M&A Lingo for CEO’s – 15 MUST-know Terms

CEO giving talk about M&A and Private Equity phrases

If you own or run a private business, chances are Private Equity firms are knocking on your door. But if you aren’t prepared for the unique language of private equity and M&A, conversations will leave you lost-in-translation, or worse, left in the dust by your PE-backed competitors.

To stay ahead of the game, every business owner, CEO, CFO, and President should know with these key terms for when acquirers come a-knockin:

1.) Turns / Multiple

“What multiple were they looking for?”
“Sounds like six to six-and-a-half…”
“I bet we can get them signed up if we give them another half-turn.”

Explained:

Turns or more commonly multiples of EBITDA are the standard in middle-market ($20-200m revenue businesses) for quickly comparing the cost of acquisitions to other transactions in the private market. For significantly sized businesses and outside of VC, tech and public markets, multiples are usually of EBITDA instead of revenue. In the middle-market, multiples generally range from three times (3x) to ten times (10x) EBITDA depending upon the specifics, with a typical range being 4-6.5x EBITDA. A business doing $5 million in EBITDA on $50m might sell for a 5x multiple (of EBITDA) leading to a $25m TEV (Total Enterprise Value). A turn would be going from a 4x EBITDA price to a 5x EBITDA price (or vice-versa). More simply, some might consider this as the number of years it might take for an investment to pay back (i.e. 4-5 years)

2.) Points

“We traditionally set aside a few points in a management pool to keep interests aligned.”

Explained:

Points are traditionally percentage points of equity, usually in a business. This is a conversation about reserving some percentage of equity ownership in the business for management to earn as an incentive for good performance of the business going forward.

3.) EBITDA (“Eeh-Bit-Dah”)

“How big is the business? How does your EBITDA look?”

Explained:

Earnings Before Interest, Tax, Depreciation & Amortization. This is THE key high-level and preliminary financial metric (in addition to Revenue) that is used in comparing acquisitions and investments to other transactions in the industry. A business doing $5 million in EBITDA on $50m might sell for a 5x EBITDA price (multiple) leading to a $25m TEV (Total Enterprise Value).

4.) Book

“Is there a book? When will the book be available?”

Explained:

Confidential Information Memorandum (CIM) or OM (Offering Memorandum) is also known in the industry as a “book” – a packet of materials for marketing a transaction with a business. Traditionally this is a multi-page document (say 20-50, but I have seen as many as 250+ pages) put together by a management team, investment banker, broker or M&A adviser that describes the operation of the business, their end markets, growth story, customers, leadership, plans for the future. Having a book that can be readily shared with potential acquirers (alongside an NDA of course) demonstrates a level of seriousness about a transaction. Many books today come in the form of detailed slidedecks.

5.) Concentration

“Are there any concentration issues?”

Explained:

Typically referring to industry and customer concentration. Diversification is the name of the game here. Risk is the enemy of private equity, and customer concentration has been shown to be one of the biggest non-starters for would-be acquirers. Most PE firms like to see companies with no customers that make up more than 10% or so of annual revenue. What happens if that 30% customer walks out the door?

6.) Roll

“How much is ownership looking to roll?”

Explained:

Rolling is a question of how much equity an existing owner is willing to keep on the table / reinvest / retain in the business going forward. Traditionally a Private Equity firm will want to take a majority equity position in a business, say around 80% to the existing owner’s 20% post-transaction. Technically speaking equity is usually rolled into a new entity as many transactions are asset sales (i.e. the owner is cashed out 100% from the existing business and purchases a 20% stake in the new entity, which acquires the assets of old entity).

7.) Platform / Add-On

“This business is too small as a platform, but we might look at it as an add-on for XYZ company.”

Explained:

Generally speaking Private Equity firms have growth-through-acquisition in mind when acquiring any business. Traditionally their initial investment in a given industry or niche is larger, and considered the nucleus or platform around which they can build. A given firm will usually raise a fund of committed capital and will traditionally acquire somewhere between 5 and 15 primary businesses within that found. Around each of those, they will often acquire many smaller synergistic businesses (“add-ons”) which allow the platform to grow accretively in addition to organically over the course of their funds ownership of the business.

8.) LP

“Our LP’s are hungry for direct investment, so we can definitely stomach larger acquisitions than our fund size might infer.”

Explained:

Limited Partners are the money behind the money. Each private equity fund (and most successful firms have many funds / vintages over their life) is a fixed-life vehicle for acquiring, building and selling companies with the objective of returning a profit to the investors. Limited Partner or LP’s are the institutions, high net worth individuals, government entities, foundations, etc that have committed an amount of capital to a fund with the understanding that they will receive a certain return on their investment. Often the promise from PE firms is 20-30% IRR and has a minimum preferred rate of return or Hurdle rate.

8.1(bonus term): Hurdle

“We won’t even be close to clearing the hurdle on that investment.”

