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| PITCHING A DEAL | |
 November 23, 1999 
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How to succeed in business, 1990's style: Our business correspondent Paul Solman of WGBH-Boston, reports on the successes and pitfalls of entrepreneurship. |
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SPOKESMAN: We're poised to become the next Yahoo of the software component industry. PAUL SOLMAN: A morning session at the Massachusetts Software Council, where two dozen would-be entrepreneurs were trying to launch the next Yahoo or Amazon.com to become the next superstars of the American economy. SPOKESMAN: We are in the process of building a nationwide information network to help people make choices about where they go out to eat. PAUL SOLMAN: In magazines, on shows like ours, software entrepreneurs have been portrayed as today's Rockefellers and Carnegies, driving an era of unprecedented economic growth. But to reach the top, you have to start at the bottom, which is what this session is about. SPOKESMAN: Hands-free networks will be the first and leading provider of affordable, effortless, and reliable automated network support for small businesses and households. PAUL SOLMAN: These are entrepreneur wannabes, practicing their sales pitches. |
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| Making the pitch | ||||||||||||||||||||
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SPOKESMAN: Your company has just acquired one of your competitors. All of their information is stored in Sybase. You guys run Oracle. How do you present a consistent view to your employees, to your end users? PAUL SOLMAN: The goal is modest, but crucial, a key first hurdle for any entrepreneur: To sell your idea and yourself, raising the money to make your business a reality. In fact, in just three days, these folks would be pitching for real to a conference of investors. At the moment, though, the job was to learn how to hook the audience within the first minute, not an easy task. SPOKESMAN: It allows really a search engine to have those killer hits that make a real difference. We're still in the seed stage, but we already have an issue patent. And you'll have to help me here. I don't know how to... clue.
PAUL SOLMAN: The coach here, Bill Warner, is one of the most successful entrepreneurs in America. BILL WARNER: If you say, you know, "I'm going to build a better automobile than Toyota, Ford, GM, Chrysler, all of them," people are going to say, "okay, well, what? What are you going to do?" You're going to have to say, "look, they get 30 miles per gallon; I get 60, and it never needs to be washed because dirt falls off it." (Laughter) You know? PAUL SOLMAN: Warner is coaching for free because he likes entrepreneurs and also invests in them. This way he gets a personal preview. He began by telling the group this secret of success: Listen to your mother. BILL WARNER: She said, "be yourself." She said, "make a good first impression." And she said, "there's somebody out there for you." PAUL SOLMAN: That somebody is the venture capitalist who will finance you. The first impression is selling yourself fast.
PAUL SOLMAN: Malay Kundu wants to sell a similar computer messaging system to schools and organizations. Warner likes the idea, but thinks Kundu's pitch is too impersonal. BILL WARNER: You got to make a connection with people. The business model comes second. Business models are important, but what's the real connection, I think, is the way to open. |
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| Turning an idea into a success | ||||||||||||||||||||
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PAUL SOLMAN: To Warner, entrepreneurs should be driven by passion, as he was back in the 70's.
PAUL SOLMAN: So in the 1980's, Warner pioneered digital editing. BILL WARNER: I'd like to show you the system right now. PAUL SOLMAN: This demo tape launched Warner's own entrepreneurial startup. BILL WARNER: Much easier, though, to see it as images, as head frames.
