Saturday, January 16th, 2010

How To Get Published in Magazines In Just 90 Days

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Would you like to be published in print and online magazines…in just 90 days?

That’s what happened to my new friend Brooke, who generously agreed to answer some questions about how she got published so quickly.

Here’s our Q&A:

Q: Hi Brooke. I get asked by aspiring writers all the time: “How do I get published?” — Can you talk about how you went from a blog to getting a articles published in commercial magazines?

Absolutely. I can sum up how that happened, as well as the advice I would give to others around that topic in four words: Stop typing, start talking.

Being the extrovert I am it was natural for me to focus on my skills that had little to do with writing, but rather direct communication and relationship building.

What I write about is a topic deeply close to my heart and I do spend a lot of time at my computer, but getting it out there takes more than a great column.

Connect with your friends and tell them about your blog. Pick up the phone!! Reach out to your old boss, your yoga teacher, your co-workers.

Create a focus group either in your living room or via email- ask your friends specific questions about your blog, your writing, and what they want to see more of.

Literally start talking (over email definitely counts), socializing, and connecting.

In my case, the specific social vehicle that supported my blog being picked up in print the first time was…wait for it…Facebook.

I shamelessly and proudly told Facebook friends about my blog, checked out what old friends were up to, re-connected with them around our passion for writing and expression, and thought of creative ways to work together.

And when I wrote about a topic I thought a friend would like or be interested in, I linked it to their pages with a short message.

For example: When I partnered with Primer Magazine for a new men’s advice column, I put the link on my ex-boyfriends page (who I’m friends with) and wrote, “For all those times you thought I was wrong…” and believe me, that got comments and attention.

For one of the publications, my blog was linked to my mom’s Facebook page (yes, really) and seen by the publisher of a commercial magazine. I got a call, and so it began…

Q: What are some top tips you can provide on how to be a writer?

I think if you’re a writer you just know…not because you’re great, but because you love it. Love. Love. Love it.

I’ve never taken a writing class, nor received an award for a high school essay or short story, but I love to write. When I write something I’m proud of, I have energy in my heart and bones for days (cheesy, yes. but also true).

If you want to be a writer, write. Make time to write. Make space to write. Don’t only write the things you hope to publish on your blog or elsewhere.

Write in a journal, write letters and cards to friends, write morning pages (from the book, The Artists Way).

Build your voice. Try new things. Write. Read. Talk. Get inspired.

One of my closest friends Gabi Moskowitz, of the fabulous blog Brokeass Gourmet said to me one day when writers block was consuming me…

“Instead of working so hard to write, start working hard on being inspired.”

That pretty much sums it up.

Q: What are some tips for writing your first blog posting?

Just write it. Really, just write it. Be careful about hinging on the fantasy that your first post will be published and make you famous and and and…that’s a flavor of pressure that you just don’t need to taste.

Just remember…it’s called your first post for a reason.

The best advice I’ve ever gotten when it comes to starting something is “The only difference between those with an idea and those with a successful idea is doing something with it.”

Your blog will never be successful if you don’t start it!

Find a friend who knows about blogging and ask them to help you set it up and give you a little 101 about how to post, edit, and manage your new blog.

Take them to dinner as a thank you…and then take a breath, and go for it…

Q: I know you’ve also got a book in you — would you talk about the approach you’re considering to go from blog to book?

I definitely have a book in me. Right now though, I’m practicing what I preach and not attaching myself to any particular route, or destination for that matter.

There are different options for writing a book including writing a proposal in print, writing the entire book and sending it in to an agent, self publishing, or writing an e-book and self-promoting.

I’m in the stage right now where I’m working on the foundation and intention of my book, meeting new people in the writing world, proudly accepting new opportunities to build my audience and my writing voice…and trying to breathe along the way.

But don’t let that grounded energy be confused with passiveness… My book will be out there one day soon.

Q: Thanks, Brooke. If someone wanted to get in touch with you, what’s the best way for them to do that?

You’re welcome!

The best way to reach me is through my blog Soapbox Therapy or email me at [email protected].

My psychotherapy office, where I see individuals, couples, and families in San Francisco can be reached at 415.294.4044

Thanks!

Brooke.

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Thursday, January 14th, 2010

A Networking Pro Explains How to Master LinkedIn in 8 Easy Steps

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My friend Drew Sanders is one of the best networkers I know. He recently presented his Action Plan for using the networking tool LinkedIn to insurance giant Chubb…and was kind enough to let me share it with you.

If you want to know why you should be linked in, check out my You Must Be LinkedIn article.

