Entrepreneurship

On Monday, I had the privilege of guest lecturing in two entrepreneurship classes at Emory University’s Goizeuta Business School. Here’s video from the first lecture.  It’s about 1 hour and 20 minutes.  Please pardon the funky camera angle…

And if you’re still awake, here is the video from the first 30 minutes of the 2nd lecture, before the camera ran out of battery life…

During the 2 classes, when I polled the audience, here’s a run down of what they wanted to learn more about:

1.  Adwords / Paid Search – How’s it work?

2.  Monetizing a site with Ads, is tough, what other ways are there to monetize?

3.  How do you come up with good ideas?

4.  How to gain technical expertise – e.g. how the internet, search, and websites work?

5.  Social Me Me Media!  How do you use it to your advantage?

6.  How has a background in accounting helped?

7.  How to get started with a business.  What are the first steps?

8.  How can you attract customers and content providers?

9.  How much does it cost to make an iPhone app?

10.  How to keep content providers happy in the early stages of a business?

What stuck out the most from the experience was how interested the students are in learning about “How to Get Website Traffic“, a topic which I’ve blogged about here before.  This leaded me to believe that every business school should have a class on internet marketing, as an overwhelming majority of the discussion became geared towards paid search, organic SEO, and social media.

Another interesting discovery occurred when I asked the class “How many of you are on Twitter?“, to which only 1 student out of a classroom of around 40, raised their hand.  I’m not sure whether this indicates that Twitter has either (A) a lot of room to grow or (B) it’s peaked. I’m inclined to vote for (B).  When I asked the class “How many of you are on Facebook?”, the entire room nodded in acknowledgement.

During the discussion I provided a list of free resources to help get them started, including TechCrunch, This Week In, and my favorite entrepreneurial / VC blog, BothSidesOfTheTable.

Since the lecture, I’ve had a number of students follow up with me seeking advice.  I’m very excited by the opportunity to give back to the community by helping them get their businesses off the ground and on the right track. Thanks to Andrea Hershatter for allowing me the opportunity to speak to her class.  I am truly honored to have been a part of their business school experience.  It’s the least that I could do to give back the the institution that has help me so much in my own career.

Later today I have the privilege of guest lecturing in the Entrepreneurship and New Venture Management class at my alma mater, Emory University, where the undergraduate business school presently ranks #7 in the country.

Sometimes I wonder, if I had to go back and apply to college today, whether or not I’d even be accepted to Emory.  The school has been climbing the rankings year after year and the admissions process is no doubt harder than ever.

What’s funny about today is that I’m not entirely sure what I’ll be discussing in the two lectures.  I’ve pretty much got free reign to discuss anything.   But forget what I want to talk about…what will the students want to hear about?

To answer this question, I’m trying to imagine myself back in business school and what would be the ideal lecture – i.e. now that I’m 10 years out of school, what would do I know now that I wish I’d known then?

The following quick list comes to mind:

1.    You have to have thick skin, patience, and determination in order to survive. Business is hard.

2.    Nothing happens fast; however, things eventually do happen – i.e. progress is not noticeable in one day, one week, or even one-month intervals.  It really takes about 90 days to show measurable progress and more even noticeable progress is made in 6 month, one year, and multi-year intervals.

3.    Since progress does not happen overnight, a major contributor to success in business is your ability to hang in there for the long haul.  As cliché as it may sound, the longer you stay in business the better.  There’s little such thing as a quick in and out, especially in today’s environment. Persistence is key.

4.    Financial Success in the real world is not just about intelligence.  What’s more important (aside from luck and timing) are salesmanship and connections.  The ability to market oneself is what often makes the difference between not having a job and having a job that pays well.  College grades and raw intelligence alone will only get you so far in the business world.  Communication skills, a knack for networking, and persistence will take you much further.

After jotting down these “fartherly” tips, I ultimately came to the notion that if I were an undergraduate business student today, I wouldn’t want to hear someone preach to me about how I should act.  Instead, I would want to hear someone talk about topics that I was genuinely interested in.

So how am I supposed to know what these students are genuinely interested in?  Take a survey, that’s how…

I’ve prepared a fairly comprehensive slide deck complete with the usual background info, how to secure funding, elements of a pitch deck, how to size up the competition, market size analysis, and many more; however, to better nail down the items to focus on in the lecture, I decided that I should poll the class at the beginning of the discussion to find out what they’d like to hear about.

I’m hoping that through polling, I’ll get some good solid feedback to help guide the discussion towards a meaningful place and that we’ll just skip over the slides / topics that are of little interest to the class.  This should be an interesting experiment.  If you’re a college student and you happen to be reading this post (the readership on this blog is massive – wink wink), then I’d love to get your thoughts.  Which topics that are of interest to you?  What would you want to learn about in an entrepreneurship class? Please leave your input in the comments section below.

Later this week, I’ll post video of the lecture here.  Stay tuned until then and wish me luck…

Related articles:

• Your Business School Is Great, But Is It Fun? (huffingtonpost.com)

Have you ever wondered how much money a particular company makes? Perhaps you just wanted to know their annual sales?   The only problem was, the company was small (i.e. not publicly traded) so there’s no public financial information available on them.   So how do you calculate their revenues?

