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netpreneur’s very last coffee & doughnets printer friendly version

a great time to start a business

After more than five years of serving entrepreneurs in the Greater Washington, DC region, the Morino Institute announced that it would sunset the Netpreneur program at the end of 2002. At Netpreneur’s final Coffee & DoughNets event held December 11, 2002, a panel of serial entrepreneurs discussed why, despite the media’s focus on gloomy news, it’s always a great time to start a business when you have commitment and a vision to work toward. Despite a freak ice storm that shut down events and institutions across the region, more than 175 entrepreneurs braved the elements to hear their message and learn more about the future of a community institution.

Amir Hudda, CEO of Brickstream
George Pappas, President and CEO of Plesk

Rick Steele, co-founder and CEO, NuRide

Mario Morino
, Chairman, Morino Institute

Copyright 2002 Morino Institute. All rights reserved. Edited for length and clarity.

Disclaimer: Statements made at Netpreneur events and recorded here reflect solely the views of the speakers and have not been reviewed or researched for accuracy or truthfulness. These statements in no way reflect the opinions or beliefs of the Morino Institute, or any of their affiliates, agents, officers, or directors. The transcript is provided “as is” and your use is at your own risk.

mary macpherson: welcome

At about 6:30 this morning, we stood in front of the registration tables with 400 name tags and started a pool to guess how many people were going to show up in this awful weather. We thought 35, 40, maybe 50, so it is incredible to see this many of you on a morning like this—about 175 people. It’s also good to see folks who I know were at the very first Coffee & DoughNets and who have been supporters of the program from the get-go. Thanks so much for coming out.

            This is the final Coffee & DoughNets. I'm still trying to get my arms around that. We've been doing this since 1997. There have been 59 events. More than 22,000 people have come out, consuming more than 14,000 doughnuts and something like 1,800 gallons of coffee.

            When we began—and this was before my time—our first program had about 35 people. That quickly grew to 100, 200, 300. The largest registration we ever had for a Coffee & DoughNets was 679 people who signed up for Jeff Osborne of Osborne Capital in September of 2000 discussing “The Real Deal: Financing Ideas to IPO.” That may be a transcript and video that don't get a lot of hits these days. By that time, the attendee numbers were getting so high that we were turning away almost as many people as we were confirming, and that means we annoyed a fair number of lawyers, marketing people, real estate agents, and other service providers in order to keep the attendance focused around entrepreneurs. It is great to see so many entrepreneurs in the audience today.

            To my mind, that's what always made Coffee & DoughNets different from other business events—it was always for and about entrepreneurs, from the attendees to the speakers. The outcome was that many new investors and entrepreneurs found information, inspiration, support, contacts, and camaraderie through Coffee & DoughNets over the years, and that's still true today. I could certainly see it happening in the networking portion of the program.

            Before we get started with the panel, let me take a couple minutes to update you on what's going on with our plans for the Netpreneur transition.

            As you all know because we've talked about it at every event for the last few months, last June Mario announced our intention to either spin out or sunset Netpreneur. On October 22, we confirmed the decision to sunset, and we're well down that path today. Following that announcement, we heard from hundreds of people who expressed interest in volunteering their time, efforts, resources, and organizations to continue the work of Netpreneur in various ways, including many inquiries about specific programs and services. We were delighted to see such a groundswell in our community for supporting entrepreneurs. As a result, while Netpreneur as we know it today will be sunsetting come the end of the month, much of what is most visible about the program will continue in new forms.

            And, of course, the network will live on.

            As I look around this morning, I see a great representation of the richness of the region’s entrepreneurial ecosystem—entrepreneurs, funders, service providers, organizations, the media, and more. It’s important that this ecosystem continues to be cultivated and supported with a wide range of programs and services for entrepreneurs at all stages and in all sectors.

            In a nutshell, as we wind down, the centralized Netpreneur team operation will evolve into a distributed network, where a loose confederation of groups and individuals will deliver services or administer processes. To facilitate this, especially during the transition, the Morino Institute will keep the Netpreneur Exchange website operating and continue to provide access to our discussions and broadcasts.

