Blog articles

Will the Next Unicorn be a Distributed Autonomous Organization?

The Emergent Fool - July 12, 2015 - 1:28pm

With the recent talk of reddit being cannibalized by bitcoin technology, I thought it a good time to post something I’ve been thinking about for a while. Could a completely decentralized startup one day rival the likes of Google, Facebook and Amazon?

Within the bitcoin world there’s a common understanding that the most valuable thing about bitcoin is not the monetary currency but the underlying “blockchain” technology that the bitcoin currency runs on. For those unfamiliar, you can check out three heavily-funded ventures creating infrastructure that would enable anyone to program applications on the blockchain that go way beyond monetary currencies: Ethereum,Swarm and Blockstream.

One such application is what’s known as a “Distributed Autonomous Organization,” which is an organization like a corporation, government or NGO, but which has no central leadership and uses internet technologies to organize and function. Examples of DAOs that you are familiar with include open-source software systems like Linux; terrorist organizations like Al Qaeda; communities like Anonymous; and of course, the Internet itself.

The logical question it seems to me is what will it take for the first Silicon Valley style startup to appear that provides a truly useful product or service to the marketplace, and makes its founders and investors gobs of money, but which is truly distributed.

What follows here is an analysis and thought experiment on how the next unicorn could be a DAO.

The Central Hurdle

In the U.S. today, the main hurdle for any startup is access to capital. Even the great Mark Zuckerberg took several years and significant effort to raise enough venture capital to expand beyond the tipping point and crush Fox/MySpace. Imagine if Zuck, instead of pitching a handful of gatekeepers in Silicon Valley, could have sold just $100 worth of stock to each of the first 100,000 Facebook users? Facebook would have been able to bypass the VCs and have $10 Million in working capital. Not to mention 100,000 new evangelists to expand the network — each of which would go on to become a college-educated millionaire today, ready to revitalize the economy and invest in the next Facebook.

If this seems far-fetched, consider that Kickstarter and IndieGogo have crowdfunded several $10+ Million campaigns to launch startups. The most successfully crowdfunded startup to date is a video game company called Star Citizen, which has raised $85 Million from almost a million financial backers as of today. And all of these campaigns were done simply by offering products and other rewards, no financial upside for backers.

While donation and rewards crowdfunding sites have proven that the public appetite for funding great ideas is latent and massive, there is the beginnings of a backlash towards for-profit endeavors that make founders rich while leave backers holding the bag full of product (see Oculus and Spike Lee for two high-profile examples).

So why don’t startups like Oculus offer stock as a reward for its early backers? The short answer is that it’s illegal to make such an offer in the U.S. unless the backer is an Accredited Investor — someone worth over $1,000,000 not including their home.

While non-accredited investment crowdfunding is in the process of becoming legal and regulated by the Securities Exchange Commission (SEC), that process has been stalled for over 3 years. And it’s likely to take  several more years before this is the default way startups attract investment.

In the meantime, many startups are turning to platforms like Crowdfunder* where they can crowdfund invesetment from Accredited Investors. A poignant example is Neil Young’s startup, PonoMusic, which attracted over $6 Million in investment interest in the first 48 hours of their campaign on Crowdfunder.

But this is just the tip of the iceberg in terms of unmet demand, and it doesn’t address the $20 Trillion of investment capital in the U.S. public stock markets. The vast majority of U.S. investors — a full 93% — are not accredited and never will be.

On the flip side, there are 540,000 new businesses started each month in the U.S. alone. Venture capitalists and angel investors combined invest under $100 Billion per year. And while that may seem like a lot, it’s just 0.3% of U.S. long-term investment capital and 0.02% of worldwide long-term investment capital. Once you compare the 9% historical returns in public stocks to the 28% historical returns in startup stocks, you begin to see the magnitude of the problem — and the opportunity for non-accredited investment crowdfunding.

Threading the Needle

One of the more fascinating aspects of Swarm and Ethereum is that they capitalized their idea by running a crowdfunding campaign to non-accredited investors. Each of these crowdfunders received a “reward” of virtual currency that has a lot of the same properties as stock, including voting rights and the potential for financial upside. And because of this, the SEC is taking a very close look at whether they have violated securities laws.

The founders of these two groups will argue that they have “threaded the needle” and successfully constructed an offering that has the desired properties of equity ownership while staying clear of selling unregistered securites. And while they may have a valid technical point, the SEC takes a practical stance rather than a technical one: if it looks like a duck, quacks like a duck and waddles like a duck….

The main litmus test the SEC employs in such cases is called the Howey Test, which asks whether there is “reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others” (for more details read here and here).

As a serial startup founder and prolific angel investor, I believe the Howey Test is not only simple and elegant, but also a good thing.  Over the course of the last 80 years, corporate structures and financial engineering of securities have served to limit the liability of investors and distance them from the source of their profits. This has been essential for the public markets to flourish, but in the startup world, it’s counterproductive.

As a founder, I’d much rather have an investor who provides value beyond their money; I want someone who is passionate about the business and will use their network, their expertise and their time to help the company grow.  And as a startup investor, I desire to have more visibility into and influence over the performance of my investment than typical equities contracts guarantee or anticipate. Again, think back to what would happen if the next Facebook or Uber could offer equity to their most ardent users and customers?

Threading the needle on securities regulations, especially for an undercapitalized startup, is fraught with unacceptable risk, in my opinion. Not only is the SEC hyper-sensitive to this sort of activity, it has nearly unlimited resources it can (and does) use to enforces its regulations. Each state also has an SEC-like agency with nuanced state-specific regulations that apply if anyone involved in a securities transaction happens to be in that state. I found this out first hand as an investor in an early equity crowdfunding site, which was forced to close because the State of California made a unilateral determination that what the company was doing wasn’t kosher. While company lawyers and investors disagreed, nobody was wiling to re-invest to fight the state’s decision, and we ran out of money quickly thereafter and had to shut down.