I created a simple, back of the envelope (i.e. quick and dirty), mathematical calculation that accurately estimates the revenue of pretty much any public / private company, large or small. It’s certainly possible that I’m not the first to come up with this calc, but for now, I’ll take the credit for it. Here’s how it works:

ANNUAL REVENUE = NUMBER OF EMPLOYEES X $100,000

That’s it!  It’s that simple.  Now let me briefly explain the logic behind this one.  The average American makes a little over $40,000 per year.  The costs of an employee to an employer is about 1.25x their base salary.  The additional 25% comes from payroll taxes, health insurance, worker’s comp insurance, office space for them to sit in, etc.  Therefore, the employer must bring in $50,000 ($40,000 x 1.25) for every employee in the company.  Because most companies have a gross profit of 50% or so, this means that in order to stay in business, the average company must have $100,000 in revenue for every employee in their company (($100k x 50%) – $50k) = $0 or Break Even).  The companies with more than $100k in sales per employee are more profitable (e.g. GOOG) than those that don’t (e.g. pretty much every startup company on the planet that takes VC / Angel money).

We so often hear about how well a company is doing based on their press releases, speaking engagements by their founders, etc.; however, no one ever wants to tell you exactly how much money their company makes. The next time you want to know how much revenue someone’s company is doing, don’t just ask them point blank. Instead, simply ask them how many employees they have. Every CEO will tell you how many employees they have. If they won’t tell you, just ask one of their employees how many people work in the company.  Once you have that number, simply multiply it by $100k, and you now have a quick and dirty (and in my experience, highly accurate) estimate of their annual sales.

A word of caution on startups…If the company is a startup, you can pretty much rest assured that they are doing way less than $100k per employee.  For now, assuming the company has a business model where they actually sell something), take their number of employees and multiply by $50k instead of $100k to arrive at the annual revenue estimate.  In a later post, I’ll explain how you can more accurately nail down the exact revenues of a cash burning startup. In addition, I plan to explain how to accurately estimate a startup’s market cap (i.e. how much the company is worth) in a calculation just as simple as the one you’ve read about here today.

UPDATE: I’ve been reading in the comments about how the calc needs to be adjusted upwards / downwards depending on the industry (Duh!  It’s a “back of the envelope” ESTIMATE, hence the title of this post!).  Therefore, I’ve come up with a simple adjustment such that it works for nearly any industry.  The revised formula is  as follows:

ANNUAL REVENUE = NUMBER OF EMPLOYEES X AVERAGE SALARY OF AN EMPLOYEE IN YOUR INDUSTRY X 2.5

I’m often asked about how to get website traffic, users, and customers on the web.  It’s frequently in the context of another entrepreneur that starting a new web endeavor.  I almost always give the same response – from a high level perspective, there are only 3 ways to generate website traffic.  You shouldn’t even bother starting an internet company unless you have a reasonably good change at succeeding at one of these 3 methods.  The 3 methods are so dead simple and obvious that this blog post will likely come across as pointless to anyone in the internet space.  That being said, I’m still amazed at how often I have this conversation with folks – both with semi-seasoned internet players, VC’s, angels, and newbies. Without further adieu, here are the 3 ways to generate website traffic:

1.  Organic Search – learn how to show up in Google‘s free, organic search results.  In short, there’s really only a few things that will ever get you to appear organically – Content and Links.  If you don’t have good content, lots of content (and I mean lots), and content that’s regularly updated (i.e. fresh and new), then don’t even try it.  In addition, if you have no way to obtain a massive amount of inbound links with appropriate anchor text, then you’re better off trying methods 2 or 3 below.

2.  Paid Search / Paying for Traffic – anyone with a keyboard and a wallet can get traffic from paid search (as well as PR).  Sometimes the wallet things is what will trip you up (i.e. your not sitting on a big pile of money).  However, if you do have a bunch of cash to literally light on fire, then load up your Google Adwords and spend away.  You can literally get millions and millions of unique visitors from paid search.   It’s as easy as taking candy from a baby.  However, if you don’t have a website that sells anything other than advertising, there’s about a 99.9% chance that there’s no arbitrage opportunity in it for you and so all you’ll be doing is loading up Google coffers.  If you do actually sell a product on your website, then buy up some keywords and determine if there’s an arbitrage opportunity in it for you.  Arbitrage is the point at which the following equation has a positive outcome —>

Arbitrage Opportunity = Amount Paid Per Click Minus Average Sale Amount Minus Cost of Goods Sold.

If Arbitrage Opportunity > $1 – Proceed, Otherwise – Pause, Rethink, and / or Stop.

Start by spending $100 on Adwords and be sure you have conversion tracking in place.  If the outcome of the calculation is not positive, then stop buying clicks because all you’re really doing is lighting money on fire.

3.  Viral Traffic – if you have a product that’s extremely entertaining and viral, you can generate free website traffic, primarily from social media.  The links from social media outlets can also help with Organic SEO (item 1 above).  When I say entertaining and viral, I mean funny, scandalous, cute, or even profane.  This type of material performs really well on the web because people love to laugh.   However, if you don’t have a product that’s funny or otherwise entertaining, forget about it.  No one is going to go to your site, share your site, or talk about your site with their friends and colleagues if it’s of a boring, mundane, or otherwise un-entertaining subject matter.  There are plenty of boring websites on the web already and the last thing you need to do is build another one only to hope and pray that people visit it.  More specifically put, if your product is not something that’s funny enough to be discussed on late night television in a top 10 list, then you’re not going to get any amount of viral traffic that matters, and you should stick to items 1 and / or 2 above.

*Note: I consider word of mouth and PR subsets of viral traffic and paid traffic respectively.

Related articles:

• Is This “Just” Another Arbitrage Opportunity? (searchengineland.com)
• 100 Ways To Get More Traffic To Your Website (dailyblogtips.com)
• Analysis: What are the Web’s Top Sources of Referral Traffic? (readwriteweb.com)