Seth and I were recently invited to present OnCard Marketing and our iBakeSale program at a conference in Stamford CT on May 15th. It is a very exciting event that is focused on bridging the gap between the business world and the tech world. There are going to be speakers on a variety of topics and a few key presenters (one of them is us). Our focus with is to connect the tech, non-profit and business worlds and fits well with the theme of the conference. We are very appreciate to Valorie Luther of Creative Concepts for giving us the opportunity to share iBakeSale with all the business, tech and non-profit executives in attendance. Check us out on their website by clicking here. You can check out the conference home page here. We look forward to sharing the experience with you all on May 15th.



For other Entrepreneurs out there: Advice on benefits

I’ve been reading a lot of entrepreneurial blogs out there and found that the topic of “benefits” is rarely discussed. Most cubicle entrepreneurs, otherwise known as corporate employees, are used to a wide variety of benefits, ranging from health-care, disability, maternity leave to other forms of insurance. The larger your employer, the cheaper and larger variety of benefits you’ve probably received. This is likely to spoil just about any entrepreneur who is struggling to pay health-care insurance for a party of 1. The remainder of this post will hopefully address some concerns by cubicle entrepreneurs regarding the anticipated costs of these corporate benefits once they pull the plug and head off on their own.

The entrepreneurs best friend in the benefits world is the U.S. government. Their is a law called COBRA that entitles any corporate employee up to 18 months of continued health-care coverage once he/she leaves the company. The good news here is that you will get your same health-care coverage at a fraction of the price it would cost you to purchase on your own. For example, I worked for Citigroup before taking the plunge to start OnCard Marketing. I had United Health Care Choice Plan A insurance (whatever that means) and was paying these health-care costs pre-tax out of my paycheck.

When I left Citigroup, I had to fill out a COBRA form, which they provided to me, that entitled me to continue receiving my United Health Care Choice Plan A for up to 18 months. The catch here was that I would need to pay the full premium, whereas before, Citigroup was paying for part of it. In the end, I was able to continue my great health insurance at approximately $420 per month. Yes, that’s expensive, but there are many cheaper plans out there from other health-care providers (which was one of the best). At the most expensive end of things, a new entrepreneur leaving the corporate world probably spends about $470 per month, including health insurance and dental insurance (that’s if you had both beforehand).

The downsides of COBRA are timing and flexibility. First, it’s only good for 18 months, so you’d better have a plan B for obtaining coverage after that time. Maybe you have a wife who is a teacher or employed by somebody who would give you family coverage. Second, COBRA is not that flexible. Once you cancel your plan or part of your plan (dropping the dental coverage for example), you can’t re-add it. So make sure not to cancel the health-care coverage and be sure you don’t need dental if you decide to cancel. You’ll never get it back.

The upsides to COBRA are numerous. The first big perk I wasn’t aware of before leaving Citigroup was that Citigroup actually paid for my first 3 months of coverage ($470 per month) and split the second 3 months with me 50/50 ($470 per month). After month 6, I decided to drop my dental coverage and continue to pay $430 a month for health-care. While this is expensive, going without health-care coverage is a pretty stupid idea and I wouldn’t recommend it. Like I said, there are other cheaper provider out there that might run you $200-300 per month. But these are high-deductible plans that will cost you money every time you go to a doctor and are only useful if you end up in the hospital with a huge problem.

So COBRA takes care of you for 18 months. The only question is, what are you going to do after 18 months? There are a few options. You’re best bet is to obtain a high-deductible plan that will only pay for itself in the case of emergency. The problem you face is that nobody will want to give you health insurance as a party of 1 or 4 (if you have a family). It’s all about risk diversification for the insurance companies. They’ll make it much cheaper if you’re part of a group of 10,000 than if it’s just you. So, the sad reality is that if you are lucky enough to obtain health insurance after the 18 month COBRA is up, it will probably be really lousy. You may find that you are just “un-insurable” as a party of 1. Don’t be surprised. Health-care companies have figured out that if you’re one person looking for health-care coverage, you probably need it (which means huge loss for them).

Here are some good resources for COBRA and other healthcare providers.

I hope this helps those of you out there looking for answers on this topic.

This is a follow-up post to a prior discussion on partnerships in The Beauty of Partnership

Choosing a business partner can be the most important decision you can make for your start-up, since it truly is a long-term relationship that is hard to get out of if things turn South. Many people say it’s like a marriage of sorts, and I would have to agree. You share the ups and downs and all the financial responsibilities and ownership with your business partner, and if you pick the wrong partner, it will be a rocky ride.