Rather than threading the needle, I believe there is a way for startups to raise investment from non-accredited investors today, and be fully compliant with all current securities laws and regulations. But until recent advances in both blockchain and crowdfunding technology, it hasn’t been practical.

My purpose in publishing the following is twofold:

  1. Provide a roadmap for pioneering entrepreneurs and their lawyers to unlock the buried treasure
  2. Alert regulators so they can be prepared to work with the pioneers

Here’s my warning for the pioneers: do not go off half-cocked; talk to several securities and corporate attorneys before you go down this path. And make sure they are confident that you are in the clear, and they are willing to defend you (without bankrupting you) in case there’s a fight with regulators.

And here’s my warning to regulators: trying to stop DAO activity is as foolish as banning the internet itself; given the financial incentives for both entrepreneurs and investors outlined above, DAOs that sell profit interest are inevitable, and will simply go offshore and underground if the climate is too restrictive. Given recent advances in blockchain anonymity and cryptography, there will be no way to identify who the principals are, let alone seize their virtual currency assets.

The Roadmap to Unstoppable DAOs

From here on out, I’m going to assume a layman’s working knowledge of blockchain technology, equity crowdfunding, and basic securities and corporate law.  You should also go to, read what’s on the home page, watch the 10 minute video, and read the white paper. Note, that even if Ethereum is stillborn, or shut down somehow, these same advancements are being added to the Bitcoin blockchain (see Sidechains), which means the necessary technical infrastructure for DAOs is already unstoppable.

In order to function and thrive, a DAO must be “invisible” to government bodies which would seek to threaten its existence. Since the main hurdle is securities law, and since the SEC has pre-emption over the states, the key to DAOs is staying out of the crosshairs of the SEC. The SEC’s mission is in regulating the sale of securities, and protecting investors from securities fraud. But the SEC has no jurisdiction over entities or individuals that do not deal in securities.  If you’re selling hotcakes out of a food truck, you’re going to fall under many regulatory agencies’ purview, including FTC, FDA, DMV, various health departments and business administrations.  But unless your hotcakes are laced with company stock, you are a non-entity as far as the SEC is concerned.

While most startups are structured as C-Corps, S-Corps or LLCs, these are not the only options. In fact there are much older corporate structures better suited for startups, namely General Partnerships and Workers Cooperatives.  Rather than limiting investor control and liability like their newer counterparts, GPs and Co-ops blur the distinction between investor and founder.  And in so doing the presumption under law is that membership in a General Partnership or a Co-op is not a security.  Unless of course it fails the Howey Test.

So let’s talk about how to pass the Howey Test while allowing startups to raise capital from investors.  Since the Howey Test is to determine whether something is a security, we must reverse the logic of the test to “pass”.  For instance, if there’s no “reasonable expectation of profit”, there’s no security.  Similarly, if there is reasonable expectation of profit, but that profit is based on the investor’s own efforts, then it’s not a security either.

As a thought experiment, let’s imagine that you tell me you are starting a gold mining club and that for $100 you will sell me a membership that entitles me to mine for gold on your land and keep whatever I find.  You warn me that only one in a thousand people who do this full time for a year have found enough gold to make a profit, but the ones who do strike it rich.  Here’s a situation where there’s no reasonable expectation of profit. And, any profit that I might make is derived only through my own entrepreneurial and managerial efforts.  Clearly, membership in your mining club is not a security.

However, we don’t have to be so strict.  For instance, you could say that I have a 90% chance of making a profit, and as long as I’m doing my own mining, it’s not a security if you sell me the right to do so.  Or you could say profits are one-in-a-thousand, but that you have a mining rig that does all the work and randomly assigns any proceeds to members based on how much they paid for their membership (i.e. a $200 membership is twice as likely to get gold as a $100 membership). It should be noted that this probably would be considered an “illegal lottery” in most states, but the point here is that it’s not a security.

Since the exercise here is to solve for allowing anyone to invest in a startup, there’s always an expectation of profits.  Thus, we need to focus on whether this expectation comes “from the entrepreneurial or managerial efforts of others.”  Before I dive in though, it’s worth remembering that the whole reason we are even having this discussion is that prior to the the Securities Acts of 1933 & 1934 (and the formation of the SEC), stock market fraud was rampant.  Grandmothers in Kansas would regularly get fleeced out of their retirement nest egg by stock brokers in New York.  So the main thing you need to remember is that the SEC’s raison d’être is to protect investors from getting hurt.

Which means that to stay out of the SEC’s crosshairs, we need to prevent investors from getting hurt whenever they are expecting profits from the entrepreneurial or managerial efforts of others.  Let’s look at these elements in a bit more detail:

  • Financial Risk & Liability – By definition, if your paycheck is not at risk, it’s not entrepreneurial activity, it’s a salaried job. Thus to remain clear, there must be financial risk for both investor and the people doing the work at the startup.  And they must both bear the financial liability if there’s a loss.
  • Corporate Governance & Control – When the SEC takes action against a company for securities violations, they look for who’s making the decisions (governance) and who’s ultimately in control of the company.  If everyone is a decision maker— investors and employees alike — and no individual person can be identified as having more control than others, then there’s no security, regardless of the financial risk and liability.

Thus, we are looking for a way to organize and run a startup that distributes risk, liability, governance and control amongst its stakeholders such that, when the SEC comes looking, it only sees a group of individuals who have pooled their resources for mutual benefit, and who are not offering investment to anyone outside the group.

Programming Your First DAO

At this point you may be wondering if we are about to throw the baby out with the bathwater. In particular, how many people would want to invest significant sums of money into a startup and have to do a lot of work? Wouldn’t this be antithetical to the first rule of investing, which is to diversify (and thus not put too many resources into one basket)?