            I want to be clear that NP is not continuing. The site will be available for reference, but others will be maintaining it. Let me give you some examples: In the AdMarketing list, we have created an advisory group—including Raj Khera, Anne Holland, Dale Gardner, and Andy Brock from this area, plus Sharon Tucci from Canada and Mark Brownlow from Vienna, Austria—who are going to run AdMarketing. They are determining how to moderate the list, how to handle administration as well as what to do about adding content to the website. The members of this community see its value and want to keep it alive and growing.

            Another example is Netpreneur Calendar. We have volunteers who have offered to manage the day-to-day screening and posting of calendar entries (from almost 700 organizations across the region, I might add) and send out the weekly broadcast. We expect ActionNet will continue under a similar process, as will Talk the Talk. We are going to continue to publish Netpreneur News through the first quarter, and see if it makes sense for someone or some group to keep it going after that.


            As to the site, it really belongs to you. It’s yours to evolve, big or small, and while we will maintain it for some period, we’ll eventually memorialize it unless someone else comes forward to sustain it. I invite you to send me suggestions, comments, and your interest in volunteering for these or other initiatives.

            One of the things that we’ve seen from entrepreneurs over the years is a desire to convene—just look at us here this morning. In spite of differences in size, sector, products, etc., entrepreneurs have a relatively common view of life and of events. Several organizations across the region have expressed interest in collaborating to continue to produce monthly Coffee & DoughNets events across DC, Maryland, and Virginia. At Netpreneur, we have been so fortunate to be able to learn and adapt accordingly as we’ve built programs. We’ll share with others what we’ve learned about events for entrepreneurs and what seems to have worked in the past.

            In our early discussions, we’ve made it clear that it’s not as simple as “if you build it they will come.” You will only come if what’s delivered is useful and relevant, with a touch of inspiration and with no BS. C&D is based on a straightforward, pull-no-punches style; content that is delivered by veteran and in-the-trenches entrepreneurs, and with communications that enable events to live on through discussion groups, connections between events, and archiving content. And let me acknowledge Dave Gardy and the team from TVWorldWide who film these events and host the streaming video. Since we started tracking this, we’ve had almost 125K hits to various C&D support documents in the Event Archives, including summaries, videos, and transcripts.

            It’s great to see these groups step up to increase their focus on entrepreneurs and to look at it as a regional effort. Thanks to Bobbie Kilberg and her team at Northern Virginia Technology Council who have jumped on this, along with Lara Vande Walle, the new President of the Washington DC Technology Council; Dyan Brasington at the High Tech Council of Maryland; our colleague and former Netpreneur team member Penny Lewandowski at the Greater Baltimore Technology Council; and Joe Walsh at Virginia’s Center for Innovative Technology.

            Finally, we’ve announced, but haven’t yet given you any details—and I don’t plan to today—that we will be doing one last “mega” event in March. Mario calls this the “mega of all mega events.” We’ll hope to bring many people in the region together to celebrate, reminisce, look forward, and have an all out good time. We hope you’ll come and spread the word. Details forthcoming.

            I mentioned a loose confederation a moment ago. To help build and strengthen the connective tissue among the participants, two of the Netpreneur team will be staying on into next year. We are forming a small advisory group made up of entrepreneurs and their stakeholders to help us with this effort and to serve as stewards of Netpreneur-oriented services for entrepreneurship in the region.

            If the spirit, network, and connections that we’ve cultivated in Netpreneur continue on in other forms after we’re gone, then we think we’ll have done a good job in making this transition. I know I speak for the team when I say that we have all been deeply touched by being part of this community. It’s an experience we would never trade and one that will shape each of such for the rest of our lives. Even after Netpreneur sunsets, we’ll still be in the network and working it. As I listened to people talking in the hall, they were saying to me, “We're going to miss you.” Well, we're not going to be gone, we're just not going to be standing up here at the podium and worrying about the name tags at 6:30 in the morning.

            I want to take a moment to acknowledge our current Netpreneur team. I think all of them made it here this morning. Fran Witzel and Mitch Arnowitz who have been here since the beginning and played vital roles in creating and shaping the program. Ben Martin has worked with our funding and finance programs. Lin Plummer keeps the trains running for us, and Neil Oatley has been the voice of Netpreneur News and other programs and publications. Also, our extended team: Adele Rudolph, who does all of our events like this one, and Jim Walker, who is the guy under the hood at the Netpreneur website.

