he or she was born or is currently located. I wish our media agreed.
23. Photography Has Great Power. Just look at this collection of 2008 in Photographs (part 2, part 3).
24. It is Better to Love and to Lose Than to Never Love at All. In other words, it is better to live life to its fullest, even if one day you may forget it. The key message of Eternal Sunshine of the Spotless Mind.
25. I Love New York. I was sitting at a Starbucks in Murray Hill (around 30th St and Lexington on the lower east side) over the Memorial Day weekend in May. I love the architecture, the culture, the art, the diversity of people, and the drive of the young people that live there. It’s the commerce capital of the world and you can go hip hop dancing every night of the week. While long term I want to end up in beautiful North Carolina, I do look forward to living in Boston and then NYC at some point in the next ten years. I wrote in my journal while at that Starbucks.
    

    “There are just cute, smart, driven, ambitious 24 year old women fricken everywhere. Especially love the Murray Hill area of town where I’ve been staying with Ryan Alovis. The parks are great. Walk back from Union Square was great last night. And all the investment bankers and private equity managers are here too. You can get anything you want anytime you want. Seriously, 2 more attractive mid-20 year olds just walked by. And another. And all wearing spring dresses. So much great diversity. Columbia was beautiful yesterday. So much activity and action. OMG another one. They are all over the place. People smiling, living. Restaurants, bars, parks, dancing, expression, tall buildings, public transport, sports teams, big concerts, being able to be yourself.”

