New York Entrepreneur

In Wake of SEC Charges Against Goldman, Paul Krugman Calls for "Lowering the Boom" on Wall Street's "Racket"

2010-04-19T12:04:00.000-07:00

In discussing the SEC suit against Goldman Sachs issued on Friday, New York Times columnist and Nobel Prize-winning economist Paul Krugman renews his call for passage of financial reform, and in the process calls Wall Street practices a "racket" in which "a handful of people are lavishly paid to mislead and exploit consumers and investors."

He asks the question, "whether financial reform of the kind now being contemplated would have prevented some or all of the fraud that now seems to have flourished over the past decade." His answer is "yes."

"For one thing, an independent consumer protection bureau could have helped limit predatory lending. Another provision in the proposed Senate bill, requiring that lenders retain 5% of the value of loans they make, would have limited the practice of making bad loans and quickly selling them off to unwary investors."

However, he says, "it's less clear whether proposals for derivatives reform -- which mainly involve requiring that financial instruments like credit default swaps be traded openly and transparently, like ordinary stocks and bonds -- would have prevented the alleged abuses by Goldman (although they probably would have prevented the insurer A.I.G. from running wild and requiring a bailout). "

He concludes that "the main moral you should draw from the charges against Goldman...doesn't involve the fine print of reform; it involves the urgent need to change Wall Street...The fact is that much of the financial industry has become a racket...And if we don't lower the boom on these practices, the racket will just go on."

Amen to that, my friends.

Getting A Quick Look at Your Company's Vital Metrics

2009-12-02T12:48:00.000-08:00

If you spend a lot of time out of the office, how do you keep up with what's happening while you're away?

Jennifer Walzer, CEO of New York-based BackUpMyInfo, wrote on December 1 in The New York Times Small Business blog that, in addition to informal feedback from company insiders, you need to have a more formal system of metrics to see what has been happening and the direction the business is going in.

"I need to know how many leads come in each week, how many go to trial and how many clients close. I would like to know all of this on a per-source basis -- how much money is being generated by my sales team, my telemarketers, our partners, client referrals, public relations and media, etc.

"On the other side of the business, I need to know exactly how many support calls my engineers
handle each week. Finally, I want to be able to get a snapshot of our average client in terms of revenue and data storage -- both overall and by source. For us to assess our performance, we need to start to document this on a weekly basis."

Walzer says they are tracking these things in "some way," but it is not as organized as it should be. She says she needs to know where they are growing, and where to focus the company's time, energy and dollars. Maybe it means hiring another sales person or a dedicated partner relationship manager. Maybe it means focusing more on PR.

"I also owe it to my employees to provide structure and accountability for their performances," she writes. "If I want to provide my employees with clearly defined expectations and then hold them accountable, I have to have a way to measure their performance."

It may be as simple as developing an executive dashboard using Excel, she says. Her Entrepreneurs Organization forum teammate Gary Tuerack, from the National Society of Leadership and Success, created one for his organization, she says.

The idea of an executive dashboard is a good one, whether or not you are out of the office for long stretches of time.

Advice for Dealing with Small-Business Stress

2009-10-07T08:30:00.000-07:00

Even during good times, small-business owners are typically under stress from a variety of sources. During a recession such as we are currently experiencing, the stress level, of course, rises.

In an article yesterday on The New York Times blog site, "You're the Boss," Jay Goltz, a Chicago-based entrepreneur and owner of five small businesses, offers tips for maintaining equilibrium during stressful periods, and learning from the experience. The article is titled "Six Ways to Deal with Stress."

First, identify the real problem. You may think the problem is that you need more sales or more credit. But looking under the surface, more basic problems can be identified, e.g., poor marketing, poor management, or weak financial management (often pricing or debt-restructuring mistakes). It may take someone with more expertise to ID the problems. Joining a business group, interviewing a new accountant, or reaching out to other business people may make a big difference.

Second, separate your fear from your anxiety. Fear is normal, rational and keeps us from taking reckless actions. You need to manage and overpower fear. Anxiety is unwarranted and irrational worrying. Do your best to recognize anxiety and put it out of mind. Suggestions here include: go to a professional or do exercise.

Third, forgive yourself. Business is not easy, and inevitably you make mistakes. Stop feeling guilty, don't look back, roll with the punches.

Fourth, keep perspective. Life is not fair. Self-pity is kryptonite to the successful entrepreneur. Success in business is as much about tenacity as it is about working hard or being smart.

Fifth, accept responsibility. There's no one but you to point the finger at. After you accept responsibility, re-read the third item above (forgive yourself).

Finally, think positively. If you think negatively, you will fail. "If things are so bad you can't do any of this, throw in the towel...Take the hit. There is no shame in failing...The sooner you can get it over with, the sooner you can move on."

Comment: This is great advice. Unfortunately, like many other things in life, it is much easier said than done. However, if you can follow this advice, you will likely be on your way to success, either in your current venture, or in a future endeavor.

The Trials of Being a Woman Entrepreneur

2009-09-23T11:56:00.000-07:00

Being a tech entrepreneur is tough work. For women, it may be even tougher writes Jennifer Walzer, founder and CEO of New York-based Backup My Info!, in an article in yesterday's New York Times titled "Nobody Ever Said It Would be Easy."

In starting up and running her company, Walzer has often been treated as if she were "a non-technical female with a nice smile, sent to butter [clients] up in the hopes of scoring a second meeting with a 'real' engineer,'" she writes. "I've had technical questions fired at me like bullets, with the expectation that I'd crack under pressure, but I always try to answer the questions calmly, coolly and knowledgeably, often to the surprise of those around the table.

"I'm biased toward tech. I think this industry is great and full of opportunities, so if you know of a woman heading to college with an interest in math, science and problem-solving, tell her to give tech a try.

"But let's face it, no matter your gender or what you are trying to do, you're going to face someone who writes you off without giving you a chance, thinks your idea is foolish, or doesn't have time to hear what you have to say. If you think you are strong enough to get up every day and try again and again to make it work, you just might be an entrepreneur."

Very sound advice for both men and women.

Belt-Tightening and Selectivity are the Watchwords for Venture Investors Today

2009-09-22T11:26:00.000-07:00

A year after the collapse of Lehman Brothers, venture capital investors continue to emphasize belt-tightening and investing only in companies that have the very best chances to succeed, says an article on the Venture Capital Dispatch in yesterday's Wall Street Journal.

