BizzBangBuzz by deal attorney & business lawyer, Anthony Cerminaro

12/01/2005

Valuing Preferred Stock

"This paper [from Salman Farmanfarmaian] outlines a methodology for valuing preferred stock and other complex financial instruments used primarily in ventre capital. Although venture capitalists appear to have a solid understanding of the capital structures they create, the analytical framework described here, as well as the graphical interpretations used to show the payout to stakeholders in a liquidation event, can serve in explaining some seemingly complex capital structures to management teams or stockholders who might have less sophisticated financial backgrounds."

Analyst Blogs: Good Source of Industry Trends

This post from The Entrepreneurial Mind points to Tekrati Analyst Cafe: Analyst Blogs as a rich source of technology oriented industry information, stating:

"Not only is industry data like this is critical for effective start-up planning, but also for managing the growth of a business. Business planning should be a process, not an event...[T]he market you are entering is probably under going dynamic change. This change is what in most cases creates the opportunity you are pursuing. You are entering what Peter Vaill calls permanent white water.

Your plan is full of assumptions, not just facts. Assumptions need to be tested and refined. Sometimes they need to be abandoned if proven wrong. The plan is more like a general map of a river. It shows where you will be headed, but the key to your success in navigating this river is in your ability to adjust.."

Tips for that first VC Meeting

Ed Sim offers these tips for the first VC meeting:

"1. Be flexible...
2. Have a well-honed elevator pitch...
3. The Slide Deck: make it short and sweet, 15-20 slides will do...
4. Listen and ask questions: try to get feedback about your business and the opportunity...
4. The Demo...I like them live, but...there are 20 things that can happen in a demo, 19 of which can go wrong. So be prepared and have a cached version of your service to walk through.
5. Next steps: In any meeting, never forget to ask about the next steps...

A couple of other points to add:
Pre-meeting: Research the VC...

A couple of don'ts: don't be late, don't be arrogant, and don't ask for an NDA before you start the pitch."

BlawgWorld 2006 free eBook Published

According to various studies, approximately 80,000 new blogs launch every day, including dozens of legally-oriented "blawgs." No one knows how many blawgs exist, but whatever the number, monitoring them would amount to a full-time job. For this reason, the folks at The TechnoLawyer Community have published BlawgWorld 2006, an eBook designed to take you on a journey through 51 of the most influential blawgs.

To receive your free copy of BlawgWorld 2006 visit http://www.blawgworld.com and register at no charge.

Business Help for Veterans

There are 25 million living Americans veterans - all having proudly served our country. When their tour of duty ends many dream of becoming business owners. And the US Small Business Administration can help.

In the November edition of SBA Solutions, discover what resources and finance options are available to vets. Plus, tips for anyone starting a business. Also visit the SBA's Office of Veterans Business Development that formulates, executes, and promotes policies and programs to assist veteran entrepreneurs for more about the resources and lending programs designed especially for veterans.

Hollywood Slanguage

"Dealing with Hollywood? Variety's Slanguage Dictionary can demystify the industry lingo and make it possible to translate its articles into English." Please access this IPTAblog article for a link to the Slanguage Dictionary.

How to Conduct an Employee Exit Interview

Good article from Post Money Value on the proper way for a technology company to conduct an employee exit interview. Hightlights include:

1. Do the interview yourself until you hit 100 people...
2. Say Thank You.
First words spoken at an exit interview. Thank you for working here and contributing, all of us appreciate it. And mean it. Say thank you.
3. If a re-hire, then give them a priority ?come on back? pass...
4. Free software/services/equipment for over X number of years...
5. Keep a connection...
6. Respect...
Respect will get you armies of people you aren?t paying for, perspective you probably need, and help you won?t have to ask for...Good people move on for lots of reasons and assuming bad stuff wasn?t the prime reason, it makes good sense to retain some value in that relationship."

Free Materials, Articles and Ideas from Businessballs

Businessballsis a free online self-help, and training and development resource for people and organizations, run by Alan Chapman, in Leicester, England. The site features "free materials, articles, and ideas for ethical personal and organizational development, compassionate leadership, self-help and self-fulfillment...for learning, self-help and for helping others, and for bringing more compassion and humanity to organizations and beyond."

Are Entrepreneurs Just Born That Way?

"Passion. Vision. Focus. Courage. Will. These are just a few signature traits of successful entrepreneurs. But where do these traits come from? Are they hard-wired into our DNA or acquired over time, like wrenches in a toolbox?

Thomas Harrison, a former cell biologist turned marketing guru...concurs that there are indeed born entrepreneurs, he concedes that others may have latent traits, which can be teased out and developed by using the eight techniques described in his book.

Are you in the lucky gene club? Find out by taking this entrepreneurial personality quiz [from Forbes.com] , adapted from Harrison's book. The 30 questions are geared toward measuring five broad aspects of personality: openness to experience, conscientiousness, extroversion, agreeableness and neuroticism. Just choose an answer for each question, and check the results when you're done."

Seven Deadly Founders' Sins

David Beisel compiled this list of the Seven Founding Sins ? common mistakes which often divert entrepreneurs off the path towards success.

"Inauthenticity...A founding team should not only have the relevant experience, but also immediate and authentic understanding of the end-users?/customers? need...

Sloth...founding a company is not a full-time job. It?s a full-time life...

Extravagance...employees treat resources with the same respect that those in power do.

Taciturnity...Founders need to ensure that all of the constituents who are involved in making the company a success...are regularly updated....

Greed....

Arrogance...Founders must realize the limits of their abilities and seek help/input when others on the team are more informed or in a better position to make decisions...

Indecisiveness...In the end, tough choices are indeed tough, founding entrepreneurs need to make them..."

Read more in this Genuine VC post.

A Thanksgiving Prayer

gratitude
Originally uploaded by TigerTigerTiger.

"O God, when I have food,
help me to remember the hungry;
When I have work,
help me to remember the jobless;
When I have a home,
help me to remember those who have no home at all;
When I am without pain,
help me to remember those who suffer,
And remembering,
help me to destroy my complacency;
bestir my compassion,
and be concerned enough to help;
By word and deed,
those who cry out for what we take for granted.
Amen."

by Samuel Pugh

Forecast Early and Often

"Forecasting is a pain, so we adopted the model of as 12-month rolling forecast with quarterly reforecasts (and correspondingly quarterly incentive comp structures) out of necessity. For early stage companies in emerging industries, there are simply too many moving parts in the business to provide enough visibility to produce an accurate 12-month budget. There are really four factors at work here:

- Investment...
- Competition...
- M&A...
- Recurring revenue: for any business that has a recurring revenue model, missing your numbers in a given month or quarter makes it nearly impossible to get back on track for the rest of the year since next quarter's number depend on making this quarter's numbers...."

So forecasting early and often is a great solution to this problem, and it's a particularly effective tool to keep the team motivated. Read more in this Matt Blumberg post.

How to Compute a Reasonable Royalty Rate

"Among the most frequently asked questions I get from start-up companies is: How much should I pay for licensing in a technology?...While most companies seem to use a valuation method I like to call "pulling a number out of the air," there are three primary methods used by licensing professionals to assess the value of IP assets. These are the Cost Method, Market Method and Income Method. With all of these methods, good data and data projection are critical in determining the appropriate numbers.

In the Cost Method, the value is the cost incurred in developing or purchasing the relevant technology or intellectual property....
In the Market Method, the method for determining value is to learn what comparable technologies have licensed for recently....
In the Income Method, value is the estimated revenues the technology is likely to produce (and savings it is likely to generate) and comparing this to the estimated cost to generate the same revenues or savings from other sources, that is, total annual returns. Basically, it's a method of determining what you can afford (or not afford) to pay in the end..."

Read more in this Patent Baristas post.

Executive Summaries of Management Issues

For a limited time, you can access the dozens of 10-12 page executive summaries from this TEC webpage. These roughly 10-page summaries provide excellent overviews of many pressing issues facing business owners and executives today.

Online Version of Uniform Commercial Code (UCC)

The Cornell Law School Legal Information Institute offers this online version of the Uniform Commercial Code stating:

"This on-line version of the U.C.C. does not include the official comments...For the U.C.C. as enacted by a particular state and proposed revisions to articles click here"

19 Ways to Raise Money for Your Business

To help you get your head around the different ways you can finance the growth of your business, Entrepreneur.com has compiled these mini-guides to raising money that cover basic information on the following 19 different financing sources.