Explained:

LP’s typical have a hurdle-rate or preferred return established with PE firms with whom they invest. A typical hurdle rate is 8%. The majority of the upside that PE firms earn is from the carried interest or earnings of a given fund, but most firm’s do not get any/much of that upside until they have at least cleared their hurdle rate (say 8%). While traditionally this applies fund-wide (vs deal-by-deal), this becomes an important number above which PE firms must ensure their companies/investments perform. While not common, some investors will structure that same hurdle or preferred return into their investment in a business to ensure they get the returns their investors desire.

9.) Independent Sponsor

“We have been operating as an independent sponsor for 10 years
and have closed 12 transactions in that time.”

Explained:

Independent Sponsors are also known as “Unfunded Sponsors” meaning they do not have an established, committed pool of capital from which then can draw. This means that after negotiating a transaction with a seller, they must pitch the deal to LP’s and other investors to get it funded. While this model is very successful for some, for others who are inexperienced or without the proper connections, sellers signed up under LOI (and exclusivity) can be dragging around for many months (and even years) with constantly prolonged closing as the buyer attempts to secure funding.

10.) LOI / IOI

“We are ready to move forward. When can we expect an LOI?”

Explained:

Letter of Intent (LOI) or Indication of Interest (IOI). Think of this as the term sheet, or offer on the table. This is fulfilling the old, “I don’t believe anything until I see it in writing.” Both are non-binding, though an Indication of Interest is usually more preliminary as in, “I believe your business is worth between $50m and $55m, and I am interested.” An LOI gets into more of the details about the value being brought to the table, what a transaction might look like, and when the buyer forsees closing upon a transaction (i.e. 60 days of diligence upon signing followed by 15 days to finalize a definitive agreement and close).

11.) Signed Up

“If we can get this signed up by next week, I don’t see
any reason why we can’t close by the end of June.”

Explained:

In addition to being time-sensitive (having an expiration date and time), LOI’s traditionally have a block for countersignature by the seller, asking the seller to agree to the preliminary terms of a transaction and to agree to work exclusively with said buyer for a certain period of time. When the seller / owner of a business returns a countersigned LOI, the deal is said to be “signed up” under exclusivity. While under exclusivity the seller agrees not to shop for a better or different deal, and to only work with this seller for the time being.

12.) Earnout

“What if we structure this thing? Are they open to an earnout?”

Explained:

An earnout is the process of paying out a seller over time post-closing, often dependent upon meeting pre-defined benchmarks. If the Total Enterprise Value (TEV) is $25m with $20m cash-at-close and $5m in the form of an earnout, then that $5m will be paid out over time from the proceeds of the business in years to come, not at closing.

13.) Leveraged Buyout

“We use a modest amount of leverage in all of our transactions.”

Explained:

It might seem like the old dirty word from the 80’s and 90’s, but majority-recapitalization LBO’s are still the standard operating procedures of Private Equity firms worldwide. Even if they don’t mention it up front, that PE firm in front of you will ABSOLUTELY be putting some debt on the business, and there is a damn good reason: it super-charges returns.

Consider this: you are going to acquire a majority stake in a business that all parties have agreed to value at $100m. You negotiate with the seller to acquire 80% and he will keep 20%, and he will continue to run the business day-to-day. So at this point you could write a check for $80m for 80% of the business, but instead you get a bank to pay for half of that ($40m) putting $40m in debt on the business, and you only have to cut a check for the other half ($40m). The business continues to grow, five years later the business has paid off all of the debt and is now worth $125m – nice work team! But more importantly, since the debt is all paid off, you truly own 80% of that $125m, or $100m. And how much cash did you have to invest to get to $100m? That’s right, $40m. That is a 2.5x cash-on-cash return giving you an IRR of 20%! So yes, that PE firm will be using debt and there is a damn good reason (so long as they don’t over-lever).

14.) Purchase Agreement

“I hope this is the final version of the DPA…”
“Don’t count on it.”

Explained:

Definitive Agreement (DA or DPA), Asset Purchase Agreement (APA) or Stock Purchase Agreement is a legal document that lays out all the details of a transaction. This document is very much final / definitive, and oftentimes transactions die here from hangups negotiating covenants and restrictions, exact legalese, details surrounding taxation once the deal becomes real, new discoveries during diligence, and frankly many petty personality and ego clashes.

15.) Retrading

“I swear to God, if they retrade on this, I’m walking away.”

Explained:

The process of retrading is, in my opinion, a horrible last minute attempt to change something in the purchase agreement often when you are down to the wire ready to close. This most often comes up as a “surprise” or “discovery” during diligence where new and previously unknown risks are used by the buyer to justify reducing the price. Some firms have a bad habit of throwing out big numbers with their IOI’s and LOI’s to get deals signed up, only to retrade multiple times in diligence to get to the value they actually wanted. This is not a common practice for most reputable PE firms, but something to watch out for none-the-less.