In the past, having distributed governance and control would indeed have required each investor to do significant amounts of “work”. But with the ability to automate and coordinate activity virtually, a Distributed Autonomous Organization need not require more labor from its investors than overseeing a startup investment does today. In fact, investing in DAOs has the potential to streamline investor engagement and allow investors to spend less actual time on more startups, leading to greater diversification and thus reduced financial risk.

What follows is a description of one possible DAO structure that accomplishes these goals and remains clear of securities violations (check with your lawyer first, I’m not one :-) There are many possible alternative structures that will work, some no doubt better and more efficient than the one I am proposing. This is simply to illustrate that it’s possible. The structure I will begin with is that of a General Partnership, and for clarity I will refer to the partnership as the Company, regardless of whether it is registered as such in any legal jurisdiction.

The structure proposed here is to be run on a system like Ethereum, where smart contracts, currency and financial flows are enforced in a distributed and autonomous fashion.

General Partners (GPs) – Any individual who has a financial stake in the Company (not including Charitable Beneficiaries) must be a General Partner. GPs — and only GPs — may also be Directors, Managers, Workers or Investors (see below). GPs must be individual human beings (not corporations, organizations, animals or technological agents such as software programs). GPs have the following rights and obligations:

  • Right to an equal portion of Dividends (see below)
  • Right to an equal vote on all voting matters
  • Eligibility to work for the Company for cash and/or equity (see Working Partners)
  • Equal responsibility and liability under the law for the Company’s decisions and actions in all jurisdictions it operates in plus all jurisdictions the GPs reside in
  • An obligation to indemnify all other GPs from legal actions and government sanctions arising from their role as a GP
  • All GPs are granted a single Share of Company equity upon becoming a GP, and may acquire more Shares via investing or working
  • Upon voluntary or forced removal as a GP, all Shares are relinquished back to the Company

Directing Partners (Directors)  – Directors serve the sole function of hiring/firing and compensating the Managers. Directors may not contemporaneously be Managers or Workers. Directors are elected by a majority vote of GPs once per quarter. Directors may not receive compensation of any form (except Dividends) while they are Directors. Think of them as jurors; they serve temporarily for the greater good, and they sacrifice accordingly.

Managing Partners (Managers) – While their main function is management of the Company and Workers, the Managers also set the strategic direction of the Company (relative to the Mission), and they hire, fire, and set compensation of the Workers (other than themselves, which is handled by Directors).

Working Partners (Workers) – A Workers is anyone who does work for the Company in exchange for compensation. In the eyes of many legal jurisdictions, there is a distinction between officers, employees, contractors, and advisors, but for the DAO these are all considered Workers.

Investing Partners (Investors) – An Investor is anyone who purchases Shares in the Company from the Company itself. Being an Investor does not affect one’s status as a GP, Director or Manager.

Charitable Beneficiaries (CBs) – Any organization or individual who receives cash donation from the Company without obligation in return. CBs may not be GPs.

Shares – The Company’s currency, which entitles holders to Royalties and Liquidity. Shares may only be held by GPs (who are referred to as Shareholders in such capacity).

Royalties – A percentage of revenues which is allotted for distribution to Shareholders on a pro-rata basis.

Liquidity – Shareholders may sell all but one share to the Company or other GPs through a transparent/fair marketplace at any time. Upon dissolution of the Company via acquisition, merger or IPO, all assets of the Company will be distributed to Shareholders pro-rata.

Revenue Waterfall – All revenues to the Company — including from sales, contracts, grants, prizes and investment returns — will be distributed in the following manner:

  1. Taxes: all accrued and potential estimated taxes are paid first
  2. Royalties to Shareholders: distributed pro-rata based on % of Shares held
  3. Salaries to Workers: as set by Managers (or Directors in case of Managers)
  4. Accounts Payable: as standard for any corporation
  5. Capital Investment: the Company may invest in assets to grow capital or hedge operational risk, as determined by the Managers
  6. Charitable Contributions to CBs: the Company may make charitable contributions as determined by vote of GPs
  7. Bonus Pool to GPs: all GPs except acting Directors participate
  8. Dividends to GPs: all GPs get an equal share

Company Formation – The Company is formed by a Genesis Raise that ratifies the Charter, which can only be changed later via supermajority vote of all GPs.

Company Charter 

  • The Mission: why the Company is being formed and what its ultimate goal is
  • Royalty Rate: % of undistributed revenues distributed to Shareholders
  • Charitable Contribution Range: minimum and maximum % of undistributed revenues to be donated
  • Bonus Pool Size: % of undistributed revenue distributed to GPs
  • Initial Directors: an odd number of Directors, along with names of individuals willing to serve the first quarter
  • Initial Managers: one or more individuals who will serve at the pleasure of the Directors
  • The Genesis Raise: the number of Shares to be sold (in BTC) during an initial capital raise and a timeframe during which it will take place. Note that:

• The first share purchased by any individual comes with GP Membership

• Proceeds from the Genesis Raise are not included as Revenue

Becoming a GP - After the Genesis Raise, if there are Shares left over, or new Shares issued, then anyone who is eligible (see above) can purchase their first Share, thereby becoming a GP.

Voting – Voting matters will be programmed into the DAO and automatically administered. In addition a majority of Shares may call a referendum at anytime for any reason. Here is a non-exhaustive list of voting matters and their requirements to carry:

  • Referendum: simple majority
  • Issuance of New Shares: simple majority
  • Quarterly Election of Directors: simple majority
  • Modification of Company Charter: supermajority
  • Removing GPs: supermajority
  • Acquisition / Dissolution / Change of Control / IPO: unanimity

While the above is not meant to be complete, it should give anyone a good headstart. Note that the standard way a company’s operating agreement or articles of incorporation is enforced is through legal contracts as interpreted by officers of the company and attorneys. With DAOs, the vast majority is programmed into the blockchain and thus immune from interpretation, tampering or influence. Still there will always be elements that require human oversight and discretion. The exercise above is designed to minimize human involvement, and where necessary to distribute both the effort and control in a way that is both mission-aligned and free from securities violations.