Here’s the 8-step plan for setting up and managing LinkedIn:

Step 1: Complete your Linked in Profile (1 Hour)

• Have a coherent narrative of your history from college graduation
• Print out several examples that you like and model yours after theirs
• Brevity is appreciated by all
• Be factual, but humility is a good tack

Step 2: Email accumulation (1 Hour)

• Export your outlook contacts to a (CSV file)
• Do the same for your hotmail, yahoo, or Gmail accounts
• Extra Credit
  • if you have emailing lists from when people have accidentally not bcc’d people and you saw some cool email contacts and saved the emails.
  • Export those as well.
• Any email from anyone you have ever met now has more value than just a way to get a hold of that person.

Step 3: Contact Invitation Process (1 to 3 hours depending on number of emails)

• Load all the emails into the LinkedIn Platform …

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Thursday, January 7th, 2010

How To Use The Google Wonder Wheel To Create More Efficient Content

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Have you heard of the Google Wonder Wheel?

It’s been available for 8 months, but few know what it is…and I hadn’t heard of it until recently.

I use Google Wonder Wheel (it appears within the “Show options” after you search something on Google) as a word reference tool when I’m writing a new article —  to get an idea of things to include.

Google Wonder Wheel = More Efficient Content Creation

For example, I wrote an article two articles on the SWOT strategic planning tool (SWOT Analysis and SWOT Analysis Examples) the strategic planning tool. And when I searched “SWOT” on Google Wonder Wheel, I got back the following topics:

1. Strategic Planning
2. SWOT Definition
3. SWOT Marketing
4. Personal SWOT
5. GAP Analysis
6. Porter’s Five Forces
7. SWOT Examples
8. SWOT Template

I ended up using the majority of these related topics as keywords within my articles.

Why? As I wrote about in Got Googlejuice, it’s important to be specific in your content in order to attract visitors from Google who are searching different variations of your topic (another way to find out exactly how many people are searching a specific term on Google is to use the Google AdWords Keyword Tool)

So, if I can cover such topics as “SWOT Definition” and “SWOT Examples” in my SWOT Analysis article, then I will attract additional traffic from people searching those terms on Google.

The Google Wonder Wheel allows for what I call more “efficient content.”

An additional use of this word reference tool is to suggest to you ideas for additional articles for you to post.

For example, I ended up writing separate articles about Gap Analysis and Porter’s Five Forces.

There’s a super-useful video of how this all works here: How To Use Google’s Wonder Wheel.

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Monday, January 4th, 2010

10 Easy Steps For How To Sell Your Business For Maximum Money

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Have ya ever seen a billion dollar sale of a business and wonder how it happens?

The largest and most successful sales of businesses are handled in a carefully crafted process that has been refined since the early days of business.

I’m gonna break that process down for you right now.

Below are the 10 steps to selling your business — since the biggest and most successful sales of businesses happen with the help of an investment bank, I’m going to include them in my 10 step process.

Here we go:

1) Sign Up Your Investment Bank

First, you’ll need to send out a request for proposal (RFP) to investment banks who you think would do a good job selling your business.

You should leverage your network to find a quality investment bank — if you need help with networking, you can start with my articles mentioning business networking tips.

In the RFP, you’ll want to ask the investment banks a common set of questions for them to answer. Here are some examples:

• What’s their recommendation on the timing of a sale?
• How do they run the process of a sale (what are their steps)? (they should be similar to mine in this article)
• What are comparable transactions (to your business) that they’ve handled (these are called “comparables”)?
• What are the names of a few references of companies they’ve sold (try to pick both recent and older references)
• What do they charge (typically this is a commission though it may include a fixed price and even a minimum)?
• Ask them to send a copy of their engagement letter (you may find that some investment banks have lengthier/more complex contracts than others
• What do they think the value of your business is?
• Who are the potential buyers of your business?

How to Choose An Investment Bank

For your choice of an investment bank, I recommend you rely heavily on:

A) Your chemistry with the individual investment banker with whom you’d be working.

B) The references you speak with (you need to dig in with these folks).

C) The experience the investment bank has with sellers like you and buyers of companies that feel similar to yours.

D) A cost structure that is weighted heavily towards the investment bank’s performance (my preference is a straight commission of a sale (1% to 2% is fairly common.

Do Investment Banks Charge Minimums?

Investment banks will typically charge a minimum amount for smaller deals (this makes sense because “a deal is a deal,” as they say — as in, it takes roughly the same amount of work for an investment banker to sell a $100 Million business as it does to sell a $1 Million business).

You then sign an engagement letter with the investment bank — this can be as simple as a 2-page Agreement.

2) The Investment Bank Works With You On Your “Book”

The investment bank will now work with you on putting together what’s called a “book” (or “Offering Memorandum” or “Management Presentation”).

These consist of the key information on your:

• Market/Industry
• Products
• Team
• Finances

This management presentation — which may be as simple as a 50 to 100 slide Powerpoint-type presentation — will be the main selling document the investment bank and you use to sell your business.

3) Your New Investment Bank Identifies The First List of Target Buyers

Your new investment bank will do market research and come up with anywhere from 20 to 50 target buyers of your business.

