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The Man Behind the 8 Ball MARCH 2014 WWW.IMPACT.FM Meet Eric Jackson, The PayPal Wars Author & Caplinked Founder Jason Nazar BE A SUPERHERO! We Expose the MASCOT SECRET GENTRIFICATION: A SOCIOCULTURAL TUG-OF-WAR P. 38 P. 24 P. 22 P. 36 User Interface & User Experience Essentials TECHNOLOGY Are You Squared Out? STARTUP & NOTICE Graphene: Strongest Known Material MARKET WATCH EXPERT VOICES The Realities Of Starting A Business

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March 2014 issue of Impact

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  • The Man Behindthe 8 Ball

    MARCH 2014WWW.IMPACT.FM

    Meet Eric Jackson, The PayPal Wars Author

    & Caplinked Founder

    Jason NazarBE A SUPERHERO!

    We Expose theMASCOT SECRET

    GENTRIFICATION: A SOCIOCULTURAL TUG-OF-WARP. 38

    P. 24

    P. 22 P. 36

    User Interface & User ExperienceEssentials

    TECHNOLOGY

    Are You Squared Out?

    STARTUP & NOTICE

    Graphene: Strongest Known Material

    MARKET WATCH

    EXPERT VOICES

    The Realities Of Starting A Business

  • 2 MARCH 2014

    18 GIANCARLO & JUSTIN: DONT ANALYZE THE ROOT, JUST TAKE THE FRUIT

    Going for it, building the perfect puzzle piece, and creating an exit strategy.

    22 BE A SUPERHERO Dont let fear paralyze your next venture.

    24 ERIC JACKSON: BEHIND THE EIGHT BALL Thinking in the present elevates Eric Jackson to a promising future.

    26 ASK DR. T27 THE TECHPRENEUR28 SEO STEVE

    30 ARE YOU SQUARED OUT? A team that lives, sweats, breathes theirstartup and never quits

    32 THREE STRIKES AND YOURE IN! David Chen overcomes challenges with his wacky eccentricity and fearless persistence.

    36 TWO WOMEN, ONE VISION Nerdy sports fans collaborate to create Mascot Secret

    38 GENTRIFICATION: A SOCIOCULTURAL TUG-OF-WAR

    Everything you thought about urban revitalization is wrong.

    ABOUTTHE COVER

    DESIGN BYALBERT ORNELAS

    THREE STRIKES AND YOURE IN!32

    6 WHAT IS A PIVOT REALLY? Change isnt always a bad thing.

    7 HIRE SLOW, FIRE FAST Waiting for Mr. or Ms. Right isnt just for romance.

    8 TAKING THE TERROR OUT OF EARLY FUNDRAISING Preparing and making pitches to angels

    10 IT TAKES A VILLAGE TO BUILD A STARTUP! You may be the captain, but the ship wont sail with just you.

    11 IT TAKES MONEY TO MAKE MONEY Its inevitable: you have to spend money to make money.

    12 WHERE DA MONEY AT? Is it better to go big or go safe in L.A.?

    13 THE REALITIES OF STARTING A BUSINESS RIGHT NOW Starting a business aint like it used to be.

    14 GRAPHENE The strongest known material to man

    16 MILTON SECURITY GROUP Taking the guesswork out of securing your network

    FOUNDERS INSIGHT

    MARKET WATCH

    EXPERT VOICES

    TECHNOLOGY

    STARTUP & NOTICE

    ON PATROL

    ERIC JACKSON:BEHIND THE EIGHT BALL

    24

    TWO WOMEN ONE VISION 36 ADVERTORIAL

  • 4 MARCH 2014

    FRONTLINE

    Carlos PeaPublisher and Chief Editor

    Were not atraditional publication.

    have to say that I hate writing. It takes me days just to get focused on a topic to write about. Having a short attention span doesnt help either. I dont even consider myself a publisher. If you ask any of the more established national publications, they can point out all of what may be wrong with ours.

    However, we dont care.See, our paper is not your traditional publication. We dont

    have over 100 people working at our offices. We dont have huge budgets to send writers across the country for an interview. We dont have a 40,000 square-foot office either. Our core staff con-sists of five people, sometimes more, but never more than 10. Our offices are small and at times we are cramped in one office and we dont care.

    We are a core group of people that want to make a positive impact on as many people as possible. This is our mantra and we live it and practice it every day. Lucky for us, technology allows us to pursue our passions in this way. With every issue we print and with every entrepreneur story we tell, more and more people are joining us to impact more people.

    This attitude is what differentiates us from a typical publi-cation. We are a publication with a purpose: to impact as many people as possible in a positive way and to provide a writer, de-signer, entrepreneur, artist and anyone who wants to

    pursue their passion a platform they can utilize to help achieve their dreams.

    DISCLAIMERIMPACT Inspired by Entrepreneurs + Innovators is published bi-monthly (6 issues per year) and distributed in part via USPS to business leaders, entrepreneurs, investor networks, VC firms, universities, throughout the community and electronically via the internet. Entire contents 2014 by IMPACT Media Publishing Inc. unless otherwise noted on specific articles. All rights reserved. The opinions expressed in the editorials are those of the writers/advertisers and do not necessarily reflect the views of Impact Media Publishing Inc. All ad/articles are submitted and paid for by advertisers. IMPACT Media Publishing Inc. is not responsible for obtaining legal permission to reprint/republish any materials contained in this magazine. All rights and permissions must be obtained by advertiser. The contents of IMPACT (the publication) do not constitute any solicitation of any financial transactions of any kind between any parties. Any financial information presented in the publication relating to the entities or individuals featured in the publication was voluntarily disclosed to IMPACT Media Publishing Inc. by the appropriate parties. IMPACT Media Publishing Inc. disclaims any responsibility for the accuracy or quality of this information and presents this information in the publication for general informative purposes only. It is the sole responsibility of any entities or individuals who have an interest in conducting financial transactions of any kind involving the entities or individuals featured in the publication to conduct independent due diligence and verify the accuracy and quality of any financial information. IMPACT Media Publishing Inc. is not responsible for typographical errors or omissions.

    PUBLISHER & CHIEF EDITORCarlos Pea

    DIRECTOR OF COMMUNICATIONSDebby Hay

    EDITORSAlejandro Grover

    Jonathan Dean

    CONTRIBUTING WRITERSMatt LeeGina Kim

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    PHOTOGRAPHERDon Haynes

    EDITORIAL ART & DESIGN

    GRAPHIC DESIGNERAlbert Ornelas

    ADVERTISING [email protected] (949) 382-1179

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  • 6 MARCH 2014

    WHAT IS A PIVOT REALLY?Change isnt always a bad thing.BY STU HEILSBERG

    Pivot. Its a word being used a lot these days. Its tied to an enormous movement and marketing machine called Lean Startup; its also sometimes associated with customer development. Both are excellent and if you are not already deeply familiar with them, I strongly recommend that you do some reading in the very near future. However, what is a pivot?

    Simply put, its a change. Its a change in what you do, how you do it, who you do it for, when you do it, how you get it to those that you are doing

    it for and/or much more. Its just a change, so why such a big deal? Why give it a fancy and catchy name like pivot? Thats easybecause most dont make these critical changes and those few that do make them usually do so too late to survive.

    We have a memorable term to use now and we make immediate and almost personal connections with others when we use it. Now that you are more familiar with the term pivot, lets dive deeper on why this is so important.

    Ive launched a lot of products in my career, from consumer products at companies like Intuit to enterprise and business solutions at startups. I can tell youand most can relate to thisthat version 1.0 of every product Ive ever launched has served primarily to tell me what version 2.0 should be.

    Version 1.0 wasnt about sales, although I often thought it was. It was about change and figuring out what change my organization needed to make to get closer to the bullseye. Thats a pivot; it can be that simple and straightforward (and should be). The importance of pivots come about when you dont make a pivot at all, make it early enough orquite franklymake enough of them to do the usually appropriate iteration to the bullseye.

    This iteration, by the way, is hard for people to accept. It feels and appears logically to be inefficient. It also appears too often to be a lack of knowledge or an inability to get ones job done, so we try to avoid that iteration. That means we avoid the pivots we need to make when we need to make them (which should be as early as possible).

    However, that does not work well. Weve all heard the phrase fail early and fail often. Guess what? Thats pivoting and its been suggested to us for a long, long time.

    So what do we do? First and foremost: assume there are several pivots your organization needs to make. Dont just think that it might be necessary, but sincerely and wholeheartedly assume it. Now take action and put processes in place that assume and foster change by figuring out what that change needs to be.