The 25 Business Lessons I Learned in 2008

1. Business Conditions Can Change Quickly. There was a Sunday night in September that changed everything in the financial world. In one day, Lehman Brothers had filed for bankruptcy and Merrill Lynch had agreed to be acquired by Bank of America. Still to come was the AIG bailout, Morgan Stanley and Goldman Sachs’ conversion into bank holding companies, and the sale of Wachovia to Wells-Fargo. In our world of Software-As-a-Service (SaaS), average valuation multiples dropped from 3.5x to 2x forward year revenues in just 45 days.
2. There Are Parts of the Stock Market I Don’t Yet Fully Understand. Although I’ve been an entrepreneur since age 11, majored in economics, and read everything I can get my hands on about finance I’ve still got a LOT to learn about markets. On September 16th, I thought that the Fed bailout of AIG would stabilize markets and that the DJIA had seen its low at 10,742. Sixty-four days later the Dow closed at a low of 7,552, another 29.7% drop. I’ve still got a lot to learn about the TED spread, credit default swaps, liquidity, and the effect of rapid de-leveraging.
3. There Are Parts of the Commodities Market I Don’t Yet Fully Understand. I also thought that the per barrel price of oil had seen it’s low at $88 in September after dropping from $147 in July. As of December 27, the price of a barrel of crude on NYMEX is $37.71. You’d think that the price of such a fundamental commodity to world growth couldn’t possibly drop 74.6% in six months–but you’d be wrong. Ahh, hedge funds, speculation, and perceptions of demand.
4. Don’t Fret About Decisions That Aren’t Yet On The Table. In August I found myself spending hours and hours considering and debating whether iContact should raise another round of venture capital or not. We had six firms interested, all at nice valuations and at favorable terms. It was just a matter of 30 days or so until we got term sheets. I spent four hours one evening while at a Pacific Crest conference in August writing an 8 page analysis of the pros and cons. By the end of September, the market had changed dramatically and all the consideration was irrelevent. I spent a few too many hours considering what we would do in a scenario that wasn’t yet on the table. We ended up choosing not to raise equity capital and went with a venture debt round from North Atlantic.
5. If You Raise Venture Capital, the Required Sale Price of Your Firm Goes Up to Have Equal Success. I learned this lesson in 2007 when we raised our first round from Updata Partners. At that point, we could have had a very successful exit for iContact at any reasonable sale price (since we received our shares at par value of $0.001 each). Once we raised funds at a $30M post-money valuation, suddenly we had to have an exit north of $60M to be seen to have had a success (and $90M for a true success) in the eyes of our investors. This ‘re-setting of the bar’ phenomenon due to a new investor coming in at a higher per share basis price is key for entrepreneurs to consider when deciding whether or not to bring on outside capital.
6. Viral Video Can Be A Powerful Form of Communication. Our iContact iNews videos have been powerful for building and sharing our culture. The Yes We Can video got over 14 million views and made an important impact in the primary election vs. Hillary Clinton. It was released just three days prior to Super Tuesday February 5th. Virtualization server company VMware hosted a viral video contest called “Virtually Famous” in May. They basic ally got all their users/fans to produce a catchy advertisement for them. Then they had their fans’ colleagues and friends vote on the best one–which drew tens of thousands of new viewers to watch an ad for their company. My friends from Cary won with their production “Hardware Hotel.”
7. Focus. Something I’ve learned to be critically important is focus. Once I figure out what I want to achieve I go after it until it has been achieved. Right now and for the next few years of my life my focus is building iContact into the leading provider of email marketing services for SMBs and non-profits. Nothing will stop us.
8. Let People Know What You Are Doing And Why. Have conversations with your key people to let them know what you are doing and why. Even if it’s absolutely clear to you why your top 5 business priorities are your top 5 business priorities, that does not mean your direct reports understand why you are working on what you are working on. Have frequent conversations with your team about the company’s top five priorities and your top five current priorities. I choose to list them monthly in a powerpoint package we review as a team.
9. Get Input in the Planning Process. Even if you have the best plan in the world it won’t matter if it doesn’t get executed well. And it won’t get executed well if people aren’t bought into it. They simply cannot buy into it unless they understand the reasons for it and have a role in providing input and structure.
10. What you Measure, Gets Managed. If you measure, set a target for, and compensate on a KPI (key performance indicator) like phone abandonment rates, your phone abandonment rates will suddenly improve. We started measuring phone abandonment rates (the % of your customers who hang up while on hold before you can answer the phone) in July of this year and within 6 weeks the percentage of abandoned calls went from 9% to 4%.
11. Human Psychology Responds Well to Deadlines. There is great, great power in using deadlines, especially as it relates to sales. Our previous record for new customers in a day was 106. On March 31 this year, during an end-of-quarter sale, we added over 225 new customers during the day. Of course, there was an added incentive that day…
12. When You Want a Team to Reach a Stretch-Goal, Say You’ll Shave Your Head. It was March 9th, we were on track for about $930,000 in sales for the month. I told our team at a company lunch if we hit $1 million in sales that month, I’d shave my head. We hit $1,030,000 and there went my hair.
13. Let Your Customers Play a Big Role in Product Management. When you’re ready to improve your product or add additional products, don’t add what you think your customers want, add what they actually want. Ask your customers informally via focus groups and formally via an online survey. Ask them what their needs are and what additional features or products that they would receive value from. Also keep in mind that sometimes having too many features can decrease ease of use of your product and thus lower conversions. The book The Breakthrough Company has a good saying–”As you diversify, let your customers lead you.” The book Ready, Fire, Aim says (and I’m paraphrasing here), “Let your customers determine your development order and timeline by a vote.”
14. My Ideas Matter Less Now. When we had 4 or 8 employees, my ideas were important. Today, at 150 employees my ideas don’t much less than those of the team we’ve put together. What’s important is that we’ve hired the right people, put the right systems and processes into place, and empowered them to think and execute. Today, my time isn’t spent writing Product Requirement Documents or Marketing Plans, but rather ensuring our team has what they need (capital, people, systems, metrics) to get their jobs done. Today our focus in to build our team up into leaders, thinkers, and innovators.
15. Everything is Negotiable. At iContact, we have one of the best CFOs in the technology business period, Tim Oakley. He is a tough negotiator. I’ve learned from Tim that everything is negotiable. There is no such thing as “reality” as every single person has a different perception of reality. Therefore, one can guide and structure reality. Reality is negotiable.
