This post originally appeared on Forbes.com.
No one thinks home security is cool or interesting, but when you’ve raised almost $180,000 with a custom made kickstarter-esque website, home security becomes pretty interesting. Lindsay Cohen and the team at Scout realized that home security is a commodity and most of the 17% of the country that has security is dissatisfied with their provider. They thought they could bring security up to date, and to do so they went about building their own organic fundraising campaign to get them off the ground. Lindsay was able to share some insights on how they pulled this off.
Dan Reich: Scout seems like a great product. Why did you decide to raise money without a platform like kickstarter or indiegogo?
Lindsay Cohen: Kickstarter rolled out new rules this year that have disqualified a lot of companies from using their site, including Scout. Too many companies were raising millions of dollars without a solid plan to deliver on their promises. At about the same time those rules hit, Lockitron launched their project and showed that you could be successful with an independent crowdfunding site. We felt well prepared for the campaign and were able to save 5% (about $9000) in fees by not going through a third-party website. That money goes a long way for a startup.
DR: You mentioned that you raised money without a first generation product. What assets did you have when you decided to start this fundraising campaign?
LC: Scout came out of the Sandbox Industries startup foundry in Chicago, IL. We had some initial seed money from Sandbox to do the research and development on the project. We used that money to complete the market research, create our initial prototypes, create our website and pay a small team to execute our rollout plan.
DR: As of this writing, you raised close to $162,000. How did you pull this off?
LC: A huge part of our success has been attributable to our ability to get press coverage. In order to do that, we spent the month prior to our campaign planning who we would contact in the press and how we would pitch the story. Since then, we’ve had a small team here at Scout that has been hustling and executing the Scout plan for the majority of their waking hours over the past three weeks. We do have a small budget for pay-per-click ads and an ad retargeting campaign, but press coverage is far and away the biggest reason we have been able to raise $160,000 to date.
DR: What advice would you give to people that are thinking about doing their own crowd funding project?
LC: Know what you’re getting yourself into, put the time into creating an aggressive rollout plan and then execute your plan every minute that you aren’t sleeping. There is a massive amount of preparation that goes into making something like this happen. We’ve written two blog posts on the topic to help others learn from our experiences. There are pros and cons to our approach. Don’t dismiss Kickstarter, if you qualify, just for the sake of doing it yourself. You can gain a lot of leverage from an existing crowdfunding site with a built-in base of users.
DR: What do you wish you would have done differently?
LC: We wish we would have talked to our early backers of Scout more often and given them more chances to share news about the project. We planned to contact them mid-campaign and during the last week, but we should have started in the first week and touched base every week thereafter. Backers are your best evangelists, their sharing efforts on Facebook and Twitter allows you to reach a whole new group of people that you otherwise would not have reached. Also, we would have incentivized sharing more often. Running referral competitions and motivating people to share can be highly effective.
De Ja Vu. Another trip to the Rose Bowl and another loss by Wisconsin. That’s how 2013 started for me but you can’t win em all, right?
Like all new years, I try to take some time to reflect on the past year. I think it’s a healthy and worthwhile thing to do (Here is last year’s review). It also helps to put things in perspective when thinking about the year ahead. So let’s see how this year went.
I mentioned it earlier but this January started off like last January. Wisconsin lost in the Rose Bowl. Shocking. Last year however I wasn’t in Los Angeles for the game. I think it was because I was looking forward to a much bigger game that would take place the next month.
(Indianapolis – Left to Right: My sister, brother, me.)
February. They did it! The Giants won the 2012 superbowl and it only took me 11 hours to drive across the country to Indianapolis with my father, brother and sister. The game and experience were both incredible. The icing on the cake was the fact that I took the Giant’s to win with 25 to 1 odds. That will probably be the luckiest bet I ever make, but I’ll take it. I also had the chance to meet a lot of great people, performers and athletes but perhaps the most interesting encounter was when I bumped into Flavor Flav at the McDonald’s airport for my 4am flight to California. Yes, he was wearing his giant clock even at 4am. He was also on my flight.
Life is a series of ups and downs and March was one of the tougher months of the year. A family member of mine passed away from congestive heart failure. I’m not sure what else to say about that month other than it sucked.