    Also, dont do what I did for part of my career and wait for your first big pivot to take place after launching a product. Do it early and as fast as you can. For instance, get a simple prototypeworking or notin some folks hands within a month or even days. A great source of guidance for immediate pivoting is your ecosystem.

    I wrote an article recently titled Engage the Ecosystem and Get Real Answers; it is a simple guide to getting out of the early building step and beginning the pivoting process. Its focused on getting real and useful guidance as early as 30 days into your companys existence and costs almost nothing to do, with the exception of your time. Again, its based on real guidance and not guesswork.

    The guide below will outline for you how to begin pivoting before you even have a prototype to show and is highly recommended. Its actually a process for pivoting your strategy before too manyif anydevelopment resources are used.

    The premise is that our initial strategy is flawed and once we get out there to engage a few members of our entire value chain (not just target customers), we will begin to understand where we should really aim our efforts.The steps are as follows:1. Create an ecosystem map: This map should contain three-to-seven categories that represent the value chain.2. List three companies/entities in each map category: The first part of the Ecosystem Engagement process calls for breadth rather than depth.3. Reach out to contacts in those companies/entities: Make a simple request to stop by for 30 minutes to get their feedback on your initiative because you are engaging other members of the ecosystem like them to understand how this might serve them.4. Have the engagements: Present your idea or concept verbally; ask Does this align with your business priorities, and if so, how can it best serve you? 5. Listen: Look honestly at the common threads in what you heard--be open.

    This is how you learn what pivots to make. Re-member, a pivot is simply change and in starting new businesses or product lines; its inevitable if you want to be successful. So embrace the idea of change and learn to expect it. Perhaps even find a way to like it.

    If you are anything like me, youll start to enjoy pivoting, as you will be listening more and more to what isnt working and it will feel like you are doing your job really well. It will feel like you are basing your business decisions on facts and objective feedback rather than smart thinking and guesswork in conference rooms.

    This is good stuff, folks. Keep it simple--pivoting is just changing. I encourage you to start pivoting soon (meaning now).

    It will feel like you are basing your business decisions on facts and objective feedback, rather than smart thinking and guesswork in conference rooms.

    Stu Heilsberg is a 20-year business development and product management executive. With an undergraduate degree from MIT and an MBA from Kellogg, he has been positioned throughout his career to bridge the gap between technology and end users. He has done this when creating several businesses at Qualcomm, Motorola and Intuit. As a complement to his consulting practice, Stu speaks regularly on his approach to ecosystem engagement, which has led to engagements with Stanford University and his authoring the book The Answers Are Outside The Building.

    linkedin.com/in/stuheilsbergstuheilsberg.com

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    HIRE SLOW,FIRE FASTWaiting for Mr. or Ms. Rightisnt just for romance BY RICHARD SUDEK, PHD

    Its a word being used a lot these days. Its tied to an enormous movement and most young entrepreneurs struggle with hiring. The hiring process is rarely enjoyable or easy, takes a long time and may require assessing skills you are weak in. For these reasons and others, most of us either rush the process or simply skip some of the steps. This often leads to bad hiring decisions. If that is not bad enough, we tend to take too long to fire an employee.

    Hire SlowThe younger we are, the more likely we rush through the hiring process or skips steps in the process of hiring a new employee. Here are some things to remember when hiring:

    1. Be clear on what the responsibility of this position will be and what skills are required for the position.

    2. How much growth will the position experience over the next 3-5 years? Areyou hiring ahead of what you need? Can you afford to hire someone that youneed 3-5 years from now? If you cannot afford the person you need in 3-5 years, how does this change what you are looking for?

    3. How will your work style, work ethic, leadership style and management styleimpact the person who is more likely to be successful?

    4. What is the culture of your firm? How will you assess the right culture fit?5. If the position you are hiring is out of your area of expertise, how will you

    assess their skills?6. How will you check references? Will you depend just on the list the candidate

    gives you? Can you network to find references not on his/her resume?7. How will you utilize your network to source candidates?

    The time you dont spend on the hiring process will likely be multiplied dramat-ically on the firing process. Few enjoy interviewing candidates; however, it is neces-sary time spent. Often younger entrepreneurs dont fully think through the culture fit issues that are often so crucial in a small company. Finding the right cultural fit is important not only for success of the candidate, but the success of the company. Hiring the wrong fit can lead to problems for the rest of the team.

    Hiring a candidate outside of your area is often a difficult task. For instance, if you are technical and you have to hire a salesperson, how do you accurately assess their skills? A salesperson is likely to be good at selling themselves in general, so it makes hiring a salesperson even more challenging than many other positions. The answer is to find a trusted advisor who has the skill set to interview the candidate. For younger entrepreneurs, this often means finding an advisor, board member or mentor who has expertise in the area you may be weak in. Even if you have exper-tise, you should consider multiple interviews with different people so you can get different perspectives on the same candidate.

    How will you really check references? Often it is hard to get a former employer to give you a completely honest and critical review of a candidate. However, working your network is important to see if you can find a reference within your network. This may require extra work by pushing the candidate for information beyond his/her resume and may mean asking about different organizations they are involved with where you might have a friend or associate who is connected.

    The best candidate is likely to come from your network rather than through an em-

    Sometimes we dont want to admit we made a mistake or we simply are too busy to fire someone and go through the rehiring process.

    Richard Sudek, PhD is director of the Leatherby Center for Entrepreneurship and Business Ethics at Chapman University, which is ranked 13th nationally by Business Week in undergraduate entrepreneurship programs. His innovative eVillage facility, launched in February 2012, offers professional resources for entrepreneurs, students and startup companies to grow new businesses. Sudek continues to be an active angel investor and chairman emeritus of Tech Coast Angels, the largest angel organization in the U.S. Sudek also serves as research committee chair for Angel Capital Education Foundation, a national organization of angel groups in the U.S.

    linkedin.com/in/richardsudek@richardsudek

    ployment ad. This means you need to spend time working your network. You will need to spend time figuring out how to leverage your network to source a good candidate.

    In order to improve your hiring process, review a recent firing and look back into the process to see where you ignored information or took a short cut. This tactic may lead to improving your hiring process.

    FiringYounger entrepreneurs often wait too long to fire someone. Typically the time to fire someone is when you first sense in your gut this is the wrong person. However, we often want to error with giving the person enough time to prove themselves and be sure we are being fair. Although this is a valiant intention, it rarely leads to a good decision. Most of us think we can help or fix the person. Sometimes we dont want to admit we made a mistake or we simply are too busy to fire someone and go through the rehiring process.

    Perhaps we dont like the process of firing someone and we are avoiding the unpleasant part of leadership. If you are going to build a company, you are going to have to fire someone at some point. There is no escaping this part of leadership. Also, you are not likely to be making all the right hiring decisions. Even if you do all of the above things right, you are still likely to make a bad hire now and then.

    When FiringFor many reasons, such as legal ramifications, dont spend a lot of time explaining why you are firing someone. You should state that it is simply not working out and you have decided to make a change. This is one of the few times where getting it over quickly is best for you and the person you are firing. You will find that some employees will try and talk you out of it. This is likely not to end well in the long run. Think of how difficult it will be if they are not fired. They are likely to be anxious, and may poison the culture. I remember more than once after we fired someone in which we were struggling with the decision, employees knew the person did not fit. They would say, Why did it take you so long?

    Hiring and firing is part of being a leader. It is often not fun and it always feels like you should be working on something else. However, it is part of building a company. Get over it and just spend the time.

  • 8 MARCH 2014

    Youve been selected to make a fast pitch (a one to two minute oral intro-duction to your startup business without visuals) or a presentation (a 5-15 minute session with visuals) to a group of angel investors. What should you include? How should you prepare? For a presentation, how should it be structured and look visually?

    Every entrepreneur goes through this uncertainty while seeking financ-ing. Either as individuals or formal groups, angels are generally the first

    source of professional capital after youve exhausted your own resources and tapped friends and family. Many angels are less interested in the industry in which the company is involved; they instead want a variety of attractive investment choices. As a result, the sandbox in which you play is often less important to angels than the opportunity for a large return.

    Convincing angels to make an investment in your company involves a combi-nation of challenges. Obviously, the business itself must be attractive, plus all of the following: appear to have a unique niche and/or competitive advantage, be scalable at reasonably quick rate and create the opportunity for a strong return (angels generally expect 10x their investments over five to seven years). However, these substantive matters are often difficult to discern when a company is just beginning. At the earliest stages of a companys life, what is generally more important for angel investors are the qualifications of your founding team and your ability to establish your credibility.

