Steve Woda's blog

Thank you buySAFE!

Today, I am starting a new chapter in my entrepreneurial story. It is with both a bit of sadness and a lot of excitement that I share with you the news that I have left buySAFE to pursue other start-up and entrepreneurial interests. In addition, I have joined buySAFE’s Board of Advisors so that I can continue to assist the company in whatever fashion is necessary.  Click here to see buySAFE's announcement on the buySAFE blog.

After almost nine years of building buySAFE, I am leaving the Company in very capable hands, with fresh funding, and the brightest future that the Company has ever had. It has been a deeply satisfying experience to create something valuable, and I want to sincerely thank our customers, our partners, my colleagues and the many investors who made buySAFE possible. I am obviously looking forward to my next adventure, but I am also very much looking forward to buySAFE’s continued success over the coming months and years.

I founded buySAFE after getting burned in an online transaction on eBay. As a student, I didn’t have any extra money to lose to ecommerce fraudsters, and so I decided that there had to be a better way to buy and sell products online. buySAFE was born!

This adventure started for me while I was earning my MBA at Wharton in 2000, and as with all start-ups, there have been huge successes and great challenges. For me, both have proven to be invaluable learning experiences.

Developing buySAFE’s early business/technology plan, acquiring our major financial institution and strategic partners (including two major strategic partners to be announced in the coming months), and raising our $30 million in venture capital financing were all challenges that I ultimately found to be great learning experiences. Over time, I was able to lead almost every aspect of buySAFE’s business operations, and all of these experiences were amazing for me personally and professionally. I plan to share with you many of the lessons I learned at buySAFE over the coming months.

Perhaps the thing I am most proud of at buySAFE is our team. Early on, I recruited Jeff Grass, Tim Woda, and Hans Dreyer to buySAFE. Today, Jeff is buySAFE’s CEO, Tim is the VP - Sales, and Hans is the VP - Operations. They are the core of our team even to this day. The rest of our team is amazing as well, and it has been a pleasure working with each and every one of them.

I never intended to spend almost a decade working on my Wharton class project, but along the way, buySAFE provided me with an amazing opportunity to make great friends, to learn important new skills, and to see that anything is possible with persistence and creativity. It also taught me that you can’t build a company by yourself.

Although I could never hope to name all of the folks that deserve my thanks, I wish I could. A few folks in particular - my wife, my brother, and buySAFE’s employees, customers, investors, and advisors - have all obviously been invaluable to both me and buySAFE. To all of you, thank you! I sincerely appreciate your investments in time, capital, expertise, and support. There would be no buySAFE without you.

As far as the next chapter in my entrepreneurial story, I am not ready to share the details quite yet, but please stay tuned. I will share my adventures with you here on my blog, so if you are interested, please make sure to subscribe using the form below.

Thank you buySAFE!

Related posts:

"Steve Woda, Founder and Chairman of buySAFE, Pursues New Entrepreneurial Ventures" on the buySAFE blog

"Founder of buySAFE, Steve Woda, Steps Down" on AuctionBytes.com

1 in 5 young employees want this more than money!

More money!  That is obviously what you expect your employees to want the most, but it turns out that for many young employees, freedom is what matters most to them.

1 in 5 young employees say that the "freedom to use technology how they want while they’re at work" is the number one thing they want out of their jobs.

Sam Narisi wrote a nice article on this recently, and it is an interesting read.

These employees want access to social networking sites like Facebook and Twitter.  They want to use the favorite personal devices whether that be Blackberries, iPhones or their own laptops.  They want to use the Internet for their personal business.

To be honest, I don't think this is important only to young employees.  I suspect that a large percentage of older employees would echo those thoughts.  As you manage your teams, keep these needs in mind.  It will inevitably help you lead more effectively if you can offer a work environment that caters to your employees and the things they hold most dear.

Dancing with First Round Capital

First Round Capital's 2008 Holiday Card (video) proves once again why every early-stage entrepreneur wants to find a way to meet with this terrific investor group.  Check it out! 

These guys are creative; they have been in the trenches themselves (multiple times!); they have been successful (multiple times!); and most of all, they like working with entrepreneurs because they are entrepreneurs.