16. M&A Firms Position Exit Value Using Synergy Value, Scarcity Value, and Strategic Value. We hired an investment banker to assist us in raising our round of investment this year. As part of this process, we learned a lot about mergers and acquisitions of companies, which they also represent companies for. Investment bankers will work to position a company at a premium to the valuation of comparable companies by assessing synergy value (the value of the added cash flow created by selling the products and services of the acquired company to the customer base of the acquirer), scarcity value (the added value if there are few substitute companies that an acquirer could purchase instead of you) and strategic value (the added value to the acquirer of your brand, competitive position, team, processes, culture, technology, and intellectual property that will help them create added cashflow within their own business).
17. Restate The Other Person’s Point Before You Begin. A lot of managers are poor listeners. Two years ago in improv classes I learned the “Yes And” principle. The same principle can be applied to either external negotiations or internal debates to help people feel heard and valued. It can be extremely helpful when in a discussion or debate to purposely restate the other person’s point and then add on to it. Try starting with “Yes, I see that such and such and…” instead of the too common, “But.” The formula is [RESTATE THEIR POINT]… and…[MY POINT OR COUNTER-POINT].
18. Market Valuation is Determined By One Willing Buyer and Seller. The valuation of any company is determined by a number of factors. All valuation models eventually come down to the present value of future net profits. The challenge is in figuring out what you actually think those future net profits will actually be and then which discount rate to use. But the bottom line is that valuation is simple–it’s the price a willing buyer and a willing seller agree upon.
19. All Disappointment in Life is Caused By Misset Expectations. This phrase is the perhaps the favorite saying of Tim our CFO after ‘net-net’ and ‘the sale is different from the install.’ It means that unhappiness in business and in life is caused when reality turns out different than expected. The human mind needs time to adjust, plan, project, and set expectations. For example, if you know that you are going to have to send a team member to Las Vegas for three months for a project (which could be exciting or disappointing depending on the team member), tell them as soon as you know not a couple days before they have to go. By telling them right away they will have time to adjust, plan, project, and set expectations and will be much more likely to enjoy the experience and be productive. I didn’t understand this when I was younger, but people require time to adapt to upcoming change.
20. Always Be Testing. If you or your company is not using at least 15% of your marketing budget to test new marketing channels each month, something is wrong. One should always be testing new customer acquisition channels. And don’t say you’ve tried them all or there aren’t enough to test. Have you tested local radio, network radio, satellite radio, classified ads, magazine ads, trade journal ads, newspaper ads, newspaper inserts, flyers, vertical-targeted direct mail, market-targeted direct mail, direct mail inserts, local television, cable television, DRTV, skywriting, phonebooks, airport ads, online co-registration, offline co-registration, affiliate programs, CPA deals, call centers, tradeshow sponsorships, search engine optimization, paid search, and banner ads? If not, get to work!
21. Don’t Make Too Few Mistakes. The corollary to testing with 15% of your budget is to be willing to make mistakes and learn from them. In business and in life you learn when you make mistakes. Mistakes are how you grow and scale. Make sure you are failing at a high enough pace in order to succeed.
22. Enable an Environment of Trust. As a Director Team we read Patrick Lencioni’sThe Five Dysfunctions of a Team at our annual Director Retreat in Virginia this year. Here’s an overview of The Five Dysfunctions. One of the key principles of the book is to work actively to get your management team to understand each other and where each person comes from. The first exercise we did at the retreat was to share our ‘personal histories’ with one another. We shared basic information like where we were from, siblings, first job, worst job, why you came to iContact, and life goals. It was amazing what we learned from people we had been working with for years.
23. Have Some Conservatism in Your Annual Plan. Most companies once they leave the start-up phase develop what’s called an annual plan. In it, you project your bookings, revenues, expenses, net profits, and cash flows by month usually about 3-4 years into the future, with particular focus on the current and upcoming calendar year. It’s basically a budget with variable drivers (in our case acquisition, churn, and average revenue per user). At iContact, we have an Annual Plan that is reviewed and approved each December by the Board. Once you raise venture capital, you are judged as a CEO primarily by whether you hit or miss your projections. Many CEOs make the mistake of making their projections unreasonably high in order to get a higher valuation which then causes the venture firm to put significant pressure on the CEO to hit these projections which just cannot be done. At iContact, we’ve always had aggressive projections (120% annual growth is always aggressive). But we’ve always been careful not to provide a Plan we didn’t think we could actually hit. I prefer to have plans that I’m 50% sure we’ll hit (expected case plans). Our CFO prefers plans that he’s 75% sure we’ll hit. He’s usually right.
24. Know Your Net Lifetime Value. Quick–what is the value of an average customer to your business? Don’t know? Ha–what type of entrepreneur are you? Seriously, come on. You better know this. To calculate it, take the average purchase price x the number of times a customer will order from you (over the average length of time they’ll be a customer). This will be your lifetime value (LTV). Then multiply your LTV by your gross profit margin % (Revenues minus Cost of Goods Sold) to get your Gross Lifetime Value (GLV). This is the very maximum amount you can spend in advertising costs to acquire a marginal customer and still breakeven in the long run. Then multiply your LTV by your net profit margin % (Revenues minus all expenses) to get your Net Lifetime Value (NLV). This is how much profit an average customer will be worth to your business.
25. Never Ever Undersell Yourself. When I got started with iContact back in 2002 I was 18. I dreamed what I thought then was a big dream. We would build a company to $1 million in sales. Beyond that mark, I didn’t envision. When we reached the $1 million mark in September 2005, we had to re-plan and re-decide what we wanted to go after. When we began, I didn’t think it was possible that we would build a company to 150 employees and $20 million in annualized sales. I certainly didn’t think that we’d have a shot at building a company to 1000 employees with a billion dollar market cap. When I went out to raise venture capital the first time in November 2005, I undersold the company and undersold myself. My goal wasn’t BIG enough HAIRY enough or AUDACIOUS enough. I knew deep down in my soul we’d get there but didn’t know HOW. Because I didn’t yet know exactly HOW I didn’t share what I knew we were going to ma ke happen. We didn’t get a term sheet from a number of VC firms then because I undersold what I knew we were going to make happen. I’m not advocating overselling either–just selling appropriately based on what you know if your heart of hearts you’re going to make happen. I’ll never undersell myself again. As my friend Elliot Bisnow likes to do, “Sell it big and then make it happen.”

I’m off to Charleston for a Renaissance Weekend. I hope you’ve enjoyed these lessons! Comments are very welcome!

iContact Wins CEDs Growth Company of the Year

Last night iContact was honored by the Council for Entrepreneurial Development as the 2008 Technology Growth Company of the Year at Bay 7 at American Tobacco Campus.

Aaron and I accepted the award on behalf of the iContact team. You can watch a video of the award announcement.

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