The legacy of your work has a value harder to compare with pure money, so we should try our best to incorporate that in our professional decision making.

I’m not a professional athlete. That may surprise many of you.

Still, without any real awareness of the experience, I find myself scratching my head whenever a big name, well-paid professional athlete chooses more money over legacy. In most cases, it seems ill-advised.

I understand that with injuries threatening livelihood, athletes are smartly coached to get what upfront money they can as soon as they can. And I understand that there is often a mind-boggling amount of money on the table, but they seem to be facing on only one axis of success.

When Albert Pujols signed a quarter of a billion dollar, 10-year contract with the major market Los Angeles Angels, leaving the devoted St. Louis Cardinals after 11 seasons, I wasn’t surprised. (In fact, the Pujols’s wife seems more surprised, saying they had never wanted to leave St. Louis but the club wouldn’t offer a long enough, guaranteed deal.)

But if the celebrated and beloved Pujols becomes a target for boos and taunts, he’ll have to assess how much money an attack to his legacy is worth.

After watching Alex Rodriguez do similarly, leaving the Texas Rangers after a spectacular 2003 season for more than $250 million from the New York Yankees, and then becoming the most hated player in baseball, I was curious. Then, when LeBron James left his (nearly) hometown Cleveland Cavaliers to take his talent to South Beach for the Miami Heat and became the most vilified star in the NBA, I was certain.

There are enormous legacy and reputation ramifications for taking the money and leaving somewhere else.

Jayson Werth took a seven-year $126 million deal with the lowly but growing Nationals that he felt his Phillies should have offered him in his 30s. It seemed he was less than pleased when pitcher Cliff Lee took less money to focus on his legacy.

Lee helped build something — though they fell short of a championship. Similiarly, LeBron could have built Cleveland. Pujols could have been remembered as one of the greatest players and most philanthropic stars in a baseball hungry city. Instead they both went to better paying markets with a different kind of fan base.

Lessons are to be had here for all of us. The money is not at those levels, but the sense that pursuing money only ignores how you will be remembered.

And that’s worth something too.

Philadelphia, like any other city that wants to compete in a global marketplace, needs a regional distinction that sets it apart, and in this place, nothing makes more sense than for Philadelphia to define itself as the hub for social entrepreneurship and urban renewal.

Around the world, our hubs of innovation and culture, of education and community are densest and most alive in cities. All of the truly great problems of our time — war and crime and poverty and disease and education and violence and racism and hunger and employment — are either exacerbated by or housed most primarily in our cities.

As a country, if the United States intends to continue to play some form of a major role in the future, the sense seems to be that we will need to do that by continuing to be smarter. Adaptability, industrial might and military strength have served us well, but we need to look for the next train.

Entrepreneurship and the spirit that came out of World War II federal funding (largely in Philadelphia first) helped define the last quarter century of American cultural impact. At a time of high unemployment and a sluggish economy, high technology and scale is meant to be that next train.

So cities do a lot of hand wringing about how to replace widgets with gadgets.

The trouble is that, as a friend put it, if Silicon Valley represents the overwhelming majority of investment in the country, and New York City is in second place, then just about every other city that is even trying is in third place.

How should Philadelphia (like any other big city) try to stand out?

WHY IT IS WHAT IT IS

If you’re a Philadelphia lawyer, you’re supposed to know every detail of the law. If you’re a Philly boxer, you’re supposed to have a great left hook. If you’re a Philly baller, you’re supposed to be able to take it to the rack. If you’re a Philly deli, you’re supposed to have Dietz and Watson meats and Tastykake treats.

Indeed, great cities are supposed to, as legendary architect Louis Kahn once said of Philadelphia, have ‘a character of personality, not impersonality.”

So, tourist pamphlets can be stuffed with the great news that Philadelphia has rich bicycle communities and beer communities and, increasingly, a restaurant community defined by its BYOB distinction. But when we want Philadelphia (or your city) to be part of leading the charge for the next economy, for restarting and rebuilding, for true urban renewal, we need to take it further to build business at its earliest stage. To do that, there is a central question.

