Tag Archives: entrepreneurship

Exit

digital.forest logo

 

On July 12, 1994, I registered forest.net, the domain for digital.forest.

You remember 1994, don’t you?

Kurt Cobain shot himself. O. J. Simpson led a good portion of the LAPD on a slow-speed auto chase. Yugoslavia was still having a messy, bloody civil war. Richard Nixon and John Candy died. George Foreman became the oldest man to win the world heavyweight boxing championship. Bill Clinton was President of the United States and Boris Yeltsin was President of Russia.

You know, back before most people knew there was the Internet and looked stuff up in physical books instead of Googling it?

In 2012, six thousand, four hundred, and thirteen days later the company sold, and I was relieved of being technical support and historical business archivist of last resort.

It finally found the exit.

Entrepreneurs and want-to-be-entreprenuers take note: I planned for digital.forest to be a five to seven year journey. I expected that it would either crater or take off in that time frame. Never did I expect it to grow like crazy, level off, raise some money, grow like crazy, plunge like a rock to the ground, and then almost, but not quite go out of business, then claw its way back to profitability but have growth hampered by capital costs that were beyond organic growth or lending capacity due to macroeconomic forces.

I also did not expect it to warp my brain the way it did. Cash flow management is now hard-wired into me. I have a deep appreciation for what can be done by a small cadre of motivated and engaged people. I am now even more unemployable and unmanageable. ūüėČ

While the financial remuneration I received was modest when amortized over those seventeen and a half years, the friendships and wisdom I accumulated are beyond priceless.

So I send a belated thank you to everyone who had anything at all to do with digital.forest over the years.

I am forever in your debt, and I look forward to the next adventure together.

Chris

Advertisements

If the USPS Stops Delivering, Will Your Business Survive?

Do you know how much of your cash flow arrives via checks delivered by the United States Postal Service? If you don’t, go find out NOW. The survival of your business could hinge on it.

Today’s news of the receipt of another suspicious letter¬†sent to elected officials immediately made me think of the 2001 anthrax mailings and how the resulting postal mail delivery slowdown nearly finished off my startup.

2001 was a rough year, and we were struggling to keep the doors open. The dot-com bubble was almost completely deflated, and it had simultaneously erased our lower-tier client base and caused our top-tier clients to cut back. Then came the September 11 attacks, which put even more downward pressure on business. While sad about broader events, me and my team were resolved that life and business would go on, even as we continued to juggle cash flow to keep the doors open.

But cash flow requires cash, and our accounts receivable split was roughly 75% checks delivered by the postal system and 25% by electronic credit card payments. As the postal system slowed down to clean up anthrax in sorting and delivery facilities, our daily mail volume decreased 90-95%. Our cash receipts tanked accordingly.

Ongoing conversations with vendors around our already late payments became even harder and meeting payroll was a real concern. Through heroic efforts on the part of Kris Bourne, we made payroll and kept the vendors from suing us for late payments. But it was close. At our lowest point, we had only a few weeks of cash on hand to fund operations.

As things returned to somewhat normal, we moved to ensure that another delivery interruption wouldn’t impact us as severely.

We shifted as many customers as possible to monthly, automatic credit card payments by offering discounts on service. For customers who wanted to continue to pay by check, we shifted many of them from monthly to quarterly payments. For new small accounts going forward, we required credit card payments.

Combined, these measures increased our average prepaid balances significantly, had the ancillary benefit of reducing our accounts receivable aging, and ensured that if the mail stopped flowing again, we would still have steady cash flow.

Are you prepared?

Yes, yes you! – A Short Story

“Yes! Yeeeessss you sir in the cleanblack duster with the headphones in listening to Rage Against the Machine off Napster, I’m talking to you! I know we’re all having a white angst day today, but I really need you get on setting up those accounts,” Clavius ordered with a mean, happy smile.

Indifferently, Diablo, not even bothering to look up from his screen, gestured vaguely stage right while muttering in a whiny voice, “I’m waiting on sales to finish their stuff before I can do anything.”

The other tech support drones groundhogged their heads up over their privacy screens to watch.

Clavius’ smile melted into an annoyed sigh that preceded a sharp, “What?”

Sensing provoked annoyance, Diablo locked eyes with Clavius before theatrically whirling counterclockwise about in his task swivel chair with his arms raised above his head. At 180¬ļ he dipped his right hand, snatched a signup sheet from a stack on his desk and flutterswooped it up into the air. Coming to an abrupt stop at 360¬ļ, Diablo simultaneously slapped his white flag down and loudly stated, (ensuring that the sales department would hear,) “Here!” Look at this!” while also stabbing with his index finger.

“Here! There’s no contact email address, only credit card information! This one,” and again with the spin and page drop, but this time in a much more businesslike demeanor, “doesn’t have an MX record.”

Clavius blinked.

“Does it need an MX record?”

Hesitatingly now, “Er, why wouldn’t it? It’s on the form.”

“What if I just wanted a place to park my website presence, but not any other service. Do I technically need an MX record set up with my account?”

“No.”

“OK. So it is possible to set up an account without an MX record, even though the MX record field is blank on the signup sheet. Yes?”

Acknowledging, “Yes.”

“But have you asked sales if there should be an MX record for this account?”

“Yes, of course!” with a shake of the head and the wave of a hand.

“How?”

“I sent them an email.”

“You sent them an email.”

“Yes.”