Further Reading:

* full disclosure, I’m a principal Crowdfunder.

Related posts:

  1. Why Crowdfunding Changes Everything
  2. Radical Transparency
  3. 25 Important Facts About the Startup Economy

Categories: Blog articles

Plans for the Workshops - An Online Workshop Deck Virtual Library

Angel Capital Summit - December 7, 2010 - 3:51pm
JWconsulting Square Logo.jpg

Thank you to all of those that attended my presentation yesterday, I hope everyone walked away with a little more information than they had before the workshop. There were a few presentations that I was not able to see because of the timing and I thought it would be a great idea to post all the decks or even something more if the presenter chooses.

One side note... I would like to apologize to anyone that went to my session thinking that I was going to hand 10,000 contacts. I wish it was that easy but as many things in business, there is some work involved in lead generation.

Please Click below for the Database Marketing Presentation:

This is what I did and I can do it for you...

For ease of use and viewing enjoyment, I turned my presentation into a movie and put some mood music behind it. If you don't like mood music you can certainly turn off the volume, the big idea is the movie part. I have also attached a couple worksheets one of which helps define a company's target audience and the other asks some thought provoking questions about current processes.

As I stated earlier, the point for me is to educate people on the power and effectiveness of using data to glean information, which feeds better decision-making. Click the picture below to open up pdf versions of the worksheets that you can print and fill out if interested.

Other Presenters...

If you would like to have your presentation turned into a video, let me know. I am planning to create a movie with a YouTube link that will go on either the ACS YouTube page or the ACS website. This way you can see what you might have missed and reference the information for future use. It would be nice to have a virtual classroom of workshop deck so let me know if you'd like me to post one for you.

Categories: Blog articles

Valuation is a tricky subject for early-stage entrepreneurs raising capital.

Angel Capital Summit - December 3, 2010 - 10:22am
Jim Nollsch.jpg

Valuation is a tricky subject for early-stage entrepreneurs raising capital. With a limited performance history of the business, how do you accurately determine valuation? For an early stage company, common metrics (such as multiples of earnings) can’t be applied because there often aren’t any earnings. The business plan and model will be adjusted as the company scales, so a group of peers can’t be used to benchmark, as the peers may change along with the model. So how do you manage the conversation around valuation?

At this stage valuation is important because it is the determinant of how much of your company you are willing to part with in exchange for an infusion of capital. Assuming that you are asking for the “right” amount of money (that’s a blog post in and of itself), determining the “right” amount of the company to part with involves a few factors.

Depending on just how early stage your deal is, expect to give up more the earlier you’re seeking capital. That is, if you have a napkin and some scribbles, you’ll be giving up a lot more than if you have a few enthusiastic beta customers. From a valuation perspective the logic fits: you’ve created value for those customers and that value is reflected in the price of your company.

Also, remember that, as an entrepreneur, you are looking for an investor who believes in you first, and your mission second. Investors place money on the jockeys, not the horse. So a strong personal relationship with the prospective investor is key.

Investors should have a meaningful stake in the company but is also be rewarded in parallel with the entrepreneur. If the entrepreneur is left with a limited share, then it puts the investor(s) at risk of the entrepreneur leaving the company—a situation that (presumably) nobody wants.

The best thing an entrepreneur can do to increase their chances of funding and improve their valuation is to focus on lowering the risk profile by executed on the business plan. Show the investors that you’ve actually accomplished what you set out to do. Bring in customers who can attest to the value of the product. Demonstrate how quickly product adoption can lead to revenue growth. These all will help your valuation and make you attractive to an prospective investor.
Ultimately, valuation for early stage companies is a negotiation exercise and requires a bit of haggling back and forth. When they come to agreement, we know they’ve arrived at the market value. How do we know? Because, hopefully, a deal was done.

Written by Jim Nollsch, partner at

Categories: Blog articles

Workshop Day is Going to Be Fun

Angel Capital Summit - December 1, 2010 - 12:41am
Data Diplomat Process Map for the Auto Industry Oh How exciting...

The Summit is less than a week away and I would like to thank everyone involved in all aspects of the event. I have met many of you and still need to cross paths with some others. I am looking forward to learning new things as well as teaching and meeting other with complimentary skills. The goal is to grow and thrive and the show starts Monday...

Check out the picture if you would like a glimpse into the Database Marketing - Find 10,000 Customer in Seconds workshop. The Process Map gives you an idea of how start thinking about your data and what you might need to help grow. My graphic designer friend put this process map together and feel free to replace any business with the auto dealer picture and be sure that the switch will fit just fine. This is like summer readu=ing without the book. Once you see the picture, decide if that fllow seems right and if you had to make a change, what would it be. I like interaction in my learning process so come with questions!

Thanks again to Kevin, Jono, Dave, Linda, and company.
Categories: Blog articles

Angel Capital Summit 2010 introduces Entrepreneur Presentation Coach Kathy Pitts

Angel Capital Summit - November 28, 2010 - 6:29pm
Kathy Pitts.jpg

Angel Capital Summit 2010 introduces Entrepreneur Presentation Coach Kathy Pitts. Kathy is an experienced, enthusiastic marketing professional with small business consulting experience in the US and Europe. Demonstrated success in crafting and implementing strategic plans and communications programs including investor presentations, press releases, sales and marketing collateral, web content, events and tradeshows. Consistently acted as a positive force in the workplace – pioneering new initiatives, crystallizing market research and defining better processes.