The article is based on a panel discussion on "Keeping Portfolio Companies Alive and Thriving," at the Dow Jones Private Equity Analyst Conference in New York last week.

"If you're not getting escape velocity, that company should be sold or closed," said Kate Mitchell, a managing director with Scale Venture Partners. While there's still a willingness to invest in portfolio companies that are doing well, Mitchell said "there's a lot more dialogue about whether it's too early or too late" to try to accelerate a company's growth.

"The best CEOs are very cognizant of how hard it is to get new funds and [are] adjusting their spending accordingly," said David Lane, a general partner with ONSET Ventures.

Not all the talk on the panel was negative. All panelists saw opportunities for companies to succeed during the recession, but the concept is the need to be very selective.

It's anyone's guess as to how long this attitude will last among venture investors.

Is Entrepreneurship Right for You?

2009-09-21T14:09:00.000-07:00

Pointing out that starting a business is in some ways like becoming a parent, an article in today's Wall Street Journal poses five questions that an individual should ask before starting a business.

The article, "How to Decide If Entrepreneurship is Right for You," by Colleen Debaise, points to the following five questions:

Am I passionate about my product or service? Because your enthusiasm for you product or service typically makes the difference in making the sale and building the business, "it's unwise to start down the path of entrepreneurship unless you've got a zeal that will get you through the rough patches and keep you interested long after the initial enthusiasm has faded."

What is my tolerance for risk? "Nothing about starting a business is for the faint of heart," the article states."...There's no guarantee of success or even a steady paycheck. If you're risk-averse, entrepreneurship probably isn't the right path for you."

Am I good at making decisions? "No one else is going to make them for you when you own your own business...Decision-making only gets more complicated as time goes on, once you have employees or clients depending on you...The choices you make can lead to success or downfall, so you must feel confident in your ability to make the right call."

Am I willing to take on numerous responsibilities? "Solo entrepreneurs in particular must be versatile and play a number of roles...If juggling many roles doesn't suit you, entrepreneurship probably won't either."

Will I be able to avoid burnout? "Working seven days a week, losing touch with friends, abandoning old hobbies and interests, and not making time for loved ones can quickly lead to burnout in the midst of starting up--and ultimately to business failure." The article gives a specific example of total burnout. With this particular entrepreneur working on his second startup, he has embarked on a better work/life balance, including not working on Sundays, making time for hobbies, and building close ties with other business owners through a faith-based support network.

"Take some time to mull over these questions, do some soul-searching, and then if you think you have what it takes, go for it," the article advises.

Good advice!

This article was adapted from a forthcoming book, "The Wall Street Journal Complete Small Business Guidebook," (Three Rivers Press, scheduled for publication December 29, 2009).

SBA Lending Has Risen This Year, But When Stimulus Money Runs Out, Where Will Additional Funding Come From?

2009-09-15T13:25:00.000-07:00

An article in yesterday's New York Times cited a good news/bad news situation with regard to monies available for SBA lending to small businesses. The article, "SBA Lending is Rising, but What Happens When the Stimulus Runs Out?", says that lending backed by the SBA has rebounded back from last winter's low point. But it adds that, unfortunately, the spigot may run dry again when stimulus money runs out. And, it adds that it is unclear whether Congress will be able to find a way to keep the money flowing.

"We're almost back to '08 levels," said Karen Mills, SBA Administrator. "Almost a thousand banks that did not make a loan from that frozen point in October have come back to the program and are making SBA loans. And more than half of those banks hadn't made a loan since 2007."

Since the stimulus law went into effect, Mills said, the SBA has approved $7.7 billion in loans, and "leveraged $9.5 billion into the hands of small businesses."

Officials in Washington are trying to find a way to keep the stimulus going, the article says. It is unlikely to be funded by an additional appropriation, it says. But an aide to a senator on the Appropriations Committee said committee members are looking at legislation that would permit the unused money from the Troubled Asset Relief Program (TARP) allocated to secondary market loans to be used to extend the stimulus provisions.

This would be a positive development for small-business growth.

Nimble Serial Entrepreneur Transforms Technology Developed for Stock Price Forecasting Into Low-Cost Data Storage Application

2009-09-14T13:32:00.000-07:00

The path to new business success is not always a straight line. An article on Scale Computing, of Indianapolis, in The New York Times on September 10 traces the circuitous route of Jeff Ready and his business partners in moving from the use of an artificial intelligence technology they had developed for forecasting stock prices and building a hedge fund, to using the technology to build a successful data storage company.

By the time they had developed the technology to the point where they thought they could commercialize it, the economy and the financial markets had turned sour, and they could not raise the $100 million they thought they needed to commercialize it for the stock market application. Furthermore, there were some problems with the technology that made it impractical at that time for this application.

Ready and his partners, CFO Scott Loughmiller and COO Ehren Maedge, are serial entrepreneurs. Prior to starting Scale Computing, they built and sold several other companies.

After their pitch fell on deaf ears, they came up with the idea of selling the low-cost storage nodes, and started Scale Computing in April 2007. This past February, they started delivering the nodes, and orders have been coming in. "Small business, hospitals, law firms, school districts and even one Fortune 100 company like the devices because they can buy as few as they want and as their storage needs grow, they can add as many as they need at multiple locations," the article says.

"I've never run a company that gained so much traction so quickly," Ready said. The company has grown to 22 employees, and Ready projects sales of $2 million this year and $8 million in 2010, though he concedes that fortunes can change quickly at startups, either up or down.

Professor Andrew Zacharakis, an entrepreneurship expert at Babson College near Boston, said Ready and his partners have exhibited the familiar entrepreneurial trait of nimbleness as circumstances change. "They take low-cost tests and learn along the way," he said. They don't get discouraged."

This is an excellent example of entrepreneurial fortitude and persistence paying off.

As Competition Intensifies, Independent Contractors Find It Hard To Take a Vacation

2009-08-10T11:13:00.000-07:00

As the recession squeezes the entire economy, it's getting harder and harder for independent contractors to take a vacation.

"Solo entrepreneurs, freelancers and other self-employed professionals have always struggled to take vacations, and the recession is making it even harder," writes Sarah Needlemen, in an article in The Wall Street Journal last week, "For the Self-Employed, It's an Endless Workweek."

"Being out of pocket can mean missing one of a diminishing number of business leads, and the rising tide of unemployed professionals has heightened competition for freelance work," she notes.

