I just saw N. again

by francine Hardaway on May 13, 2005

I just saw N. for the first time in almost five years. She’s a former business acquaintance of mine, now a friend, an Egyptian female serial entrepreneur and venture capitalist. (There aren’t that many of those :-)) She is also a Thunderbird grad and a veteran of the New York financing trenches. She recently raised $16 million for six different companies and then decided to start another one of her own. Could she be any more competent to do a startup? It’s hard to imagine so.

So now she is the proud owner of Ink and Toner Depot (www.inkandtonerdepot.net), a flourishing little business that sells remanufactured printer cartridges either online or through associations as a member benefit. It�s aimed at the SOHO market, and it seems N. has more business than she knows what to do with, because she is doing it all on her own.

N.is more fortunate than the average entrepreneur. First of all, having analyzed business plans for the past ten or so years, she knows what she’s doing. She has a business plan. She has a product for which she knows the market. She has some good corporate contracts with companies that employ independent contractors (insurance salesmen, etc) who print a lot, and who like to save money.

So of the three things a funding source looks at when evaluating a business, N. has two — the technology and the traction. She has cash flow (although it’s small). She has a sound value proposition (30-80% off retail prices), a collaborative sales model (revenue-sharing with associations), and a product that is a razor blade. HP sells more than a million printers a week, and most of those can use a re-manufactured consumable.

However, she can grow because she doesn’t have the team.

It�s rare when I meet with an entrepreneur who doesn�t ask me to find money. But this woman can find her own money. What she isn�t easily able to find is someone to share the burdens, the joys, and the roller coaster ride of the business. Like everyone else, she�s exhausted and needs a fresh pair of eyes to look at all her decisions.

And, like everyone else, she can�t get money without a team because she doesn�t pass the �bus test:� if she got hit by a bus, her business could not go on.

Why am I telling you this? Well, three reasons. First of all, it�s instructive. Too many entrepreneurs try to do everything themselves, either because they feel they can�t afford to pay anyone else or because they are afraid to lose any of their previous �equity.�

Second, because I believe in the power of the written word. I think if I put it out there, someone will manifest and be the right person to join N.

And third, because I think there�s a business opportunity in matching partners with opportunities and automating that process.

Now why doesn�t social software already do this?

I think because the value proposition of social software is to make contacts, but not necessarily to find the �right� contacts. If you already know that you want to sell your software tool to Microsoft, social networking software can probably help you search for a given job title or person within Microsoft who might be your buyer.

But social software doesn�t really tell you if someone could be your ideal business partner.( I don�t think you can search for a CEO or a CFO on LinkedIn.) And neither does EHarmony or Match.com. That�s especially true if you want someone to join as a partner rather than as a hired gun.

One of the most recurrent problems I see in startups (or, more accurately, in attempted startups that never really get started) is the failure to begin with a good, competent group of people whether virtual or real. Somehow, most entrepreneurs think if they can�t pay someone, they can�t have them on the team.

Myself, I don�t believe that, because I have more than once �paid to play� on the team of a startup. One time I�m fond of talking about occurred when a serial entrepreneur friend of mine wanted to seed his second company. He gathered a group of six of us together, each with different talents. He collected $5000 from each of us in cash, and then made us promise the equivalent in sweat equity over the next six months. There was a doctor in the group who had no applicable talent, and if I remember correctly, he paid double the cash to be part of the team.

The cash was used to do things like start the patent filings and put the corporation together correctly. The sweat equity was used to handle all the chores involved with starting up and driving our little stake in the ground. (This, by the way, was almost fifteen years ago, so the ante might be a little higher by now).

The fun part of this was when the first round of funding came in, and we all had the opportunity to cash out or stay in. And guess who the angel was who took out the friends, family and fools? (us) It was the rock group U-2! How could any of us have missed that experience?

So who is going to help N.? By the way, if all you want is printer cartridges and you go to www.inkandtonerdepot.net and type in Francine when you order, you will get a 10% discount. Such a deal ?

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