The world of Private Equity and M&A is full of success stories, successful exits, management buyouts, inter-generational transfers of ownership, growth, and long-term value, as well as letdowns and failed attempts. These key terms and pro-tips should help you avoid the potential pitfalls when pulling together a transaction. If you have other terms you would like explained (or believe would be helpful to others), just drop me a note in the comments below :).

Full disclosure, I spend the majority of my time connecting buyers and sellers as an M&A matchmaker, but am compensated by the buyers of the world. That said, I would be more than happy to learn about your transaction needs and see if one of the hundreds of buyers I work with might be a right fit for your business.

 Dan Herr on LinkedIn

View Daniel Herr's profile on LinkedIn

Disclaimer

The above materials (as well as other content on my blog) are for informational purposes only and not for the purpose of providing legal advice.

In New Brand of Philanthropy, Nonprofits Invest in For-Profits

Amazing that looking back on my post comments about creating a Private Equity Non-Profit Fund, I also found this article from 2012. Definitely interesting:

Stephanie Strom of the New York Times Reblogged from DealBook:

Click to visit the original post

When the W. K. Kellogg Foundation set aside $100 million in 2007 to invest in companies that could produce both social and financial benefits, it was considered revolutionary. Historically, major foundations had used mainly stocks, bonds, real estate and other traditional asset classes to build their endowments.

Now, such investments are increasingly common — and profitable.

In 2010, the Kellogg Foundation invested $5 million in Wireless Generation, a tiny educational software maker working to improve public education in New York City. Just 219 days later, it made a 25.9 percent return after Rupert Murdoch’s News Corporationbought Wireless Generation for $360 million.

“The customer and market insights that the private companies we’ve invested in have, whether it be in food, health care, financial institutions or education, sharpened our ability to target our grant making and public policy efforts,” said Sterling K. Speirn, the foundation’s chief executive. “Similarly, I think the companies we have invested in are able to leverage not only our patient capital but the different kind of knowledge assets we bring to the relationship.”

Philanthropy is taking its cues from Wall Street and Silicon Valley. The language of finance is so common that it is sometimes hard to tell the difference between an investment conference and a fund-raiser. Grants are referred to as investments, and public-private partnerships as innovations. Money used to buy vans, computers and buildings is called growth capital.

“It’s not just the language that is changing,” said Antony Bugg-Levine, chief executive of the Nonprofit Finance Fund. “The actual distinction between the two sectors, for-profit and nonprofit, is starting to collapse.”

The shift stems from a new generation of philanthropists, like Bill and Melinda Gates, Pierre and Pam Omidyar and Steve and Jean Case, hoping to stretch their dollars. As they see it, the pool of philanthropic assets — even at a whopping $4 trillion-plus — is too small to make a dent in seemingly intractable social problems like malnutrition, chronic homelessness, water quality and sanitation. So they are trying to find ways to reuse existing financing and to attract new types of capital.

“If we really want to produce transformational change, change in a disruptive, exponential kind of way, there is going to have to be more than philanthropic dollars involved,” said Steve Goldberg, a social investment adviser at Caffeinated Capital, which advises investors, governments and nonprofits.

In essence, the philanthropists want to enlist the capitalists — and they are making

Read more… 786 more words

 

 

 

Why NO ONE should drive for Uber in Tahoe

Lake Tahoe Uber Drive Says No More

Let me start by saying, I have loved using Uber for convenient rides everywhere from Sydney, Australia to Boston to San Francisco and back again. I am a huge proponent of using Uber in most situations…

…that said, I ran a little experiment over the Holidays when Uber was launching in my hometown in North Lake Tahoe and found that as an Uber Driver in Tahoe I was losing money or barely breaking even at best. Not good! My best trip was netting $1.66 on a $6.00 fare. My worst – being down $12.62 on a 2.5 hour foray (last time I drive to South Lake to pick someone up). Now given, you can say I am only out money if I include wear-and-tear and use the standard mileage rate ($0.575/mi) for my expenses, but even just taking into account direct fuel and maintenance expenses I am making well less than minimum wage while decreasing the value of my car at the same time.  Bottom line is, something needs to change with Uber in Tahoe before every driver out there learns the sad truth – it is currently a money losing proposition.

Here is my threefold take on Tahoe’s Uber-problem:

  1. Tahoe is split by two states and you can only pick up in one making most trips uni-directional;
  2. There are very few in-town trips; and
  3. Uber is subject to what I will call the populational gravity effect.