"If you don't get to the inquiries right away, they disappear," the article quotes Frank Natoli, a partner in LanternLegal.com, a legal-services provider in New York. "They'll call somebody else in a second."

"We're tied to the desk," Natoli says. "When the phone rings, we have to be here to answer it."

Competition among freelancers is getting even more competitive than ever. Guru.com, a freelance job site, reported membership of 907,000 in July, up 15% from a year ago. Rival Elance.com says it received 131,000 new applications from freelance professionals in this year's first half, up 40% from the same period last year.

Some freelancers may be able to stay in touch with the business and their clients by using cell phones, email, texting and voicemail, during a vacation, but many say that defeats the purpose of a taking a vacation.

To preserve some degree of sanity and avoid total burnout, some freelancers are resorting to one- or two-day respites.

At least some time off is a must, because people tend to underperform when they're overworked, says Gene Fairbrother, lead business consultant for the National Association for the Self-Employed.

So, if you're an independent contractor, despite what seems a necessity to stay plugged into their business at all times in the current economy, it is imperative that you take some time off, or else suffer the consequences of declining performance and burnout.

Kauffman Study: Credit Card Debt Reduces Startups' Chances of Survival

2009-08-07T12:32:00.000-07:00

Although conventional advice for startups is that they finance partially through bootstrapping, including the use of credit cards, a new study from the Ewing Marion Kauffman Foundation suggests that startups with credit card debt have a lower chance of survival. The study's results are reported on the Wall Street Journal's website today.

The study, "The Use of Credit Card Debt by New Firms," was conducted by Robert H. Scott III, an assistant professor of economics and finance at the Leon Hess School of Business.

A statistical analysis in the report shows that for every $1,000 in additional credit card debt taken on by the firms studied, the chances of survival were reduced by 2.2%.

"More than half of all new firms rely on debt financing when starting operations," the report states. "A vast majority of these businesses rely on credit card debt to fill any equity gap. This debt financing can be very expensive. While credit card debt provides needed short-term funding, reliance on this type of financing may lead many businesses into a long-term liquidity drain that affects their financial stability -- and thus survival."

"Many factors explain why new businesses succeed or not," the study concludes. "The growth in credit card use among small businesses has raised the question of whether firms with credit card debt were less likely to survive during their beginning stages of development. This study shows that credit card debt does play a role in business closure in the first few years of operations. And, while it is not the only determinant of a business's stability, it appears to be an important factor in a firm's likelihood to survive."

Angel Investing Groups Have Become More Selective During the Recession

2009-08-04T11:56:00.000-07:00

During the current recession, angel investing groups have exhibited the following pattern: a decline in the amount of money sought by entrepreneurs, a reduction in the number of companies receiving financing, and a decrease in the expected value of companies, but a small increase in average deal size.

These conclusions are included in an article by Scott Shane, a professor of entrepreneurial studies at Case Western University, on the New York Times website today.

Citing data from a survey by the Angel Capital Association, Shane noted these figures for 2008: a 9% decrease in angel capital dollar investment, a 16% decline in the number of angel deals, and a 4% increase in average deal size.

Data from Angelsoft, which provides investment tracking software for angel investment groups, shows "an increase in investment selectivity" among angel groups in 2008. That selectivity was evident in a drop in the share of companies who sought financing who actually received an investment from 3.9% in 2007 to 1.8% in 2008.

Angelsoft data also showed that the amount of financing sought by the typical entrepreneur declined from about $1 million in the fourth quarter of 2006 to $750,000 in the first quarter of 2009. And the average company valuation fell from $3 million in the pre-recession period to $2.5 million in the 2009 first quarter.

It is clear that angel investor groups have become very cautious in the current environment, and, and in my judgment, that caution is likely to continue for at least the next 6-12 months.

New Study from Kauffman Foundation Analyzes Background and Motivations of Successful Entrepreneurs

2009-07-31T09:32:00.000-07:00

A new study from the Ewing Marion Kauffman Foundation analyzes the backgrounds and motivations of entrepreneurs who have established successful companies.

The study, "The Anatomy of an Entrepreneur: Family Background and Motivation," was published this month.

The authors of the study interviewed about 550 company founders from a variety of industries, including aerospace and defense, computers, electronics, healthcare and services.

The research showed that entrepreneurs are typically well-educated and experienced. They have ideas they want to commercialize, are motivated to build wealth, and like the idea of being their own bosses in a startup.

The entrepreneurs in the study were likely to be more educated than their parents and to come from the middle class or the upper-lower class, with very few coming from backgrounds of extreme wealth or extreme poverty. They performed well in high school and college, with the vast majority ranking average or above in their educational institutions.

Entrepreneurs don't always come from families of entrepreneurs, however. A little over half of the sample were the first in their families to start a business.

These company founders are much more likely to be married and have children when they launch their business.

The authors plan to continue the research into a new round of inquiry that will focus on "the deeper formative factors that influence this select and incredibly important class of individuals."

New Website Providing Expert Advice for Small and Mid-Sized Businesses -- Bizmore.com -- Goes Live

2009-07-30T09:00:00.000-07:00

This week, Bizmore.com, a new website providing expert advice and guidance for small and mid-sized businesses, went live. With former junk bond king Michael Milken as a major investor, the site will respond to specific questions posed by executives.

Advice will be provided by industry experts and peers within the industry. Experts include David Allen, organizational and personal productivity guru; Jeffrey Pfeffer, management and strategy professor at Stanford Graduate Business School; Gary Hamel, management and strategy expert, and professor at London Business School; Libby Sartain, an HR specialist; Jason Jennings, a leadership advisor; and others.

According to a July 29 New York Times blog article by Brad Stone, Bizmore is a subsidiary of San Diego-based Vistage International, an executive coaching and networking organization, which is partly owned by Milken. Vistage has so far committed about $10 million to the venture, The Times article states.

Rafael Pastor, Vistage CEO and a former EVP at News Corp., told The Times that Bizmore's opportunity is to provide "instantaneous information that is very tailored to a specific question or need, which some of the old media organizations couldn't do even when they were at their height."

According to Stone, the experts who answer the questions are unpaid for their services, but a possible spinoff could be additional sales of their books and lectures.

The site will also include contributions from freelance writers on various business and management topics.

The business model for the site is to gain advertising as the site increases readership.

If Bizmore can maintain and increase the contributions of its high-profile experts, my sense is that more and more traffic will be driven to the site.