April was better. In just one month I would be getting married. Even typing the word “married” is still a bit strange but I wouldn’t change it. Aside from the wedding plans, I got to head back to Madison, Wisconsin with Andrew and Corey to talk to some students about our Spinback experience. As one friend put it, “the student becomes the teacher.” I don’t think I would go that far but it was great to share some stories with students.
May is when I married my best friend, Amy. The wedding was incredible and I still need to watch the wedding video. I’ll be sure to do that in 2013. After the wedding we did the honeymoon thing and traveled across the country and to the Pacific: Hawaii. It was my first time there and I’m sure I’ll go back at some point. It was also a major milestone in my life as I finally got to cross
sky diving off the bucket list. I expected to be terrified jumping out of the plane but it was one of the more peaceful and exhilarating experiences of my life. It’s something I highly recommend that you try. I also got to play golf at some spectacular courses which only reconfirmed how much work my golf game needs.
(Amy is already out of the plane)
In June, Buddy Media got acquired by Salesforce.com. It was such an incredible experience to work with Mike and Kass Lazerow as well as the rest of the Buddy Media team. It’s amazing how much you can learn in such a short period of time. The deal was finalized in August and then I took some time off to do some traveling. Amy and I went to Greece, Turkey and Israel, ate some amazing food and did some extraordinary site seeing. If there is one thing I took away from that trip it’s this: Travel more. Life is short and the world is small. I’m pretty sure Australia is next on my list but who knows when I’ll make it there. And now I’m thinking about this quote I recently read.
The World is a book, and those who do not travel read only a page. ~St. Augustine
Overall, 2012 was a phenomenal year. I learned to be more fearless, more independent and more appreciative of the important things and people in my life. In 2013 I’ll write some new chapters and blog posts. I’ll start a new business venture and keep moving on in this little thing called life.
Here are some random and meaningless predictions for 2013:
- - Green Bay Packers will win the super bowl
- - Zero Dark Thirty will win an award for best picture
- - Iran will get a serious wake up call to stop development of nuclear weapons
- - The internet will be less about people communicating and more about things communicating
- - There will be another major stock market crash
- - The health care industry will finally undergo disruptive transformation
- - All of my predictions will be wrong
- - I’m going to remind myself to never make any predictions ever again
This post originally appeared on Forbes.com.
“I’m terrified. I have no clue what I’m doing.” When you’re trying to build an exciting business you would think the description would be a little different but my friend continued. “I have a great idea for a business and I know it will work. I just need $300,000 to make it happen. I want to ask my family and friends for money but I don’t know how. How does it work? Is it a good idea? What if I let them down?”
Starting a business is extremely difficult and like any business, it requires capital. We often read stories about people raising millions of dollars from venture capitalists but most people don’t have access or the means to raise money from a VC. For the vast majority of people, money is raised from banks, from personal savings, and from family and friends. So it’s no wonder my friend was terrified. There’s an emotional tax associated with a capital raise from close relatives. It’s the feeling of losing dollars and trust from your strongest supporters.
Nonetheless, the thought of losing family money shouldn’t prevent you from doing so. So what do you need to know if you want to raise money from family and friends? What are the important things to think about? Here are a few points to consider:
They know all about risk and reward, right? My friend heard about my new business and asked me if he could invest. I said no to him three different times and on three separate occasions. On the fourth time he said something that stuck with me and I ultimately changed my mind. He said, “I’ve invested before and I’m not afraid to lose this money.” Good point, friend. If you’re talking to friends and family that can afford to invest, it’s likely they understand the concept of risk and reward. After all, that’s probably why they can afford to invest some of their money in the first place.
Give fair and favorable terms. Taking money from close friends and family may typically happen in the very early stages of a company. The earlier a venture the riskier it is. If you have a friend or family member that wants to help you get off the ground you should consider giving them favorable terms on their investment. You can make them a larger equity holder. Or perhaps you give them favorable interest rates on a loan they give you. As long as you’re having an honest conversation with them, you can figure out a fair deal structure. Which brings me to my next point.