The result is unsustainable earnings at best unless you assume no incremental wear, maintenance or cleaning:

 Earnings before Taxes after Taxes
– after Uber Fee, Federal Mileage & Phone Data $ 1.53/hr $ 1.14/hr
– after Uber Fee, Fuel & Maint (prorated) & Phone Data $ 6.71/hr $ 5.03/hr
– after Uber Fee, Fuel & Phone Data (no maint/wear) $ 12.57/hr $ 9.43/hr

(more about these numbers below)

Two States

Every Uber forum will tell you not to drive anywhere between trips – it is a useless expense. Since Tahoe is split by two states, many of your trips as a Driver become one-directional because if you pick in Nevada and drop off in California, you have to scurry back to Nevada before you can go back online and begin accepting trip requests again – and those new riders often want to go back across the state line. This means that your costs are roughly double for every trip because you cannot just pick up another trip where the last one left off. If you are a California Driver in Truckee, Tahoe City or South Lake this may not be as much of a problem for you, but I would love to hear your input.

 

Populational Gravity Effect

By the nature of taking people where they want to go, Uber naturally has a gravitational pull toward populated areas which means if you are working in a less populated area (i.e. Incline Village, Nevada – pop 8,800) near more populous areas (Reno [250,000pop], Carson City [54,000], South Lake Tahoe [24,000], Truckee [16,000] etc), you are highly likely to have a trip outside of town to one of these other more populous areas every day. Once you drop someone off in a bigger town/city you are more and more likely to continue receiving trip requests within that area. If you don’t live in the biggest city/town in your area and you drive for Uber, good luck – every driver eventually receives a trip to that city and at some point you have to return home, only to end up getting sucked into that city again the next day by its inescapable gravity field.

A typical day driving in Tahoe:

  • Daytime trips to/from Ski Resorts primarily:
    • Mid morning (8-11am)
    • Mid afternoon (3-4:30pm)
  • Evening Trips to/from
    • Casinos
    • Bars
    • Restaurants
    • Hotels
    • Rental Homes

Here is a sample of some trips from Incline:

 

By the numbers

I invite you to look at my numbers too and tell me what you think: danherrdotcom.files.wordpress.com/2015/12/uber-tahoe-costs-29-dec-2015.xlsx

 

I can see how Uber would claim a driver “makes” more than $20/hour – but that is before Uber fees, costs to operate etc. From my experience, you can show that during my actual trips (not including before or after mileage) my fares were $282.05 for the 5hr, 14 min and 21 sec I spent “driving” on trips – that is $53.83/hr, but remember I can’t just turn around and pick someone up where I drop off most of the time – I have to drive back to Nevada, and at some point return home. If I include the hours driving to pick up and return from dropping off that quickly turns to $21/hr. But that is not an accurate number – you have to pay Uber, you have to pay for Fuel, and somewhere in there needs to be maintenance and phone costs:

Total Fares/Sales $282.05
Expenses
  Uber Fee $62.85
  Safe Rider Fees (reimbursed by Uber for Tahoe) $0.00
  Mileage to start (@ $0.575/mi) $34.99
  Mileage on Trip (@ $0.575/mi) $79.44
  Mileage returning (@ $0.575/mi) $83.46
  Cell Phone Data $1.59
Total Expenses $262.34
 Net Income $19.71
 Taxes (25%) $4.93
Net Profit $14.78

 

Breaking this down by the total amount of time I was on the road:

Trip Time 05:14:21 5 hrs 14 min 21 sec
En Route Time 07:40:39 7 hrs 40 min 39 sec
Total Time 12:55:00 12 hrs 55 min 0 sec

Dividing my $19.71 of pre-tax earnings and $14.78 post-tax by 12 hrs and 55 minutes gives you the $1.53/hr and $1.14/hr respectively that I gave above.

Of my driving it broke down like this:

Mileage (mi) (per)
To Start 61 18%
Trip 138 40%
Return 145 42%
Total 344 100%

I understand the argument that the Federal Mileage rate of $0.575/mile might be a bit high depending on your vehicle and the actual wear-and-tear, so I included a second and third calculation below. The second set of numbers ($6.71/hr & $5.03/hr) includes 87 octane Fuel prorated by mileage between fill-ups and Maintenance by mileage based upon my 12-month average maintenance expenses (oil changes, tires, tire rotations, checkups, cleaning supplies, etc), but does not include any incremental depreciation or wear-and-tear. The third only includes fuel. For me those numbers worked out to $0.17/mile for fuel and $0.22/mile in maintenance for a total of $0.39/mile.

 Earnings before Taxes after Taxes
– after Uber Fee, Federal Mileage & Phone Data $ 1.53/hr $ 1.14/hr
– after Uber Fee, Fuel & Maint (prorated) & Phone Data $ 6.71/hr $ 5.03/hr
– after Uber Fee, Fuel & Phone Data (no maint/wear) $ 12.57/hr $ 9.43/hr

Again these numbers do not include any payment for my time sitting around waiting for a request to come in – simply starting when I accept a trip and stopping when I get back in my workable area.