NeoClassics Films Ltd., a Startup, Distributes Low-Budget, Quality Independent Films from Around the World

2009-07-29T10:03:00.001-07:00

Last week, I attended a very interesting presentation by Irwin Olian, Chairman and CEO of NeoClassics Films Ltd., which is based in British Columbia, with North American headquarters oin Culver City, CA. The company was formed in late 2007.

The company distributes independently-produced, feature-length films for initial release. The pictures are produced by filmmakers from around the world, with a focus on English language films from the UK, Australia, New Zealand, South Africa, India, the U.S. and Canada. In addition, foreign language pictures from France, Spain, Germany and other countries are being licensed and distributed with subtitles. The company presently is, or will be, distributing films from Australia, Belgium, Jordan, Canada and the UK.

The initial focus is on films with a budget of $5 million or less, with plans to expand this horizon over time as the firm's distribution network is established and matures.

Olian said that his company's ability to identify and reach a targeted market for these films is fundamental its film-acquisition strategy. The company has acquired five films in its first year of operation, and plans to acquire approximately 8-12 films a year.

Current films include: The Black Balloon, from Australia, which has been in select theaters since last December; Moscow, Belgium, also in theaters since last December; Surviving Crooked Lake, a 2007 Canadian Film, which was scheduled for release this month; Captain Abu Raed, Jordan's entry for the 2009 Oscar competition; and St. Trinians, a British film scheduled for release in select theaters on August 28. These films have received excellent reviews and many awards.

Olian and other members of his financial and management team are highly experienced and well connected in the entertainment business. With a BA from Princeton and a law degree from Harvard, Olian was previously CEO and Chairman of three successful junior mining exploration companies.

NeoClassics is using a conservative business model that identifies good pictures but does not assume any hit movies or over-sized revenues.

The company is currently raising a Bridge and Development fund of up to $5 million, and is considering whether to raise a Print & Ad Fund and a Production Fund, both of which would be significantly larger than the Bridge and Development Fund.

Mr. Olian's presentation was highly interesting and entertaining. It included the playing of trailers for three of the five movies mentioned above. Many attendees walked away with a positive feeling about the company, but at least one in the room was concerned about the small amount of cash on hand, wondering whether the company could keep operating long enough to implement its vision.

Does Your Startup Need Funding? Google's New Venture Unit May Be Worth Contacting

2009-07-28T12:13:00.000-07:00

Despite the severe recession, Google started up a venture capital arm in March, according to an article in the August issue of Entrepreneur Magazine. Rich Miner, previously in charge of developing Google's Android OS, and Bill Maris, founder of early web-hosting company Burlee.com, manage Google Ventures, and want to invest up to $100 million in their first year.

Areas of investment will likely include software, hardware and Internet startups, as well as clean technology and health care.

So far, Google has invested in two companies based in Northern California, near Google's HQ, the article says: Pixazza, a Google AdSense-style technology that allows users to shop via photographs, and smart-grid metering service Silver Spring Networks.

Pixazza CEO Bob Lisbonne praised Google for being supportive without micromanaging.

Given the success of many of Google's ventures and investments, it would make sense for startups in need of funding to consider contacting Google Ventures to talk.

More and More Small Businesses Are Now Using Twitter to Market Themselves

2009-07-27T13:19:00.000-07:00

More and more small businesses are benefiting from the use of Twitter to enhance their marketing efforts, according to an article in the New York Times on July 22 titled, "Mom and Pop Operators Turn to Social Media."

Though there has been a lot of publicity about the use of Twitter by large companies such as Dell and Starbucks, the article points out that "today, small businesses outnumber the big ones" on Twitter, and "in many ways Twitter is an even more useful tool for them."

"For many mom-and-pop shops with no ad budget, Twitter has become their sole means of marketing," the article states. "It is far easier to set up and operate a Twitter account than to maintain a Web page. And because small-business owners tend to work at the cash register, not in a cubicle in the marketing department, Twitter's intimacy suits them well."

Anamitra Banerjee, who manages commercial products at Twitter, said that when he joined the company in March, "I thought this was a place where large businesses were. What I'm finding more and more, to my surprise every single day, is business of all kinds."

Twitter, which does not yet make money, is now concentrating on teaching businesses how they can join and use it, Mr. Banerjee said, and the company plans to publish case studies. He is also developing products that Twitter can sell to businesses of all sizes this year, including features to verify businesses' accounts and analyze traffic to their twitter profiles.

According to Mr. Banerjee, small-business owners like Twitter because they can talk directly to customers in a way that they were only able to do in person before. "We're finding the emotional distance between businesses and their customers is shortening quite a bit," he said.

The Opportunities in the SaaS 2.0 Space

2009-05-29T09:07:00.000-07:00

A strong panel of internet entrepreneurs and service providers spoke on the subject of market demand and entrepreneurial opportunities in the Software as a Service space at a meeting of the MIT Enterprise Forum New York City, last evening.

The approximately 60 attendees heard from six experienced individuals in the field who are working in various aspects of SaaS 2.0, or the second generation of this space.

"Since the late 1990s, the promise of SaaS for businesses has been to maximize business process quality and productivity with minimized IT departmental [capital expenditures] and personnel," the meeting's literature stated. "With some notable exceptions, big successes have been rare. Nevertheless, in the midst of an 'economic perfect storm,' market demand for the promise is greater than ever. Intensified market demand, along with enabling technological innovations such as cloud computing and Web 2.0, are igniting entrepreneurial efforts to deliver the promise of ... SaaS 2.0"

The session covered a number of topics, including:

SaaS Platforms: What are Microsoft and Google doing to create SaaS platforms that support ecosystems of independent SaaS providers?

SaaS Startups: How are two exemplary SaaS startups that target businesses, winning customers and making money: subscription services, advertising, or other?

Investors: From VC and investment banking perspectives, is SaaS 2.0 a field of dreams or a great opportunity?

The panel included: Harry Patz, vice president of Microsoft's Communications Sector Americas Region; Frank Fawzi, CEO, IntelePeer; Duke Chung, CEO, Parature; Scott Johnston, senior product manager, Google Sites; and Ben Boissevain, managing partner, Agile Equity. The moderator was Alan Mitchell, president, ARMAK & Associates.