1. Start-Up Financing
2. Equipment Leasing
3. Community Development Financial Institutions (CDFIs)
4. Microloans
5. Asset-Based Loans
6. Bank-Term Loans
7. SBA-Guaranteed Loans
8. Private Loan Guarantees
9. 504 Loans
10. Royalty Financing
11. Federal Government Venture Capital
12. Angel Investors
13. Electronic Matching Services
14. Business Incubators
15. 401(k) Financing
16. Direct Public Offerings
17. Reverse Merger
18. Initial Public Offering
19. Institutional Venture Capital

Kauffman eVenturing Coming Out

"After about a year in the making, our site Kauffman eVenturing is ready for its public coming out party! The site is designed for busy entrepreneurs, and is well on its way to being packed with relevant, practical and timely information on how to manage and expand your business.

We will offer original articles, written by entrepreneurs drawing on their own experiences, and an in-depth aggregation of the 'best of the best' existing articles and tools to guide you on the path to high growth. The site will cover many topics organized around six key subject areas:

Finance & Accounting
People / HR
Sales & Marketing
Products & Services
Operations
The Entrepreneur "

IRS Puts Early Stage Company Valuations in Focus

"Recent tax law changes have put increased focus on private company common stock valuations. This new law, IRC Section 409A, applies to "discounted" stock options (options having an exercise price that is less than the stock's grant date fair market value), and imposes significant penalties on noncomplying awards. This puts private companies under increased pressure to be able to support and defend their valuation determinations. Proposed regulations issued in connection with the new law set forth protective presumptions on which private companies may (and should) rely in making valuation decisions."

The Heller Ehrman Venture Law Group has prepared and assembled these private company valuation materials including a summary of principles useful in valuing early stage companies, that will be helpful to companies as they adjust to these developments.

Thanks to my colleague, James Cummins, for the link.

Yale Stuns Duke with Last Second Goal

"There are games where the final score sums up all you need to know.

And then there are games where a simple tally of goals or points is woefully inadequate, like reducing Bob Dylan's songs to notes on a sheet of paper.

The scoreboard shows that Yale upset No. 3 seed Duke 2-1 on Sunday to advance to the third round of the NCAA women's soccer tournament. But those numbers reveal little about one of the most dramatic endings in the tournament's history. Like saying the Los Angeles Dodgers beat the Oakland A's 5-4 in Game 1 of the 1988 World Series or Colorado beat Michigan 27-26 on the gridiron in 1994, the score alone deprives those were weren't on hand of an amazing story.

Anyone in attendance on Sunday won't soon forget the game's frantic final seconds, culminating in Yale senior Laurel Karnes putting the ball in the back of the Duke net with just one second remaining..."

Read more in this ESPN.com piece. Thanks to darling daughter for the link to this great article.

Issues in Technology Company Mergers & Acquisitons

This article by Jaqueline A. Daunt provides an excellent overview of the issues facing technology companies that are either looking at being aquired as an exit strategy or are seeking to grow through acquistions, stating:

"A recent survey showed that between two and five emerging technology companies (TechCos) are acquired for every one that does an initial public offering (IPO). Acquisitions can provide strategic, operating and financial benefits to both TechCo and the company acquiring it (LargeCo). A strategic acquisition can provide TechCo's shareholders with earlier liquidity than an IPO, with less risk and dilution. It also can provide TechCo with the immediate leverage of LargeCo's established manufacturing or distribution infrastructure, without the dilution, time and risk of internal development.

A strategic acquisition can provide LargeCo with the new products and technologies necessary to maintain its competitive advantage, growth rate and profitability. Ill-conceived or badly done acquisitions, however, can result in expense and disruption to both businesses, the discontinuance of good technologies and products, employee dissatisfaction and defection, and poor operating results by the combined company. By understanding the key factors that lead to a successful acquisition, TechCo and LargeCo can improve the probability of achieving one."

Break-Even Analysis

"For any new business, you should predict what gross sales volume level you will have to achieve before you reach the break-even point and then, of course, build to make a profit. For early-stage businesses, you should be able to assess your early prediction and determine how accurate they were, and monitor whether you are actually on track to make the profits you need. Even the mature business would be wise to look at their current break-even point and perhaps find ways to lower that benchmark to increase profits. "

Read more in this article from businesstown.com.

In Flanders Fields

Poppies
TigerTigerTiger.

In Flanders fields the poppies blow
Between the crosses, row on row,
That mark our place; and in the sky
The larks, still bravely singing, fly
Scarce heard amid the guns below.

We are the Dead. Short days ago
We lived, felt dawn, saw sunset glow,
Loved, and were loved, and now we lie
In Flanders fields.

Take up our quarrel with the foe:
To you from failing hands we throw
The torch; be yours to hold it high.
If ye break faith with us who die
We shall not sleep, though poppies grow
In Flanders fields.

"The poem 'In Flanders Fields' by the Canadian army physician John McCrae remains to this day one of the most memorable war poems ever written. It is a lasting legacy of the terrible battle in the Ypres salient in the spring of 1915.

The most asked question is: why poppies?

Wild poppies flower when other plants in their direct neighbourhood are dead. Their seeds can lie on the ground for years and years, but only when there are no more competing flowers or shrubs in the vicinity (for instance when someone firmly roots up the ground), these seeds will sprout.

There was enough rooted up soil on the battlefield of the Western Front; in fact the whole front consisted of churned up soil. So in May 1915, when McCrae wrote his poem, around him bloodred poppies blossomed like no one had ever seen before."

Find much more on this poem and its author here

For those who would wish to pray for veterans, here is a short prayer

Please God take care of all the Veterans.
Look out for them and watch over them.
They protected people and strived to keep them safe.
Thank you.
Amen.

10 Points on IP Portfolios

"IP has become fully integrated within the fields of art, science, commerce and law, yet understanding the overlap and implications of this integration can be challenging. As a basic primer, here are 10 things you should know about IP portfolios:

1. There Are Different Types of IP and Associated Protections...
2. IP Rights Can Overlap...
3. Just Because You Have a Patent, Doesn?t Mean You Can Practice the Invention...
4. It Can Be Expensive to Procure and Maintain IP Rights...
5. It Can Also Be Expensive to Ignore Other?s IP Rights...
6. Getting the IP Right Is Only Half of the Equation; You May Need to Enforce the Right...
7. Choosing an IP Practitioner Is a Significant Decision...
8. IP Rights Are Not a Requisite for Commercial Success, But They Can Be of Great Help...
9. Valuation of IP Rights Can Be Difficult; Know When to Hold ?Em and Know When to Fold ?Em...
10. Common Sense Is Underrated When Developing IP Portfolio Strategy..."

Read more in this Goodwin Procter article from Mondaq (free registration required).

Mind Your Own Business

Mind Your Own Business is a website "where you can find the links to turn your entrepreneurial dreams into reality. Created by the U.S. Small Business Administration and Junior Achievement, this site walks you through five easy steps of business ownership - whether you've just had a brainstorm for your first business venture or you've been at it a few years.

So go Mind Your Own Business, and find out about the challenges and rewards of being an entrepreneur."

Start Up EPA Offers Assistance to Bay Area Entrepreneurs

"East Palo Alto Micro-Business Initiative, which does business as "Start Up," is a private, nonprofit organization whose mission is to promote economic development in and around East Palo Alto, California, by providing training, capital, and other assistance to help establish and support locally-owned and operated small businesses...Start Up graduates own and operate a number of successful enterprises. Most of these start out as home-based, part-time income supplement streams but may go on to be full-time self-employment resources for the entrepreneurs and their employees."

Among the many business resources that are accessible from the website is this step by step guide to creating a business plan.

Work For Hire Agreements Prevent the Unexpected

"You should be greatly concerned about who owns the work you specially commission. For example, unless there is a special kind of agreement in place before any work begins, someone who contributes material to your new book or web site can, in theory, sell that same material elsewhere without your permission. Worse still, if there is no written agreement, and you want to adapt that material, or publish it elsewhere, you will probably need that person's permission.

Similarly, if you hire someone to illustrate one of your short stories, unless there is a written agreement that says otherwise, you may be surprised to learn that the illustrator has become your coauthor. These seemingly odd results follow from the fact that under copyright law, authors are presumed to own the copyright in the works they create. The best way to avoid these problems is by having a written agreement in place before any work begins."

Read more in this article by Attorney Lloyd J. Jassin.

Take Me to Your Google

"Paul Graham, an essayist and programming language designer, has an interesting essay about the 'venture capital squeeze.'

To summarize, he says VCs have found themselves in competition with acquirers, with Google first on the list. Companies like Google have realized they can acquire a company early, and bypass venture capitalists. Graham proposes VCs, in response, should let entrepreneurs partially 'cash out' early, so that the entrepreneur's interests are aligned with the long-term huge results that VCs crave. "

Read more in this SiliconBeat summary article or read the Paul Graham essay The Venture Capital Squeeze.