Why so many target buyers?

Most investment bankers stick to their philosophy that “competition breeds the best price.”

The Businesses That Typically Buy You

Many of these target buyers may be companies you’ve never heard of. The target buyers will typically consist of two types of businesses:

A) “Financial Buyers” — These firms are typically private equity firms that are looking for cash-flow positive businesses to invest in that can be sold to a larger buyer or taken public.

B) “Strategic Buyers” — These are companies for whom your business adds strategic value. For example, you may have products that their existing customers would like to buy or vice-versa (e.g. you have customers who would buy their products).

Strategic buyers may also find redundancies between your business on the expense side such as overlapping customer service, technology or administrative costs that can be eliminated through the combination of your businesses.

4) The Investment Bank Sends Non-Disclosure Agreements and Executive Summaries to Target Buyers

Your investment bank will ask the target buyers to sign NDAs in order for them to view an executive summary or “teaser” of your business (the executive summary may be just one page of an offering memorandum or 5 to 10 slides from your Management Presentation.

Buyers are asking questions during this stage (this may take a few weeks).

5) Potential Buyers Submit a “Letter of Interest.”

By this point, about 10 to 12 potential buyers should send in a Letter of Interest that they’d like to buy your company.

These Letters of Interest are non-binding; however, target buyers that submit them are usually very serious.

6) Management Presentation

At this point, your management team will prepare to present to the 10 to 12 interested buyers. The presentation is typically 50 to 75 slides on every aspect of your business…with an emphasis on selling your business.

You will practice your presentation with the investment bank — a good investment bank will ask you dozens of the standard questions that buyers will ask.

Once you’ve practiced, you will perform the 10 to 12 management presentations over a week to two weeks ( e.g. two management presentations per day is common). These may take place at the investment bank’s offices (or at your own offices if you’re comfortable with that).

What’s a “Virtual Data Room?”

Around this time, buyers will use what’s called a “Data Room” (sometimes called a “War Room”) — this is a place where they can review financials, stock certificates, audits, account receivable aging reports, accounts payable aging reports, contracts, employment agreements, etc.

This used to be in a physical location but now there are virtual data rooms; a leading provider of such a virtual data room for mergers and acquisitions is Intralinks.

The main benefits of a virtual data room are: 1) Speed — The target buyer can review your documents much faster and 2) Control Over Buyer Activity– You the seller can see exactly what each interested buyer is reviewing (by topic) and how much time they’re spending on the due diligence.

The virtual data room is paid for either by you the buyer or your investment bank for an average cost of $15,000 to $20,000, according to this Boston.com article.

7) Buyers Submit Final Proposals

After you complete the management presentations, about one-third to one-half of the interested buyers will send a final proposal to buy your company. Again, this is non-binding on their part but it shows that they are serious.

That means you should have receive 5 or so proposals.

8) The Top 2 or 3 “Horses” Are Picked

You and your investment bank will now pick 2 to 3 final horses with rankings of #1, #2, and #3. Your investment bank will go to #2 and #3 and ask them if they can “step up” their bids to beat the #1 horse’s bid.

After this dance, there should be a clear #1 choice — your investment bank alerts #1 that he’s #1 (and also alerts #2 and #3 that they are second or third choice).

9) One Month Exclusive Due Diligence With #1 Horse

You now sign an exclusive agreement to let the #1 buyer due more in-depth due diligence on everything about your company.

This is often where some skeletons come out of the closet. Roughly half the time, the #1 buyer will pull out of the deal (in which case you go to #2 buyer and tell him he’s now #1 (and you repeat the one-month exclusive due diligence period)

10) Final Closing: You Receive Your Cash

At this point, final contracts are signed (your investment bank will have been working on this earlier with an attorney representing you) and transfers of assets and any other material begin.

The buyer then wires money into your account (and wires the commission directly into your investment banker’s account).

What’s a Clawback Provision?

A buyer will often ask that a certain percentage of the sales price (e.g. 10% to 15%) go into escrow to cover “Clawback” provisions. The definition of a clawback is the right for a buyer to “claw” “back” a certain amount of money for things that you the seller fail to deliver over a certain period of time.

The whole process from beginning to end should take about 6 months with about:

• 8 weeks of preparation
• 4 to 6 weeks of selling
• 10 to 12 weeks of closing

I hope you get to enjoy a sale of your business some day — I’ve experienced one of my own and it was a blast!

Oh, and don’t forget to read my friend Doug’s 7 Steps to Maximize the Value of Your Business — afterall, it’s tough to sell your business for much if you haven’t built in amazing value!

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Monday, December 14th, 2009

How To Get Incoming Links to Your Blog (or Web Site)

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I’ve seen traffic from my blog go from zero to 8,000 visitors in eight months…and I’m starting to learn how to get incoming links.