Community Banks are Key to Financing Small Businesses in Today's Economy

2009-05-28T11:21:00.001-07:00

With all the talk about small businesses being unable to borrow to finance growth during the current financial turmoil, lenders and borrowers in some quarters say that money is available. That is particularly true for borrowing from community banks, according to an article in today's New York Times, titled "Getting the Loan Officer on Your Side: Small Banks Will Lend if They Understand the Business."

"Many bankers claim that their small-business loan volume is up significantly," the Times said. The Federal Reserve's April survey of lending practices showed that credit conditions have improved somewhat. The Small Business Administration (SBA) says that the weekly volume of loans to small businesses is up more than 25% since March.

Most of the lending is being done by small community banks, the Times said. A May survey of 1,500 small businesses by Barlow Research Associates found that companies that applied to small banks for loans in the past year were three times as likely to obtain credit as those who applied to large banks.

Through comments from both borrowers and community bankers, the Times indicates that money is available to creditworthy borrowers who can communicate their needs articulately to the banker, have a good plan in place for moving forward, have good financials and/or a good previous track record, and can develop a good relationship with their banker.

The Times also pointed out that community banks have been cautious, and that many applicants may not be creditworthy at this time.

New Federal Effort to Enable Venture-Backed Tech Companies to Contract with the Government

2009-05-27T11:45:00.000-07:00

The federal government is seeking to alter the government procurement process to enable more venture-backed technology startup companies to compete for government contracts, the government's Chief Information Officer, Vivek Kundra told attendees in Washington at a conference sponsored by the Mid-Atlantic Venture Association.

In an article posted on nextgov.com, Kundra was quoted as saying: "We're looking at the procurement process to make sure we're able to tap into some of the best ideas. We cannot continue to spend billions of dollars on IT projects that haven't produced the dividends we've been looking for. The federal government can lead when it comes to innovation."

A key barrier to achieving the objective, Kundra told nextgov, is achieving a balance between the risk of a zero return on investment and the potential for accessing technology that can transform our society.

Former federal government officials speaking at the meeting on Tuesday raised the possibility of involving VCs and private equity investors in helping to bring new technologies to the government.

New Ideas to Revive Venture Capital Investing Presented at Industry Conference

2009-05-06T11:20:00.000-07:00

A New York Times blog post earlier this week described the four-step plan put forward last week by the National Venture Capital Association to address the drought in acquisitions and IPOs of venture-backed companies. The plan was announced at the association's annual meeting in Boston.

The plan calls for "the return of small investment banks and accounting firms. These helped small tech companies go public until the dot-com bubble burst and then they disappeared. In order for start-ups to start going public again, the big banks and accounting firms must partner will smaller ones to reinvigorate them," the N.V.C.A. said.

Second, the plan deals with new forms of exits, such as SecondMarket and other exchanges where start-ups can sell shares on the private market.

Third, the plan seeks new tax benefits, such as a more competitive capital gains tax rate for IPO investors and tax incentives for-clean tech companies.

Finally, the plan calls for regulations such as Sarbanes-Oxley and financial statement requirements to be eased for very small companies that want to go public.

“It can’t be fixed with a stroke of the pen, but without fixing this problem, literally innovation will be at bay in this country, precisely at the time competition is increasing from abroad,” The Times quoted Paul Maeder, a general partner at Highland Capital Partners.

The blog post also cites Josh Lerner, a Harvard Business School professor of venture capital and entrepreneurship, who recommends that the VC industry focus on three key ideas.

(1) Changes in patent policy. Patent litigation costs so much and takes so long that it is burdening small tech companies, Lerner said. Instead, he suggests a patent policy similar to that in Europe, where inventors can challenge patents before they are approved. By contrast, in the U.S., Lerner said, most patents are granted quickly and protesters have to go to court to fight them.

(2) Lerner recommends using federal funds to support start-ups, rather than just supporting large, struggling companies.

“In our efforts to rescue failing giants, we are spending all this money keeping buggy whips afloat,” he said. “It seems a little crazy to say we’re going to invest all this money in sunset industries, not emerging companies.”

(3) Lerner said the U.S. to do a better job of keeping foreign-born scientists and entrepreneurs who have immigrated here to stay here. These are people we need to advance our business and economy. He predicted tremendous future pressure from China and India -- who will want to hold on to these talented people and provide incentives for them to remain at home rather than emigrat to the U.S.

Getting Investing Wisdom Straight from the Horse's Mouth

2009-05-05T11:24:00.000-07:00

Last year, a friend of mine bought one non-voting share of Berkshire Hathaway stock so that she could make the pilgrimage this year to the company's annual meeting in Omaha, which features the presence and comments of Warren Buffett, the company's chairman and the world's most famous value investor. Indeed, to ensure herself a room at an area hotel, she booked more than six months ahead of time.

The 2009 Berkshire Hathaway annual meeting was held last weekend, and from press accounts, despite the weak year in 2008, Buffett continued to enthrall his audience of the faithful.

The New York Times reported today that 35,000 shareholders attended the meeting, and that despite the weak year in 2008, "shareholders still hung on every word from the 78-year-old investor's lips."

The Times added, "Between sips of Cherry Coke and bites of peanut brittle, he served up some wisdom that might have saved a lot of heartache (not to mention jobs and untold financial losses) had investors heeded it over the last decade: keep it simple."

While "his fan club is still strong, dismissing his bad year as part of the 'markets go up and markets go down inevitability of value investing...., even "Mr. Buffett himself acknowledged, 'I didn't cover myself in glory' in 2008."

The Times report noted that, "Most of what Mr. Buffett said was basic and obvious -- and was roundly ignored during the period leading up to this mess [the current financial crisis]. 'Leverage is what causes people real trouble in this world,' Mr. Buffett said. 'You don't want to be in a position where someone can pull the rug out from under you or, emotionally, where you pull it out from under yourself.'"

However, The Times noted that Buffett, too, is invested in some complicated leveraged investments, i.e., "the very same derivatives that he has called 'weapons of mass destruction.' On Saturday, he acknowledged that he had futures and options contracts on stock indexes and foreign currencies, but added that, in and of themselves, 'derivatives aren't evil.'"

It is doubtful that another Warren Buffett -- combining the extremely sophisticated value investor with the folksy ways that endear him to his followers -- will come along anytime soon.

I'm sure that my friend enjoyed the weekend and will no doubt have gained some investment wisdom along the way.

Lessons for Startups from Four Experienced Entrepreneurs

2009-05-01T12:07:00.000-07:00

Four entrepreneurs discussed their motivations for starting their businesses and provided insights into the many challenges they have faced since startup, at a meeting at the Crowne Plaza Hotel in White Plains on Wednesday evening, April 29.

