From the article:

Increasingly home-based businesses are being looked at as a competitive force, and some, like Anchorage, Alaska-based LeadDog Consulting, even have a niche market captured. In the cartography industry, there are only a handful of companies that are responsible for producing the majority of the digital maps in use around the world, and one of them is LeadDog, founded in 2000 by Jim Anderson. The company’s operations are extensive, having digitally mapped much of Iraq and Afghanistan for the U.S. military, but what’s surprising and different about LeadDog is that those maps are created right from Anderson’s home. Using specialized software, an Internet connection, and data from satellites, Anderson says he is able to map the tiniest details on streets that are thousands of miles away from him home base. Like many entrepreneurs, he acquired most of his skills working for another major mapping company for seven years before venturing out on his own.

In light of hosting social events and our upcoming conference in partnership with the Federal Reserve and the Institute of the North, we encourage our users to add us on Facebook to recieve event notifications:

http://www.facebook.com/group.php?gid=139855799154

Additionally, feel free to add us to Twitter to contiune the conversation:

www.twitter.com/akiesorg

Finally, check out our website/forum at:

www.akies.org

Thanks again to Allan and others for encouraging the groups success. The more active we all are, the more successful we all can be. It would be fun to get monthly meetings going, provided members express their interest.

All the best,

Tyler

From his article, he quotes:

Nature is so wasteful because scattershot strategies are the best way to do what mathematicians refer to as fully exploring “the potential space.” Imagine a desert with two pools of water separated by some distance. If you’re a plant growing next to one of those pools, you can follow one of two different reproductive strategies. You can drop seeds near your roots, where there’s a pretty good chance they’ll find water. This is safe but soon leads to crowding. Or you can toss the seeds to the wind and let them float far away. This means that almost all will die, but it’s the only way to find that second pool of water, where life can expand into a new niche, perhaps a richer one. The way to get from what the mathematicians call a local maximum to the global maximum is to explore a lot of fruitless minima along the way. It’s wasteful, in a sense, but it can pay off in the end.

I’d suggest checking out the article and seeing how you can prepare your business for an age of abundance. Great food for thought!

Companies IntegraClick and MediaPost, which saw 12,654.4% and 9,481.1% growth over the last year respectively, both offer similar cost-per-action advertising platforms used by advertisers to measure the effectiveness of their ads. Could we be in the middle of a shift in the way advertising dollars are spent?

Think about it – how much of business is just in a website anymore? Many content creators, bloggers, and website owners promote themselves and their brands across other sites like Twitter, Facebook, and LinkedIn. Why not try to cash in their clout by offering affiliate-style advertising solutions that benefit them across their multiple platforms of promotion?

The whole point of both IntegraClick and MediaPost is that they’re seeing quadruple+ digit growth. Numbers that dramatic usually signal a shift in the market, possibly brought on by a recession that encouraged businesses to switch to spending methods where they can better track their return on investment.

In my dealings with my company, SnobbySlice, I’ve found content creators more than willing to enter one-on-one negotiations about partnerships or other creative advertising solutions. There’s no doubt that bloggers are looking for more ways to make more money to support their site, but the question is how long can these one-on-one partnerships sustain themselves?

Affiliates and partnerships now aren’t to different from advertising just a few years back. Before the easy buy/display ad systems of Google, Yahoo, and Microsoft, billions of dollars worth of ads where distributed site by site and advertiser by advertiser. With the advent of Google AdWords and AdSense, the web saw a birth of a new dominant startup that was able to profit billions just by taking a small percent of every transaction.

Yet, the market is still growing. The text and display ad systems of Google left out the creative blogging world seeking a more effective system better tailored to their needs. Thanks to BuySellAds.com, a business that has seen incredible growth over the past year, upscale content providers were able to find a system that met their basic needs. What about their success? Taking 20% of every ad dollar spent, BuySellAds has seen exponential revenue growth since its relatively recent birth.

When will we see this happen again? I believe it’s only a matter of time before a cleverly designed system grants advertisers a hassle free solution for landing Pay-Per-Performance advertising that replaces people and firms with a single integrated solution. Who could be in charge? It’s difficult to predict. Perhaps publishers will take the upper hand by selecting advertisers that offer them the best deals instead of the other way around.

Is Pay-Per-Action advertising the way of the future? Is it only a matter of time before Google integrates such a system into their existing software?

Comment with your thoughts below.

The Alaska economy is in dire need of an active private capital network. Many well-intentioned local investors invest directly in exciting entrepreneurial opportunities, but more often than not they are neither making a wise investment nor really helping the entrepreneur.

In Alaska, frequently the business plans for new businesses are underdeveloped and the operational skills of management are untested. It is very important for most new ventures in Alaska to seek active capital before seeking passive uninvolved capital.

The active capital investor should have demonstrated success in operating and investing in businesses similar or related to the new business opportunity. The active investor should be on the board of directors or have a representative on the board.

He or she would usually own a more senior class of stock then the founders and require rights. For instance, if certain operating benchmarks aren’t attained, then the active capital investor would have the right to do whatever it takes to salvage the business. This type of investor is very important to the future of high-growth business opportunities in Alaska.

Alaska has very few “business validators,” but we do have numerous “real estate validators.” There are several real estate developers who have successful track records as well as repeat investors waiting for the next opportunity. This is the type of successful network we need to grow for operating business type opportunities.

Seldom do first-time entrepreneurs realize that the appropriate initial money usually has many strings attached, but those strings frequently turn out to be lifelines that rescue the company.

In concert with active investors, developing a strong board of directors or advisory board is often the difference between success and failure for many companies. The initial “business validator” helps a new business establish credibility. This investor is considered an active capital source and helps the entrepreneur validate his or her business model and provides valuation to other potential investors.

Most available capital sources in Alaska are considered passive and should not invest in local deals unless they have a “business validator” that has committed to the opportunity. It isn’t that Alaska is lacking in investment capital so much as it is lacking in lead investment capital.

One of the proven ways of nurturing this process is by developing an “Angel Network.” This is normally a formal network of successful business individuals and organizations that are “business validators” in various types of business.

It also includes wealthy individuals and organizations that are looking for suitable investment opportunities, but the successful business individuals and organizations with documented operating skills are initially the most important seed in growing the network.

This network usually evolves into one of the most important sources of active capital, co-investment capital, advisory board members and prospective directors for new businesses.

This initiative is now under way in Alaska under the Alaska InvestNet banner. It is an excellent opportunity for village and regional Native corporations to nurture shareholder development by signing up some of their current and future leaders and dealmakers into these types of self-help organizations.

Alaska InvestNet’s mission is not to replicate any existing support activities, but rather to initiate missing components and encourage collaboration among like-minded existing organizations. To get a feel for the incubation process in action, I encourage prospective participants to watch Bruce Borup’s Alaska Business Plan Competition at Alaska Pacific University.

In the competition, master of business administration students are paired with an Alaska entrepreneur or develop an idea from one of their student team members. The students develop and refine a business plan with all the appropriate financial information and compete in a well-rehearsed and dynamic investor presentation.

Hopefully, the business plan competition model will expand statewide and other schools will have feeder competitions that will lead to an annual competition co-sponsored by all institutions of higher learning in Alaska, all financial service organizations and all for-profit Native corporations.

I envision that the Alaska InvestNet “Angel Investors” will be involved in numerous advisory boards on winning business plan competitions. Some of the winning business plans will probably receive active funding from their advisory board members, and many students will find jobs either from the entrepreneurial businesses or from one of the advisory board contacts that were impressed by the students’ thought process, initiative or other factors that were displayed through the competition.

Alaska InvestNet needs early adopter civic entrepreneurs to join to help the organization reach critical mass. Early investors in the organization shouldn’t be too concerned about what type of deal flow they will be exposed to, but how they can help support and incubate the process.

Allan Johnston is chair of the Alaska InvestNet Advisory Board and a co-founder of the Alaska Business Plan Competition. He can be reached via e-mail at allanrjohnston@yahoo.com

BENEFITS:

•    attractive potential returns. The Stanford 2007 Search Fund Review calculated a 52% internal rate of return for an equal investment in each of the 61 qualifying funds.

•    the creation and retention of high quality jobs in Alaska

•    improved investment and management opportunities for Alaskan investors and young business leaders

STRUCTURE:
The typical Search Fund consists of one or more MBA graduates who spend 12 to 24 months searching for a business to acquire that met some predefined acquisition criteria.

Even though the graduates have little or no operating experience, Angel, business or corporate investors fund them for up to two years during the search process.

The Search Fund managers (MBA graduates) receive a modest salary and an expectation for an ownership and entrepreneurial management opportunity.

In return, the investors are given the right of first refusal to fund the additional capital needed for the acquisition.

A representative example of this would be:

A Search fund was initially capitalized by investors at $300,000 or $10. per share for 30,000 shares.  An attractive business opportunity was identified that required an additional $3,000,000.  The original investors were given a credit for $15 per     share or $450,000 for their original contribution.  All of the original investors would have the right, but not the obligation to come up with a pro rata share of the additional $3,000,000.  Any unmet capital needs would be offered to new investors at $15. per share or higher.

THE TRACK RECORD:

Center for Entrepreneurial Studies (“CES”) at Stanford Graduate School of Business tracks the performance of these Search Funds. The most recent 2007 Search Fund Review calculated an internal rate of return of 52% per year for an investor that had invested an equal amount in each of the 61 qualifying and participating new Search Funds that started since the Stanford 2005 Search Fund Review was published.

HISTORY: The original Search Fund was started in 1984. The intent was to empower recent Stanford University Center for Entrepreneurial Studies (CES) graduates to create entrepreneurial management and ownership opportunities for themselves.

The Search Fund model has been successfully modified by many venture capitalists where an experienced entrepreneur with documented business skills provides the initial management with the venture capital firm providing the capital and support.

Frequently these experienced entrepreneurs are domiciled at the venture capital company as an Entrepreneur in Residence or are senior level executives at companies that the venture capital company previously financed. An excellent example of this would be Housatonic Partners, a venture capital company of which Professor Grousbeck is a special limited partner.
Professor Grousbeck is quoted on the Stanford Graduate School of Business CES homepage as saying:

“It’s the most direct way I know for aspiring MBA entrepreneurs to get into business for themselves. And now that there are many experienced search-funders out there, those who have gone earlier are advising those who have come along more recently. Our objective is to have the search fund model grow, flourish, and be self-supporting, as one wave helps the wave behind it.”

THE ALASKAN OPPORTUNITY:
In Alaska, we could modify the Search Fund concept to improve long term business and management opportunities for Alaskan Native Corporations, their shareholders, Angel Investors, and up and coming young business leaders with strong management potential.  Empowering more Alaskans to create and participate in equity and entrepreneurial management opportunities will sow the seeds of innovation, leadership, and a ‘can do’ mentality that will benefit all of us.

COORDINATING SPONSOR: The Entrepreneurs and Mentors Network Inc (TEAM)

NEXT STEPS:
If you would like more information or you would like to become involved in The Entrepreneurs and Mentors Network Inc (TEAM) and the Alaska Business Plan Competition, please contact me, Allan Johnston, at:

Allanrjohnston@yahoo.com  or (907) 346-1087

UNIVERSITIES WHICH ENCOURAGE SEARCH FUNDS:
- Stanford University Graduate School of Business, Center for Entrepreneurship

Alaska is in need of a sophisticated capital source to initiate venture capital projects so that regional and village Native corporations can refer unsubstantiated investment opportunities for due diligence, screening and refinement.

In the Lower 48 states it is common for venture capitalists to require entrepreneurs to attract several concurrent investors for a project, rather then depend on a single capital source. This process is very important to catalyze and incubate new business development in Alaska. I strongly believe that the timing is right for more active venture capital activity to be started in Alaska, and I predict that we will see the first investment vehicle of this nature formed within the next 24 months.

If we can identify an individual or local organization with a demonstrated history of successful operational and collaborative business skills then the opportunity to raise a critical mass of venture capital from various Native corporations and/or other institutional investors currently exists. This type of collaborative vehicle should encourage mentoring as well as the mutual sharing of expertise and opportunities.

As lead active capital sources develop a successful track record in Alaska, some of the billions of dollars of passive capital on the sidelines could be accessed for co-investment opportunities in Alaska-related investments. If we are serious about wanting to create high-quality, high-paying non-resource related jobs in Alaska then we need to encourage and support this type of economic evolution.

Several individuals and organizations are currently evaluating various aspects of getting one or more venture capital companies going in Alaska, but most of the conversations are on a small scale. If instead a larger investment pool formed it could attract those with high-level managerial skills and could provide incentives by employing the traditional 2 percent annual fee with the 20 percent backend participation.

Initially the fund may establish a track record and credibility by engaging in at least some leveraged buyouts where the investments have a demonstrated cash flow. There are a number of Alaska investments available where local management can purchase assets and businesses from out-of-state entities and improve on the bottom line return through the elimination of high allocated costs from expensive New York, London and Tokyo headquartered companies.

This strategy would lessen the risk of the first fund while assisting in reversing the brain-drain that happens when national firms purchase local companies and the high-end professional services are consolidated Outside. These high-end professional service providers are a critical source for knowledge and expertise in maintaining the competitiveness of local businesses. The are also quite frequently the breeding grounds of new CEOs and CFOs for our most dynamic companies. Some of these individuals would most likely be part of management teams in the leveraged buy out process, while others might join new management teams as acquisition opportunities present themselves.

The purpose of this article is to stimulate discussion on this issue and to identify potential funders, managers and opportunities that are needed to condition the economic environment to encourage active capital formation in Alaska. If you would like to participate in this process I would appreciate your comments and suggestions. Please e-mail me at allan.johnston@wedbush.com or call me at 907-273-2300.

Allan Johnston is regional manager for Wedbush Morgan Securities in Anchorage. He can be reached via e-mail at allan.johnston@wedbush.com.