    Angels receive hundreds, even thousands, of funding applications annually and only a fraction of those even make it past initial cursory review. Only two to three percent of them get funded and often only after several presentations and meet-ings with a formal due diligence process. Deals can fall out at any stage, but many companies fail their initial tests because their pitches and presentations are not clear, do not include enough of the right information or are not made in a way that instills investor confidence. The remainder of this article will provide guidelines and tips for structuring your pitches and presentations to make it more likely that youll generate real interest from angels.

    Keys to Effective Pitches and PresentationsThe most important thing to remember about any early pitch or presentation is that it should not try to elicit an immediate investment. Angels, like all investors, are cautious; they will want to digest and evaluate what they have seen and heard. In fast pitches and early presentations, your objective should be to engage your audience and encourage investors to move to the next step, where you will be able to explain the business in more detail.

    In addition, you should memorize your fast pitch and practice it in front of people not familiar with the business to confirm that it is clear to an independent listener. I recommend that you memorize your pitch. While you need not memorize a presen-tationa memorized presentation can seem wooden and forcedyou should have notes to which you can refer unobtrusively and that provide cues to what you want to say. The presentation should also flow naturally and never simply parrot your slides. Your audience can read, so use the bullets as introductions to topics that you

    TAKING THETERROR OUT OFEARLY FUNDRAISING

    will explain more broadly. Finally, whether youre making a fast pitch or a

    presentation, you should display the passion that you feel for the business; if youre excited about the oppor-tunity, potential investors are more likely to be as well.

    The AudienceIt is important to understand your audience. If you are unsure about the expertise and interests of those to whom you will present, I recommend getting a lay of the land by attending and observing a meeting of the group before the one at which you will present.

    The Length of a PresentationAffects Structure and ContentObviously, the amount of time that you will have to make your pitch or presentation will influence what you should say. The fast pitch is done without written or visual materials. Presentations can be accompanied by visualsslides are the most common. I recom-mend that visuals, other than a brief video (no more than one minute) be avoided in presentations of less than seven to eight minutes. A key objective of any presentation is for you to establish a connection with the potential investors with visuals in lieu of direct communication.

    Elements of a Good Pitch and PresentationIronically, the elements of a strong fast pitch or presentation are the same. The differences are in the scope of the discussion of each topic and the breadth with which it can be outlined. Believe it or not, the same matters can be covered in a fast pitch (often called an elevator pitch because it should be short enough to give cogently in the time it takes an elevator to reach the top of a reasonably sized building) as in a 10-15 minute presentation, although in less detail.

    The Fast Pitch Coverage companys business problem that it is solving and the proposed solution size of the market niche in which the company is competing any protectable IP that the company has revenue model marketing strategy key competitors projected revenue growth over a three or four-year period key team members and their qualifications, includ-ing particularly any previous startup experience and successful exits how much money the company is trying to raise and what it will be used for exit strategy

    Since a fast pitch is often made in the context of a pitch competition in which a number of companies are presenting, your fast pitch should, if possible, both start and end with something strikinga hookthat the audience will remember. There are infinite possi-bilitiesall it takes is some creativity and thought.

    Preparing and Making Pitches to AngelsBY STEPHEN BLOCK

    What is generally more important for angel investors are the qualifications of your founding team and your ability to establish your credibility.

    EXPERTVOICES

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    (g) Outline your companys marketing strategy. How will it reach its customers and how much will it cost (customer acquisition)? Will it use direct sales, Inter-net and other media marketing or a combination of all (often the case when the company is both B-to-B and B-to-C)?

    (h) Explain the competitive environment. Who are the companys competitors? What features does your company offer that its competitors do not, i.e., what is your competitive advantage? Presenting this information in matrix form is effective and allows potential investors to see your competitive advantage quickly.

    (i) Present brief biographies of the key team members and advisors. Emphasize domain experience, prior startup experience and successful exits. Angels want to see at least a two-person team, including a CTO

    (k) Set forth how much money your company is re-questing from investors and the terms you propose for the raise. This includes, if known: the form of the secu-rity, preferred stock or convertible note (professional angels will almost never accept common stock) and what the funds will be used for. Do not seek what in-vestors might perceive as either too much or too little money, which will concern investors. Asking for too little will mean that you will be spending more time seeking additional investment when you should be focusing on the business; seeking too much will result in investor concern about overspending and waste.

    (l) Describe how the investors will realize a return on their investment, or the exit. I recommend focusing on acquisition since most companies will not do IPOs, and suggesting an IPO can cause a loss of credibility. If available, provide examples of other exits in a similar space to demonstrate what multiples of revenue or EBITDA are possible for investors.

    who can code (even if he or she will only supervise others). Advisors can be particularly beneficial, but only if they are truly engaged with the company. Identifying a well-known person in the space who is really doing no more than lending his or her name will be quickly discovered and discounted.

    (j) Explain the companys financial picture.Do not try to load up your presentation with full three to four year detailed projections. Only include a dashboard that shows key revenue and cost financial metrics, including gross revenue, gross margin, operating revenue and operating margin (or EBITDA). These should encompass no more than seven to eight lines and be in a font size and format that can be easily followed. Companies often also have a more complete set of financials for people to read later in an Appendix.

    (m) Finally, present a summary with the key bullet points that you want angels to remember.It can also stay visible during the Q&A period as a continuing reminder of what the company can achieve.

    In addition to a more complete financial state-ment, the Appendix can also contain additional information that you were unable to present; you can refer to it during the Q&A session. It also gives angels more to review later should they express interest in your company.

    During Q&A, keep your answers brief so that you will have time to answer more questions and dont challenge your questioners. You want their money!

    Be passionate, prepare, practice and engage your audience. If you do these things, your pre-sentation has a greater chance of creating angel interest.

    Presentation Coverage OutlineI mention them in the order in which I generally recommend that they be presented; the suggested structure is a method of making your presentation more complete and cogent.

    Slides should be in short, crisp bullet points with no more than three to four per slide and done in 20-point font size or greater. Graphics should not clutter or overwhelm the focus of the slide.

    The use of a video or demonstration of a live website can also be effective, but either should be short and not dominate the presentation.

    (a) Explain your business. I recommend that this explanation be the first slide in the presentation to give the audience a frame of reference for what will follow. I cannot count the number of times that an entrepreneur has pitched and presented (including using visuals), and at the end of the presentation the first question is: What do you do? That query is almost always a death knell for funding, since it shows that the entrepreneur cannot explain to others simply, clearly and concisely the nature of the business.

    (b) Identify the problem that the business is solving. It is important that investors understand why the rel-evant market would need or otherwise be interested in what your company is selling (e.g., new, disruptive technology, efficiency or cost reduction).

    (c) Outline your solution. How it solves the problem, why its better than what the market is providing today and why customers will buy it.

    (d) If your company has patents, whether they are granted, filed applications or other protectable IP, explain it simply and in laymans language. Many in the audience will not be familiar with the space or the technology. The presence of real IP is often a strong incentive for investors.

    (e) Discuss the addressable market, the portion of it the company will attack and the percentage it believes it can capture. The smaller that percentage the better, since angels want to invest in a company that will compete in a clear market niche where it will have a true competitive advantage.

    (f) Explain your companys revenue model. How will it make money? Will it sell products and/or services? Will it operate on a SaaS/PaaS, subscription or licens-ing model, where the company can represent that it makes money for investors 24-7 (often described as while they sleep)?

    The less physical sales effort the company needs to make, the better investors will react. If the company has a tangible product, will it maintain inventory (re-quiring working capital, which means more funds will be needed) or, assuming its not manufacturing itself, can the product be shipped directly from the actual contract manufacturer to the customer on a just in time basis?

    Stephen Block is a venture partner with K5 Launch, as well as a member of Tech Coast Angels, and the Executive Committee for the Orange County Network. He is also a mentor to entrepreneurs and a speaker on angel and VC investing at universities and business conferences. He is on the Board of Directors of two public companies, two non-profit boards and the Leatherby Center for Entrepreneurship at Chapman University, Long Beach Opera. He also has 40 years legal, management and executive experience. He possesses a JD from Harvard Law School and a BA cum laude from Yale University.

    linkedin.com/pub/stephen-block/7/912/[email protected]

    Be passionate, prepare, practice and engage your audience. Do these things and your presentation has a greater chance of creating angel interest.

