113th 1M/1M Strategy Roundtable For Entrepreneurs: Spotlight on Jacksonville, Florida
Today’s roundtable was co-hosted with the Jacksonville Startup Weekend. For the uninitiated, Startup Weekends are 54-hour events where entrepreneurs come together to pitch ideas, form teams, and learn best practices. This past weekend, the Jacksonville entrepreneurship community hosted their own version of this exciting program. 150 people came together, and 17 businesses were formed. An additional 50 were on the wait-list, an evidence of the energy and enthusiasm that is bubbling in Florida right now. MJ Charmani, founder of iStart Jax, a business accelerator, and one of the key organizers of the event introduced today’s session with additional reports on last weekend’s event.
Armex Zero Suit
First, Eric Keeler with Armex Industries, Inc. pitched the Armex Zero Suit, a new kind of durable, special-purpose suit with significantly higher heat and cold resistance targeted towards racecar drivers, firefighters, and military personnel. Eric has done some technology scouting, and believes he can deliver on the specs of the product.
The problem, however, is that he is assuming that an investor would fund the product development. Investors rarely fund concepts. Even seed investors generally fund businesses that are already rolling. So, Eric will need to create a method with which to get to paying customers before any investor would invest. In addition, there is significant work to do on market sizing and go-to-market strategy. Direct selling simply is not the right solution for bringing this product to market. The price-point is too low for that to be sustainable.
Next Perry Kaye presented pay2pitch.com, a network where entrepreneurs will come and pitch investors and mentors and pay, say, $1,000 for a twenty-minute interaction. The money, however, will be donated to the investor or mentor’s favorite charity.
Perry rightly points out that a miniscule percentage of entrepreneurs get funded. We agree on the observation, and many of you have already seen our The Other 99% video. However, Perry’s observation that entrepreneurs don’t get funded because they can’t get meetings is not entirely accurate. Most entrepreneurs don’t get funded because they are simply not fundable. For a variety of different reasons that have to do with the fundamentals of their businesses, entrepreneurs, even if they CAN get meetings, don’t get funded. So paying $1,000 to get a 20-minute meeting, in my opinion, is a total wastage of money. Of course, if the assumption is that this is for charity, that is different.
The second problem with the assumption here is that mentoring networks typically do not scale. You can see my video on the subject to get more color on why.
Bottomline, we get this question very often: Can 1M/1M help me get funded? So yes, tons of entrepreneurs are looking for funding, whether or not they should. Most of them are not fundable. So getting them to pay $1,000 for a 20-minute meeting that will most likely result in a rejection seems deceptive to me.
Then Tim LeMaster pitched Ziffor, a service for table restaurants that would like to offer promotions for non-peak times. This is a compelling idea, because many restaurants that have experimented with Groupon-like services have often been overwhelmed with unprofitable customers showing up during peak hours. Tim’s idea offers a good solution to this problem.
However, there are some serious operational complexities involved to make a solution like this work at scale. Getting access to restaurant booking data won’t be easy. Also, selling to restaurants is expensive, as we have seen in the massive operational expenditure and lack of profitability in the Groupon model.
I reviewed Tim’s financial assumptions, and advised him to redo them with the assumption that the team would have to bootstrap the business locally, get enough validation, etc., before any investor would even consider investing.
Next Rushabh Shah pitched SustainAbin, a concept that anchors on the assumption that 83 million people are searching for how to practice a green lifestyle. Rushabh wants to create a portal that harnesses this traffic, and give them meaningful content, based on which he would be able to generate high value leads for local businesses in the sustainability area such as solar, organic farming, etc.
Rushabh needs to do a lot of studying of how lead-arbitrage businesses work. To make a case of the business he proposes, he would have to, somehow, channel the search traffic from Google to his site. This is the domain of PPC and SEO, and the market is very competitive, buying extremely expensive.
On the business model side, also, some of the assumptions of monetizing with advertising are misplaced. I keep repeating this: there is way too much unmonetized ad inventory out there, driving CPMs down. Dramatically. Rushabh’s analysis of the business needs to be significantly more thorough and comprehensive to even assess viability.
Vincent Laganella then pitched Bthere, an excellent concept of analyzing 911 data feeds to extract leads for glass repair, door and window repair, and other crime-related contexts that immediately trigger needs in consumers. For example, a consumer has just had a burglar break in to the house through a glass window. The 911 call would generate a lead for a local glass repair shop instantly. And small businesses would be more than happy to pay good money for such immediately actionable leads. Very strong idea, and excellent analysis of the business fundamentals.
Overall, today’s roundtable was a window into Jacksonville’s efforts at drumming up additional entrepreneurship for regional economic development. The Startup Weekend programs around the world are doing this in different cities, and the organization is supported by the Kauffman Foundation. We look forward to supporting more such efforts through the 1M/1M initiative.
You can listen to the recording of today’s roundtable here. As always, I would very much like to hear about your business, so let me invite you to come and pitch at one of our free 1M/1M public roundtables. We will be holding future roundtables on the following dates starting at 8:00 a.m. PST:
Thursday, February 2, Register Here.
Thursday, February 9, Register Here.
Thursday, February 16, Register Here.
Thursday, February 23, Register Here.
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