Can Politicians Help Entrepreneurs? My article in Gannett

Here is an article I published in the Gannett papers. It is a formula - a policy proposal that changes the way Start-Ups grow in this economy.  Based on current trends, the next election seems to be focusing on job-creation so this could become a really big topic!

"County Executive Rob Astorino did a great outreach to the voters of Westchester with his recent phone conference "town hall" meeting, yet he stumbled when he took questions about developing new business in Westchester. The best he could say was: "We need Pepsi . . . and 900 jobs."

He is not alone. As the head of a national start-up forum called the iBreakfast, which has helped thousands of start-ups meet investors, I can say with some authority that most politicians — in fact, most corporate executives — have no idea how to create new businesses. Corporations may know how to grow the businesses they already have; they certainly know how to negotiate better tax deals for locating their headquarters. But when it comes to creating new business, they usually buy someone else's start-up.

Yet start-ups are where the new jobs really come from. At the New Jersey Institute of Technology, which has more than 90 start-ups, each one generates an average of seven full-time jobs and four student jobs according to the director, Jerry Creighton. In this new economy, where factories tend to be in China, logistics are king and everyone is online, we have to think way beyond fostering the growth of sweetened-liquid companies. The question is how?

What we need is a new business ecosystem
Read the rest by clicking here:   Brody on Innovation and Politicians in Gannett

iBreakfast Controversy - Can You Beat SEO?

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Report from "Google Changes the Rules" iBreakfast

It is not often that the staid world of Search Optimization erupts in controversy but it did at the last iBreakfast on Google's "Farmer" and "Panda" Updates. One of the speakers, Steve Arnold, claimed to override traditional SEO and boost the rankings or even silence offending sites by a method that sounded both intriguing but also like a storyline out of the "Wag the Dog."

This iBreakfast was designed to cover the key issues of Google's revamping of its ranking algorithm supposedly to reward quality providers and to ditch the questionable "content farms." These are the sites that fill the vast underbelly of the net with just enough text to attract high value Adsense ads or raising the rankings of a particular site

What we got was a challenge to go beyond the SEO model and think about creating a kind of transcendent awareness that enables sites to be seen via social media and mobile search.

While Google has framed the update in terms of refinements it is quite likely to be more profound than that. Silicon Alley Reporter noted that upwards of 12% of sites would see their rankings change. Some dramatically. The ever pugnacious Jason Calacanis found his Maholo website at the wrong end of the "update." This resulted in him drastically changing the business model from a kind of "Yahoo Answers" to "better" eHow. Good luck.

Google has grown on the backs of these content farmers since they boosted their ability to monetize high value keywords. After all, Google let everyone know what the high value keywords were and by encouraging the content farms they wound up with more inventory to sell.

When the New York Times ran its famous expose on the JC Penny that prompted Google's change - it seemed well, just a little too convenient. Perhaps there was more than meets the eye. While we can't say we saw the smoking we can suggest the bigger picture here - at least according to Arnold. Google would rather sell paid placements than let SEO's artificially boost the rankings of well-heeled but unworthy players. Not only that, but they are seeing real competition in Facebook which is becoming the home of more and more searches that are powered by Microsoft's Bing. The situation can be more drastic overseas while mobile too, is becoming more of a challenge since it is less and less web-oriented.

Matt Robson of Hachette talked about some of the key attributes of the Google upgrades that would qualify sites for a "Trust Ranking" - meaning it has been reviewed and tagged as a "quality" site for better rankings. The other side of this is being tagged with an "adversarial classification." The big issue facing traditional publishers online is their expense in creating deep original content is often challenged if not undermined, by the likes of Gawker or Mahalo which follows high value keywords and writes just enough fresh text to appear as a quality site before linking to the underlying video or story. They industry term for this is "Churnalism" and it is a behind-the-scenes battleground. At the end of the day though, Google values the user experience, rewards the originator and in his view they are moving to wards more techniques that harness forms of crowdsourcing to filter or improve their algorithm. 