What is the regional distinction of Philadelphia’s startup community?

The answer is that we don’t have one. Yet.

(For clarification, we care about startups because they build some jobs, offer some tax revenue and, most importantly, help build a culture of smart people that attracts more to do even more of the first two things and more).

Regional healthcare companies, a life sciences network and a legacy pharmaceutical presence make biomedical an inroad here (and your city probably has something, at some level, like it), something University City Science Center President Steven Tang astutely calls to lead in. Looking at the graph above from ChubbyBrain, you see a chunk of investment here dedicated to healthcare that other regions don’t have.

But here’s what I think.

Startups here should be defined by a social consciousness because Philadelphia is the largest city in the Western World that has every urban problem known to man at a deep level. Yes, I said it. The highest crime and poverty rates. A criticized education system, beleaguered city infrastructure, an outmoded tax structure, ailing institutions and decaying industry.

Social entrepreneurship is solving important problems while building a business that sustains the mission. And in Philadelphia, we have a lot of important problems. (More, I’d say, than Silicon Valley.)

For years, this has been Philadelphia’s curse. It can’t be a place for entrepreneurship because all of the social ills that bring this city down.

If you’re smart, you need to take what are your challenges and make them a strength.

THE EAST COAST SWING

Here’s what’s I predict: The Mid-Atlantic region will shine in the future. The urbanized megalopolis, which strings from D.C. to, one might argue, the New England jewels of Boston and Cambridge, will interest the urban minded of the future: walkable, car-less, dense. That means entrepreneurs and their ilk will continue to once again roost here.

History be damned: New York City’s tech revival will lead that, buoyed by being the financial and media capital of the country today. Washington D.C. will have its own cluster of entrepreneurship that seeks proximity to federal government and its related industries.

But the story doesn’t need to end there.

Philadelphia has another chance to un-make the last half century or so of its decline. To do that, the Philadelphia narrative needs to be changed so its community can have a reason to be here other than proximity to D.C. and New York. Consumer facing products and companies are what changes narratives — not the staid enterprise and biomedical class of this region (though we should not take them for granted).

So we need to continue to build that community.

There’s a chance Philadelphia could develop that perception with a runaway consumer facing success — Chicago has Groupon and Etsy and Tumblr seemed to note the revival of New York’s tech scene before anyone else much did. As a startup reporter, I can say that many people here in Philadelphia are trying to build that next consumer facing social Web 2.0 shining star here in Philly — maybe the videogame movement will break or something else will flourish — but it’s nearly a crapshoot.

Still, to have a rich and varied ecosystem, those are pursuits worth continuing.

But when we’re talking about a regional distinction, I think social entrepreneurship is an area Philadelphia could take hold. This is the argument:

• Philadelphia is a big market with lots of industrial problems and a vibrant, collaborative tech community that wants to do good.
• GPIC: The federally funded, sustainably-focused innovation cluster in the Navy Yard is a national model. Better energy efficiency is a poster child of the social entrepreneurship movement.
  
• OpenDataPhilly.org: The first open data catalog built by the private market around which we’ve helped develop a civic-minded development community. **In a NewsWorks interview, I first started cobbling together these ideas that a civic hacker scene is the bedrock of social entrepreneurship.
• Independents Hall: The Old City coworking stalwart has been ‘making it cool to care’ since the beginning, including its entrepreneurship and neighborhood interest.
• GoodCompany Ventures: the socially-minded startup incubation program needs to get louder.
• BLabs: the organization that certifies b-corporations has offices in New York City and suburban Berwyn. We need BLabs to bring offices into Center City.
• Murex Investments: the East Falls investment fund specializes in the socially minded and houses in GoodCompany.
• Nutter administration: Like their politics or not, the current mayor has been on watch during the launch of a number of interesting public-private initiatives like digital-divide focused FreedomRings, sustainable-minded Greenworks, tech-fueled OpenAccessPhilly and community action-orientated PhillyRising that could prove a new model. This is social entrepreneurship in the spirit of creating community-building models that don’t depend on government.
• Code for America: The Oakland-based nonprofit that brings developer fellowships to city governments is coming back to Philly for its second year. It should open an East Coast office here, and we hear rumors that something just short of that could happen.
• Healthcare and life sciences: Spin our existing infrastructure as a focus on improving the fundamental health of the world.
• University City Science Center: The oldest urban research park in the country incubates life sciences companies that are having that very impact as noted above. It could focus its mission around life sciences that are improving medical treatment.
• University Impact Fund: Drexel, Temple and Penn should lead an investment fund dedicated to urban renewal in their adjacent neighborhoods.