            Thanks to all of you for all you've given to the Netpreneur community.

            I'm not going to go on for much longer about this, but it's great for us to see so many of our colleagues and associates from the Morino Institute and Venture Philanthropy Partners who have supported us. Thanks for coming out this morning as well.

            Finally, thanks to all of you for being entrepreneurial. If you weren't, we wouldn't be here to tell the story.

            Now, on to our program.

            As I look at the open seat here on the dais for George Pappas—I’m guessing that the ice is slowing him down—I also see a lot of people in the audience who could fill it. We thought a lot about what we should do for this last Coffee & DoughNets. Should we have a panel? Should we stick to the format? Should we reminisce? Should we just network? We decided that we wanted to have a panel of serial entrepreneurs who are building companies today, and have done so in the past, who had seen the bubble and had seen times before the bubble.

            We believe that it's a good time to start a business, and I think that's what you'll hear from this panel. It’s not all smiles and roses, but it is a good time. Shortly, Mario Morino will come up and join the panel, and you know that will shake things up. While we wait for George to arrive, I'm going to ask Amir and Rick to take a few minutes each to give us a bit of background on how they got to where they are today, their entrepreneurial experiences, and whether they have some advice for the audience. Amir?

the panel: on timing, commitment, and vision

Mr. Hudda: Hi. My name is Amir Hudda, I’m founder and CEO of Brickstream. I'll just take a couple of minutes to describe my background and what Brickstream does.

            I started Brickstream a couple of years ago in June of 2000. Thinking back, it was not the greatest time to start a business, but here we are, struggling, but alive. Before I started Brickstream, I was the founder of another technology company called Entevo. We built software for managing large corporate networks, essentially systems and network management software. I started that in 1994, but the first three years were really just development services, not a products company. We started doing products in 1997 and raised our first round of venture capital that year. We went on to grow that business successfully, raised three rounds of venture capital for about $25 million in total, and, in February of 2000, we sold the company to Bindview. I stayed for about three months to do the initial integration efforts, then moved on to start Brickstream.

            At Brickstream we're doing something radically different from what I did at Entevo. We help businesses that run a brick-and-mortar environment capture and analyze activity within the physical environment. We describe it as analytical customer relationship management (CRM), but you can think of it as a combination of business intelligence and CRM. It's the business of getting a better understanding about your customers, the key difference being that we're doing it for the physical environment.

            Over the years, call center applications have become very popular. In fact, almost any business that interfaces directly with customers runs a call center, and they know everything that goes on about the activity within the call center, such as how many people call, how long they have to wait before they get to speak to someone, the duration of the call, and they record the call for quality purposes. The goal is to get better insight into how they're serving their customers.

            The same thing has happened online. People know everything about what we do online just by following our mouse clicks. They know how many people are on the site, the browsing patterns, how often you click on banner ads, and everything about what we do on their site.

            But if you look at the physical environment, which is where most of these businesses make their money—over 90% of retail revenues are generated within the brick-and-mortar environment—it's surprising to see how little they know about what goes on within a store. All they know is how much money they make per store at the end of the day. If you ask them how many people came to the store and didn't buy, they don't have a clue. For the most part, they don't even know how many people came by. They don't know how long it takes for us to checkout, or whether it was a good experience, or if we found what we were looking for, or whether we got help. They know nothing about that; it's really a big black box.

            The way they've tried to solve that problem in the past is by using traditional manual techniques. They survey customers, they send mystery shoppers to their stores, they do all kinds of things that are essentially manual in nature. As a result, it's slow and expensive. What we're doing at Brickstream is automating the process of capturing and analyzing customer activity within the physical brick-and-mortar environment.


Ms. MacPherson: Rick?

Mr. Steele: I’m Rick Steele, co-founder and CEO of NuRide. The first business I started was in 1994. It was a software development business and we ran it quite profitably for a number of years. We had a number of employees, two locations, and it was really quite fun. I enjoyed running the business a lot and actually had a little office at Cornell with some students working there and a number of marquee clients, including Viacom and a number of their divisions. It was working quite well, then we saw the Web coming along. Most of the software we were developing was CD-ROM-based. When I saw the Web coming along, I said, “This is it. The CD-ROM thing is dead. We've got to move to the Web.”

