Inside the mind of a crazy (rich) inventor

(FSB Magazine) Indianapolis -- You probably don't know the name Scott Jones, but chances are his life has touched yours. Checked your voicemail lately? You've got Jones to thank. Pop a CD in your computer, and iTunes brings up the track names. That feature comes from another of Jones's companies, Gracenote. When Indiana last year adopted daylight savings time, it was Jones who pushed hardest for the change. The roller coaster at the Indianapolis Zoo? Jones. Dinosaur skeletons at the Children's Museum of Indianapolis? Made possible in part by the Scott A. Jones Foundation.

Most folks in the Indianapolis suburb of Carmel (pronounced like the candy) know their wealthy, energetic neighbor as "the guy who invented voicemail." In the early '90s Jones made about $50 million on his company, which created the predominate form of voicemail, and he "retired" at age 31. But he found he wasn't the kind of entrepreneur who could just fly off into the sunset in his helicopter. Over the past two decades this driven inventor has been generating ideas for new products and companies - some were successful, others hit the scrap heap - at a pace that would make Thomas Edison's head spin.

Jones's latest company, ChaCha (chacha.com), is developing a potential rival to Google - a search engine assisted by human experts who will help you find your answer. And here's what Jones claims to have on deck: self-propelled robotic lawn mowers, a method to sequence your entire DNA in one minute, a way to make humans fly.

From anyone else these might seem the ravings of a madman. But Jones backs up his ideas with a fortune he estimates to be worth $150 million, a brain that lets him keep pace with the geekiest of scientists, and a knack for managing startups. His ambition is to change the way people live, and he figures that any one of his half a dozen or so new startups could do just that.

We were intrigued by his latest ideas, but even more so by how he conjures them, culls them, and inspires a team to nurture them. Just what, we wondered, goes on inside the head of this quintessential American inventor?

[via - CNN.Money]

Daylight Savings Time Arrives Next Weekend

“Fall Back” Time Changed by Energy Bill

Daylight savings time is tardy this year, arriving one week later than usual, on Sunday Nov. 4. The extension is the result of the Energy Policy Act of 2005, to lengthen the daylight-saving time period, starting in 2007.

Among other provisions, the bill attempts to combat growing energy problems by changing the start and end dates of daylight savings time. Delaying the announced time of sunrise and sunset increases the use of artificial light in the morning and reduces it in the evening. It is presumed that more people need evening light than morning light, and energy is conserved if the evening reduction outweighs the morning increase. Despite this theory, however, many question whether daylight saving results in a net energy savings.

Believer or not, next weekend you’ll get that extra hour of sleep.

Matchmaking May Be An Old Concept But It Still Makes Money

Tal Golan knew he invented potentially game-changing technology in the fight against spam. Proving that to investors was a different story.

While venture capitalists in 2003 were intrigued by Mr. Golan's product, a hardware box that checks for spam before the message reaches corporate email servers, they kept telling him the same thing: He lacked the right pedigree for an investment.

"I didn't have the right degree. I didn't work for five years at Cisco and Oracle, then start up three companies," said Mr. Golan, who previously founded a small software development and consulting firm. "The reality is that VCs invest in people first, second and third, then the technology."

Undeterred, Mr. Golan operated out of his garage in Costa Mesa, Calif., for three years and invested roughly $750,000 in his company, Sendio Inc., by maxing out credit cards and refinancing his mortgage, betting the financial security of his wife and young children. By late 2005, the device was selling, but it was clear he needed to take his business to the next level. That is when he linked up with Momentum Venture Management LLC, an unconventional firm that promised to give him the credibility needed to court VCs.

Matt Ridenour and Andy Wilson, veteran start-up executives, incorporated Momentum in late 2004 to work full time with company founders to shape their business plan, find credible management, finish a product and gain customers -- a process that typically takes them about nine months to complete. At that point, they shop the company to VCs with hopes of securing a Series A round of between $4 million and $5 million.

Momentum is one of several firms that have cropped up in recent years to fill a funding void left by VC firms shifting their investments downstream and bypassing the traditional guy in a garage. That shift left many unseasoned entrepreneurs such as Mr. Golan to fend for themselves in bringing intelligent ideas to fruition. But it is also opening up an opportunity for smaller firms willing to take on higher risk and lend more credibility than do traditional angels.