BILL WARNER: So I would start with a reflection shot and go to the inside the door... this shot. With a nonlinear system like Avid, you can stick that in the beginning, but in the old days when I started this, with video, that would have been a problem. PAUL SOLMAN: Solving this problem, though, eventually led to a more fundamental one. As Avid grew, Warner lost his passion. BILL WARNER: When a company gets bigger, the challenges of running it become different. They start to move away from entrepreneurial solutions to problems. They start to move towards more systematic solutions to problems, to more proven solutions to problems. I'm interested in coming up with solutions to problems that haven't been solved. |
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| Personalizing an idea | ||||||||||||||||||||
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PAUL SOLMAN: Back at the coaching session, Rebecca Moore's unsolved problem is the overwhelmed museum goer. REBECCA MOORE: We are the one-stop shopping resource on the Internet for museums throughout the world. PAUL SOLMAN: Moore has a polished pitch, but she didn't mention her credentials. BILL WARNER: What is your background? REBECCA MOORE: Marketing museums. PAUL SOLMAN: How long ago? REBECCA MOORE: Ten years ago. BILL WARNER: There is value in the audience in knowing that you know an industry. A lot of times people, especially when they say, "I'm going to bring, you know, X, Y, Z to the Internet," it's like all they had was the idea to bring that to the Internet. They weren't really involved in it. PAUL SOLMAN: So a good idea needs a passionate person with credibility, like Liz Cobb, who used to manage complex incentive pay plans for salesmen. LIZ COBB: There are 17 million sales reps in the U.S. and there's a big hair ball of spread sheets... PAUL SOLMAN: Cobb was coached by Warner two years ago. He quickly backed her in incentive systems, which makes software to automatically compute the carrot for many salesmen, their bonus. But is money the carrot for entrepreneurs? |
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| Looking to get rich? | ||||||||||||||||||||
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PAUL SOLMAN: So you weren't looking to make millions? That wasn't your chief objective? LIZ COBB: It's not my chief objective, no. It's not. It's to solve the business problem and to have been responsible for building it and for having gotten people to see it, accept it and buy it, and use it and see a difference in their lives. PAUL SOLMAN: But wait a second. If wealth is secondary, why does society make entrepreneurs so rich? BILL WARNER: I'll tell you, it's part of our culture. It's creating heroes, and you create heroes by making them wealthy. We measure our heroes by how much money they have. PAUL SOLMAN: More mundanely, though, no matter what the entrepreneur's original carrot was, if her company strikes it rich, so will she. And that can be an incentive for anyone. |
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| In search of investors | ||||||||||||||||||||
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MERCIA TAPPING, The Tapping institute: For ten years, I used to wake up with a blinding headache. Doctor 19 told me that I was allergic to my house. PAUL SOLMAN: Mercia Tapping's product is a independent consumer Web site for allergy sufferers. MERCIA TAPPING: Well, we tell the truth about consumer products. We tell you what works and what doesn't work. BILL WARNER: Wow. That was very strong, and you can see how, you know, this was the ultimate connect with the audience, personal story. PAUL SOLMAN: So a compelling first minute with a person and idea you could really get behind. But would it sell? Okay, the conference itself, where venture capitalists like Frank Dodge, who runs his own investment firm, and Joan McArdle would size up the entrepreneurs and their software. These are investment gatekeepers whose thumbs up or down may well determine if businesses ever get off the ground. Hundreds of such meetings are held every year in the U.S., a vivid contrast with financing opportunities in other countries, like India, where Kundu's family comes from.
PAUL SOLMAN: Of course, if you're well connected, you're in good shape anywhere. MALAY KUNDU: If you've got a rich uncle, in any country that's good, you know, but if you don't, then it becomes much more difficult to get a hold of money, and I don't have a rich uncle here, but we've got a business now. BILL WARNER: America is truly the foremost country in the world for entrepreneurship. One of the things I tell entrepreneurs, is I say, "look. You've got venture capitalists, bankers, lawyers, engineers, accountants. They're all set up to help you start your company, grow your company, build your company, fix your company, everything about your company. It's like we're all here to help. PAUL SOLMAN: To help, and also profit from, entrepreneur hopefuls who look pretty much like the rest of us, except younger maybe. Anyway, it was time for their pitches.
PAUL SOLMAN: Kundu continued like this for nine minutes. MALAY KUNDU: That the messages don't interrupt what you're doing but at the same time I'm showing you exactly what I'm talking about. PAUL SOLMAN: So, what did the smart money think? BUSINESSMAN: His speech was too canned. BUSINESSMAN: And he was too formal and waving his hands around, and obviously he had rehearsed a lot, but it didn't have the same level of sincerity and conviction. PAUL SOLMAN: In the Q&A after his talk, Kundu seemed more natural, but money loses interest in a hurry.
PAUL SOLMAN: McArdle means that a startup C.E.O. Has to pitch suppliers, landlords, customers, banks, nearly everyone. Okay, next up would be allergy entrepreneur Mercia Tapping. She was nervous. MERCIA TAPPING: It's like being a teenager going to your first mixed dance and saying, "I hope someone picks me."
JOAN McARDLE: I think she has a terrific personality and I think she sells the story well, but it's still a story; it's not a business quite yet. PAUL SOLMAN: It's funny. You know, she was just walking by, and you said, Frank, "hey, get her away from here before I start talking." Is that because you thought she might be unusually sensitive?