The Deming Plan-Do-Check-Act Cycle

"W. Edwards Deming in the 1950's proposed that business processes should be analyzed and measured to identify sources of variations that cause products to deviate from customer requirements. He recommended that business processes be placed in a continuous feedback loop so that managers can identify and change the parts of the process that need improvements. As a teacher, Deming created a (rather oversimplified) diagram to illustrate this continuous process, commonly known as the PDCA cycle for Plan, Do, Check, Act*:

PLAN: Design or revise business process components to improve results
DO: Implement the plan and measure its performance
CHECK: Assess the measurements and report the results to decision makers
ACT: Decide on changes needed to improve the process "

Read more in this balanced scorecard article.

Startup Resources

This list of articles and links from MIT Professor Hadzima is worth exploring for useful information about organizing and operating an entrepreneurial enterprise.

A Technology Entrepreneur Guidebook

Reprinted below are the major topics covered in the Technology Entrepreneur's Guidebook (pdf). I draw your attention in particular to the "Accounting Policies" and "Legal Issues" sections that provide good overviews of basic issues.

Entrepreneurship
A Sensible Approach to Writing a Good Business Plan
Raising Venture Capital
Accounting Policies and Procedures for Early Stage Companies
Legal Issues for Early Stage Entrepreneurs
Managing Explosive Growth in Technology Companies
Choosing an Exit Strategy

If You Have Died, Call....

Did I hear this correctly? During last night's football game, I swear I heard a lawyer advertisement seeking potential plaintiffs for pain patches gone wrong state,
"If you have suffered serious injury or death, please call...."

Won't this be difficult for the deceased to do?

Let Your Passion Lead the Way

Some interesting observations from The Lazy Way to Success:

"When you start a business, what must lead the way should be your own interest in or love for whatever it is you want to do. Loving what you do miraculously attracts all the necessary resources, people and opportunities....Your passion doesn’t have to be about any particular product or service. For me, my passion is the process – building teams, collaborating with others, wrestling with creative challenges, supplying customers with value, entertaining paradigm-shifting ideas, dreaming of the potential for fast growth, and being socially responsible to all the stakeholders, not to mention Mother Earth. I am passionate about those things, so if all those elements are present, then it doesn’t make a lick of difference if the end-product is ice cream or telecommunications...or whatever."

Deal of Lifetime

The purchase of a residence may be the single largest transaction in which most individuals will ever be involved. For an entrepreneur or small business owner a similar statement can be made about the buying or selling of a business. In short, it is often the deal of a lifetime.

Legal considerations affect even the most basic aspects of such a transaction. For example, the risk of assuming unwanted environmental or employee benefits liabilities may rule out a particular structure for a transaction or prevent the transaction from going forward at all. Consultations between client and counsel at an early planning stage are essential to (1) close the deal in a timely manner, (2) ensure a smooth post-closing transition, (3) avoid surprises about the value of the business, and (4) avoid the assumption of unwanted or unknown liabilities. Read more....

[I am posting a link to an earlier article I wrote to demonstrate a workaround to the Blogger "read more" problem.]

Seven Steps to Career Growth and Excellence

"Achieving excellence in our work is an integral part of feeling genuinely satisfied in life. We want our careers or businesses to blossom, making us financially secure and content with our achievements. Here are seven stepping-stones that lead to career growth and excellence. When used as part of a total action-plan, these stepping-stones can contribute tremendously to the fulfillment that you desire.

1. Make a Commitment to Excellence...
2. Empower Yourself and Others by Continuing to Learn...
3. Multiply Your Efforts through Networking...
4. Communicate Powerfully...
5. Lead with Empathy...
6. Maintain Physical, Mental, and Spiritual Fitness...
7. Serve with Love, Faith, and Gratitude..."

Read more in this article by Steve Brunkhorst for the National Business Association

E-Signatures 101

"Federal and state e-commerce laws provide that electronic contracts and signatures cannot be denied enforceability solely because they are electronic. Electronic records must satisfy similar requirements to their written counterparts so that the enforceability of a record or signature remains valid despite its electronic form. "

For more on the basics of electronic signatures, see LeapLaw's Ledger, November 2005.

Small-Business Employment Law Guide

You may download from this NFIB website:

"A free publication from the U.S. Department of Labor [that] helps small-business employers understand their rights and responsibilities under federal employment laws. The Employment Law Guide summarizes DOL's most widely applicable laws.

The guide describes statutes and regulations administered by DOL that affect businesses and workers. Each law has it own chapter organized by the standard discussed, such as wage and hour, health and safety or retirement. Within each chapter, sections describe which employers are covered by a certain statute, the basic requirements of each statute, employee rights, opportunities for compliance assistance, sanctions or penalties for non-compliance and correspondence to other federal, state or local laws. To give users a better understanding of each law, chapters link to the statute discussed as well as to interpretive materials and other regulations.

The guide is written in plain language, not legalese. It focuses on giving employers introductory information to help them develop wage, benefit, safety and health and non-discrimination policies for their businesses. The guide gives information to businesses, particularly new businesses, about which DOL laws most likely affect them. An overview describes the most applicable laws and covers three categories: generally applicable regulations, federal contractor regulations and industry specific regulations. "

The Encyclopedia of Small Business

Check out the Encyclopedia of Small Business site that is, well, an encyclopedia of small business terminology.

What Do VCs Really Look For?

Many articles have been written about the criteria venture capitalists use in selecting companies in which to invest. This article from Entrepreneur.com is one of them that stresses the latest information received from a recent gathering and is well worth reading in its entirety. A couple of nuggets follow:

"Business Model. Will the numbers map out? In other words, once someone takes a sharp pencil and starts tracing where every revenue dollar comes from and then seriously challenges every expense it'll take to generate that revenue dollar, will you have:

-a profitable model?
-a repeatable model?
-an expandable model?
-a predictable model?
-a defensible model?"

and

"The team is still an important part of the equation, but the entrepreneur is just as important. Here's what the investors are looking for in both:

-Passion: The entrepreneur must demonstrate a contagious excitement about their vision for the company.
-Tenacity: The entrepreneur must prove they have the stamina and willpower to stay with their vision through thick and thin.
-Flexibility: The entrepreneur must be willing to reevaluate and refocus their plans when things don't work out as anticipated.
-Commitment: The entrepreneur must be willing to invest enough of their own money into this project to convince investors they're serious.
-Teamwork: The entrepreneur's team must prove they can work effectively together.
-Coachability: The entrepreneur and their team must be coachable. No team knows everything they need to know to succeed.
-Knowledge: Investors prefer to back teams that really know their market by having backgrounds that are rich and impressive in the market niche for which the company is engaged."

Dealing with Security Issues in IT Contracts

"In today's IT contracts, it is important to address security issues during the negotiation process rather than trying to sort them out later in litigation. By consulting the 10-point checklist [from DennisKennedy]...,you will have a number of ways to negotiate security protections in your IT contracts by approaching the issues in a number of different directions. You may not get all you ask for, but you should be able to get some protection or get a good sense of how comfortable you will be with a vendor who is not willing to stand behind its security efforts."

The Face of a Startup's Offices

Excellent point from this Genuine VC post:

"A startup's office directly speaks to prospective & current employees, customers, and investors. Not only does it communicate an outward and explicit message, but like a face, it provides insight into what's going on underneath the surface."

Open Source Derivative Works Can Be Scary

"Many users of open source software are frightened by the term "derivative works." They worry that they might accidentally create derivative works that will infect their own proprietary software." This is particularly true if the open source software being used or linked to is distributed under the GNU General Public License (GPL) or the Open Software License (OSL), both available at www.opensource.org/licenses. This is so because the GPL and OSL require that derivative works be offered to the public under the terms of the applicable license.

This article by Lawrence Rosen provides a good summary of the issues involved and the emerging law in this area. He suggests the following as guides in determining whether a derivative work has been created:

"Here’s how I would decide in the edge cases that I described above:

· The primary indication of whether a new program is a derivative work is whether the source code of the original program was used, modified, translated or otherwise changed in any way to create the new program. If not, then I would argue that there is not a derivative work.

· The meaning of derivative work will not be broadened to include software created by linking to library programs that were designed and intended to be used as library programs. When a company releases a scientific subroutine library, or a library of objects, for example, people who merely use the library, unmodified, perhaps without even looking at the source code, are not thereby creating derivative works of the library.

· Derivative works are not going to encompass plug-ins and device drivers that are designed to be linked from other off-the-shelf, unmodified, programs. If Linux is designed to accept separately-designed plug-in programs, you don’t create a derivative work by merely running such a program under Linux, even if you have to look at the Linux source code to learn how to do so.

· In most cases we shouldn’t care how the linkage between separate programs was technically done, unless that fact helps to determine whether the creators of the programs designed them with some apparent common understanding of what a derivative work would look like. We should consider subtle market-based factors as indicators of intent, such as whether the resulting program is being sold as an “improved” or “enhanced” version of the original, or whether the original was designed and advertised to be improvable 'like a library.'”