 

What I have surmised is that the Balance of Uber Earnings (green line) as a function of mileage for an Uber Drive in Tahoe is a losing proposition:

Uber Far & Expenses
Uber Fare, Uber Fee, other Expenses and Earnings Balance by trip distance (mi). View original interactive Google chart at jsfiddle.net/DanHerr/4cmuezmt/4/embedded/result/. Source file is available as well: danherrdotcom.files.wordpress.com/2015/12/dont-drive-for-uber-29-dec-2015.xlsx

I encourage anyone/everyone to have a look at my data and let me know if you draw any different conclusions – perhaps I am missing something. But my recommendation would be that until Uber figures out how to have us pick up across state lines or increases the fares in Tahoe, it is not worth your time to be an Uber Driver.

danherrdotcom.files.wordpress.com/2015/12/uber-tahoe-costs-29-dec-2015.xlsx

Notes & References

In all cases I went back online in Nevada as soon as I crossed back into Nevada again (Nevada drivers are automatically logged out at the end of a trip in California and cannot log in again while in California). There are some cases where I could have spent more time driving outside of my “area” (generally Incline Village and Crystal Bay), but at some point in the evening you need to return home. Generally if I waited for than 15 minutes without any request, I began moving toward home while staying online.

The above generally assumes:

  • $2.00 Base
  • $0.20 Per minute
  • $1.10 Per mile
  • $5.00 Minimum
  • $1.70 Safe Rides Fee when/if charged
  • 25% Uber Fee
  • 40 MPH average speed
  • 20 MPG fuel usage when needed
  • $0.575 Per mile standard federal mileage cost rate when used
  • 25% Tax Rate when there are any earnings

All of the above does not take into account that Uber’s earnings system has issues causing it to double charging me for Safe Rides ($1.70/ride) which they have confirmed via email they are working upon. Above I have taken the assumption that Uber will correct these issues and pay me the balance due of $1.70/ride.

Lehman Fee Calculator

Being in the Private Equity and investment banking world you run across the Lehman Formula in paying advisor/broker/banker fees quite often. Most all of us know the structure of 5%, 4%, 3%, 2%, and 1% for the first 5 million respectively, but sometimes it is just easier to have a calculator that does it for you. I couldn’t easily find any online and had some time to kill one evening, so I made one (includes option for Double Lehman):

Link to Lehman Fee Calculator by Dan Herr
Click image to access Calculator

Unfortunately, WordPress doesn’t let you embed Javascript (Myspace can tell you why :)), so either click the above image or go to:

http://danherrski.github.io/lehmanfeecalculator/

The other ways to remember the calculation / keep it simple in your head are:

  • $150k for first $5m TEV + 1% of the balance; OR
  • $200k for the first $10m TEV + 1% of the balance

 

In the future I could add flat % (i.e.1% & 2%) as well as Reverse Lehman options to this calculator if enough people would find it helpful – please let me know in the comment section below.

Happy hunting!

Why FAKE GRIMLOCK & I blog

2013-08-09 22.07.56

If all of my thoughts are constantly sitting on my computer’s hard drive or in my head, they have a 0% chance of helping anyone.

I began blogging during the summer of 2009 with a simple Blogger site: dananimal.blogspot.com. Without context, most people might think my blogging is for “personal branding” or some sort of vanity exercise. Precisely to the contrary.

After being laid off due to the economic downturn early 2009, I felt that all signs were pointing toward a personal, philosophical, and spiritual journey further outside of my comfort zone. While backpacking throughout New Zealand that summer (winter in down south) I reconnected with my undying purpose to serve society by aiding those in the midst of ambiguity. From being a soft ear to deeply troubled neighbors, to helping friends launch new adventure voluntourism businesses. From hosting Startup Weekends, to serving as a high school basketball coach guiding young men on more than their quest for a championship.

Lake Wanaka 2009

Whilst visiting the beautiful town of Wanaka in the Southern Alps, I consider the fact that if all of my thoughts were constantly sitting on my computer’s hard drive and/or in my head, they had a 0% chance of helping anyone other than me. How selfish is that? (Not to mention mind-blowingly simple). I inherently believe there’s a large chance that none of my thoughts will become anything more than letters on a page of the internets. But, there is that off chance that one of my thoughts, one of my posts, even one sentence of my blog may be useful to somebody else. To that end I find blogging as selfless as one can possibly be.

Now if only to take that ultimate step of selfless conveyance of perceived truth without the Theory of Mind. Here we all could learn a thing or two from FAKE GRIMLOCK:

Truth Go Ahead Try It

“What’s the purpose of what you’re doing?”
(Question to FAKE GRIMLOCK because he dresses up in and assumes the online persona of a Giant Robot Dinosaur)

Answer: “It’s a proof of concept, it’s to prove a theory. And it’s to prove that who you are doesn’t matter. In fact, truth requires that you aren’t anyone, because if you’re someone, whatever you say is always biased. It’s influenced by what you know about that person.”