Categories: Blog articles

Angel Capital Summit 2010 introduces Entrepreneur Presentation Coach Chris Christopher

Angel Capital Summit - November 28, 2010 - 6:15pm

Angel Capital Summit 2010 introduces Entrepreneur Presentation Coach Chris Christopher. Chris Christopher retired from Hewlett Packard Company in 2008 after a 40+ year career. The last three years in HP he was the Senior VP and General Manager of Desktop PCs, Workstations, Displays, Virtualization systems and Point of Sale Solutions. This role included responsibilities in long term strategy, product development, product marketing, supply chain and total customer experience.

During the last two years, he has consulted for HP and a number of startup companies in strategy, business plan development, operations and executive coaching and he is currently engaged in a management consulting practice, CERT DELPHI Consulting.

Mr. Christopher earned both bachelor’s and master’s degrees in electrical engineering from Colorado State University in 1968 and 1974 respectively. He completed the Executive Management program in INSEAD – France. Received the CSU College of Engineering annual Distinguished Alumni Award in 2008. He also served on the Board of Directors of SMS Technologies.

He joined Hewlett Packard as a research and development engineer. Over the years, Mr. Christopher had the opportunity to innovate with small and large businesses and serve in multiple executive leadership and management roles in R&D, manufacturing, engineering computer development, desktop computer software, operating systems, languages and graphics.

He was born in Greece where he finished the high school education before moving to the United States. He currently lives in Loveland, Colorado with his wife Georgia. In his free time, Mr. Christopher enjoys reading, the arts, bicycling, hiking and fishing.

Categories: Blog articles

Angel Capital Summit introduces Entrepreneur Coach Mark Schumacher

Angel Capital Summit - November 28, 2010 - 5:52pm
Mark Schumacher.jpg

Angel Capital Summit introduces Entrepreneur Coach Mark Schumacher. Mark Schumacher runs his own investment management firm. Mr. Schumacher is a successful entrepreneurial himself, and frequently helps business owners and executive teams develop and sustain competitive advantages and economic profits (profits that exceed the cost of capital). His business coaching experience is industry-diverse, but functionally, is primarily related to competitive strategy, financial controls, and marketing and selling.

Categories: Blog articles

Evidence Based Entrepreneurship, De Constructing Colorado - The US 36 Corridor

Angel Capital Summit - November 26, 2010 - 2:55pm
Kevin Johansen

There are a few cities on the list that have a great ratio of Accredited Investors to new businesses in the past 12 months, and a number of factors affect these numbers. This is the first in a two-part post that will give readers an understanding of the space between Denver and Boulder and help layout who is in charge of what and a general lay of the land.

Click on the US 36 Grid Picture for some information about the cities...

I found the video linked below about FasTracks on the RTD website and it sure seems like a good idea for shuffling people to and from work, entertainment, and other various travel needs. There is a green element as well since we all know it is more eco-friendly to all pile into one vehicle than drive separately.

Click HERE for the FasTracks video...

All I am saying is that public transportation is in theory a good thing and many times in practice as well. The New York subway system is a beloved public transportation icon that everyone should experience at some point of their life. The Washington DC subway system is also pretty cool and the two experiences are night and day. Baltimore put in a Lightrail and some say it put elements of the city into the county creating bad juju.

We are in Colorado, a kinder gentler place than the east coast and public transportation is pretty cool out here. It has taken some time to catch up to other cities and in 2017 it looks like we should be where they were some time ago. Progress is progress though and I think the new guy in charge of the state is in it for the people and will hopefully keep Colorado the envy of the nation. That might be a little extreme but I think if you live here for a while, you know what I mean. If you have only lived in Colorado I urge you to try somewhere else to gain the appreciation that us transplants have for the state.

The Other Pictures are Maps of the Cities on the Grid... Stay Tuned...

There is more to come on these cities, I thought you might want to watch the videos and see the pictures first. You can draw whatever conclusions you'd like about starting businesses in this area and hopefully I have given you some research tools. It will be interesting to see how the RTD affects Economic Development in these areas. Boulder has always been a hot spot for technology in Colorado and the surrounding cities seem to be doing their part to help the state grow. The next post will include more in-depth information about these areas.

I am a Marketing guy so if you like to see things the way I do, click HERE for a much prettier version of this blog post.

Categories: Blog articles

“Experts” & “Gurus” Won't Help You Succeed

Angel Capital Summit - November 24, 2010 - 10:10am

“Experts” & “Gurus” Won't Help You Succeed

“Everything that can be invented has been invented.” Charles H. Duell, commissioner, US Office of Patents. 1899

The problem with experts and gurus is they already know everything. If you ask them for help, you’ll often get stale, static advice based on a narrow view, bad assumptions and old ideas. How do you find good advice? Get an advisor, not an expert.

“The telephone has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.” Western Union internal memo, 1876.

“Heavier-than-air flying machines are impossible.” Lord Kelvin, president, Royal Society, 1895.

“There is no reason for any individual to have a computer in their home.” Ken Olsen, president, chairman and founder of Digital Equipment Corp. 1977

Advisors vs. Experts/Gurus

An expert or guru already knows everything, which usually makes them a terrible place to find help. An advisor knows the only way to get to a good plan is to start with a bad plan and work constantly to make it better.