  • 10 MARCH 2014

    IT TAKES A VILLAGE TO BUILD A STARTUPYou may be the captain, but the ship wont sail with just you.BY LAURIE PETTINELLA ZORN

    Deciding to start a business can make you feel a multitude of different feelings at onceexhilaration at the prospect, passion about the idea, concern about the execution and confusion about the questions you should be asking yourself first. Youre feeling overwhelmed, excited, anxious, surreal and eager to begin.

    So, where to begin? It all starts with an idea. However, with

    almost half of startup companies in the U.S. failing after three years, we know that a good idea just isnt enough, not nearly enough at all. With that considered, what do you think is the #1 contributing factor to the failure of 44 percent of startup businesses after three years? Poor execution.

    What does this mean for you, the one about to walk down the twisty-turny path of starting a new venture? How can poor execution and failure be avoided?

    The answer may seem obviousand rather simplebut it is all too often overlooked or underestimated. Great execution is about leveraging the right resources!

    Think about it like this: A first-time entrepreneur is akin to being a first-time filmmaker. The startup process is surprisingly similar to the process of making a movie, wherein all hope and effort is channeled into releasing that product to the public and making enough money to pay off your investment.

    Consider this: youre a writer-director. Sure, you wrote the 120-page, three-act script (hey, kind of like a business plan) all by yourself. You know the beginning, middle, end and all the wonderful details in between. You know it better than anybody else, but to turn this visionyour scriptfrom paper to the big screen all by yourself? It cant be done--you need help.

    You need a camera operator, a producer, financing, actors, a costume designer, a set decorator--the list goes on and on. Naturally, youre not an expert on everything needed to create and launch your film into its release, nor should you be. When it comes down to it, no matter how much you trust your own vision and believe it can work, you just cant possibly do it alone.

    Many filmmakers have mastered the art of getting the right resources (film crew, post production crew, money, etc.) to translate their script and ultimately their vision into reality, all while consistently losing money until the film is released. Many young entrepreneurs may feel like they have to be a lone wolf, solely performing every needed task and skill that their startup requires (and often doing this 24/7 while dining on ramen noodles and PB&J). However, much like successfully gaining resources to make a film, the entrepreneur must become a spokesperson for their startup business and inspire others to jump on board.

    How do you do that? How do you attract the right resources to join you? 1. You must first take your idea and formulate a vision. A vision should provide a sense of aspiration and describe your proposed future state. It should be your north star and define what you want your business to be. 2. From there, you should develop a strategy, which is a plan to mobilize and implement your vision. This strategy should clearly define what it will take to be successful and, more importantly, which resources you need to acquire (beyond yourself that is).3. Lastly, you must create a clear and convincing story that pulls it all together into a nice package. Sound like marketing? Well, yes it is. Not only do you need to market your business to attract customers and users, but it is also how you should recruit your team, investors and service providers.

    Once you have all of these pieces buttoned upyour vision, strategy and storyyou can then go on the hunt for resources to build your busi-ness. There are numerous methods to go about recruiting resources, such as personal and profes-sional networks, job sites, advertising, events--the list goes on. However, with limited funds as a budding entrepreneur, you will have to get a little creative with compensation.

    I will leave you with this example: say you meet a web developer and she writes in HTML and CSS better than she writes in the English language. She can create a beautifully laid-out website in less than an hour. Assuming she has some free time, she might be willing to invest some hours on an idea that she is passionate about, provid-ed that it is well-defined plan and has a great leader. With the right resources, the possibilities to partner are endless. There are many individual service providers as well human capital venture funds already developing these unique partner-ships with startups today.

    Its time to begin. Start walking on your path. Soon enough, youll be running with more people by your side than you thought possible.

    When it comes down to it, no matter how much you trust your own vision and believe it can work, you just cant possibly do it alone.

    Laurie is a strategy and business development professional with a decade of experience advising companies across various growth stages, from startup to Fortune 50. Her work with entrepreneurs focuses on go-to-market, new product/market development and organization/business process design. She is a partner of K5 Launch (a early-stage startup accelerator) and managing director of Equitive (a human capital venture fund). Laurie holds an MBA from Columbia Business School and an undergraduate degree in finance and organizational behavior from Boston University.

    linkedin.com/pub/laurie-zorn/0/a17/534www.k5launch.com

    EXPERTVOICES

  • [email protected] | WWW.IMPACT.FM

    Why do I have to spend money on marketing? Isnt word-of-mouth enough? Too often I am asked these questions by small business owners, perplexed about the costs associated with marketing and wondering if they can build a sustainable business through relying solely on word-of-mouth. Whether you realize it or not, there is an opportunity cost associated with word-of-mouth; the person promoting your firm is doing so on their time schedule.

    What that means is depending upon the frequency of peoples patronage to your firm, and then when the opportunity to mention the wonderful product or service you delivered is presented, that then becomes the context for how and when your business is being promoted. Relying on word-of-mouth is like using organic methods rather than Google keywords to run a digital campaign. It was possible in the past, but now with the new algorithms being developed its nearly impossible to avoid paying for keywords.

    I teach a monthly marketing workshop, and sadly most of the firms in the course are struggling after being in business for over five years. Too many failed to invest in creating a solid marketing strategy and now are facing the possibility of losing their business as the market changes. These owners did not anticipate or prepare for the change in market dynamics. In some cases, this was as simple as marketing to other buyers within the same organization where they previously held a contract.

    However, it never occurred to the leaders that the firm needed to invest in marketing and now after years of doing business, they are headed out of business. It also demonstrates that the firm didnt diversify its client base and allowed one client to represent more than 20 percent of the total gross revenues.

    Marketing is so much more than closing a sale; it includes the integrated cross-functional actions which collectively support the brand building process. We operate in a global brand environment where Main St. firms are competing with Fortune 500 firms and the customers are so inundated with branding messages that they expect strong marketing strategies from all businesses.

    This market environment requires firms to have a strategic plan to guide not only what, but how the firm communicates, as well as delivers services, pricing strategies and entire value-chain activities. This is more evident when you compare brand promises; for example: Wal-Mart delivers a different brand promise from Nordstrom. Consistent with the brand promises are the physical structures associated with each organization, and the human capital focus as well as the types of media being used.

    Recently, this was articulated by a CEO sharing how he has held conversations with over 20,000 of his customers. He says that he does not understand marketing, yet his actions of speaking with customers is step number one in developing a clear understanding of clients wants, while step number two is developing a relationship. In essence, hes addressing the current and future product needs through this process of being informed by his end-users. We refer to this as research and development (R&D). Since this CEO can allocate the necessary resources to implement any of the recommendations that he feels are consistent with his brand promise, he is also able to make strategic decisions. Again, these are some of the ingredients that are essential for crafting an integrated marketing strategy.

    The marketing environment today has shifted to include not only the messages, but the customer experience. Customers expect to have an experience that they relate

    IT TAKES MONEYTO MAKE MONEYIts inevitable: you have to spend money to make money. BY STEPHANIE ARDREY

    Marketing is so much more than closing a sale; it includes the integrated cross-functional actions which collectively support the brand building process.

    Stephanie Ardrey is the MAOM president of ArdreyGroup LLC/iVentLABS Business Accelerator. Ardrey is an adjunct professor at University of California, Los Angeles, California State University, Los Angeles, and speaks regularly for SCORE.org. She is also the author of Show Me the Money: the 9Ps to Profit! Previously, she helmed ArdreyGroup, Inc., a full-service advertising and marketing communications agency with eight offices, 400 employees and a $250 million capitalized resource base.

    linkedin.com/in/[email protected]

    to your brand. Heres an example: if a customer went to Starbucks, had a great experience and then walked into your business, subconsciously they are now evaluating your service delivery in the context of the Starbucks experience.

    You may say, well I have not invested the same amount of dollars as Starbucks has to ensure that doing business with my firm delivers that type of experience. My response is that of course you may not be able to deliver on the Starbucks promise, but you need to be clear on your brand promise and consistently deliver on that promise and experience.

    Another small business owner complained about having to invest in the marketing expense. He felt that the costs associated with marketing should be optional and couldnt figure out how marketing would help with reaching revenue growth goals. My first response was to inquire further about his desired growth goals. I asked if he expected to grow his revenues and if so, to what percentage over existing gross revenues. Quickly, I learned that the revenues are declining as the firm had faced competitive threats which the owner addressed by cutting fees. Unfortunately, since the fee was not tied to a market value, but a personal value (job) the cuts now threaten the sustainability of the firm.