Philadelphia has a real network of institutions and real, deep problems. That sounds like an opportunity, which is good, because we need something.

WHY THE DISTINCTION MATTERS

A couple months ago, one of my colleagues was on a panel hosted by Select Greater Philadelphia for a gaggle of London entrepreneurs who were interested in either relocating to or opening up offices in North America.

Three questions about why Philly could be a serious option seemed to cut my colleague the most:

1. What direct incentives in taxes and investment are there to move here? Ultimately, my colleague said, it seemed that if these entrepreneurs were going to challenge the default of New York or San Francisco, it was going to be for a hell of a tax break. If that’s your city’s only way to attract talent, you’re going to lose. Proximity is a strong incentive: so if Philly was a hub for social entrepreneurship, we could help fight our problems and attract new talent.
2. Where is the top level talent coming from? As much as we trumpet Philadelphia as being with Boston as among the densest clusters of universities in the country, this international crowd didn’t have that attitude. For computer science, the University of Pennsylvania is a top 20 program and Drexel is battling to get there, plus Princeton is in the region and if Pittsburgh wasn’t having its own revival, Carnegie Mellon and Pitt would be within striking distance. However, fair or not, among the jetsetting, global elite with businesses to move, Penn still isn’t seen as an Ivy League power like Harvard or Yale and Drexel is surely not seen as a Stanford. So talent isn’t yet seen as a universal win for Philly (though there’s room for a win there).
3. Will our clients perceive that we are less savvy because they are expecting us to be in New York? In the 21st century, globally, NYC is inevitably seen as the place for American business and finance. The assessment from many participating in the event was that even if they didn’t want to or didn’t care about being in New York themselves, or thought cost savings could be had by being somewhere else, they still felt the pressure to be seen as not making waves, of being where everyone else is. So, particularly when Philadelphia is so close, the question needs to be answered as to why would a startup of any kind, and certainly one from abroad, choose Philly over New York.

Right now, the sell on Philly all amounts to quality of life: it’s walkable, it’s pretty, it’s historic, it’s close to NYC and D.C., it’s affordable.

That can all be gravy. But it can’t be the meat.

Instead, this is my pitch for this city’s regional distinction.

Philadelphia entrepreneurs: we give a fuck.

That is, this is where people who want to solve real world problems with real impact should come. Combat poverty and crime and the digital divide and education and any other urban issue. Do it in Philadelphia. Your venture can help and find a place for real impact. Sounds like a case for the home of social entrepreneuership.

Then, with proximity and distinction, selling Philadelphia becomes much easier (which is good, because we probably won’t be considered affordable forever).

Most of us (myself included) could do a better job of more often recognizing that when we buy something, we are also, in a way, voting for it. Cost analysis should include an awareness of what message you’re sending when buying something or going somewhere (I want this beer/farm/news site/bar/zoo/restauant, etc. to exist.)

Purchase power has always been a way to show support, but when we increasingly buy that which is not tangible, it may be even more important to incorporate that support into the price point.

As the music industry has fought online pirating, it has seemed to have the most success in arguing to consumers that buying music (an mp3, a CD, etc.) not only ensures a better experience, but purchasing also is a way to support, and tacitly “vote,” for a favorite musician — whether they are getting the biggest cut of the pie or not.

