SoCal TechNews - Thursday, July 22, 1999
Copyright (c) 1999 by Benjamin F. Kuo
http://www.socaltech.com
-- Special: Interview with Jim McDermott, co-founder of Stamps.com
-- LA The Next Boomtown
-- MBAs Foregoing Consulting Firms for the Net
-- PeopleMover Looking to Help Staffing Cos
-- ArtistDirect One-Ups Competition by Signing Musical Acts
-- Dr. Drew Adds Web Site to Media Empire
-- Conexant Cites Strong Demand in Communication-ICs
-- PCWeek: Pick the Best of the Breed
Upcoming Events http://www.socaltech.com/calendar/calendar.pl
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*** Yes, missed yesterday--internet connectivity glitch. As promised,
today includes the interview with Jim McDermott, one of the three
co-founders of Santa Monica based Stamps.com. (Though it must
be said--they started in Westlake Village along the 101 technology
corridor :-) - Ben
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Special: Interview with Jim McDermott, co-founder of Stamps.com
----
Jim McDermott is one of the three co-founders of Stamps.com, which was
the result of a UCLA business plan competition. Stamps.com recently
had a blockbuster IPO, and has been getting lots of attention from
investors and others because of their high profile strategic alliances.
I asked Jim a few questions about the genesis of Stamps.com, and some
of the lessons that he could share with aspiring entrepreneurs.
Jim McDermott:
BK: How did Stamps.com come about, and how did you decide to pursue it
as a business?
JM: Jeff, Ari and I were in the same section at UCLA business school. I
lived across the street from the Post Office at the Federal Building
(corner of Veteran and Wilshire). During my job search between my first
and second year of business school, I ran out of stamps one night. I
thought to myself, why can't I buy stamps online? I pitched the idea to
Ari and Jeff and they liked it. So we wrote the business plan as part of
Alan Carsrud's "Business Plan Writing" class.
BK: Did you find it difficult to find financing for your idea?
JM: Initially, it was very difficult raising funds. From the moment we
finished the business plan to getting our first check from Brentwood, it
took almost a year. We were rejected by no less than 25 venture funds. As
a sidebar, we wasted time and money looking for funding up north with the
Sand Hill Road crowd. There is plenty of angel and venture capital money in
southern California and in the end most investors like to be close to their
investments. The main reason VC's didn't like our deal was the government.
Most felt that there was a strong possibility that the Post Office would
never give us the license and, as a result, their entire investment would be
lost.
BK: You've been through the full process now from idea to startup to IPO.
What would you have done differently now that you've gone through the
experience, and what advice would you give aspiring entrepreneurs?
JM: I know it sounds trite, but the best advice I can give about the fund
raising process is go with personal contacts. An hour spent figuring out
how to establish a personal connection with a potential investor is worth fifty
spent mailing out business plans. Investing is a very personal thing and
convincing someone to part with their money has much to do with what the
investor thinks of you than your idea.
As I think back on Stamps, I think I learned the following lessons:
1. Beg, borrow or steal from your friends, family and angels before you go
to a VC because $100K early on can be worth millions later.
2. That said, once the deal is done with the VC don't look back. If the
company is a success lots of undeserving people will make lots of money.
And, still more will attempt to take credit for the success. Don't worry.
In the end, investors rarely forget who did the real work.
3. If you believe in your idea, don't listen to naysayers. Many people
prefer others to fail so they never have to confront their own shortcomings.
4. Always keep in mind that you are the talent and that great
companies are built by highly motivated people pursuing compelling ideas.
Money is but one element of the equation and shouldn't be overvalued.
