ENT645 – Direct Response

Step One of the direct response is web-based. It presents a striking picture and headline, which then prompts the visitor to enter their email address to receive available educational resources.


Step Two is a sort of random sampling of the education services currently provided by Course Ninja. Once the user begins clicking on items in the list provided, a heuristic profile of the visitor begins to be established. Over time, this profile becomes more accurate in its anticipation of visitor interests.

Since Course Ninja has not yet implemented the technology to create the heuristic profile, the feedback provided by ideal clients centered upon a course recommendation list provided by Coursera.


The feedback from ideal clients was focused on how to increase the likelihood of newly-registered visitors to continue the process of signing up for a course and further using Course Ninja’s services.

Qualities that most likely result in a registration include:

  • Faster webpage load times result in “less friction” for user interaction to register
  • Fewer web fields to register (and pay) for a course result in more successes
  • More variety in course and university offering increases likelihood of network effect
  • The more accurate the heuristic profile of the visitor, the more chance of success
  • The product must state clearly the way it meets FERPA data guidelines

Professional Presentation: Toastmasters

When I began my search for professional presentation opportunities, I realized something: for many years I’ve wanted to improve my public speaking to the point that it felt as natural as speaking among small groups. I knew I needed recurring opportunities to achieve this. To that end, I felt this was the perfect opportunity to join my local Toastmasters group.


Toastmasters was founded almost 100 years ago with the goal of helping people improve their public speaking skills, give better presentations, communicate more effectively, and become more comfortable giving unprepared remarks. Toastmasters is one of those things I always intended to pursue but never really got around to doing. ENT645 was the motivation to finally do something about it.

The typical Toastmasters meeting involves about 10-30 people who meet once a week for about an hour. The meeting is conducted along a formal itinerary that goes through periods of time dedicated pre-planned speeches and presentations that each can last up to fifteen minutes. The speeches are timed to help the speaker get a feel for whether they are speaking too long or too briefly.

After the pre-planned portion, the meeting turns to table topics, which are briefer and allow more members the chance to speak at the meeting. I’ve spoken at each of the meetings I’ve attended, and each time I learn a little more about how I present myself and get ideas about how I can improve my communication skills. An evaluator is designated ahead of time to provide feedback after the speech; a grammarian and “um” counter are also roles assigned.

In a larger sense, the fear of public speaking is a common pitfall for people in general, not only entrepreneurs. How many talented people have held back the best part of themselves simply because they were afraid to get up and talk in front of others? In many endeavors the greatest challenges are not external but those we impose on ourselves.

If you feel that something is holding you back from reaching your potential, taking the first step is the hardest. But it is a step you won’t regret taking.

Week 2: Survey of Likeable Social Media

The appendix of Dave Kerpen’s Likeable Social Media is a helpful overview of the state of social networks across the web. Clearly Kerpen likes social media…so much that it makes me wonder what he would do if we didn’t have the Internet.

Overall the appendix is strongest in the way it captures the way a potential customer might find their way to your business. Facebook and Google are of course the 800lb gorillas, but Kerpen brought my attention to sites that I hadn’t specifically considered “social”: namely Pintrest and YouTube.

I don’t usually go to YouTube to connect with people: mainly I just like to listen to my favorite songs and watch my favorite movie scenes. For Pintrest, I like the way that CEO Ben Silbermann characterizes it: as a “catalog of ideas”.

The author pointed out that YouTube could be used to provide a Q&A format to assist customers with your product or service. That can be true, but in recent years I’ve noticed that videos can actually be more inconvenient (and therefore less likeable) to customers that have questions better answered in text.

When you add in the x-factor that many videos are still encoded using Adobe Flash, and platforms like Apple, Amazon and Google are actively trying to kill Flash in their browsers, the video content producer may find himself with years of content that is no longer accessible or browser-compatible.

One way to look at social media is that it is another facet to tell our stories. Whether around a campfire or on the evening news, people want to hear stories about who they are and where they come from. Businesses want to tell their stories too – usually for very different reasons than individuals who want to share their life experiences – and these social platforms can lend a voice to those public relations efforts.

In the coming weeks we’ll look more in-depth at this topic.

Week 8: Harvesting

One of the deceptively hard things to do with an investment is knowing when to exit. Exit too late and you might just lose all your profits, if not also the principal. Exit too early and you might miss out on the profits to come.

Angel investors face this dilemma too. There are positive exits and negative exits; staggered exits and the cash-out-in-a-single-day exit. These are the forms an exit can take. But the exit strategy itself should be formulated in the initial stages of the relationship between investor and entrepreneur.

A wise thing to do might be for the investor and the entrepreneur to have a candid discussion in the initial conversations about funding. Do the investor and the entrepreneur have the same goals for the business?

The investor will be primarily concerned about returns. The entrepreneur may have other primary goals. It would avoid much tension down the road to get a sense of whether the goals of both parties are aligned here.

For example, if the investor wants the company to put out an IPO one day, but the entrepreneur would rather shutter the business than go public, that could turn into a problem. As stated in Amis & Stevenson, these potential conflicts can be discovered in the structural agreements that investors and entrepreneurs agree to for funding.

There is a direct relationship between exiting an investment and the structuring of the investment. If the goal of the angel investor is to effect an IPO, the structure of the deal should have enticements that lead the entrepreneur or CEO to that end. These enticements are financial in nature.

Interestingly, sometimes the investor and the entrepreneur are the same person.

When Elon Musk was fired as CEO from PayPal, the company had not yet gone public. Musk remained on the company board, and while retaining his stock he continued to exercise options to buy more PayPal shares.

By the time PayPal had its initial public offering in 2002, Musk was the largest shareholder with 11% of the company. When eBay bought PayPal later that year, Musk received $165 million for his shares.

Musk’s (lack of) an exit strategy proved to be quite lucrative in that case.

Week 7: Supporting

Along with financial support, counsel and connections are other major assets an angel investor can bring to the startup.

What often first attracts investors to the fledgling business is the achievement of an initial value event. The company has accomplished something that makes it look like it has real potential to grow and succeed.

Amis and Stevenson describe value events as key achievements the company must accomplish to succeed. We see evidence of value events everywhere. That framed dollar bill on the wall of your favorite restaurant is symbolic of a value event – the first sale.

Microsoft, for example, reached a value event when it first purchased the DOS operating system. It reached another value event when it struck a business agreement with IBM to ship DOS with its hardware, and then later on with the release of Windows 3.1, Windows 95, and so on.

Through money or advice, the angel investor should help the company reach more of these value events.

In the last few years I’ve noticed we see a lot of advisors or “angel investors” whose primary contribution isn’t so much financial or industry-related as political. Elizabeth Holmes, CEO and founder of the beleaguered company Theranos, hired heavyweights like Henry Kissenger and former secretary of state George Shultz to be on the board of the company. Sam Nunn, Bill Frist, James Mattis and Bill Perry were also present.

The strange thing is that Theranos’ business focus was…hematology – blood analysis, in other words.

Kissenger is one of the most well-connected people alive today. We remember him well from his negotiations with Russia, China, and the Vietnam War’s Paris Peace Agreements. I can understand the value of being well-connected, particularly in the regulation-heavy medical industry.

However, having Kissenger, Perry, Nunn and former secretary of state Shultz seems to be a curious case of overkill. It almost seems like the politico-cum-investor version of “lawyering up”.

More significantly, it also makes you wonder how much the company in question is focused on producing its revolutionary blood sampling equipment to market. These advisors don’t have a background in the technology at hand, and I can’t imagine Kissenger would join just any company board on a whim. What sort of time and resources did it take to get him involved with Theranos?

At its height in the private market, the company was valued at $9 billion. Holmes was the majority shareholder. Its headline product – the “Edison” – was a device that could analyze blood samples for disease with only a few drops of blood. Just imagine – today for an annual physical it isn’t uncommon for the nurse to extract two or three vials of blood for analysis. What if that could be brought down to just a finger prick? Every clinic in the country would be an interested customer.

In the rise of Theranos (and Elizabeth Holmes), the Edison was the driver of the company valuation.

Then things began to fall apart. When people wanted to see the new technology in action for themselves, the company demurred. Then, Theranos was discovered to be using traditional blood testing machines instead of Edison, due to the fact that Edison might provide inaccurate results. The SEC began an investigation into misleading investors, officials and regulators about their product’s capabilities. Federal prosecutors are also conducting a criminal investigation into Theranos.

In 2015, George Shultz’s grandson – who worked at Theranos – quit the company and became a whistleblower, reporting to the Wall Street Journal that the company was manipulating a key process that regulators used to measure lab test accuracy.

By 2016, valuation experts said that Theranos was more likely worth $800 million. According to Forbes, since the venture capitalists had negotiated ownership for preferred shares, they would be paid back before Holmes. This would mean Holmes’ shares would be worth essentially zero. Further, Holmes is reported to owe Theranos $25 million for stock options she once exercised.

Holmes herself was barred from owning or operating a diagnostic lab for two years by the Centers of Medicaid and Medicaid Services. When Amis and Stevenson warn about messy failure in their book, this is what it looks like.

Theranos is a strange case. It makes you wonder where in the process fantasy outpaced reality. The value proposition of Edison is an enticing one – a better blood analysis using less blood. But by all appearances it seems that Theranos became a sort of runaway hype train, fueled by impossible promises and well-connected insiders.

When angel investors offer support, it is important for the entrepreneur to weigh how those contributions will help the company reach value events to sustain it over the long haul.

In the case of Theranos, we can see that not all value events provide equal value. The value events Theranos did achieve – massive valuations, widespread buzz, and access to the halls of power – did not help reach the one value event that mattered: making its miracle product a reality.

Week 6: Negotiating

One of the best things I ever read about negotiation was an article from Edmunds.com called Confessions of a Car Salesman. Between that article and Amis & Stevenson’s look at the tactics of angel investors, we get an interesting glimpse at negotiation itself.

Like many things in life, negotiation brings ethics to the fore, along with the negotiator’s animating motivations. Empathy and mutually-shared goals are possibilities, as are misdirection and manipulation.

While negotiation doesn’t lend itself well to universal statements, let’s look at a few of the tactics that can be used for good effect or bad.

Use of a Catspaw

Haggling over financial details can engender a lot of ill will – something you want to minimize when entering an investing relationship. In Amis & Stevenson, a portion of the book outlines the benefits of letting someone else do the negotiating. One way to do this is to hire a lawyer and let the ill will of negotiation fall on their shoulders.

We see this in the Edmunds article about car salesmen as well. After a successful conversation out in the parking lot, a salesman will sit a customer down in the box (his cubicle) and together start going through the paperwork to discover the price of the car.

Often the customer won’t agree with this or that number in the equation. So the salesman has the option of calling his manager, assume (or feign) the role of advocate for the customer, and displace the confrontation of that haggling onto an absent sales manager. This allows the manager to be “the bad guy” while the salesman himself builds further rapport with the customer.

It is important to remember that when someone is acting as your advocate in a situation they stand to gain financially, their true loyalties can be revealed by determining the outcome in which that advocate will gain the most. Just something to keep in mind.

Creating a Sense of Urgency

We’ve all been to a car dealership, inquired about a car and then heard the statement, “You better move fast – someone came by this morning asking about this car!” The gesture can be transparent and hackneyed, but it also triggers an instinct in our brains: the fear of losing out.

Investors can do this as well. Entrepreneurs may have their own ideas about valuation, but this belief can be short-circuited by putting a deadline on an offer of financial support. This can be good and bad.

On the one hand, a deadline forces the issue, allowing both the entrepreneur and the investor to move on in case the deal doesn’t work out. It frees up valuable time to pursue other opportunities. But it could also rush the process, leading either party into a bad deal that further reflection might help them avoid.

The only counter to a sense of urgency is the sense that you have enough time. Do you?

Make Your Money in Other Parts of the Negotiation

Some investors say that they usually cede to an entrepreneur’s initial request for funding and wait for the next round before imposing demands. Maybe it’s kind of like a drug dealer: sure, the first one is free, but the next one you have to pay for. What this highlights though is that entrepreneurs should consider other dimensions aside from just the amount of money they are receiving.

If you take a deal only to set yourself up for a complete burn job six months from now, are you really coming out ahead?

Let’s say you want to trade in your old car for a new one, and you’re willing to pay X amount of dollars on a monthly payment. You’re fine with financing through the dealership. People do this all the time and often are content with the results.

But in a transaction of this complexity, there are many variables to keep track of and negotiate over. For example, maybe you can buy the new car for your target price, but perhaps you get a low-ball number on the trade-in value and accept, thinking only of the victory gained from the new car’s price.

The more numerous the variables, the easier it is for something to slip past. In an ideal world you might keep each of these transactions – selling your old car, buying a new car, financing – separate from each another. You break up the transaction into smaller, easier-to-understand pieces.

Granted, not everyone likes this approach. And in investing, there is the added dimension that you may not have a lot of investors waiting in the wings to spend money on you.

Cues and Non-Verbal Communication

Everyone has heard the saying that 75% or so of all human communication is non-verbal. This is no less true at the negotiating table.

The first thing to make sure you do is simply to show up to the negotiation on time. Don’t be late. That might sound basic, but would you rather be twenty minutes early or two minutes late? Which do you think strengthens your stance? I thought so.

Another thing is to be aware of cues. One of the most humorous parts of the Edmunds article is the “up to…?” cue. A customer will come in and say he’s willing to put down $4000 on a car. The salesman will then simply respond “up to…?” And the customer will take the cue and say something like “$4500”.

That’s a $500 bump, surrendered effortlessly.

There are many lessons to be learned about negotiation (and human psychology) from that simple exchange. A lot of people are quick to doubt themselves in a negotiation, and unfortunately that lack of confidence can be preyed upon. It’s a living demonstration of the Matthew Effect.

In such a scenario, a good defense would to rest on the rationale that led that hypothetical customer to make the $4000 down payment offer in the first place. Such a defense comes from within. And it might not be a bad idea to do thought experiments with certain scenarios ahead of the actual event. “What would happen if I went with a $4500 down payment?”

That way, you have a better idea of how to handle the situation if your first moves don’t go exactly to plan.