FoodCrunch 2015: Innovation You Can Taste

Sorry for the hiatus.  I am back with more start-up news.

The Food & Agribusiness Institute at Santa Clara University and Beta Gamma Sigma, international business honor society, hosted FoodCrunch: Innovation You Can Taste on April 30^th.  The event brought together two of the most important elements of Silicon Valley—technology and food.  Over the course of the evening, participants heard from four top executives in the industry and enjoyed a sampling fair with local vendors of innovative sustainable food products.  

Roger Royse of AgTech Incubator moderated the panel that included:

Dan Zigmond, VP of Hampton Creek

Kate Danaher, Lending Manager at RSF Finance

Harvindar Singh, local forager at Whole Foods Market

Eric Quick, CEO of Froovie

The panel was incredibly informative with great advice for any entrepreneur.  Here are some of the highlights:

Starting up

• EQ: Bootstrap as long as you can.  You will learn about your own resiliency.
• DZ: “The cost of failure has never been lower.”
• EQ: Don’t start a company just to sell it.

Knowledge

• KD: Investors and lenders want to know if you understand your clients, know your numbers, understand what your goals are, and how you are going to get there. 
• HS: Know your industry and do your homework.
• EQ: Free samples are free feedback.  Use it.

People matter:

• EQ: You want to listen to the people who will tell you that the product isn’t right yet.
• EQ: “Surround yourself with great advisors who will bring you forward.”
• HS: When he initially meets an entrepreneur, he doesn’t look at the product primarily, but observes the people first.  He wants to build a relationship.
• KD: Relationships are huge.
• KD: Stakeholders matter.
• DZ: In food you must win over customers one at a time. 

The product

• HS: Local markets are saturated so you need to be different, unique, not available on the market.   To do so, you need to be innovative and takes risks, stand out, and don’t be a me too product. 
• HS: To stand out, pay attention to your packaging.

Crowdfunding platform list as of Sept 3 2014

Hello readers,

There is a new page on this blogging website that contains a summary of popular crowdfunding platforms.
It is a work in progress and is definitely not perfect, but it does have a lot of data in one spot.
Let me know if you have any information to update the list.

Entrepreneurship at Santa Clara University - really

Yes, you can be entrepreneurial in a large (old) organization.  Santa Clara University (SCU) has developed a Master’s of Science in Entrepreneurship with an emphasis in Global Innovation (MSE-GI).  This isn’t the first time that SCU’s Leavey School of Business has been entrepreneurial.  In 2010, the school launched CAPE, an entrepreneurship education program for non-matriculating students.  The fifth cohort started this summer with 50 participants.  In 2013, the Master’s of Science in Finance and Master’s of Science in Entrepreneurship started.  The MSE-GI is an overhaul of last year’s MSE; however, this time the program is focused in both scope and market.

The MSE-GI program is a 12-month, full-time post baccalaureate degree program for international students in Silicon Valley. The program integrates course work and internships to equip students with business skills and practical experiences necessary for successful careers in a range of organizations from start-ups to established market leaders. International students will be immersed in the business landscape, culture, and network of Silicon Valley and study under prominent Silicon Valley scholars, gain experience with local firms and network with business leaders. Additionally, students will gain the skills and contacts to enable them to lead entrepreneurial projects and intrapreneurial opportunities.

SCU was founded in 1851 in the heart of Silicon Valley. The university now has over 8000 students across undergraduate and graduate degree programs. 

The first cohort will begin in June of 2015. 

You read it here first.

The website will be up in a couple of weeks.     

http://www.scu.edu/business/

Pitching a Fit

Today, the F50 held a pitch fest for their first season of firms (http://f50.io/) at the Computer History Museum in Mountain View.  The founders of 25 companies presented their business ideas to over 200 investors along with a large room full of interested business founders and ecosystem participants (e.g. consultants, attorneys, and press).  F50 identified these firms as some of the “most fundable start-ups” and then matched them with investor mentors to help them raise capital.  Thus, it is no surprise that many of these firms have revenues and some have angel or VC funding already.  Many have been through Y-Combinator or (and) 500 StartUps Accelerator. Many founders are serial entrepreneurs.  This is not the typical start-up crowd.  They are experienced, savvy and ready to take on the world. 