Hamlet Batistsa's Altruik is known for automating SEO techniques. In his view, the major area of concern for websites is that prior to the updates their rankings were based on individual pages. Today, the entire site is taken into account. That endangers sites which used lots of filler pages loaded with keywords. On the other hand Google gives higher rankings to sites that are updated frequently.

For those looking to improve rankings these are key lessons.

For those looking to step up the game, we will be taking a deeper look at Steve Arnold's end game around SEO with his "Content with Purpose" seminars.

  Want to know more about "Content with Intent" Seminars?   

Report: Entrepreneur iEvening

VC Panel led by:  

Stephen Brotman, GSA Venture Partners  

Mike Segal, Joshua Capital

John Ason, Angel Investor

Frank Garland, Investor

Dorothy Price Hill, Mid-Market Capital  

The Entrepreneurs: Fahim Mahir, Allan Pincus, Tanjila Islam, Farhan Memon, Steve Naidich, Richard Radoccia & Alan Brody  - Photo by Seitu Oronde

Herrick, Feinstein, LLP hosted the now quarterly event for Start-Ups at their fine auditorium on 32nd & Park. All attendees are invited to the Entrepreneur workshop beforehand - this is unique forum variously titled: "The Pivot Workshop" the "Positioning Panel" or even just the "Start-Up Shop." The purpose is to get your peers to give you completely unbiased feedback on how your plan is perceived. It is the skill of the facilitator to help you understand the following: are you hiding your real idea (much more common than you'd think) are you seen as investible and what can you do about that? Most of all, since businessplans change, can you identify the "Soul of your idea?" When you have to reposition a plan for different kinds of investors - this is what you need to know. It is also a place where execs can throw their resume into the panel and see how entrepreneurs would reinvent them.

Some of the issues that came up were:  

· How would you increase value for a world news digest (find high value readers such as investor or government analysts)?

· Math site for kids - will parents respond to claims of a superior algorithm, or do the kids need to be lured somehow?

· When it came to the pitching, the feedback we elicit from our panel of four judges is often worth its weight in gold - even at today's commodity prices. Not all the startups will get the gold but hearing from in the investors can totally change the life of their plans. Just listening in can help you go for the gold!

Steve Naidich & winner, Farhan Memon - Photo by Seitu Oronde

The Winner of the Start-Up evening gets a meeting with investors and a ticket to the high-value Private Equity Forum at the Yale Club in May. Last weeks winner was Farhan Memon of WikiOrgCharts - a site that combines the best features of LinkedIn and Jigsaw by using a core database and crowdsourcing to fill in all the organization linkages between government and corporate personnel. It's a great resource but I'd probably not want to see Al Qaida using it either!

The other Start-ups were:

TigerTrade presented by Tanjila Islam, who made an impressive presentation on a world trade site that offered to do what Ali Baba does - but for South East Asia which is now competing as a lower cost alternative to China. The challenge, for often foreign-averse investors, is convincing them of the value of this marketplace.

The Language Chef, polylinguist Robert Auidi's site is based on the theory that you only want to learn a foreign language so you can understand their menu. The judges didn't bite.

GigBlast Ed Johnson's site came with a room-rousing presentation and a warm recognition from the judges of the value professionals have in developing a career presence online. Making this a scalable business is another challenge though.

John Rogers, Alan Brody & Steven Greene  - Photo by Seitu Oronde

ClipboardMD is one of those services of the future for the medical world - all your incoming data is entered through their notepad and patients lives are eased while doctors profoundly improve their ability to get reimbursed by the insurance companies. The issue is adoption and competition. Will doctors pay for this? (Clipboard already claims to have too many customers.) How do you avoid the 500-pound gorillas?

CarNova - this is a car buyer referral site that promises to offer better info for the buyer in order to attract a high price per lead from the dealer. Judges were interested but the money was sought for marketing: Adword arbitrage, linking, advertising and so on.  Check my upcoming "Prayerbook for Entrepreneurs" for tip #26 VCs hate to invest in marketing.

eGenomics, Inc Steve Naidich made a great presentation on identifying the problem - locating the origin of nasty hospital bacterial breakouts. But, from an investors point of view it came undone for lacking a cure itself. While the identifying the source is worthwhile and hospitals might pay for it - the real money is in an eradication product. That would put a bug in VC ears!