Be honest. If you’re involved in financial transactions with close friends, it’s extremely important that you are brutally honest and transparent. Sure, you’ll discuss things like terms of the investment and how the business will grow and make money. It’s also important however to talk about expectations. The last thing you want to do is build your business at the expense of a trusted relationship.
Diversify your investment base. When you’re making fundraising rounds with friends and family you may have the opportunity to take money from more then one person. If you do this, you’ll diversify your investment base. You’ll be able to provide some risk protection for your investors even though you’ll be limiting their upside potential. Less money in means less money out. On the other hand, having more investors means managing expectations and communications among more stakeholders. This can get very time-consuming especially when you are trying to run a business. But hey, there is a reason you often hear the word “diversification” when it comes to money management.
Social Proof. Would you invest in a company or entrepreneur that couldn’t raise a single dollar? Probably not. Raising money from your friends and family is a decent indicator that you can successfully convince someone to believe and invest in you. Even if it’s from your parents or your best friend. It sets a baseline precedent that you are capable and trustworthy of managing capital and this is very important for more meaningful capital raises and conversations later on.
Today, there are new technologies that make it easier than ever to raise money. These are crowd-funding platforms that facilitate investments among large networks of individuals. However, it’s often easiest and perhaps most problematic to mix funding with family. If you go down that path, make sure you are thinking about some of the implications. You might all become rich but you also might shake up a relationship or two and that might make for an awkward family dinner.
Have you ever taken an investment from a close friend or family member? Have you ever invested in one? What advice would you give?
Dan Reich is a tech entrepreneur and engineer. He has founded and sold multiple companies, the most recent of which was acquired by Buddy Media, which in turn was acquired by Salesforce. Follow him on Twitter at @DanReich.
This post originally appeared on Forbes.com.
Ian Monroe is a lecturer at Stanford University, as well as the founding CEO of Oroeco, a company that’s gamifying personal sustainability (and seeking to incentivize the global economy in the process). It’s a big mission and I was intrigued by what his company is working on so I caught up with Ian to hear more about Oroeco’s trials and tribulations, as well as his relocation to Santiago for Start-Up Chile.
Dan Reich: When and why did you decide to become a social entrepreneur?
Ian Monroe: Well, I suppose my path to social entrepreneurship was part inspiration, part imitation, and part process of elimination.
I’ve spent most of the last decade bouncing around the world while working on projects related to energy, sustainability, and international development. I enjoyed working with non-profits and corporate clients, but I didn’t see many lasting impacts come out of my field research and report writing. I also enjoyed collaborating with academics and government, but the lack of information transfer from research to policy-making and public awareness got similarly frustrating.
As these frustrations were building up, I saw many of my friends start companies I’m convinced are going to change the world, like Lukas Biewald (CrowdFlower), the late Corwin Hardham (Makani Power), and Brent Schulkin (Carrotmob). Being surrounded by entrepreneurship mentors – where I live in San Francisco’s Mission district there are literally dozens in every direction – made the process of founding a startup seem less daunting and more doable. All I needed at that point was an idea worth dedicating a substantial chunk of my life to build into a business.
DR: How did Oroeco become the idea you decided to build into a business?
IM: Oroeco was born out of seeing both need and opportunity. Fundamentally, Oroeco is something I’ve wanted for my own life for a long time. Despite being a supposed “expert” in sustainability – to the point that I’m invited to teach courses at Stanford on the topic, speak at conferences, and contribute to industry certification efforts – I still can’t walk into Walmart or a grocery store and easily quantify which options are best for other people and the planet. And the choices I know make a difference – like driving less and eating less red meat – are often offset by my international flights.
What I’ve been missing is a tool that easily tracks all my choices, shows me how they compare based on the metrics I care about, and suggests and encourages improvements. Ideally this tool would be fun and social too, since it’s easy to get overwhelmed by data, while comparisons to friends are a lot more engaging.
I also found myself increasingly thinking an Oroeco-like service was needed to realign our economy for sustainability. Most large-scale social and environmental issues – like climate change – trace back to companies producing goods and services that ultimately get paid for by consumers. So informed consumption can drive supply chains to become more sustainable, but first we all need the information and incentives to make better choices.
