Tuesday, February 9, 2010

GROWCalifornia: A Jobs Initiative That Will Work!

Over the past 18 months we've heard numerous theories about how to fix the economy and create jobs: launch a public works infrastructure initiative, heal the investment banking and commercial banking world, bail out the American auto industry, give citizens small tax refunds so they'll spend a few hundred dollars more on consumer goods. Thus far, these options haven't generated much traction.

Creating jobs is not complicated. Numerous studies over the past two decades have told us who creates the meaningful jobs in this country. It isn't the government, or big, multi-national corporations. It isn't the hundreds of thousands of mom-and-pop shops that exist in every community across the country. Rather, it's a small number (3-4%) of entrepreneurial growth companies who create 70-100% of all net new jobs in the United States. Some are start-ups, others emerging growth companies, and still others existing market leaders. What is unique about entrepreneurial growth companies is their ability to innovate and to produce scalable products. Because they can tap large national or global markets, they bring new dollars into their community and state; increasing the overall economic pie rather than just redistributing it.

At Golden Capital Network (GCN), we plan to fill a leadership void and launch a jobs initiative called GROWCalifornia. We are implementing it on a region-by-region basis throughout California as we confirm local and regional partners who share our vision that entrepreneurial growth companies will create jobs. The objective of GROWCalifornia is to find the growth companies, recognize their important economic contributions, and provide them with access to the resources -- whether financial capital, industry expertise, customers and strategic partners, talent, or government programs -- they need to help them grow.

The GROWCalifornia process we have created enables us to quickly identify the companies in any community, and to capture important economic and job creation data from those companies. In January, a soft launch of GROWCalifornia tested 3 key hypotheses. First, could our system identify the growth companies. Second, would they provide us with jobs information and other relevant economic data. And, finally, would they tell us whether they have resource needs and would they like help in accessing the resources. The result was a success.

Over 60 companies signed up to participate in GROWCalifornia and provided us with information about their companies and their job projections and requirements. We learned about intriguing, and under-recognized, growth companies such as Fifth Sun, Auctiva, Mooney Farms , ProPacificFresh and Klean Kanteen. Companies that are each stamping an indelible economic signature on their community.

A majority of the companies who participated in the soft launch indicated they would be hiring new employees in the next quarter, and expected revenues to increase. We also learned that every company had at least one resource need and would welcome a warm referral by GCN to a service provider or capital source who could help them address that need. In our initial sample, over 150 referral requests were made by the companies. We are now in the process of proactively referring these companies to the initial members and sponsors of GROWCalifornia.

GCN is now ready to publicly launch GROWCalifornia to create jobs and wealth in the state by supporting the types of companies that have always been the economic "difference makers" - and the core of our mission. We will continue to do events, as bringing people together in a physical setting to network is always an important piece of the equation. But with GROWCalifornia we will assist growth companies, capital sources, service providers, and the public sector every single day of the year. A new model we are happy to bring forward.

I urge you to join GROWCalifornia and help lead the state out of our economic funk and create sustainable, meaningful jobs. The process is simple, and the value proposition is clear for each GROWCalifornia participant.

If you represent a growth company - small or large -- simply fill out our online survey twice a year. For your participation, we'll recognize your company as an elite contributor to the local and state economies, and help you get access to any key type of resource you are seeking. The data is kept strictly confidential and only presented in aggregate form. Click here to participate.

If you represent a capital resource, service provider or emerging growth company seeking to expand your visibility to other growth companies, contact me about being a Referral Network Member or GROWCalifornia sponsor. Every two weeks we'll pass on to you growth company referrals who are seeking services or capital in your area of expertise or particular sector of interest. If you become a sponsor, we'll provide heightened visibility for you to a target audience. We are limiting the number of participants per area of expertise to maximize the impact for participants.

If you represent a job creation, workforce investment, or commerce-related organization or government agency, you should consider being a local, regional or statewide partner of GROWCalifornia. If your mission is to find jobs and put people to work, we have a turnkey solution for you.

It is time for us to move beyond the rhetoric of 2009 and into action in 2010. I look forward to working with you to create jobs.