ComfortMouse by Allan Pincus is a product that has identified a problem - people with serious hand issues who cannot use a regular mouse. The solution, however, is not exactly a sight for sore eyes. While it is true there is money in custom fit and medically prescribed solutions, investors hate products that require gatekeepers and reimbursement. But at $500 a pop people might prefer iPads and motion sensitive technologies. Perhaps 10 years ago, at the height of PC adoption. Now we're all mobile.

Joy Wai with investor, John Ason   - Photo by Seitu Oronde

Sponsored by:

The Next iEvening
May 19 - iBreakfast/iEvening NJ presents Mayor Cory Booker
June 14 - visit www.ibreakfast.com

Publish Post

The New Incubators Report

David Tisch, TechStars · Gabe Zichermann, Founder Institute · 

Brian Cohen, NY Angels · Moderated by Alan Brody

Sponsored by Herrick, Feinstein

Three styles of incubators were highlighted at The New Incubator iBreakfast last week - giving our audience of entrepreneurs and investors a view of options that may never have been available before.

Start Ups if You're Under 30 
The buzz has been with TechStars, a new kind of incubator that, like Y-Combinator and others is part of the so-called "agile start-up" movement. Unlike the old days of betting on an expensive build-up based on the Entrepreneur's theory of what the market wants, here the idea is to build cheaply - even living at the incubator - while allowing the market to tell you what they want. At that point, the start-up pivots to where the market is.

A good example of this is ignighter.com - a TechStars start-up for group dating - that found its true market in Southeast Asia and India where group rather than one-on-one dating is the norm. Despite knowing almost nothing about India, the founders were now in the Indian dating software business.

With TechStars, a vast number of applicants are viewed before a handful are selected to receive $6,000 per principal up to a total of $18,000 for around 6% of equity and a few months to produce. They are given space, business and technical resources and then access to additional investors. The house typically has options on an additional 20% or so of equity. This tends to favor young, lean start-ups that can dedicate themselves, move fast and adapt. Their success rate has been quite compelling.

According to David Tisch, who runs New York's TechStars chapter, of a crop of 70 companies, 70% have received additional funding or been acquired by companies like AOL and IAC. (The program was originated by David Cohen, a serial entrepreneur in Colorado.)

Start-Ups if You're Over 30 
The Founder Institute is almost the opposite of TechStars since it favors people that may already have a job, business or a career and are taking a part time approach to evolving their Start-Up. They may even be execs reinventing themselves by way of a their Start-Up. As New York manager, Gabe Zichermann says, the vast majority are "not out of college but are post business or retirement." After a sign-up fee, Founder Institute members, a group created by Adeo Adessi and now in over a dozen of cities and countries, give up about 3% of their equity and go through an entrepreneur's program that sharpens their plan and puts them on their road to seek funding and customers.

For All Ages: New York Angels
Brian Cohen is the Vice-Chairman of New York's venerable angel group that has made scores of investment over the years - over $60 million in over 40 deals. Their view is more traditional - good plans, good young management, straight angel deals. At one point, NY Angels, was involved in its own lean incubator, SparkSpace but exited it after a few years because they felt their operating model did not require it.

While the panel offered a cordial cross-view of start-ups, there was some controversy over the idea of a start-up as being the "new cool" - something akin to being a screenwriter in L.A. The work of Entrepreneurs, some of the panelists opined, is really quite mundane and that calling them "stars" is not such a great idea. "Success," said Cohen, "is the worst teacher."

After the presentations and discussion, we invited starts-ups of various levels to come up from the audience to make elevator pitches. This was instructive in a number of ways:

1. All starts-ups seem to need some type of interaction with peers, business experts and investors to find their new business path
2. People with experience often dwell on their past accomplishments rather than their business ideas
3. Investors can still find a good a good idea in an uncertain pitch

The pitches covered a lot of educational areas: financial, hiring etc. Investors are often leery of education but seem to give a second look to pitches that find a genuine pain point with actual dollars at stake. Likewise, businesses that reach kids are only of interest if parents with checkbooks are standing behind them....

