This blog and it’s future

This blog will soon go under a domain name. I will turn this blog into a more professionally handled blog. How soon this will be I cannot tell at this point. Just wanted you to know that I will create a business structure around it and start letting you readers suggest startup related subjects for me, and my coming blog writers, to cover.

There will also be open ad space for up to 10 advertisers as well.

I think you will see this transformation take place in the first half of 2009.

Until then: Happy New Year:).

Spend your cash and your startup will become a rich venture

Did you react to that:)? Think I am crazy? I can assure you, I am not crazy. I actually got that catch phrase from Mr Robert Kiyosaki (he wrote the book “Rich Dad, Poor Dad”).

What I mean with spending your cash so that your business can be a rich venture is not to go out and buy new furniture for your overly expensive startup office (which you can’t afford in the first place). I mean, you need to spend money on marketing. Spend money on it like crazy, but spend money on smart marketing. Only invest the boat load of your marketing budget on procedures that generates results. Google Adwords, used correctly, is one inexpensive and very laser targeted way of marketing your offline and online business. Google Adwords generates warm and pre-qualified leads (meaning “very interested, potential customers” calling or emailing you).

This post will not go into technical details on how you do this Google Adwords thingy. I let professionals teach you that. I am the expert at startups, so let’s stick at that shall we?

When I start a new business venture, my very first act is testing the idea on Google Adwords (just like Tim Ferriss author of “4 hour work week”). I do this to see if I can get pre-orders attracted to me and my new product/service. I usually have some kind of website constructed so as to make it easy for people to sign up on a contact form (pre-qualification stage).  I then use the pre-orders to start a business and attract other resources like a COO (Chief Operating Officer) who can make this business even more  viable (without my direct input in the day-to-day activities) by even more concentrated marketing so as to attract even more pre-qualified prospects. And this will then fuel the continued expansion of the business. All without my direct input, I will let the COO handle business for me. I will only take care of pre-planned updating deadlines with the COO who then goes back to work again.

So, remember: If you don’t invest a lot of cash in marketing, then don’t yell if cash is not rolling like water to you, it’s your fault in the first place. Now, heat up that marketing engine (if you haven’t already). You can’t succeed without marketing, you can’t succeed if no eyeballs sees you. It’s as simple as that. Believe me, I know. I live it.

Take care and see you as soon as I have something interesting to write or if you guys inspire me with something related to startups:).

Private banking – The way the rich save

I wrote a post a while ago about the importance of having a savings nest egg to live on while building your startups. As mentioned then and as mentioned now:  you live on the interest, not the actual nest egg. You eat the golden eggs so to speak. You don’t eat the goose.

I just wanted to expand on this subject a bit.

Many people save money in a regular savings account and they always get the worst possible interest rate. Rich people wouldn’t do that. I wouldn’t do that at least.

I would go to my bank and ask them to direct me to their Private Banking departement. Private Banking is like VIP service for rich people. You usually need to have a couple of hundred thousand dollars to to be eligible for this service.  But do not mistrust, if you create companies that succeed you will have more than enough to impress those bankers:). The reason I mention this now is because you need to know what to do when you do get those millions of dollars. You can’t plan that later on. You need to plan now. No excuses, OK?

So, I would be directed to the Private Banking departement of the bank and I would say “Mr Banker, I have $X hundred thousands (or millions, whatever suits your situation) to bank with you. I want to lend this money to the bank at a fixed interest rate of 7% (or more) annually. I also want all of those 7% to be paid-out annually for me to live on”. They usually oblige, because this is after all VIP banking. This is not some average Joe banking service.

The reason you want to do this is so that you can really enjoy the fruit of your hard labor (or fun labor if you like creating companies. Like me:)). So the more you make, the more you keep. And the more you keep, the more passive income you get in the form of interest income.

When you can see this abundance of money, you will never be afraid of losing the cash you have accumulated an start over. Because you know that if you just make it over, say $500,000, and you place this with the Private Banking service, your golden. And you are more or less back to where you where.

“Only $500,000″, you say. Yes, I say $500,000. You can create that wealth with ONE company. If you don’t believe that, then I have doubts about you. At least in the career choice of a startup entrepreneur.

What do you want to read about?

What do you want to read about on this blog? Remember: The subject most be relevant, meaning it has to be about startups. Nothing else.

Please post your comments below and I will sift through them. Thank you in advance.

Two ways of selling your company

There are two main ways of selling your company. I guess you know them:

Private selling – Selling your company to another company or selling to a private individual buyer

Public selling – Going public.

This post will be about going public, but with a fun twist: “How to go public without all the hoops and hassles.” Ready? Here we go.

