I'm There For You, Baby

Social change, not profit, is winning innovator’s aim

Neil Senturia — Tue, 15 May 2012 15:30:10 +0000

May 15, 2012 from UT-San Diego

by Neil Senturia and Barbara Bry

For a certain breed of entrepreneur, the next big thing is not always about money. It is about applying their skills to find sustainable and innovative ways to change the world and make it better, and the University of San Diego is taking a lead role in this important trend with its recent Social Innovation Challenge competition.

This year’s winner, Eat Better Today, is a mobile food-catering truck that will provide healthy food to homeless individuals. Eat Better Today’s founder Teresa L. Smith, who is studying for a master of arts degree in nonprofit leadership, beat out 51 other teams for the $10,000 first-prize award. The service will begin in late May, and the homeless will be able to pay with Cal-Fresh benefits (formerly known as food stamps).

Before starting the masters’ program at USD, Smith was already an entrepreneur in the nonprofit sector. A trained social worker who has long been involved with homeless issues, in 2009 she started Dreams for Change to “utilize innovative techniques and methods to meet the basic needs” of the homeless. The organization’s first initiative was the Safe Parking Program that provides a supportive environment for homeless who live in their cars. Next came food.

“I got the idea for Eat Better Today a little over a year ago when I was talking to some of the participants in the Safe Parking Program. They talked a lot about the food issue — waiting in long lines, getting food that wasn’t great or healthy, and of course they don’t have a place to prepare their own meals,” said Smith.

Just like any entrepreneur, Smith listened to her customers. This is a core principle in the “lean startup” model. The customer will tell you what business you should be in. Listen to them.

Keeping costs down was important, so Smith worked with the county of San Diego to be able to accept Cal-Fresh benefits and to enroll people seamlessly at the truck. The county has provided funding for a worker to handle the applications. The Uptown Rotary Club and the Lions Club have also provided capital. In essence, she built a socially focused support network where each element provided a small piece of the puzzle, and no one organization bore the whole burden.

In addition, Smith said, “We will be using a lot of volunteers to make the food and work on the truck, and we are asking the homeless to volunteer so they learn about how to run a small business. We want to empower them.” The group has purchased a used food truck for $26,000, and Smith estimates that the annual cost of operating one truck is $100,000. Her goal is make each truck self-sustaining through the revenues from Cal-Fresh.

Smith credits the USD master’s program with being an important source of inspiration. “I’ve learned that you have to be willing to take risks. People told me there is no way you can pull this off. It’s too far out there. I learned that when you’re pushing the envelope of change, this is a standard response. I’ve also learned that failure is all right and that you have to be able to move to the next stage,” she said.

“Social innovation requires energy, creativity and enthusiasm, having your feet on the ground and a willingness to do the hard work,” said Patricia Marquez, director of USD’s Center for Peace and Commerce, which is collaboration between the School of Business Administration and the Institute for Peace and Justice.

Note: While USD celebrated social innovation, the annual University of California San Diego’s Jacobs School of Engineering Research Expo featured “posters” by 230 graduate students, many of whom also have entrepreneurial dreams. The winner — Carolyn Schutt, a Ph.D. student in bioengineering — is developing a more sensitive imaging technique that can hopefully improve how we diagnose breast cancer. Schutt also finds time to participate in the community. She was the lead organizer for the Jacobs School exhibit at the recent San Diego Festival of Science and Engineering for K-12 students.

Our city is alive with the sound of innovation.

Rule No. 52

If you can do well at the same time you do good — that is the next big thing.

Wise entrepreneurs treat lost causes as pivot points

Neil Senturia — Tue, 08 May 2012 16:47:30 +0000

Tuesday, May 8, 2012 in U-T San Diego

Pivot, or pull the plug. Entrepreneurship is often defined by young men and women who are willing to demonstrate discipline, courage, passion, fortitude, the relentless pursuit of success and the fierce determination never to give up so as not to be blotted with the stain and shame of failure.

The startup model is often characterized by technology solutions in search of a problem. And thus is born the infamous pivot. What used to simply be called “We are clearly headed down the wrong road, with no revenue and no customers, so we better change course and do something else before we go broke” is now called elegantly — to pivot.

