What Happened in Venture Capital over the last 10 years?

For the last 10 years venture capital has been polluted.
Polluted by people with money posing as smart money managers.
They are not intentionally trying to deceive anyone, they just don't belong in the industry.

Many new venture funds were started by smart engineers, marketers or business professionals that provided tremendous value to successful public and private companies. They understandably took that money and wanted to put it to work to help other entrepreneurs succeed. Don't get me wrong, some have done very well.. but many more have failed miserably.

The challenge is that Venture Capital and what it was meant for has been changed and the definition of "technology" is now associated more with websites than actual technology like data infrastructure, microchips and operating platforms.

Venture Capital was meant for businesses that require significant capital to build infrastructure, create real intellectual property or acquire tangible assets with quantifiable value.

Best intentions aside, what does this really mean for the industry?

It means that the funds with real returns and true financial management experience are battling for investment dollars, making it harder to put the money in the hands of those that can do more than just write a check.

The real Venture Capitalists understand that it is about much more than the money; it is about the support, the network and the ability to spot real management talent.

Consumer Engagement... What does it really mean?

Consumer engagement all too often is defined as "a means to a sale". But that is not what engagement is all about. Think about the steps in a successful, committed relationship.

1. Dating: All fun, mostly chemical with no ties, commitments or loyalty.
2. Boyfriend/Girlfriend: The decision to be exclusive. This decision usually stems from the belief that there is the potential for something more, that the partner has special qualities not easily found elsewhere. There is a commitment here, but the potential to find something better is still a real possibility.
3. Engagement: Showing a willingness to commit exclusively to one partner for a lifetime. This requires trust and a feeling of equal participation in the future of the relationship.
4. Marriage: The binding commitment to one partner for life.

I know that the divorce rate is very high, but focusing on getting to the point of engagement is the key as there are very few things that are truly permanent in this world.

To truly engage with any product or person there must be trust; trust that the reward is greater than the risk and trust that there is the ability to have an active role in the future of the relationship. Trust comes down to the person or brand; if you can't deliver, don't make the promise. If you can deliver, engage the consumer in the vision. Make them part of the decision making process and they will be a part of the process, rather than just a potential customer.

Viral marketing stems from consumer engagement. People share what they are most interested in; themselves. Allow your brand to become part of a desire to interact, enhance social status, improve health, etc... and you will find consumers sharing your message as if it were their own.

Facebook, the iPhone.. all of these are but mere channels to reach consumers. So the next time you think about how many different ways you can spam potential customers STOP! step back and ask, what message would I share willingly with my friends and family?

Making Money in a Down Economy

The phrase "this is when the rich get richer and the poor get poorer" is only as true as each investor makes it. It is true that having enough money to continue making investments has an impact, but it is all relative.

All of us know someone who lost 40%+ of their net worth over the last year, the question is have they done anything to recover that loss?

As an example let's say you lost 40% of $1 million when the market tanked. When the Dow was at 6500 you could have bought into quite a few stocks that were down but were key to the recovery of the U.S., in other words, if they failed things would have gotten a lot worse. These investments, AIG and CITI for example, would have provided an average of ~550% return within the first 90 days after the stock market bottomed out. If you would have taken ~15% of your remaining net worth and invested that money in these two stocks you would have recovered the 40% you lost and been up. It may seem like this sounds easier then it really is... you know hindsight is 20/20, but at the end of the day managing your money is up to you. Trusting a low level number cruncher or customer support rep at some money management firm is not going to get you your money back... no offense to them but these are the same people who recommended or were invested in Madoff.

Anyone can make money in an up or down economy. To be successful with any investment you have to be willing to do the following;

1. Put some money at risk, no matter how small. Too often we get caught up in the thought that we need to look for an investment that can provide a 300-400% increase on a minimum of $50,000 or it isn't worth the time. I will use a baseball analogy here, if you hit a bunch of singles you will score runs. Grand slam or strike out is not a smart way to invest money. Start somewhere and realize that you won't get rich overnight but in time you will build real wealth and your money will be working for you.
2. Spend the time to understand where you can get the best return for your money. Don't just blindly trust anyone with your money. The great thing here is that with the internet and many talk shows you can hear what the true investment experts think are good investments and why. You can follow their advice for a while and overtime you will learn what to look for.
3. Pay attention. Managing your money is an ongoing commitment. You can't set it and forget it. Once you set up an account with one of the online trading platforms you can track your investment performance and set sell maximums and minimums... which leads into the final step.
4. Stop making excuses... Start today! There are so many great tools out there to track your investments and minimize losses. TDAmeritrade, eTrade, Schwab... You can get started with any one of these sites in a couple of days and with less than $100.