The Blade

I interviewed dozens upon dozens of successful founders for my book, The Hockey Stick Principles. I learned so much from these amazingly successful people, but in all of those conversations, the advice that stuck with me the most came from Bob Young, the founder of Red Hat Software, Lulu, and most-recently PrecisionHawk.

Bob believes that in order to succeed as an entrepreneur, you must be able to create your own luck. To illustrate this theory, Bob cited a story about his brother, Michael, who has learning disabilities but still invariably manages to win the family’s annual fishing tournament. Michael’s strategy? He keeps “lines in the water” by fishing longer hours than anyone else. The more you fish, the “luckier” you’re going to appear to be at catching fish. But in reality, it’s not pure luck. The top winners on Bass Masters prepare better, search better, and thus they attract the odds to their side better than the other guys.

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There is no “right” age to start a startup because every situation is different and the skills required to build a startup are wide-ranging. However, that’s only part of the story. Practically speaking, starting at company between 25 and 30 makes good sense. According to my Hockey Stick Research Study, the average age for founders of successful startups age was 32. Another study in the Harvard Business Review reported the average age was just over 31 for founders who were VC-backed and had startups valued at $1 billion or more. Jeff Bezos started Amazon when he was 30. Jack Dorsey launched Twitter when he was 30.

5 reasons that ages 25 to 30 win the battle

1. My Study shows that 25 to 30-year-olds perform better: This chart shows the revenue for 172 successful startups. During the first three years, the 25 to 30-year-olds may have gotten off to slower starts, but they finished much stronger growing to 65 percent larger by their seventh year.

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I’ll never forget starting First Research and designing my own brochure. It displayed a golfer gazing at a putting green, a sunset in the distance, with the caption, “You Only Get One Shot.” It was so bad, it was sorta good. But hey, I did the best I could with the resources I had!

As a startup founder, you can’t possibly possess all of the skills you need to get your business off the ground. You have to improvise to be successful. You may know how to sell a product, code software, or manage a team, but you may know very little about marketing. Unfortunately (and ironically), marketing is often the most important skill needed to launch a new product. So you have to figure something out.

Bridging the marketing gap

From my experience watching successful founders, here are six methods they use during the first few years to close the marketing skills gap.

1. They get scrappy, take risks, and try to stand out by being different: I’ve seen some founders with little marketing experience produce some cool, effective stuff. My brother-in-law started Localeyesite.com, which provides a unique job board for the eye care industry. He produced a video, “Eileen,” that poked innocent fun at eye care professionals—helping him land a partnership with a media company. Another example: While attending a banking tradeshow, I met these two founders struggling to collect prospects’ business cards. They’d invested $10,000 and leaving the show without any leads would be devastating. So the next day, they hired a model (for $800, if I recall) and walked away with more than a hundred business cards. I seriously doubt an established business would pull such a stunt. Now that’s scrappy!
2. They simply do the best they can: Some founders don’t take risks or get outside the box, but they survive and advance. For example, they review other press releases and produce their own one in a similar fashion. They attend tradeshows with a basic booth and try really hard to make connections while there. Nothing produced is top-shelf, but at least they’re in the game. Some seek marketing advice from their connections. My friend David Buffaloe, an experienced marketing leader, has been known to provide an hour or two of advice for giftcards, pizza, and a few beers. Talk about a good deal! Nothing wrong with that.
3. They “sell” their way out of the problem by doing little or no marketing: Some founders are better salespeople than they are marketers. And due to the fact that when you start out, selling face-to-face is helpful in understanding potential customers’ needs anyway, they spend their time selling, cold-calling, looking for connections. This is fine, so long as you have a high enough price-point to justify it. This is a difficult strategy to pull off if you’re selling a $30 product face-to-face.
4. They outsource marketing to an agency: This is an ideal approach if you can afford it. Costs range from $2,000 per month on the very low end to $10,000 per month and up. I have seen several startups pay around $3,000 per month and receive about 20-30 hours each month. Of course, the $3,000 just pays for labor and expertise; you still have to pay for print costs and/or direct marketing programs such as online advertising, tradeshows, or whatever the activity is. With this route, you mostly get things done right, solid advice, and professional work, but you have to actively manage their activities. The squeaky wheel gets the grease!
5. They outsource marketing tasks to freelancers: If you have a good feel for what types of marketing activities you want to do, you may just need expertise and labor to get them done. Some founders hire part-time writers, graphic designers, social media experts, or whatever it may be. A typical freelancer may charge anywhere from $30 to $120 per hour and will work when you need them. I’ve personally had good success using this tactic.
6. They hire an inexperienced marketing employee: Let’s say you have a new company that has $200,000 in revenue and little funding. Some founders in that position may hire an inexperienced, yet passionate, young employee willing to learn. For example, a marketing major right out of college may cost $35,000 a year.

