A VC in Vacationland

A Secondary Market for Private Securities

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One of the big problems with being an entrepreneur (or venture guy) in today's investment marketplace is the minimal equity exit options for private companies. You can do an IPO (good luck), sell your stock to an insider or another investor (if you can find one), or get acquired to monetize your equity.  That's about it for the moment.  With currently a six to nine year wait for either an IPO or an acquisition to happen, according to recent data from the National Venture Capital Association, one has to wait a long time for entrepreneurial rewards.

Enter Second Market. They recently announced that they would be launching a marketplace for private company equity, in addition to their markets in auction-rate securities, mortgaged backed securities, limited partner shares, among other "troubled" assets. I am sure that private company equity does not belong in the same world as these dogs, but any market in a storm.  The site identifies a number of interesting private companies, such as Twitter, Facebook, eHarmony and Etsy where trades may be offered in the future.

As anyone who has taken Econ 101 knows, a more efficient market produces better prices.  The Second Market program will bring together buyers and sellers, track trades and prices and provide some sense of fairness in selling illiquid shares.  Problems will emerge, however, as companies may gain undesirable shareholders, employees will have less incentive to work for success if they sell out and founders may bail early.  All are already problems later if a company goes public or gets acquired, but now they may happen earlier.

Before you get all excited, my gut tells me that this market will be limited initially to the "best of the best" private companies, such as those listed above. Over time, as investors and entrepreneurs get familiar with how the second market will work, opportunities may emerge for other private companies to "make the short list". Other start ups are working to create similar secondary equity markets, probably with a variety of market-clearing technologies, including bringing in foreign investors.

Web-Enabled Marketing, Sales & Training

I often get asked which providers my companies use for their web-enabled selling, marketing, demos, training, etc. with customers or prospects.  Here's the short list of the ones we have found to be the best:

• Small Session Desktop Sharing--want to do one click, screen sharing within up to 100 people? Inexpensively and easy to use?  Consider Glance when you want to do a demo for the global IT team evaluating your software.  Besides being quick to set up and prepare invitations, Glance has the best latency of many sites we have tried in the past, especially when participants are in many countries. Plus free phone conferencing with each account. Much faster and easier than competitors for smaller, uncomplicated conferences.
• Larger Session Meeting/Webinars--Cisco's Webex ,while expensive, is still the best way to host a first-class meeting, training session or webinar with all the bells and whistles--moderators, questions, wikis, discussions, PowerPoint sharing, demos, videos, video conferencing, among other options are all available. A poor cousin, Go To Meeting , does many of the the Webex basics, at a lower cost. It works just fine for a straightforward PowerPoint and voice session.

Please avoid using companies like free conference call.com . These "free" services drive me nuts as they have major talk over/latency problems during calls.  When a prospective entrepreneur calls me to do a pitch using one of these services, I politely offer my own services, either Verizon or Ready Conference.

Do not skimp on purchasing quality communication services to call/interact with your customers or prospects.  Often, you have only one chance to make a good impression.  Spend a few bucks to do it right.

Stress Reliever!

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We can all use relief from stress, especially in the current economic environment.  Acupressure is a quick tension reliever, according to researchers at Hong Kong Polytechnic University, who found it can reduce stress by up to 39%.

For fast relief from tension, massage your hoku(the fleshy part between your thumb and index finger) with your opposite thumb and index finger for 20 to 30 seconds.  This is the universal pressure point for easing upper body tension.  It really works....

Marketing & Sales Strategy: Jigsaw

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Jigsaw Data Corporation has a developed a unique company contact database offering, one that is continuously updated and enhanced by their current customer base.   Jigsaw grows their product offering by sharing and trading their existing records for client and potential client contact databases.  In early 2004, Jigsaw started with less than 100,000 names and today has grown to over 11 million contacts.  With over 700,000 members, an average of 20 names per company, Jigsaw projects global contacts (mostly US based) will exceed 20 million by 2010.

Jigsaw is a contract database; not a complete corporate database.  The Jigsaw data is useful for sales lead development, direct marketing mailings, recruiting, credit/finance, among other applications.  The Jigsaw advantage is driven by the members that join and trade business contacts. The Wikipedia model ensures a continuously expanding and accurate listing database.  A number of my portfolio software company are using Jigsaw daily and find it  a viable “reach” tool for identifying high-end and mid-market company decision makers.  Jigsaw claims that their contact detail is close to 90% accurate; an exceptionally high rate for a notoriously unreliable industry space. 

Jigsaw has one of the largest contact databases in the business, including:

 ·       Email coverage at 100% (most B2B files range between 20-40%)

·        Direct (50%) phone number listings; rest main corporate number

·        100%  actual postal addresses, not only the main corporate address

·        Actual position titles with function code classification

 

Jigsaw also sells lists to corporations for direct marketing programs, will take an existing data base, cleanse it and return it to the client, and append the old database with new names, phone numbers, addresses, locations, and email addresses.  They will also swap. For example, a customer who offers 100 viable contacts will receive in return at least 100 new Jigsaw-cleansed names.  The customer can then cleanse the received names, re-submit and start the “swapping” process all over again; driving perpetual growth and accuracy.  This is an invaluable tool, seldom found in any contact database.  Jigsaw also offers a fee-based service to cleanse client’s database on a quarterly basis. 

For a start-up hungry to grow their contact database and willing to contribute contacts in return for new ones, Jigsaw is an excellent tool to help a cash-strapped entrepreneur gain potential new customer contacts.

 

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Marketing & Sales Innovators (Update): Zoom Systems

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According to VentureBeat, Zoom Systems, the San Francisco-based provider of luxury-good vending machines, just brought in $20 million in fifth-round funding to increase its market presence in the U.S. and Japan. You may have already spotted its machines (termed “automated retail stores”) in airports and shopping malls. By and large, they sell major electronics from companies like Apple and Sony, and other swanky tech goods like Rosetta Stone language-learning software.

We originally reviewed Zoom Systems two years ago. They have come a long way in a tough economic environment.  The concept started as a vehicle for marketing Motorola products in 2006 — only 20 machines were supposed to be placed throughout the U.S. Today, more than 800 machines have been installed, bringing in about $40,000 per square foot of space they occupy per year in airports alone. While Zoom doesn’t actually make the machines itself (it outsources manufacturing to a partner), it says it takes care of installation, maintenance, security and supply monitoring.

With just 100 employees, the company claims the recent round will fund the rollout of 1,000 more machines in the U.S. and Japan by the end of the year. The money came from existing backers Sierra Ventures, Goldman Sachs Group, NeoCarta Ventures, Motorola Ventures and Starfish Ventures.

For now, it appears to be the only vending machine provider of its kind. Their minimal supply chain and sales cost per product will continue drive success for Zoom, even in a difficult economy.