I thought I’d share some tips (many of which I still need to master myself!) on how to get incoming links to your blog (or Web site).

Top 8 Tips for Getting Incoming Links

If you’re like me, you’re going to learn all sorts of things as you try these tips out – including finding potential business opportunities beyond just incoming links.

Ok, let’s begin the list of my top 8 tips for getting incoming links:

Incoming Links Tip 1: Provide Valuable Content on Your Blog

For starters, you should have valuable content on your blog — if you do, others on the Web will eventually find you and link to you…it’s that simple.

That’s how I got this blog up to 8,000 unique visitors per month in six months.

For example, if you write helpful advice, then you’ll initially get found through search engines such as Google (who will find you through the keywords you have typed)- and then when users are searching Google for advice they will find you.

As they said in Field of Dreams, “If you build it, they will come!” As visitors do come to your valuable content they may: link to you without even asking;  ask you to publish your advice on their Web site (with a link to you); tell their friends; add you to directories of blogs, etc.

Creating valuable content on your blog takes time and it also takes time for people to find you and link to you…but in the long run, you’ll be successful generating incoming links by following this advice alone: write valuable content!

Incoming Links Tip 2: Write Comments On Blogs

Search other people’s blogs to find topics similar to those on your own blog and contribute a comment to their blog along with a link back to your own blog posting of the related topic.

Note/Warning: You should add genuine value to their blog posting (not just post a link back to your own posting) as the administrator of the blog your commenting on can easily delete your comment for being too selfish.

Incoming Links Tip 3: Insert your Blog link or RSS Feed into Your Social Network

• LinkedIn
  • LinkedIn has a “MyBlog” field on your profile to let you put in the address of your blog.
  • LinkedIn has “Applications” that allow you to insert your blog feed into your LinkedIn profile so that people will see an excerpt of each new blog posting you make.
• Facebook
  • Your profile on Facebook allows you to insert an RSS feed of your blog to your Facebook page so that every time you post a new item on your blog, it will show up on your Facebook page. note: if your blog is a business blog you may want to set up a separate Fan page on Facebook).
• Twitter
  • Insert links to your blog on Twitter. These links may be clicked on by your Twitter followers or also come up in search engines which now index Tweets (you may have to use a URL shortener (such as TinyURL or bit.ly to get your link to fit on Twitter.

Incoming Links Tip 4: Alert Content-Sharing Sites of Your Pages

Each of the below sites allow you to share your content by allowing you to submit a title and short description of what your site/content is about.

• Digg.com
• Reddit.com
• StumbleUpon.com
• Delicious.com
• Folkd.com

Visitors to these sites below then rank your content good or bad and the more good ratings you get the more visibility you get.

Incoming Links Tip 5: Reciprocal Linking

You should always be on the look-out for Web sites whose traffic you desire and consider how you might link to each other.

For example, I have a friend who writes for a Web site for entrepreneurs and that’s part of my Web site — so he has linked to me in particular articles and I have linked to him.

The key with such reciprocal linking is to make sure the links are relevant and in context, otherwise you might get into trouble with Google and other search engines.

Google frowns upon “link schemes” such as:

• Links to or from spammers or “bad neighborhoods” on the Web
• Excessive/automated link exchanging (“I’ll link to you if you link to me”)
• Buying or selling links

Incoming Links Tip 6: Link Directories

There are plenty of directories that allow you to freely provide a link to your blog or Web site.

I’ve listed some examples of ones below ranked by largest to smaller ones (rank = their rank in terms of traffic on the Web (e.g. Yahoo is the second largest Web site) and unique visitors is per month).

• Yahoo (rank: 2; 120,000,000 unique visitors)
• Blog Catalog (rank: 233; 4,600,000 unique visitors)
• Technorati (rank: 529; 2,868,383 unique visitors)
• MyBlogLog (rank: 802; 1,294,037 unique visitors)
• Dmoz.org (rank: 1,774; 1,015,926 unique users)
• Scribnia (rank: 90,510; 19,115 unique visitors)
• OnTopList (rank: 98,802; 17,308 unique visitors)
• Dr. 5z5 (rank: 124,385 13,221 unique visitors)
• FeedPlex (rank: 214,466; 6,948 unique visitors)
• ooBdoo (rank: 329,927)
• DayTimeNews (rank: 397,805; 3,328 unique visitors)
• rss001 (rank: 548,185; 2,274 unique visitors)
• FeedMil (rank: 629,551; 1,931 unique visitors)
• Blogbal (rank: 736,845; 1,611 unique visitors)

Note: The source of the rankings and traffic is a combination of Quantcast and Compete.com

Niche Directory Submission

There are also more specific niche directories for you to be listed on – you should try a search on your favorite search engine for “keywords related to your business + directory.”