    A quick way to evaluate the effectiveness of the current market strategy is to conduct a marketing audit. The first step is to evaluate the environment in both macro and micro to understand the current dynamics. You should ask yourself the following questions:

    What external factors (regulatory, economic, etc.) are impacting your business? How long will these impacts prevail?

    Are you required to make modifications to your product or internal processes to remain competitive?

    What strategies have you used to make past decisions? How effective has the word-of-mouth or other limited marketing efforts been as it relates to generating client traction?

    What is the sales cycle? If you were to segment your customers from the last 1-2 years, how many

    primary, secondary and tertiary customers do you have? Are you operating at full capacity? What is the cost of goods/services sold? Are your competitors adding or

    removing products? Do you recognize any opportunities to improve upon value-chain processes? Can you break your product and craft a better solution? Can you lower costs and deliver a higher volume?

    Once this quick scan is completed, begin to craft a comprehensive plan which includes investing in the marketing efforts necessary to build your brand.

  • 12 MARCH 2014

    WHERE DAMONEY AT?Is it better to go bigor go safe in L.A.?BY TOM NORA

    Southern California lists over 100 venture capital and angel organizations or partnerships focused on the current technology startup craze here. Yes, over 100. L.A. is currently rated as the #3 region for venture capital deployment in the U.S., behind Silicon Valley and New York. According to CB insights, this represents about

    10 percent of the market. Thats pretty amazing con-sidering the history of this area.

    SoCal also has a large number of accelerators, angel investors, celebrity investors and other indi-viduals involved in venturing in high technology startups.

    So why does it seem that there is so much less going on here than Silicon Valley or New York? There is plenty of buzz about Silicon Beach, Orange County and San Diego, but not much in the way of amazing household name companies emerging from the past four to five year growth spurt here. There is certainly not any buzz on 10 percent of the hottest Internet companies. Where is all of that venture capital going?

    One giant milestone these days is reaching a val-uation over $1 billion. Hundreds of technology com-panies have started, grown and reached that magic number within the past four to five years. Pinterest, Instagram, Path and Square are just a few in Silicon Valley alone, but none in southern California.

    So what about L.A.? What is the flaw in the money path here as it flows from limited partners to VCs or angels to deployment into winner startups? Where is the weak link? Where are the IPOs?

    There are several factors, having to do with more than just capital deployment. However, if we isolate that part of the ecosystem, here are some areas to consider:

    Lower Risk AppetiteIf you study the investment patterns of local funding groups, there is a tendency towards less cutting-edge business models and more towards evolving exist-ing industriesconservative tendencies. We invest in media, commerce, video, web analytics, ad-tech, gaming and other established markets.

    These are updates of niches discovered many years ago, mostly in Silicon Valley. This decreases the upside and downside for funders--its less venture-y. After a few five-year cycles of these kinds of

    Tom Nora is a Silicon Valley technology veteran and an L.A. native. He started his career as an engineer then progreseed through the ranks to the level of CEO for 5 successful technology startups. Currently Tom is the founder and CEO of z2 Development, a next generation eCommerce and mobile payment software company. He is also the founder and leader of Startup Workshops, a tech industry networking and training group helping to build the Southern California startup ecosystem with over 1,000 members.

    linkedin.com/in/[email protected]

    investment tendencies, the early stage companies tend to tune themselves to the market. They then tend to train their people to be more conservative as they go out into the world and start the next round of companies.

    This style goes against the definition of venturing. Silicon Valley Super Angels will invest millions into a startup before it even starts. SoCal doesnt have those people. Angel rounds in Silicon Valley are often bigger than local VC rounds.

    For example, almost all of the top local incubator accelerators now have a policy of only accepting new companies that have deployed product and have reve-nues. Thats not incubation or venturing; its a reaction to having so many unsuccessful companies.

    Actually, the biggest funding rounds in SoCal are invariably funded by Silicon Valley VC firms. Snap-Chat and SendGrid are great examples of this kind of funding. Sand Hill Road firms take the big risks on SoCal companies, not our VCs.

    Marc Andreessen, a leading Silicon Valley venture capitalist and thinker, calls it a pro-risk environ-ment. Heres what he said:

    Our combination of great research universities, a pro-risk business culture, deep pools of innova-tion-seeking equity capital and reliable business and contract law is unprecedented and unparalleled in the world.

    Under Deployment of CapitalMany local VCs also just sit on money here in SoCal. One prominent firm told me they make zero to one investment a year or they give small rounds or half-rounds as theyre called here.

    Followers vs. LeadersIn a concept related to lower risk, local investors tend to invest in new implementations of proven ideas rather than radical ideas. After several generations of this over the past 20 years, the culture is set more towards evolution than revolution. Radical thinkers and big risk-takers tend to move north.

    The emphasis here is to get to revenue fast, even if its small revenue to pay the bills. That competes with go big, so companies follow more and pivot their aspirations downward to safer models. One of the top VCs in Santa Monica recently said that the

    most important thing to do is ring the cash register. In Silicon Valley, Boulder or Austin, many companies never ring the cash register, but create extremely valuable companies that are integrated into the eco-system where they eventually ring much bigger cash registers and change the world a bit. However, Los Angeles is not inventing new industries.

    Less Big Fish AcquirersCompanies like Facebook, Salesforce, Google, Apple, Oracle, Twitter and now even Yahoo are giant acqui-sition machines in the bay area, putting billions of dollars every year back into the local ecosystem and taking some pretty big risks. This encourages entre-preneurs to try something crazy. Therefore, compa-nies can win big by being bold without ever having revenue or profits.

    This action also helps foster new industries, like the current big data and data analytics markets that are spawning hundreds of new companies and rein-venting many others. SoCal is missing these giant tech acquirers.

    ConclusionSo with over 100 venture firms here, we still have yet to create our first Google or Facebook. Where do we go from here? Change our way of thinking or just make the most of the investing style we have in tech startups?

    Southern California is one of the most entrepre-neurial regions in the world, producing some of the most famous brands and products in the non-tech world. We take enormous risks with capital in enter-tainment, energy and real estate because those have been our industries for a long time.

    However, we dont leverage bleeding edge future technologies to make high-risk investments of $10 to $100 million to take a shot at creating a new market. Thats just not us, at least not today. A few wins could change that quickly and attract a much more aggres-sive risk-taking investment style and a different breed of venture capitalist.

    It takes 15 years to convert a region into a startup machine. Boulder did it, Austin did it, SoCal is in about the 5th year of its current cycle; maybe it can pivot and become the innovation machine it aspires to be.

    EXPERTVOICES

  • Starting a business aint like it used to be.

    When I was asked to write this article, the immediate thought I had was that this was definitely not going to be some fluff piece on how great it is to be an entrepre-neur. Theres a major difference between being an entrepreneur (someone who actually knows how to run and grow a

    company) and a creator or a developer (someone who can build things). As a partner in an accelerator, this distinction plays out every day in spades, which is to be expected, yet people should know the truth about what it really means to start a business in todays economic climate.

    Dont get me wrongthere is no better time than right now to start a company, but not for the reasons you might think. Here are some realities to consider as you move your startup ideas forward:

    The economy needs new business and new business innovations...whether you are ready to provide them or not.Money moves differently these days and takes on different forms. The central banking system has literally put a squeeze on lending; debt as well as credit are harder to come by. The economy itself is in flux, meaning that with fewer jobs, less production and shifts in consumption, companies and respective markets must focus on providing real value. This value is based on consumer needs and the needs of enter-prises to satisfy those needs. For a new business, this means you must not only develop innovations that disrupt current business models, but those that actual-ly create new markets and sustain them.

    Institutional money is changing face.A current trend amongst VCs and PE firms is to invest at a way later stage. While capital allocations in aggregate are still significant, the reality is that institutions are investing in fewer companies and are mitigating risk by only getting involved with companies that have amassed a substantial amount of capital, are substantially in revenue, or both. This bodes well for companies in the inner circle, but not so much for thousands of others considered to be on the fringes. The good news is that institutional investors arent the only game in town, and many

    BY GUNTHER SONNENFELD

    Gunther Sonnenfeld is a serial entrepreneur, social technologist and corporate strategist. He is the co-founder of Heardable (a brand analytics engine), a venture partner of K5 Launch (a southern California accelerator), and a managing director of the C-PET Futures Platform (a policy reform initiative for emerging technologies). He is the co-author a new book entitled, The Big Pivot, an in-depth look at how a new approach to data and storytelling transforms businesses, brandsand economies.

    linkedin.com/in/[email protected]

    incubators, accelerators and funds are emerging with alternative capitalization and growth models.