Create an E-Commerce Business Plan

"Many people have great ideas for online businesses, but the truth is that few people can translate those ideas into reality. It's a complex process and it takes knowledge, vision, persistence, technical skill, money, and just as much business acumen as it takes to make a bricks-and-mortar business successful. There are many pitfalls for the unwary, so it helps, before you start, to create a realistic business plan that is as complete as possible."

This article from John Bremner provides a good overview and details specific to the development of an online business. For example, he states, regarding the website aspect of the business plan:

"There are also a number of other questions you need to answer about your solution:

What will be your business domain name?
What are you going to sell?...
What information will you provide for each product? Will you show pictures? If so, how will you obtain them?
Are you going to need a transactional or a display site?
Will you have multiple departments or just one? Will it be a vortal, a portal, a shopping mall, or a single shop?
Is web-space an issue?
Will you be taking credit-card details? If so, who will be your Payment Service Provider, and what will be your security arrangements?
Will you be letting out web space on your site to others as a way of increasing revenue streams, or not?
Are you aiming for a worldwide market, or a local market?
How will you achieve search-engine registration and maintenance?
What will the site look like?...
Who is going to run, update and maintain the site?
How will you keep customer information safe? If you are not using an Applications Service Provider, what will you do about data backups, how will you provide telephone support for visitors to your website, and how will you deal with problems?
How will you keep track of stock and orders, arrange delivery, and deal with complaints, returns, refunds, out of stock items, and order tracking?
What shipping options will you offer?
Will you have a special offers area?
How can you generate additional revenue through your website? Advertising? Subscriptions?"

Dictionary for Small Businesses

This Web Site provides definitions as a ready reference to 2,500 of the most commonly used terms encountered by the start-up entrepreneur, the small business person and the student of business theory. Found via this Small Business CEO post. Thanks, Steve.

Beware of Potential Acquirers on Fishing Expeditions

"It is always nice to have a large company call you and express acquisition interest. That being said, go into the conversations with a skeptical eye and make sure you do not waste your time as these strategic discussions can quickly lead to a dead end if not managed appropriately....If you manage this process appropriately you may find yourself in a great place as many of the best acquisitions happen when companies are bought and not sold. The downside is that these discussions can suck up lots of your precious resources and be a tremendous distraction to your management team."

Read more about this process and the questions to ask of your potential acquirer in this post from Ed Sim.

Anthony needs ...

From a post by Jack Vinson comes another "do-this-instead-of-work meme" for your pleasure. This time you ask Google what you need by doing a quoted search for "yourname needs". Then list the top ten hits, possibly removing the pornographic ones. My list follows:

1. Anthony Needs Coaching In Game Of Life
2. Anthony Needs Your Feedback
3. Anthony needs touches, and to forget the past
4. Anthony needs every second to achieve some measure of atonement.
5. Anthony needs you to know that the kid isn't his.
6. Anthony needs all the help he can get.
7. Anthony needs a new team.
8. Anthony needs to know.
9. Anthony needs to go.
10. Anthony needs to film more.

Pick Partners Carefully

This excellent article from Jeff Cornwall discusses some of the issues faced by a business founder deciding whether and with whom to partner in starting a business. Some of the questions to ask before "tying the knot" include:

"- Do your share the same vision for the business?
- Do you share the same aspirations for the business? Does one want to build an empire while the other create a simple lifestyle kind of business?
- What are your work habits and work ethic? Are they compatible enough to keep the partnership feeling fair to all the partners?
- How much time off to you plan to take each day, each week, each year?
- How much money will you put into the business?
- How much do you expect to get out of it?
- Who will be the President of the company? What roles will the other friends play?
- How will decisions be made?
- What is everyone's credit rating? Can all help to guarantee a loan, if necessary?
- What if one of you gets married and the new spouse gets a job offer in another city? Would you move away?
- What are your core values and how do you want to see them play out day-to-day in the business?
- How will employees, customers, suppliers, etc. all be treated?
- What will you consider to be real success in this business?"

Small Companies Have Big Secrets

"Small companies may have a very large number of trade secrets. These trade secrets are not so well bounded and defined as patents, copyrights and trademarks, and so they tend to blend into each other, forming an interlocking mesh of information that does not easily divide into separate, countable and distinct trade secrets. Finally, trade secrets are created and destroyed rapidly in an information economy, making the management of trade secrets a dynamic process."

This article from the Trade Secret Office, Inc. provides a good overview of trade secrets concepts, a methodology for valuing them, a discussion of litigation issues and helpful recommendations for protecting trade secrets including the following:

"* An inventory of the potential trade secret assets should be conducted immediately. In practical terms, this will involve the preparation of a list of trade secrets with documentation of the dates of creation, places of storage, places of use and other key information necessary for the maintenance of these assets on an on-going basis.

* Employee, contractor, and visitor agreements should be implemented. Careful attention should be paid to both confidentiality and ownership issues, with contractual assignment clauses being implemented where necessary.

* With respect to paper documents and tangible items, procedures for locked file cabinets or other security measures should be implemented.

* Electronic security procedures should be implemented, including, at a minimum, the implementation of login protections on personal computers.

* Access to information should be on a need-to-know basis. Sign out/sign in procedures should be used. Confidential documents should be marked “confidential.” Super-confidential documents should be marked “super-confidential,” and access should be severely restricted.

* Locked bins should be used to discard confidential documents, and these bins maintained by an outside company performing onsite document destruction.

* Accounting procedures should be implemented to track the time, effort and money expended on the creation and development of trade secret assets.

* All persons should wear prominently displayed badges while on the premises. A visitor sign in/sign out badge system should be implemented.

* Manufacturing processes should be restricted from public view.

* The company handbook should devote an entire section to trade secrets. There should be ongoing employee education on the importance of identifying and documenting the existence of trade secret assets, with employee economic incentives for complying with this policy.

* The company should implement a strict procedure for trade secret exit interviews."

MIT Entrepreneurial OpenCourseWare

MIT Enterprise Forum OpenCourseWareis a free educational resource for faculty, students, and self-learners around the world. OCW supports MIT's mission to advance knowledge and education, and serve the world in the 21st century. A list of courses available includes:

"Nuts and Bolts of Business Plans
Taught during the Independent Activity Period every January by Joe Hadzima '73, the MIT Enterprise Forum, Inc.'s Chairman of the Board, this class is meant for those interested in starting their own businesses.

Law for the Entrepreneur and Manager
A basic understanding of legal issues that corporations face during their existence.

Entrepreneurial Finance
An examination of the elements of entrepreneurial finance, focusing on technology-based start-up ventures, and the early stages of company development.

Marketing Strategy
This course is aimed at helping students identify, evaluate and develop a marketing strategy that best suits the strategy of their company.

Entrepreneurial Marketing
This course clarifies key marketing concepts, methods, and strategic issues relevant for start-up and early-stage entrepreneurs.

Global Entrepreneurship Lab
G-Lab focuses on the issues and challenges facing a global start-up.

Designing and Leading the Entrepreneurial Organization
This subject is about building, running and growing an organization, including establishing a structure and culture that cultivates success.

Managing the Innovation Process
The primary goal of the course is to expose students to a variety of perspectives on innovation through different levels of analysis."

Business Plan Resources and Examples

The Small Business Development Center National Information Clearinghouse offers a goodcollection of resource links and sample business plans including several for restaurants, which is what many people think about opening when they first consider becoming entrepreneurs.

Famous Trials Website

"My vision was to create the Web’s largest collection of primary documents, images, essays, and other materials relating to famous trials from Salem to Simpson. Trials have long struck me as wonderful vehicles for exploring history and human nature. What better way to understand the 20s than reading about the Scopes, Sacco-Vanzetti, and Leopold and Loeb trials? What provides better insights into the nature of evil than reading the transcripts of the William Calley court-martial or the Nuremberg trials? Would not the Amistad, Shipp, Scottsboro Boys, Sweet, and “Mississippi Burning” trials provide an excellent launching point for a discussion of racism in America? I wanted these materials to be made readily available, in an easily digestible form, for everyone from junior high students to law professors."

So states Professor Douglas Linder of the University of Missouri - Kansas City School of Law about his Famous Trials Website. In my view, he has succeeded very well and the site is worth visiting for its fascinating and easily read subject matter -- famous trials from Socrates to Bill Clinton

Make a Charitable Microloan via Kiva

"Kiva lets you connect with and loan money to unique small businesses in the developing world.

By choosing a business on our website and then lending money online to that enterprise, you can "sponsor a business" and help the world's working poor make great strides towards economic independence. Throughout the course of the loan (usually 6-12 months), you can receive monthly email updates that let you know about the progress being made by the small business you've sponsored. These updates include reports on loan repayment progress, photos of new capital equipment, narratives on business growth and standard of living improvements, and more. As loans are repaid, you will get your original loan money back.

