investment insurance, not

November 10, 2010

I’ve raised a lot of money for a broad-range of companies and industries over the years. And, one question that pops-up generationally is how to mitigate risk for investors.

Below is a real exchange between one of my Accelerator Element principals and myself. We have been successful recently in closing a round of $4mm through an Exec-with-Check (amazing in this economy, I know), and the question finds us again:

QUESTION:

—–Original Message—–

From: [mail: name protected]

Sent: Wednesday, November 10, 2010 2:21 PM

To: Brian Patrick Cork

Subject: Question

“Brian,

What do companies do about the $100K limit of FDIC for deposited funds?  Do they spread the money around to multiple banks?  We will likely have $750K by the end of the month and hopefully the balance of the $4M by the end of the year (possibly middle of 1st Quarter).

[name protected]“

ANSWER:

The money is simply always at risk.

This also applies to money in savings accounts at big banks.

All of it is relative.

But, the risk is low percentage unless the vehicle is, well, risky. Banks are low risk, while ventures like DSI are deemed high risk. NOTE: The odds are your DSI is classified as high risk on the” risk pyramid (such a measurement actually exists)”, and the money will be lost.

Any effort to spread the money across multiple accounts will be compromised by cost associated with the time to manage it, and the associated fees.

One way to assuage the fear of an investor, and in this case, a new principal, would be to implement key-man insurance. Otherwise, the FDIC measure aside, there exists no other form of insurance or protection outside of best practices, great strategy, and good luck.

Brian

reasonable questions: #12

October 25, 2010

Young padawan Jenny Chang asked:

“In your opinion, what do you think it takes to be world-class in something besides just raw talent and an excellent work ethic?”

That’s a fair question from a young and likely frustrated emerging executive today that faces enormous uncertainty due to a lack of mentorship. Especially in an economy that has four separate generations knife-fighting for the same jobs

My response:

“A careful development of Subject Matter Expertise (SME).

Thought Leadership is always valued. But, what drives that is a keen ability to point to a target and kill it with flair. So, identifying a passion for a subject; immersing yourself in it; and, becoming a definable expert through research, application and acknowledgment is the best path to sustained success.”

Let’s be part of the solution.

Brian Patrick Cork

This isn’t new. But, reminders are always vital – just like repetition is critical for improved performance in both business and athletic efforts.

A key coaching tenant of mine is that everyone (including myself) should have a minimum of a three year plan. Five years is better because it requires stretching and having a sense of emerging trends. This is more vitally important, today, than any other time in global business.

Let’s be part of the solution.

Brian Patrick Cork

more thinking on LinkedIN

September 20, 2010

All of my coaching clients, and the people we recruit understand that we do not advocate having a general resume handy. And, we don’t advocate having your profile on a repository like monster.com (especially monster.com) and The Ladder, etc.

NOTE: Many companies prohibit outside recruiters from pulling candidates from the repositories (again – especially monster.com), and mostly because in-house recruiters can leverage those uncertain platforms themselves. Good recruiters don’t, or shouldn’t, need to use repositories.

But, the primary point I want to make concerns LinkedIN.

And, I want to keep it real simple, today.

LinkedIN is less about social networking as it is self-promotion. It can certainly be a collaboration tool. But, few people really use it to help one another. Let’s be honest about that. However Search Engine Optimization (SEO) is working better and better when it comes to Google-oriented candidate search efforts by recruiters, analysts and hiring decision-makers.

So… To that end, here are some quick job search and/ or positioning tips to optimize LinkedIN…

If you are in career-transition, or want to be in transition, be transparent about that (well… maybe not if you are employed). But, use the Summary section to highlight the best things you have accomplished relative to industries you find attractive. Reference Blogs and “Thought Leadership”. But, the real gold mine opportunity will be found in the mini-summaries in the Experience section. Take the opportunity to drop in duty post (job) highlights per job that can be picked-up under SEO search algorithms. These can include key words, buzz phrases, industry subject matter expertise (SME), Thought Leadership efforts including Blogs and White Papers, and performance awards.

In summary… Even though most people ignore your updates on LinkedIN. Use it as a filter for those companies that need you, and are looking for you. Make LinkedIN work for you.

Let’s be part of the solution.

Brian Patrick Cork

raising money and paying fees

September 13, 2010

It’s a very common misconception – especially amongst startups, and possibly desperate founding entrepreneurs, that it’s okay to pay commissions and fees for raising money.

I’ll not belabor the point. Just some facts…

When money is raised from investors for a company to grow, there is typically the expectation that the money will be returned to the investor. This understanding is usually formed under an agreement. That agreement is thusly, a “security”.

Unless any person is a registered broker with a license to sell securities (i.e. series 7, 22 or 63) they can’t accept any fee relative to capital formation. And, when they are licensed, they must be associated with and supervised through an Broker-Dealer that is current with the Securities and Exchange Commission, and the local state regulatory boards. Here is a list of the Rules that define what a Broker is.

The only exception might be an Agent of the Issuer. If an issuer of securities (the Company) does not wish to use a broker-dealer to distribute its securities to the public, it may decide to market them directly to the public. Issuers may choose to have an officer, director or other employee make the solicitations and effect the sales or they may hire a third party specifically for the purpose of soliciting buyers. These individuals may be considered Agents-of-the-Issuer as that term is defined in the Uniform Securities Law. Depending on a number of factors, these agents may still need to be registered with the Division before commencing any solicitation activities. One important factor is the security registration or exemption used to qualify the offering for sale in a particular state. No determination of agent registration requirements can be made until the security registration or exemption filing has been made or, in the case of an exemption that does not require filing, the issuer has explained which exemption it is relying on and how the issuer intends to meet the provisions of that exemption.