“The best of the best of the best, Sir.”

It was a really interesting pitch fest with a wide range of ideas.  Some good, some excellent, some just plain bad. 

Trends:

Almost all of them had something to do with the internet.  If the firm wasn’t completely contained on the internet then they relied heavily on it for reaching customers.  Seven were “platforms”.  Seven were market places (think ebay).  Eight were social such as dating, networking, or photo sharing.  (There is some overlap in these categories.) Other start-ups ideas included on advertising, gaming, and sensors.

What not to do while pitching:

Oh yes – it is back - the list of what not to wear (see previous post).  This time I have included what not to do based on what I saw here and comments that I heard.  I got to sit up front with the investors and VIPs and listen to their comments.  It was hilarious. 

#1 – Don’t dress like a slob.  Seriously.

Holy Guacamole!!

For the love of ironing boards everywhere – get one.  Half of the presenters were dressed like “slobs”.  (Direct quote – I can’t make this stuff up.)  One VC said that he was so distracted by the presenter’s horrible clothes that he completely missed what the company did.  Face it, the dress down look is so 2001.  Actually, if you want to stand out, dress well. All of the investors dressed professionally.  If that is who you are targeting, take note. 

Rule of thumb – First Date Attire or Better.  Dress as least as well as you would on a first date.  That is what this is, your first date with someone with whom you will have a long intimate relationship – if it goes well.  Dirty athletic shoes do not impress.

And do us all a favor – take a shower and shave.

One of these things is not like the other...

#2 – Don’t wait until minute 3 out of 4 to tell us what the firm does. 

We really don’t care if the firm has backing if we don’t know what your product or service is.  Same goes for your pedigree.  Give me a clue of what you’re doing before telling me that you are from Ivy League University. 

#3 – Don’t take your phone.

You think that I am joking.  Nope.  It was probably to help keep time, but boy did it look bad.  How long have I been talking?  Wait, let me look at my phone.  Oh, and Mom called.  (By the way, there is someone in the front row with 1 minute and 30 second left signs.)

#4 – Don’t be mysterious about how you will use the money.

Far too few of the presenters discussed what they would do with an investment.  Just because the firm has traction doesn’t mean that you know how to scale.  For all we know, you will spend all of the next round of funding on t-shirts for marketing.

#5 – Don’t read the slides.

Many venues have the technology that displays your slides in front of you in addition to the larger screen for the audience in back of you.  Unfortunately, some presenters now think that just because the display is in front of them, they can read it like a teleprompter.  Not so much.  And the audience might not know that there is a display on the floor in front of the presenter, so it just looks like he or she is staring at the ground. 

#6 – Don’t go over the time limit.

This is really difficult since the time is so very short.  However, you don’t want to be the one where the organizer walks on stage to usher you off.  The audience understands that you don’t have much time.  The audience is also watching another two dozen presenters (or so).  Don’t be rude.  Share the podium. Play nice. 

Crossing the Valley of Death

Research update here.  

In addition to chocolate and social entrepreneurship, I also study technology start-ups.  Recently, I have been examining how technology firms cross the valley of death with some pretty interesting results.  Without getting into the statistical model, this blog post shares some of the findings. 

So what is this “valley of death”?  Basically, it is the lack of funding between the invention of technology and launch of commercial product.  Government and private investments have emerged to help firms commercialize nascent technologies.  Government programs in the United States include Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. 

The SBIR and STTR programs are two of the latest and biggest programs that the U.S. government has enacted to support small business development (Bonvillian and Van Atta, 2011).  The SBIR program was implemented in 1982 to support innovation in small, often nascent organizations (Audretsch, Link, & Scott, 2002).  The STTR program was started in 1992 and focuses on supporting innovation collaborations between firms and public organizations such as universities and government labs. The primary objective of these programs is to support innovation in small business.  The secondary objective of these programs is to help organizations cross the valley of death. Through 2012, SBIR and STTR have cumulatively provided over $34 billion in funding (Small Business Administration, 2013). 

Nanotechnology is the control and manipulation of matter between one and 100 nanometers.  One nanometer is about three to six atoms across, so nanotechnology is incredibly small and difficult. And expensive.  A complicating factor is that matter at the nanoscale acts differently than the same matter at larger scales.  Nanotechnology is used across industries including cosmetics, packaging, optics, and semiconductors. 

So if any technology firm is going to risk the treacherous valley of death, it is a nanotechnology firms.  They must endure the trifecta of burdens: the firm's liability of newness, the industry's lack of legitimacy and cohesive structure, and the technology's inherent uncertainty (see Woolley article in Entrepreneurship Theory and Practice). 

I analyzed all nanotechnology firms started before the year 2002 and it turns out that 60% obtained SBIR or STTR grants and 25% were award at least one of each type.  In comparison, that is a lot.  Overall, the acceptance rate of the SBIR and STTR programs is about 20%.   More interestingly, firms that obtained SBIR or STTR funding were more likely to patent than those that did not received funding and were less likely to cease operations.  These firms were also more likely to receive VC funding.

Go nanotech!

And you may contribute a verse...

Last night, the Center for Science, Technology, and Society (CSTS) at Santa Clara University held their first MAGIS Dinner to celebrate leaders in social enterprise development.  The two awards were presented to Graham Macmillan of VisionSpring and the Citi Foundation and Sally Osberg of the Skoll Foundation.  Founders and employees of other social enterprises were also in attendance, as well as dozens of supporters and sponsors.  Some of the amazing social enterprises on hand were Angaza Design, Anudip Foundation, Artisan Connect, Givve Collection, Global Women’s Water Initiative, Good World Solutions, Not for Sale Campaign, Nokero, Sankara, Smart Voter, Twothirds Water, World Wide Hearing, and Nazava Water Filters.

What is social enterprise?  People argue about the definition all the time, but it basically comes down to organizations using traditional business practices to solve problems of social welfare.  That means that social enterprises and the people in them are changing the world to be a better place. 

Seeing the work that these people do is both inspiring and humbling.  Most of the time, I sit at my desk overwhelmed by the evil in the world.  Reading the paper and online news gets more difficult each day with the sheer volume of violence and cruelty reported both locally and worldwide.  Heck, I can’t even drive down the street without getting cut off by someone who must be more important than me and is in a very big hurry (I picture that he has to go to the bathroom… and hope that he doesn't make it).  I admit that I vacillate between feeling helpless to why bother.

So, sitting in a room of people who make it their life’s work to make a difference is astonishing. It reminds me that there are good people and the world need more of them.  And when I think that one person can’t make a difference, I can think about this – if Dr. Stanley Zlotkin hadn't started Sprinkles Global Health Initiative, millions of children would be malnourished. If Joseph Adelegan hadn't started Cows to Kilowatts, thousands would be suffering the ill effects of water contamination by slaughterhouse waste.  If Jordan Kassalow and Scott Berrie hadn't started VisionSpring, there would be almost 2 million people who can’t see.  One person matters.

I couldn't help but reflect on my own contribution to society when listening to the stories and feeling rather guilty.  But then, my husband reminded me, we all can contribute in our own ways.  And no, we might not be the next contender for the Nobel Peace Prize or MAGIS Award, but that isn't the point. 

As Ol’ Walt said, “the powerful play goes on, and you may contribute a verse.”   

-----

FYI - The CSTS has the Global Social Benefit Institute (GSBI) that helps social enterprises develop and grow.  They estimate that the over 200 organizations that have completed the program in the last 11 years have reached over 100 million people at the base of the pyramid.  The GSBI is the cornerstone of the CSTS.  Graham Macmillan is a graduate of the GSBI.  Other exemplary organizations in his cohort include Kiva, Sprinkles Global Health, Cows to Kilowatts, and Whirlwind Wheelchair.  Sally Osberg is the President and CEO of the Skoll Foundation, which invests directly in social enterprises such as Girls Not Brides, B-Labs, Global Witness, Medic Mobil, Kiva, One World Health and VisionSpring. They also support organizational development through programs and partnerships.  They have a new film that summarizes their mission at skollworldforum.org.

Shout out to TestaRossa Wines, REBBL Tonic, and Pisco Porton for their generous donation of terrific libations. 

The World of Entrepreneurship

Over the last couple of months I have been catching up on some travelling, flying to Tel Aviv and Paris to continue my adventures.  No matter where I went, I couldn't help but be struck by the entrepreneurship in every location.  This is no surprise being someone who studies entrepreneurship for a living. But even after all of these years, I couldn't help but be intrigued by the similarities and differences of new ventures around the world.