The discussion, titled “What I Wish I Knew When I Started My Business,” provided a lively and informative exchange between the panelists and the audience of approximately 40 professionals, many of them budding entrepreneurs evaluating whether they should start up businesses of their own. The meeting was sponsored by the Westchester-Connecticut Committee of the Columbia Business School Alumni Club of New York.

The panel of entrepreneurs included: Anirban Das, president and CEO of USAS Technologies (www.usastechologies.com); Mobeen Khan, COO of Metaphor Solution (www.metaphorivr.com); Jamak Khazra, founder and designer of Bluesuits LLC (www.bluesuitsonline.com); and Jennifer Prosek, founder and CEO of CJP Communications (www.cjpcom.com).

Some of the key points of advice provided by the panelists included:

Das: Talk to many knowledgeable people to get a wide range of advisory input before you start up. Use internet resources as well.

Prosek: Promote your successes through PR and other tools of marketing communications.

You can’t build a business totally on your own. Give commissions to those who help you bring in new business. “Spread the wealth,” advised Prosek. “You can’t do it alone.”

“Great advisors are important,” Prosek said. “Surround yourself with entrepreneurs. We’re all learning. “

Khan: “I carried forward some of my mentoring relationships of the past,” said Khan. “These were invaluable. This process allowed me to call on someone who I trusted to give me unbiased advice.” For example, I have called on my former COO at Cingular for this kind of advice. He can be very straightforward in his comments.”

You need to be able to communicate – with customers, employees, board members. If you’re not good at this, get an executive coach to help.

Khazra: Develop relationships with many people in your industry. You may be able to piggyback on the capabilities and experience of larger organizations without really spending a lot of money.

Das: Go into business for the right reasons. Don’t do it because you don’t like your boss and you want to get away.

You need to have a well thought out and disciplined business and marketing plan.

Khazra: Starting a business is like deciding to invest in a stock. In a stock, you’re investing in the idea of the company. In starting up a business, you’re investing in your own idea.

Determine your risk tolerance. You need to know when to cut the cord.

Khan: You need to love what you do.

Prosek: You have to love what you do, because you’re going to live it 24/7. It’s like a marriage. You have to believe you’re in love and it’s going to last forever.

Try to sell your idea to others before you start up – i.e., try to have one or two customers pre-sold.

On the Current State of the Economy

Das: The downturn is an opportunity, where a small company has an advantage. When things are going well, there’s no incentive for customers to change. If you can survive this period, there’s a huge upside.

Khazra: This is a good time for business suits, because so many people are doing job interviews.

What helps, too, is diversity of products, investment in social networking, add to market basket.

Khan: There are opportunities, but I spent a lot of time in the past six months trying to save my company. You better have a high risk tolerance during these times.
This is a good time to get great talent at cheaper prices.

Prosek: Your pipeline is your only insurance policy in a recession.
You need an army of entrepreneurs, not a single rainmaker. We’re basically flat.
Today’s talent pool is excellent, high quality and available at lower rates.

How to Use Internet Marketing to Build Your Business

2009-04-30T11:44:00.000-07:00

Three experts in internet and search marketing provided insights and tips on how these tools can help to grow your business at a Sunrise Seminar on Tuesday, April 28, sponsored by the Yonkers Downtown Business Improvement District. The breakfast meeting was held at the Larkin Library in downtown Yonkers, with approximately 40 businesspeople attending.

David Hoffman, president of Search Smart Marketing, of Mount Kisco, NY, discussed some of the ways in which a business owner can increase their chances of rising high in Google rankings, so that potential customers will find them easily. For example, Hoffman stressed the importance of using keywords and phrases that are important for potential clients in the development of website content -- and including such words on each page, not just on some pages. "The better you can target the specific customer and your specific value added, the more hits you will get and the higher your rankings will be," he said.

You should also consider the use of Google Adwords or pay-per-click as devices to bring in business, Hoffman said.

He noted, too, that while there are about 200 criteria that Google's system looks at when determining rankings, there are only 10 or 12 that are really significant in the determination. These include keyword-rich content, page architecture and high-quality link development to other sites.

Hoffman noted that blogs, press releases and videos also help to raise a company’s Google ranking.

Mara Rupners, director of communications for Arts Westchester, based in White Plains, pointed to a wide range of actions and initiatives that business owners can take to get prospective customers to come to, and return to their site. These include videos, photos, blogs and forums. “You can develop a community around the particular content and areas of interest of the people you’re targeting,” she said. “News about your industry or your firm can generate continuing interest,” she said. “News updates and RSS feeds can help to build a following.”

Rupners noted that there are pros and cons to disseminating eblasts and enewsletters, in that people are already inundated with a great deal of email, and many may ignore emails. It is best to use these sparingly, she said.

She also noted the increasing availability of social networking sites such as Facebook, Myspace and Twitter. You can deliver posts, news releases and other information using these tools.

One important piece of advice is to keep your content clear and concise, and reflective of who you are, she said.

For young people, all of these tools are second nature, she pointed out, so that they may be a better audience for social networking.

For nonprofit organizations, Rupners noted that Google has created Google Grants. This can be a very helpful tool.

David Simpson, director of communications for Yonkers Mayor Philip Amicone, as well as a marketing consultant, noted that today, for many companies, internet advertising and marketing have largely replaced print and broadcast spending. For example, he said, many companies are spending 60%-80% of their marketing dollars on internet-related initiatives.

He also suggested that it might be a good idea to consider using a third-party provider to manage your website. “Most people are not going to be impressed by a website unless it is designed well and has great content,” he said.

In addition, services such as Constant Contact make it very easy to manage your emailings and follow-ups. They are not expensive – as little as $15 a month, he said – with many features to help you manage your email list.

Facebook and Twitter are also good tools to consider. However, with respect to Twitter, since the expectation is that the information is immediate, it needs to be accurate to gain respect and a following.

“Stick to what you do best and leverage third-party providers to the extent possible,” Simpson said.

Panic Cost-Cutting During a Recession Can Hurt Your Business in the Long Term

2009-03-25T14:03:00.001-07:00

An article in the March issue of Inc. magazine by veteran entrepreneur Norm Brodsky points out that fear that overtakes business owners during a recession can lead to unwise panic decisions that weaken their company in the long term.