For local, small businesses (yes, niche media too), the pitch has to be the same. We need to offer value to consumers, yes, but ultimately the audience needs to also see any purchase — whatever that is — as a sign of support.

I am not denouncing bigger brands or cheaper options (I make both types of purchases regularly), I am arguing that other externalities go into your purchases, so you should keep them in mind.

Examples:

• Buy advertising or sponsorship with the local news site, blog, forum or web community that helps bring together your customers or community. The value is the traditional branding and helping to support that niche site.
• Go out to the local restaurant or corner hardware store for your smaller purchases — Every extra cent you pay over the cheaper option is a vote for not living in chain-store, strip mall hell.
• Buy, drink and love locally grown and made foods, beers and spirits — Something is unique to where you live/visit/stay, so enjoy it and, in turn, vote for it to exist.
• Purchase a tour to learn more about your home, like, in Philly, the Mural Arts Program or a Food Tour. The value Is the fun experience and learning something, and the added value is helping those groups exist and spread more elsewhere.

In the local news version of the conversation, though the end may be the same, I do think this is a different ask than suggesting the unnamed collective needs to be taught to pay for content. There isn’t a tangible good so feelings need to be part of the equation. Content is free — that’s how you create the community — so we need to find what additional, relevant value we can offer,  sell that and encourage our customers/readers/supporters to remember that a portion of that price goes to helping us exist.

Price points matter. When you don’t have a story tell, the cheapest quality paper towel or headache medicine or whatever will often be the right choice.

In competition, the cheapest cost is almost always a major deciding factor. In experiences (our supporting/growing where we live, celebrating, lifestyle or politics), the cost analysis should always include the support of what you hope to continue being available.

A journalist salary bubble may still be lurking somewhere beyond the newspaper right-sizing of the past decade.

We at Technically Philly are in the process of hiring our first reporter — to begin as an independent contractor expected to make something like $30,000 in a 12-month period. That’s a respectable, entry-level salary for a young, hungry reporter in a big market.

Unless you think otherwise. A freelancer friend of mine gave me a little grief, said she had a $30,000 salary when she started in 2004, expecting the total to have gone up in the ensuing years. I tried to remind her that in the years since she started, the momentum on subscription declines and advertising reductions have accelerated, not to mention a recession that stalled, if not shrunk, salary growth.

In short, her argument seemed to redouble my confidence that our small startup, for-profit technology news site was doing alright to budget $30,000 for a young reporter who would focus on reporting, social media and outreach. Her argument did something else though. It made me think there may still be shocks left in this generation-long restructuring in news from higher-yield print monopoly to lower-yield, online competition.

Starting reporter salaries at the Philadelphia Inquirer are something in the arena of $35,000, with benefits, as I understand it. Updated: See the Guild contract details here [PDF]. That’s not great money for a storied big market newspaper brand, but the Inquirer is a union shop so, as I’ve been told, the guild has a structure not unlike you’d expect for a civil servant: steep pay increases with years in.

A business columnist there might be getting north of $130,000, if I understand correctly. It sounds like an experienced reporter for another business publication in town is making between $70,000 and $100,000. Now I’m not suggesting that reporter salaries were ever at that level on average, but I am pointing out that at most legacy brands, there is a pay structure that ties back to a big yield print world.

A friend of mine is jumping from a well-paying, newspaper-backed administration job to a social media-driven role with a big foundation-supported journalism outfit. His salary is probably somewhere in the $60,000 to $80,000 range.

That’s just my concern.

The old pay structures that can grow reporters into six figure salaries are being maintained because of culture, union and logistical concerns. The biggest new celebrated brands of our age — MinnPost, Pro Publica, Texas Tribune, San Diego Voice and the like — are backed by big donors and foundations. Without normal market forces pressed on them, it’s my understanding that they are following the same salary levels of the standard-setting newspaper brands.