The idea for Oroeco didn’t refine into a social business concept until I saw that technologies already existed to make it happen. First my environmental life cycle assessment research with Stanford and NRDC exposed me to a bunch of great data sets, which quantify sustainability impacts for most products and services. Then I saw technologies like Mint.com make it easy to automatically track all my spending and investment in one place. And the last piece was seeing the opportunity to connect both of these data feeds to the growing ubiquity of Facebook and social gaming.
DR: What are the biggest challenges Oroeco has faced so far?
IM: The biggest initial challenge was building a great tech team. It’s funny, because I considered myself to be more of a “techie” than most with my science and engineering background, but unless you’ve got “computer” or “software” in front of your degree you don’t count as “technical” in the Silicon Valley.
Finding a team of solid technical co-founders took nearly a year. The process was made more difficult by the fact that Oroeco was entirely bootstrapping, so I was essentially only offering equity and enthusiasm for how Oroeco could change the world. On the positive side, we’ve now got a fantastic team that’s both highly qualified – most are startup vets from Stanford, MIT and UC Berkeley – and as passionate about personal sustainability and Oroeco as I am. I’m particularly excited that our primary engineering leads are two awesome women (Yang Ruan and Kirstin Cummings), which is a rarity in the startup world, and something that’s helping us incorporate gender-balanced perspective into design decisions.
DR: Chile is a long way to go for a startup accelerator, what convinced you to leave San Francisco for Santiago?
IM: We considered a few American startup accelerators, but by offering about $43,000 in equity-free investment, Start-Up Chile was by far the best deal we could find, as well as a great opportunity to connect with a network of international entrepreneurs who can eventually help Oroeco go global.
I’m the only Oroeco team member who’s spending a full six months in Santiago, while the rest of our team will keep circulating between the San Francisco area, Boston, and New York. While I’ve had the opportunity to work in much of the rest of Latin America on various sustainability projects, this is my first time in Chile.
On the more personal side, I’m fascinated by Start-Up Chile’s model, and getting a firsthand look at its successes and failures. The program is already being emulated by other countries, like Brazil. Start-Up Chile clones could catalyze entrepreneurship throughout the developing world, and the program is already sparking a tremendous amount of international networking and knowledge exchange.
DR: How has the Start-Up Chile experience compared to building a business in Silicon Valley? Has Chile succeeded in creating a startup-friendly environment?
IM: Overall, Start-Up Chile has been fantastic. The support staff and working environment are great. Santiago is an easy city to navigate, with public transportation on par with San Francisco and many European cities.
Navigating the Chilean bureaucracy has been a bit more challenging. Start-Up Chile has tried to streamline the process as much as possible, but there are still a lot of paperwork hoops to jump through. It took me nearly a month and more than a dozen signatures to open a bank account through a local Citi branch, then another half dozen documents to sign off on just to put cash into my account. In contrast, setting up a Citi account in San Francisco took about 15 minutes, and I’ve opened an account in Beijing in about as much time, despite my Mandarin being much worse than my Spanish!
DR: Oroeco’s mission is to fundamentally shift the global economy towards sustainability. But that task seems quite daunting, particularly for a little startup. What are your biggest challenges ahead?
IM: Our current challenge is to spread the word that we exist. Our big push now is to recruit our first beta users through our Indiegogo campaign – indiegogo.com/oroeco – which wraps up January 1st. So if people hear about us, like what we’re doing, and want to try us out, that’s the place to go. We’ve got a next to nil marketing budget, so we’re relying heavily on social marketing and word of mouth.
Over the longer term, the challenge is to simultaneously grow our user base while keeping our existing users engaged. There’s plenty of market research that shows most people want to live more sustainable lifestyles, and Oroeco can be a disruptive technology that changes how people and companies incorporate sustainability into decision-making. But for that to happen we need to scale to millions of users, ideally hundreds of millions, and these users need to be engaged enough by Oroeco’s user experience that our information and incentives factor into their everyday choices.
