On October 28 one glass ceiling was shattered.

Therese Tucker just broke a glass ceiling as the first woman founder/CEO to lead a venture-capital-backed Los Angeles startup to an initial public offering, according to The Los Angeles Times’ Paresh Dave.

Not just a woman, but a woman of a certain age, 55, who built her company, BlackLine, over the last 15 years the hard way.

“I funded the company up until 2013, and there were some very difficult times,” she said. “I ended up putting in everything that I had into it. First the nest egg from my options from my previous company. But then I drained my bank accounts and my 401(k). I told my kids, had I been able to access their college savings funds, I probably would have taken that, too. I second-mortgaged my house. I maxed out my credit cards. I begged from friends to cover payroll.
It was difficult and humiliating and scary. I thought, ‘Oh my god, I’m going to be a woman in my 40s who’s bankrupt and starting over,'” she said of the years through about 2005.

That’s grit — the thing everyone is talking about.

BlackLine went public $2 above the target price and soared from there.

On Friday morning, the shares opened at $24.52, a 44% pop. The stock was trading at around $23.31 midday, giving the company a $1.15 billion market cap.

The result of that $2 increase meant raising $46 million more than than the $100 million planned.

Tucker didn’t build BlackLine by raising round after round of funding in an easy money environment—she bootstrapped it.

She did, however, jump on a still unproven new technology/business model.

The turning point happened in 2007, when the idea of cloud computing was very new. She and her team decided to quit making old-fashioned software and sell the service exclusively through the cloud.

And that was true grit.

Congratulations, Therese Tucker.

One Ceiling Down and a few more to go.

This post is dedicated to every woman of every age who has put herself at risk to follow her dreams — whether as an entrepreneur or something else.

Image credit: California Community Foundation

Ever wonder what the old proverb, “the proof is in the pudding” means?

No? That’s good, because it has no meaning.

Why? Because the phrasing is incorrect.

The original proverb is: The proof of the pudding is in the eating. And what it meant was that you had to try out food to know whether it was good.

Startups are like that.

Creating them doesn’t prove anything.

Neither does customers trying them out.

Funding rounds proves even less.

Only when the public market or another corporation has the appetite to eat is the value proved.

Or is it?

Living Social and Groupon are proof that those appetites are fickle as a teen.

Square lost nearly half its value in its IPO (priced $6.46 below the last funding round) and now being actively shorted.

The true test is whether the appetite is sustainable.

Sustainable isn’t just a matter of price; share prices will always go up and down — that’s the nature of the beast.

It’s not even about profitable.

Sustainable means a business model that generates enough revenue to function, grow and innovate without requiring new/outside infusions of cash — like Amazon.

Flickr image credit: Ruth Hartnup

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

Since 1996 founder/CEO Kevin Plank built Under Armour into a real billion dollar company that went in 2005.

Real because that billion dollars is revenue, i.e., money paid to the company in return for its products.

In other words, sales, as opposed to a great story told to investors so they will fund yet another round raising valuation, but not value.

During his talk at the iConic conference, Plank cited two serious misconceptions rampant among today’s founders.

1. Raising money at high valuations is equivalent to a successful business

2. Going public is a way for founders to cash out and ease up on intensity

His thoughts echo what Salesforce CEO Marc Benioff said at the Fortune Global Forum.

“They are being drawn in by these venture capitalists and private equity to take these huge amounts of money at these huge valuations. They cash out early, they buy these penthouses in the sky and then all of a sudden they’re trapped. They can’t go public because their last valuation would be higher than their public valuation.”

And Benihof sees value in an IPO that has nothing to do with losing intensity.

“Public markets are great for CEOs. You have to answer to the public market. You have to listen. You have to pay attention.”

Plank also offers a solution for cheap capital to fund growth.

“I think that the cheapest capital in the world is probably sitting in your inventory racks or the product you are trying to sell because, No. 1, it doesn’t require a board seat and doesn’t have an opinion to weigh in on what you are trying to do with your business. So use that as your capital. Go sell what you have, and go raise money.”

Granted, it’s a mundane solution, with no glitz and is unlikely to garner headlines in techland, but it works.

Kind of like getting your medical or law degree without student loans.

Image credit: HikingArtist

Myth: innovation is the province of the young.

Myth: old companies don’t innovate.

Myth: successful startups IPO.