How does the loan process work?
By partnering with existing microfinance organizations and institutions, Kiva finds outstanding entrepreneurs who need loan funding. Our expert in-country staff works with these partner organizations to conduct due diligence on each business, and once approved, post each business' profile on our website. This is where you come in. You can choose loan money online, using your credit card or Paypal, in increments as low as $25 toward the loan needs of a business. With your participation, Kiva gives entrepreneurs access to the capital they need to lift themselves out of poverty. "

Found via this Seth Godin post.

An Executive Summary of the Executive Summary

"The Executive Summary (or Project Summary) is not only a synopsis of the most important parts of the business plan and project, but it is in fact your plan in miniature form. Brevity is the key word in presenting a summary of your business plan....The Executive Summary should be written in a clear, concise, logical manner and should be viewed as a "stand-alone" document. As such, it must accomplish the following if it is to get the reader's attention:

-Must be easy to read and understand
-Capture and hold the interest and attention of the reader
-Encourage the reader to want to read more of the actual business plan
-Highlight the positive aspects of the business, past, present and future
-Succeed in conveying the substantive nature of the rest of the plan
-Show that you have a competent and experienced management team
-Be market-driven and not product-driven
-Identify sales and distribution channels
-Show that you know and understand your competition
-Addresses future direction and strategies
-Provide historical and current financial information and future projections
-State the amount of funds required, financing structure, and repayment, period of loan, investor exit position"

Read more is this detailed summary from the Cynton Company via Mondaq (free registration required).

Fair Use of Copyrighted Materials

"What is fair use?

We would all appreciate a clear, crisp answer to that one, but far from clear and crisp, fair use is better described as a shadowy territory whose boundaries are disputed, more so now that it includes cyberspace than ever before. In a way, it's like a no-man's land. Enter at your own risk.

Why is it like this and does it have to be this way? Is there no alternative to the vagueness of the "four factor fair use analysis," to fear of lawsuits and frustration with uncertainty? Maybe it is reasonable to simply throw up our hands and say, "What's the use?" After all, many legal scholars, politicians, copyright owners and users and their lawyers agree that fair use is so hard to understand that it fails to provide effective guidance for the use of others' works today. But the fact is, we really must understand and rely on it.

So wouldn't Guidelines help? Many people who think so recently gathered in Washington to negotiate Guidelines for Educational Uses of Digital Works in a two-year-long Conference on Fair Use ("CONFU"). For many, the Guidelines that emerged satisfied the need for clarity; but for some, considerable objections remained. Some CONFU participants and their constituents complained that the Guidelines were too narrow; others that they were too broad; or unfounded in the law; or too premature; or too long; or unclear; and so on. In the minds of many, the Guidelines asked the right questions, but for some, they provided the wrong answers."

The University of Texas decided to take a different approach to guiding its component institutions and faculty, staff and students in the exercise of fair use rights. They call their approach "Rules of Thumb" for the Fair Use of Copyrighted Materials. Like the Guidelines from which they are in some cases derived, the Rules of Thumb are tailored to different uses of others' works. But unlike the Guidelines, they are short, concise, and easy to read.

How To Give A Great Presentation

What follows are nuggets gleaned from anexcellent article from To-Done that should help whether you’re speaking at a large conference, giving a small internal presentation to you coworkers or classmates or giving a sales pitch....

Think before you speak. Take pauses...
Visualize a positive outcome...
Keep text to a minimum. No more than 5 bullet points per slide...
Use pictures to get your idea across. They’re easier to remember...
Avoid complicated charts and graphs...
Think positive.
Tell stories...
Don’t read your slides. They should support what you are saying, not be what you are saying. The same goes for your notes.
Keep your intro short and strong...
Keep it slow and steady...
Don’t agonize over mistakes, and don’t say you're sorry. Keep confident and if you mess up—move on.
Pause to let strong ideas sink in...
Smile, joke and laugh if appropriate. A little humor can go a long way, but don’t over do it.
Learn from your mistakes....
End strong. Make your finale crisp, clean and powerful.
Be prepared for interruptions and questions. If you are doing well, you’ll have lots of questions."

How To Give A Great Presentation

How to Study Guide

I wish I would have known about this when I was in school:

"A very good guide on How to Study including the following sections: 1) Introduction, 2) Manage your time, 3) Take notes in class & rewrite them at home, 4) Study hard subjects first & study in a quiet place, 5) Read texts actively & slowly, before & after class, 6) Do your homework, 7) Study for exams, 8) Take Exams, 9) Do research & write essays, 10) Do I really have to do all this?..."

Via this Marcus P. Zillman post.

Presentations from Startup School 2005

For more on Startup School held at Harvard on October 15, 2005, including copies of slide shows and mp3 versions of presentations, see the Presentations (Startup School Wiki) site.

Notes from Startup School 2005

Here are a few nuggets from Robbie Allen's Startup School Notes regarding the presentation and Q&A session with Langley Steinert, Co-Founder, TripAdvisor:

"Lessons learned:

+Follow your passion...
+Do it for the right reason
Don't do it for money.
Do it because you have passion for the idea...
+Choose your Founders very carefully...
+Be very picky about your first 10 hires...
+Raise as little money as possible
+Don't get big fast – that's why most bubble companies crashed...
Chuckles when he sees press releases stating "I raised $20 million". It should have a subtitle: "I just gave up half my company."
+Explore Angel investors...
+Don't be afraid of change...
+Keep an eye on the exit signs...
Don't pass up a "reasonable" acquisition offer, might be your last..."

Entrepreneurial Fellows Center Accepting Applications

The Entrepreneurial Fellows Center of Institute For Entrepreneurial Excellence at the University of Pittsburgh's Katz School of Business is accepting applications for its 2006 program.

The Entrepreneurial Fellows Center (EFC) program, is a ten month entrepreneurial education program that begins in January and provides established business leaders with the opportunity to continue their business education, network and formulate strategic plans to enhance their company's success. Monthly half-day sessions are taught by successful, seasoned entrepreneurs and Katz Graduate School Faculty.

Ten Patent Portfolio Management Issues

'Some common issues encountered by companies in the management of the company's patent portfolio include:

1. Use preliminary and supplemental claim amendments....
2. Manage continuation or divisional patent applications and/or RCE's....
3. Partition your technology into inventions....
4. Consider the strategy or cost of pursuing improvements or extensions of your existing technology....
5. Consider low-cost procedural options....
6. Utilize appeals, teleconferences, and affidavits during prosecution....
7. Meet your duty of disclosure to the USPTO of known prior art....
8. Learn to let go when you need to and consider alternative approaches....
9. Identify licensing opportunities as well as litigation possibilities....
10. Use reissue, reexamination and interferences..."

Read more in this article by Dennis Fernandez via VC Experts.

Entrepreneurship Three Step

Reprinting this evhead post:

"Regarding Innovation 2.0 (sorta) Naveed Ahmed writes in with:

"I think to be a successful entrepreneur only 3 things matter:

1] A clear vision of where your company is going.
2] Genuine desire and passion to create amazingly great products/services.
3] Strong conviction that your product/service is going to make a positive difference in your customer's life.'

I like it."

So do I.

Value vs Price in the Sale of a Business

Rules of thumb and valuation formulas are a starting point in determining the value of a business. A standard rule of thumb is to value a business at a multiple of EBITDA (earnings before deducting interest, taxes, depreciation and amorization). The most useful formula for approximating value may be the discounted cash flow method which calculates the net present value of the future cash flows of a business based on certain assumptions.

Remember, however, that value is not the same as the price that is paid for a business. For many reasons, such as the relative bargaining positions of the parties and the skills of their negotiators, businesses are often purchased for more or less than their valuations. For instance, a business seller may be anxious to sell because of factors, such as family issues, that have nothing to do with the value of the business. Anxious sellers tend to accept prices that may be below the value of the business from an objective or market based perspective.

Nonetheless, having an accurate picture of the value of a business is essential in determining whether and how to proceed.

This post from The Entrepreneurial Mind summarizes a list from the Christman Group, LLC that equates value with price, but otherwise is instructive as to the types of factors that determine the value of a business for sale:

"Number 10: Industry Outlook
If the outlook for the industry is bright, the price goes up. Buyers look hard at the outlook for a company's gross margins, future growth projections, international economic factors, etc.

Number 9: Depth of Management and of the Sales Team
If an owner wears all of the hats, including generating most of the sales, the price will go down. A strong and experienced management team to operate the business is key value driver.

Number 8: Customer Base
If a company has limited customer concentration with no single customer representing more that 5-10% of revenues the price goes up. If the customer base is made up of “blue chip” companies, the price goes up too.