Interview with FAKE GRIMLOCK

Inbound Marketing Cliffnotes for Business

Dan’s Social Media & Inbound Marketing Cliffnotes
Keys to making social media work for your business

I have read 6 books about Social Media, Personal Branding and Inbound marketing over the past two years and I thought it might be helpful to provide you with a super-condensed “cliffnotes” version I recently compiled:

Be Social. Listen. Communication is a two-way street

  • The real key is it’s not about being ON social, it’s about BEING social, but make sure you have the right people on your team to talk for you.
  • Social media marketers ask, “What can we provide our customers online that will make their digital experience better?”
    • Create something worth building a community around
    • Identify and recruit advocates immediately
    • Give people something to chew on
    • Welcome criticism
  • Don’t “play” with community building, take the no-bullshit approach:
    • Define Goals
    • Establish Measurable Objectives
    • Enact Strategies and Tactics to accomplish them
    • The measure what is done and the results of it
    • Rinse and repeat.
  • To sell online, stop thinking like a traditional marketer. Remember the fundamentals of this type of marketing:
    • Listen first
    • Be responsive
    • Be honest
    • Provide value
    • Sell last
  • There is a difference between driving business FROM social media sites and driving business THROUGH social media sites.

Get Found with Inbound Marketing

  • Customers are getting better-and-better at ignoring marketing “interruptions.” Inbound marketing today is about “getting found” using Google, blogs, and social media on the Web.
  • Inbound marketing as opposed to outbound is achieved through social media marketing when your business:
    • Asks and answers questions;
    • Provides information or engagement through content, or
    • Shows up when the audience members are having conversations about the industry, the company or anything at all really.
  • It is about having a seat at the table.

Create Remarkable Content

  • It is important to create remarkable content on top of having a remarkable value proposition. Remarkable content encourages your message to be spread giving you links of people that may possibly become customers to your website and allows you to move up in the search rankings for your keywords. Remarkable content is the gift that keeps on giving, unlike paid advertising. You need to make sure that you create content that people can effectively spread online like:
    • Blog Articles / Posts
    • White Papers (about industry trends and challenges, not products)
    • Videos (short 2 to 3-minute videos about industry and/or products)
    • Webinars (live ppt presentations)
    • Podcasts (Ten to twenty minute audio programs)
    • Webcasts (live video shows viewed online)
  • You have to give to get with remarkable content. Today your marketing effectiveness is a function of the width of your brain. Think of yourself as half marketer, half publisher.
  • Blogging

  • Video Posts:

    • Videos are a great way to give a sneak peak behind the screens of a company and make people feel like you are more real and approachable.
    • Videos should be less than two minutes, accompanied by text descriptions and posted on the blog.
    • In general video views drop by about 1% per second for the first minute or so (10.4% @ 10 sec, 55% @ 60 sec, etc). Simply posting any video does not mean it will be watched from start to finish.

Tweet your tweeter off – but don’t be a lame broadcaster

  • Think of Twitter as a micro-blogging interface
  • “Give more than you expect to receive out of twitter,” and to ask the question, “How many people can I engage in a dialog with?”. 20% about yourself 80% about everyone else on social media is the rule.
  • Focus more on starting conversations and less on broadcasting
  • Most everyone on Twitter is looking for new wisdom and hope. Order of operations for using the collaborative power of Twitter is:
    • Find a topic;
    • Ponder;
    • Share your thoughts and findings.
  • In terms of Twitter Research:
    • Find awesome people to follow. You can use wefollow.com and other sources (there used to be a site called twellow, but it has closed down).
    • If you are all about the metrics, check out influence measurement tools like Klout and Twitalyzer
    • Twubs.com and WhatTheTrend.com are great resources for tracking what people.
    • Start using Hootsuite or bit.ly to track your links and see what people actually click upon.
    • For monitoring, check out SocialMention.com and google.com/alerts. Set up some alerts for our topics (i.e. Solar, WasteWater Efficiency, things like that). You can receive email alerts when something new pops up. For instance, any time my name appears on the web somewhere new, I get an email letting me know someone is talking about me.
  • Look at personalizing (and possibly standardizing across the company) a twitter background that includes name, contact info, web, and bio but is not distracting

How to get started – game plan #1:

A big shout out to @DrBret for help pushing many of us to jump into the fire and get started in this way:

  • Define Value Stream:

    • Define a simple yet niche value stream for your online communication (say Solar for California municipalities)
  • Tweet:

  • Facebook:

    • Similarly engaging content as found and posted on Twitter should be posted to the Facebook page, but not as frequently (say once per day) without handles, though Facebook now recognizes hashtags.
    • Consider asking questions and provocative (non-scandalous obviously) content is encouraged. Example:
      • Project Vesto post: “Entrepreneurs are willing to work 80 hours a week to avoid working 40 hours a week.” – Lori Greiner.
        ‘Like’ if think this is true
        Example of Engaging Facebook Content - Lori Greiner Project Vesto
  • Publish two blog posts and one video post per week
    • Publish posts on different days
    • Each post should be shared on Facebook, Twitter, Google Plus and/or LinkedIn where appropriate
  • Comment on relevant blogs:
    • Comment on say 2 blog posts per day with insightful and relevant thoughts.
    • DO NOT just comment to comment or spam with a bunch of links back to your homepage. If you have nothing to say, keep that nothing to yourself.