"If you're an entrepreneur, seed and Series A deals are really tough to get right now," said Beau Laskey, a managing director at Burbank, Calif., early-stage firm Steamboat Ventures. "Venture firms are looking for customers and traction."

Los Angeles-based Momentum has a distinctive model that dedicates far more time than a typical angel or seed-stage investor would, while also assuming considerable risk. Momentum first spends about six weeks -- usually for a fee of less than $20,000 -- validating a business plan, confirming the chemistry with the founding team and completing due diligence before committing to the start-up.

Upon approval, one of three Momentum partners then installs himself as the chief executive officer, moving the founder to the role of chief technology officer and eventually bringing on a new CEO a few months later. At some point during the process, Momentum provides a bridge loan -- typically $250,000 to $500,000 taken from a small bridge fund pooled from wealthy individuals -- to keep the company going, all for a "nominal" monthly stipend.

"We're solving an intractable problem in the early-stage business ecosystem," Mr. Wilson, Momentum's managing director, said. "Entrepreneurs are often stuck in that vicious business cycle of needing money to recruit business talent, build a product and attract customers, yet they can't raise the money unless they have those pieces in place."

Typically a Momentum partner works with two companies at a time, spending half of his time on each, with an operating associate subbing as a project manager and director of operations. Momentum's ultimate goal is to deliver the company to venture capitalists and secure that first round of capital, when the firm's bridge investment converts, often at a discount, into Series A preferred stock. It is at this point the firm gets paid for its work after having deferred the majority of its management fees during the previous nine months.

Longtime venture capitalist Lou Volpe, a managing general partner at Waltham, Mass.-based Kodiak Venture Partners, believes Momentum's model is unique and would consider investing in a start-up seeded this way, but questions the firm's scalability. "Whipping a company into shape, enforcing operating discipline and building an executive team takes a lot of energy and time," Mr. Volpe said. "These guys are going to be limited with their scale."

Thus far, the firm has taken all seven of its start-ups to the Series A level, focusing on Los Angeles-area technology companies that require less than $10 million in funding to break even on a cash-flow basis. The seven have raised a total of $30 million in Series A funding from venture capitalists. The firm had its first exit in 2006 when Discovery Communications Inc. acquired Academy123 Inc., which had raised a $5 million Series A round the year after Momentum brought the company to venture firms Arcturus Capital and Hanseatic Group.

For Mr. Golan, it took about 10 months to get Sendio through the Momentum-coached process and into the hands of VC investor Kline Hawkes & Co., which provided $4 million in Series A capital in October 2006. Sendio now has about 275 customers. Earlier this year, it estimated it would have 1,500 customers and sell $7.8 million of product by the end of 2007.

Before linking up with Momentum, Mr. Golan said, he pitched his plan to angel coalitions, but found them as unwieldy as investors. "You have to make like 100 presentations to 100 guys and the only thing that qualifies them is money," Mr. Golan said. "It's kind of like 'American Idol.' You make the pitch, move on to the next round, and try to get 10 people to agree on everything. I'd rather take the risk on the credit card than have to deal with angels."

Klaus Koch, a Kline Hawkes investor who led the firm's investment in Sendio, said a firm like Momentum is especially beneficial to VCs because it is bringing only companies with proven business models and customers.

"Momentum comes in and takes out the significant risk," Mr. Koch said. "They're pitching us with all the information we need and cleaning up the legal issues. They really understand what a VC wants, and for a firm like us that manages $270 million, that's very valuable."

[via - StartupJournal]

Content Syndication As A Business

Media organizations increasingly rely on syndicated content, but access to such material typically requires expensive subscriptions or syndication deals. New York-based Mochila has devised a way to offer articles, photos, audio and videos a la carte while dispensing with subscription fees and protecting authors' rights.

Launched earlier this year, Mochila's website is essentially an online marketplace for content. Sellers offer up their wares along with price and any restrictions; buyers search for what they need and choose the best match. Content can be instantly downloaded into any publishing system, and purchases can be made in two ways: either by paying the price set by the original content owner, or by agreeing to post advertising along with the item, in which case the content is free. In the ad-supported arrangement, advertising revenue is shared among the buyer, the seller and Mochila.