Never use an expert or a guru. Here’s some “advice” on how to find an advisor instead:

Look for an advisor who:

- Doesn’t have 12 easy steps to success. That expert/guru has no idea how to succeed.
- Sees possibilities, and understands that almost no new business is going to land on the product it will make money at right away. It takes 5-10 iterations to find the money-maker. An “expert” will tell you how bad your idea is. An advisor will help you get from your initial idea to the money-maker.
- Doesn’t start by seeing if the numbers work. The numbers almost NEVER work early on. It’s about resolve and commitment first, the numbers second.
- Helps you test your resolve to somehow make it work in the face of great odds and your mother’s voice in your head telling you not to take risks.
- Leads you to gain clarity about the end result you really want.
- Gives you tools to keep that end result directly in front of you at all times to effect every decision you make.
- Promotes a sane assessment of where you are right now – doesn’t blow smoke about the gap between where you are and where you want to be.
- Helps you define the next few steps to get from where you are to where you are going.
- Doesn’t confuse you with defining every single step between where you are and where you want to go. Don’t do a Business Plan – it’s a huge waste of time. Just know clearly the end result and the next few steps to get there.
- Keeps you focused on three simple things – 1) Where am I? 2) Where do I want to go? 3) What are the next few steps?
- Keeps you from doing useless and endless research about what could happen if you ever did something.
- Gets you MOVING and helps you plan as you go – *Implement now. Perfect as you go.* (not Implement now. Never perfect; or “Perfect now. Never implement).

I’m a big fan of Outside Eyes on your business. Get advice, just don’t get it from people who have it all figured out. Find somebody who says they’ve made a lot of mistakes and knows that life is more like a stream than a canal – it’s messy and flows all over the place on the way to the ocean. Business is the same – it’s messy and flows all over the place on the way to success.

People with easy answers haven’t faced the hard questions. Get an advisor, not an expert. You’ll be much more likely to get where you’re going.

Categories: Blog articles

Everyone is Our Customer! (And Why You're Wrong)

Angel Capital Summit - November 23, 2010 - 3:05pm

Everyone is Our Customer! (And Why You're Wrong)

The best thing that ever happened to me was getting picked last for kickball. Not being nominated for the Homecoming or Prom Queen. Never being the captain of any sports team. Missing valedictorian by 8 slots in high school. It’s all an epic win for one reason: popularity doesn’t translate to success.

When launching and the subsequently growing and scaling a business, one of the worst mistakes I see is companies who try to bank on popular. Pleasing everyone, offending no one and walking the dashed yellow line on the divided highway of business. My publicist has a great quote (and I steal it often, and shamelessly) that she uses during media briefings: “The shoulders of the road – left or right – you’re safe there. That’s what happens when you take a stance. Where do you find road kill? The middle of the road.”

Do you want to end up as road kill on the thoroughfares of business? I’m going to offer up two key points today for getting on the shoulder (or at least staying in your lane), as everyone is not your target customer: audience identification and testing and market access. Both are critical for not only your potential investors but your marketing team (and if you’re starting a company without your marketing hat on, grab the hat – it’s cold out there).

Audience Identification & Testing

I’ll say this once: your customers are right in front of you. Stop waiting for permission to open a dialogue with them. Believe me – they want to talk to you and they’re more than happy to tell you what they think of your awesome concepts. You can’t build a company without first understanding who you serve. If you cast the net too wide, your business concept will be vague and you’ll find yourself floundering before you could even swim. There are some key benefits to not only identifying your audience, but also using them to refine your business model:

• The Horse’s Mouth: Your product or concept won’t do anyone any good if people don’t know or don’t get how to use it. Start asking the people whom you think comprise your target audience early on what they think. Funny thing is, you might find they’re not your target audience after all.

• New Markets: In every marketing strategy I’m involved with, we discover at least one untapped potential market for the client. At least one. The earlier you start asking people how they would use your product or service, they’ll start giving you ideas on how to improve, expand and yet refine your offering to meet their needs. That’s a pretty tasty cocktail: improvement + expansion + refinement.

• The Funnel: I’ll ask you to consider Facebook for a moment. No one can argue their widespread growth and adoption rates, but what one can argue is that they do not listen to their users and nor do they well serve their target demographic (advertisers). When you actually take the time to ask your audience what they want, they will tell you and you can drop that information into your business strategy funnel. Imagine how much more successful a behemoth like Facebook could be if they actually had a customer service department. Frankly, as a marketer, multiple account holder and advertiser, I don’t need a messaging platform. I need service. Facebook has ignored the funnel and gone off on some internal development mission to build what they want to build. Don’t sacrifice your funnel – it’s a key, low-cost resource to build the better mousetrap (or light it on fire).

Market Access

Young companies also bank on popular by overstating their market. If you tell me as a marketer (and I’ll bet the investors might side with me on this one) that your target market has a valuation of $300 million, it really means squat to me. It’s possible you’re telling the truth, but I need you to tell me why I should care about those numbers. Is your market that large because it’s a real resource for revenue…or is it so large because you think you can bank on popular? You can’t monetize what you don’t know how to access – popular only goes so far. There’s an inherent value in being able to tell not only your investors but your employees and target customers that you not only understand your market, but you know how to access them and monetize that access (profitably). As an added bonus, demonstrating that you have a plan for retaining them and servicing them on an ongoing basis after initial access…yeah. We’d like to see that.

Building a successful business is about understanding first whom you do not serve. Who will never like you, use you or think you’re clever. Once you’ve got that chunk out of the way, you can actually focus on the people whom you seek to serve. You can involve them. And while it might be a far more narrow demographic than your eyes might care to see, isn’t it better to serve a specific market or set of markets well and let them become your raving brand lunatics than pay marketers like me to sell your stuff to people who will never care about it (or help you improve it)? Not that I actually take business like that (because I know whom I serve), but as a young company, you might or might not be surprised how your business model, service model, marketing strategy and burn rate all coincide. Next post? I’ll discuss four ways to lessen your burn rate on marketing expenses. For now, I’d love to hear your thoughts on how you will or have placed your customers into your funnel and let them become a prime source of information for your product and service refinement process.