Take Tel Aviv for example.  What an amazing city of history and innovation!  In the same block that you have a historic site of biblical importance there is a start-up working on the latest technology.  It was inspiring to see a government that promoted not only entrepreneurship, but also the vital infrastructure necessary for start-ups to survive.  They are working to attract funding sources from around the world including venture capitalists and large financial organizations.  Unfortunately, the World Bank ranks the country in the lower half of all countries for registering property, getting electricity, and dealing with construction permits.  And it was obvious that some parts of the country are more developed than others, but by and large - infrastructure was great.  And Israel ranks highly in investor protection, international trade and ease of starting a firm.   (http://www.doingbusiness.org/data/exploreeconomies/israel).  Corporate tax rates are 25% and firms only pay about 5% in social security contributions. The US corporate tax rate tops out at 34% and the social security contributions are only slightly higher at 6.2%. 

In contrast, people that I spoke to in France said that it is very difficult to start a company there.  It is not the red tape, although the counties is ranked low for the ease of registering property.  This biggest complaint was the cost of hiring and paying employees.  Employer paid social security contributions are about 40% of one's salary.  40%! On top of that, firms pay a payroll tax of 5.45%.  Then, the corporate tax rate is 33.33%.  Think of the implications - a firm hires someone at $50K, but ends up paying $72.5K before being hit by corporate taxes.  Even with the strong infrastructure, education, and technology (and pastries), the cost of running a company is high.  Many companies choose to remain small to survive. 

So the next time you take a trip, look at the local companies.  Start-up success is as much influenced by the people who start and run firms as the infrastructure on which it relies.  

Chocolate is back

What would you do to create the perfect product?  How about take 5 flights, canoe for 5 hours through the Amazon, and then trek 15 kilometers through the Bolivian jungle?  That is what it takes just to get the raw cacao for Oialla chocolate.  And we haven’t even started to discuss production yet.  And Rasmus Bo Bojesen, the owner of Oialla and chocolatier, will not settle for less.

This all started a few years ago when Rasmus’ wife asked him one morning why

they didn’t make organic chocolate.  This question didn’t come out of the blue.  Rasmus is a world-renowned chef and restaurateur who owns Axelborg and The Royal Danish Opera Restaurant.  (He has started several other restaurants throughout Denmark.)  His obsession with chocolate started over thirty years ago while working as a chef at Michelin star restaurants and as an apprentice to Lyon master-chocolatier Bernachon. Since then he has studied chocolate.  When I write studied, I mean that the man should have a doctorate in cacao if there were such a thing.  In addition to making and selling chocolate and delicacies in his restaurants and shops over the years, he started Bojesen Chocolate, which produced raw chocolate, in 2006.  And then he wrote a cookbook, “A Sense for Chocolate” that was published in 2009 (for which he won the Gourmand Best Chocolate Book in the World Award in 2012).  When he talks about chocolate, he beams as though nothing else in the world matters. 

So when his wife asked about making organic chocolate, Rasmus’ response was “Three reasons. Taste. Taste. And Taste.”  At that time organic cacao beans had a reputation for poor quality.  The supply of organic cacao was extremely limited and not consistent. But the couple was up for the challenge.  They talked with friends and colleagues, including an agriculture professor nearby that suggested that the cacao they were searching for may exist in the wild and only in the jungles of Bolivia.  After a lot of research, a small protected area was located that had virtually untouched cacao trees around Baures in the Beni region of Bolivia.  And they weren’t exporting the beans. 

This is where the 5 flights, 5 hours canoeing, and 15 km hike come in.  There was no assurance that Bolivia would have the quality of beans that Rasmus demanded.  In fact, he didn’t have proof that this raw material even existed. First, Rasmus met with locals who worked with Bolivian wild cacao harvesters. He then went to the sites to taste the beans and meet the workers.  He was surprised by what he found, an impressive bean with no acidity and bitterness that is usually associated with raw cacao.  He had found his bean.  And it doesn’t get more organic.  These trees have not been cultivated, fertilized, or treated with herbicides. The pods that are produced are about half the size of traditional pods, but hold much better flavor.  These are among the few beans that I have tasted that are not bitter.  They have a solid cacao flavor without the harsh aftertaste. 

Social entrepreneurship

When asked about gaining the trust of the Bolivian farmer, Rasmus shook his head.  “There are no farmers.  There are no farms.  This is the jungle.”  Trust was a big deal.  After working with the beans, he found that the fermenting and roasting process needed a small change.  However, this change flew in the face of what had been done by the locals for generations.  Thus, the relationship with the workers was critical to success. Additionally, the chocolate industry is notorious for the obscene use of child and slave labor. Since the location was deep in the jungle, it would have been easy for a company to come in and exploit those who live there.  Oialla now works with the Danish Foreign Ministry to set and ensure high standards for working conditions. 

Innovation

Working with these beans has not been easy. As I mentioned earlier, the pods are smaller and the beans have a different flavor than traditional beans.  This cacao also has more cocoa butter.  Thus, the traditional ways of making chocolate did not work.  New recipes needed to be perfected before products were ready.  Initial products were launched in 2010 and in less than a year, Oialla won an award from the “Academy of Chocolate.”  Later in 2011, they won the Gold in Great Taste Awards.  In 2012, Rasmus was invited to a small conference with the most talented chocolate makers in the world.  Although impressed with Oialla, a colleague asked why he didn’t get the entire flavor from the bean.  Puzzled, Rasmus went back to the kitchen and spent almost a year refining the manufacturing process.  He says that he now understands what his colleague meant.  The 78% chocolate now has a fuller flavor that captures more of the nuances of the Beniano beans. 

The product

When I visited Oialla, I was offered a beautiful tray of chocolate to taste, first the solid wafers and then the truffles and nuts.  Bottom line - Oialla chocolate is so good that I actually felt guilty eating it.  There were so many wonderful choices.  Now, I wish that I had taken the whole plate, thrown it in my bag and ran out with the treasures.  I knew that you could buy the chocolate wafers, but now I find out that the truffles and other chocolates are not sold.  Cruel cruel world.

At first, Oialla was produced as 72% and 78% dark chocolates (percent of cacao solids).  They just started producing a 46% milk chocolate.  Although chocolate snobs often look down at the lighter versions of chocolate, this milk is for the connoisseur. Rasmus made a subtle, but genius change to the manufacturing process that takes this milk chocolate to another level. I can’t tell you the secret, but it is brilliant.    

  

Recipe for success: Passion

What does every entrepreneur need? Passion. Everywhere you turn, people who are talking about successful entrepreneurs talk about passion.  But, what is passion?  The dictionary uses synonyms such as intense, driving, overwhelming conviction, strong desire, and enthusiasm. 

Passion is what gets you through the unforeseen difficulties and challenges, and there always are some.  In talking with Rasmus, you can’t help but understand his need to make the best product that he can, whether it be gourmet meals or organic chocolate.  He is also witty and down to earth, breaking out the beautiful photo book that his wife produced after their last trip to Bolivia with their children. It is a terrific combination that has served him well.  We may very well find Rasmus’ photo under passion in the dictionary.

Crowdfunding article Posted!- Part 3 (of 3)

HAPPY NEW YEAR!!

After frantic end-of-the-year madness, I am back to bring you more information about Start-Up Success.

First up, Part 3 of the Crowdfunding article has been posted.  Just go over to the crowdfunding tab and scroll down.

On the horizon:

• tips from business veterans
• even more interviews and visits with entrepreneurs
• information about the latest trends, research and buzzwords.  

Speaking of which, here are a few fun stories to start the year. 

Buzzword Alert

Linkedin published their list of the most overused buzzwords in members' profiles.  http://blog.linkedin.com/2013/12/11/buzzwords-2013/

Here is the list: 

1. responsible
2. strategic
3. creative
4. effective
5. patient 
6. expert
7. organizational
8. driven
9. innovative
10. analytical 

If you are re-writing your profile now, you are not alone.  Just remember that although you have to be creative and innovative to show that you are a strategically driven expert, use the thesaurus responsibly.

Pivot Here for an Epic, Dynamic, Entrepreneurial Game 

WSJ has posted its "Business Buzzwords Generator".  Hilarious.  

