G3 iVentures Releases First iPhone and iPad App

April 27, 2011: G3 Systems, Inc. gets our first App approved for the App Store in iTunes. This iPhone and iPad optimized application launched on April 18, 2011 in the Android Marketplace and is now actively selling on iTunes. This App is the culmination of nearly a year of work on the new patented G3 Systems mobile architecture application as well as nearly a year collaboration with best selling authors Ralph Alterowitz and Jon Zonderman on the content for the App. This should be the first of many new Apps that G3 and Alterowitz/Zonderman (A to Z) work on together.

Download it for yourself and try it out.

Two Fundamental Questions!?

One of the things that I always find fascinating having looked at over 200 deals in the last 10 years and having invested in 20 of them is that there are two fundamental questions that seem to go on during the exchange between entrepreneurs and investors; 1) How smart does the entrepreneur think he is? AND 2) How dumb does the entrepreneur think the investor is?

The most fascinating exchanges typically happen when the entrepreneur thinks he (or she, but mostly he) thinks he is the smartest guy in the room. He will typically try to impress everyone in the room with how smart he is and will strive to defend any point to the bitter end. They are often very impressed with themselves and with what they think they are capable of or what they have done before. Typically, they have had their 15 minutes of fame and will never have lightning strike twice… at least not with that attitude. The best exchanges have happened with folks that are experienced, confident and listen more than they talk.

The second question about how stupid those of us looking to invest might be is always an interesting one. Most entrepreneurs have ridiculous ideas of how far along they really are, how much money they really need and what it is all worth. Everyone thinks their business is worth millions, or at least hopes so, but very few understand or appreciate exactly what it takes to build millions in revenue and continue to build value. Typically entrepreneurs will have projections that are too optimistic and gains are not based on logical or defensible positions in the market supported by current market conditions and the real length of sales cycles.

The ironic thing about both of these questions is that either the entrepreneur thinks that the investors are dumb, careless or superficial (and some are) or you have to assume that they they don’t actually know what the correct scenario really is. Either way, they don’t get my vote, or my money. Educate yourself, become comfortable with the reality and the simplicity of your business model. Explain it to your mother-in-law. If she doesn’t get it, then neither will your customers or investors. If she does get it and wants to invest, then call me.

ESBI Quadrant

ESBI Quadrant by Robert Kiyosaki, Author of Rich Dad Poor Dad

I have been a longtime fan of Robert Kiyosaki and his book Rich Dad, Poor Dad, but one of the key concepts that Robert puts forth in his more recent works is the ESBI Quadrant shown here. This is meant to illustrate the 4 basic states that a person can aspire to.

E = Employee
In the upper left, the Employee is the heart of a business and good employees are critical to the success of any good business. There is nothing wrong with being an employee, in fact those of us in the other categories could not survive and thrive without them. In too many cases, the employee is not fully appreciated. Almost everyone will start out in this category. You work for someone else and you get paid by a business owner for the work that you do. In most cases, you have to show up in order to get paid. Your job is only as secure as the company that you work for and as too many people have learned in the last few years you can be terminated at any time for any reason, even for reasons beyond your control. I got my first job at age 10. I worked in my father’s business on weekends to save money. By 13 I was opening and closing the business on Sunday from 10AM-6PM. By 18, I was running operations for his international corporation in 38 states and 14 countries. I quit that job to go back to graduate school in 1987.

S = Self-Employed
Many people believe that being self-employed is the personification of the American Dream. I think those of us who have been there and done that might agree, but also would be quick to correct everyone on the misconceptions surrounding it. As an employee, you typically will work 40 hour a week and between 1880 and 2000 hours per year. When you are self-employed you can expect to work as much as 60-80 hours a week and if profits suffer you are always the one who suffers right along with it. If you go on vacation for 2 weeks then no money gets made for 2 weeks. The business at this level is dependent on YOU and on YOU showing up every day and getting it done. In most cases, you have gone from being dependent on a company to being dependent on YOU, but most self-employed people would say that they feel they are a slave to their business. They don’t own their business, their business owns them. If you have ever been self employed you will find that there are special rates for insurance and financing (read as HIGHER) for the self-employed. It may sound like a great idea, but the faster you move from the world of the self-employed to being a business owner the better off you will be. I started my first company in 1993. We didn’t show a profit the first year we were in business until I realized that if we didn’t show a profit then we wouldn’t be around long to support our clients that needed us. So, we have always had the mission to support our clients by making a profit so we can serve their needs best.

B = Business Owner
The next step in the evolution is to move from being an E or an S to being a B. The Business Owner is one that owns a business that runs without his/her direct 24/7/365 input. This business is one based on processes that drive the success of the business forward. I started my first business in 1993, but we didn’t start to adapt the processes necessary to get it to a B until nearly 10 years after we started. I am grateful that I learned my lesson early enough to transform our business into something with enduring value.

I = Investor
I have seen this final quadrant commented on in a variety of ways, but for me and in my personal experience, it is more about investing in businesses than in stocks. I have made good money in the stock market over the last 20 year, even in this down economy, but I have made 3x that much in real estate over just the last 10 years. That said, the money that I have made in stocks and real estate is nothing compared to the value that has been built in the companies that I have started, launched, helped or owned. I started my first company in 1993, but my second came along in 1999. My third in 2004 and my fourth in 2007 and my fifth and sixth in 2010. Aside from these companies, I have an evolving interest as a minority investor in 4 others. By taking the money that I make and using it to build value in other companies, I have been able to take $2 Million over the last 10 years and turn that into $100 Million in value for these 10 companies. If you assume a return of even just 10% then the $10 million that is returned is 5x what I put into them. It is also much more than I have ever made on the stock market or on real estate. My advice to everyone is to work hard, and to save your money to invest in building value in as many businesses as you can so that you too can live the real american dream.

So, in you are working in a job right now or you have recently been laid off. Don’t immediately think of starting your own business as a way out of this problem, you are likely trading one set of problems for another. That said, work hard and save your money and even if you don’t start your own business or buy another business, you can potentially invest money that you do have in the success of other businesses. I encourage everyone to seek out your local Angle Investor Networks, but not for the purpose of asking them for money, but for the purpose of investing in other businesses. The rules for a qualified investor have changed, but the rewards are still as good as ever. So, do your research and educate yourself and understand how to move from E to S to B and eventually to I in the quadrant chart.

Know Your TRL (Technology Readiness Level)

I typically review around 200 deals a year. I narrow that down to 20 that seem fundable. And I fund 2 of them. What separates a good idea from a fundable deal varies based on investor, but for me, the focus is not management team or patents or any of the typical criteria… For me the primary basis is TRL (Technology Readiness Level) and how it contributes to ROI (Return on Investment). For me, it isn’t so much where a technology is at but fast and how much money will it take to go from TRL 1 to TRL 8.

Company A comes to me at TRL 3 (typical) may be looking for $200,000. But that $200,000 may only get that company from TRL 3 to TRL 5. After that it will require more money to get tomTRL 7’and even more to get to TRL 8. By the time you are done you have invested $2 Million.

On the other hand, Company B might have an idea that is only at TRL 1 but can get all the way to TRL 6 or TRL 7 with only $200,000 or so. Even if it makes 50% of the total return it still MAKES more ROI.

At $20 million in sales, Company A made 10x the initial investment but did so in 3-5 years with 3 rounds of investment. Company B on the other hand made 100x the initial investment and did it in 2-3 years with only 1 round of investment. That is less risk, less dilution and 10x the normal 10x return. So, it pays to know your TRL!