Erika Napoletano is the Head Redhead at RedheadWriting LLC, a Denver-based online strategies consultancy. Her blog, RedheadWriting, is a bastion for "unpopular thoughts and blunt advice - delivered" and consistently strives to say what others won't and don't (but should) about marketing, social media, business integrity and life in general. The recent recipient of Westword’s Best Facebook Pan Page to Promote a Personal Brand at their inaugural Web Awards, she's a guest blogger on such popular outlets as Copyblogger, one of the most widely read RSS feeds on the web. She was also named in Social Mouth's 7 Examples of Kick Ass Personal Branding. You can follow her on Twitter (if you dare), check out the hoopla on her Facebook Fan Page or discover what it's like to be Bitch Slapped (a recurring weekly feature on her blog) at

Categories: Blog articles

Angel Capital Summit 2010 introduces Entrepreneur Presentation Coach Don Van Gilder.

Angel Capital Summit - November 22, 2010 - 7:12am
DV vegas cropped.jpg

Angel Capital Summit 2010 introduces Entrepreneur Presentation Coach Don Van Gilder. Don Van Gilder has held a variety of management positions, over a wide range of industries. He started his professional career as a naval officer and aviator, leading a variety of divisions of up to 150 personnel and responsible for $2.5 billion in aircraft, armament and support equipment during several combat operations. Since leaving the military, he has proven himself, primarily in small companies, in a variety of operations, project management, finance, and business development roles in the commercial real estate, finance, and energy sectors.

Don earned his Bachelor of Science in Engineering from the U.S. Naval Academy in Annapolis, MD, and a Master of Business Administration from the Daniels College of Business at the University of Denver. His interests are even more wide ranging than his professional background, and he can often be found in the outdoors or trying out some new sport or fitness activity, or continuing to teach part-time for Vail Snowboard School. His love for travel has taken him to over 40 countries, and 49 of the 50 U.S. states, culminating in a 6 month Virginia-Alaska-Colorado trip by camper van and more recently, a 17 month around the world trip, primarily by motorcycle.

Don continues to be involved with a variety of non-profits, including Project C.U.R.E., E.S.G.R. (Employer Support for the Guard and Reserve, a DoD group) and the Clean Tech Open – Rocky Mountain.

Categories: Blog articles

Angel Capital Summit 2010 introduces Entrepreneur Presentation Coach Steve Tonkin

Angel Capital Summit - November 22, 2010 - 6:55am
Steve Tonkin Headshot2 (1).jpg

Angel Capital Summit 2010 introduces Entrepreneur Presentation Coach Steve Tonkin. Steve Tonkin worked in national, regional and local levels of both large publicly traded corporations and small privately held business. He employed a strategic big picture perspective while maintaining attention to the
immediate objectives and goals of an organization. He has found that strength of an organization is in its people so he's invested heavily in staff management and development while overseeing the monthly financial reporting cycles. Significant experience includes: Refining the financial processes and improvements to assure efficiencies and accuracy; cash flow management; budgeting; forecasting; variance analysis; maintain communication and collaborative relationships including with operations,
maintenance, sales and marketing departments.

Categories: Blog articles

Angel Capital Summit 2010 introduces Entrepreneur Presentation Coach Robert Volpe

Angel Capital Summit - November 22, 2010 - 6:46am
Robert Volpe.jpg

Angel Capital Summit 2010 introduces Entrepreneur Presentation Coach Robert Volpe. Robert Volpe, Managing Directorof DTI Consulting, brings more than twenty years of experience in managing cross-functional teams combining strategy, business development, finance and commercialization. His experience includes the successful building and leading of start-up organizations in the renewable energy, technology, and health and wellness industries AT DTI, Robert has led international projects in the areas of software, internet/web, medical technology, renewable energy, energy efficiency and smart grid. His clients range from startup companies seeking the development and implementation of a strategic business plan to growth-stage companies seeking international business development and capital raising strategies.

Also as part of his practice, Robert has worked withinvestment firms requesting due diligence and opportunity analysis of a potential investment. Directly, Robert has worked with foreign governments and business leaders on projects in excess of $350 million. Prior to DTI Consulting, Robert was a director and partner for over 10 years at an enterprise technology solutions provider specializing in ERP, e-commerce and customer relationship management. His leadership role in the company encompassed development and implementation of strategic business plans, business development, marketing, product development, and operations.

His passion is to build successful companies through the development of innovative strategies, effective execution, and aggressive business development with a dedicated team that can have fun while overcoming challenges. Robert has an M.B.A.
from the University of Colorado and a B.S. from Boston University. Always looking to develop new skills and provide additional value to an organization, he continues to learn and is currently completing an M.S. degree in Finance.

Robert has led international projects in the areas of software, internet/web, medical technology, renewable energy, energy efficiency and smart grid. His leadership roles have included the areas of corporate and product strategies, business development, marketing and operations.

Software, internet or cleantech (renewables, energy efficiency and smart grid) are all of strong interest where Robert can apply his skills in business development, marketing, finance and technology commercialization.

Mr. Volpe can be reached in Boulder at:
Phone: +1.303.351.1110

Categories: Blog articles

Angel Capital Summit 2010 introduces Entrepreneur Presentation Coach Alesa Locklear

Angel Capital Summit - November 22, 2010 - 6:32am

Angel Capital Summit 2010 introduces Entrepreneur Presentation Coach Alesa Locklear. Alesa Locklear is a retired, successful entrepreneur with specific experience in Marketing and Business Planning, primarily within the Software industry. She is also a Business Coach, CPA and Angel Investor.