One day, you’ll have a startup with a few million in revenue, and at that time you can hire a marketing director for $150,000+ plus and provide him or her with a $500,000 marketing budget. Until then, you have to heed Mick Jagger’s advice: “You can’t always get what you want, but if you try sometimes, you might just find, you get what you need.”

I believe most of us are born charismatic and unconventional. As children we are free, confident, silly, risk-takers. But as we grow up, we lose that sense of innocence. The peer pressure to conform to society’s standards becomes too much, and we slowly become boring and conventional. Startups often follow the same pattern as they grow up. They start out as a reflection of their founder’s innocence, but all too often become corporate and so politically correct that their founder’s scrappiness and innocence are washed away.

An exception…

Chick-Fil-A, the fast food restaurant whose TV commercial cows demand we “eat more chicken” is a rare exception. It’s a company that has maintained its late founder Truett Cathy’s innocence—which for him, was built upon incredible customer service and being great to his employees, even if doing so risked profits. Author Larry Julian says: “What impresses me most about Truett Cathy is that he has had the courage to follow his beliefs even though he’s pressured by the world to do otherwise. Even though the business world said it didn’t make sense to take Sundays off, Truett insisted on a day of rest.”

Chick-Fil-A remains “Closed Sunday” so their employees can spend time with their families, a policy for which the company is well-known. Closed Sunday is part of what makes Chick-Fil-A remarkable. And after more than 50 years in business, Chick-Fil-A has maintained Cathy’s vision by partnering only with franchisees who are class acts and fully buy into the original vision created by Cathy long, long ago.

Authenticity matters

There are so many big, profitable companies that have completely lost their founder’s original visions. They brag about how much they help their communities and run TV commercials about how great their service is, but we see right through it because we’ve experienced first-hand their boring, lousy execution. They’re just profit machines that provide jobs. That’s it. There’s nothing special about them. You know those firms—the type that sponsor PGA golf tournaments and whose EVP interrupts the TV broadcast with their sponsor plug, bragging about how great they are for their customers and “communities”—which makes me throw-up just a little. Don’t grow up like that.

Staying true to self

Here are 3 tips for keeping your startup innocent and true to your original vision, and not growing up to become big and uncool.

1. Discover what makes your startup remarkable and stick with it: I recommend the books The Purple Cow by Seth Godin and Different by Youngme Moon in order to figure out what makes you remarkable and different …and then embrace it.
2. Be careful who sits on your board of directors: Cathy Truett once said, “I believe no amount of business school training or work experience can teach what is ultimately a matter of personal character. Businesses are not dishonest or greedy, people are. Thus, a business, successful or not, is merely a reflection of the character of its leadership.” Nuff said.
3. Be careful who you take cash from: Accepting money from corporate-type people (who have amassed venture money) often means you’re likely to become slowly corporate yourself through who they want you to hire and how they want you to run your firm.

I love the iconic Gatorade TV commercial “Be like Mike.” But when my startup grows up… I Want it to be Like Chick-Fil-A.

A scene from the great movie Glengarry Glen Ross shows Alec Baldwin’s character, Blake, chewing out a sales team saying they’ll wind up losers in a bar mumbling, “‘Oh yeah, I used to be a salesman, it’s a tough racket.’” I get this feeling that one day, I’ll be the loser in the bar, except I’ll be mumbling, “Oh yeah, I used to an angel investor, it’s a tough racket.”

Angel investing is a difficult, stressful endeavor, which I summarized in last week’s post. You work alongside founders, struggling to get their new businesses on solid footing (much less reach hockey stick revenue growth); you’re helping convince founders’ frustrated spouses to live for another year on a paltry salary; you are trying to decide whether or not to invest more funds into their businesses; and you’re stressing about the uncertainty of this startup’s future.

