The most recent issue of Business 2.0 has a great article by Om Malik on hyperaggregation, or sites that aggregate other sites that do niche aggregation of a specific topic. For example, this blog is an aggregator of web, business, tech news, etc with a local Utah flare. My blog is also hyperaggregated by Connect Magazine that also aggregates other specific bloggers on a variety of topics though mostly focused on business issues. At some point Connect will likely post ads and start earning revenues merely by aggregating the best content. In theory, they will incur little to no content costs. The reason? People pay (in this case via attention and their time) for convenience, so as we get bombarded with even more worthwhile content, expect hyperaggregators to profitably compliment the big aggregators already out there.

Reading the article also makes me a bit sad to remember a project I was working on 9 months ago. It was an editorialized hyperaggregator built in WordPress that aimed to collect the best individual blog posts across a variety of topics. It was aptly named ContentDJ (one of the better site names I think I've come up with). Independent publishers signed up with our site for the chance to increase their exposure and ultimately take a cut in future ad revenues. I believe in a short few weeks with no exposure resulted in several hundred independent publishers. Sadly, my funding got cut, the site never left Alpha, and I currently don't have the resources to keep it going though I still plan on seeing it realized.

On a related note, Griffio won a small account with Podango a few weeks ago to build a website for their newly launched Latest At... service which hyperaggregates the best of the best on big social websites like YouTube, MySpace, even PerezHilton.com. So take note: hyperaggretion will likely do very well in the coming months.

Being laid up for the last couple of days provide me with a ton of time to think about whatever I wanted. So I got thinking - what’s the world’s greatest business model? Is it franchising, which provides an almost plug and play solutions? Is it subscriptions? Is it something affiliate based? Is it Wal-Mart providing the world with cheap and desired goods? Is it auctions?

After a couple of days of thinking this over I came to a conclusion. Pay Per Click (Google AdSense to be even more specific) is the greatest business model ever devised. Why? Check out Google’s financials and you’ll see why. PPC is the most efficient, most profitable business model ever created.

That’s just my $.02. What do you think?

Over the past seven years I’ve been a member of just about every business networking group in Utah. An organization would have had to try hard to fly under my radar. I’ve been a member of or have attended Association for Corporate Growth, Utah Technology Council (formerly UITA), Mountain West Capital Network (formerly MWVG), Utah Valley Entrepreneurial Forum, Corporate Alliance, Genus Group (now First Fridays), various chambers of commerce, Fight Club, the BYU Management Society, American Institute of Graphic Artists, The Breakfast Club, Business Partner Meeting, technology@breakfast, and Young Entrepreneur’s Organization, just to name a few. I must admit I have missed out on the National Association of Women Business Owners, but would be happy to attend if invited, pending permission from my wife.

One of my favorite groups to attend has been the Utah Valley Entrepreneurial Forum (UVEF). As the name suggests, the organization is focused on entrepreneurship in Utah Valley. Each month they have a nice luncheon in a hotel banquet room and they have a speaker, generally an established and successful entrepreneur. Once a year they also have an event honoring the 25 fastest growing companies under 5 years old, as opposed to MWCN’s event that honors the 100 fastest growing companies in Utah over 5 years old. What I particularly like about UVEF is that it attracts a decent mix of older and younger entrepreneurs, there aren’t any salespeople (other than the entrepreneurs themselves), and the speakers are generally interesting. It’s a simple organization that doesn’t demand much, doesn’t try to do too much, but which provides a noteworthy service to the business community.

What puzzles me is why there is no such organization in Salt Lake County, or if there is, why I don’t know about it. Perhaps it’s because there are other organizations that overlap. But none of these has an exclusive focus on entrepreneurship. MWCN includes a lot of entrepreneurs, but also focuses on venture capital and fundraising, which leaves out most entrepreneurs. UTC attracts some entrepreneurs, but the focus is on technology. ACG also attracts entrepreneurs, but other business people as well. The only organization I know of that is solely focused on entrepreneurship is YEO, but this is restricted to entrepreneurs whose businesses brought in at least $1M last year, and you have to be under 40.