Be Human. Be Genuine.

Get to the point

  • Spend less time searching and more time engaging. While you obviously want to make the most of this experience, the priority with social media is action over precision.
  • Between searching, listening, creating content, sharing content, and engaging with folks don’t spend more than one to two hours in the day (though when you are first getting started I understand it taking a little longer ). A person could spend all day doing this stuff, but that wouldn’t be the most effective use of all of their time.
  • Don’t end up in analysis paralysis in searching for the perfect people to follow or engage. Take the startup culture mentality by getting 60% of the way there and then acting  and testing your hypotheses.

Follow @DanHerr 🙂

Thank you for reading my blog – Daniel S. Herr.
I invite you to connect with me on Twitter @DanHerr
Or follow to my blog 

Sources

Project Vesto – A call to arms

Out of the ashes of recession
A state born of the battle, reinvents itself
Makes opportunity in a deserted land
Turns loss into opportunity
And gives new life in an empty void

$100,000 pooled
To start new hope
To launch a new Nevada business
Not what the Project wants
What we the people need
Not California rebranded
Not in Nevada for the sake of a state-shaped logo
But because we are from here
We were born in a great struggle
We were born in the sage and the Basin
We don’t show up to party in the black rock
We were in the desert before the desert was hip
This is not a conglomerate and outside consulting firm
This is not Silicon Valley money
This is not an out-of-state investment
This is Nevada money for Nevada people
This is us, pulling ourselves up
This is our own grunting hard work
Our own get-it-done
Our own micro-brewed, down-home, self-serving revival of Nevada business
Investing in ourselves for ourselves
Reinventing how we, the real Nevadan’s, revive our economy
Revive our business culture
Rebuilding; one startup at a time

We the people of Nevada
Launch Project Vesto
In Nevada
For Nevada
On Nevada Day
Giving new life
With our battle-born business rebirth

Vesto Logo

Elko to Host Startup Weekend for Entrepreneurs

Reblogged from SWElko:

Click to visit the original post

Elko to Host Startup Weekend for Entrepreneurs
Startup Weekend Elko will connect local innovators
and startup enthusiasts to share ideas and launch companies

ELKO, NV – Startup Weekend, a national grassroots business-launching event, is coming to Northern Nevada, September 28-30, 2012. Startup Weekend Elko will connect local entrepreneurs, developers, designers and startup enthusiasts with mentors and resources for a weekend of sharing ideas, forming teams and launching startups. The weekend-long event will take place at the Great Basin College campus in Elko.

 Whether participants found companies, find a cofounder, meet someone new or learn a skill outside the usual 9-to-5, they will be better prepared to navigate the chaotic and exciting world of startups.

“Many of us in Nevada had the rug swept out from our feet the past few years and we’ve had to adapt; become innovative and entrepreneurial to survive,” said Daniel Herr, life-long Northern Nevadan, organizer of the event and a recent participant in the Las Vegas Startup Weekend.  “Northern Nevada has a lot of hidden gems and I am really excited about bringing this fast-paced startup proving-ground to Elko. It will be great to bring entrepreneurs from many of Nevada’s smaller North-Eastern communities together.”

On Friday night, attendees will take the open mic to…

Read more… 457 more words

Looking forward to this awesome event on September 28th in Elko! Read the rest of the post on the elko.startupweekend.org blog ->

One Sand-Skeeball-Sculpture at a Time

Building sandcastles and other sand structures is incredibly similar to being an entrepreneur. Everyone on the beach has the tools and resources to do so right in front of them, but few try for one reason or another. Perhaps some have never thought to try, they do not have the creative vision. Others might think it a cool idea, think back on times as a child, and say, “Well I will be shunned by society if I try; and I’m likely no good at it anyhow, so I won’t bother.”

Growing up my father loved to make his classic Skeeball game on the beach out of sand. I do not know where the idea sprang from to do so, but every summer on the beaches of Ocean City Maryland, we would make grand sand-sculptures: from mermaids, to hammerhead sharks, turtles, and the famous beach Skeeball. The sand was our canvas and we could create darn-near anything out of it; why not create a classic game to play? We would build a giant mound of sand, water it down, pack it out, use buckets to create perfect hole, and personally I loved to build in automatic ball returns for every hole.

Today we were at Big Carona Beach in Orange County, California and after a swim out to the buoys, body-surfing, some paddle-ball and a brief nap in the sun, it felt like time to add my creative touch to the sand for all of my fiancés cousin’s little children to enjoy. Skeeball.

