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QAestherdyson_Body.jpgby Sharon Kahn.

She describes herself as a "start-up catalyst." Through EDventure Holdings, Esther Dyson places her bets in emerging markets such as Eastern Europe and, more recently, Africa. In the U.S., she specializes in cutting-edge ideas, specifically information technology, preemptive healthcare, and commercial space travel. "I don't want to be redundant by investing in companies that would happen anyway," she recently told business writer Sharon Kahn. Some of her best-known successes include Flickr and (both sold to Yahoo!) as well as Medstory (sold to Microsoft). She's also involved with Russia’s leading search company, Yandex, and Nomanini, a South African company that makes and distributes terminals that let small businesses accept prepaid vouchers for products such as airtime, electricity, and insurance.


SK: How did you become a venture capitalist?

ED: I ran a technology newsletter, Release 1.0, for 25 years. In the mid 1990s, a friend said, ‘Gee, you keep telling people that they should invest in technology companies in Eastern Europe, where so many changes were going on. How about I give you one million dollars to invest?’ I said, ‘How much did you say?’


Money goes a lot further in Eastern Europe, but I eventually decided to invest in the U.S. as well. At that point I hired someone to run my newsletter because I became fanatic about disclosing where I might have a vested interest. With all kinds of people now blogging, disclosure has become less of an issue, but I still feel it's important.


SK: You now specialize in preventive healthcare and space as well as digital technology. Why those areas?

ED: I love emerging technologies in the same way I love emerging markets. Digital technology allows us to know and track our bodies better, helping us change behavior so we can avoid needing health care in the first place. Through their phone and sensors [that read, record, and transmit body functions], people can collect their own data and collaborate and compete with other people in the same situation. That social interaction provides motivation to eat better, exercise, whatever.


I'm also on the boards of several space companies, which represent, literally, the path to a new frontier. I trained as a backup cosmonaut. It's extremely exciting to be involved in commercial space.


QAestherdyson_PQ.jpgSK: Where do your geographic interests lie?

ED: I'm still involved with Eastern Europe and Russia, but I've also invested in several startups in Africa. The cell phone is making a huge difference there in much the same way that the Industrial Revolution changed the Western world. Armed with a cell phone, an individual does not need an employer. When farmers can easily learn the price of crops, for example, their lives dramatically change. The phone lets them advertise their services. It is a piece of capital—not  just a personal communications device—that is moving millions and millions of people from the subsistence level because they are empowered.



SK: What attracted you to some of your most recent investments?

ED: I look for entrepreneurs who have a mission—not just people who want to get rich. Ideally, they will come as a team who can support one another and keep each other from getting too crazy. An example is Omada Health. A couple of guys in California started a business to provide online group counseling for people at high risk for developing diabetes. A "facilitator" takes people who meet in groups of 10 through a 16-week course where they learn to live better. I liked not just the technology behind the company [which tracks progress using a cellular-connected scale, among other metrics], but also the plan that called for most of their counselors to be former group members. It's a virtuous cycle, where I am helping people become economically self-sustaining. And these people are going to be passionate about what they do.


SK: In many cases, you take an active board member role once you invest. What do you bring to the table?

ED: I try to do whatever is not being done. I have helped to build a team. I have had to be the grownup in the room and replace the CEO. I've frequently rewritten press releases to provide a PR message. One of my roles is to introduce management to potential customers. For example, Voxiva [a Washington, D.C.-based 2001 startup which delivers health services to clients via cellphone] wanted to enter Russia, so I provided contacts.

SK: Have you ever been tempted to start your own venture?

ED: I think being CEO is overrated. I have a very short attention span. I hired a CEO for EDventure, which lets me do the fun stuff while she takes care of the details.


SK: What types of companies are you looking to invest in over the next few years?

ED: One of the big issues we're facing is too much knowledge. That forces us to make decisions we never had to make beforewhether about climate change or health insurance. Because we can figure out the consequences of our actions, it's harder to claim ignorance.


So, in many ways, I'm investing in companies that will respond to this trendservices or devices that will give people self-knowledge and the motivation to change their behavior. And also in what I call human-capital playsassessment and motivation tools for employers and people looking to manage their own careers, and also in education itself. Overall, educated people are better equipped to make complex decisions...and to be good citizens.