    Capital can be cheaper, but its also a lot more difficult to manage in terms of whos behind it.Private capital is still quite abundant, which speaks to an even greater need for products and solutions that are turnkey. Private investors are also commonly strategic investors, which means that they are a lot more hands-on. This can be a good thing if youve got your ducks in a row. For most startup founders, however, this can be frustrating, especially as they desire room to develop product ideas and run experiments in the market. Staying lean might mean that you are careful with your resources, but it also means that you are highly efficient in the way you prove or scale your revenue.

    Bootstrapping isnt really an option,but part of your revenue reality.Make no mistake about itdemonstrable revenue is mandatory in attracting investment. During the first Internet boom (1994-1999), mere ideasthose without actual working products or viable business or market modelswere enough for funding. During the second boom (2001-2009), you needed a working product and a quick means to get to revenue. Nowadays, a proper growth strategy means you have to have everything in place along with the ability to adapt to rapid shifts in the market. This notion is something relatively few startup founders are able to do, hence the earlier dis-tinction between entrepreneurs and creators of ideas. Successful startups bootstrap, especially with cash in tow or in the coffer; this means that founders must create revenue streams without having to rely on old models or operating cash flow.

    Build to scale, not necessarilyfor a traditional exit.There is a silver lining in all of thisthe nature of investment. Co-ops formed by large corporations with cash and credit (such as P&Gs Cintrifuse or Nikes LAUNCH) are emerging as a great way of strategically funding startups to spread or mitigate risk, invest in infrastructure without having to own it and to conduct research and development. One

    way to look at this if you are a startup is to consider yourself an extension of a larger company or a bigger market. Those that do may find themselves strategi-cally funded by these companies with an opportunity to develop their business models with the support of people who are decision-makers on the ground and in the trenches.

    You may not be expendable as a founder,but your ideals are.Something we see a lot at the accelerator is unwilling-ness in founders to constantly change or adapt their business practices. Some of this has to do with startup culture and some of it to do with a lack of understand-ing of the market. With that said, founders should bear in mind that they dont need to compromise their vision; rather, they need to see how their vision can be improved by way of a market scheme that tends to look at new companies as bait for new ideas and standards of innovation.

    Everything about branding, marketing and going to market has changed and will continue to change.

    Its no longer good enough to have a logo, a tagline and a product strategy. Branding is really about how companies operate internally and externally. Market-ing is really about building a market. With technolo-gies and cultures changing at breakneck pace, startups must embrace this. Much like mid and large-size com-panies, they must be savvy about their market-build-ing in order to remain relevant. As mentioned earlier, consumer needsdistinctly by-products of surviving very tough economic conditionsare driving this shift, both in the B2C and B2B domains.

    Commit purely for the love of what youre doing or trying to do, not for the cash...and the cash will come.

    This one is harder to get across, especially as we all worry about keeping a roof over our heads. We all need to make money and create value (or a higher valuation) in a startup business. However, in most cases, an investment, an exit or a successful go-to-market strategy comes by being vigilant about what was possible. This means that founders must build up their risk-taking muscles by asking different questions, being smarter and quicker in their decisions and in general, looking at all of it as an opportunity to grow individually and collectively.

  • 14 MARCH 2014

    Market Watch is where we identify innovative products and ideas that are either currently creating an impact or have the potential to make an impact to whole industries in the near future.

    MARKETWATCH

  • 16 MARCH 2014

    Jim McMurryWouldve Prevented TARGETsSecurity Breach

    ADVERTORIAL

    Milton Security Group: Taking the Guesswork Out of Securing Your Network

    We all have information we want to keep a tight lid on, not just for ourselves, but for our clients as well. If you were to walk into the office Monday morning and get dozens of calls from angry clients, all demanding to know what happened to their money or information, how would that reflect on you? Pretty poorly one

    could guess, as you have no doubt had a security breach. Names, addresses, phone numbers, bank routing numbers, credit card informationthese are all things would-be hackers are looking to siphon from your network if they find a gap in the security.

    Take what happened to Target and Neiman Marcus for example. The hackers did not attack the companies directly, as that would have drawn a lot of attention to them. Instead they gained access to the companies networks through third party contracting companies that had legitimate access (in the case of Target, it was an HVAC-type company), and found that there was no access control in place. Many people had their information and money stolen seemingly overnight and effortlessly. Though the hacker for Target was caught, the danger is no less present for other companies who also lack layers of security on their network.

    James McMurry of Milton Security Group has observed this problem many times now among companies and has proposed his own solution to the security breach scare. One of the main issues that larger network security firms have is that they attempt to come up with a one-size-fits-all product for the general market, McMurry explains. [They] leave it to the customer to figure out how to adapt it to their own network, which can be time consumingit can be painful; it can be costly. We decided to take a different direction and come up with a security solution that was low-cost [and] that could help any organization, from the federal government down to a three-person outfit, by adapting the solution to each individual network.

    Milton Security Group has found an one-size-fits-all approach to network security to be ineffective against cyber-attacks, mostly because it attempts to blanket a network, but falls short by leaving open gaps that smart (and ultimately successful) hackers like to prey on. Such thinking has earned Milton the trust of utility companies, universities, governments, and local hospitals just to name a few.

    McMurry believes that part of the reason so many small to medium-sized businesses are vulnerable is because network security is simply not part of the discussion. Even if the networks are small and do not seem as though they would be a target at all, McMurry argues that most small businesses still have data worth stealing. In many instances, theyre using unprotected or lightly protected wireless access points provided by their internet service provider. They often also include the point of sales system on the same network as their public WiFi access. There are so many holes that they arent aware of! We have had great success educating these businesses on how to not only locate and patch those holes, but improve their overall network security. Those that do believe they have a problem usually do not know where to start the security process.

    Milton Security Group has created its own network se-curity appliance that evaluates each device on the network and adapts the solution to suit each networks needs. Since [our box] sits in line on the network, we can actually find

  • out if those endpoints have already been compro-mised. If they show signs, we can drop them from the network before they cause an issue to other devices around them.

    McMurry has been able to study the malware that attacked Target and believes his system would have prevented the hacker from ever getting into the network. The Milton Security Group appliance works much like a tracking dog looking for a scentalways searching and always keeping a lookout for some-thing out of the ordinary. If [Target] had our product, first, we would have denied access to the point of sale networks to an HVAC contractor to begin withsimple enough rule. Second, we would have controlled access by time of day, type of user, where theyre coming from, type of machine, etc.we call it the who, what, where, when, why, [and] how.

    Should your system ever get compromised, Milton will immediately alert you and lock the system down before any malware can propagate. Using our adap-tive scan sets and filter, we can figure out Are they being attacked [and] if so, what type of malware? There [are] two facets of protectiontheres con-trolling the actual user (making sure youre a valid user), you have the proper rights to the area of work you need to be in, and you have a valid machine, your machine is not infected, and [that] youre not going to infect anyone else.

    So what is this little miracle machine that Milton has cooked up to keep your network safe? McMurry describes the Edge7200i as a layer-2/layer-3 adaptive network access control system. Sound complicated? Not at all. McMurry explains that we built a system that actually sees everything thats happening on the wire in real time and [can] decide in real time Is it good? Is it bad? Is it coming from a known user [or] a known machine? Is he allowed to go to that destination or not? [All] in real time and we can decide what to block and what to allow through.

    James McMurry knows all about keeping networks secure, as his personal experience in and of itself inspires credibility and posterity. The Milton Security Group CEO has worked with a number of firms and agencies in both the public and private sector. With experience in 8-10 startup companies during the first initial dot com boom, McMurry knows a thing or two about network security. From Silicon Valley to the Land Warrior (Military) project for the government, McMurry brings a world of knowledge to his work at Milton Security Group.

    Miltons repertoire of security skills arent simply

    for where you work, but also where you live. Secu-rity is more of a problem than everyone realizes, McMurry admits. Its going to become worse in the next two to three years, and not just for the small, medium and large business, but also for the homeown-er. All these devices like TVswhich have Ethernet and wireless connections nowyour Apple TV box, your Roku box; they all have Ethernet connections, right? Well now your refrigerator, your washer, your dryer, your air conditioning system, your Nest device, your door locks, your windows and lightsthey will all have some sort of sensor if they dont already. They all want to send that data someplace, and how does a typical homeownerlets say five years from nowthat moves into this intelligent home, how do they protect themselves?