Call 530-893-8828 for more information or e-mail us at growcal@goldencapital.net

Should your growth company be a part of GROWCalifornia? Click here

Click here to see a list of Butte County companies involved


Tuesday, December 1, 2009

“Invention is science. Innovation is economics. Entrepreneurship translates one into the other."

Golden Capital Network is thankful for the support during the past 10 years from the early stage angel and venture capital investment communities, and from the startup entrepreneurs we have had the pleasure to serve. As we enter 2010, we are pleased to present a new initiative that will elevate our ability to provide value and track metrics from innovation companies well beyond the startup phase.

GROWCalifornia is a project by Golden Capital Network to provide solutions for innovative growth businesses that drive the economy, service providers that serve them, and the public sector that supports them.

The purpose of GROWCalifornia is to identify, survey, report and make service referrals to 1000 high-performing, locally-based innovation companies in the state.

GROWCalifornia provides a unique value proposition by reaching out to locally-based high-growth companies and collecting primary data about their performance, their innovations, their job creation, their business needs, and their opinions on matters of business climate, talent and capital.

GROWCalifornia surveys and reports on businesses from various industry sectors and growth stages that meet unique criteria for potential expansion and positive economic impact. These data reports are valuable economic planning and rapid response tools for economic development, workforce training, elected officials and the business community at large.

The results of the reports are released at networking and press conference events to discuss the findings, offer innovation-focused business content, and to benefit companies, service providers and officials through visibility and networking.

Individual growth company referrals identified through the survey process go directly to the GROWCalifornia partner network, whose members pay an annual membership fee for the opportunity to offer operational value to the growth companies.

The GROWCalifornia partner network delivers critical support to growth companies. Members of the network represent multiple disciplines and are screened for quality and integrity. Direct referrals are made via email with links to online profiles of the companies and the providers.

The GROWCalifornia index divides the state into 20 different regions and tracks 1000 companies that represent high likelihood to generate new products, new revenue and new high wage job opportunities. Growth business criteria include:
• Growth focused management
• Locally owned or operated headquarters or base of operations
• Current or potential national and global markets
• Scaleable products or services
• Significant process or product innovations

GROWCalifornia is the first project of its kind to recognize, quantify, report and support innovation, entrepreneurship, risk capital and regional affinity as key drivers for jobs and regional economic growth.

If you are a growth company, a service provider or a workforce/economic development official interested in joining GROWCalifornia, find out more by calling 530-893-8828.

Monday, August 3, 2009

Venture Island - North State: The Trading Post

The Venture Island - North State entrepreneur competition launched its second annual competition with a special event called "The Whole Pina Colada" on June 23. The event showcased several successful innovative product companies in the North State. The Venture Island competition process includes a series of four challenges.

The first challenge, "The Trading Post," took place July 23 at the N.T. Enloe Conference Center. In this challenge each entrepreneur was given two minutes to pitch his or her company to a panel of esteemed judges from the investor and professional business communities. At the conclusion of the event, companies were stack ranked based on their presentations and the top companies earned the night's prize and bonus points for the next round.

The top ranked pitch from "the Trading Post" was Novasyte followed by, Save Our Skins, Telecom Lifters, Cable Master, and MyIndependentContractor.com. Other contestants included BAQ Enterprises, Bumblebee Transport, Clean Traks, HFB Enterprises, MendaComp, Organic Chico Wash, SafeHealthInsurance.com, Sauer Energy, You Gaming, and Wiredcat. All contestants will go on the the next challenge, "The Snake Pit," taking place September 10 also at the N.T. Enloe Conference Center.

The “Snake Pit” program challenges contestants to justify their business opportunity, their solution, and their execution strategy. This will be a five-minute Powerpoint presentation detailing the problem to be solved, their proposed solution, market size and segmentation, customer acquisition, revenue model, and competitive advantage and defensibility. The judges will ask questions and give feedback on each presentation and, along with the audience, narrow the group of contestants down to 8 companies who move on to “Make or Break Beach”, which will focus on execution plan, financial projections, capitalization requirements, and exit strategy.