New kinds of apps are always of interest. One testy moment occurred when a software entrepreneur asked the what value would be given to having patents. Due to the fast-changing nature of software tech, the group were not very enthusiastic about it. They appear to be valued in Biotech and medical and other devices where there is a long approval lag but when it comes to software the patent bloom seems to be off the rose.

The iBreakfast/iEvening will be return on April 5 with its famous Executive & Entrepreneur Workshop and Pitching Event.

Middle East Turmoil & Entrepreneurship: What I Learned from My Trip to Israel

With the uprising in Egypt and the Middle East this analysis of Israel offers a timely insight to the region.

I had just returned from Israel when the rebellion in Egypt took place. In an odd way, I wasn’t surprised that it happened, nor that the name Israel was barely invoked during the revolt. Where once Israel was the rallying cry of the Arab street, they were now a mostly forgotten bystander.

 I remember thinking at the time just how calm was this new Israel. How long could this last I wondered? This was not the same Israel I saw 25 years ago: the once nervous, ramshackle outpost of world Jewry and the lightning rod of Arab animus had grown into a secure, wealthy nation state. Time Magazine even had a cover story in September 2010 observing much the same thing (“Why Israel Doesn’t Care About Peace”).

After the 2000 Intifada, Israel put up a controversial wall separating them from the Palestinians in the West Bank. At the same time, Israel’s lively mix of chaotic politics, citizen army, advanced education and pure chutzpah had met the technology revolution and liked it. The country took off. This is no longer the resource-starved country of old living off handouts from the Diaspora or gifts from Uncle Sam. The Israeli side of the wall – clear as day – is the showcase of a vibrant, self-sustaining knowledge economy that can fill highways with fancy cars running on $8 a gallon gas, glittering skycrapers and a bountiful middle class.

On the other side of the wall lies the hardscrabble Arab world brimming with its own chaos, dilapidation and poverty.

Thanks to this parallel showcase of socio-economies the differences between the two competing world views are stark and unambiguous. Thanks to Al Jazeera, every Arab with a TV has seen this and one way or another, they know.

For years, the PC party line of the left was Israel had sucked the wealth out of the Palestinians. There are plenty of arguments to show that Israel took first dibs of the resources. However, the Egyptian uprising showed that peoples’ conditions under the autocratic regimes of the Middle East weren’t that different from the Palestinians. So maybe it wasn’t just the Israelis. If anything, it made the Israel look pretty good, especially when looking at the Arabs living on the Israeli side of the wall. Regardless of Israel-US politics and their hankering after Mubarak as keeper of the peace - in terms of lifestyles - Israel stopped looking like the devil and more like an island of aspiration.

There ought to be a way they can trade on that because the future of the Middle East will be nothing like the past. The turning point is not just democracy or that the Internet and satellite TV have opened the eyes of downtrodden. There is also a changing of the energy guard. Israel is now sitting on one of biggest gas reserves in the world. You can assume there will be innovations that only a scrappy, inventive, barrier-breaking country like Israel can come up with. At the same time, we in the US are also awash in natural gas yet are deeply reluctant to make full use of it. Put that together with our need to migrate from oil and you can see why an influential source in the middle east with nothing but gas on their hands and an innovative will to use it across the board will open up new possibilities.

Israel’s influence has also grown due its population boom which is unusually sophisticated for the region thereby adding value more than the resources they devour. In the 70’s there were about 3 million Israelis. Now, it is closer to 9 million. Nevertheless, they will need space and my guess is they will eventually reach out to the Mediterranean in the same way Dubai did with its artificial islands in the Persian Gulf. Advances in water desalination combined with their own low-cost energy sources is likely to drive hydro innovation and once ntractable deserts may suddenly bloom. The Negev is still Israel’s biggest land mass. Going forward, peace negotiations may have less to do with land – there is plenty of idle, arid kind – and more to with hydration. In effect, the conversation will move more toward innovation than real estate.