And one of the most successful pivots in the last decade belongs to Instagram, a 20-person company recently sold to Facebook for $1 billion (yes, with a “B”). But Instagram started as a “check-in” site called Burbn that enabled people to leave messages via the mobile phone. That concept got very little traction, so the team developed a mobile app that allowed people to take photos, alter them visually (make them appear “old”) and share them. It took off and had 27 million users as of last month. Voilà, Mr. Mark Zuckerberg came calling, and the rest is history.

The statistics favor pivoting. Startups that change products between one and three times raise more venture money than companies who don’t, according to a 13,000-company survey by Startup Genome Compass. An often-repeated Silicon Valley mantra is “fail fast.”

But constant pivoting can also be deep denial. Sometimes the right decision is just to pull the plug. I have a very good friend who came to see me recently, and after much discussion, my advice was “Sell it for whatever you can, get your life back, and then go do something else. You are pushing on a rope, and it is wrapped around your neck. You need to cut the rope or it will strangle you.”

What followed was a lengthy and painful discussion. The topic was not the product, the marketing, the investors or the company. It was about the personal feelings of shame, failure, letting people down, followed by maybe, just maybe, if we tried to raise one more round, we could pull a rabbit out of the hat.

Let me be very clear. I have stood in that young man’s shoes. I know that feeling of humiliation and disappointment. When you are the CEO, there is some unspoken tribal belief that you are also Houdini and can escape from any straitjacket or lock and chain. And the truth is, sometimes you can’t. This is tough stuff, because every entrepreneur knows in his head that he could fail, but every one of us also believes in our heart that we won’t.

The pivot is important. It gives a company a couple of chances. But running a company is not magic. We are not Penn and Teller; there are no secret trap doors. And sometimes, it is better to accept the inevitability of defeat, salvage what you can and save your soul than irrationally run the company into the ground.

And the hardest question to answer is “When?” When is it time to pull the plug, rather than double down? There is no simple iPhone pop-up that says, “Now, pal.” The elements that lead to that decision are enormously complex, and we will explore some of those in a future column. But one of them is not, “We have run out of money.” If that is the case, then you have missed the signpost up ahead.

Rule No. 109

“To pivot, perchance to dream.”

— Hamlet, 2012

Neil Senturia and Barbara Bry, serial entrepreneurs who invest in early-stage technology companies, write this weekly column about entrepreneurship in San Diego. Please email ideas to Barbara at bbry@blackbirdv.com

Crowd funding lets little guys in on investment act

Neil Senturia — Tue, 01 May 2012 22:35:57 +0000

(From U-T San Diego, May 1, 2012)

Got a half-baked idea? Need 20 grand to get launched? Are your old man and Uncle Harry broke and on the skids? Who do you call? The rest of the world!

Welcome to “crowd funding,” where you can get 5,000 people who don’t know you from Adam, are not sophisticated investors, love your idea and want to support what you are doing, have a limited expectation of ever making any real money on their investment, and hope you will at least send them one of whatever you are making. This is the new paradigm for entrepreneurship 2.0.

In early April, President Barack Obama signed the JOBS Act that is designed to loosen the requirements for companies looking to raise capital. Strict rules from the Securities and Exchange Commission and the magical wall erected by the big, bad (and up to now, monopolistic) investment banks that kept small companies from accessing the public markets have been shredded.

Audited financials, liquidation preferences, are you kidding me? Welcome to the new wild, wild west where Kickstarter, Indiegogo and CircleUp are just a few of the clearing houses and facilitators designed to connect the “I want to get in on this technology boom” small investor to the myriad capital-starved companies that offer up the promise of riches — or at least a shot at being part of the next big thing.

You know crowd funding works when you see that it is being used in multiple venues, not just technology. Hello, Broadway. The revival of “Godspell” on the Great White Way has 750 investors, some of whom put in no more than $1,000 and wouldn’t know a playbill from an electric bill. But like Max Bialystock, they are now Broadway producers. Crowd funding for commercial theater.

It tells you that the world of capital is going to be democratized in a way that is radical, and the final outcome of which is unknown. If you want to lose your shirt, you no longer have to be an “accredited investor” — a term of art that required you to have a certain amount of net worth and income before you leapt off the deep end and invested in Amalgamated Widget. Now anybody who can’t afford a ticket to Vegas can play the slots (we mean invest) on whatever their little heart desires. Online, over the Internet, unregulated.

And what is fascinating is this new breed of investor knows going in that they will probably not make any money. And they still want to do it. In a New York Times article, Sue O’Connor, a human resources director in Chicago and an investor in “Godspell,” says, “I hope I will see a return, but I feel it is probably in my best interest to assume I won’t.”