For sellers, the benefits include new revenue opportunities and increased exposure; for buyers, decreased operational costs, more ad pages and revenue opportunities, and the rub-off effect of big-name content are among them. More than 1,000 media organizations have joined Mochila so far, including Reuters, the Associated Press and Hearst Magazines—you can't get much bigger than that.

World media spent just under USD 2 billion on syndicated news content last year, and that figure is expected to grow to USD 3 billion by 2008, Mochila says. The time is ripe for a new content model, and it looks like this one is taking hold. How about putting a niche or curator’s spin on the concept?

[via - Springwise]

Finding new homes for pre-owned cell phones

Despite the growing number of cell phone recyclers, junk drawers across the country hold 130 million cell phones each year. "Everyone perceives value in their phone; they just don't know what to do with it," says Cyrus Farudi, the 27-year-old co-founder of Flipswap.

Three years ago, Cyrus--along with brothers Sohrob, 30, and Rahmeen, 25, and friends Edo Cohen, 27, and Andrew Berman, 30--decided to tackle the problem of electronics waste. But instead of recycling cell phones, they put them back into use. Their program, now used by 2,500 retailers nationwide and available at cellphonetradeins.com, offers consumers cash for trading in their old phones.

More than 15,000 units a month are shipped to Flipswap in Torrance, California, inspected and then sold to companies that sell them back to consumers, most of whom are overseas. The entrepreneurs, who project $12 million in sales this year, have since added iPods to the mix and plan to start "flipswapping" other electronics soon.

[via - Entrepreneur]

How To Turn $60 Into $1000 In Three Months With Domain Names

Here is an interesting story about 'renegade webopreneur' who turned sixty dollars into a thousand bucks as a 'domain profiteer' I just received via e-mail. Most likely, we'll see more and more stories like that. Here is why:

The smart investors with big money are now jumping into this market. You should know that Ross Perot's Perot Investments, Inc. and Howard Schultz's (Chairman of Starbucks Corp.) Maveron LLC have each invested millions of dollars into companies that are buying domain names today for income and future profit. You know these guys are not going to put millions of dollars at risk on a whim.

Richard Rosenblatt has created and sold $1.3 billion dollars of Internet companies including iMALL which he founded, ran and sold for $565 million, and MySpace which he turned around as Chairman and sold for $580 million. He's raised over $200 million to invest in his domain business.

With major players like Perot, Schultz and Rosenblatt writing multi-million dollar checks, you don't have to worry about this being some fly-by-night deal. We're talking about a serious - incredibly profitable business - that's exploding across the Internet. Just one portion (according to Red Herring magazine) has exploded from $400 million in 2006 to a projected $1 billion in 2007!

Sweetest Day - National Holiday Founded in Cleveland

Sweetest Day, observed on the third Saturday of October, was started in Cleveland in 1922 by candy employee and philanthropist, Herbert Birch Kingston as a way to give something or do something nice to those less fortunate than ourselves. Originally called "The Sweetest Day of the Year," Sweetest Day has evolved into a romantic holiday, similar to Valentine's Day.

History:

The first Sweetest Day came out of one man's desire to do something "sweet" for Cleveland's orphans and unfortunate residents. With the help of movie stars, Theda Bara and Ann Pennington, Herbert Birch Kingston, delivered thousands of boxes of candy throughout the city. Begun in 1922, the holiday, observed on the third Saturday of each month, became popular during the bleak economic times of the Great Depression.

Sweetest Day Today:

Although it started as a regional holiday, Clevelanders have taken the custom with them as they moved around the country. Today, Ohio still tops the list in sales of Sweetest Day cards, but other states on the top ten list include California, Texas, and Florida. Over the years, the holiday has evolved into a day to celebrate romantic love, similar to Valentine's Day.

What to Do for Sweetest Day:

Typical Sweetest Day activities include going out to dinner at a special restaurant or giving chocolates, flowers, or greeting cards. Indeed anything "special" is an apt gift or activity for Sweetest Day.

[via - Sandy Mitchell]