To give you an idea of what I mean by an entrepreneurial country consider this: my host had recently taken his software company public on the NASDAQ with a $500 million cap and $187 million in annual revenues. They had invested some of that money with another relative who had developed and artificial bone biotech company. At some point in my trip I met an old employee of mine who had moved to Israel, used her experience with our parent company, TECHmarketing to get a job in a start-up that also went public on the NASDAQ and then married a colleague who went on to sell his company to IBM. Nowhere did oranges, real estate or kibbutzes play a part – except that a pioneering, collectivist state of mind probably molded a culture with a will to work and overcome.

The highways glitter with flashy high rises sporting Micorosft, Intel, IBM, Texas Instrument and other well known logos. Teva Chemicals has becomes a huge generator of biotech and pharma start-ups and so on. If Facebook is credited as the enabler of Egypt’s uprising’s, then it is worth noting that social media as a technology probably began in Israel – with Yossi Varid’s ICQ (now AOL’s AIM) while the proto-social media site, sixdegrees.com was itself invented by a homesick Israeli in New York. They may not celebrate this in Cairo or Teheran but somewhere it is known that the Facebook they cherish bears the imprint of the chosen people. In any case, Israel is a dramatically clear example of a free market knowledge economy vs. a repressive oil-and-religion economy.

More to the point this polarized vision of parallel universes has become clear enough to the Arab masses that it has raised the bar on their governments. Even the old revolutionary movements will have to take note: Hamas can chant and Hezbollah can hiss but thanks to Al Jazeera the Arab world knows what a tech paradise looks like and the young, I believe, will want them to match it or get out of the way. You can pray and innovate but when prayer bans it and progress it brings, the theorcrats will lose.

While Mid-eastern utopia is a long way off it is not impossible. There may be historical grievances that cannot be solved overnight but when people share a common goal, they can begin the process of forgiving if not forgetting. When the future is about creating abundance you no longer have to fight over vanishing resources.

When you talk to historians they will tell you that Jews and Arabs have always gotten along. They have had their tragic moments but it was nothing like the fate Jews suffered under the crusaders, Rome or central Europe. So there is hope. Perhaps Israel, rather than being the enemy can be reinvented as a kind of Dubai of creative technologists, brainpower, guts and a certain outlaw attitude. Remember, entrepreneurs are usually rulebreakers and apparently, the UN and the liberal West’s approbrium of Israel have, in a peculiar way inspired the country. Even Apple’s developers, for years, worked under a pirate flag. (So take note Microsoft, RIMM, Dell etc. loosen the ties get a little chaotic….)

While no one knows how the Middle East uprising’s will play out – the bottom line is that Israel is no longer its bogeyman but a silent exemplar of 21st Century possibilities. Tech innovation and entrepreneurialism will have a huge role to play, the China card is rarely discussed but as I will discuss in Part 2, it lurks – as it does in Israel – in provocative ways. Most importantly, this extraordinary moment of flux there are clear opportunities where we can influence the future and settle, with honor, some age-old differences.

Meeting with Al Gore

My meeting with Al Gore at Social Media Week.

Good old Social Media Week. It brings up great topics - like our TV Goes Social iBreakfast - and it brings out the stars like Al Gore. It turns out we have a common interest in the Tobacco Industry! When he was Vice President, he stood up to the tobacco industry. As a southern politician with presidential ambitions, that took a lot of guts. Like Mandela’s release from jail – it was one of the things I never expected to see in my lifetime. While Al Gore did not risk his life the way Mandela did, his stand had its own world-changing effect: the great $250 billion tobacco settlement of 1997 and a fundamental change in smoking regulations here and around the world.

My interest in Tobacco is a little more academic. My book Cigarette Seduction is about the marketing research behind the brands, how that defines smokers and cultures (brands vary dramatically by country) and how smokers can use that knowledge to quit.

Al Gore believes that Tobacco Companies are evil. While I don’t necessarily disagree with him, I do think it’s a little more complicated. They are addressing some fundamental human needs. If we don’t understand what they are and how to deal with them, they will just re-emerge – probably in more harmful forms. In that respect, Tobacco Companies are, to certain people, the good guys - and you have to accept that.