I’ve made plenty of mistakes as an angel investor; had I know these fallacies beforehand, I could have saved myself a few drinks in a bar feeling like a loser:

1) Trying to cram processes that have worked at one business into another business: In the beginning, when founders are frustrated by their lack of traction, I tend to push them towards using processes (e.g., sales or marketing methods) that other successful businesses I’m involved with have successfully deployed. This advice may sometimes work, but I’ve clearly gone too far with it on occasion. Each business has their own “groove” – and as an adviser, it’s best to help the founder discover his or her own course—not someone else’s.

2) Occasionally being a nuisance: In his entertaining post, “Are Angel Investors God’s Stupidest Creations?” Ajeet Khurana says, “One way angel investors sell themselves to entrepreneurs is by promising them value in addition to the money they will invest. Upon investment, this value is usually nuisance value.” I’m probably guilty of asking for too much information, butting in, and slowing down the machine when what I really need to is, well—get out of the way.

3) Not being a good listener: When meeting with investors, founders should do 80 percent of the talking. Too many times, I’m doing 80 percent of the talking, or “telling” in too many cases. It’s so tempting to tell someone how to do something, rather than just listening so he or she can sort it out on their own.

4) Communicating with employees instead of exclusively with the founder: I like to dive into the details, and there’s no better way to get details than directly from the horse’s mouth – from the employees managing the tasks. But unfortunately, this doesn’t help the founder because their leadership strategy may be undermined. This should be a no-brainer, but I’ve screwed it up more than once.

5) Not realizing that follow-on investments were common and necessary: Almost every new founder spends twice as much and makes half as much revenue as he or she originally figures in the first few years. This creates a cash shortfall that needs to be plugged just to remain in business. Smart angel investors anticipate these follow-on investments from the beginning and are ready to address them one way or another – often by providing additional funding.

6) Investing on a part-time basis: Just like any career, trying to do investing on a part-time basis is a real challenge. For example, I have no time to generate deal flow, so I only look at a few real deals per year. In fact, I may stop angel investing unless I take it up full-time because it’s too difficult.

I’ve also managed a few things well. I genuinely care about founders; I introduce them to people who could help; I get back to founders when they have questions. At least I’m not haranguing them: “PUT. THAT COFFEE. DOWN. Coffee’s for closers only.”

Are you considering becoming a part-time angel investor or curious what it’s like? I’ve invested in five startups, three of which were pre-revenue when I got involved. The following table offers some information about my portfolio.

Here are 13 observations about my investments that may help your own journey in becoming an angel investor:

1. I mostly own “life–growth” businesses: Life-growth businesses are lifestyle companies whose founders aspire to grow at a solid clip, often 25 percent or more. But life-growth founders reduce their stress by choosing not to work or ask their employees to work 70 hours a week. They typically don’t raise professional growth capital in order to grow exponentially; they’re fine with having a great business, fun lives outside of work, and just trying every day to get better. They’re driven, but just not over-the-top driven. I’m totally cool with that.
2. My return on investment is cloudy, but looks pretty good on paper: Basically, these are illiquid investments that rarely return cash back to me. But if I compare the amount I’ve invested versus what the businesses are worth on paper today, my unrealized ROI per annum averages 47 percent. However, I have to make important assumptions to arrive at that ROI percentage (e.g., that the businesses are worth 2.5 times revenue; that businesses sell today for cash).
3. I’m chasing after dividends, not necessarily exits: One or more of the firms I’ve invested in may one day sell out for a bunch of money, but as I stated last month in my blog post, now that the founders are drawing larger salaries, I plan to begin collecting larger dividends to get a return on my investment of money and time.
4. I’ve made a number of mistakes: Next week, I plan to write a blog about the missteps I’ve taken as an angel investor, but here are a few previews… 1) I have tried to cram processes and methods that have worked at one business into another business. 2) I haven’t always been such a great listener. 3) I’ve occasionally communicated directly with employees instead of channeling it through the founder. 4) In the beginning, I didn’t realize follow-on investments were common and necessary. And I have other lessons-learned to share…trust me.
5. Investing is a bit of a grind: Investor George Soros once said, “If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.” I’m not sure I’d classify good investing as boring, but it is hard work and a grind. I’m working with five founders, all of whom have their own unique, difficult challenges to overcome.
6. Professional investors would categorize my companies as “still trying to figure out their business models”: Professional angel investors wouldn’t be too pleased if after six years, one of their businesses’ revenue was only $1.5 million. But I’m cool with that track record since I’m investing my own money and not doing it for a living. I believe in hockey stick revenue growth, so I’m confident most of their revenues are headed to $5 million much faster than they got from $0 to $1.5 million.
7. One or more of the companies I’ve invested in could “break out”: My companies’ revenues may appear small, but they have decent-sized markets (i.e., $30 million or more) with little competition. One challenge is that most of them offer “nice-to-have” products instead of “must-have” products. Nonetheless, one could easily become hot and grow to $10 or $20 million without raising additional capital. If and when that occurs, my overall portfolio will do really well!
8. I’m spread thin: The trouble with being a part-time angel investor is that you become distracted by lots of disparate challenges rather than one core challenge. Therefore, it’s difficult to have a big impact on any one thing. For part-timers like me, angel investing is more of an interesting distraction than it is a huge time commitment. So it’s difficult to do on a part-time basis and do really well monetarily.
9. Growth becomes tougher as the denominator gets bigger: Another big challenge for these startups is that as their revenues become larger, they must figure out how to accelerate new sales faster in order to maintain the same growth rates. I’m involved in the “how do we grow new sales faster?” with each firm on a monthly basis.
10. Follow-on investments are common: Three of the five firms have needed follow-on investments in order to survive and thrive. One wanted a follow-on investment, never got it, but figured out their business model anyway. The lesson there is sometimes having cash perpetuates flawed business models. Desperate founders often figure out challenges better than ones who are coasting.
11. I like having a niche: I love Warren Buffett’s great quote, “Wide diversification is only required when investors do not understand what they are doing.” Most of my businesses sell information on a subscription basis to sales and marketing firms. The nice thing about investing in the same type of business is the expertise you gain. But I must admit: I’m getting ready to invest in two firms that I know little about – which is going to be exciting for me, but also chancy.
12. Economic cycles can have a big impact: My portfolio has enjoyed five years without a recession. I’m not sure what will happen to these firms when the economy inevitably hits a wall for a few years. My best guess is that their revenues will slow somewhat, but time will tell.
13. Working with five different vibes: I have discovered that each founder and company that I have invested with has their own personality and methods for going about things. I find it’s best to adapt to their styles – and try to help out as best as you can according to the founders’ desires.

The purpose of being a part-time angel investor might be best explained by Albert Einstein when he said, “Any fool can know. The point is to understand.” When you’re an angel investor, over a period of years, you learn to understand many different products and business models. What a blessing this learning journey has been.

A few weeks ago, I implored you to second-guess selling your company in my post “12 Reasons Selling Your Business is a Bad Idea.” But I may have missed the mark a little when I said, “Your employees often lose out.” I failed to mention how my first company’s employees fared in the end. Of the 40 employees of First Research, 10 company alumni have founded five new companies, all successful. And, if you add up their revenues, it’s a bigger number than First Research’s revenues in 2007, the year we sold. They must have thought, “If Bobby can start a successful company, then I know I can.” Turns out, they were correct, and they are among the five reasons I’m glad I sold my first company.

1. Local Market Monitor: In 2009, Ingo Winzer and Carolyn Beggs reintroduced Ingo’s brilliant home price forecast models. Today, banks, mortgage firms, and home construction companies are subscribers. Ingo is regularly quoted by the national media. In fact, he was recently asked to be a regular contributor to Forbes!

2. Schedulefly: In 2008, Wes Aiken, Tyler Rullman, and Wil Brawley launched this employee work scheduling software for independent restaurants. Today, more than 6,000 restaurants and hundreds of thousands of their employees use it every day. They’ve also added two more First Research alumni to their technology team.

3. etailinsights: In 2010, Darren Pierce started a sales and marketing intelligence tool designed specifically for online retailers. Today, this business is jamming with hundreds of customers ranging from DHL to Symantec, just to name a few. Did I mention that etailinsights has a fantastic work culture too?

4. Vertical IQ: In 2011, Bill Walker, Susan Bell, and I teamed up and launched this company to provide industry profiles to help bankers better-prepare for business calls. Today, we have 130 banks on board, 26,000 users, and the company is growing like a weed.

5. Boardroom Insiders: In 2009, First Research alum Lee Demby helped founder Sharon Gillenwater crank up this tool that provides in-depth information about business executives. Cisco, HP, and Citrix are just a few of its many clients – and the business is growing insanely fast.

This phenomenon is like the great circle of life, so I must quote the The Lion King, “There’s…more to do than can ever be done…It’s the circle of life, and it moves us all.” So sell your company; just make sure you and your team start new ones – preferably ones experiencing hockey stick growth like these!

Why too many startups aren’t paying dividends, but should be.

Photo: pedrojperez

Dividends are considered “uncool” in the startup community. Most founders think they’re for boring, mature companies like utilities and banks. Executive editor of CNET Roger Cheng explains: “For most companies, paying a dividend is the ultimate admission that the growth phase (also known as the fun period) is over.”[i]

But wait! I know a startup that has millions in revenue and pays out 80 percent of it to its owners. (No typo here – they dividend 80 percent of revenue). Yet it still grows 20 to 30 percent each year. Can you imagine how much these founders earn each year?

Kickstarter is also paying dividends. Fred Wilson from Union Square Ventures says, “I did the math, and I thought about it, and I concluded that there was going to be a lot of cash flow, potentially, to dividend out.”[ii] Another company that believes in earning its owners profits instead of operating breaking even is $3.2 billion SAS Institute, whose cofounder, Jim Goodnight, explained in Forbes: “We were profitable the first year, and we’ve been profitable for 38 years since… That’s one of the goals – to make sure we always stay profitable.”[iii]

While these startups are unusually profitable, it is possible to run your business with a similar mentality. Let’s look at a typical scenario of a startup that has developed a niche market. Let’s say you and a cofounder start a company and you each invest $50,000. By the fifth year, your revenue is $1.5 million, but instead of spending $1.5 million in order to grow faster, you retain $250,000 by choosing to spend $1.25 million (16.7 percent operating margin). You choose to pay a $200,000 dividend, so now you’ve recovered all your original investment plus socked away some money in your company’s savings. Each year going forward, you continue maintaining 16.7 percent operating margins, 30 percent growth rates, and paying 80 percent of profits in dividends. After eight years of doing that, you’ll have paid out $6.5 million in dividends while still owning a company with $12 million in revenue. Not a bad gig. And keep in mind, you’ve been collecting a salary each year as well.

My own startups have paid dividends, so I’ve learned a thing or two about them. Here are some tips:

1. Don’t pay dividends before you’re ready: Every situation is different, but as a rule of thumb, once you have a consistent, steady flow of new, happy customers for two to three years and have more than a million in revenue, then you can consider dividends. Before that point – better stick to reinvesting cash back into the business.

2. Don’t forgo mission-critical projects just to pay a dividend: Never feel the need or obligation to pay a dividend every year. Remember, you aren’t a publicly traded company that should never decrease its dividend without hell to pay. Balance carefully taking good care of your business first, and paying dividends second.

3. Have the discipline to say “Next year!”: Your business will always have a backlog of projects to spend newly earned cash on. Instead of always saying yes to them, figure out which ones are necessary and delay the others.

4. Dividends aren’t for all startups: If you’re the next Google, Amazon, or Facebook and chasing a multi-billion-dollar market, then maybe you should raise venture capital and invest 100 percent of newly acquired cash into growth. Dividends are best-suited for niche markets that have steady growth, but not off-the-charts revenue potential, or game-changing ideas.

5. Speak to your accountant before paying dividends: I use the term “dividends” generically for taking cash out of your business. Ask a CPA to tell you the most tax-efficient method to do that based upon your own tax and financial situation.

You might be thinking right now about college or high school finance classes that dictate the net present value of cash is worth way more in your business growing 20 to 30 percent than sitting in a bank earning 0.5 percent. True. But don’t forget the proverb that a bird in the hand is worth two in the bush. And you only live once also comes to mind, so enjoy the fruits of your labor. Don’t wait for that huge exit (that often never comes) to get a return on your risk and hard work. Instead, enjoy the benefits of hockey stick revenue growth on your own terms.

[i] http://www.cnet.com/news/why-technology-companies-loathe-dividends/

[ii] http://washpost.bloomberg.com/Story?docId=1376-O8X5876JTSEI01-66OREETR931R8I4BM5JQM72L53

[iii] http://www.forbes.com/sites/peterhigh/2014/05/12/an-interview-with-the-godfather-of-data-analytics-sass-jim-goodnight/#674d53b50424

It’s been nearly 10 years since I sold First Research for $26 million to Dun & Bradstreet. Do I regret doing so? It is a complex question, but let’s just go with YES. Here is why I encourage founders to think twice before selling their company:

1. When you’re selling your business, you’re selling your passion: The words of one founder who made a great sale for his start-up especially resonate for me. Roger Bryan, who started Enfusen Digital Marketing, eloquently told mashable.com in an interview about his thoughts on the transaction, “I spent six years building the first company I sold. The day that I sold it was one of the greatest accomplishments of my life. . . .Then as each month went by, and the money sat in my bank account as I tried to figure out what to do next, the regret started to set in. I hadn’t sold my company; I had sold my passion.” Many founders feel a deep sense of remorse once a sale is complete, even if they have made a truly great deal.

2. Most of the time, your “company” will becomes a “product”: Large businesses don’t normally maintain multiple independent departments for each product they sell. They already have a sales force, finance, and management – so why would they need those functions for your product? Cutting those duplicate expenses is one way mergers are profitable. The result is the destruction of the company you built.

3. Merger negotiations are stressful: Selling your company is a full-time job – and keep in mind that you already have a full-time job managing your company that must maintain its current growth rate, which is probably fast. Life’s too short – trust me.

4. Integration is stressful: Combining two organizations is like merging together two families. It’s a hellish two-year during which the acquiring firm must guess about which new business processes will work and which ones won’t. The stress is guaranteed to put gray hair on your head.

5. Your employees often lose out: The first year after a merger, your employees are uncertain whether or not they’ll be fired—stressing everyone out. They’re told by the acquiring firm how “valuable” they are. But one important caveat—they aren’t told that they are only “valuable” for the first year or two after the merger. Screw that torture!

6. The strategic fit between two companies can’t be known until they’re put together: The truth is that the acquiring company is only guessing about how successful integration will go – and they may have delusions of grandeur. Don’t assume that because a company is large and employs a bunch of MBAs and CPAs that they can foresee the future. Mergers are risky.

7. You’ll be going through a not-so-great life-change: When I sold my company, I ended up with so much stress from integration and from losing something that I loved that I was visiting a psychologist and doctors to check my overall health. These stories don’t happen every time someone sells his or her company, but my research shows it happens quite often.

8. You’ll probably want to rebuild what you already had: After selling their company, many founders, like myself, start a similar one all over again. To do that, you’ll have to grind out building a new business from scratch a second time.

9. Having lots of money is overrated; owning a growing company is underrated: Just this morning, I was barking at the employees of my “yard irrigation company” because the system isn’t working properly and my expensive plants are dying. To my mind, that’s no way to live. Having lots of money is sort of cool, but having a high-energy growth company with a good culture is really, really cool!

10. If you have a successful company, then you should have already earned money: Too many founders operate their company’s “breakeven” by investing all their operating profit into growth to increase their company’s valuation. Unless you are the next Amazon, why not pay out a reasonable percentage of profit as a dividend?

11. It’s doubtful you’ll become “corporate jet rich” anyway: Corporate jet rich means you can afford several hundred thousand a year just for your jet. Ninety-nine percent of founders who sell their companies aren’t going to obtain that kind of wealth, so just keep your company and be happy with what you already have.

12. Founders grow companies better than outsiders: A 2006 study showed that the average return on stocks of the 26 Fortune 500 firms run by founders was 18.5 percent annually from 1995 to 2005, which was seven percentage points better than the Fortune 500 average in those years. A 2010 study reported that “founding CEOs consistently beat the professional CEOs on a broad range of metrics ranging from capital efficiency (amount of funding raised), time to exit, exit valuations, and return on investment.”

The value of the satisfaction of guiding the long-term success of your company cannot be measured. When you sell out, you’re trying to quantify your creation, which doesn’t logically work. Ben Horowitz agrees in The Hard Thing About Hard Things, noting how the logical part is easy: “One of the most difficult decisions that a CEO ever makes is whether to sell her company. Logically, determining whether selling a company will be better in the long term than continuing to run it stand-alone involves a huge number of factors, most of which are speculative or unknown. And if you are the founder, the logical part is the easy part.”

To gain more valuable insight and perspectives about selling your business, check out John Warrillow’s podcast series Built to Sell Radio, a collection of well-organized interviews from founders who have sold their company. The best book on the subject is Finish Big by business writer Bo Burlingham.

By the way, I never could come up with 12 reasons you should sell your business. I’m just sayin’.

In 1999, when I started First Research, my work consisted of two things: 1. selling my product; and 2) improving my product. That’s pretty much it. I had few distractions. In Wilmington, North Carolina, where I lived at the time, startups were basically non-existent, so there were few random meetings. I’d have a meeting over coffee with an aspiring entrepreneur here and there, or lunch with another startup founder every once in a while, but it was the exception–not the norm. During that stage of my career, I was super-focused, successful, and happy. I had my niche, and that was all I needed. Fast-forward to today, and I have sold First Research and moved to Raleigh. I spend half my days juggling random meetings with vague agendas. My success and happiness have dwindled.

When contacted for a meeting, I’m unsure if people are trying to sell me something, pick my brain, look for funding, find connections, or build relationships. I’m pretty sure they aren’t looking for a friend; otherwise, they wouldn’t request the meeting take place on a weekday at 9 a.m. Most of them just create distracting white noise for me or result in additional meetings.

To put an end to a majority of these random meetings, I started charging $200 for each. Here were my motivations:

1. Focus is a beautiful thing: I recently invited my 14-year-old nephew to play golf with me, and he declined because he wanted to play basketball instead. He plays basketball all day long because that’s what he loves to do. And he’s doggone good at it. When you’re focused on one or just a few things, you become passionate about it and learn the important nuances required to be good at it. Constant distraction kills that groove. I’d rather buckle down with one or a few projects than have irons in a lot of different fires.
2. I like producing and selling stuff–not talking about it: These days, there’s too much talk and not enough action. People are spending too much time strategizing and not enough time grinding out the work, which is what it really takes to be successful. For example, Schedulefly is one of the most successful businesses I know, and their partners haven’t had a meeting in years. (No exaggeration here.)
3. Random meetings are real work: I’m not a professional consultant, but I’m working as hard as one while trying to help people problem-solving in a coffee shop. Many of these meetings require wrestling with difficult-to-solve challenges that require lots of educating and exhausting exchanges. I already have three jobs, thank you. I’ve run out of gas. At least pay me for working.
4. I’ve completed my fair share of “helping out”: I’ve complained about these random meetings amongst friends, and they say, “What about helping others, man? People have helped you. Pass it on!” Well, by now I’ve surly repaid my debt in pro bono consulting.
5. I’ll eliminate 90 percent of the meetings: Realistically, I don’t need $200, but what I do want is to find out how important a random meeting really is to the person before I book it. If the meeting is not worth $200 to them, then I probably shouldn’t invest my time either. Instead, I should be calling on prospects or building stuff.

Some of you enjoy random meetings (either asking for them or agreeing to them), or perhaps they are necessary networking opportunities for your career. If so, have at it and enjoy. Here are three best practices for contacting people for random meetings:

1. Limit the first meeting to 15-minutes: Doing so proves you respect their time and forces you to be concise and get right to the point.
2. Offer a clear purpose for the meeting: What is it that you want? What outcome are you looking for? Cutting to the chase enables the person you’re trying to meet with to prepare.
3. What’s in it for them?: Offer value to the person you’re trying to meet. Create a win-win. Here is an email I sent to David Cohen, cofounder of Techstars, requesting a meeting.

But for those who hate random meetings as much as I do, consider implementing the $200 plan yourself. It’ll save you time, fatigue, and stress. And your business will probably benefit for it. Cheers, and here’s to eliminating the white noise in your life!