Myth: billionaire founders live loud.

Oops. Chester Pipkin, founder, chief executive and chairman of Belkin International, blows up all these myths.

Pipkin started his company in the 1980s in his parents garage and the innovation has never stopped — from the earliest days of computing to today’s Internet of things and on to tomorrow.

The company capitalized on the early explosion in personal computing, selling devices that connected computers to printers. Through the years the company has kept pace if not stayed ahead of the changing tech landscape. In 2014, Fast Co. named Belkin one of the 10 most innovative companies specializing in the “Internet of things” thanks to its Wemo line of Internet-connected home accessories.

Belkin is still private, has 1300 employees, a billion in sales and Pipkin keeps a very low profile.

He’s low on ego and high on hands-on philanthropy, as opposed to just writing checks.

Definitely a role model for all times.

Image credit: Belkin

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

Cheating is rife across the board, so seeing more of it shouldn’t come as a surprise.

I think what does surprise is not how overt it is these days, but the assumption that everyone will participate.

Especially when money is involved.

Recently the CEO of soon-to-go-public Arista Networks offered Fortune Sr. Editor at Large Adam Lashinsky, who had written about the company previously, ““friends and family” shares in Arista’s upcoming initial public offering. The offer was explicit….” (He declined.)

Lashinsky saw similar acts before the last tech bubble burst and sees this as a sign that there is indeed a tech bubble that will soon blow up.

When times are so good that executives are willing to disregard the difference between ethical and unctuous behavior, it’s just one sign that the end, relatively speaking, is near.

I’m not sure unctuous applies as an alternative to unethical, but there is no question about the ethics of trying to bribe anyone in a position to affect an IPO.

It’s cheating, plain and simple and the SEC tends to frown on it. 

Sadly, many don’t see it as an ethical lapse, let alone cheating.

They see it as reasonable business practice.

How do you see it?

Image credit: HikingArtist

Between the pre IPO media frenzy of hype and the post IPO media frenzy of angst we all need a break from Facebook-related news.

Not to mention a little levity on the subject, which John Flowers of McSweeney’s was kind enough to provide in the form of the prospectus of the next hot tech IPO.

Facebook beware; Ponzify will surely eat your lunch.

Facebook’s IPO is all over the news and who am I to ignore a topic of obvious interest? Suffice it to say that IMHO valuing Facebook above McDonald’s, Citigroup and Amazon is totally ridiculous—but what do I know?

However, I’m not alone.

A survey done by WhisperNumber.com polled 1,100 registered traders and investors, found that 71% do not consider Facebook a long-term investment and will not be buying share after Facebook’s initial public offering.

And comparing Facebook to Google isn’t a no brainer; it’s a no brains-er.

But when Facebook amended its S-1 on Monday…the company reported a season decline in revenues hitting $1.058 billion compared to $1.131 billion in the quarter before — the questions started cropping up about whether it was too much to ask that Facebook soar in the markets like Google had. Just prior to Google’s IPO, on the other hand was gearing up quarter after quarter pre-IPO and experienced sequential revenue growth of 27.2% from Q4 to Q1 before its IPO.

Bottom line is that for garden-variety investors (that us) making a profit from Facebook isn’t likely (unless, IMHO again, the market crashes and you still have spare change to invest. And even if you there would probably be better places to use it.)

But if history offers any lesson, average investors face steep odds if they hope to make big money in a much-hyped stock like Facebook.

The IPO should create at least 1000 new millionaires, but it’s unlikely that wealth will be ostentatiously displayed; the exception being when funding another startup—or buying a bicycle.

The hand-painted Italian bicycles that flash across Silicon Valley on Saturday mornings have become the new Ferrari — and only the cognoscenti could imagine that they cost more than $20,000.

My favorite bit of IPO wisdom addressed to all those newbie Facebook millionaires comes from Seattle-based entrepreneur and investor Jonathan Sposato, who earned his first taste of wealth at Microsoft 20 years ago, then founded Picnik, which was bought be Google, and is currently GeekWire’s chairman.

For some, stock wealth launched entrepreneurship and philanthropy. For others, materialism and conspicuous consumption. It was a lottery ticket, plain and simple. And statistically, 90% of all lottery ticket winners go broke after 3 years. And while people seldom talk about money in our culture, avoiding the topic makes history repeat itself, and stigmatizes issues around money.