For example, if you searched “business advice in the United Kingdom” you would find that a site called FreeIndex provides a free listing of your blog/business/web site

Incoming Links Tip 7: Write an Article for Someone Else

You can get a link back to your Web site by writing an article on such sites as ArticleBase and eZineArticles. I checked ArticleBase and it seemed to allow you to use at least two or three links back to whatever URL you choose.

Incoming Links Tip 8: Acquire An Existing Web Site/URL

You may consider acquiring a Web site that has a high Google Page Rank.

For example, go to Sedo and check out existing Web sites for sale and then look at their page rank (which you can do by downloading Google’s tool bar).

If you can acquire a Web site that has a higher page rank than yours, you can then control that Web site and link to your own blog or Web site.

Note: I only recommend doing this with a Web site that is relevant to the blog or Web site you want traffic to.

For any external link you seek you should know about the no-follow link.

What Is A No-Follow Link?

If any site links to you (including some above), they may include what’s called no-follow code within their HTML.

A no-follow link indicates to search engines that the Web site publishing the link does not necessarily want the search engine to associate its reputation with the site it’s linking to.

That said, there is still value to you of being linked to from a no-follow link since you will receive traffic and some believe it is another way to let a search engines know that a particular page on your site exists (especially useful if your blog/site is a new one with few to no links to it yet).

How To Determine if a Link is No-Follow

To determine if a Web site uses no-follow you can click on the page on which they are providing links, click View/Page Source on your browser and search for a URL and see if it is preceeded by the words “no follow.”

You can also search the Web for “do-follow” Web sites – some people have compiled lists of them.

A link without the no-follow in the HTML is more valuable than a link with no-follow.

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Thursday, November 19th, 2009

How to Leverage Social Media For Your Business

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Social media is changing the way consumers interact with information and products…and it’s likely going to change your business.

One person specializing in social media for business is Sacha Cohen, CEO of Grassfed Media, an integrated communications company that serves green and socially responsible companies.

Her clients have included National Geographic, The Washington Post, and AARP.

Sacha was kind enough to answer some questions regarding social media and business.

Q: Here’s a lob-ball question to start us off with: would you define social media for us?

Ah, the million-dollar question. Generally, it refers to user-generated content (blogs, video, social networking sites, etc) that enables people to interact, share information, and communicate online.

Here’s a cool little video that illustrates the concept of social media better than I could ever explain in a few words: Social Media in Plain English.

Q: Would you give us a little “Social Media 101” on the top few social media tools (LinkedIn, Twitter, Facebook, etc.) — and how a business should participate in each?

I’m going to point you to Mashble’s Social Media 101 Guides which has, for example, these how-to tutorials and many more:

• How to Measure Social Media ROI
• How to Make Facebook Your Company Newsroom
• A Small Business Guide to Wikis
• How to Integrate Facebook With Your Blog

What I will say is that no matter what forum you are participating in or what tool you are using, becoming familiar with the etiquette and conventions of each is critical.

Chris Brogan, who is something of a social media god, offers this excellent Twitter Etiquette Guide.

Q: Your firm provides social media marketing services for socially conscious businesses — would you elaborate on challenges a business might face that you can help them with?

The social media universe is constantly changing and evolving. I’ve found that many businesses are overwhelmed by this new world; I help them navigate through it.

The other challenge is having enough bandwidth to successfully engage through Twitter, Facebook, LinkedIn, etc. They can all be huge time-sucks if you’re not careful.

On the other hand, they can be extremely useful for connecting to customers, product development, and marketing-it’s a matter of focusing on goals and staying on message.

Q: Whose job within a business is it to set social media strategy?

There’s no one-size-fits-all, but it’s usually a collaboration between marketing, PR, and customer service.

Q: What do you think are important new social media trends happening right now?

Here  are three:

1. Social media for social good (e.g. Fledgling Wine)
2. Mobile and local social media (e.g. Four Square)
3. Mass mingling
   

Q: Would you list examples of businesses using social media most effectively?

Love this one. Here are my top picks: Zappos, Virgin America, and Starbucks. As for non-profits, I’d have to say the Nature Conservancy and Share Our Strength.

Q: You mentioned that you used social networking to increase conversion 17% for one of your clients — what can you tell us about how that worked?

Actually, it wasn’t a client. It was a company I worked for full time. We were able to increase conversion by introducing product reviews and rating with help from a company called Bazaarvoice.

Customers want to know what other customers think; they want real, unbiased opinions. That’s what we delivered and it was a huge success.

Senior management was very resistant at first, but by showing them the research and best practices from other companies, they eventually saw the light.

Q: How do you see social media and public relations working together to grow a business?

Honestly, these days, you really can’t have one without the other. People are talking about your product and company, whether you know it or not.

The questions is: Are you going to ignore the conversation or join it?

Q: What are Top Essential Tools You Recommend for Twitter? (this was added after the original Q&A)

1. TweetDeck — This is a must-have Twitter application. It can help you manage multiple Twitter accounts, keep track of mentions and friends, help you find other people to follow, and more.
2. Twitter Grader — Find out how you stack up to other Tweeters in your area.
   
