Month: July 2015

One irritating consequence of my traveling the country while singing the praises of the science behind the Money Machine concept is the disdain that often arises in the hearts and minds of certain segments of the financial world, yep you guessed right – INVESTORS.  In this instance I use the term investor as a descriptor very broadly to include

• angels
• venture types
• bankers
• self-funding zealots

or anyone who offers any form of debt relief or equity dollars or a self-funding financial “kick-start” to a tech, foodie, maker, or creative business start-up.

Now I already know that many of you reading this post have just finished perusing the most recent issues of Inc, Fast Company and Wired magazines and are thinking, “About what in the heck is this entrepreneurial fruitcake postulating?”  I am so glad that you asked.

I recently attended a local networking event where a few angel types were engaging a group of very sharp start-up founders.  As one of the angels was introducing me to the group he stated something to the effect “…he and I have very different views on funding start-ups.  He”, referring to me, “believes that founders should bootstrap their businesses and grow them organically, while I”, the angel referring to himself, “believe that start-ups should have all of the capital necessary to scale as quickly as they possibly can.”  I still shake my head from side-to-side when I think about his most inaccurate explanation of some of the coolest business science on the planet.

What I often seek to understand is why would anyone with a sane mind invest in a business enterprise of any type that has no customers and after doing so be perplexed as to why they did not receive a return on their investment?  Quite a perplexing question indeed.  Here is a modern day riddle for you the reader – “Guess what happens to any type of up front funding that is given to an individual or group of start-up founder(s)?”  That’s right – She or he or they find very innovative ways to spend it!

• Maybe it is that batch of new $4,300.00 27″ iMacs all tricked out w/ Retina 5K displays, 4.0GHz quad core i7 processors, 1TB of flash storage, and 32GB of SDRAM, without which the firm’s software developers, designers, and ceo could not write a single line of code nor manage any of the business operations.
• No I’m sorry and am mistaken, its that $1200 Bivi table for two, a couple of those $900 Gesture chairs and that $2000 Bivi counch, by the way, all superly cool and designed by SteelCase/Turnstone, without which the two co-founders of a particular start-up could never accomplish any work nor hold their first set of business meetings.

Am I exaggerating?  Not by much.  This scenario or one similar plays out in the start-up world each and every day and these are only a few of the front end entrapments.

When I think about the back end gotchas, an American History instructor that I once had always comes to mind.  For two consecutive semesters he began each day’s lecture with the following statement – “Nothing in this world is free!”  Many years removed from that particular history class I can only echo his sentiments – Nothing, and I do mean nothing, especially investment funding of any type, is free.  Please don’t get me wrong.  I have no issue with investment capital in all of its shapes, types and sizes.  I just personally believe that it is one of the worst ingredients for a start-up Money Machine and its founder(s).  The true cost of this infamous type of funding is a matter of to whom the Money Machine founders become beholden once funding is accepted.  For instance

• typical debt funding – founder(s) beholden to the banks or family members
• equity funding – founder(s) beholden to the angel/venture capitalist or family members
• self funding – founder(s) beholden to spouse, children, or did I mention family members?

Each of these scenarios create unnecessary entrepreneurial noise and in each of these instances the founder(s) are beholden to everyone but the individuals to whom they should be superly acknowledging and paying attention – the CUSTOMER (more on this concept in a future post).  For the Money Machine founder, outside of themselves, this is the only group of individuals whose opinions really matter.  Why is this the case?  Simply stated

NO Money from Customers = NO Money Machine

But you the reader may be saying

• “I want to create a company that scales to the point that it dominates my particular industry!  What other options do I have?”

or

• “What about that savvy and successful banker or angel/venture type who has a penchant for providing “seed” investment funding to start-ups who possess zero customers?”

Ok, ok, I hear you loudly and clearly.  How about we chop up the details of these inquiries and some possible solutions during our next segment.  Until next time…

So I am sitting here at the Overall Company, one of the coolest coffee shops on the entire planet and am about 60 minutes out from my next workshop session with a group of local start-up founders. So what is the point of my musing in such a digital fashion? The point is that it is nothing less than a small miracle that I am sitting here adding my first post to this blog. 8^)

For a few years now, especially over the last 18 months, I have been crisscrossing the nation presenting at tech conferences such as the Open Source Conference (OSCON) as well as at conferences similar to the last held RISE Week Austin about the virtues of how entrepreneurs, especially those of a tech, maker, creative, and foodie orient, should leverage a start-up concept called the Money Machine. I have talked, shared, and explained this concept to such a degree that someone a few months back suggested that I begin “informally” documenting my thoughts on this particular business ideology. The small miracle that is now occurring is that on this day, to the shock of many, I am taking this individual up on his suggestion.

The question may be asked, “What in the heck is a ‘Money Machine?” Simply defined

money machine – a very small scale tech, maker, craft/creative based, or food start-up or business that provides occupation for no more than three individuals.

The key words here are “very small scale.”  We live in a world that is enamored and stupidly fascinated with being bigger, stronger, and faster, especially in the realm of occupation, business and entrepreneurship.  I have often simply asked, “Why?”  We applaud an academically and intellectually gifted young lady who is hurried through her academic career so that she can finish medical school by the time she is 18 years of age but why?  This particular accomplishment often only means that she will be employed within the current workforce ten years longer than her peers and contemporaries.

We applaud the fast growing tech companies of the world and their gazillionaire founders who are worth more dollars than one can count.  This in and of itself is superly, cool beans and on the surface, is great subject matter for a passing conversation but how many standards of living are there between an individual having a net worth of $10 billion dollars and this same individual having nothing?  The science behind the Money Machine concept simply explores the other side of the coin.  What if the business operational purpose and posture of an individual or two or three who have created some superly cool tech is that they simply desire that the business operation be self serving, ie a vehicle for them to do “whatever in the heck” that it is in life that they desire to do?  Now this is a major reason and purpose of creating and operating a Money Machine.  I look forward to our exploring the intricacies of its science with you, the reader, through the content of this blog.

With all of this being said some may be asking, “Who in the world are you sir?”  I am glad that you asked.  I am simply what many may refer to as a money maching hacker (mmhacker).  Now when I use the term “hacker” I do so paying tribute to its original meaning which was formally documented by the Internet Engineering Task Force (IETF) over 20 years ago through RFC 1392 and later RFC 1983, namely

hacker – a person who delights in having an intimate understanding of the
internal workings of a system, computers and computer networks in
particular.  The term is often misused in a pejorative context,
where “cracker” would be the correct term.  See also: cracker.

while within that same document a cracker is defined as

cracker – a cracker is an individual who attempts to access computer systems
without authorization.  These individuals are often malicious, as
opposed to hackers, and have many means at their disposal for
breaking into a system.  See also: hacker, Computer Emergency
Response Team, Trojan Horse, virus, worm.

A great overview of the confusion in the usage of these two terms can be found here.  Now having provided this tad-bit of clarity on these particular terms, I find myself constantly attempting to gain a more intimate understanding of the internal workings of 1-3 person shop whose business operations revolve around the activities of techies, makers, crafters/creatives and the creations of the foodie community.  Through this particular blogging platform I hope to share additional insights and findings as together we work towards “hacking” the intricacies of that most wonderful entrepreneurial vehicle called the Money Machine.

Until next time…