The Pebble E-Ink smart watch, a device that syncs to your iPhone, showing text messages and telling time, raised $4 million in five days on Kickstarter. The investors get a watch — no equity.

The world has changed. Yes, there are still some rules and regulations, but fundamentally, this thing called crowd sourcing, crowd funding, the wisdom of crowds, is going to level the playing field in a critical way. What it really does is call out to the entrepreneur to bring it. The best ideas have always found venture money, and now the vote on what those best ideas are has been opened up to the world. Show me what you got.

Casting for success is art, like casting for steelhead

Neil Senturia — Wed, 25 Apr 2012 22:05:09 +0000

(This column first ran on UT San Diego on April 24, 2012)

Oncorhynchus mykiss. Or more commonly known as the rainbow trout. Its close cousin, the steelhead, is a sea-run rainbow trout (anadromous)

Neil Senturia

that returns to the fresh water river, where it was first born, to spawn after two to three years at sea.

I recently spent three days on the Nehalem River outside Tillamook, Ore., chasing the steelhead, and the experience provided some echoes to the entrepreneurial challenge we all face.

First, there is a reason they call it fishing, instead of catching. Fly-fishing for steelhead is not about catching; it is about the art and beauty of the cast. The catching part is to a large extent luck.

We used a spey rod. It was 13 feet long, and the cast was supposed to launch the fly about 90 feet across the river. It is a two-handed cast, with its own ballet twist and turn ritual. There is a delicate rhythm; apply too much power too quickly and the fly falls in a ball tangled in front of you or hooks you in the ear.

Well, creating a product is like that cast. It is an art; it has its own elegance. Find the graceful transfer of effort to create power in your company. Form follows function. Delight in the presentation, in the sheer joy of being able to cast the fly a very long way with a beautiful, final finish. There is serenity and gratification in creating a great product — just like a great cast. When it all works and the fly lands far out on the river, there is a yelp of joy — unbridled enthusiasm simply in the doing, in the being able to make something that meets the test, in making something that someone wants to use or touch or buy.

Raising money, on the other hand, is like catching. Presentation of the fly matters greatly. However, casting where there are no fish is an exercise in futility, except, you can’t know if there are no fish. You have to assume that every cast is right on the nose, with a pink flashabou pattern that they cannot resist. But then there is no take. Like pitching your PowerPoint to the angels who don’t fund or the venture capitalists who say they have money, but really don’t. They just like to look at the fly. That way they can collect their fees.

So you have to love the pitch, you have to love the process, you have to love your team, your company and your product, because even making 700 casts (as I did on the trip) — many of them beautiful— does not guarantee a bite.

Finally, one member of our group caught a very nice steelhead from a terrible, tangled cast. Luck and timing. It doesn’t seem fair. And isn’t that the whole story of the startup. You fail many more times than you succeed, and the favorable outcome is often a fortuitous pivot from a failed idea. It can make you crazy. Why isn’t there a clear, connected, linear correlation between effort, conception, execution, production, acceptance and catching? There isn’t, and after all these years at the game, I have finally come to believe that is just the way it ought to be.

It’s not a puzzle you can solve. That’s why you keep coming back. Just like the steelhead that keeps coming back up the river, against the current, so he can spawn and go back into the ocean, and then a few years later, come back up the river to spawn again — and again.

Be the fish.

That’s fly-fishing for entrepreneurs.

Rule No. 208

Never, ever underestimate the power of good fortune.

Rule No. 213

Never, ever underestimate the power of time and timing.

Source: From Neil Senturia’s book “I’m There for You, Baby: The Entrepreneur’s Guide to the Galaxy,” which has more than 200 rules for entrepreneurs

Prolific invenor unafraid to fail or be challenged

Neil Senturia — Tue, 17 Apr 2012 15:55:39 +0000

Segway, the self-balancing human transporter; iBOT, the all terrain electric wheelchair; Slingshot, an engine system for simultaneously

Dean Kamen

generating power and purifying water. What do they all have in common? All were invented by the legendary and prolific Dean Kamen.

What Kamen has accomplished is unbelievable. He holds more than 440 U.S. and foreign patents. While still in college, he invented the first wearable drug infusion pump. But the accomplishment for which he is most proud is starting FIRST — For Inspiration and Recognition of Science and Technology— which is best known for running an annual robotics competition that has involved more than 1 million students from more than 50 countries.