In any case, I salute Al Gore who is really warm guy in person. I thank him for his Nobel Prize-winning work on Global Warming - it has made us think green and electrified ours and our children’s generation. 

Just one thing - and sure, this is a cheap shot - with this rotten winter, we could use just a little global warming right now……

Standing up to an Internet Bully - why we support Private Equity Events

For several years now the iBreakfast group has run low-cost Angel pitching events of its own where the winner gets a free seat at one of Mike Segal's Private Equity Forums. So on that basis I can speak to this issue. 

Mike Segal's Private Equity Forum events are always sold out and are packed with real investors and entrepreneurs - often from outside of New York.

In most cases, these players are worlds away from Calacanis and Digital Media. They never get the attention of the Fred Wilsons, the Esther Dysons, the DFJs and so on. They tend to come from energy, engineering, biotech, transportation, waste management – all the stuff that doesn’t make it to the blogoshpere. They are also usually older and let’s face it - you don’t see too many gray hairs in the digital Start-Up world. When they do, the seniors rarely get funded. 

At Segal’s events these participants are, for the most part what I call pedigree start-ups – people with 10 or more years of experience in serious business and technology fields. Their plans are not too sexy or too wildly conceptual and they will never be the next Facebook or Twitter. But they often have real customers on tap and genuine backgrounds in the field with deep relationships and so on. They tend to come from areas in the hinterland that are not flooded with investors – so presenting in New York means something to them. 

Should they pay what they pay? That’s their calculation. Does Mike have a right to charge them? Ask them? They know the cost and resources they need to reach out to investors – and there really are investors here – and so they make that decision.

The bottom line is they will never get an invite to Fred’s office, they won’t get a “free” invite to Techcrunch or any other hackerthon or techie start-up fest. And guess what, this is not a socialist country - people have a right to charge and you have a right not to show up.

So why the libel?

Has anyone stopped to ask what Jason gets out of this crusade of his? Free publicity for his ridiculous people-powered search engine, Mahalo that now answers your every lame question. Jason is the same idiot who dropped over $200,000 on a late night TV poker game and then claimed it was really publicity for Mahalo because he wore a logo shirt. Some publicity! See Calacanis Poker Face.

Last year, after he got into a fight with his partners at TechCrunch, he went after Mark Zuckerberg and Facebook. While the site has its flaws it is nowhere as evil as Calacanis made it out to be. But he was after his usual cheap publicity. I don’t recall any Egyptians saying “Thank you Mahalo.” Even the so-called “founder” of the revolution, a Google executive, said “Thank You Facebook.”

I have met Mark’s dad, Dr. Edward Zuckerberg so I know what it is like from his perspective to be slandered by the likes of Calacanis who has never found a cheap shot not worth taking. It is not only an unpleasant thing but almost impossible to respond to because he hogs the conversation. I even saw him hold up a gun of some sort when talking to a Keiretsu exec. Hardly a fair fight.

I am all for choice. If you can get a free ride as a Start-Up, for heaven’s sake take it. But most entrepreneurs heed some help and one way or another they are going to have to pay for it.

What I can’t abide is a bully. Calacanis made his mark as a champion of NY’s Silicon Alley in its salad days (remember that?). He picked battles when no one else would and paraded about with his trademark bulldogs – which made him look like a good guy to some people. That was 10 years ago. Flame throwing is OK when you’re in your 20s. Being a Tae Kwando black belt when everyone else is a geek is intoxicating all right. But this act is getting old – a touch of the Mubarak. In reality, Jason is rapidly becoming a slander machine that mistakes dirt-dishing for publicity and thinks it makes Mahalo and his various conferences look good. 

If he can make money doing what he does good luck to him. But here’s an amazing reality: the Private Equity Forums have never been fuller – precisely because they fulfill a need that others don’t offer. Apparently, Calacanis is just singing to his choir hoping they’ll pay for more of his web-thumping. Watch out, if he thinks there’s a publicity angle, he could come after you!