Seth and I have been working together since leaving Citigroup in June, and it’s been fun and tumultuous. In the midst, we attempted to bring on two additional partners (one at a time) and saw the negotiations deteriorate in final stages. We were incredibly disappointed with these developments, since we put a tremendous amount of time, energy, and money into making these deals happen. However, in retrospect, this was the best thing that could have happened for our business.

So why take the risk of bringing on another partner to help run the business? We took the risk because we thought that with another (and older) partner, we would be in a better position to raise money from outside investors, establish credibility with potential business partners, and have the guidance from somebody who had been through the start-up mill before, all leading to a higher valuation for our company. We thought that these benefits would outweigh the risks if we chose carefully.

So if you decide the risk is worth it, how do you choose such an individual? This answer is not simple. It’s hard to know if a good friend would make a good business partner. However, I believe you have the best chances of picking a good business partner if it’s somebody you already know and trust. But a business partner cannot be just any friend. This is not a friend who you used to get drunk or play sports with in college. It is a friend who has the same work ethic as you do. More importantly, this is a friend who has no qualms about telling you when you’ve messed up. This honesty and openness, critical in any business relationship, is often found in very close friendships; all the groundwork for a successful partnership already exists. This is why I believe that a close friend who meets these criteria has the potential to be a better business partner than anybody you might find elsewhere.

Bottom Line: Choose any partner carefully. You’re giving up a lot (equity/control), so make sure you’re getting a lot in return. If there is a pre-existing relationship, all the better. Make sure there is a sufficient level of trust, openness and honesty. It is also critical that all partners share the same vision for the company and a similar work ethic to help the company achieve its long-term goals. Without these critical aspects, the partnership will deteriorate more quickly than a Las Vegas Marriage. I do not claim to have the answer on this topic ans would to love to hear your feedback on this subject, so please feel free to share you comments and experiences.

Check out the first post on working with Cornell MBAs at Working with Cornell MBAs

The work we did with the Cornell MBAs during the fall semester went really well. Seth and I were very pleased with their work and their dedication to creating and administering the retail survey they created. They reached out to numerous Cornell (Johnson School of Management) MBA alumni and received some very interesting feedback and responses. It was very helpful in helping us re-evaluate our strategies to go after large retail merchants and gave us additional insights for what large retailers are looking for in a service/product like ours.

Based on our positive experience working with the MBAs up at Cornell, We have decided to apply again for a new project with a new team of MBAs for the spring semester. This past semester, we’ve engaged a couple MBAs to work with us on a research project that will survey various kinds of Internet advertisers and marketers to solicit feedback on what they are using and any interest they might have in trying out our service. They have been doing a great job so far, reaching out to many more internet merchants and marketers through the use of on-line press releases (you can view it at and reaching out to various blogs and bloggers across cyberspace to post links to the survey. In only a short time-span, they’ve managed to get approximately 40 survey respondents!! We are hoping to see trends in the data that will support initiatives to build-out our advertising service and validation that merchants actually need something better and are willing to give us a try.

There’s nothing better than hiring smart MBAs to do pro bono work for our business as we try to keep costs down and mitigate a lot of our market risks by doing our homework (surveys etc.). This is the essence of bootstrapping, and we’re getting pretty good at it. The MBAs are doing a great job, and we may even hire one of them to do paid consulting work for us in the future because she is doing such a great job on this project. All we can say is that we hope our hypotheses are proven true by the data we collect and that we can build an ad-serving technology that will appeal to the savvier marketers for online merchants. We’ll keep you posted…


I wanted to write a follow-up to a previous post detailing some lessons learned as we continue our capital-raising journey. The topic of the first post was focused on identifying potential investors and how to approach them. This follow-up is focused on the “how” of what documentation is needed to raise money once friends or family say they are willing to invest. The basic advice I had been given and will pass on is to make sure you document everything in writing. This does not mean writing down an IUO on a napkin at your favorite local diner. Don’t laugh, I’ve read many stories (some of them successful) of entrepreneurs documenting investments on a napkin. I wouldn’t recommend it though. For this, you need a lawyer, specifically a lawyer who is familiar with capital markets transactions, which is a fancy term for companies raising money.

A lawyer will be able to provide you with the right kind of documentation so you can raise money one of two ways, selling stock in your company (most common) or borrowing money as a loan from investors. There are even things in between where you can borrow money from investors and offer them the right to convert their loan into stock in your company in the future. This is called a convertible security, and it’s not as complicated as you think. Nonetheless, you need a legal expert who knows this stuff to give you the right document. Most of the wording is going to be the same no matter which lawyer gives you his template. So don’t try drafting these agreements yourself.