Let’s say you built this multimillion dollar company. And you now want to let go of the reins. You want out, but not necessarily stop owning shares in it. Just stop being the “head” of the company. You would like to go public, but you wouldn’t want to go through all the hassles that brings with it. So you come up with a new way of doing this in a shorter time frame that it normally requires. You contact a lawyer firm with expertise in M&A (Mergers & Acquisitions) deals and you tell them to find a publicly traded company similar to yours. A company that would consider taking over your company, but without having to pay cash for it. The deal would be for the publicly traded company to create new shares and give you these shares in return for 100% of your company. In one swell swoop you would be a mayor player in the publicly traded company and with less hassle in terms of time, money and energy.

This happens daily. This is not a new idea. It happens often. The great thing about publicly traded shares is that public shares can be used as money in transactions, when cash in the bank is short or non-existent. Isn’t that magic? I think so.

I have a brittish financial company (private company). My exit strategy is to either sell of privately or do as mentioned above, through an artifical public offering. If I did the second option, then in my case I would add one thing, a 12 million SEK allowance annually (a passive income stream to me personally) for 40-50 years. That would make my retirement. Not that I would stop creating new companies after this company though (I would continue on doing more creations and make more millions), but it would still make a nice cushion for those rainy days people speak about.

How using savings interest to live on while building companies is good

This post is more like a “post-startup-sell-off” kind of thing.

Say you build this startup to be a company worth $100 Million and you sell it off and pay taxes on it (I am swedish and in Sweden we have a 30% capital gains tax. We will use this tax rate as the default tax rate for capital gains from now on. If you live in the US or other countries, then please go ahead and use your capital gains tax rate).

So when you sell the company for say $100 Million and you have paid $30 Million in taxes, you will have $70 Million left (obviously).

If you can find a savings account with 5% interest (you can find those accounts in Sweden everywhere you go at these days. I don’t know about other countries unfortunately. Please go ahead and shop around) you can get a hefty amount of passive income from those $70 Million ($3,5 Million in interest income a year to be exact).

The point I want to have said is: Your mission is to start a company, get it to a stage where it generates big revenues and with a good enough profitable level so that you can sell it of for at least 10 times profit. Then pay taxes on the gain and deposit the whole amount (less some living expenses during the first 12 months) into a high paying savings account.

Don’t factor in inflation for now. I really think inflation levels etc are kind of non-interesting for one reason: If you can make so much money as $100 Million I don’t think inflation will kill you. If that where the case, then employees wouldn’t afford to buy milk due to it being more expensive to buy milk today than yesterday. But they still do. And if you make as much as a couple of millions passively every year, then I don’t think inflation will be anywhere near to kill you.

Inflation also goes down from time to time so what you lost will certainly be regained later on anyway. I know I will hear bad words from detailed oriented people now, but I will stick to my guns on this one.

The fact is: You will still earn more than many people do in a lifetime and not even have to work for it. I think that is a pretty good trade off for a couple of years of determined company building. Wouldn’t you agree?

I mean, it only requires one company to succeed big time (you may lose a couple of companies at first, but if you score big on only one company you are pretty much set for life).

The Importance of Being an Optimist

One of the things you as a startup entrepreneur need to become an expert at is: Optimism. Because you will need it. I kid you not.

I can’t tell you how many pessmistic people and cynical people I have met in my 7 years as a startup entrepreneur (serial entrepreneur). I have heard all of the reasons you can never succeed at doing startups. I have heard all of the reasons why I am the most low-intelligent idiot ever to start a business and actually succeed.

You need to become ignorant of the world views of such people. Their world view is often the most non-realistic there is. They have so much negativity in their lifes that they cannot see reality as it really is.

There are two ways to look at the world. Through the optimistic lens and through the pessimistic (even cynical) lens. Try to stay in between and you will stay healthy and also succeed more often. But try to be more optimist than pessimist. For your own good, that is.

You don’t need a bunch of people telling you that you can’t do anything. It is fairly enough having your own negative thoughts to tackle with. I believe all of us are good enough to judge what is bad or not for ourselfs. I am fairly certain we don’t need a negative cheerleader crowd to teach us that or indoctrinate us with that filthy shit.

Tell all of those negative people this: “When I want your opinion I will ask for it, until then shut up and get out of my face. Or take up that shovel and dig me a hole and contribute”.

The startup phase is the most fragile stage of a company. It is untested, it is not trustworthy and all that. But let me give this last advice on this: If the startup will succeed or not should always (and never deviate from this) be decided by your customers and the team running the place for you. Never the (mostly) uneducated bunch of “know-it-all”, the cynics.