I have had the pleasure of working with and knowing lots of technology investors, and along the way, I have learned a thing or two about who you want to try and work with (and what you want to avoid).  These guys are good.  Period.  In addition, their holiday video is brilliant, low-cost, and fun, and it highlights their strengths in an intangible, yet powerful manner.

Let me share one quick story that illustrates why I like these guys so much.  Although they won't likely remember it, both Howard Morgan and Josh Kopelman provided me with a helping hand while I was trying to get buySAFE launched back in 2001.  I was introduced to Howard via a mutual friend, John Tedesco, and Howard offered to meet with me in NYC and provide me with feedback on my business plan.  At the time, the venture was called BondMyAuction.  I was not ready for primetime, and yet, Howard spent two hours listening to me and coaching me on how I could improve my plan.  Howard also introduced me to Josh Kopelman.  At the time, Josh was an executive at eBay because he had recently sold his business, Half.com, to the ecommerce giant.  For no reason other than to be helpful to me, Josh also spent almost two hours on the phone giving me feedback and advice on how to proceed. 

I will be forever grateful for their assistance since I was no more than an aspiring entrepreneur with a paper napkin business plan.  Their help was both gracious and inspiring.  In many ways, they (along with a few others like them) gave me the extra motivation and confidence that I needed to stick it out through the inevitable challenges of getting a business launched.  Since then, I have tried to return the favor with other aspiring entrepreneurs because of their good example (although I am quite sure that I could never be as helpful as they were for me).

Again, check out First Round Capital's holiday video, and I think you will agree with me.  These guys are authentic, and entrepreneurs clearly have good reason to want to work with them.

Nice job Howard and Josh!  For everyone else, enjoy!  http://holiday.firstround.com/

How Do You Win a Business Plan Competition?

The short answer is that you need to be very, very good.  There are a lot of terrific, aspiring entrepreneurs out there, and so a bit of luck is useful too.  Having said that, winning isn't everything. 

buySAFE is actually a product of the 2002 Wharton Business Plan Competition, but the plan was not the winning plan.  PayMyBills.com has a similar story.  The founders and my good friends, Jeff Grass and John Tedesco, were finalists, but not winners, in the 1999 Wharton Business Plan Competition.  However, they went on to raise tens of millions in venture capital and they built a really nice business in the process. 

Simply going through the business planning and critique process is the real benefit of these competitions in my opinion.  Business plans are funny things.  Business planning is a fairly simple exercise, but if you haven't previously developed a plan, the effort can seem very daunting.  Business plan competitions typically provide basic advice to the entrepreneurs on how to get started.  The competitions also have multiple stages with each stage presenting an opportunity to receive valuable feedback from the experienced entrepreneurs and investors that are judging and/or mentoring in the competition.

The following Business Week video does a nice job of covering the basics regarding what you need to know before submitting your business plan.

Winning a Business Plan Competition | The Businessweek Video Library

In the video, the University of Oregon's Randy Swangard talks about how to win that business plan competition -- what to keep in mind before you apply, and why it's sometimes better to come in second.

The Wharton Club of New York is running a business plan competition now, and here is all the information you need to enter as a participant.  I highly encourage you to participate if you can.

Also, you might find the following NY Times article interesting.  "Beyond Grades: Business Students Put Their Start-up Ideas to the Test" does a nice job of covering the ins and outs of business school business plan competitions.

Have fun, and good luck!

Does Your VC's Fund Have the Capacity to Do Follow-on Rounds of Financing?

Another great post on TheFunded.com....

When considering a term sheet from a prospective VC, it is key to understand whether they have have the means to fund follow-on rounds. Most VCs will not do cross over funding and often startups find themselves in trouble when their VCs can not provide subsequent financing. So, it is key to determine...

If your VC's fund is having problems (financial, political, hiring or retention, etc..) or if your VC's fund is at the end of its lifecycle, you may ultimately experience artificial, unnecessary problems that you will have to navigate in the future while running your business.  For entrepreneurs, this is a very serious issue to consider before you allow an investment, not after an investment has already taken place.