I respect greatly the involvement of philanthropic organizations in journalism (of course I do, such funding has helped us do great work), but I think those efforts should be focused on projects, not operations. Projects have ends. Operations are ongoing.) As this funding without normal market pressures impacts this still unsettled industry, I am left with two related questions about reporter compensation. Is there any evidence that the market can (or should) support pay levels of the past? Could foundation funding be protecting a journalism pay bubble?

As I look at the smaller, independent niche news sites that I know well, I see two paths: (a) one is a leaner, more efficient operation that doesn’t pay its reporters the kind of levels the past has prized, and (b) the other is funded entirely by foundations or other deep pockets, and pay reporters rates that are not unlike the past.

Granted everything is cyclical, so as news fractures, I fully expect there to be consolidation once again. With consolidation, presumably comes efficiency and better paid, top talent. There are already years-old glimmers of that, with properties like Gawker Media, which has a portfolio of high traffic sites, driven by content written by bloggers paid largely based on page views. Pre-recession estimates suggested that Gawker writers were getting paid up to $80,000, which would be respectable pay for valued writers at a valued brand.

But, as anyone covering communities know, Gawker is an aberration — a niche conglomerate with big money. I don’t think that will be representative at all.

When we crunch the numbers at Technically Philly, I’m not sure we could ever support the kind of salary figures an established technology reporter for a big legacy brand would demand. And, frankly, I’m not yet sure it should.

The second annual Philly Tech Week will take place April 22-28, 2011, as we announced on Technically Philly recently.

We unveiled our media kit, made impressively by my colleague Brian James Kirk, which you can see here.

The open calendar of events was first held this past April, attracting more than 4,000 people attended at least one of 65 events held throughout the city and surrounding counties during the inaugural celebration. See my roundup of the event series impact here.

The week was officially endorsed and recognized by City Council. A major public-private partnership launched an Open Data repository for the city and Councilman Bill Green unveiled a 10-point plan for improved government transparency through technology. Startups launched during the week, video games were unveiled and educators held the first Robotics Expo in the city.

With more than 50 press hits across newspapers, radio, television and blogs, the week also became an enormous opportunity for the partners involved in making it happen. The week’s 35 sponsors and more than 50 event organizers were able to put their message and organizations in front of 30,000 unique visitors of Philly Tech Week web properties. They were included in the 5,000 print publications distributed in 50 retailers across the city. And they were able to align with the 1,000 social media messages that spanned the event.

This year, April 23-28, 2012, Philly Tech Week will be bigger year’s event, it is expected that more events will be organized with lessons learned from last year, the programming will be made stronger and its impact greater.

We hope to prove true this year’s theme: to make a better Philadelphia through technology. We hope you’ll be a part of it.

To learn more, check out the event’s media kit here bit.ly/ptw2012_mediakit to learn why Philly Tech Week is so important to the region, and get involved by either organizing an event [bit.ly/organize_ptw2012] or sponsoring the week [bit.ly/sponsor_ptw2012] to connect with the region’s growing community.

More than a year ago, Steve Jobs spoke about the iPad and Apple’s broad role in touching publishing and journalism, during a broader interview at the D8 conference.

At 1:50 in the below video, watch highlights of Jobs talking about his relationship with news and follow the quote below.

“One of my beliefs, very strongly, is that any democracy depends on a free, healthy press…. Some of these papers — news and editorial gathering organizations — are really important. I don’t want to see us descend into a nation of bloggers myself. I think we need editorial more than ever right now. Anything that we can do to help the New York Times, Washington Post, Wall Street Journal and other news gathering organizations find new ways of expression so they can afford to get paid, so they can afford to keep their news gathering editorial operations in tact, I’m all for. What we have to do is figure out a way to get people to start paying for this hard earned content. So [the tablet industry] provides us an opportunity to offer something more than just a web page and to start charging something for that. I’m trying to get these folks to take more aggressive postures than what they traditionally charged for print because they don’t have the expenses of printing, they don’t have the expenses of delivery and to charge a reasonable price and go for volume. I think people are willing to pay for content.”