The final challenge, “Climbing Kahuna Mountain”, will pit the top three finalists presenting to an elite panel of investors at CEPCO’s annual awards banquet, October 29th at CSU-Chico’s Bell Memorial Union auditorium.

Tuesday, July 7, 2009

Pandora Won

Looks like there's finally an agreement in place to permit internet radio stations to operate profitably. The New York Times reported this morning that SoundExchange has agreed to a royalty plan. Under the new arrangement, webcasters with revenues in excess of $1.25 million will pay a per-song fee ranging over time from .08 to .14, or 25% of revenue, whichever is greater.

Our old friend Tim Westergren said "This is definitely the agreement we've been waiting for."

Thursday, July 2, 2009

Venture Island Starts With A Splash At the Whole Pina Colada

To kick off the Venture Island Northstate competition series this year, we hosted the Whole Pina Colada June 23 at Canyon Oaks Country Club in Chico, the home of many classic Golden Capital Network events over the years, (and also the site of a great many hacks on the golf course by GCN staffers).

It’s a pastoral canyon setting and perfect for this type of loose business networking affair. Unfortunately, the Canyon Oaks bar was out of Pina Colada mix, so Sierra Nevada Pale Ale was the able fallback for those wishing to imbibe. (In truth, Mai Tais are really a better rum drink anyway -- 2 parts light Bacardi, 1 part pineapple juice, 1 part orange juice, a dose of Cointreau, and a dark Myers floater on top…mmmm).

The evening began with intros from Stewart Knox, a great resource and advocate for Northstate business through his work with the esteemed Charlie Brown at NorTEC, our regional workforce investment board. Stewart and Charlie are two of the most innovative workforce guys in the business, which is interesting since they represent the most rural, underpopulated regions in the state. They are the local overseers of the Northstate WIRED program, an innovation catalyst initiative brainstormed by former U.S. Dept. of Labor assistant secretary Emily DeRocco, and apparently gaining some traction in the Obama administration.

Our own President and CEO Jon Gregory was next up with the outline of how the Venture Island competition series will work this year: Three events with business challenges and eliminations each time until we get the final three showdown.
Sandy Baruah, former assistant secretary of the U.S. Economic Development Administration (EDA), was on next. Sandy is the Honorary Co-Chair of the California Business Ascent Challenge, as well as a Senior Fellow with the U.S. Council on Competitiveness. His remarks centered on recent conversations with colleagues at the Council, and it comes as no surprise here, but according to some of the smartest economists in the world, innovation and entrepreneurship are the keys to U.S. economic recovery and competitiveness into the future. How can we invent and produce more of the products and services the world needs and wants here on our own soil?

In this vein, Sandy indicated that during a conversation with high-level officials in the Obama White House there was continued support by the new administration for the WIRED innovation initiative started by Dept. of Labor about four years ago. The WIRED initiative funds Venture Island and other GCN business catalyst activities, along with many other important innovation efforts across the country, so this was good news for us, as our current grant expires the end of this year.

The first panel of the night was the one I was most looking forward to, and I wasn’t disappointed. Titled simply, “Business Success,” this panel featured five successful North State entrepreneurs telling their stories and imparting some gems of wisdom they’ve picked up along the way. The panelists included Rob Innes, from Innespace Productions, Matthew de Bord from Origami Foods, Kendall Bennett from A Main Hobbies, Todd Radke from ATC Hardware Systems and Andy Keller from Chico Bag.

Perseverance and passion are the words that come to mind when I try to generalize the session. Specific advice I recall included:
  • Protect your intellectual property (get the international patents, too)
  • Maintain customer satisfaction (you'll have a problem someday. You'll be judged by how you handle it)
  • Be ready for challenges with manufacturing quality control (in China, esp. You'll have to take many trips to stay on top of it)
  • Focus on the right market (identify what you really do best and avoid the temptation of the latest bright, shiny object)
  • Find the right talent (there's a lot available cheap right now. Be cautious with stock incentives)
Each of these founders have experienced success and failure along the way and clearly love what they do. All of the company products were very cool. It was an inspiration, even if it did get a little long-winded.

The final session of the night had by far the most energy, and rightly so. Thirteen early stage entrepreneurs standing before the world (or at least the 200 people or so in attendance) making their two minute pitches for capital, talent, advisors or whatever it is they think they need to get to the next level. The top five are granted automatic pass through the first elimination round of Venture Island: The Trading Post.
The five winners were:
  • Jim Philips, Inovius Software, Redding
  • Jim Crummett, Telecom Lifters, Browns Valley
  • Joe Andrew, Novasyte, Chico
  • Julie Atlas, Bumblebee Transport, Paradise
  • Steve Heumann, Cable Master, Paradise
There were a couple crash and burns, but almost all the competitors in the field showed well. You could tell which had availed themselves and actually listened to the coaching advice Jon gave them the week prior. Julie Atlas from Bumblebee Transport was the standout from the winners. Not so much because of her on-call large item moving service business model (which isn’t bad) but more because of her sheer energy, perseverance and authentic passion.

My two favorite picks from the also-rans were CleanTraks and the grill lid lifter – probably because I could use both of them yesterday.

CleanTraks has a product that incorporates a doggie bag holder into a retractable leash. It includes waterless hand soap, and no, this is not for leftovers from the restaurant, but for what the dogs themselves leave behind. The company is pretty much pre-product and pre-revenue, so they’ve got a long road to travel, but CleanTraks was a neat, innovative, well presented concept, and with something like 75 million dogs in the U.S. and a corresponding $500 million annual addressable market in dog accessories, they could have something big on their hands with the right marketing.

Grill lid lifter was yet another case of an intrepid inventor solving one of American’s most vexing problems: how do you keep a beverage in one hand, a basting brush in another, and get the grill open when you need to sauce the ribs? The answer, of course, is the grill lid lifter: Step on a button with your foot and the grill lid lifts. This one’s just on paper, but Jason Darrow from Yreka has some nice business chops and I wouldn’t bet against him to make a compelling case for this baby as the competition unfolds.

Our next Venture Island event is July 23 at the Enloe Conference Center, when all the companies from the Pina Colada, plus whoever else comes on board between now and then, face-off in the Trading Post.

As always, more information about our Business Ascent challenge events, our investor judges and panelists, and the company profiles and video of the elevator pitches are available for viewing on our web portal, in this case at VentureIsland-Northstate.Com

Monday, June 22, 2009

Liquidity Launches

Photo Credit: Bill Tyne, used by Creative Commons licenseJune has seen the start of three new liquidity markets for private equity assets. The IPO market dried up very quickly after the turn-of-the-century dotcom market bust, and most exits since then have been in the form of mergers and acquisitions.

Indeed, it has been one of the biggest challenges for companies raising capital. An absence of a public market for shares has diminished the flow of private capital into technology startups. If the economy is to recover robustly, it is entrepreneurial companies, fueled by angel and venture investment, that will lead the way.

Now some of the leaders in the private equity industry are becoming
entrepreneurial themselves, creating new models for trading equity in privately-held concerns, as a mechanism for investors to take smaller positions in companies, and for employee shareholders to cash out some of their holdings.

Launched on June 1st, InsideVenture offers what it calls a "hybrid public-private offering", or HPPO (pronounced "hippo", lamentably). It works very much like a conventional IPO, with investment bank underwriters making a market, with the exception that InsideVenture member investors enjoy privileged early access to the shares before the public at large.

Our old friend Tim Draper also soft-launched XChange in early June, "The Private Stock Market. Done Right." This new firm offers four distinct service categories. XOM - Open Market is a trading platform for both new issues and aftermarket sales of privately-held shares. XPO - XChange Provate Offering is a private auction where valuations are defined and shares are allocated. XIQ - InQuest matches buyers with sellers, and XBP - Business Platform offers social networking capabilities for collaboration.

Rounding out the new private equity exchanges this month is Sharespost, "We make private equity liquid". This is a fairly straighforward trading post for buying and selling shares in private companies. It seems particularly targeting towards employees of companies that received stock in their companies as incentive compensation (and a "loyalty leash"), but that have no likely pending liquidity events. It lets founders and their early hires cash out some of their equity, and can enable a company to extend its runway before being acquired.

All three trading posts are a welcome addition to the venture ecosystem. Investors can diversify their holdings, shareholders can harvest appreciation, and companies can raise operating capital for growth.

Saturday, May 23, 2009

The Sound of Web 3.0

We've long been fans of Tim Westergren and the Music Genome Project.  In 2003, at our East Bay Venture Capital Conference, Savage Beast Technologies (as his company was called then) was honored as the best presenting company at the event.

The business model was very different then.  The inference engine SBT built around their proprietary musical attribute database was furnished to music retailers, to recommend music to their customers based on their previous purchases.  It turned out that music retailers were going to need a lot more help than that.

So Westergren and his team repurposed the code to create the streaming internet service Pandora, which has become one of the most popular "personalized radio" sites on the web.

Meanwhile, there has been a lot of discussion about the next era of internet evolution, the so-called "Web 3.0", and what it will look like.  Observers professing expertise in the matter say it will be "semantic" and "distributed" and "mobile".  Indeed, it may be inaccurate to call it "web" anything.  The term of art in play lately is "stream".  The web is a network of sites using a shared protocol, whereas the stream is a constantly updated delivery of rich media content to a variety of user devices, not just the personal computer.

One indication of this evolution is the .tel top level domain.  It's a directory where users store and publish via granted privileges their personal, professional, and social contact information.  When this service was still in beta, we were informed that it was "beyond the browser".  It is accessible by mobile devices directly, and can be utilized by location-aware services.

We submit that Pandora is an early example of this new network paradigm.  It is semantic, inferring preferences from user behavior.  It's distributed, and can be used via internet appliances such as the Vudu set-top box.  And it's mobile, with clients available for the iPhone and other hand-held devices (although, lamentably, not for the Palm Treo, alas).

One other evolutionary dimension in the social media world is the "freemium" business model, and Pandora has been a pioneer in this, as well.  Pandora is free to use.  You just go to their site, start a station by citing a few artists or records, and it plays music that you will probably like -- and may never have heard before -- based on your selections.  Because Pandora pays royalties on these plays, it stops once per hour to confirm that you are still listening.  And, as with most free content services, it comes with display advertising on the site.

But you can upgrade to a premium subscription, which eliminates the ads and the interruptions.  We've had a premium subscription for awhile now, and at $36/year (less than a dime a day), it's one of the best deals you'll find.

Well, earlier this week, Pandora took it up a notch.  The premium subscription is now branded Pandora|One, and offers several improvements, the most immediately noticeable being a higher bitrate, up to 192Kbps, which is audibly superior if you have the broadband to support it.  But the coolest thing is the new desktop client, that runs on the Adobe AIR stack, a development platform that boasts that it is also "beyond the browser".  

It's an elegant looking utility, with an instantly comprehensible interface, especially if you're already quite familiar with the browser-based version.  Like a number of other Adobe AIR-based products (Seesmic Desktop, e.g.), it combines graphic, multimedia, text, and controls in a very compact package.  From the default view, you can play or pause, adjust volume, "like" or "unlike" a selection, or call a menu for more options, including help, bookmarking, station info, and the ability to email a station to someone, or purchase the content from iTunes or Amazon.  You can also set preferences, including display, notification, and quality parameters.

It is released as version 1.0.0, bucking the trend with many services soft-launching as "Preview" or "Beta" versions, with the implication of "unexpected results".  So far, we've been using it for several hours, and it appears to be quite stable and ready-to-ship.  Kudos to Westergren and the Pandora team for this excellent new product/service bundle.  They've weathered some rough times with the copyright and royalty battles, and like many companies had to reduce their workforce to remain viable.  With this latest development, they've taken a major step in the direction of a fee-for-service revenue stream (pun intended) that is affordable and sustainable.  Seriously, a dime a day.  You just can't beat that.