Our success will ultimately hinge on our user experience, since a compelling product will market itself. We think we’ll appeal to more users as we add societal, health and environmental impacts indicators beyond climate change, and we should appeal to even more users as we refine our social gaming and rewards. The challenge is to add functionality without compromising on design elegance, and to provide a flexible interface that can accommodate a wide range of user preferences.
A final challenge is protecting user privacy, particularly since we’re working with financial transaction data that can be sensitive. It’s important users trust us with their information, and have faith that we won’t create a great service that changes the rules of the privacy game once it hits critical mass. Users understandably get quite upset when this happens, which we’ve seen most recently with Instagram.
DR: Any parting advice for aspiring social entrepreneurs?
IM: It’s cliché to say, but the most important thing is to be thoroughly passionate about what you’re working on. And don’t be afraid to share that passion with everyone you know. Your honest enthusiasm is what will attract like-minded team members, as well as investors and users. It’s also ultimately what will make the bouncy startup journey fun and rewarding, even if you end up in a ditch.
I’m naturally a pretty laidback guy, with a tendency to engage in long-winded academic discourse, so infectiously exuding my excitement for Oroeco is a challenge. But I’m still happily working long nights and waking up excited, which is only the case because I still thoroughly believe we’re building something that will help craft a sustainable future. Sharing this passion with a great team and crew of awesome advisors has only magnified this feeling. Now we just need to demonstrate there are a lot of users out there who feel the same way.
Dan Reich is a tech entrepreneur and engineer. He has founded and sold multiple companies, the most recent of which was acquired by Buddy Media, which in turn was acquired by Salesforce. Follow him on Twitter at @DanReich.
I just finished up my National Ski Patrol refresher over the weekend. This is the 12th year I’ll be volunteering as a patroller at Mount Snow Vermont. For those of you that don’t know what ski patrol is or what we do, you can think of it as an EMT on skis or in my case a snowboard that is primarily responsible for the immediate response, rescue, stabilization, and transport of a patient off of the mountain and to a primary care resource such as a doctor or hospital.
Hurricane Sandy has made everyone aware of the importance of good preparedness and immediate rescue in emergency situations. With that in mind, I wanted to share a few tips that you could use in times of an emergency.
Hands-Only CPR. In times of an emergency or a disaster, it is likely that people around you may go into shock. This could happen for a number of reasons but the result is that a person may experience low blood pressure, a rapid heartbeat, or poor diffusion which means organ’s aren’t getting the appropriate blood and oxygen levels. These issues can lead to death. One serious cause of shock might be due to hypothermia. With many people still out of heat, coupled with another storm coming, it’s entirely possible that you come across someone in need of CPR.
We watched this video (below) at our refresher and it is a great lesson on hands-only CPR. You can do this without being certified in emergency healthcare and it could make all the difference in a life or death situation. As for the video itself, please disregard the emergency number in the video as this was created for the British Heart Association.
Have a Plan: In Ski Patrol, we train and plan for a variety of scenarios that are both likely and unlikely to occur. The likely scenarios are things like broken legs or head injuries. The unlikely scenarios are things like an entire chairlift collapsing. In either case, we have a plan and set of tools we can use to handle any situation.
In times of an emergency, it is important to stay organized and have a plan. Hurricane Sandy caught everyone off guard and many were ill-prepared. In 2001 my family was also caught off guard when an F2 tornado hit our house in New Jersey.
Just like the fire-escape route in your office building, your family should have a defined plan of action in the event of an emergency.
Have the Tools: I think we all now understand the importance of preparation so some things to consider include: food and water supplies, clothing for extreme weather conditions, medical supplies like bandages and medicine, tools like knives and shovels, and gas and fuel.
Below is an actual list of items that a Sandy victim is in need of. Might you need these things too in case of another emergency?
- - work gloves to pick up your sewage soaked stuff
- - black garbage bags to put them in….
- - swiss army/leatherman type multi tools
- - hand sanitizer
- - plastic grocery bags for use over spackle bucket as toilet. baby wipes and diapers also
- - paper towels / toilet paper/ zip lock bags all sizes
- - plastic tarps to lay your good stuff on so it stays off of the wet porch and street while you pack it in your car…
- - rope to tie down your roof and your hatch back so you can fit more stuff per trip.
