Okay, so this round of the Finance of Startups, I’m going to dive into the S-1 for Fitbit – filing for its initial public offering (IPO) seeking $100M. I’ve been researching various finance concepts for a while now, and so I’d like to start putting more practice to the understanding with this kind of like David Cummings does. I figure if he’s successful and doing it, I could follow in his shadow, and take a crack and learning.
Fitbit, if you didn’t know, is well known for its wearables that count the wearers’ steps, calories burned, sleep habits, and the like. Fitbit devices are paired via Bluetooth with a user’s smartphone that then interprets the data to provide analyses and trends to the users. Fitbit is one of the first companies to really pave the way for the “quantified self” movement.
Diagram of Fitbit’s community of users – three categories and fitness levels
But before I begin, here’s what an S-1 form is:

The S-1 form, also known as “Registration Statement Under the Securities Exchange Act of 1933”, is required by the Securities and Exchange Commission (SEC) for any company seeking to sell securities on a national exchange. The form requires the company disclose details regarding the use of proceeds, current business model, etc.

So some highlights of Fitbit’s S-1:
  • Fitbit mission: “Fitbit helps people lead healthier, more active lives by empowering them with data, inspiration, and guidance to reach their goals.”
  • Company started in 2007, and as of March 31, 2015, has sold more then 20.8 million devices (~68% market share, by dollars, in 2014 accordingly to NPD Group)
  • Fitbit uses virtual badges and social competition (with other users) to motivate wearers
  • Revenue have grown rapidly (average year-over-year growth rate of 285.6%)

2011: $14.5 million

2012: $76.4 million
2013: $271.1 million
2014: $745.4 million

  • Net income (loss) has just turned into the black in 2014

2011: $(4.3) million… -30% of revenue
2012: $(4.2) million… -5.5%
2013: $(51.6) million… -19.0%
2014: $131.8 million… 17.7%

  • Device sales (ranging from $4.95 to $195.00 U.S. MSRP)

2011: 0.2 million
2012: 1.3 million
2013: 4.5 million
2014: 10.9 million

  • International Data Corporation (IDC) estimates 21.0 million devices were shipped in 2014, and estimates wearables will reach 114.0 million in 2018 – a 442.9% growth
  • Over 45,000 points of sale (retail) in more than 50 countries
  • 1.1 million registered users as of December 31, 2012; 19.0 million as of March 31, 2015
  • Acquired FitStar in March 2015 to enhance the company’s software and services especially with interactive exercise videos
  • Corporate wellness is mentioned a lot including citing the corporate wellness industry expanding from $7.4B in 2014 to $10.4B in 2018
  • The company incorporated in Delaware in 2007 as Healthy Metrics Research, Inc, but changed the name in October to Fitbit, Inc. Company is headquartered in San Francisco, CA
  • Paid Active Users:

2012: 558 thousand
2013: 2,570 thousand
2014: 6,700 thousand

  • Fitbit cites a highly competitive market not just including specialized consumer electronics companies like itself (Garmin, Jawbone, Misfit), but also the traditional health and fitness companies (Adidas, Under Armour) and even large, broad-based consumer electronics companies (Apple, Google, LG, Microsoft, Samsung). Think about that for a second, aren’t those “large, broad-based consumer electronics companies” now touching everything from fashion to cars to homes, as well? Crazy
  • Products are all contracted for manufacturing in Asian with Flextronics – sole source. This has business continuity issues and procurement implications all over it
  • Fitbit had a product recall due to users having “allergic” reactions to its devices in March 2014
  • For the three months ending March 31 of 2014 and 2015, Fitbit spent $71.9M and $21.1M on advertising and marketing campaigns
Okay, I reached page 28, and it’s getting pretty dense, so… I stopped. The S-1 continues for another 100+ pages describing in detail about each of the sections from the prospectus earlier presented as well as current product features. Skipping around, you can find some interesting other tidbits including executive compensation (like $7.8 for the President and CEO James Park, of which, $222K was salary) and much more.
Very interesting to see Fitbit, where they were, where they are, and where they plan to go. I’m surprised, though, the company did not include any other future plans including expanding into more integrative health such as building networks with healthcare providers. Hmm…
What questions do you have about the Fitbit S-1? How do you think the company will fare in the coming years?
Wow… so this is what 100 feels like! Actually, it feels about the same as 52, 89, and 75. But it sure as heck feels a lot easier than 1-10. Since about October 2013, I’ve posted once every week, typically on Wednesday. Today, it’s second nature for me to write and share – takes about two hours per post including editing.
When I first started writing, I didn’t really have a clear-cut goal other than to start my path down “thought leadership”. I knew that I had already earned a lot of experience that I could put to use today, rather than wait several years when I was “older”. Although, the blog was under the moniker “Supply Chain Ninja”. I’ve rebranded to Entrepreneurial Ninja, so the earliest posts were about supply chain and consulting.
I saw the number of posts continue to climb, and it was only till I hit 90 where I really started to reflect on what I wanted to say on my 100th post. If you ask most people around me, this isn’t really a big deal to me. I mean… 100? Really? Over a couple years? That’s really not much considering there are several bloggers who publish three times a week and real stalwarts who published DAILY.
Alas, I’m celebrating the consistency, especially given the countless times I wanted to just say, “Nah, I’m done. I have nothing left to share.” But I’ve kept it going anyways.
So for my 100th post, I’m going to give you three things: what I’ve learned, posts that have garnered the most views, and then, my own favorites.