Number 7: A Good Story to Tell
Telling a company's story is critical in helping the buyer recognize the full value of a business. An extensive confidential offering memorandum that describes the business operation, the marketing and sales programs, its organizational structure, its facilities and equipment, its financial performance, and provides a financial analysis including a believable 5 year financial forecast.

Number 6: Stage of Industry Consolidation
If a company's industry is experiencing consolidating with the big companies getting bigger through acquisition, prices for smaller companies will rise.

Number 5: Company Track Record
If a company can show a track record of consistently growing profits and sales, buyers will pay more.

Number 4: Type of Business
A manufacturing company with a proprietary product will sell for more than a job-shop manufacturer. A distributor that adds value by offering installation, repair, and/or engineering/design will sell for more money than a non-value-added distributor. A service company with a special expertise will sell for more than a similar service company without this expertise.

Number 3: Revenue Size
The larger a company's revenues, generally the higher the price. A business with $25 million of annual sales will sell for more than a company with $5 million in sales.

Number 2: Market Position
A company that dominates its market or has a unique niche in the market will sell for a premium over other companies that do not dominate their markets.

Number 1: Having Multiple Buyers
When there are multiple buyers bidding on a business, the price of the business will exceed the price paid for a business that is sold without competitive bids."

Top 10 Most Practical Blogs for Entrepreneurs

I humbly report that this blog has been selected by Scott Allen, the About.com guide to entrepreneurs as one of the Top 10 Most Practical Blogs for Entrepreneurs.

What is most gratifying about this honor is the opportunity to be listed among the nine other truly great blogs that comprise his list. Thanks Scott.

Annotated Sample Venture Capital Term Sheet

From the Practising Law Institute:

"For any readers who might not know a thing about venture capital, it 'is money provided by professionals who invest alongside management in young, rapidly growing companies that have the potential to develop into significant economic contributors.' And a term sheet is more or less a letter of intent for private equity -- a non-binding summary of the principal points that will be memorialized in greater detail in a subsequent Stock Purchase Agreement...[This] sample term sheet for a Series "A" Preferred Stock Financing...'is the work product of a coalition of attorneys who specialize in venture capital financings, working under the auspices of the National Venture Capital Association.'"

Principles of Servant Leadership

TDIndustries uses Robert Greenleaf’s essay‚ The Servant as Leader‚ as a blueprint for behavior. Every TD employee completes Servant Leadership training and participates in small Servant Leadership dialogue groups. This philosophy has built an environment where employees trust leadership to listen to their thoughts and ideas. And leadership has learned to trust the judgment of the employees. The Servant Leadership philosophy suggests that every person can become a leader by first serving‚ and then through conscious choice‚ leading. Servant Leadership principles are summarized as follows:

"People can and should work together to grow a company. If an organization is to live up to its basic values and vision‚ a key ingredient will be leadership from a very large number of us.

Simply and plainly defined‚ leaders are people who have followers. They have earned recognition and respect.

Leaders are first a servant of those they lead. They are a teacher‚ a source of information and knowledge‚ and a standard setter‚ more than a giver of directions and a disciplinarian.

Leaders see things through the eyes of their followers. They put themselves in others’ shoes and help them make their dreams come true.

Leaders do not say‚ “Get going.” Instead‚ they say‚ “Let’s go!” and lead the way. They do not walk behind with a whip; they are out in front with a banner.

Leaders assume that their followers are working with them. They consider others as partners in the work and see to it that they share in the rewards. They glorify the team spirit.

Leaders are people builders. They help those under them to grow big because the leader realizes that the more big people an organization has‚ the stronger it will be.

Leaders do not hold people down… they lift them up. They reach out their hand to help their followers scale the peaks.

Leaders have faith in people. They believe in them. They have found that others rise to their high expectations.

Leaders use their heart as well as their head. After they have looked at the facts with their head‚ they let their heart take a look‚ too.

Leaders keep their eyes on high goals. They are self-starters. They create plans and set them in motion. They are persons of thought and persons of action — both dreamers and doers.

Leaders are faced with many hard decisions‚ including balancing fairness to an individual with fairness to the group. This sometimes requires ‘weeding out’ those in the group who‚ over a period of time‚ do not measure up to the group needs of dependability‚ productivity and safety.

Leaders have a sense of humor. They are not stuffed shirts. They can laugh at themselves. They have a humble spirit.

Leaders can be led. They are not interested in having their own way‚ but in finding the best way. They have open minds."

Key principles for business-driven sotware development

As a major update of IBM Rational's six best practices for software development, this paper articulates a new set of principles that characterize a mature approach to the creation, deployment, and evolution of software-intensive systems. The paper articulates a set of principles that IBM Rational believes characterize the industry's best practices in the creation, deployment, and evolution of software-intensive systems:

"Adapt the process.
Balance competing stakeholder priorities.
Collaborate across teams.
Demonstrate value iteratively.
Elevate the level of abstraction.
Focus continuously on quality."

The paper explains each of these in order, describing the patterns of behavior that best embody each principle, as well as the most recognizable "anti-patterns" that can harm software development projects.

Oregon Business Guide

The Business Referral Center of the Oregon State Department has produced the Oregon Business Guide, a consolidated source of information on starting a business in Oregon, that also is instructive of the types of issues and information needed to start a business in other jurisdictions.

Blawger Bowl Report from Dead Leaves

A few legal bloggers are participating in the second annual Blawger Bowl of fantasy football, whose defending champion is yours truly. Perhaps because of our adversarial natures, or perhaps because we believe, no doubt incorrectly, that we have better things to do, we could not agree on who would write the first report on the progress of the season. Therefore, ipso facto, ergo and brimming with res ipsa loquitor, after week six of the NFL, we have our inaugural report -- The Mid-Season Slackers' Guide to the Violence Inherent in the System that begins:

"Last year, I joined up with a number of other law bloggers for the first annual Blawger Bowl Fantasy Football Competition. It was... well, it was an experience. I've never played fantasy football before, and the immediate addiction to statistics and gaming I felt was an experience I had only felt before while handicapping horses. "

Seven Steps to Success

"Someone once said that too many people quit when they're just a step away from achieving success. Here's a plan to accomplish your goals while you work in harmony with your intuition:

1. Focus on the goal....
2. Develop a plan....Take that first step, and then take another.
3. If you get off track, be willing to change....Many times the road to sucess is found by taking a detour.
4. Cultivate the attitude of a wish fulfilled. Success is waiting for you -- feel it, see it, vividly imagine it, sense it and grasp it.
5. Don't dwell on the old. Put your mental energy and action into focusing on where you want to go.
6. Look ahead, rather than back....
7. How will you know when you're succeeding? Success isn't a destination. It's a journey. Here's a checklist:

Are you enjoying what you do?
Are your connections with friends, colleagues and family strengthened by your success?
Are you proud of your accomplishments thus far?
In the process of achieving your goals, are you developing the qualities of kindness, self-respect, courage, compassion, patience, love and hope?
Do you feel more in control of yourself and your life?
Are you able to shift negative self-talk to something more positive and useful?
Has your spiritual life been enriched through the process of achieving this goal?
Are you being of service to others?
Are you more self-confident and sure of your capabilities as the result of pursuing this dream?
Are you continuing to stretch just beyond your comfort zone?
Are you easily able to shift direction if the course you've been on isn't working?
Are you consistently listening to your inner guidance and following its wisdom?

If you answered yes to most or all of these questions, you are a success!"

Read more in this article from ThirdAge.

Open Business Models

OpenBusiness "is a platform for sharing innovative Open Business ideas - entrepreneurial ideas which are built around openness, free services and free access."

Skyline-New-York-City
Originally uploaded by TigerTigerTiger.

See this J-Walk Blog post for a link to:

"A big, and I mean really big, image of the New York City skyline. We're talking 7979 x 740 pixels.

Here's a small, scaled-down portion of it:"

Collection of Idea Generation Methods

This website lists and explains every idea generation method encountered by the author during the past 15 years.

"It is the result of extensive research; my many sources include books, management journals, websites, academics, consultants and colleagues.

The methods have been drawn not just from the worlds of creative problem solving and innovation, but also from other worlds such as organisational change, strategic planning, psychotherapy, the new sciences and the creative arts."

Everything About Management Methods

A tremendous amount of useful information is found at this site that serves as a management portal explaining 250+ management methods, models and theories on strategy, performance management, finance, valuation, change, corporate governance, communication, marketing, leadership and responsibility.

Five Ways to Accelerate Revenue Growth

"Entrepreneurs in early stage companies can spend many months, and sometimes years, developing a new product. For many, the moment when the product is finally ready to go to market fosters feelings of great accomplishment and great anxiety. Can I make my sales projections? Will the company scale? Do we have what it takes to be successful?