- - rubber boots for cleanup volunteers and the older people wandering the street in their slippers because they will not leave their homes….
- - propane as people are using their gas grills to keep warm…
- - flashlights/batteries/head lamps
- - metal water/paint buckets to boil water on the grill to make cup of soup/canned ready to eat meals (think chef boyardee) especially with pull tops!/tea/hot cocoa/instant coffee also flip top canned fruit!
- - certified red plastic gas cans… as people are bringing poland spring jugs to the gas station and being turned away .. 2- 1/2 gallon or smaller…. we would love 5 gallon ones too but they are very heavy to carry when full especially if you have to walk a great distance…….. trust me I know!
- - our “pipe dreams” are for generators and hand trucks but we will work on the small stuff for now…
- - I know there are more items but these are what WE needed when we were there… clothing and food being brought by local scout troops etc but the above things the stores down there are out of!
So there you have it. Having a basic understanding of life saving skills like CPR, having a plan, and having the right tools can make all the difference in another disastrous situation.
There were at least 30 of them just standing there, listening to the tour guide talk about the room they were about to walk into.
Some of them looked between 60 and 70. Some of them looked much older. All of them however were speaking very heavy German. I’ve been to Germany before but this was a sort of different German. It was the type of old, rustic, 2 generations ago German that I’ve only heard a few times in my life. One time when my grandparents said a few words in the language and another time when I was visiting Frankfurt Germany for the 2006 world cup.
This group was about to walk into the room that I had just left. A room that left me with a sharp pain in my throat and no matter how many times I would go back into this room, I knew that sharp pain would always come back.
Auschwitz. Dachau. Treblinka. Birkenau. Bergen Belsen.
These were some of the names of the death camps that Nazi Germany built and used to kill over 6 million Jews, many of which were my relatives.
(I don’t know if the picture above are actual relatives of mine, but with the same last name they must have been related to me at some point in time, right?)
The names of these camps were also engraved on the floor of this remembrance hall. It was a special room of Yad Vashem, the Holocaust Museum in Jerusalem, Israel.
As I walk out of this remembrance hall, I can hear the elderly group very softly asking the tour guide questions in German. It was refreshing to see a group like this visiting the museum in hopes of learning more about those horrible years. Inquisitively asking questions. Looking upon their tour guide and consuming every word as if they wanted to imagine what it would be like to actually be there.
..actually be there..
They were probably about the same age as my grandparents both of which are holocaust survivors.
And that’s when I stopped to turn around.
Then my brain started to fire off questions..
Were they Nazi soldiers?
Did they help the Nazis?
Were they civilians?
What did the see?
What did they hear?
What did they do?
What didn’t they do?
These questions kept bouncing around in my mind. I walked away and concluded that they were probably just innocent bystanders of the war having little or no involvement.
And that is precisely the moment when I felt the worst.
How is anyone innocent when they silently stand by while pure evil or injustice is happening around them? How is anyone innocent when people are packed in to cattle cars only to be shipped off to death camps?
And that brings me to today.
Our world is fucked up. Although we think the world is a better place, which it is, there is still a lot of hate and injustice floating among us. Bullying, antisemitism, racial stereotyping. Even at a lesser degree we see injustice happening in places like work, school, and politics.
And yet many of us including myself sit by and do nothing.
Today we have Facebook, Twitter, blogs (like this one), and it is extremely easy, physically speaking, to take a position and speak out against something you disagree with even if it is only 140 characters long. This is happening all over the world today. It is the cause of new revolutions and uprisings from places like the middle east to places like China. This past week alone we saw a 14 year old girl stand up to Al Queda using her blog.
During the Holocaust there wasn’t an easy way to share information and stand up for something at a large scale. There were many German civilians, and even Jews, that stood by and did nothing.
Seventy years later there are German citizens who are donating their entire estates to Israel due to the guilt that went along with their actions or inactions. Seventy years later I witnessed firsthand the guilt that went along with those actions or inactions.
If we see injustice happening we should use the means around us to take a stand.
Standing up for something today is much better than standing over a memorial tomorrow.