Read the rest of this article at TheFunded.com: Fund Diligence Item in order to learn the three critical questions you should ask your prospective investors before taking their venture capital dollars.

Technorati Tags: Venture Capital,VC Due Diligence,Follow-on Financing,Grotech,Core Capital,The Hartford Ventures,buySAFE,Steve Woda

Post Funding Advice for VC-backed Entrepreneurs

If you have ever raised venture capital, you know how important the post-funding relationship is with your venture capital investors.  Your pre-money valuation and financing terms are all important needless to say, but to be candid, the post-funding relationship you have (or are likely to have based on a VC's previous track record) is probably the most important issue for you to consider as an entrepreneur.

An experienced entrepreneur posted a great article on the subject on TheFunded.com, and here is an excerpt of the article...

There are a lot of postings here about getting the initial term sheet and getting the VC on board. However, just like marriages, many of these courting periods can be quite different from the month to month evolving operations and business that we face a year or two down the road. Remember that often these VCs will sit on your board, and direct your business in different ways and depending on your dilution can dictate how operational decisions should be made. Thus, it is important to get an early feel from your VC dialogue, especially how they would respond if the actual business is less than the wonderful picture we sometimes paint in our pitches.

If I can give you piece of advice that you need to follow religiously in your quest for venture capital, it is that you MUST speak to the entrepreneurs and CEOs that have previously taken money from and worked with the VC firm and the VC partner that you are considering.  Do not limit your discussions to the entrepreneurs and CEOs of the successful deals, but rather, you should talk to the entrepreneurs and CEOs of the unsuccessful deals as well.  In my experience, the VCs play a critical role in both outcomes, and you need to make sure you get the full, unedited scoop before you take money from a VC.  This is absolutely critical to your success or failure as a startup.

Speaking of which, I am always happy to share my insights on this subject with folks that are interested, so don't hesitate to email me with your questions.

You can read more of the original article here >> TheFunded.com: The post funding experience

Technorati Tags: Venture Capital,Post Funding Advice,Grotech,Core Capital,The Hartford Ventures,buySAFE,Steve Woda

Daily Roundup for 2008-04-08

• Just What We Needed, Google on Speed - Google Everflux
  Is it just me or has Google gone into overdrive? As a professional full-time online marketer I have to keep my mind firmly placed on what Google is doing. As much as I try not to because Google has probably driven more people around the bend than Chrysler and Mercedes-Benz put together. Like any professional marketer, I monitor my numerous keywords on a daily basis - especially my major targeted keyword phrases that bring in the most sales and subscribers. For years now, I have had top rankings in Google for my chosen phrases; they move up and down, but mostly they don't leave the first page.


• Beam it up: Tiny projectors to magnify cell-phone cinema - Technology Review
  Recognizing that it is not much fun to watch movies on a tiny cell phone, a number of companies are racing to develop gadgets that project what's playing on the small screen onto walls, table cloths and other handy surfaces. ''Pico projectors'' that are small enough to carry around in a shirt pocket are expected on the market later this year. Eventually, the technology will be tiny enough to be built into phones and portable media players, the companies say.

So You Want to Be a Blogging Star?

I have discovered the hard way that blogging is not an easy endeavor, and this is especially true for folks that have real jobs during the day.  At a minimum, it takes time, dedication, and creativity.  I have often wondered how to others do such a great job with their blogs while still maintaining excellence in their day jobs.  To that point, I thought this article was very interesting, and it included a number of practical tips for all of us aspiring bloggers.  I hope you find this useful as well.

MARK CUBAN, the owner of the Dallas Mavericks, has a full plate. Besides his basketball team, the busy billionaire also owns part of a media company, and serves as chairman of the TV channel HDNet. He recently competed for five weeks on “Dancing With the Stars” on ABC. How on earth does he find time to blog?

Yet his site, blogmaverick.com, is one of the top 1,000 Weblogs, according to the search engine Technorati. Thousands read Mr. Cuban’s posts every single day. If he can do it, why can’t you?