Ultimately, these questions boil down to one: how to accelerate revenue formation. In this article, I want to share with you five proven revenue accelerators....

1. Reduce product complexity...
2. Increase compatibility...
3. Make the people who use your product visible to other likely adopters...
4. Let people try before they buy...
5. Use Diffusion Networks to create brand preference...

By focusing on these five drivers, you can have a profound effect on the adoption curve for your product..."

Read more in this article from ElDorado Ventures.

Keep Founders Engaged as Companies Grow

Fred Wilson has an interesting post from the perspective of a VC about how to keep founders engaged in the companies they started after they step out of CEO roles. This post from Minding the Planet amplifies on Fred's post by presenting the viewpoint of the entrepreneur.

Internet Business Models

Business models have been defined and categorized in many different ways. This article by Professor Michael Rapa attempts to present a comprehensive and cogent taxonomy of business models observable on the web. He notes:

"Internet business models continue to evolve. New and interesting variations can be expected in the future.

The basic categories of business models...include:

Brokerage
Advertising
Infomediary
Merchant
Manufacturer (Direct)
Affiliate
Community
Subscription
Utility "

Build a Better Checklist

"Checklists ensure that things are done in a systematic and consistent way when time is short, the pressure is on, and we are more apt to make mistakes. They take the thinking out of routine and emergency tasks and help us accomplish what we need to do much more quickly."

To find out how to build a better checklist, see this post from Open Loops.

Beware of the Devil's Advocate

"The devil's advocate may be the biggest innovation killer in America today. What makes this negative persona so dangerous is that it is such a subtle threat. Every day, thousands of great new ideas, concepts, and plans are nipped in the bud by devil's advocates.

Why is this persona so damning? Because a devil's advocate encourages idea wreckers to assume the most negative possible perspective, one that sees only the downside, the problems, the disasters-in-waiting. Once those floodgates open, they can drown a new initiative in negativity."

So what is a body to do? Adopt one or more of the following Innovation Personas and you'll have a chance to put the devil's advocate in his place:

"1. The Anthropologist...
2. The Experimenter...
3. The Cross-Pollinator...
4. The Hurdler...
5. The Collaborator...
6. The Director...
7. The Experience Architect...
8. The Set Designer...
9. The Caregiver...
10. The Storyteller..."

Read more in The 10 Faces of Innovation from FastCompany.

Customer Lists as Trade Secrets in Pennsylvania

My colleague, Jane Lewis Volk, produced this Employment Law Update that I have reproduced below:

In a recent decision, Iron Age Corporation v. Dvorak, the Pennsylvania Superior Court analyzed Pennsylvania’s developing law of trade secrets, with particular regard to customer lists. The Court affirmed an Allegheny County Court’s denial of a request for an injunction by an employer who had a signed agreement with its employee regarding non-disclosure of information including customer lists and pricing practices. The agreement did not purport to prevent the employee from seeking employment with a competitor as do most “covenants not to compete.”

The lesson in this decision is that the most crucial aspect in the issuance of an injunction is not the presence of a confidentiality agreement, but rather, the general availability of the information and the treatment of it during the employee’s tenure. The Court recognized that customer lists can be protectible secrets and set up a checklist of sorts for employers who seek to maintain customer list confidentiality, regardless of whether a non-disclosure agreement was in place. Consider these factors:

-Do you share your customer lists with other suppliers?
-Are your customer lists widely known or readily obtainable?
-Do you obtain your customer lists through public sources such as trade shows or the internet?
-Do you coordinate with competitors regarding shared customers?

Positive answers to a number of such questions could prevent you from obtaining judicial protection of your lists even if your employees sign agreements that purport to protect them. The Court stated, “A non-disclosure covenant does not create a per se right to protection, but is merely indicative of the parties’ agreement as to the information’s confidential nature.”

In affirming the denial of injunctive relief, the Court also found significant that the ex-employee and new employer had acted above board. The employee had returned all materials and there was no evidence that he had engaged in any pre-departure raid of company information or property. Such factors can be extremely persuasive even in the presence of a restrictive agreement.

Iron Age Corporation v. Dvorzak is a reminder of the importance of not only maintaining appropriate written agreements but also of monitoring your treatment of information you wish to protect. It also reminds prospective employers that a confidentiality agreement will not necessarily prevent your new hire from pursuing his trade. We stand ready to assist you on either side of the equation, including in the development of appropriate agreements and practices to protect your business.

Gefsky and Lehman, A Professional Corporation
One PPG Place, Twenty-Third Floor, Pittsburgh, Pennsylvania 15222
Telephone: 412-391-2727; Fax: 412-391-1685 www.geflaw.com

ENTER/VOTE TODAY!

From ALM, which produces Law Technology News, Small Firm Business & Law Firm Inc., comes word of not one but TWO contests with deadlines looming. Please see this post from The Common Scold for details and forms. The post states:

"I am a very firm believer in the value of awards, both to acknowledge the hard work and leadership and innovations of our community, and then to educate our readers in our writeups about the winners.
I also feel that it's really critical for underrepresented folks who often don't get the spotlight (read: diversity) to enter these contests and get a shot at the exposure.
If you are so inspired, could you take a moment and help spread the word know that the deadlines are approaching both for our LTN Awards (Dec 15) and SFB Best Practices Awards. (Oct. 28).
The LTN vendor awards ballots are available both online, and attached to the cover of the Oct. issue (which should arrive on your desks momentarily).
The LTN Law Firm/In-house entry forms are available online, (or across the 'hall' here -- just click on the ad to my right.)
The SFB Best Practices entry form can be found here.
Remember, like the lottery, you can't win if you don't enter!!! "

Funding Stock Buy-Sell Agreements

"Within a closely held corporation, shareholders are often concerned about what might occur if one of the owners dies. Will the deceased shareholder’s family retain the economic value of the corporate interest? Can the surviving owners avoid interference from the deceased shareholder’s family? Will the survivors have the economic resources to redeem the deceased owner’s interest? Given these concerns, corporate owners are best served by entering into a buy-sell agreement while they are all alive.

Owners usually choose from two basic types of buy-sell agreements. With a cross-purchase agreement, each owner of the corporation purchases an insurance policy on the other shareholders. The purchaser is both owner and beneficiary of the policies. Upon the death of a shareholder, the other shareholders are then able to use the life insurance proceeds to purchase the deceased owner’s shares. Another commonly used type of agreement is a stock redemption agreement, in which the corporation owns policies on the lives of the shareholders. When a shareholder dies, the corporation buys the deceased shareholder’s interest in the company with the insurance proceeds."

For a good discussion of the tax implications of funding such agreements with life insurance and other issues, see this article from the New York Society of CPAs.

Thoughts and Resources on Disaster Planning and Recovery

From new dog old trick:

"A few thoughts on disaster planning and recovery for business...

1. Planning is one thing, practice is another.... Plans created in a conference room to satisfy a requirement (e.g. for when the insurance inspector asks to see your company's evacuation plan for earthquake or fire preparedness) or to qualify for funding (when a city or state has to tick a box on a FEMA form to qualify for Federal matching funds or grants - hello New Orleans) which are then never practiced (or even communicated) are useless - maybe even worse than no plan at all. If you are serious about having your facilities, your information, your staff, your customers protected and prepared for a disaster you MUST combine planning with instruction and practice....

2. Do you have an information back-up plan that has been rigorously tested - on a regular basis? Where is your off-site storage?... Is your information in multiple, widely separated physical locations? The critical backbone of so many companies today is their information - could you recover if your data were destroyed even if your physical facilities and staff were unaffected?

3. Have you done an insurance review recently?...

4. Don't rely on government - not local, not state, not federal. You - and only you - need to have planned and prepared for how to protect your business."

Read more and find links to useful information and checklists here.

How to Buy, Improve and Flip a Website

"Given the time it takes to get a new website off the ground...and the amount of work and effort it takes to create a site, produce content and build backlinks, the prospect of buying a ready established domain and website is very appealing. If you have a sound understanding of search engine optimization and the industry you work in online, you should have no problem finding under optimized websites, or perhaps fully fledged web e-commerce businesses to buy. By adding content, fixing title tags, linking structure and all the other good search engine marketing practices you can very quickly start reaping rewards. Sites with quality traffic but no monetization strategy are huge opportunities ready for you to step in, stick some advertisements up, use your AdSense optimization skills and boom, start profiting immediately. Alternatively you might look for sites that augment your existing web enterprises and purchase the targeted traffic to effectively 'buy customers'. No matter what your strategy, the web is ripe with opportunities for smart investors and you don't have to have a wallet the size of Rupert Murdoch's to start buying and profiting. "

Read more in this post from Entrepreneur's Journey found via this Small Business CEO post.