It is like corporate mad-libs. As they describe it, "Use this tool to generate and share custom-built meaningless business phrases using overused business buzzwords as submitted by WSJ readers." My favorite so far, "Looking forward to 2014, narrative will be key to our ability to pivot the solutions strategically."     http://projects.wsj.com/buzzwords2014/#p=15||37||||1

Investor speak

qz.com reports that the use of the term "big data" is up 43% in investor presentations and conference calls while "cloud computing" is down 37%.  Just don't put your big data in the cloud.  

Crowdfunding article Posted!- Part 2 (of 3)

Check out the crowdfunding page.

I have finally added Part 2 that discusses the nuts and bolts of crowdfunding Campaigns.  The article talks about the description, video, value to the investor, online presence, fulfillment and more.

Part 3 is coming soon - Caveats.  Stay tuned!

New crowdfunding page here

Crowdfunding is one of the latest buzzwords to hit mainstream America.  In the broadest sense, crowdfunding is a process by which people with ideas can get money (funding) from others (the crowd) to pursue those ideas.  More subtly, crowdfunding can a unique mechanism for sophisticated entrepreneurs to market their products.  However, crowdfunding is not for everyone. 

The new Crowdfunding page (tab above) of this blog is a three part article detailing the ins and outs of this phenomenon.  Part 1 of this article defines crowdfunding and discusses the participants involved.  Part 2 describes campaigns and their components used by innovators to solicit funding.  Part 3 discusses the advantages and disadvantages of crowdfunding and potential pitfalls. 

From Technology to Tea

Onomea Tea

Rob Nunally and Mike Longo started Onomea Tea Company in 2003.  This was a second, if not third career for both of them.  Rob and Mike started Onomea Tea after realizing that their initial crop of choice, daylilies, would not grow as consistently as needed for cultivation.   Considering their options while drinking tea, they thought – “Why not grow tea?”  Having green thumbs and plenty of available property on Hawaii’s Big Island, they jumped in.  A new career was born.

Before Onomea, Rob lived in California.  He attended CA State University and received a BA in Business with an emphasis in Information System. This was perfect for Silicon Valley and he started in with a software support job and ultimately his own technology business. Since most of the technology was sold internationally, this business could be run from most anywhere.  In 2010 the political climate for the business changed and the business income dropped substantially, since that time he has been more focused on tea.

Mike was born and raised on the East Coast.  He grew up working in his father’s nursery and garden business and studied Biology and Chemistry at Marquette University.  After teaching high school biology, Mike’s path led him to the National College of Chiropractic and a career as a Chiropractic Physician and Natural Health Practitioner.  Mike lived in Fiji for a short time and eventually moved to Hawaii Island in 1977. He began hybridizing daylilies in the late 80's. In the mid 90's he moved to California and owned a retail nursery and a daylilies garden.  His interest in daylilies led to the creation of an online auction website for daylilies, which he still runs.

After a few years in California Mike began to feel the pull back to Hawaii. He convinced Rob to accompany him on a trip there. Rob became attached to the big island overnight. They began to look for a residence there in 1999. In a short time they discovered available land overlooking Onomea Bay that was breathtaking. They both packed up and moved to Hawaii in 2000 and began building their house. Their first tea plants were planted in 2003.

It has only been 10 years, but Rob and Mike are tea experts.  They have certifications galore and have trained with world renowned authorities.  Set on a nine acre plantation above Onomea Bay, Onomea Tea grows, cultivates, and processes some of the finest tea available.  Impressively, Onomea Tea is completely organic.  As Mike pointed out, tea isn’t washed before it is processed, so whatever is on when it is picked is on it when you drink it.  Pesticides – out, sea spray and Hawaiian sunshine – in.  Beautiful. 

The tea is picked and processed by hand on site.  They have been cultivating new hybrids of their tea plants after painstakingly selecting the best from their existing stock.  Currently, they produce and sell white, green, oolong, and black tea. Onomea does not add flavors and uses only their own crops. Recently, they produced an aged black tea “Koko Ki” that had subtle hints of cocoa.  (Yes – with no additives or flavorings they brought tea and chocolate together in one luscious cup.) Unfortunately, the demand is so high that they often sell out quickly. 

This second career seems to be working out quite nicely. 

If you are on the Big Island, contact them for a tour of the plantation and afternoon tea tasting!  You won’t regret it.

www.onotea.com