Thus, I offer some very candid advice for my younger colleagues at Facebook, who are about to have a life-changing event.

Finally, here is some useful advice in the form of what to consider when offered equity in lieu of cash.

The shares-versus-dollars decision presents a common dilemma for startup staffers and consultants. Early-stage companies often don’t have the ready money to just write a cheque, so they have to lure talent with the promise of stock. (…) If you are in the fortunate position of weighing a juicy stock offer, what issues should colour your decision?

Flickr image credit: pedroelcarvalho

2008 – RIP Investment Capital.

The significant reduction of investment capital ranks as one of the major challenges affecting businesses in 2009. While 2008 may be the year that investment capital evaporated, we are only now learning to live with the loss.

The drought in venture capital has been well documented, with only seven venture-backed companies completing IPO’s in 2008, generating a meager total of $551 million in liquidity (Dow Jones VentureSource). Liquidity through acquisition also fell, by 50% from 2007, both in total dollar volume and in median price paid. In 2009 venture funding will be both smaller and more difficult to close.

Start-up funding from other sources, such as angels investors and friends & family has also plummeted, in direct relation to the decline in the stock markets. Bank credit, either from loans or from credit cards, has shriveled.  This deleveraging will become a permanent part of the economic landscape, for the next decade or longer.

Business Models for the New Decade—Small is Beautiful

In response, many small businesses are exploring new business models that do not depend upon external investment capital and long time horizons for liquidity. While these models are only beginning to emerge, a few trends are already evident:

• Immediate cash flow—without investment capital, cash generation becomes critical. The criteria for business investment shifts from total ROI to payback period, measured in weeks. New business models will generate cash almost immediately.

• Small scale—Scalability has lost its luster. First, there only limited investment capital to fund infrastructure for scaling. Second, the pressure for immediate cash flow shortens the window for investment in scaling. Third, the value of scaling is much lower when the traditional exits—IPO and M&A—are reduced.

• Multiple revenue streams—in the current risk-averse environment, multiple cash streams have strong appeal. Multiple streams can create challenges with business focus, but the combination of smaller scale and overwhelming drive for cash flow can help to keep the organization on track.
• Linked, but not integrated—Linkage generates benefits to the organization, but preserves flexibility and maintains focus for each individual cash stream. Tight integration, often a requirement for scalability, needs more capital and a longer time frame.

• High dependence on the owner/operator—this is a significant diversion from the venture capital business model, in which the investor/owner becomes a central actor in the success of the company.  In the venture model, the entrepreneur develops and prototypes a business concept, then raises venture capital. At some point, the venture owners often replace the entrepreneur with a “professional manager” to grow the company into an acquisition candidate, or rarely into an IPO. Then the “IPO executive” steps in to provide the leadership to close the acquisition or acquisition. Note that the venture investor / owner, not the entrepreneur, provides the continuity in this model.

Example—Building Contractor Reorganizes for Multiple Revenue Streams

The Texas building contractor we met in the last post refocused his business on restoring foreclosed houses owned by banks when financing for new home developments dried up. He targeted small investors searching for cash flow from rental properties. Then he assembled several small service teams to deliver a complete package to rental property investors:

1. house acquisition and restoration,
2. mortgage lender,
3. property manager, and
4. long-term maintenance service. Each team is a separate company and a separate revenue generator with a separate revenue source.

Two threads link these companies economically. First, they all focus on a specific type of customer—a private investor in small rental properties. Each company provides a separate service, but all the services are necessary to offer a complete solution for the customer. Each individual company succeeds better when the entire group succeeds. Second, each company owner has some ownership in the other companies. As a result, the companies are more than just mutual suppliers to the customer. From the customer’s viewpoint they function as a single operation. They are linked, but not integrated.

Build Your Business for Life—Not for the “Exit”

This is perhaps the single biggest change in the emerging business model.

There is no exit.

This is not a threat from Jean-Paul Sartre, the author of the depressing existentialist play No Exit. Rather it is the opportunity of a lifetime. The entrepreneur is a business owner for a long time, even for a lifetime. The rewards for building and owning the business must directly from the business. Any financial rewards come from a stream of profits generated by the business. Any personal rewards in satisfaction come from the business itself. This new model, surprisingly, leads us back to the roots of entrepreneurship.

Do something because you love it.

The rewards will come to you.