PAUL SOLMAN: How did Tapping think it went? MERCIA TAPPING: Well, the truth is, you don't quite know. I mean, the fantasy is that, you know, 20 people would rush out of their seats and say "tomorrow we must talk!" Or they'd get out their check books, or "I'll send my lawyer to negotiate." And the truth is, it doesn't happen like that. So now we wait. |
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| The next big thing | ||||||||||||||||||||
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BILL WARNER: Wildfire. SPOKESPERSON: Here I am. PAUL SOLMAN: For the past seven years, Warner's entrepreneurial baby has been an electronic phone system called Wildfire. BILL WARNER: Call. SPOKESPERSON: Call whom? BILL WARNER: Paul Bassett. SPOKESPERSON: At work? BILL WARNER: Yes. SPOKESPERSON: Dialing. PAUL SOLMAN: Wildfire has spent millions in investment capital. Yet the jury is still out. In a few years, it could be your voice mail system or out of business entirely. SPOKESPERSON: What's it say? PAUL SOLMAN: Meanwhile, back at the conference, it's time for one last pitch. REBECCA MOORE: King Tut, Star Wars... PAUL SOLMAN: Rebecca Moore of Museumshop.com had taken Warner's advice: Same first few words, but quickly she added herself.
MICHAEL FITZGERALD, Commonwealth Capital Ventures: I think the museum shop is probably right up at the top of the list. PAUL SOLMAN: Is that right? MICHAEL FITZGERALD: Yeah. I thought that was very good. PAUL SOLMAN: Did you like the open or the beginning of the presentation? MICHAEL FITZGERALD: Oh, I thought it was fantastic. I thought she was one of the best speakers so far. I got all the basics that I needed. DAVID SOLOMONT, CommonAngels: There's a classic example of a young, capable entrepreneur who's really taking advantage of the Internet opportunity and picked the market niche and seems to be going after it very nicely. PAUL SOLMAN: A victory at last, or was it? Well, we checked in four months later to see how our would-be entrepreneurs had fared.
Mercia Tapping? She never got a nibble, which prompted her to go back
to the drawing board. She officially launched her Web site at the end
of August, and is looking for a And finally, Rebecca Moore. She was approached at the conference and she has her deal, now being finalized-- which made us take more seriously her answer to what had been our last question. What are entrepreneurs really like?
PAUL SOLMAN: So bottom line, it seems, all that you entrepreneurs out there need is a good idea, a taste for uncertainty, credentials, passion, poise, a stomach for rejection, a touch of madness, and, if you're still interested, a great one-minute open. BILL WARNER: Go. |
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SPOKESMAN:
Go. 
BILL
WARNER, Entrepreneur: You have to be more specific. 
MALAY
KUNDU, Invino Corp.: We are basing our business on an instant messaging
product based on a system that's been used at MIT for the last 12 years.
BILL
WARNER: I was making videos using, you know, inexpensive equipment for
a few years, and I loved making the videos, but the editing was just
torture.
PAUL
SOLMAN: Avid Technologies is now a multibillion-dollar business in a
typical high-tech industrial park in suburban Boston. Avid Software
has become the standard for editing movies, TV shows, even stories like
this one. 
REBECCA
MOORE: King Tut, Monet in the 20th century, star wars: Did you miss
any of these exhibitions that maybe came to your town, or were you hoping
to go to any of them? 
BILL
WARNER: If you look at real entrepreneurs, they're in it for the success,
and the success is measured in the results that it gives to the people
that are buying the product, to the people that care about the product.
BILL
WARNER: Let me set this thing. Go. 
MALAY
KUNDU: It's hard enough for people who have had years and years of experience
just to get a loan, to be able to start up their own business, let alone
someone as young as myself getting enough money to, you know, start
up a viable, you know, new idea. 
MALAY
KUNDU: Invino Grapevine, just like Zephyr at MIT, is something that
when we replicate that model at another university, that becomes the
means by which…
JOAN
McARDLE, Mass. Capital Resource Co.: If real estate is location, location,
location, investment is people, people, people. And the smaller the
company, the more important it is that the CEO and founder makes a very
strong first impression. 
MERCIA
TAPPING: We're about unbiased information and research about allergy-
related consumer products. When I went through this, I thought, "wouldn't
it be great if there was actually a catalog that told the truth about
these products instead of everything is the best thing since sliced
bread and a miracle cure?" 
FRANK
DODGE, Frank Dodge Associates: Exactly. That's a good point. She does
not have that veneer of the seasoned entrepreneur, and she's a very
sensitive individual. I think that's why she's doing this. 
PAUL
SOLMAN: Uncertainty: It seems to be the one sure thing about entrepreneurship.
And even Bill Warner is in its grip. 
REBECCA
MOORE: I started my career at the Smithsonian Institution about 13 years
ago, and I was struck by two things: One, that museums had to compete
with all other types of attractions and media to get attention... 
Malay
Kundu? The conference netted him a handful of meetings but no deals.
Meanwhile, you can see his messaging system on his Web site, even become
one of the people testing it. 
seasoned
Internet CEO to run the company. 
REBECCA
MOORE: I think we're all crazy. I mean, if we knew how difficult it
would be, nobody would go into it. 