            I'll never forget the wonderful conversations with my wife about how we we're going to take this wonderful, profitable business of which we owned 90% and go out to raise venture capital, give up equity, redo all this, and shift to the Web. Now, of course, we get cereal boxes at home that have CD-ROMs in them, and I keep reminding my wife that's where the business was going. We had to jump off that train before it was too late.

            I took the media technology business, reinvented it, and came up with a second business called LivePrint, an online design and print business. When we started to move in that space, I think I got caught up in the hype. It was the 1998-1999 time frame, and I was thinking about how big we could get with the Web and how we could go everywhere.

            One thing that we held pretty steady on, but something that I saw a lot of folks thinking, was that they could build a brand overnight. It was one of the things that kept bothering me: raise $50 million, take out a Super Bowl ad, and build a brand. Every equation I've ever seen from marketing and business books is that there are two variables to building a brand—time and money. You can't compress the time scale with money to build a brand. What we did at LivePrint was to license Kinko's brand through a licensing agreement. We became and it changed the business overnight in terms of our value, in terms of customer retention, and in terms of customers coming and actually doing business. Amir talked about the physical bricks-and-mortar shops where people come in, look around, leave, and you don't know what happened. On the Web you can watch them, and we were watching them pouring in on LivePrint and saying, “This is really neat, but who are these guys and why should I buy from them?” Then they were bolting for the door. When the Kinko’s brand showed up, all of a sudden people felt safe giving their credit card, they felt safe buying, and it changed things pretty significantly.

                That was in 2000. Around mid-2001—I guess everyone knows the approximate time, March/April when things started to change—it became clear that a separate company for Kinko’s was going to be splitting a margin too thin. A the end of 2000 we sold the remaining portion of back to Kinko’s. They bought it, moved it out to California, and I exited it three months after. That was an interesting endeavor. We learned a heck of a lot about the value of building a company and where the real value lies in terms of getting customers, keeping customers, and building trust with that customer base.

            Since that time, I took a little time off and helped a friend with a turnaround. I realized that I'm not a turnaround guy, so I came back to the entrepreneurial world and decided it was time to start something again. That's part of what I want to talk about today—why start a business now and what are the variables in this environment that make it work?

            I don't know about you, but I still think that there's a lot of problems out there that need to be solved and a lot of opportunities that need to be taken advantage of. I like to start businesses because I want to solve a problem. There's a fundamental problem that needs to be solved, and you need to go after that problem. The fact that the stock market is jumping up and down is almost irrelevant. The problem is still there and it still needs to be solved. Some people may have joined the game during the bubble because they were looking for a quick hit, or fame and glory, or they wanted to be on the news, or they thought it was suddenly cool to be a geek. Once that washes away, there are still fundamental problems to be solved. I think this group thrives because people want to solve these problems. They know these problems, they can feel them, they can touch them, they can see them, and they say, “If I could just get some time, I could fix that thing. I know I could do a better job than those other six companies, or I could do it a different way.” I can't go to the movie theater without thinking about how I could get the popcorn faster if they could just get the guy to move this way. If you’re constantly thinking that way about how you can make something better even though you know nothing about the particular industry, well, that leads me to where I am today.

            We started a business back in March called NuRide. I don't know about you, but I don't like sitting in traffic. It really stinks and it doesn't appear to me that the government is going to solve that problem anytime soon. The interesting part about the local roads referendum that just failed in Virginia was that even if they had raised the money, they still wouldn't have been able to build the roads because the pollution would have been so bad that we would have blown the Clean Air Act and we would have gotten no federal highway dollars. If you want to talk about a tough problem, traffic is getting worse and the more roads we build, the more cars, and the more pollution. Thirty percent of the pollution in this area comes from driving. I’ll bet 90% of us drove here alone, maybe 95%. 100%? Did anybody pick somebody up on their way?

            So we had a great problem and, of course, the first thing everybody said is, “You don't know anything about transportation.”