    Smart homes as they are being called now are becoming more prevalent with each new home built or remodeled. Virtually every device and the house itself will be plugged into a network that controls all functions of the home. Of course, having everything now connected to the network comes with the same risk your computer faces from would-be thieves and hackers. Milton Security Group has also expressed interest in pursuing security solutions for the emerg-ing Internet of Things that are coming in the near future. McMurry is committed to protecting you, no matter where you are.

    Milton is also a big proponent of BYOD (Bring Your Own Device) practices in the workplace, as it is becoming more common and allows employees to be comfortable with their own devices. However, you never know what may happen when they are not at work and may accidently (and hopefully not purpose-fully) bring some bad stuff into your network.

    So if I go home and my machine is attacked at home, then I come to work and I plug it into the network, does that mean my work is going to be attacked now as well? McMurry asks. Thats where our device comes in as well to ensure those endpoints meet the company policies, clean and up-to-date. With Milton products and services, BYOD has been integrated into the algorithms and is now an integral part of how they can protect you, even from your own devices. Milton understands that smartphones, tablets, and personal laptops are now the accepted way of doing business and wants you to be able to keep your guard up with so many new access ports.

    In addition to protecting your computer, McMurry contends that even your personal mobile device, whether a smart phone or a tablet, is at risk and needs

    protection. Since about half of the web surfing and online transactions taking place happen via mobile devices these days, your personal data is still vulner-able to attack. However, Milton also provides a shield for that device you just cannot live without.

    McMurry also warns against using social media too liberally when it comes to your personal infor-mation. Today, everyone is an open book, McMurry states. Weve made ourselves this way through social media, through everything we do online. Just by simply telling everyone where you are constantly, the restaurants you eat at, etc., can entice someone to follow your spending habits and find a way to get to your financial and credit card information. Such hackers can sniff your traffic and watch your keystrokes, leaving you vulnerable to cyber-attacks. Always being aware of your habits during electronic transactions and online exchanges of information is always the first step toward keeping your stuff safe; after admitting that you potentially have a security problem, Milton Security Group can get you on the right track to peace of mind.

    So you must be wondering What does Milton Security Group have to offer me in terms of keeping all my digital data safe? Milton offers many products and services, including all-around support for your devices, at a low cost. The latest hardware to come out of the Milton Edge series of network security boxes is the Edge7200i, the industrys first Adaptive Network Access Control (Adaptive NAC) appliance. The Edge provides identity-based access to the network, controlling access at the edge via granular policies and continuous enforcement. Basically, the Edge7200i allows you to not only keep track of what data is being transferred across your network, but also who is accessing your network (do they have authorization to do so?), where they are coming from and whether or not they are bringing dangerous malware with them when they try to access your network. If a user is not playing nice on your system, you have the ability to isolate and drop them.

    Milton Security Group is located in Fullerton and is ready to talk with you about any security concerns and perhaps even problems you may not yet know you have. The security firm has the experience and understanding of the ever-changing technology that houses our precious information; now Milton would like to share their expertise to keep what is most precious to you safe. Call 1-888-674-9001 or email them at [email protected] to begin your journey to a safer network and a safer life.

    www.miltonsecurity.com

  • 18 MARCH 2014

    TapIt Founders Justin Barr and Giancarlo Maniaci: Its not aboutthe milestones, its the little winsthat are really exciting.PHOTO BY DON HAYNES

  • [email protected] | WWW.IMPACT.FM

    When a couple of guys create a successful mobile platform like TapIt, build it up to being acquired for $23 million and exit within the span of a few years, it makes you want to figure out what the hell their secret magic sauce is. Not surprisingly, the true story behind

    their success doesnt involve any magic at all, just personal recipes and consistency. Luckily for us, co-founders Justin Barr and Giancarlo Maniaci were kind enough to fill us in on their personal and professional journeys as entrepreneurs.

    Upon our arrival to conduct the interviewback when they were still at TapItwe were given a quick tour, which included a look at the break room that was, to me, mind blowing. It was messy and reminiscent of a rebellious teenagers room, albeit a very fortunate teenagers room. With an HDTV at the focal point, the room contained several video game systems, musical instruments, amplifiers and a variety of pedals lying around. Now this is corporate culture, I thought.

    I had to grab a guitar, play some music and start messing around with the pedals. I imagined what itd be like to have this for a break room. One would wonder how any work gets done there with so much dynamic entertainment available at any given time, but theres no doubting the success of TapIt after being acquired for $23 million by tech giant Phunware this past January.

    Giancarlo & Justin: Dont Analyze the Root,

    Just Take the FruitGoing for it, building the perfect puzzle piece, and

    creating an exit strategyBY ALEJANDRO GROVER

    After just one look at Justin Barrs face, you could see the contrast between the fun environment of the employees break room and the seriousness involved in creating a successful company. They seemed disconnected from the entertainment aspect and were more in the work hard mindset. As the masterminds behind TapIt, it was clear that they were in a different place mentally.

    From the very beginning of the interview, they wanted to emphasize the importance of work ethic in their lives. Although their stories had different flavors, they both shared similar perspectives and personal backgrounds that led them to become who they are today. When asked about their entrepreneurial journeys beginning and how it shaped the rest of their lives, Maniaci was quick to point to work ethic as one of the most important values that pushed him through his ventures. He described some of the ways his father had ingrained this important habit into his mind.

    At the age of 12, Maniaci was already constantly expected to do hard work around the house by his father. To stretch that work ethic across Maniacis immediate social life, Maniaci explained: My friends would hate to come over, because my dad would always put them to work. Every summer, his father would bring out the big boat and make them deep clean it with toothbrushes. Good work ethic and entrepreneurship were characteristics that Maniacis family lived and breathed.

    My older brothers are both entrepreneurs, my dad is an entrepreneur, self-made, and with us, the way we were raised isnone of us [had] trust funds, none of us [had] a golden key, but we were all taught two things early on: one thing is work ethic, and second is the ability to stand on your own two feet.

    None of his brothers ever worked for his fathers company and neither did he. This was all a part of their fathers way of fostering their entrepreneurial spirit and making sure they recognized the value of creating their own futures instead of accepting hook-ups from friends and family. Maniaci has a slightly different philosophy from his own father that he wishes to raise his children with; he proclaims his plan to give them enough to do something, but not too much to do nothing.

    Justin Barr, Maniacis former partner in crime at TapIt, also started working at the age of 12. In his case, it started out with picking strawberries, and he got what he called a promotion to washing dishes in a restaurant at age 13. He grew up with a single mother who had to take care of everything herself. In order to persevere through this struggle, she was usually working three to four jobs at any given time in order to support her family. Barr describes this as an observational experience that he says rubbed off on him.

    This work ethic is something that would become an essential catalyst to their success. Maniaci described the beginning of TapIt as working 36

    Founders Insight profiles established businesses through which entrepreneurs can provide our readers with an inspirational or motivational story. These stories explain the trials and tribulations they have encountered in growing their business and how theyve persevered to reach their entrepreneurial goals.

    FOUNDERSINSIGHT

  • 20 MARCH 2014

    FOUNDERSINSIGHT

    hours a day. To stress the idea of having impeccable discipline and work ethic, they referenced a recent car ride with Barrs son, to whom Maniaci said It doesnt matter whether or not youre smarter than the next guy. You just gotta be willing to work harder than him.

    Maniaci and Barr briefly described how their collaborative relationship worked. Maniaci saw himself as a peaks and valleys kind of guy, saying my highs are very high and my lows are super low. Maniaci explained that Barr was complementary to his attitude as Barr was more flat, suggesting he has the ability to remain more stable during the peaks and valleys rather than being taken by the emotional ride.

    fortunate in the sense that his wife would interact with his mother as well as his brothers wife, who have already seen first hand the payoff that long-term ridiculous hours can produce (Maniacis brother retired at 35).

    As much as that was helpful, he admits Dont get me wrong, there were still the times where I got the youre never f***ing here and even when you are here youre still not here, youre on your phone and you knowbut at the end of the day she still sees me excited and that makes her excited, because she sees the growth and the potential that we have. But, its only worth it under certain circumstances, like for me number one isyou gotta be passionate about it and

    consultant responded I do have my own business its a mobile company. Something about that stuck with Maniaci and he couldnt sleep.

    The next day he came to Barr and said This is what were doing Justin, were doing a mobile company. They explained that once they knew that their goal was to build a mobile ad platform, thats exactly what they did. Maniaci clarified that the difference between the diet company and the mobile ad company was the laser focus that they exercised during the development of TapIt.