The act of selling products, of course, is like finding your Atman of the service industry, so, acknowledging that that is at the top of the pyramid and any kind of client work is the foundation, let’s look at what helps these service businesses thrive enough financially to ever endeavor to trial a product or two: the three “R’s.”

By service industry, I’m thinking of professional firms that do things like web design, marketing, consulting, strategy and other high-level tasks that many companies will look to outsource.

There are three “R’s” that every successful company in a service industry achieves in building into its revenue strategy:

• Retainers — In most cases, you first work with a client around limited, deliverable-driven projects (or at least this is what we find valuable for both us and those with whom we work) for six months or a year. These are often big lifts that make heavy use of staff time, resources and insight. Good work happens here. But ideally, if value can be offered long-term with maintenance or further staff development, longer-term or continuing contracts of smaller value but steady income allow real stability and scale in the type of business (service) that isn’t very good at either.
• Recommendations — I can remember questioning the value of someone else speaking good on your work — words pasted on some leaflet or buried on a website. But in the past few years, I’ve found occasion when those very words, even when detached from the human being who supposedly said them, have been requested. Having a list of published testimonials and the client list that comes with them is endlessly valuable to draw upon in discussions, sales and strategy. When you’re starting out, use past work or give up some free work to start building that network.
• Referrals – This is surely related to the recommendations but quite a bit more valuable. Of our work at Technically Media, most of our clients come as a direct result of an introduction and private suggestion to work with us. Referrals are prized for a legion of reasons: cold calling sucks, you can better calendar-out clients, it becomes a curated list of clients with whom you want to work, the expectation is for you to succeed so winning is easier and more.

Whether they are meant to be there or not, real business lessons are buried within the made-for-TV, startup-pitch-event-turned-reality-show Shark Tank, and despite the raised eyebrows, I love the program.

A rotating crew of five potential investors, billed as self-made millionaires, hear quick pitches from would-be entrepreneurs of varying skills, interests and levels of experience. Sometimes deals are made; sometimes those entrepreneurs walk away with nothing, aside from a little exposure.

This is not the first time I’ve talked about the show: last fall, I wrote about what the Knight News Challenge could learn from Shark Tank.

I watched most of last season and all of what has come out so far this year. I’ve got to thinking there are a few lessons to be learned from watching.

First, it’s the best reality show on TV because — though the drama is naturally turned up and the personality surely encouraged — it has the same quick-cut, digestible entertaining qualities of other programs, but it also has a taste of next-big-thing trends and dives into the American ethos of entrepreneurship with all the teachings of what works and what doesn’t.

Watch a clip from last season below.

So, yes, I’ve had some takeaways, some for pursuing investment and some, of course, for being the very unique experience of having five potential, competing investors sitting in front of you on national TV.