“Fear can be a motivator, but it can also lead you into bad decisions, particularly in times like these,” Brodsky writes. “I have no doubt that a lot of business owners have spent the past couple of months implementing cost-saving plans and survival strategies that will weaken their companies and damage their long-term prospects. They've done it because they've been afraid, and fear makes us shortsighted.

“With the economy falling apart around us, we forget that recessions always end. Yes, some businesses will go under, but some companies will emerge stronger. If you want yours to be among the latter, you need to be careful about which costs you cut and which deals you offer your customers.

He makes his point by using a case study of a young woman named Lisa whose photography business had grown to four galleries in California and New Mexico. Her business had fallen sharply due to the recession, and she needed to either increase revenue by $200,000, or cut her spending for the year by that amount in order to remain stable.

Analyzing her situation, Brodsky talked her out of reducing hours at the galleries, saying that would reduce the amount of time when customers could come and purchase her work.

Rather, Brodsky recommended looking at ways that would reduce costs more appropriately and/or enhance revenues. One area of cost reduction was to try to negotiate with her landlords at the various locations to temporarily reduce her rent payments, with the shortfall being made up later on.

Brodsky advised against having a sale – i.e., reducing prices overall – since he believes in general that one should hold the line on prices during a recession, while at the same timing providing some value added to bring in new business. For example, he suggested holding a “customer appreciation week,” where Lisa could offer something extra to the people who buy her smaller, unsigned photos – for instance, a special limited edition of select photos signed by her.

Lisa also suggested she could save significantly by reducing inventory, where she said she has typically overspent.

An idea to potentially increase revenue significantly was to look for untapped markets outside her locations in the West. Brodsky suggested that the photographer expand into other areas of the country, give up some control to allow for larger commissions, and thereby potentially sharply increase business.

As this example shows, not all ideas for cost reduction are good ones – in the sense that they can actually impair the future of the business.

“At the end of the recession,” says Brodsky, “the winners will be those who have taken advantage of their most important resources -- imagination and creativity.”

Harvard Study Finds VC-Backed Failures Do Not Help the Entrepreneurs To Future Success

2009-03-24T13:41:00.000-07:00

Research by a group of Harvard Business School professors suggests that, contrary to conventional wisdom, the failure of a venture-backed business does not equip the entrepreneur with any greater capability for a future successful venture than a totally inexperienced entrepreneur, according to an article in The New York Times (3-22-09).

The study found that "when it comes to venture-backed entrepreneurship, the only experience that counts is success," the article states.

"The data are absolutely clear," said Paul A. Gompers, a professor at HBS and one of the study's authors. "Does failure breed new knowledge or experience that can be leveraged into performance the second time around?" In some cases, yes, he says, but overall, "We found there is no benefit in terms of performance."

The study looked at several thousand VC-backed companies from 1986-2003. Gompers and his HBS co-authors, Anna Kovner, Josh Lerner and David S. Scharfstein, found that first-time entrepreneurs who received VC funding had a 22% chance of success -- defined as going public or filing to go public. Gompers said the results were similar when using other measures, e.g., acquisition or merger.

Already-successful entrepreneurs were far more likely to succeed again, the study showed. Their success rate was 34%. But entrepreneurs whose companies had been liquidated or gone bankrupt had almost the same follow-on success rate as the first-timers, 23%.

"For the average entrepreneur who failed, no learning happened," Gompers said.

Some entrepreneurs and VCs disputed this conclusion. For example, Mark Pincus, founder and CEO of Zynga, San Francisco, an online-game developer, said that he received funding for Zynga in part because he founded two successful companies prior to a failed venture that preceded the formation of Zynga.

VCs expect entrepreneurs to take risks, and both VCs and entrepreneurs expect occasional failures, Pincus said. "As an entrepreneur, you have to get used to failure. It is just part of the path to success," he said.

Although the study found that in general, failures are not a particularly effective teacher of entrepreneurship, Gompers said that "absolutely some entrepreneurs can learn" from them.

He also believes that Silicon Valley's deep-rooted belief in the value of failure is due to "attribution bias" -- people generalizing from anecdotal success-after-failure stories.

Search Funds are Growing In Popularity As a Way to Raise the Odds of Building a Successful Business

2009-03-17T07:10:00.000-07:00

"While most people have never heard of them, search funds are attracting increasing attention as a way for small businesses to beat the usual odds of success, even in the midst of a deepening recession," according to an article in The New York Times ("Paying Entrepreneurs to Find the Right Business," March 12, 2009), from which this posting is abstracted.

"This is the way a search fund typically works: One or two ambitious graduates of a top-tier business school, who want to run their own business but recognize they lack practical experience, offer themselves as fledgling entrepreneurs who can make some tough-minded investors a lot of money.

"These investors put up about half a million dollars for the pair to spend up to two years scouring the marketplace for a promising business with $10 million to $30 million in revenue. If satisfied with the choice, the investors help finance the acquisition of the business, join its board and give their young partners a crash course in hands-on management. If all works out, the venture grows and makes everybody richer.

"H. Irving Grousbeck, co-founder of Continental Cablevision (later Media One) and now a consulting professor of business at Stanford University, helped originate the business model a quarter of a century ago and has been studying it ever since.

"Grousbeck says studies by the Center for Entrepreneurial Studies at Stanford, which he co-directs, show average annual returns by search funds to their original investors of well over 30 percent.

"The results are skewed by the big winners, which constitute about a fourth of the total. Another fourth fold without making a purchase, a fourth lose money for their investors and a fourth provide a middling return, according to Mr. Southern, the Boston investor. Still, taken as a whole, search funds can be a winning proposition.

"The funds do have drawbacks, of course. The same recession that has attracted search fund buyers has scared off sellers, for example, Mr. Grousbeck said.

Moreover, major successes are rare. However, one major success is Asurion, which was built from a $6 million roadside assistance company with 45 employees into the nation’s largest provider of insurance products to cellphone companies.

"Asurion provides a case study of the power of the search fund model in the right circumstances.
The founders, who had studied under Mr. Grousbeck at Stanford, said they liked Roadside Rescue (the predecessor company) because it was not a towing company. Instead, it sold roadside assistance insurance through local wireless carriers to their users. The venture grew by 50 to 100 percent a year in its first four years.