    We wanted to know how Maniaci and Barr measured their success. Maniaci jokingly replied I measure mine with a yardstick as he laughed, unsure of how to answer the question. Barr had this to say: I, for one, have not achieved the level of success that I hope to achieve. I mean, I have a healthy and happy family, and we live comfortably, so Imsomewhere Ill admit Ive achieved some level of success, but will continue striving to reach greater heights.

    Immediately afterwards, Maniaci gave us his perspective: I dont wanna sound clich, but I mean, first of all theres always a dollar number that I have in my head that, to me, really says successwhere you never have to worry about anything ever againbut beyond that, what I think is important is to be able to say hey, youre well liked, youre appreciated, youve got a great family, people look up to you, youre able to help people, and I mean I really think the material things should not define you. Justin sent me a picture message the other day that had a paragraph from James Altucher where he says Every night when I have a bunch of anxieties, instead of counting sheep, I count the things I am grateful for and try to go to 100 and I think thats very important. I dont think success should be defined by your networthBut, itd be nice to have that number! Barr followed up by saying I just want to continue to make an impact on people. Id like to look back one day and know that Ive affected people in positive ways.

    As a final word of advice, Barr had this to say to potential entrepreneurs: Get out there and do it do not let fear grip you. Just take that step forward and dont let your papers of ideas and business plans sit there and never actually take action. Maniaci wrapped up the interview in agreement with Barr saying Dont analyze the root, just take the fruit.

    As for now, both have decided to take some time off for themselves and their families.

    In a more recent correspondence, Barr explained: When you decide to try and build a successful company, its easy for you to neglect other parts of your life, so I have been spending more time with family, exercising, traveling, catching up with old friends, etc.

    The future is undetermined for these two successful entrepreneurs, but based on their personalities, we expect to see them involved in something big again soon.

    It doesnt matter whether or not youre smarterthan the next guy. You just gotta be willing to work harder than him.

    it could be broad. Like for us, were passionate about Internet, but it has to be something thats fun so that what youre doing isnt just work. The second thing is [that] it has to be able to make money, and third [is] to build something thats exitableYoure building something that you know is going to be a puzzle piece and that puzzle piece should be able to fit into someone elses puzzle. So, I want to build something that is going to fit in with a lot of people, so I feel confident that theres an exit strategy there for me.

    When asked about the origins of their venture and inception of the idea for TapIt, they gave us a quick rundown of what led them up to this point. They started out with the realization that there was a ton of money in the online space. Their first company was actually a diet company that sold diet pills, pamphlets, DVDs, etc. They took it to market and utilized their marketing skills to escalate their sales. Before they knew it, they realized theyd sold over 10,000 packages in one month online.

    The issue was that they were dumping a lot of money into the company in order to make it happen. As they began to doubt the potential for making money with their diet company, Barr had the lightbulb idea to sell the ad space. Maniaci explains We sold the advertising space, and from there, our first month out we made about half a million bucks. After confirming the potential for making money in the advertising sales market, they decided they wanted to create something meaningful.

    However, they were clueless about how to do that, so they hired a consultant who dealt with advertising expertise. During their meeting, Maniaci thought to himself: What about the age-old concept that those who cant do, teach? After grilling the consultant, trying to get to the bottom of why it is that hes teaching instead of doing if he knows so much, the

    Maniaci admitted: Justins lack of EQ is what helped balance me out. The two explained the role of fear in their ventures. While Maniaci seemed to have almost no fear at all regarding the success or failure of his companies, Justin Barr admitted to having some fear. He explained that it was not a gripping fear that paralyzed him, but rather a fear that co-existed with his consistent motivation to make things work, and he did not entertain the idea of failure enough to be overtaken by fears power.

    The Little Wins Milestones are the things you hear about in the news; theyre the goals that we all aspire to accom-plish in our efforts to succeed. However, Maniaci and Barr offer their own perspectives on milestones. They believe that Its not about the milestones, its the little wins that are really excitingyou knowthe progress. The little wins are what keep the momentum going and that puts energy into our sales and that was im-portant for the entire thing. Its more like the journey was more enjoyable than the end destination. We asked them if they still experience those feelings now that theyve been bought out and are working more executive hours; they gave us a conser-vative and respectful answer explaining that theres a little less satisfaction in building something thats not your own anymoreits still exciting and its still fun, but theres gonna be a little less satisfaction in building a house thats no longer yours. But, the other thing is that its less fear inducing, and less stress-ful. Its as though weve passed on our headaches to someone else. I meanwe still worry about things to a certain capacity, but its not as much as if it were your own baby.

    The burdens that come with being an entrepreneur can play a large role in the flow of close relationships. Maniaci explained that hes been

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    FOUNDERSINSIGHT

    Have you ever stood at the edge of the high dive at the deep end of the pool, desperately wondering whether or not to just will yourself over the edge? I think we all had that experience at least once when we were kids, letting fear overcome us as we would shamefully climb back down the ladder. This

    is very reminiscent of the plight of the entrepreneur, or rather, those who want to be. Much like jumping off the high dive, there is no maybe or kind of. You either jump or you dont.

    Jason Nazar, the co-founder and CEO of Docstoc, relates to fear in a practical way because he believes strongly that it is fear that keeps people with creative minds from diving into the deep end. The journey is never smooth, nor is it meant to be, but I think thats what makes it fulfilling and purposeful and also why not everyone does it, Nazar reveals. The CEO began his own journey as early as age 6, in which he admits he became an elementary school loan shark of sorts. He had his fellow students borrow money from him with interest after signing a contract; though his first venture landed him in the principals office, it solidified his place among those swimming in the deep

    Dont let fear paralyze your next venture.BY JONATHAN DEAN

    end of the entrepreneurial pool.Nazar grew up in a traditional Jewish household,

    inheriting the hard work pays off in America mindset from his Persian father, who immigrated to New York in the 1950s and met Jasons mother, who recognized Jasons promise early on. From the beginning, Nazar was instilled with the idea of self-sufficiency from his father, who had only ever worked for himself and found success in Los Angeles real estate.

    Nazar rekindled his passion for financial self-sufficiency towards the end of college, earning a business degree and a law degree while balancing budgets as the student body president at UCSD. After graduation and short stints in public speaking, marketing, his own consulting company and even a hypnosis show, Nazar realized the idea of Docstoc.com, which he describes as a place where people [can] get access to any business, legal, financial or professional documents they [need] fast, easy and free.

    Through the process of creating and maintaining his business, Nazar has had his fair share of fear, whether by doubt or financial issues. Nazar admits it instills a lot of fear and I think that fear is most of the time very healthy because its what gives you the

    impetus to figure out how to get something done. However, if not properly managed, fear can be very debilitating to the point of feeling extreme doubt, despair and depression.

    Entrepreneurs just jump into a situation and they know or they anticipate that things are going to get really hard, and they dont have the answers, but they say to themselves When I get to that point, Ill figure it out then, Nazar states in earnest. Whereas people say they want to be entrepreneurs but never do itthey let that fear of the unknown paralyze them from taking that next step.

    Just like focusing on the leap instead of the fall from the diving board, most realize that after the initial splash, the water feels fine. Once youve started the business and you find yourself in a situation where you dont have any money, theres certainly an aspect of fear, but the reality of it is often less paralyzing than the anticipation of the moment, Nazar says, speaking from experience. The CEOs statements amount to the fact that you can never let the initial pain ruin the pleasure you get from calling a venture your own.

    Dont Be Afraid,

    SuperheroBe A

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    Youre not alone in your struggles, so to overcome your fears, you must stand tall and defeat them like the superhero you are.

    Jason Nazar, the co-founder and CEO of Docstoc

    Of course, Nazar has some of the best examples in reality and fiction to draw inspiration fromsuperheroes; this is an easy notion to grasp when you visit his office, which looks more like the Marvel Comics corporate office with all its superhero motifs. I often talk to our team about this idea: Think of yourself as a superhero, and from the office dcor, one should feel like a member of the Justice League or Avengers (whichever universe you may adore more).

    Nazar himself wrote an article entitled 10 Things Startups Can Learn from Superheroes in which he describes the main tenants he and his team adhere to:

    Superheroes1. Are the best at what they do2. Always get the job done3. Accomplish huge feats (make major

    differences or changes in the world)4. Are powerful by themselves, but theyre

    more effective in teams

    Nazar likens his team of talented individuals to a team of superheroes because he finds the above

    tenants to be a great business plan. He finds solace in the fact that each person is as passionate about the business as he is and has been able to generate something that is both