Categories: Blog articles

Angel Capital Summit 2010 introduces Entrepreneur Presentation Coach Stephen Miller

Angel Capital Summit - November 21, 2010 - 10:21pm
Stephen portrait.JPG

Angel Capital Summit 2010 introduces Entrepreneur Presentation Coach, Stephen Miller. Stephen Miller is President/CEO for CleanLaunch. Miller was formerly Executive Director of Denver Ventures at Stapleton (CTEK Stapleton), a business incubator for early stage technology companies founded in 2005. Prior to focusing solely on entrepreneurs and early stage companies, Stephen was the Vice President and Chief Economist of the Southeast Business Partnership, where he led economic development efforts for the south metro Denver region, representing clients including First Data Corporation, Echostar, CH2M Hill, Aspen Bio, Stryker Endoscopy, Charles Schwab, SkyRidge Medical Center, and Nordstrom. Stephen has also served as an economist for the Colorado Department of Labor, where he created the Job Vacancy Survey, for which he was recognized by the Denver Business Journal as one of Denver's Forty Under 40 business leaders.

Stephen earned a Bachelor of Arts in Economics from the University of Denver, and a Master of Public Administration from the University of Colorado. He lives in the Stapleton community and spends most of his time outdoors skiing, windsurfing, scuba diving, playing (but not always enjoying) golf, and collecting wine (he always enjoys the wine) when he's not off searching for the next great technology entrepreneur.

Stephen serves on the Boards of the Colorado Business Incubator Association,the Colorado Energy Coalition, the Stapleton Development Corporation, and netFactor Corporation, and is the co-founder of the Clean Tech Open - Rocky Mountain.

Categories: Blog articles

Angel Capital Summit 2010 introduces Entrepreneur Presentation Coach Brewster Boyd

Angel Capital Summit - November 21, 2010 - 10:11pm
Boyd Headshot.JPG

Angel Capital Summit 2010 introduces Entrepreneur Presentation Coach Brewster Boyd. Brewster Boyd has direct experience in the consulting and venture capital industries. As a consultant, advisor, or investor, he has worked in a number of fields related to energy or environmental technologies/services.

Categories: Blog articles

Angel Capital Summit 2010 introduces Entrepreneur Presentation Coach Steve Sheafor

Angel Capital Summit - November 21, 2010 - 9:55pm

Angel Capital Summit 2010 introduces Entrepreneur Presentation Coach Steve Sheafor. All of his direct experience has been in the technology area, primarily in semiconductors, hardware systems, networking and system software, and he has managed Engineering teams in all of those areas. He has had significant interactions with Marketing, Sales, Finance and Manufacturing, but has never actually worked in those areas. He have served on the Board of Directors of several companies, both public and private.

He will be most effective in the Pitch Practice with teams working in the high technology area, and generally developing hardware products or software for commercial applications rather than consumer or web software. He is most experienced in Engineering and Product Development, but has worked a lot on the Marketing and Finance functions. He has worked closely with a number of companies in the development of their business plans.

Categories: Blog articles

Angel Capital Summit introduces Entrepreneur Coach Chris Noonan

Angel Capital Summit - November 21, 2010 - 9:38pm
DCN pix.jpg

Angel Capital Summit introduces Entrepreneur Coach Chris Noonan. Chris Noonan is a Vistage CEO Group Chairman in Denver, Colorado. He is a strategic advisor to top management-a corporate motivator, tenacious and futuristically-driven toward organizations achieving their goals quickly and effectively.

Experience: Advisor and consultant to more than 100 clients worldwide, from start-ups to Fortune 100, in the private and public sector, with for-profits and not-for-profits, as well as privately-held organizations. Successfully managed multi-million dollar projects, domestically and internationally . Advisor on mergers, acquisitions and outsourcing. 40 years as an executive and consultant, using business insight and technology know-how.

Professional background: Chair, Vistage International . Executive Director, The Genessee Group, a management consulting firm, helping boards and executives to manage change, to position for growth and to think and plan strategically . Senior Vice President,Security Pacific Corporation-launched a new subsidiary, directed corporate development and oversaw a $60M multi-national technology operation. Senior Manager, Coopers & Lybrand, management consulting services-provided strategic and technology advice to boards and executives. Director, Continental Airlines-led this airline's computer operations in providing technology offerings to 75 airlines worldwide . CBIS-founded this software firm that developed and sold systems for training and fund raising, while attending Loyola University of Los Angeles.

Board and organizations: Generalist Mentor, CleanTech Open & Angel Capital Summit. Board Member, Novell CoolSolutions Advisory Board . Member, TBI Financial Services Technology Advisory Board. Former Director, Digital Imaging Services Corporation Board.

Categories: Blog articles

Angel Capital Summit 2010 introduces Entrepreneur Presentation Coach Becky DeStigter

Angel Capital Summit - November 21, 2010 - 9:15pm
Angel Capital Summit 2010 introduces Entrepreneur Presentation Coach Becky DeStigter. Ms. DeStigter was a marketing strategist with her own company for six years. Before that, she worked in healthcare software. She knew B2B markets better than B2C. She was comfortable working with high-tech companies and professional service providers. In the past 5 years, she has been working towards an MBA and a separate Masters in International Business. If a presenting company has major international plans, she will evaluate the workability of such plans.

She can be reached at:
or on twitter at: IntlEntreprenr

Categories: Blog articles

Angel Capital Summit 2010 correspondent Lynn Koves interviews Mark Forsyth of the Partner Group The @RMI2

Angel Capital Summit - November 21, 2010 - 8:52pm
Angel Capital Summit 2010 correspondent Lynn Koves interviews Mark Forsyth of the Partner Group The Rocky Mountain Innovation Initiative.

The Rocky Mountain Innovation Initiative, or RMI2, is an organization dedicated to accelerating the success of high impact clean energy, bioscience and technology startup companies in the Northern Colorado region. RMI2 promotes the regional innovation economy and entrepreneurial ecosystem, and provides a broad range of programs and services to assist entrepreneurs and accelerate formation of targeted industry clusters. The initiative also serves as a connecting platform between entrepreneurs, advisors, investors, talent and support organizations.

Mr. Forsyth can be reached at:
Telephone: 970-221-1301

Categories: Blog articles
Syndicate content