3. TwitPic — Easily upload photos to Twitter via your phone or the web.
4. Twellow — You’ve signed up for Twitter. Now what? Find people who share common interests on this Twitter directory.
5. Qwitter — Are you posting good content? Keep track of who is unfollowing you with this clever notification tool.

Q: Thanks, Sacha! If someone wanted to get in touch with you, how should they do so?

They can email me at [email protected] or call me at 202-234-0104.

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Sunday, November 15th, 2009

How to Raise Money Using a Bridge Loan or Convertible Note

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If you’re raising money for your business from friends and family or angel investors, I recommend you consider using a convertible note or bridge loan to do it because it is typically cheaper and quicker than raising a “priced” round (in which you sell stock at a certain price).

Here are the main things you need to know about bridge loans/convertible notes:

Q: What is a bridge loan (or convertible note)?

A bridge loan/convertible note is simply interim financing until the next round of financing can be obtained. The word “convertible” is often used since the bridge loan will “convert” into equity at your next round of financing.

Q: Why use a bridge loan/convertible note versus selling stock?

• It typically costs you less than selling actual stock — You can get a bridge loan administered for a couple of thousand dollars or less.
• Fewer attorneys involved — Investors are less likely to ask their counsel to review it .because it tends to be a shorter document that is less complicated than a stock agreement.
• You don’t have to set your valuation yet — A bridge loan is simply a loan that will convert into equity later when a valuation is set (typically during a larger round of financing).

Q: During which stage of financing is a bridge loan/convertible note most useful?

I find them most useful during the initial seed financing rounds of fundraising such as taking on a small amount of money ($500,000 or less) from private angel investors or friends and family (as opposed to venture capital firms).

Q: How long should a bridge loan be for? (what should the length of the term be?)

It will typically be one year or less (it should be timed such that the maturity date of the bridge loan is due roughly around the time that another financing (or liquidity) event occurs for the company.

Q: What should the interest rate for a bridge loan be?

A: The interest rates for convertible bridge notes vary but tend to be around five percent greater than the Federal Reserve rate (one point of reference: California laws dictate that there should be a cap of 10% on the bridge note interest rate).

Q: What happens if you reach the maturity date of a convertible promissory note and there hasn’t been another round of financing or liquidity event (and your company doesn’t have the money to pay back the loan)?

In this event, you can:

1) Ask the investor to extend the maturity date

2) Convert the loan into stock based on a price you pre-determined or a price you determine at the maturity date.

Q: What is a conversion discount (or warrants) for a bridge loan?

A “conversion discount”(or warrants) is a future discount that you provide to your investor (the person giving you the bridge loan) in the event that you do raise another round of money or have a liquidity event.

The conversion discount generally ranges between 20% and 40%.

So, for example, let’s say you get your bridge loan and offer a 30% conversion discount and then later you raise a Series A round of venture capital at $1 per share. Your bridge loan investor would then receive one share of stock for each $.70 that he loaned you.

Q: Do you have an example of a convertible note/bridge financing term sheet?

Here’s one: Convertible Loan Term Sheet

Q: Are there any drawbacks to taking a bridge loan?

If you take a bridge loan and can’t pay it back at maturity then an investor can technically use that as an “event of default” which could lead to bankruptcy — the way around that is to accept the bridge loan from someone close to you who you trust to see you through such a scenario.

Additionally, to protect yourself, you can try to get language into the bridge loan which converts the loan into something else (no matter what).

Final Thoughts

If you want to read more about bridge loans/convertible notes (which are also called “convertible promissory notes”), a great resource can be found at Convertible Notes by Yokum Taku, an attorney at Wilson Sonsini Goodrich Rosati (WSGR) in California, USA.

I have worked with the WSGR law firm on one of my startups and highly recommend their services. In fact, one of their attorneys was so good, I eventually hired him as our general counsel!

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Friday, November 13th, 2009

How to Master The Design Process: Six Easy Steps

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My friend Jessica has designed products ending up in such places as Pottery Barn, SF MoMA and Barnes & Noble.

She also teaches Product Design in the Mechanical Engineering department at Stanford University.

I ran into her at our favorite San Francisco Mission coffee house recently and talked her into sharing her thoughts on the design process as it relates to business.

Q: Why is a product design process important for business?

Product design is a lot more than just the design of an object.  It is a process for creative problem solving.

The design process can yield great products, but the process can just as easily help to create unique solutions to problems in any other area of business.  The design process is a way to think, create and come up with new ideas.

Objects and solutions don’t just appear. It is a time consuming and detail oriented process.  However, it can lead to great results, get you thinking out-of-the-box and you might even have some fun in the process!