Personally, I would like to see an organization in Salt Lake County that is similar to UVEF. Members pay dues that cover the cost of the luncheons and simple gifts for the speakers. Perhaps some type of awards ceremony could be organized each year. A website could act as a member directory, event calendar, and informational resource. Like UVEF, the organization would not try to bit off too much, but would serve as a networking group for any and all entrepreneurs, but only entrepreneurs. The question I have is whether there would be enough demand to make such an organization work. In order to get started I would estimate the group would need roughly 50-100 members, at least 40-50 of whom would attend the luncheons on a regular basis.

Let me know your thoughts on the matter. Obviously I wouldn’t want to start such a thing if an organization that serves this same purpose already exists, but to my knowledge it doesn’t.

The legislative session is winding down, and it looks like the Legislature is going to provide significant new support for public and higher education this year. As the session winds down, there will inevitably be news coverage pronouncing “higher education was a winner” in this year’s budget. This strikes me as a very peculiar notion. Can an institution like higher education, public education, or social services be a winner? I think not.

Higher education, and the business education component that is my little corner of the University, exists to serve the greater social good by preparing the next generation of leaders for Utah and the world. An educated and skilled work force supports the high technology companies that are Utah’s promise for the future, individuals with college degrees will generate more than a million dollars in greater lifetime earnings than a high school graduate, which means they pay considerably more taxes, and college graduates participate in their communities more extensively than those without college degrees, partly because they are making more money and can afford to spend some of their free time on community affairs and participating in government. College graduates also serve in leadership roles in many arenas, including the arts, social services, non-profits leadership, education, government, and in business. Support for higher education opens the opportunity of higher education to a broader segment of our society, and clearly these individuals win and society wins.

You may be thinking “good in theory,” but more money is more money. Yes. I have budget responsibilities for an organization of about 150 employees, and everyone is glad there will be raises. But state support for higher education also means a lower tuition increase than might otherwise have occurred, which means the students who are attending the state’s higher education institutions will pay less for their education and probably a few students who might otherwise have been unable to afford an education will be able to attend a college or university. So, a few citizens of Utah, who are hard working and have remained hard working through a long series of disappointing pay years from 2002 to 2006, will finally get a little bit of an inflation catch up and a large group of students, who are the sons and daughters, grandchildren, and neighbors of everyone in Utah will get a break that will help them realize their full potential to contribute back.

The “winners” when the State invests in education at every level are the citizens of the State. The money goes to directly benefit the children and young adults who are the future of this state, and these young people are our children. The institutions are not the winners, it is the people who benefit from the commitment and qualifications of the teachers and staff who are the winners. To borrow a paraphrase: “We have met the winners, and they are us.”

Let’s have a party! And let’s remember when it comes time to make hard choices that those who are the winners from investment are also the losers when we fail to support the children and young adults who are our future through the tough times.

Later.

I am on my soapbox today, so here goes one of my pet peeves. I enjoy hearing successful people tell about what they did wrong and what they did right to make their business grow. Often, however, the statements are conclusory and do not give any real guidance on how to avoid the same mistake, or achieve the same positive results. "My advice to you today is to start a successful business, run it at optimal capacity and sell it for loads of cash."

I was recently at a luncheon where a panel of 5 successful entrepreneurs discussed their ventures. The moderator asked each where they had made mistakes. Four of the five indicated that they had spent too much time chasing "the wrong kind of funding." I was determined that if I ever started a company that needed outside funds, I would not waste time chasing the wrong type of funding. The only problem is that the comments gave no guidance on idea how to determine what the wrong kind of funding is. Thus, I will not know how to avoid making the same mistake until after I have already made it. A few examples or an advice on picking the right funding would have been helpful.