"Then the two men had an epiphany: they were not in the roadside-assistance business; they were in the cellphone services business. In 1999 they expanded into insurance for loss or damage to cellphones. After making three major acquisitions in recent years, Asurion, based in San Mateo, Calif., has grown into a $2.5 billion company with 10,000 employees, more than 70 million wireless customers and a growing presence in Asia.

Jim Southern, a Boston investor, said his search funds had generated 14 times the capital he placed in 20 companies over an average holding period of eight years

He says that "more business school graduates are being drawn to search funds, in part because of Asurion’s success and in part because the recession has diminished prospects on Wall Street and in corporate America. Nearly 25 would-be search fund entrepreneurs have approached him since November alone, he said, compared with fewer than 10 in a full year in the past. He plans to back nine funds this year, the same as in 2008 and 2007 but significantly more than the one or two a year he helped finance before that.

"Mr. Grousbeck, the Stanford professor who nurtured the first fund in 1984 when he was teaching at Harvard, says the business model has spread to Europe, Latin America, Asia and even South Africa, if only by a trickle.

"Still, search funds occupy a tiny niche of the investment world. Mr. Southern estimates that only 160 or so have been created, all looking for companies with less than $50 million in revenue. He estimated that about 60 search fund companies were active today.

"Even so, Mr. Grousbeck said, investors who back a portfolio of search funds stand a good chance of beating the returns in other markets. “I can’t tell you how many investors have asked me, ‘Why should I pay somebody to hunt for a company when entrepreneurs are knocking on my door all the time to invest in theirs?’ ” he said. “I tell them, ‘You’d be taking a very small risk for the chance to ride the coattails of some very bright and talented people.’ ”

Developing Leaders Rather Than Managers May Be the New Objective of MBA Programs

2009-03-16T12:40:00.000-07:00

Many MBA programs today are under intense scrutiny, with the objective of re-emphasizing leadership and ethical behavior, and de-emphasizing single-minded, aggressive pursuit of maximizing shareholder value at all cost.

With the turmoil of the financial crisis impacting businesses at all levels of their organizations, and with the exposure of so much wrongdoing and unethical behavior, many of the nation's business school programs are undergoing a significant evaluation -- both internally and by outside parties.

An article in The New York Times (March 15), "Is It Time to Retrain B-Schools?", citing the recent problems in the financial services industry, says that "analysts, and even educators themselves, are wondering if the way business students are taught may have contributed to the most serious economic crisis in decades."

“It is so obvious that something big has failed,” said Ángel Cabrera, dean of the Thunderbird School of Global Management in Glendale, Ariz. “We can look the other way, but come on. The C.E.O.’s of those companies, those are people we used to brag about. We cannot say, ‘Well, it wasn’t our fault’ when there is such a systemic, widespread failure of leadership.”

"Critics of business education have many complaints," the article states. "Some say the schools have become too scientific, too detached from real-world issues. Others say students are taught to come up with hasty solutions to complicated problems. Another group contends that schools give students a limited and distorted view of their role — that they graduate with a focus on maximizing shareholder value and only a limited understanding of ethical and social considerations essential to business leadership.

“Instead of being viewed as long-term economic stewards, managers came to be seen mainly as the agents of the owners — the shareholders — and responsible for maximizing shareholder wealth, said Rakesh Khurana, a professor at Harvard Business School.

"There is a need to broaden from the analytical focus of M.B.A. programs for more emphasis on skills and a sense of purpose and identity,” said David A. Garvin, a professor of business administration and one of the project’s authors.

"Indeed, students themselves may welcome an emphasis on character skills. In surveys that the Aspen Institute regularly conducts, M.B.A. candidates say they actually become less confident during their time in business school that they will be able to resolve ethical quandaries in the workplace."

A growing number of business schools are trying new approaches — and many are finding valuable lessons to draw from the economic crisis, the article states.

At the Yale School of Management, for example, the new dean, Sharon M. Oster, has called for a renewed focus on the social value of management. “Business creates value in terms of services and products,” she said. “That’s what business delivers, just like medicine delivers a healthy person.”

Professionalism is hardly a panacea, the Times article states. "No one would argue that lawyers, doctors and accountants are immune from wrongdoing or poor judgment, and they have long been taking certification exams and promising to act ethically. It is also unclear who would monitor continuing education and what kind of certification would be required."

"But surveys of business students show that they are starting to focus more on social issues and ethics, and that this could intensify talk of making managers’ obligations to society more explicit."

“The challenge for a lot of business schools is how to develop leaders and not managers,” said James Tran, a candidate for an M.B.A. and a master’s in public administration at Harvard. Many of the top schools are moving in that direction, he said, but “I don’t think they have actually figured out how to do that in the most effective way.”

Seminar on Storefront Design Provides Food for Thought

2009-03-11T13:03:00.000-07:00

The unexpected happens a lot to me. On Tuesday, I attended a business event that I was not sure would be right for me -- but it turned out to be an excellent meeting in terms of both learning something new and developing new business contacts.

The event was part of the new Sunrise Seminar Series of breakfast meetings presented by the Yonkers (NY) Downtown/Waterfront Business Improvement District (Yonkers Downtown BID). The topic was "Curb Appeal," and the broad subject was how to add excitement to store window displays to bring more traffic into the store.

Now, this is not my area of expertise, nor my usual area of interest. But at the suggestion of one of my business associates, I attended and was very pleasantly surprised.

Two experts in the field of storefront design provided guidelines for good design that can help to draw customers into a store, and illustrated these guidelines by showing pictures of both well-designed and poorly-designed storefronts.

The speakers were Maureen Farrell, project manager and treasurer of the New York City Chapter of the Retail Design Institute; and Nicole Innis, of Yonkers-based Innis Designs, which specializes in designing eco-friendly interiors and spaces for retailers, other businesses and residences.

Both presentations were much more interesting than I had expected. Ms. Innis provided 10 tips for better storefront design, while the focal point of Ms. Farrell's presentation were pictures of dozens of storefronts that illustrated both the do's and don't's of designing appealing window displays.

The presentations made me think about things that I normally do not -- e.g., how the design of a business location impacts our desire to enter the premises and make a purchase.

An added plus for me was the opportunity to network with Westchester-based businesspeople, in a congenial atmosphere.

Finally, the venue for the seminar -- the Larkin Library in downtown Yonkers -- is an excellent location. The library offers a scenic view of the Hudson River, adding to the enjoyment of the meeting.

The bottom line for me: Take a chance on a meeting or event -- even if it doesn't seem right up your alley. You may be pleasantly surprised.