There are design consultants of all sizes and types that can come in and facilitate this process for any of your needs.  Each firm or consultant has a specific focus and their own process, I am going to discuss the basic process that I use.

Q: What are examples of when design processes should be applied in a business?

A creative process can be applied anywhere.  I use the process to help me when I am stuck or need inspiration in any area of business….it does not have to be design related.

As the founder of a toy company, I have used this process (or parts of this process) to plot the overall direction of the marketing, branding and the general trajectory of the company.  Of course, I also use it to design toys!

With clients, I often map out the process to show them exactly what I am doing for them.  It also helps to keep them involved.

As an external consultant, I cannot design in a vacuum. We all need to work together as a team.  Especially in the Analysis and Definition stages, I can lead the process, but the trajectory ultimately needs to come from the client.

Being a designer is not a solo job.

Q: Do you have a design process diagram you could share with us?

This is a basic representation of the process that I use. It is an adaptation of the design process that Don Koberg and Jim Bagnall describe in The Universal Traveler.

Q: Would you explain each of the six steps of your design process model in more detail (I’m especially interested in the ideation phase)?

As shown in the diagram above, design is a process.

Step 1: Analyze

To design an object you need to understand the area surrounding that design.  Why are you designing this object? What is the need or problem that you are trying to solve?

What else is out there? What is your competition?  Why is your competition not filling the need?  Who is going to use it?  Where is it going to be sold?

The list goes on and on….

You can do this in a number of ways.  Market research, talking to primary or secondary users, formal interviews, market surveys and observation are a few of the methods.

Why don’t we pick a need and walk through an example together.  Let’s say you were annoyed that your bike seat got wet in the rain and you wanted to design a cover for it.  How would we go about doing this?

First we would look at stores, catalogs and bikes we see around to see what other solutions exist. We might talk to bike commuters, people who worked in bike shops or kids who ride to school.

We might see how others are solving this problem or are you the only person who has this specific problem….if it is just you, your product might not be such a huge success and we might want to just make one.

This is also the phase when you should question your mission and try to look at it from a new perspective entirely.

Is a bike seat cover really the answer, or do we really need to create a new form of transportation that is rainproof?  Or should we really be creating a way to stop rain all together?  Would waterproof pants solve the problem instead?

Is the bike seat cover really the best solution to your problem or is it just the first thing you thought of?  Take a moment to explore other directions.  We might end up back where we started, but we should take time to consider this.

Step 2: Define

Once we have analyzed the marketplace and environment that we are designing into, we need to define the goals. What are the specific design principles where we will not compromise?  Who are we designing for?  What qualities does the product need to have?

Is our bike cover for bike cover for tri-athletes that have very high-end bikes? Is it for college kids with no money?  Is the price important? Are your users eco-conscious and do we need to consider that?  Is aesthetics an important factor?  Is convenience important?

Does it need to stay attached to the bike so it doesn’t get lost? Are our users somewhere where it might get stolen and does it therefore need to lock?

The list goes on, but the designs that emerge will be vastly different based on the answers to these questions. This is especially important when designing with a team. If everyone is not going down the same path, we are going to have major problems.

(This is why when I design for a client group, their involvement is imperative!)

Once we list out all our design criteria and everyone agrees to them, we are ready for the ideation phase!

Step 3: Ideation

Ideation is also known as brainstorming. This is where you should go big and not be afraid to get a bit wild.   The ideation phase is a divergent phase.   We go wide, looking for quantity over quality…yes, quantity, not quality!

There are a number of different brainstorming techniques that you can use.  But the main rules of brainstorming remain the same.

RULES OF BRAINSTORMING:

• Defer judgment -Don’t edit yourself of others.  No idea is stupid!
• Encourage wild and crazy ideas (Maybe we should all move to the moon and bounce to work instead of biking?)
• Build on other people’s ideas.  Steal, Steal, Steal!!  Take other people’s ideas and leapfrog off them. There is no claiming credit in a brainstorm; it’s all about working together!
• Stay focused on the topic.  Your ideas can get wacky, but keep generally focused on bikes and rain.
• Have one conversation at a time. If you are brainstorming in a group, let other finish their thought. Jot yours down so you wont forget them in the meantime.
• Be visual. Drawing conveys ideas; you don’t have to be Rembrandt, stick figures are great!
• Go for QUANTITY!!!  (We make our students come up with at least 100 ideas before they can pick one to work on).

SUPPLIES:

• Big paper or a white board
• Comfy chairs
• Caffeine and snacks
• Items for inspiration. (In our scenario, we might have a bike, an umbrella and any existing seat covers on the table for inspiration.)
• Open minds!
• In a group, it also helps to pick a facilitator to lead the brainstorm.

There are a number of techniques people use to brainstorm from listing, to different uses of perspective.  Any technique is fine as long as it gets creativity flowing.  My favorite technique is mind mapping.