“So why isn’t the form on the salesguy’s desk so I can chew him out instead of you for the signup backlog?”

Diablo saw the light. Without another word but with the chattering of the other techs buzzing behind him, he turned to the stack, dug out a few, unplugged himself from his computer, rose, and then delivered the signup sheets to the unsuspecting salesguys with a casual, “I need these forms fully filled out before I can do anything.”

The other groundhogs scurried themselves and followed quickly behind.

There was rarely such a polite exchange between factions, and the salesguys were uneasily quiet.

Satisfied, Clavius barked, “Keep up the good work, men! But get cracking on those signup sheets or I’ll filter the network!”

Cackling, he turned to the sales pen.

More Adventures in Fundraising

Fundraising is a funny thing.

If you’ve never done it, it appears to be a light-sucking black box. Magical things happen in there, and some people go into it and never come back out.

If you’ve done it, you know it’s really a fragile, transparent, little glass box, easily shattered. But then, HA! HA! the joke is on you! It’s a solid crystal that you accidentally drop on your foot, crushing a toe. Then it melts like an ice cube and you’re bailing out your sever room because somebody’s dishwasher two stories up and 100′ feet over, leaked aaaallllllllll across the supporting beam that sagged directly above same-said server room. And that turns out to be another one of those Mayberry-esque moments in ancient corporate history, happening way before you deposit close to a million dollars into the bank, (AND HOLY FUCK THAT TELLER DIDN’T EVEN BLINK WHEN I PUSHED THE DEPOSIT SLIP OVER. Was I on surveillance? Did I look like a drug lord with machine guns strapped over my back, rudely hidden under a way too clean duster that also made me look like I might wear a mechanical exoskeleton under it? Wonder what the bandwidth is looking like today…)

Wait, where was I?

Oh, that’s right.

Fundraising is standing in someone who thinks they’re very important’s office, and you are neither offered the courtesy of a seat, nor the acknowledgement of an introduction to a person sitting very far away on the other side of the person who thinks they’re very important’s office. And then they have the temerity to ask for a board seat with their investment.

And. They. Never. Send. In. Their. Fucking. Paperwork. Even. After. You. Call. And. Get. Promises. Because. They’re. A. Douchebag.

(I’m still amazed at how many people are absolutely incapable of saying no, especially myself!)

And then you visit a Zen temple inside of a converted church, begging for more money from another former Microsoft executive manager who did send in their paperwork, and they give you Zen homework:

“When you think you’ve cut to the bone, you haven’t. Look again.

No.”

And it’s a dismal, quiet drive home with the CFO and COO, because everyone is thinking the same thing.

Adventures in Fundraising

My first “real” investor pitch for digital.forest was in the lobby of the Seattle Westin hotel in the fall of 1999. There were five of us all huddled around a small coffee table to the side of the hustle and bustle.

My gut was doing somersaults and I was having a severe case of stage fright. I wasn’t sure I was going to be able to make it through this.

It was me, my friend Peter, who I had recruited to be a VP in the company, Michael, our advisor and lead investor who turned into a board member, and two prospective angel investors.

Michael had set up the meeting and had coached and worked with us to develop the pitch deck, which was a PowerPoint presentation that we had printed and handed out.

Taking a deep breath, Peter and I flipped through the presentation, stumbling and groping for purchase, trying to find the way to close an investment. We were sidetracked several times by flipping paper to answer questions. My stomach dropped even further.

Angel 1 was ebullient, loud, engaged, and asked many tough questions. Angel 2 was quiet, subdued, and seemed very distracted, like he wanted to be somewhere else. He didn’t ask many questions.

Angel 1 seemed very interested, but when we did the ask, he declined, saying he wasn’t sure we had our shit straight.

Deflated, and thinking we just crashed and burned, I turned to Angel 2 and timidly asked him. He chucked the presentation onto the table and then said, “Yeah, I’m in for a unit.”

My gut performed another somersault, but in a good way.

Data Acquisition and Analysis, and Startups

I had dinner at my in-laws over the Christmas break, and my brother-in-law’s father is a retired Boeing engineer in his 80’s that used to work in their wind tunnels. He shared some great stories of how moving from analog to computerized methods solved many problems for him and his team, especially around data acquisition and analysis, and it made me think of startups.

One area in particular that got much easier for them was recording air pressure over airfoils at various speeds and angles of attack. They used to have air pressure sensors attached to dozens of needle gages that were mounted on a nearby board. They’d crank up the fan to the desired speed, adjust angle accordingly and snap a few pictures of the gages. Any change of speed or angle would have them taking more photographs of the gage board.

The reason they’d take a few pictures per setting was that the needle gages had a lot of noise – they’d bounce around the scale and they needed multiple pictures to average/guess what the “real” reading was across all the photographed readings per wind speed and airfoil angle setting.

The time from taking a photo and then having it developed, examined, and compared to others in the series to record the results of the experiment in order to compare the tabulated data against the calculated model could be weeks. You can also imagine all sorts of ways that errors could creep into the dataset using this method.

In engineering today, most of this type of data is now either simulated entirely inside the computer or the computer collects massive amounts of data for further analysis. Data is the new coin of the realm, and the bigger your dataset, the larger the opportunity you have to exploit it for financial gain and hit your target.

Disk is cheap and missing the signal in the noise is expensive.

If your startup isn’t already generating and analyzing¬†datasets or¬†considering which you may create or have, you might as well be taking photos of physical gages in your quest to build a rocket to the moon.