Read more of "So You Want to Be a Blogging Star?" - New York Times >>>

 

Technorati Tags: Blogging,Mark Cuban,Blogmaverick.com,Technorati,Ted Dziuba,Uncov.com,Xeni Jardin,BoingBoing.net

Daily Roundup for 2008-03-19

• Woman to record industry: Stop spying
  A woman who claims the recording industry's anti-music piracy campaign threatens and intimidates innocent people has filed a new complaint accusing record companies of racketeering, fraud and illegal spying.


• Startup RatePoint bets that people want user reviews refereed - Technology Review
  One of the great things about the Internet is the way people post reviews on just about anything you are considering trying, whether it is a movie, a new restaurant or the local florist.  This also introduces one of the worst things about the Internet: trying to figure out which reviews to trust. Was that effusive praise written surreptitiously by the merchant? Was that anonymous online slam posted by a devious competitor?  The dilemma might be unavoidable in this age of abundant user-generated content, when we have to be smarter about separating signals from noise. But a startup called RatePoint Inc. begs to differ. It wants to play referee, giving consumers more clarity into a business' reputation and protecting the business from unwarranted blights on its credibility.

Daily Roundup for 2008-03-08

• Jeremy Siegel on Politicians, Prices and a Potential 'Buying Opportunity of the Decade' - Knowledge@Wharton
  The U.S. Presidential race has reached a critical juncture. The Republicans have a confirmed nominee in John McCain; as for the Democrats, Hillary Clinton has bounced back, while Barack Obama retains a marginal lead in terms of delegates. How the presidential race evolves will be shaped in part by the increasingly worrisome state of the U.S. economy. Consumer prices are rising, oil has crossed $103 a barrel and gold is nudging $1,000 an ounce -- suggesting that the economy could be entering a phase of 1970s-style stagflation. Fed chairman Ben Bernanke, however, told Congress last week that he doesn't anticipate stagflation, and he continues to indicate his willingness to keep cutting interest rates. What lies ahead for the U.S. and world economies? Knowledge@Wharton discussed these questions and more with finance professor Jeremy Siegel, author of The Future for Investors.


• Ecommerce Blogging: Who, What And When: Well-written blogs create credibility, interest
  Last month I talked about blogging platforms and the value blogging can bring to ecommerce sites. When a website makes the decision to begin a blog and decides upon a blogging platform, it will then have to decide who will blog and how often. Time allotted to blogging is also a relative issue, as is subject matter. So why bother at all?  Relative to static ecommerce sites, search engines consider blogs more real and trusted because blogs tend to have fresh content and there is a less financial, more informational link between a blog and its readers. An ecommerce site should take advantage of this tendency by adding a blog to augment the overall site.

Daily Roundup for 2008-03-07

• Sites With Anti-Fraud Sign Still Flawed - The Associated Press
  When a small padlock appears in the corner of your Web browser's address bar or the entire bar turns green, it seems like a powerful signal you're safe to proceed.  But experts say the SSL certificates those green lights signify — digital stamps of approval that Web sites buy to prove they're running a legitimate business and can send and receive encrypted data safely — don't provide the safety they seem to.  "They instill some sense of security, but that could be a dangerously false sense of security," said Paul Mutton, a researcher with UK-based security firm Netcraft Ltd.  The site itself could still be riddled with security holes for hackers to exploit. And the certificate could simply be bogus: Criminals have been forging them to get the padlock icon and dress up fraudulent sites.


• Web 2.0's Long Road to IPOs
  During the Web's heyday, a profitable Internet company nearing $100 million in annual sales while luring a million new customers a month would have found itself on the IPO fast track. But that's hardly the case for LinkedIn, a professional networking site that has cleared those hurdles and then some.  Instead, LinkedIn is hewing closely to the Web economy's new motto on initial public offerings: Easy does it. Founded in 2003, LinkedIn may not sell shares until some time next year. Likewise, social networking site Facebook, worth $15 billion on paper, may not go public until 2010,

Daily Roundup for 2008-03-06

• The Tipping Point—Web Logo Style
  The other day, a friend who runs a small business lamented that his Web site wasn't worth the trickle of business it brought in. Something told me he's not alone. In fact, some estimates have found the majority of small-business Web sites fail to generate revenue.  Which is too bad, because I think that entrepreneurs like my friend make a mistake by blaming the site itself, or even the medium of the Web. The problem, in my view, is not the site—it's the lack of trust in the company behind the site. Trust is an elusive concept, of course; the sort of term bandied about freely in Marketing 101 but rarely defined adequately since any of us found ourselves in that class. Building trust is important. Building trust via your Web site is essential. Now here comes the biggie: How?