Mind mapping is the equivalent of a writer’s free-writing.   Mind mapping is simple, you write a topic or question in the center of a paper.  Then as quickly as you can, branch out and write or draw ideas.  Topic areas will naturally form as you branch off each other.

Q: Do you have any mind map examples you could share

Sure, here’s one example of mind mapping:

When I mind map with a partner, we both write as fast as we can, when we see our writing start to slow down, we rotate the paper and start to branch off of each other’s ideas.  We keep rotating until the paper is full.

Now that you have a huge stockpile of ideas, it’s time to converge again.

Q: Ok, sorry to interupt. What’s the next step in the design process?

Step 4: Select

Don’t forget to look back at those design criteria from the define step.  With those in mind, we will pick 3-5 ideas that we like from the crazy brainstorm.  There should be some really fun ideas that don’t fit the criteria, but hopefully we can find a few that could.

The selection process can be as formal or as informal as we want.  We can pick based on our favorites, we can hold a team vote, or we can use a more formal decision matrix. (I wont go into the details of that here, but it’s an mathematical way to make a decision.)

The decisions might be made due to cost, or manufacturability or just how cool the idea is. Whatever direction we choose, we need to make sure we all know why we are choosing it.  All these reasons are valid as long as we understand our motivations.

After one more check to make sure everyone agrees on the concepts and to make sure all the criteria can be met, we are ready to implement!

Step 5: Implement

Now that we have a direction (or a few) it is time to implement our ideas.

Designer will consider implementation anything from sketching to prototypes.   The quicker or faster we can prototype something, the faster we will be able to evaluate it and move on.

A designer’s motto is “Fail Early, Fail Often!”  Test all the crazy ideas; just don’t invest a lot of time or money to do this.  Ugly prototypes out of foam core or cardboard are great!

If we are testing our bike seat cover, maybe we spend 30 minutes with a garbage bag and an empty soda bottle to test a concept.  All we are doing is seeing if this concept is worth moving on to a more advanced prototype.

There is no point in wasting time or money on something that we can prove wont work with 30 minutes and stuff we found lying around the office.

We build to learn. The first idea might inspire our second and we will certainly take what we learned with us.

Don’t fall in love with any of the ideas! This will cost time, money and heartache.  Test it and move on if it doesn’t work.

Step 6: Evaluate

Now it’s time to debug the prototype.  Take a step back and evaluate it with a fresh set of eyes.  After we do this a few times, and we think we have something good, we are ready to get some feedback!

It is time to take our prototype out for a test run!  The point at which we can do this depends greatly on what we are making, but the earlier the better. Get it in front of users and get feedback!

People often think they can judge a design themselves. Unless you are creating something that is only for your use, get other people to tell you what they think. They will think of things we never could.

Maybe our design only works for tall people, or people that have both hands free at that moment.  Maybe there is a social stigma that we are not aware of for some users. Testers will be honest. We will take their feedback and go iterate.

Iterate

The design process is iterative.  We will cycle through this process many times in the creation of a product.

Express-Test-Cycle is another way to look at this phase of the process.  Express or build your idea, test it and then iterate!

We will do this on a macro and micro scale.   The same process we just went through for the overall design will work for the details.  For example, we might do an entire mind map and implementation on how one hinge is going to work in our overall bike cover design.

Ideate and iterate at ever stage and for every part!  Our final results will rarely resemble where we started.  (If it does, we are probably not working the process correctly.)

Q: What are some design tips that most non-designers wouldn’t be aware of?

Come up with crazy ideas. Don’t be afraid to get silly.  They might seem ridiculous, but they can also spur other ideas that may in fact be great.

Remember when we were 5 years old and imagination was endless?   Try to recapture that part of yourself!  It’s still in there!

Only positive energy and positive comments are allowed during a brainstorm.  Don’t edit yourself or others.  There is no such thing as a stupid idea.

Come up with as many ideas as you can…narrow them down later.

Don’t fall in love with any one idea. This will make it easier to test them objectively and move on if necessary.

Q: Let’s put me on the spot: do you have any blog design tips for Purchase.com?

Yup!  Invite friends over and do a brainstorm!  (I am happy to come facilitate.)

Q: What are you favorite books about the design process?

The books that we often recommend to our students are:

• The Universal Traveler: A Soft-Systems guide to creativity, problem-solving and the process of reaching goals by Don Koberg and Jim Bagnall
• Experiences in Visual Thinking by Robert McKim
• Rapid Viz by Kurt Hanks and Larry Belliston

Another good book is Back of the Napkin by Dan Roam (This is a more recent book. It does a great job at showing non-designers how to use visual thinking techniques.)

Q: Thanks, Jess. If someone would like to learn more about you, or get in touch with you, what should they do?

I am always happy to talk about design.  I am available at [email protected] if anyone wants to reach me.

Amazing value, Jessica — see ya at the coffee shop!

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