INVESTMENT PITCH LESSONS

1. Have a strong elevator pitch – Well, obviously, first and foremost, you should have down exactly what you aim to say: simply what your business is, why it’s unique, what needs it fills, how much money it has made, how it will scale to make more and why you’re the person to do it. Gabe Weinberg recently wrote on this and many other angles for your investment pitch.
2. Always offer your sales figures for the last calendar year — Or, if more relevant, in the last year or fiscal year, but the point is to have, ready immediately, how much in actual sales you made in a 12-month period. Projections are fine, recent numbers are cool, orders or forthcoming sales are great, but the first thing to say is what you’ve already done and that figure needs to be during a 365-day period.
3. Have existing sales — Don’t seek outside investment without sales unless you have a very clear, special circumstance, like intellectual property concerns for high technology, pharmaceutical, heavy machinery of the like. ….Even then…
4. Have a clear sense of why the investor needs you — Many of the entrepreneurs took for granted the idea that they were of value to the business being pitched, however in multiple pitches I watched the investors questioning that very idea. Have a rational, reasoned and succinct answer to why you are the best person on the planet to run or be involved in your business — other than just that you began it.
5. Don’t make an investment pitch as your last report — As noted above, you need to know what you want and what’s the least you’ll take and be able to walk away if neither is met. If you’ll take anything and show it and are unable to walk away, you can get yourself in a world of trouble.
6. What specifically will you do with an infusion of capital — You absolutely must be able to very specifically cite precisely what you’re going to spend outside investment on and it better be a very clear way to quickly grow revenue.
7. Investment money is for scale — When speaking to investors (not friends and family) you’re essentially trading a chance to grow your business big for an efficient return of investment. That means, outside investment is for a clear next step to growing quickly your business, as noted above.
8. Know your options for product direction — Startups are pushed lots of different ways, from direct to consumer sales for bigger yields, to private licensing for existing company for quicker payout, to distribution agreement with stores and more. Be well researched in which directions are possible, have a clear sense of which way you think you should go, but be aware of the other options.
9. Getting on store shelves is much easier than staying there — Products can be put on trial by a store, but price point, shelf placement and customer reaction dictate if it will stay there. As I learned, it all comes down to “gross margin per linear inch,” a phrase I now love.
10. Come with a clear direction in mind but be ready for others — Know how, where and why you want to grow your startup, but be willing (and eager) to get criticism and advice from investors who might offer varying directions.
11. Products scale, not services — Don’t go seeking investment for your service. Go seeking investment for a product-driven business or a service made unique by a product that supports it. Perception is that that’s a far safer chance to make a return on investment.
12. Know the size of your industry — Be researched enough to recite what annual sales are across your industry or a related one, be aware of units or other size scales. You need to be able to quickly prove that there is money to be made in an industry that those potential investors might not know well.
13. Know your cost to produce and the retail price — Those are two very important figures to know well in advance of asking for outside investment. Compare to other similar products, pay for user testing, have existing sales and do whatever else will get you to those numbers.
14. Have other investment to speak of and lessons learned – Before seeking outside investment, you should have used your own capital and that of friends and family. That’s where you start, and then have a reason why that money was successful and why you need more of it. If these tests of capital failed, getting more money from outsiders won’t look so wise.
15. Know the difference between a product and a company – Having a single idea or product or service is a fine start, but without anything more, when you seek an investment, that single sale needs to scale in a bigger way than if your idea is to build a robust and diversified business.
16. Licensing a product to an existing company can get costly — Let’s say you have a unique, cost effective way to better maintain the shine of motorcycle chrome, and you want to license the product to Harley Davidson. Assuming your product is good enough and connections strong enough that you meet with the company and get the deal agreed to, you just might be paying a hefty downpayment and pledging guarantee payments that will come from either sales or from limping away from the deal.
17. Gaining investment is not a success, it’s a tool — This is a concept that also came up in a recent interview I had with a scaling tech company in Philadelphia and is an important one. No one’s goal should be to get investment. Investment should be a way to get to that goal.
18. Know your competition — Be well versed in who is doing work similar to yours, directly or otherwise. Being unaware of relevant competition or simply ignoring someone who is can be a big mistake.
19. Having a mission is a wonderful plus, but it doesn’t replace needing to be able to talk business — Offering a reason that you’re motivated to make your business succeed, through social entrepreneurship or personal experience, can inspire an investor, or at least sell her on the idea that you’re determined to succeed. None of that, though, will replace the need to be sure about the business sense of your project. Inspiration doesn’t keep missions alive, the funding does.
20. Patents, trademarking and copyright matters more than almost anything you have – Unless you have sales to suggest otherwise, nothing you have is as valuable as the protection of an idea, product, brand or service to keep your sales your own.
21. Know the lingo but never be dependent on it – Every industry have its phrases and specifics. Know it. Talk it. Talk shop with others in your industry enough that when you encounter an investor who knows that industry, you convey the idea that you know it. But always be able to speak in comfortable, recognizable language.
22. Don’t take it personally — Women have cried, men have wined on the show. Be sure to keep your personal values and pride separate from a group of investors who could likely tear your plans apart.
23. Royalty guarantees are commonly at seven percent of profit per unit sold — When investing relatively large sums for a promising product with little in existing sales, the investors often asked for a product royalty on top of equity. The argument was that the invested money would have to go largely to awareness and less to scaling, so to better get a quick rate of return, royalty on unit profit was desired. The royalty rate varied but most often landed at seven percent, described as a common rate.
24. Evaluate your company appropriately — A surprising number of entrepreneurs came to the table without fully understanding that putting a price on equity in a company sets its evaluation; that is, if you’re offering 10 percent equity in your company for $10, you’re suggesting that your company is worth $100. That said, there’s some variation to evaluating companies, particularly startups and across various industries. Different methods include [A] multiplying your last 12-months of EBITDA by 2.5 or another multiple, [B] putting a dollar figure on all monthly users, [C] totaling full assets with a dollar figure and adding a calendar year projection. There are also startups like YouNoodle trying to get an algorithm to do the work or use resources from Inc. magazine or from CNN or perspective like here.