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LA The Next Boomtown
----
The Internet is turning the greater Los Angeles area into a new boomtown,
increasingly the choice for entrepreneurs building the Next Big Thing.
http://www.news.com/News/Item/0%2C4%2C39414%2C00.html?sas.mail
MBAs Foregoing Consulting Firms for the Net
----
27-year-old Seth Baum, a June graduate of UCLA's Anderson School of
Management, did what lots of MBAs seem to be doing nowadays. He forgoed
a $140K salary + bonus and options at a major consulting firm to instead
take a $75K and 50,000 in options for a job as a senior marketing manager
at an Internet startup.
http://www.forbes.com/forbes/99/0726/6402140a.htm
[Ed's note: Seth was listed in the networking list at
http://www.socaltech.com/network.html looking for jobs earlier this year]
PeopleMover Looking to Help Staffing Cos
----
Manhattan Beach based PeopleMover's software helps the nation's largest
staffing companies. The LA Times looks at the VC funded firm and its
prospects.
http://www.latimes.com/HOME/BUSINESS/t000064878.html
ArtistDirect One-Ups Competition by Signing Musical Acts
----
Encino based ArtistDirect, operator of the UBL (Ultimate Band List),
signed on 45 premier musical acts for exclusive branded online stores--
beating out a host of new Net music companies. The top notch performers
signed on with ArtistDirect for a share in their planned IPO this year.
http://www.thestandard.com/articles/display/0,1449,5557,00.html?02
Dr. Drew Adds Web Site to Media Empire
----
MTV and KROQ on air personality Dr. Drew's web site went live earlier this
month. An interview with some of those involved.
http://www.cpnet.com/news/docs/drdrew.asp
Conexant Cites Strong Demand in Communication-ICs
----
Newbury Beach based Conexant Systems reported strong sales, citing
demand in the communications IC business.
http://www.ebnonline.com/digest/story/OEG19990721S0027
PCWeek: Pick the Best of the Breed
----
A PCWeek editorial tells companies looking to move onto the web to
use the best of the breed to help you get there--including Los
Angeles based PeopleSupport.com, which is helping companies outsource
support.
http://www.zdnet.com/pcweek/stories/columns/0,4351,409880,00.html
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Upcoming Events This Week
Full calendar at http://www.socaltech.com/calendar/calendar.pl
** Am I missing your event? Tell me about it! ben@socaltech.com
July 22, Irvine -- "RAISING MONEY: DEALS FUNDED BY INVESTMENT BANKERS"
Sponsored by the Tech Coast Venture Network. For more information visit:
http://www.tcvn.org/forums.htm
July 23, Camarillo -- Manufacturer's Technology Conference, hosted by the
Economic Development Collaborative of Ventura County. For more information
call 805.384.1800 x 21
July 26, Los Angeles -- "Intro to HTML and HTML Optimization" WebGrrls Los
Angeles. See http://www.webgrrls-la.com
July 27, Beverly Hills -- Breakfast@VIC: DEN AND THE ART OF INTERNET
PROGRAMMING. DAVID NEUMAN, President, DEN - Digital Entertainment Network.
See http://www.veniceinteractive.com
July 27, Marina Del Rey -- WNMA's July Education Seminar Intro to New
Media: The Languages of the Internet. Learn about and explore the more
advanced languages and concepts that are integral to today's new media
industry. http://www.wnma.org contact: Shirley Brown 818.980.5042 or
Bernadette Williams 310.821.8114.
July 28, West LA -- THE TOP MANAGEMENT CATCH-22: YOU NEED IT TO GET FUNDED,
AND YOU NEED FUNDING TO GET IT. ENTREPRENEURIAL REPARTEE, the
Entrepreneurs' SIG of the Software Council of Southern California. Marijo
Bos, Russell Reynolds Associates. See http://www.scsc.org/entresig.html
July 29, Westwood -- "Summer-Brew" Westwood Biobrew. Swap surfing tips and
tanning secrets with your fellow biomedical industry entrepreneurs,
investors, bankers and service providers. Contact Bill Robbins at
Convergent Ventures (310-643-7990, billr@convergentventures.com) or Steve
Sisskind at Angeles Ventures (310-550-1080 steve@angelesventures.com).
http://www.angelesventures.com/biobrew.html
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