• A VC: Thoughts On Choosing Board Members
  I am a professional board member. I've been sitting on boards for almost 20 years and I've seen a lot. I've seen some of the best board members in action and have tried to copy them. I've seen some of the worst board members in action and have tried hard to forget them.  Here are some thoughts on choosing board members. This advice is for everyone, but it's of particular use when you are a bigger company, maybe public, and need to fill your board with good people.

The eMarket for Lemons at The Wharton School

I had the opportunity to speak at The Wharton School, University of Pennsylvania last week about an article that Dr. Eric Clemons recently authored for the Journal of Management Information Systems, "An Empirical Investigation of Third-Party Seller Rating Systems in E-Commerce: The Case of buySAFE".  My presentation was focused on marketplace economics and specifically about information asymmetry, signaling, the "Market for Lemons" concept, and buySAFE.  In addition, I was able to share a few thoughts about my entrepreneurial experience with buySAFE.

As always, I had a great time as the guest of Dr. Eric Clemons, and I enjoyed hearing the passionate questions, insights and feedback from the students.  One of the students posted an article about my visit on his blog, The Un-Wharton. 

Should Entrepreneurs Worry About the Loyalties of Their Lawyers?

Should entrepreneurs worry about the loyalties of their lawyers?  That is the question posed in a recent article on TheFunded.com, and to be honest, it is a fair question.

Most venture financings have closing legal expenses in the mid-five figures, and I know of Series B deals where the closing expenses have approached a quarter million dollars (yes, you heard me right... $250,000).  At the end of the day, these expenses are ultimately paid for by investors.  In addition, within local venture ecosystems, the venture lawyers obviously do many deals with the venture capitalists in their area over the course of time.  These factors certainly create the potential for major conflicts of interest, and according to many entrepreneurs, the conflicts of interest are real.

My team has always had the benefit of terrific legal counsel, and we haven't personally struggled with this issue.  However, if you honestly assess the dynamics of the venture relationships as well as the economics of where and how corporate lawyers get paid, you will have to agree that entrepreneurs probably should be keeping a close eye on your lawyers.

As I mentioned, there was a terrific post on this subject at TheFunded.com - Venture Legal: A Conflict of Interest and a Complicated Mess.  The author of this post hit the issue right on the nail.

How to Answer the VC Valuation Question

Over the last few years, I have presented to dozens of venture capital firms while fundraising, and inevitably, the venture capital investor always asks you what valuation you are looking for.  This reminds me of that job interview question we have all been asked... "What are your biggest weaknesses?"  There really isn't a right answer, but there sure are a lot of bad answers.

Stu Phillips does a nice job of explaining how to answer this important VC question on his blog, Soaring on Ridgelift. 

One hint... Don't answer the question! 

Well, there is actually more to that conclusion, but you can read the details in Stu's blog post, The Valuation Trap.

Nice post Stu!

Core Capital Invests in $20M Round for NextPoint

Core Capital Partners, a venture capital firm that has invested in a number communications infrastructure companies particularly focused on the IP and VoIP, announced its participation in a $20 million round of funding for Gaithersburg, MD-based NextPoint™ Networks, Inc.

According to the investment announcement , NextPoint will be the result of the recently announced merger between NexTone Communications Inc., a software-centric session border controller and session management provider, and Reef Point Systems, Inc., a mobile access universal convergence gateway provider. In addition to Core Capital, other investors in this round include the round lead investor, One Equity Partners, the private equity arm of JP Morgan Chase (NYSE:JPM), as well as American Capital Strategies (NASDAQ:ACAS), Jerusalem Venture Partners, Safeguard Scientifics (NYSE:SFE) and Summerhill Venture Partners.