The bottom-line is you can’t or shouldn’t pay a fee or commission to ANYONE for raising money that is not properly registered.

Let’s be part of the solution, and not the problem.

Brian Patrick Cork

I’m thinking it was either early  2001 or 2002 when David Gardner, the co-founder of The Motley Fool, and I were hanging out here in Atlanta in a local hotel bar pondering optimistic investment options, when it dawned on me how technology is, and will remain, a two-edged sword.

Between the two of us we had six gadgets scattered across a small table that included bulky cellular telephones, Personal Digital Assistants (PDA’s), and one pager (his, not mine), and a camera (again, his not mine). Since, statistically, the odds are good you are reading this blog, and you are at least thirty four years of age, you are probably thinking back with the vision of a similar array of your own.

I was telling David how one of my investors (think Palm Pilot and then PalmOne) that I was coaching and a company I was recruiting for called Handspring had collaborated around the Handspring Vizor devices (that, as you might know, then evolved into the Treo line of products) working with a cellular company to form (what is now) a “smart phone”. The Handspring was a PDA that you could now also use as a phone using a Sprint snap-on module (and, yes, I was an early adopter)! So, you had the least amount of “stuff” you needed to do a lot of business on the fly. By the way… The Handspring  and Palm collaboration realized one of the first efforts to utilize USB connectivity for synchronization, and worked brilliantly with the Macintosh operating system out-of-the-box.

I was pondering my gadgets when I looked at him and asked:

“Do you think all this technology simplifies your life and business, or creates more stress and confusion?”

That was another of my “Forrest Gump” moments as we subsequently witnessed that Motley Fool take a lead in driving a great deal of attention around convergence and mobile technology platforms.

With the advent of Apple’s iPad (and, obviously the iPhone) maybe the answer to my question today is: “as complicated as you prefer”.

I think Nicholas Johnson would appreciate that because he likes to fidget and tweak stuff, in the spirit of all things Windows and Google. He is also apparently offended by things “that just work (a la Apple).

And, this will bring me around to what is currently a continued bastion of confusion – the PC (to be sure all computers are, essentially “PC’s” – some are just more PC, or useful, or work, for that matter, than others) – all of them aspiring to be compared to an Apples.

I have an iPhone and I’ve owned hundreds of computers (mostly Apples).

Here is another question in this time of economic uncertainty, continued efforts around convergence, mobility and the unending quest for what the real “truth” is, any where:

“are computers portals to chaos or confusion?”

Today, if you are under forty years of age, and asked a question, you will almost always go to Google.com for the answer. And, this might be where we realize the true cost of chaos. There is an old rule that allows: “if it’s in writing, it must be true”. Print is a powerful tool or weapon – and, misinformation can be the result.

Picture the twenty five year old “techie”, all-sophomoric, to be sure, at a cocktail party when they get challenged with a great question. The first thing they’ll do is whip out their Treo (well… maybe not) or Android device, fire up Firefox and google the question. Whether the information they find is accurate or not, it will often be touted as gospel and spread like wild-fire.

Think about it… If you Google a topic, most of what you read as a result is from blogs (sic), websites designed to influence thinking, white papers based on uncertain facts, “chat” responses posted on written articles of uncertain origin, etc. Other sources of information those which you find on MSN that can include media-hyped head-lines about the stock market and other economic reporting that is rarely based in fact. And, this is what forms our thinking and opinions daily.Wikipedia might have some credibility due to its community-based self-regulation that suggests some integrity from the intellectual community. But, how do you know if you don’t balance the information against information possibly found in a library or research facility.

I studied Social History (not a widely promulgated course-of-study, and some what “unofficial”) – or why things happened at Radford University and through other programs most of you won’t have access too. And, that has helped form my super powers perspective and position as a heterodox and contrarian. For example, if I read about a certain stock on a blog or through an oped, I know how to verify the information – and, first via skepticism. I focus on what most people don’t realize what they don’t know.

I also ask a lot of questions and always cross-reference. And, that is where I’ll end this piece and hope you pass this on as both a historical perspective of reference, and a warning around how to absorb knowledge, form your own super powers for good use, and be part of the solution, and not the problem.

Lets be part of the solution, and not the problem.

Brian Patrick Cork

cash flow

August 23, 2010

I was on the telephone with a client out of Minneapolis last Tuesday listening to a common lament:

“I have a customer that is well past ninety days in paying us. They keep telling us they need to: ‘manage their own cash-flow’. They started out at thirty days and renegotiated for ninety. Now they are pushing that out. If this keeps up we’ll have to look at making cuts in payroll.”

So, I started to realize this is one of the core problems within our economy and business practices… Fear drives a lot of behavior. But, in cases like that stated above companies are actually managing the cash flow of other organizations – and, after they’ve done the work.

So, the economy slows down because companies are hoarding payment dollars, just like banks are hoarding loan dollars. The revenue figures for companies are impacted, and banks get the wrong picture. That makes for an ugly and potentially endless cycle that hurts business and can eliminate jobs. Things, in general, just get worse from there.

There is much more to it than my simple outline.

If a service provider or vendor gets the job done – pay them, and timely. Or, don’t take the service or product(s).

Bottom-line (literally): Don’t manage their cash flow.

Thats part of best practices – not wreaking havoc in-and-amongst your partners.

The banks are going out of their way to tear apart the small and emerging business community. But, we have to pull together and seek to do the right thing. We don’t need to tear at one another.

This line-of-thinking isn’t sophomoric or overly obvious. It;s simply not discussed enough.

Let’s be part of the solution, and not the problem.

Brian Patrick Cork

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