It is crazy the level of doubt at first outset. So many lack the vision. Perhaps it is because I have been there before, made other versions. The fact remains; so many doubt what they cannot see. And the progression is always the same: doubt, disregard, curiosity, desire.

I tried to recruit a number of the kids, and full grown cousins, to help without avail. I did get one young-in to grab me one bucket of water, but that was enough for him. People walk by and you can tell the look on their faces says, “Why is that full-grown man piling up sand; weird. Keep walking.” The slow progression moves toward; “Wow, that is a big mound of sand,” people whisper, “that must have taken him a while.” Not too long, thanks. “What ‘cha makin?” come the next and more curious questions. “Skeeball, wanna help?” “Skeeball hunh? Cool (I think). No that’s alright, I’ll let you do your magic,” followed by a thought of, “Wow, he’s taking this too seriously.” Or “That’s kinda lame; no thanks I’d rather boogie-board. Have fun playing in the sand though (you grown-as man).” I was probably done in 20-minutes or less, though it definitely took longer do it by myself than when I was a kid with my father, brother, sister and cousins helping.

But once you finish, everyone wants to gather around and play the game. “Wow, can I play?” “It’s my turn, give me the ball.” “This is awesome!” And finally those who ignored the call build upon that original vision and make it better once you’ve created it.

The joy in these kids faces as they played the game time and time again was fantastic. The laughs and excitement as they ran around the back to grab the ball they overthrew is that unexpected value and feeling of success that many search for their whole life-through. This value of creating for others out of seemingly nothing is one thing I cherish most in life.

Success is not eminent in the sand; there are many ways for the vision to fall off track. Perhaps you run out of time. Maybe you don’t have great vision at the outset and build it poorly; or make it in haste leaving people to understand the vision but think, “Wow this really had potential, but just isn’t that cool.” Or you could be entirely unlucky and have a wave (or mischievous child) come knock your masterpiece to the ground before completion; but perhaps you could have planned better for this.

At the end of the day, sand will return to sand: bound to gravity and mulled around by the ebbing sea. But for a time, it is possible to build a grand work: as simple or complex as you like. For a time you can enjoy what you have created out of the world’s canvas. For a while you can create value that is life and enjoyment thereof. But understand that in time all will be washed away to not but memories of what once was.

In a World of Encrypted Search Terms

Once upon a time there was a world of perfect web information when you knew where you visitors came from, what they were looking for, what they found, how long they stayed, and where/why they left.  I don’t know about you, but more than 30% of my web visits these days come from “encrypted search terms.” From WordPress Jetpack to Google Analytics I see “(not provided)”, “encrypted search term”, “unknown search term”, or “other search term” every day in my keyword referrals.

Where is this going as more an more people opt to select “do not track”? Will our information as content creators, web designers and curators be incorrect? If I do not know which of my content is most effective, how will I deliver what is most valuable? What happens when and if privacy concerns get to the point of website users not wanting website owners to even know when and if they access content?

Completely anonymous browsing would lead to imperfect websites, where in order to find out what works and what doesn’t, you would have to go back to focus groups and test sample markets; supremely slow adaptation is what this reads. No longer could the web be dynamic, custom tailored, or quick to change in meeting our every whimsical desire. No longer would the try and fail quickly, iteration, least viable business model approach work. Will that happen, likely not.

Sure many people will stick to their privatest ways, hiding in the dark shadows of the web, creeping on websites and hiding browsing data with the fear the Uncle Sam is watching my every move. The derived right to privacy seems fundamental to our US culture, but technology and the web has dipped dramatically in the favor of public good and connectivity. Have you ever asked how Google gets its live traffic information on Google Maps? I looked the other day to find that when Andriod users are opted into location tracking (to show where they are on the map, identify close restaurants, directions, etc) they are also agreeing to share their location constantly with Google. When Google see’s a bunch of Android cell phones slowing down at the same time, it knows there is likely traffic their. Crazy hunh?

In my opinion this is all great stuff that truly does you little if no harm, but I am sure that if everyone knew that, it could turn into a big privacy uproar eventually leading to Google needing a more costly, non crowd-sourced way, of identify traffic delays. To me what all of these privacy questions will lead to is a need for more good-ol-fashion statistics. No longer will you know the entire base of your population, but you will have to derive a population mean from your sample with a determined confidence requirement.

Perhaps someone will read this as a substantial business opportunity for the future (which will likely be captured, created at, purchased by, or merged into Google, Apple et. al. eventually) is web statistics simply integrated in graphic form with web analytics. I think most people’s eyes glaze over at the first mention of statistics, standard deviations, and confidence intervals, but to me that is the opportunity shinning its head. Will some people ride the privacy crazy train, yes; lets just hope not too many. All that can be told is that future will definitely unfold new needs for solutions (new opportunities) in a world of encrypted search terms.