Solving Problems and Batting Practice

This post by Go Daddy founder Bob Parsons reminds me of the line in the long form of the Serenity Prayer by Rheinhold Niebuhr about accepting hardships as the pathway to peace. Parsons explains:

"Every business has problems.
Let’s be honest. There’s not a business anywhere that is without problems. Business is complicated and imperfect. Every business everywhere is staffed with imperfect human beings and exists by providing a product or service to other imperfect human beings...

What I’ve learned...
1. Our measure is taken by how we handle the difficult times. Anyone can manage their way through good times. It’s how we handle the difficult times, that all of us are sure to have, that determines how happy and/or successful we will eventually become.
2. The obstacles we all have to face – be they personal or business – do not get in the way of us living our life. The obstacles are our life.(emphasis added)

So remember, the next time bad news surfaces -- look at it as your test. You are being given a chance to determine how successful you will be. If you can lighten up and deal with whatever the problem is, you will be better in three ways:

1. You’ll have the satisfaction of handling a problem.
2. You’ll be wiser when it comes to dealing with future issues.
3. Those around you will respect and welcome your leadership....

Once you get in the habit of enjoying the process of dealing with and resolving problems, you will indeed become happier...So why not change your perspective and simply enjoy the process of dealing with them?...

A mental trick for dealing with problems.
I've noticed over the years that it's easy to hear about someone else's problems and to offer a solution. It only becomes difficult when the problem at hand is yours and not someone else's. An interesting drill to help deal with problem situations is to mentally step outside the situation. Try to think of the problem as being someone else's instead of yours. The trick here is to not worry or even think about the consequences. Instead, deal with the problem at hand and only that.

Look at each day like batting practice.
I often tell my managers to look at each day like baseball players look at batting practice. I tell them to swing at each pitch (or problem) that comes their way. Some they will knock out of the park. Others they will miss completely. And for the ones they miss -- simply swing at them again tomorrow."

Twenty Five Project Management Tips

"1. Develop a team consensus on the nature of the problem...
2. Remember and follow the mission statement...
3. Develop a project strategy that will meet all project objectives.
4. Check back periodically...
5. Determine milestones and benchmarks...
6. Get buy-in from all stakeholders...
7. Choose the right people for the project team...
8. Work as a team...
9. Be realistic...
10. Plan the project by answering questions...
11. Brainstorm solution options, then choose...
12. Negotiate for scarce resources.
13. Have a deliverable at each major project milestone...
14. Qualify estimates...
15. Don't schedule any task with a duration greater than four to six weeks...
16. Continually ask questions...
17. Avoid the temptation to perfect everything...
18. Keep float or extra time in reserve...
19. Keep critical tasks on schedule... 20. Be alert to roadblocks and be very pro-active...
21. Consider co-locating team members on critical tasks...
22. Identify team members who will champion various parts of the project...
23. Don't let project members wait until the latest possible start time to begin...
24. Remember the Triple Constraint: to complete the project at cost, on time, and in keeping with the scope set and customer expectations.
25. Do a post mortem review..."

Read more in article from the American Management Association.

Lawyers Get High Marks from Small-Business Owners -- Grudgingly

I have observed that even although many people complain about and ridicule lawyers, if you ask the same people about the lawyers they know, the answers are generally positive. Lawyers in the abstract receive low grades, but lawyers in the actual are not all that bad.

Apparently, small business owners feel the same way as demonstrated by this story from NFIB that notes:

"Ask small-business owners what they think of lawyers and odds are you'll get a negative reaction. That opinion stems partly from the filing of so many frivolous lawsuits. But as professionals, lawyers are given high marks by entrepreneurs, according to a National Federation of Independent Business Small-Business Poll released today.

Despite frequent battles with the legal profession, nearly seven in 10 small-business owners told researchers that they have trust and confidence in lawyers and their profession. However, they complain that lawyers govern every aspect of business these days."

10 Steps to Profit from a Smart Idea

IP Australia has launched a new website to help new small business operators in Australia understand the importance of protecting their intellectual property (IP). Smart Start is designed to introduce businesses to basic IP concepts for those starting or buying a business. The initiative recognizes that starting a business can be daunting, and that IP issues are often misunderstood or overlooked during this important phase. Smart Start has been structured to take into account some of the different scenarios that may face a new business in Australia, but provides case studies and useful information on what a new business should know about IP regardless of the jurisdiction in which it operates. An example is this list of:

"10 Steps to Making Money from Smart Ideas

1. Treat intellectual property as a business asset by putting a dollar value on it and look to protect it in the same way you do your tangible assets. This is important for your balance sheet if you want to attract investment to grow your business, or to find out what your business and your IP is worth if you want to sell it.

2. Understand the different types of IP and the advantages of each one. Patents protect inventions; design registration protects its look. A registered trade mark protects brand names, logos, original sounds and scents and even aspects of packaging. Or you may want to rely on rights such as copyright or trade secrets, which do not need to be registered, to protect your IP. IP Australia’s website gives you more details about your IP options at www.ipaustralia.gov.au.

3. Keep your smart idea confidential—until it’s protected. If talking to others about your idea, use a confidentiality agreement, otherwise you could risk your right to legal protection and competitive advantage. Once signed by the party, a confidentiality agreement prevents them from disclosing your ideas to others without your permission.

4. Protect your idea using the IP system. Wise innovators seek advice from an IP professional sooner rather than later.

5. Build a model of your invention, where practical, to help prospective financial backers visualise your smart idea and its market potential. However, don’t let anyone see it without having a confidentiality agreement in place first. Also, if you have an invention, be cautious not to chase money in relation to that invention before lodging an application for patent protection. A ‘commercial use’ of the invention prior to filing your patent application may destroy your chance of receiving a patent.

6. Keep track of all your development and protection costs to help you put a value on your IP and give you an idea of how profitable your venture should be to recover costs.

7. Every business needs to research its potential market and understand its likely consumers, competitors, buyers, licensees, investors, manufacturers and distributors. Doing this will help you work out if your product or service is competitive. It will also assist you to avoid infringing the IP rights of others.

8. Many inventors are great at inventing but to commercialise your idea you need a variety of business skills. Taking a course in business management or at least educating yourself via books or accessing information on the web is fundamental. Use support groups such as inventor’s associations, your local Business Enterprise Centre and government agencies. However, before taking major steps, invest in quality professional advice.

9. There are different ways to make money from IP. You can sell it, license it or make products yourself. It might be more profitable in some cases to not manufacture it yourself. If you do this, get legal advice on any contracts you intend entering into with other parties.

10. Keep an eye out for infringers. Not only do copycats erode your hard-won market share, poor quality imitations can quickly ruin your brand reputation. Seek the advice of a lawyer or patent/trade mark attorney to help you to decide on the best course of action against infringers. You may need to take legal action, but infringers can often be stopped without having to resort to legal proceedings."

Success Factors in Technology Entrepreneurship

What are the key success factors in building new high-tech companies? This transcript of a talk by John T. Preston, Associate Director, MIT Entrepreneurship Center, originally delivered in Tokyo in 1997 and updated August, 2001 and the slides from the lecture offer useful insights, stressing the importance of "attitudes, and particularly why small companies are so important in bringing new innovative ideas to market...management talent...patents...passionate behavior among employees...quality investors...the rate of infusion of money...getting high quality products to the market quickly...flexibility...where you locate your business..."

Small Business Computer Networking Solutions

"There is no one network servicing and technical support solution that fits all small companies. Some companies opt to address their networking needs with internal resources. Others look for outside help.

For the latter, network service providers have recognized the need to provide service options for smaller organizations. The key for small businesses is finding quality service while maximizing the value of technology investments...

Regardless of how a small business chooses to address its networking and computing needs, there are best practices that can be followed to ensure that the best possible choices are made. Below are seven best practices that small businesses can use for their network serving and support:

* Determine how mission-critical your technology is to your business...
* Consider leasing instead of buying your computer and network equipment...
* Look for an industry buying group or network service provider...
* Form your own network services cooperative...
* Ask your vendor what his performance guarantees are...
* Check references...
* Consider a "payback period" for training investments..."

Read more in this article from ComputerUser.com.

Freeware Business Downloads

FreeWR makes available free software downloads, including the following business related topics:

"BUSINESS & OFFICE
Accounting & Stock
Address Books
Business & Personal Finance
Calculators & Converters
Clocks & Timers
Database Management
Notes & Reminders
Organizers & Calendars
Project Management Tools"

Software Companies Need Capital Efficient Business Models

"What is a capital-efficient business model and why does it make sense? From my perspective, a capital-efficicent model is one that allows a company to use as little cash as possible to generate significant growth and become self-sustaining and profitable. Growth at all costs without profitability does not get you there and neither does profitability with no growth. Finding the right balance is important."

Read more in this BeyondVC post.

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