If you decide to sell stock in your company by selling shares to investors, the documentation will involve several pieces of documentation. That’s what the lawyer is for. The trick with selling shares in your company is that you need to figure out what each share is worth. This is a frustrating exercise and involves you determining how much you think your company is worth (i.e. $250,000, $1 million, $5 million). If your start-up is in the idea-phase, meaning you don’t have any revenues, this will be difficult. Many people will argue your business is not worth anything, and you will argue that your business is worth as much as the idea is worth (billions and billions). In the end, you will have to negotiate down to something reasonable (I will put up another post that discusses valuation).

If you need to raise money quickly and don’t want to spend the $10k it will probably cost for the legal work associated with raising equity, you’re best bet is a convertible note. As discussed before, this is a much simpler document and outlines how you will be borrowing money from investors and that their investment will convert into shares later on (most of the time it’s within 12 months) when the business is further along and people are more comfortable discussing how much the company is worth when you hopefully have revenues and cash-flow. The convertible note is a complex IOU which says that when the investor gives you the money, you sign the document that says the company promises to convert the loan into shares in your company. The best part of using a convertible is that the legal costs are minimal (doesn’t require any custom work) and you don’t need to set a valuation for the company, meaning you can raise money much more quickly because there’s no negotiations taking place. As far as choosing the right law firm and where to start, check out my other posts on the topic of searching for and hiring a law firm. If you’re curious who we’re using, it’s Perkins Coie out in Menlo Park CA. Shoot me an email and I’d be happy to make the introduction.


We are almost done developing our technology and interface for iBakeSale, our first consumer rewards program. We have just engaged a PR firm to help us market the program to consumers through a variety of on-line and off-line publications (journals, magazines, newspapers etc.). Furthermore we have hired a few more part-time technology developers to work with our technology team to expedite our time-table for additional functionality we would like to build into our technology. Given our recent commitment to all these near-term expenditures, Seth and I have decided that we will probably need to go back out to existing and new investors for additional capital. Seth is beginning to draft an updated business plan and executive summary to reflect iBakeSale and some our updated strategies, and I have spent hours updating our financial forecast to reflect the same. While this process has been grueling so far, we can only hope that with the successful launch of iBakeSale and demonstration of consumer adoption and usage, we will be able to attract new investors who may have been on the fence up until this point. Let the games begin…


Selecting a PR firm…

April 7, 2007

Read up on the first part of this process in Our Search for the Perfect PR Firm

So we’ve been going through this process of selecting a PR firm for a little over a month now. It’s been quite an experience and education. I’ve spoken with about 10 firms, solicited proposals from 6, and met in-person with 5 of them. Prices per month ranged anywhere from $5k to $10k (there were firms that I spoke to that charged $10-$15k per month but those were short conversations). The firms were primarily located in NYC and the surrounding area. One of the firms was located out in CA and was a personal referral from one of our valued advisory board members. The firms we met with varied in size, from two-man shops to 50+ professionals. The smaller firms are called boutiques and the larger ones are called agencies. I was advised to stay away from the agencies because chances were that we would get junior-level employees working on our account. This meant that since we were paying so little money in the grand scheme of things, it was only worth the time of a recent college grad. We decided to go with a smaller firm, where we would get the service and attention from more senior executives who had left the larger agencies out of their desire to work with smaller companies (probably only part of the story I’m guessing).

Anyway, we narrowed it down to two small firms, one in CT and the one in CA, and finally ended up hiring Libby Communications out in CA. One reason we decided to go with David Libby and team was because he is going to collaborate with a colleague of his, Dan Cohen, at Full Court Press Communications on our account to deliver the optimal level of PR expertise on both consumer marketing and technology (of which we are both). Their price was just right, although a large chunk of our budget, at $7k per month. We have a kick-off meeting with them on Wednesday to begin formulating our PR strategy. We expect work to begin May 1st.

Bottom Line: Pick a PR firm that is both reputable and has a track record (i.e. recognizable client list). If the firm was not personally recommended, make sure to get references from existing clients. Pick a firm that has experience in your field. Additionally, make sure the firm provides you with a staffing plan and basic strategy of how they would market you to the media. A staffing plan is simply an outline of who is going to work on your account. Make sure the firm understands your company and story. If they don’t get it, they won’t be able to pitch it correctly to the media, which means less press for your business. Most importantly, don’t overspend. Cash is important at this stage and you want to spend wisely. As in most circumstances, you get what you pay for. There are lots of firms out there who will take your money and give you terrible service. However, if you look hard enough, you will be able to find really good PR professionals who will do a good job for you anywhere between $6k and $8k a month.