Read more about Core Capital Partners >>
Read more about NextPoint >>

The eMarket for Lemons and The University of Maryland

Last week, I had the opportunity to speak to a few hundred business school students at the Robert H. Smith School of Business, University of Maryland.  Michael Beveridge, buySAFE's VP of Business Intelligence, joined me in speaking at the invitation of Professors Guodong (Gordon) Gao, Peter Weiss, and Mingfeng Lin.  The students had previously read "buySAFE - Creating and Profiting From the Bonded Seller Advantage", a case study on buySAFE authored by Wharton professor, Dr. Eric Clemons.  Here is the presentation that Michael and I shared with the students... "eMarket for Lemons - The Economics of an Evolving eCommerce Marketplace".

As always, it was a terrific experience for me.  The students were extremely prepared, and they had definitely done their homework on buySAFE, information asymmetry, and the ecommerce marketplace in general.  If you ever want to get an excellent sense of how well your marketing efforts are working or how well you are educating the market about your solution, I highly recommend inviting a couple hundred college students to study your product or service and let them give you feedback.  I loved it!

Read more about Dr. Guodong (Gordon) Gao >>

A Few Interesting, Recent eCommerce and Entrepreneurship Articles

Good morning everyone!  If you know me well, you know that I am a voracious reader of anything and everything that I believe is interesting or useful either personally or professionally.  My colleagues will attest to the fact that their Inbox usually has at least one article that I have recent found that might be useful for them or buySAFE. :)

Today, I have been catching-up on my reading list, and I thought I would share with you a few articles that I found interesting.  Hopefully, you will some of the info interesting as well.

Steve

The Wharton School and Entrepreneurship

The Wharton Business Plan Competition took place earlier this month, and NP Solutions was the big winner for 2007. The new venture took home the $20,000 grand prize for a business that provides a polymer based injectable hydrogel treatment for back pain.  Obviously, I wish these folks a bunch of luck with their new business.

As you may already know, I am a big fan of these collegiate competitions.  buySAFE (formerly known as BondMyAuction) is a product of the Wharton Business Plan Competition, and so I can speak from experience when I say that these events can be very useful in getting entrepreneurial ventures launched.  I actually entered the business plan competition in 2000 and 2001 with different ventures as a student.

Then after graduation, I teamed up with Peter Niessen, a 2002 MBA grad, to enter BondMyAuction in the 2002 Wharton Business Plan Competition (You need at least one current student on your team to participate, but the rest of the team can be alums, etc...).  Peter was a terrific teammate, and he and I were able to make it to the Finals of the competition.  Again, it was a great experience, and you can read about it in this recent article by the New York Times - "Beyond Grades: Business Students Put Their Start-Up Ideas to the Test"

One last interesting note for you...

Jeff Grass, buySAFE's CEO, was also a finalist in the Wharton Business Plan competition in 1999 along with his business partner, John Tedesco (John is currently the CEO & President of Guardian Mobile Monitoring Systems).  Jeff and John launched PayMyBills.com shortly after graduation, and they ultimately sold the company to PayTrust in 2000.  Today, the company's service is owned by Intuit, and it powers the bill payment and management solutions for some of the country's largest financial institutions.

Needless to say, collegiate business plan competitions can provide aspiring entrepreneurs with a generous leg up on the formidable challenges of starting up a company out of school.  For me, the Wharton Business Plan Competition experience was invaluable.

buySAFE Founder Guarantees Delivery by The Washington Times

The Washington Times recently did a nice article on buySAFE, and of course, I appreciated the generous coverage as well.

"buySAFE Founder Guarantees Delivery" by The Washington Times

I hope you enjoy the read.

Related articles & blog posts:
AuctionWire
TMCnet

The "Beltway Money Man"

Forbes Magazine recently called Core Capital's Jonathan Silver the "Beltway Money Man".  Jonathan is an investor in buySAFE and on our Board of Directors, and so I thought the article was a pretty interesting read.  Here is the link to "Beltway Money Man: Jonathan Silver".

Legendary VC and Entrepreneur, Vinod Khosla, on Entrepreneurship

I recently spoke at Wharton, and one of the students asked if I could periodically post on my experiences as an entrepreneur.  I thought it was a great idea, and so here is my first of many thoughts on entrepreneurship.