            I said, “Well, it's a pretty obvious problem and the guys who have been working on transportation for 100 years don't know how to do it.” We just looked at it and started this business called NuRide. What we're doing is paying people to rideshare. We looked at it as a capacity utilization issue. The statistics show that about 80% of the cars on the road have one person in them. If each car can hold roughly four people, that means we're operating at 25% capacity utilization. The roads can carry us, we're just not ganging up and carrying enough people in our cars. If Kinko’s ran at 25% capacity utilization, their copiers would have been gone a long time ago. I don't know about most other manufacturing facilities, but you just can't operate that way. We want to get people in cars and we figured that the only way to do it was to pay them. We structured a model in which people can arrange to ride share together and, when they do, their trips are sponsored by businesses who want to reach those people.

            We've created a targeted marketing plan based on geography. The Web saw a spree of people target marketing based on demographics, on cliques, based on this and that, but we've never seen anybody do it based on pinpoint accurate geo-targeting. For example, when you take a ridesharing trip and two people pick each other up to go from point A to point B, they record the trip with NuRide, telling us where they started their trip and where they ended it. Now I know where they live, where they work, where they start, and where their local communities are. Businesses in those communities sponsor those people's trips and give them coupons and discounts and try to reward their behavior. We ran a pilot program for about six weeks. It was interesting. I won't go into the details of NuRide here, but it's a hard problem and it's going to take us a long time to solve it.

            That reminds me of another reason that we all need to keep our heads on, that it takes a long time to build something valuable. It took Amir six years to work through Entevo. It takes a long time to build something, but, because of a lot of that hype from the bubble years, people thought they could do something quick. “If I don't get an exit in 24 months, I'm a failure.” That is ridiculous.

            The best part about NuRide is that I love the problem. I think it's going to take us a long time to figure it out, but I started the team with three other guys who were former CEOs and founders of their own businesses. We all wanted to solve a problem that was hard and find a way to do some good at the same time. It's a real pleasure to work with three other gentlemen who have literally started from scratch, built and sold their businesses, and gone through the process. They're operators. They're executors. They're not finance guys—although nothing against that. It's an important part, but at this early stage we all know what it's like to work in the basement on folding tables.

Ms. MacPherson: Rick, you mentioned how you built your team and the advantages of having folks who've worked together. I'd be interested to hear from Amir, about what you learned from your previous business that you applied in building your current team.

Mr. Hudda: After I sold Entevo, one of the things I decided was that I wanted to do something different. I didn't want to create another systems management company, so I tried to take a different spin on it. Still, on a day-to-day basis, you're trying to do the same thing—trying to solve similar problems. I felt that if I was going to be able to bring that energy and passion that it takes to do a startup, it had to be something that I found different and challenging. I figured, let's get into a space that I know nothing about.

            Of course, the flip side is that when I talked to VCs, they looked at me and said, “Are you out of your mind? You know nothing about this business.”

            Even before we had actually started the company, I was brainstorming on some concepts with a friend I'd gone to school with in my days at Georgia Tech. He had joined a couple of companies when they were startups, and they both became very successful. Both are large public companies today. He had spent the last seven or eight years building retail software, the kind of systems that large retailers run their business on, everything from inventory management, to merchandise management, promotions management, supply chain, logistics, you name it; all of the back-end operations that large retailers use. He was very familiar with the retail business. I said, “Why don't we put together your expertise on the retail side and my expertise in creating and growing businesses and see what we can come up with?”

            This was in June or July of 2000 when the technology bubble had just started to burst. It wasn't rocket science to figure out that we wanted to stay away from anything Internet-related. Retail is as solid a business as there ever has been. Large retailers have been around for decades and they're going to be around. The Wal-Marts of the world are not going away. Kmart has, but in those days it didn't look like it would.

We decided to solve a problem that was specific to large brick-and-mortar companies. Quickly, through brainstorming, we decided that there was no way for businesses to communicate with their customers within the brick-and-mortar environment, so we went down that path. Over time, we have morphed into what we do today, but that's how the original concept came about and how we started. The founding team came together because I wanted to do something different and my friend had a lot of retail expertise. Along the way we hired a couple of executives who have experience in both startups and large companies, but they came much later, after we had started.


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