This interview has been condensed and edited.

WorkingwithBFF_Body.jpgby Heather Chaet.

She’s been by your side since the fifth grade. She’s seen all of your break-ups, was your sorority sister, and was in your wedding party. He’s your best friend, your go-to guy, the Fred to your Barney, the Michael Jordan to your Scottie Pippin, the Laurel to your Hardy.

Yes, knowing someone that well can be great if you go into business together, as you know how each other think and what each of your passions are. But working with a best friend can also be fraught with trouble—not only for your bottom line, but also for your relationship. So what are some steps you can take to make sure you keep that friendship solid as you build that company together?

Put it writing

Ideally, before you put the OPEN sign in the store window or set up your web site, you will have spelled out the basics of your partnership in writing. Adam Torkildson, PR coordinator for Customer Hook, went into business with one of his best friends and still remains partners and, more importantly, friends three years later. He says getting the business details in writing before you even begin is key. “[Have] signed documents detailing your arrangement, payment structure, who owns 
what percentage of the company, and any other legal questions that [could] crop up
over the course of doing business,” says Torkildson. He adds that having defined budgets for raises, infrastructure, bonuses, and
 savings as well as guidelines on whether or not to take capital funding is also essential. “Right now, we're being courted to 
receive funding, but my friend is very hesitant,” he says.“I'm all for it.” With these guidelines already in place, however, he points out that struggles and heated discussions have been kept to a minimum.

Bibby Gignilliat, Founder and CEO of Parties That Cook, went into business with two friends, and then ended up going it alone. She agrees that setting up everything at the start is the best course of action. “Outline priorities, objectives, values, and business roles up front,” Gignilliat says. “Hire an attorney to draft
a partnership agreement—like a pre-nuptial agreement in marriage—and
 clearly spell out all exit scenarios in case it fails. Ideally, you and 
your partner should each have an attorney so that your interests are 
protected.” Tokildson adds, “These things aren't rocket science and are basically good business 
principles for anyone in business.”

WorkingwithBFF_PQ.jpgPlay to your relationship’s strengths

Michael Laramee, co-founder of Meal Train, started his company with a friend and former college roommate. “I was the officiant at his wedding,” he notes, “[Having] shared that history has worked well for us. The benefits are that you have a foundation to work from.” Laramee suggests those thinking of going into business with friends break down who is best at what. “[Define] areas of expertise before you get started,” he says. By delegating from the get-go who is better at what, tapping into each other’s strengths, and not overlapping responsibilities, the decision-making and day-to-day operations become more productive.

Louis Rosas-Guyon,
of R-Squared Computing, who has been business partners with a good friend for 12 years, agrees, and suggests partnering with a friend who isn’t just like you.  “Find your complement, someone whose strengths are your weaknesses and vice versa,” he says. “For
 example, my partner is a technical genius who doesn't particularly like to talk to
people, whereas I am less of a tech genius, but I will talk to anyone.”

Don’t let you friendship get in the way of open communication

Having your best friend sitting next to you everyday can make for a much more enjoyable entrepreneurial experience, but you have to keep in mind why you are there together—to make money and grow the business. That means constant communication, even if it is a tough conversation. “Encourage open and honest conversation. With friends involved, communication tends to become dysfunctional quickly because of fear of upsetting your friend,” says Raj Shah, SEO manager for, who has gone into business with many friends over the years.

Brandon Medenwald, the co-founder of Simply Made Apps, a start-up founded with his friends after a fun conversation one evening,
 concurs. “The biggest fear is that, as things change, co-founders start to drift apart silently,” he explains. “We stem this by constantly communicating our wishes, thoughts and ideas. If we see something becoming an issue, we sit down and address it immediately. Letting issues fester is an absolute killer.”

Don’t mistake work-time for friendship-time

When you start to work together, you may be surprised to discover new aspects of your old friend. “Most of your friends, even your closest, rarely get to work with you, so your business acumen and the way you conduct yourself might be a side they've never seen before,” says Shah, “You [both] have to be ready to be seen in a different light.” This is all the more reason to keep doing “normal” things you did before entering into business together.


Medenwald agrees. “We still meet up for beers, play golf, and everything we did prior to starting a company together. This has prevented the relationships from slipping into a ‘business only’ mode,” he explains.  It is essential to maintain your non-business friendship to make sure that foundation on which you joined together in the first place grows stronger, along with your company.

QAjerryross_Body.jpgby Erin McDermott.


If you’re starting or running a business near Orlando, Florida, Jerry Ross is the man to see. A lifelong entrepreneur who sold his first company right out of college, he eventually started an entertainment-lighting company that lit up the 1996 Summer Olympics in Atlanta, and a Super Bowl or two, before he sold the firm in the late ’90s. Now he’s the driving force behind the National Entrepreneur Center, a small business nonprofit hub that more than 12,000 business owners and would-be entrepreneurs have passed through in its nine years. The Center is a home for business mentoring, one-on-one advice, and seminars about all aspects of the small business world.   


EM: Is there a mantra that you have for small business owners?

JR: For me personally, “Just stay vertical.” That means just stay upright and don’t hit the mat whatever challenge comes your way. If you can take whatever comes and just stay upright, eventually you will outlast the storm, opponent, competitor, or hurdle of the day. “Just stay vertical.”


Professionally, it’s: “Is what I am doing right now, making me money?” As an entrepreneur, I would ask myself that question 10 times a day. If the answer is yes, keep on doing it. If the answer is no then I would drop the task right there and redirect my efforts. Going to lunch with a client can be a “making money” activity. However, playing golf with a bunch of buddies who aren’t going to buy from you—during the workday—is not!


EM: What do people lose sight of?

JR: Making money! A business is not a hobby. A business must make a profit. If you don’t make money, you go out of business and then you can’t help anyone, including your family, your investors, and the community as a whole. If you like to sail and buy a sailboat, you can spend all the money you want and people say you have an expensive hobby. However, if you get into the “sailing cruise” business, you better make a profit.


QAjerryross_PQ.jpgEM: Looking back, what were the key decisions that you agonized over when you struck out on your own?

JR: Three things. 1) How long was it going to take to actually make money to take home? 2) How I could possibly work all day in the business, and then all night doing paperwork, mailings, etc. and still have time for family?  3) How and when to hire an employee—how can I afford it? How can I afford not to?


EM: Were there mistakes that haunt you even now?

JR: I was too quick to give up pieces of the ownership to partners that I probably didn't need to have in the first place. And I was too slow to fire employees who were not productive.


EM: It’s been a difficult few years for a lot of small businesses. What are the trends you’ve been seeing in the last few months? What should SBOs be keeping an eye on for 2013?

JR: Businesses are getting better at getting rid of expenses that they don’t need and can’t afford anymore, which helps them stay vertical. And there is virtually no capital for the smallest of businesses, so businesses are getting more creative about asking friends, relatives, and neighbors for investment because they are getting no interest on their savings accounts, Wall Street is scary, and they know the local businessperson... just like the old days.



EM: Small businesses are a major engine of employment in the U.S. What have visitors to the NEC been reporting about the outlook for hiring? 

JR: Hiring plans remain stagnant with so much uncertainty in the marketplace—health care, expiring tax cuts, the election etc. Most businesses are hesitant about investing in anything—including people.


EM: Your organization deals with all types of people looking to hang out a shingle. Are there new groups you’re seeing come forward that surprise you? Are there those that you have difficulty reaching, traditionally?

JR: It’s hard to quantify, but service businesses remain a big part of the startup market because many folks have decided to start their own business because they can’t find employment elsewhere and those businesses are not capital intensive.


EM: You’ve enlisted numerous nonprofits and organizations that run the gamut of business backgrounds—Hispanic, African-American, disabled entrepreneurs, female business owners, among others—to advise and coach. What are the common threads? How do you advise other regional entrepreneurial centers in terms of inclusiveness?

JR: This is something that we have learned to do over the nine years we have been in operation. There is a real attitude of inclusion in Central Florida that has allowed us to not only think about these initiatives, but also actually engage community funders who got involved and financially supported doing something. I speak to audiences all over the country about how simple an idea like collaboration can be, but how difficult it can be to actually accomplish. Today we have such diverse opinions, ideas, and agendas. However it can be done, and you can achieve great things as a community, an entrepreneur center, or as an individual entrepreneur—if you just stay vertical.


This interview was edited for length and clarity.

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