COMPETITIVE GROUP PITCH INVESTING LESSONS

• Ask for all potential offers on the table before negotiating — By simply asking if anyone else in the room would like to make an offer, you can improve the terms being offered from which to negotiate.
• Be confident, or at least look confident — The pack of investors swarm and cut down those who look nervous or uncertain.

WORDS OF WISDOM

• “Between an idea and a business is a hell of a long way.” – Kevin O’Leary, season two, episode five
• “Don’t cry about money, it never cries for you.” — Kevin O’Leary
• “Don’t ever be enamored by what something sells for. It’s more important what you get to keep in your pocket.” – Robert Herjavec

OTHER READING:

• How to evaluate your financial position — Some interesting, unique measurements of a business’s viability, like the very simple idea of dividing cash on hand by monthly expenses to get the number of months before you hit bankruptcy. That’ll keep you from focusing too much on sales, if overhead is skyrocketing.
• Real-Life Lessons From Shark Tank — Some good, broad takeaways
• Branding Lessons From The Star Of ‘Shark Tank’
• Business Lessons from ABC’s Shark Tank

Following President Obama’s much hyped jobs speech, small business owners have been discussing the direct ramifications for if his proposals were enacted by Congress.

My Technically Media colleagues and I were specifically interested in these details, as provided by the New York Times:

“The centerpiece of the American Jobs Act is an extension and expansion of the cut in payroll taxes, worth $240 billion, under which the tax paid by employees would be cut in half through 2012. Smaller businesses would also get a cut in their payroll taxes, as well as a tax holiday for hiring new employees.” Also: $4k to any business that hires an employee that has been looking for a job for six months.

Beyond the fact that those proposals aren’t actually in place yet, I wanted to share the basic, common reasons for why independent contractors and freelancers are still the way of the world, particularly in publishing.

*Note, I am far from a financial planner. These are just commonplace words of wisdom and direct advice from professionals.

Benefits of independent contractors:

• Save 12-15 percent of expected money paid to the individual, in employer-matched payroll taxes, worker’s compensation and related costs
• Be absolved from worker liability and many workplace expectations
• More easily trial individuals and work on short-term projects with a clear end
• Simply collect a W9 for all individuals and then file a 1099 for those paid more than $600.
• Avoid expectations for health insurance, retirement plans and other additional benefits not already providing early in your business.

Benefits of full-time employees:

• Encourage work from a central office, to foster collaboration and connectivity
• Encourage similar working hours to foster better communication.
• Allow employees to use tools and resources provided by your company (computers, equipment, paid tools)
• Pay them through payroll, instead of paying a variable, monthly invoice
• Dictate all or the majority of the assignments and work projects for the individual

Important Reading:

• Independent Contractor (Self-Employed) or Employee? [IRS]
• Is This An Employee or Independent Contractor? 
• Independent Contractor definition [Wikipedia]
• W2 for full-time employees, 1099 for independent contractors
• W9 and 1099 forms for independent contractors
• 1099 vs W2 at around $60k/yr: How much actual difference?  [ars technica forum]