In contrast to the funding comments, one of the panelist provided an interesting solution to his company's problem of hiring mistakes. He indicated that he had made several hires where the employee's skill set did not match their resumes. The problem was resolved by creating a testing protocol to ensure people had the right skill set and having one of the women at the company interview the candidate. Experience had shown that the female employees were better able to get a feel for the person and were less swayed by an impressive (potentially padded) resume. The proposed solution got me thinking. How can I be more effective in the hiring process. Don't be surprised if all of your job interviews are conducted by women in the near future.

To successful entrepreneurs who are asked to speak - when you tell of challenges you faced in your business, give of examples of what you did (wrong or right) to correct the problems, and give suggestions on how up and comings can avoid making the same mistakes.

I was recently at a meeting that discussed presenters for an upcoming VC conference. Each company's name was given with a short statement about what they do. The companies had put some effort into creating introduction that would make the companies' products and service sound impressive. Unfortunately, at the end of the presentation, I was at a complete loss for what most of the companies actually do. I probably have a need for the product or service of at least one of these companies. They will not get my business, however, because I still do not know that they have the solution.

We are all guilty of the same thing at times. When people ask what I do I often respond that I am an IP attorney. Of course everyone knows what an IP attorney does, right? IP is attorney slang for intellectual property while PI is slang for personal injury attorneys- please don't confuse the two. Even if I say intellectual property, most real people (Dilbert claims that law students are 1/4 of a person and that drops to zero after they pass the bar) and even some attorneys are not sure exactly what that means. Intellectual property covers patents, trademarks, copyrights and trade secrets. When introducing myself, I should indicate that I handle patent, trademark, copyright and trade secret matters. If I don't, I am risking losing a potential client because they are not familiar with industry slang. Occasionally I will introduce myself as an IP attorney only to have the person tell me they were looking for a patent attorney or a trademark attorney. I had already lost the chance for the introduction to convince the potential client that I am the right attorney for the job.

I am working right now with clients who started a business as partners 5 years ago and everything was happy and working well. Now they are in a fight and want to split; however they have no agreement to facilitate the split-up or to valuate the company. It is a mess. Every business with partners should have buy sell agreement so when problems arise (fighting, death, disability, retirement etc.) they have a plan already in place.

Ever the target of patent owners everywhere, Microsoft has set a new record. A San Diego Jury found Microsoft liable for patent infringement regarding playing MP3 files in Windows. The $1.52 Billion (yep with a "B") award is the largest to date in a patent infringement case. Microsoft, of course, plans to appeal.

I don't care what calculated advice your PR company gives you, this is how you start correcting a mistake if you run a consumer business, or any business for that matter. It's called a sincere apology and it's been helping men stay out of the dog house since the dawn of time. Watch as JetBlue CEO David Neeleman publicly apologizes on YouTube to his customers. He takes full responsibility after leaving numerous passengers stranded on a frozen tarmac for 10.5 hours at JFK. Admirable.

Today I gave a presentation to Funding Universe subscribers describing the valuation of a startup across stages of development.

The theme comes from a metaphor I heard Ron Poelman use in a speech: valuations of early stage businesses come down to dividing the pie.

Founders: So, when the founders sit down to decide how many shares they each should get, the process is rarely a function of math and is more often a simple discussion of what feels equitable.  

Friends and Family:  With friends and family, the founders typically set a price arbitrarily that the friends and family accept.  This makes sense because there is typically so little basis on which to value a business this early.

Angels:  Typically, the value of a business at the angel investor stage is negotiated, focusing on creating a win-win scenario in which management remains sufficiently motivated to work while the investors are compensated for taking risk.

Venture Capital:  In the early rounds of venture capital, there remain relatively few bona fide metrics on which to base a traditional valuation analysis.  For instance, if there is little or no revenue and no profits or cash flow, most traditional metrics won't work.  The focus becomes subjectively assessing the company's prospects for growth and the future capital requirements that will dilute current owners.  While somewhat more analytical than prior rounds, early venture rounds still come down to making sure that the management retains enough equity to be highly motivated to work and for the investors to be compensated for their risk.

Let me share one story by way of example: