 This is Think Tech Hawaii, Community Matters here. Guys, and we are back live here in the studio with Think Tech Studios Hawaii. This is the Prince of Investment, right here live, and I'm your host, Prince Dyches, and we're here on Episode 12, and we still haven't gotten canceled. So that's always a good thing. But as you guys can already see in the description box, as you guys can see into the title, whether you're here from the podcast, watching it live, just watch the replay on YouTube, Facebook, Twitter, Instagram, whatever the case may be. You guys see in the description box, we're going to be talking about one of the most essential things out there, starting a business. Entrepreneurship seems to be so cool and easy and all that good stuff like that. But getting started, getting the ball rolling sometimes could be a heck of a situation. So today, we're going to talk about how you can start a business and doing it successfully. You need to start one, but to do it successfully is a different story. So today, as always, I brought on a very, very special guest to come in and talk about this, Ms. Ellen Seminole. And if you don't know who Ms. Ellen Seminole is, she is one of the founding vice presidents of Yahoo. Before that, she started Frontier, and she sold a company to Adobe for hundreds of millions of dollars, 500 million, I think, or something like that it says, reportedly. She's done so many phenomenal things around Silicon Valley and all that great stuff. So we're glad to have her here today. Ms. Ellen, how are you doing? Awesome, awesome. Now, for people out there who don't know who you are, I know I just gave you an introduction, but can you kind of give people a background in your business and you into the business world, all the great things you've done so far? Princeton and economics, I've done the whole pre-med curriculum. My father swore to me that that would be useful to me, and I'm still waiting. I have an MBA from Stanford Business Development, as well as another bunch of their various business units, so we took that company from handful of employees to a much bigger company. Then I ran Efficient from Spear, which was one of the very early algorithmic restrictions in marketing firms. Thank you for the flood. We wound up selling that company from almost half a billion dollars to Adobe, and now I'm CEO of Shrews and I'm in the online education world. Oh, wow. That's a very, very impressive resume. What was your education from having an MBA from Stanford and going all the way to building an Efficient Frontier to selling the company for half a billion dollars and stuff like that? You've seen a lot of things from the ups and downs, especially, are you in Silicon Valley right now? Is that correct? I am in Silicon Valley. I'm in California. Okay. The thing about it is when people want to get out, they want to start a business, are they thinking about starting a business? One of the first things a lot of people have issues with is financing. Hey, I have this great idea. It sounds good, but getting the finances, because if you don't have the finances to create the products or the material or anything like that, what would be your advice or what would you have to tell someone to even try to get started in a situation like that? I've always been associated with, had what you call very early traction and were stressed before they actually ever raised financing. The biggest challenge is the less you have and the more expensive that money is in terms of both the valuation, the terms, and the life. The more traction you have going in, the easier it's going to be for you to raise money to build up a company. So let's take some examples. With Yahoo, one of the biggest things that Jerry and David did when they signed the company was they actually were students at Stanford. So if you're a student today and you can be in a position where you can get something going while you're at school, that's it. Because your room is covered, usually your food is covered, and you can actually get some of the hardest visible signs of progress before you have to raise real money. So even financing, which is very early state financing, the problem is if you can't track as long as you can before you stop raising money. Okay. So what you were saying there is pretty much the best way to do this is to get traction first. And for someone out there that says traction, what does that mean? What do you say traction? Well, you have a lot of users. If you're a consumer based site and you can show that you can attract users and be viral in some way shape or form, that's one way to get traction. Two is to have customers. So if you can get one or two customers or you can get a couple advertisers if you're a consumer based business, just to show that you have a revenue model and that you tested it in a little sort of business development deal where you can come partnership with a bigger company. But the revenue isn't that right away. It should show that there are people who want to work to have some practice. You can get some of the right about the concept and the revenue concept, whether it's... Okay. So essentially you say instead of trying to see financing first to go out and start a business where most people think, hey, I need a crap ton of money or whatever the case may be. You say, hey, the best way is to go out and start traction first whether you start a website or whatever the case may be. Get some users, some people to download it if it's an app or if it's a game or something like that to prove you have traction first, then maybe go out and seek finances. Is that correct? That was difficult. Unless you're a business employee, please invest and see from them. Yeah, that's got to make sense. But as soon as we're going to do, we're going to take a quick break, quick one-minute break, and we're going to come right back here live from Honolulu, Hawaii with the Prince of Investing, and this is your host, Prince Dix. This is Think Tech Hawaii, raising public awareness. Hello Austin here folks, your host on Where the Drone Leads, our weekly show at noon on Thursdays here on Think Tech. We talk about drones, anything to do about drones, drones, remotely piloted aircraft, unmanned aircraft, whatever you want to call them, emerging into Hawaii's economy, educational framework, and our public life. We talk about things associated with the use, the misuse, technology, engineering, legislation with the local experts, as well as people from across the country. Please join us noon on Thursdays and catch the latest on what's taking place in the world of drones that might affect you. Guys, we're back live here at Think Tech Studios, Hawaii. I'm your host, Prince Dix. We was having a little bit of technical difficulties there with the audio, but we got that all straight now. And plus, on top of that, we still have Ms. Ellen Simronoff, one of the founding vice presidents. She says, yahoo, here, live with us. Now, one of the things we wanted to mention that she was speaking about early, people always say, hey, I need to have money to be able to start a company. I need all this money to be able to start a business. And she said, hey, first create a product, get some traction on the product, then go out and seek people that may want to invest in your product to seek the funding that way, which is great. So if you do get investors, that's great. But now I have a question. Now, you can do, I don't know what the key to success is, but I do know you will never get there alone. You need other people. You need the right people. Now, when you're going forward and stuff like that, my question is, what do we have to think of as far as building a team? When you build your team, when you find people, how do you find people? Let's say if you can't afford them. What do you have to say to that, Alan? When you're looking to build a team and maybe you may not have the funding to pay everybody like you would like to pay them. Any good entrepreneur, hopefully you have a good idea. And if you have a good idea, your first sale is really to sell others to work with you and to be excited about your idea. In almost any company that's in Silicon Valley, you need a good tech lead. So either you have technical chops or you need to get someone who does it. The second is you want to have someone who can help with sales, marketing, those kind of things because you're going to want to get either users or revenue in one sort of way. There are lots of other positions that are really important, but that's the start. I mean, obviously, depending on what business you're in. The key is you're going to have to sell people on your idea because if you can't pay them cash, because we've just talked about we want to put points on the board before you actually go out and raise money, then you're going to have to give them either very low salaries, that they're going to just have to believe that if the company does better, you'll increase what you pay them. Or you're going to have to give them equity in some way, shape or form in the company. And that can be in the form of stock outright or options. But at the end of the day, a lot of wealth can be created that way, but also it's risky for the people coming on board. So they have to really believe in what you're doing. Okay. So essentially, now, sometimes you have people that say, hey, well, you have people that may come around, right? They may say, hey, well, I can provide a service that can potentially help your company, maybe help do some type of service where bringing more customers, maybe get some people to sponsor all that great stuff like that. Do you look to pay those particular people or would you rather just say, hey, maybe give them stock options and use that money to market? What would you say? Or would you just try to find a team that really believes into the company and give them equity in the company? You can give people some mix where you can give them some cash so that they can feed themselves and some equity in the company. You generally want your early team to really be on board. The best way is if they feel they have a stake in the company. The more they bring in in terms of experience and expertise, the more you're willing to pay them in terms of the company or in terms of cash if you have it. The key thing to keep in mind with any early-stage startup is likely you will be raising a big around at some point so everyone will face some level of dilution, which means that they'll accept some other investors and the pot will get a little bit thinner. So you really have to think carefully about that early team. Okay. Why do you say the early team is so crucial? Because at that time you're kind of selling an idea and a concept both to the marketplace at large and to potential partners. And you want people who are on board who are excited, who are going to work hard because it's rarely a 9-5 job and who are going to help you execute. If you have a company of a thousand people and one person is a stinker, it's not going to kill your company. If you have a company of five people and one person is a stinker and that person's in charge of a pretty big function, that's a problem. So be very crucial about the team and if you can't afford to pay your team either, you know, they have to take a pretty low salary or factor off giving them equity into the company. Now, those don't want to say hey, I have a company and they may start at LLC or whatever they may start. How will one, you know, they may not know the steps to how do I give away equity in my company? Do I need to get a lawyer? What would your advice be on that? We actually have a great section if I can plug my company Schmoop at www.schmoop.com We actually have a great area on finance and we're building out more and more every day about how do you structure a company. And there are a lot of different formats where you can structure a company. There's limited partnerships, there's different corporations that you can set in place and there's full partnerships. All of them have different levels of liability and control and you have to decide which way you're going to go. You definitely want to probably go in a direction where you're going to have limited liability. So either a limited liability corporation or a full corporation in general. In terms of how you structure it there are lots of pretty inexpensive ways that you can set up a company in its early days. There are legal services that you can do online. There are lawyers that you can go to who can do this relatively inexpensively. It used to be really expensive to set up a company but it's a lot easier today and a lot of it can be done online. Got it. So you said www.schmoop.com www.schmoop.com Okay you actually have a finance course there online that one can take and help them to see what they will like to whether they want to go to LLC, a limited liability incorporation or whether the case may be that sort of thing. Exactly. We have a full range of different educational topics and finance is a big one. One of the areas we've discovered is that people don't often take a finance course in high school and some people are afraid to take one in college. Yet it is probably the single most important skill that you need to have. We all take out eventually that either you're signing a rental agreement or you're signing a mortgage but eventually we all need to understand finance and if you don't understand how to set up your company how can you grow and build it and you're likely to have someone take advantage of you which is just terrible. Wow. Very great point there and you know to get the education and get the financial education and the financial literacy show somewhere that someone can tune in and listen to someone who's been there done it at a major level and all the other great stuff. Now when you say shmoop what made you go from building you know algorithms to you know sell pretty much like what we know as Google ads today selling this company for half a billion dollars from Yahoo being in Silicon Valley to hey you know what education platform we got you into that. And I think there are a couple times in your life you get really interested in education when you actually are getting educated yourself although at that time you might not be as interested in education as you are getting through it when you become a parent and apparently when you become a grandparent because you really care then and one of the things I noticed is that there's not equal access to awesome educational materials in this country and around the world and we wanted to provide really great materials that students would actually use so everything about shmoop takes the education part very seriously but we're fun and funny and built for the digital age so our view is studying for the SAT learning about finance learning about math and literature shouldn't feel like a root canal it should be interesting it should be fun and you should be able to learn it without being in pain that is very true because I was looking around on your site and I saw that it wasn't typical hey you know here's this big long power porn here's this big long pdf file you got to read all through it with books that are gigantic you know it was very very keen stuff that you can use and utilize so it was and it was fun you know it was like fun and you know you have some animated stuff there and it wasn't approaching it in a you know funny dorky type way versus what we know is oh education is usually I have to finance I have to learn all these formulas and go through this you know massive program where the case may be whereas this is just taking it and making it simple so we like to think of it as storytelling so we actually run through various companies and we make up our own company names to show people how you would finance a company or how you would understand what a stock option is which is probably one of the more important terms that someone should understand but if you make it mind numbingly boring no one's going to engage in it we live in a world today where students and all of us quite frankly are used to constant communication lots of video lots of engagement and we need to expect our learning resources to act in the same way and that's very true where we live in the age now everything is fast we have so much information at our fingertips via social media via all our phones and stuff like that now that everybody carries around 24-7 but now we can have so much information where sometimes it can be too much information and that's great that you found a new way to attack it and bring it now for someone out there that's interested and want to take a course how much does the course cost? Actually it's an all you can eat unlimited models so for under 25 bucks a month you can take over 400 courses and if you finish in a month you're great and if you want to continue you can do that we also now have community college accepted courses on Schmoop so you can actually get credit towards your degree so we're really excited about that Awesome so you could sign up for parents during the summer time they could take a course paid 25 bucks a month and maybe the kids can sit down and take an online course for the whole month or the summer have access to anything they want to take for the whole summer In fact one of the things most parents find is over the summer so many kids go backwards in school and they spend the first three or four months of the next year relearning material that they had learned the year before just because they weren't exercising their brains enough over the summer Okay that makes sense Well that's great on top of that we're building Schmoop to building things like that Now let's go back to our original topic of having your own business and starting stuff like that What are some of the most common pitfalls that you see people fall into and what are some ways they can avoid them The biggest pitfalls people have is not being thinking about the growth of the market and how big a market they're trying to reach and how to go after that market So I think some people go into it without doing some basic investigation is how big is this market and how do I make money in it That's sort of the first problem people face The second problem people face is that they don't think about what kind of people they need to make the team great and for me I am what I call an opportunistic hirer When I find someone awesome and I think they're going to impact the business I try not to worry as much about like is there the perfect job for them as much as I give them a bunch of stuff that needs to get done and when there's awesome people they'll get it done So you say don't try to hey this person is not fitting in this way, fitting in this way you're just saying hey just find great people and great people will do just make it happen There's nobody who's a great person who will not like find a way to make them self-worth file So I mean don't hire 100 people if you don't have any revenue but if you find one or two people who you think are game changers got it that's a very smart way to look at it most people look at the particular skills to say hey this person needs to have I'm looking for this particular person this is what I need to have but that's the way you look at it and say hey just find great people and if you have great people then you can just if you have great people good ways to get the job done and then you know with me I'm very big on honesty and integrity and I think that's crucial when you're starting out in the beginning phases because you could have someone that could be great at a technical piece but they don't have the honesty and integrity and like you said when you're so small it's so crucial that you could end up losing your whole company based off of you know like I forgot the words you used earlier so you got one stinker so if you got one stinker that doesn't have the integrity at the beginning phases that can be very detrimental to your company versus you know if you have someone with honesty and integrity that believes in what you're doing and believe in the mission that can help you out tremendously and you made a great point because in the beginning phases people are going to be multi-tastic you know they're going to be making phone calls sending emails setting up things and they're going to say yes people are not going to follow through and they have to be pretty resilient to be able to make it do that stuff I totally agree that you need people who are ethical that's just a very important point especially because today sometimes the people who work with you won't be necessarily located in the same city I mean we're finding that a lot of people you know outsourced other countries or other cities to work remotely and a lot of it has to do with trust and integrity and having just a team that's really dedicated that's very true Alan is there anything else you want to say here that you want to leave the bands and listeners and follow-up isn't your research there awesome shows like yours plus your podcast where they give a lot of great information and people should remember to do their homework starting a company because there's so much fantastic information out there that you can draw on got it all right lenders and gentlemen and children who are listening around the globe my name is Prince Dykes this is Ms. Ellen Semenoff we want to thank her for taking time out of her day to sit back you know out of her business skills as well as accomplished as she is to sit back and give you so much knowledge and things like that you kind of hear some stuff that you you've heard before but it's not a bad deal to hear it again I'd like to hear it again so I learned it a lot personally I hope you guys took away something from it as always guys this is Prince Dykes this is The Prince of Investment until the next podcast, video, cartoon, book whatever you see me do crazy around the globe peace be safe and I'm out thank you