Kamen was in San Diego recently to accept the Scientist of the Year award from the San Diego Chapter of ARCS — Achievement Rewards for College Scientists. His message at the event is important for all entrepreneurs: Don’t be afraid to fail, and focus on solving big problems.

“I only work on projects that I believe will improve life for a bunch of people. I get up every morning, work hard and fail a lot,” said Kamen, a thin, wiry 61-year-old who was wearing his trademark jeans and denim shirt. In his honor, many of the dinner guests were dressed in similar attire.

Read the rest at UT San Diego.

Do you want to encourage innovation? Try offering a prize.

Neil Senturia — Sat, 14 Apr 2012 01:48:40 +0000

In the midst of March Madness, another sort of contest was taking place on the San Diego State University campus as five technically focused

Irwin Zahn

teams battled in the first Zahn Incubator Prize competition.

The prize is named after entrepreneur Irwin Zahn, who sold his company — Autosplice — last August.

“In my company, I solved problems by setting up design challenges — competitions which used internal teams that then created solutions — and were rewarded,” said Zahn, who contributed $700,000 to launch the Zahn Prize and the Zahn Center, an on-campus incubator that provides mentoring, prototype assistance and coaching to faculty and students who are developing technical products or services.

Rest the rest at UT San Diego.

Brits’ philanthropy model could pay dividends for San Diego

Neil Senturia — Tue, 03 Apr 2012 17:18:44 +0000

Barbara and I have just returned from Israel, and while I am there for you, Bibi, it is true that we were not asked to assist in the peace talks.

Sir Ronald Cohen

We were there as part of a conference on philanthropy, and we would like to share one idea suggested by Sir Ronald Cohen, known as the father of European venture capital, who has turned his entrepreneurial skills to the social enterprise sector.

In 2007, he co-founded Social Finance U.K., a British organization that has developed a financial instrument that pays investors a return based on measured improvement in a particular social issue. What is extraordinary is how it is constructed and how it calculates its return on investment.

Read the rest on UT San Diego.

Don’t be caught off guard by innovation

Neil Senturia — Wed, 28 Mar 2012 15:42:30 +0000

In 1996, Clay Christensen, a professor at Harvard Business School, wrote a book called “The Innovator’s Dilemma.” The book’s theme is that

Clay Christensen

disruptive technologies are innovations that upset “the existing order of things” and that “incumbents generally do not react to disruptive technologies until it is too late.”

Well, say hello to the Encyclopaedia Britannica. You know, those 20 volumes, bound in leather that sat on the shelf in the family room, and you (if you were born in the 1940s or 1950s) would go there to get the answer to all things — all things. You did your homework with the help of the Britannica.

Read the rest at UT San Diego.

Businesswomen share secrets of success

Neil Senturia — Wed, 28 Mar 2012 15:03:34 +0000

Passion for what they do, determination, a sense of humor and an ability to adapt to new situations were the key traits exemplified by four of

Wendy Johnson

the most successful entrepreneurs and executives in the San Diego biotechnology-pharmaceutical industry at a recent program sponsored by TiE (The Indus Entrepreneur) South Coast chapter at the La Jolla Women’s Club.

Although these four executives happened to be women, none believed their gender had hindered their rise to the top. Their inspirational stories indicate that there are diverse routes to the C-suite. Two started as research scientists, one as a sales rep for a drug company, and one was a regulator with the Food and Drug Administration. The insights they shared are relevant for all entrepreneurs.

Read the rest at UT San Diego.

MIT courses open to anyone who wants to try

Neil Senturia — Thu, 15 Mar 2012 22:34:14 +0000

The Massachusetts Institute of Technology may have its physical campus in Boston, but its reach and impact are global.

In San Diego, for example, several leading entrepreneurs have earned degrees from MIT. These include the co-founders of Qualcomm — Irwin Mark Jacobs and Andrew Viterbi; Peter Farrell, founder of ResMed; Farrell’s son Michael, a senior executive at ResMed; and venture capitalist Kevin Kinsella. In addition, hundreds more work in key positions in our technology and life sciences companies and research institutes.

But that is still just the United States. MIT now offers its classes on a global basis to anyone and everyone in any country in the world for free. Welcome to MITOpenCourseWare.

Read the rest at UT SanDiego.