Lessons I’ve Learned Through 100 Posts

  1. I love writing. I didn’t care much for writing in school, but post-school when I absolutely do not have to write this or in other mediums, I love it. I’ve done my own mini-research papers about relationships and technology, I’ve written about personal goals and my way of thinking on another blog, etc. It’s fun. It’s therapeutic. It’s distinctly me.
  2. People love my writing. People like my writing. People hate my writing. People don’t care about my writing. All of this is OKAY. I obviously want more passionate, lovers of my work, but I’m comfortable with those who don’t care about it, too. Sometimes my message resonates with people, and sometimes it doesn’t. That’s okay.
  3. Even as a consistent writer, I still get shy. There are posts when I have no idea if what I’m writing truly adds value in the message I’m writing. However, I do it anyways because it needs to be like clockwork for me.  And then, there are times I still feel shy about writing and sharing with the world. Even though I JUST said it’s okay for people to not care for my writing, I do have twinges of timidity.
  4. I love learning. When I write and write, I can run out of ideas. Luckily, there are sources of inspiration everywhere. Blogging has been a source of great ideas for me and great learning. I’ve read much more than I used to (again, in school, didn’t care for it). I meet so many more people now than ever. I like to ask questions, and I like to learn and share with the world.
  5. I write a lot. I’m going to change up my writing style soon (I’ll have a post about that, too), but I can write (and talk) A LOT. I’ve learned I’m very opinionated, but I’m open to others’ opinions and thoughts because then I learn. But I’m happy about being opinionated, too, because in my earlier years, I was shy and lacking of self-confidence. Now, I have confidence in my abilities and who I am.
  6. It’s about the message, not necessarily the details. As I click through my earlier posts, I smile at what I’ve written, but I also start editing little punctuation or grammatical mistakes. I’m like the guy on Match.com who will not date a chick with too many typos on her profile. In blogging, I can easily spin my wheels sweating the details of grammar, details, etc., but then I would be stressed and may never push out a post. What matters THE MOST is hitting that Publish button, and sharing the message with the world. As long as the main idea and key tenets are there, readers will appreciate it. As will I.

5 Posts with the Mosts… Views, comments, and more

My Favorite Posts… the ones I enjoyed writing and sharing

I’ve had a lot of fun writing both the goods and the bads (the challenges). Looking forward to hitting the next 100 posts, and maybe (MAYBE) up my frequency, too. Thanks for reading and following along!

What posts were your favorites? Any suggestions on writing style or topics to cover? 
Kenneth Cole speaking at the GMSC event at Goizueta Business School on Thursday, May 7th. 
Last Thursday, I had the pleasure of hearing THE Kenneth Cole give a keynote to MBA students at Emory’s Goizueta Business School (GBS) as part of their Goizueta Marketing Strategy Consultancy (GMSC). I was there as a judge of the group presentations, not as a student.
A little intro to both:
  • Kenneth Cole is the founder and designer of Kenneth Cole Productions, Inc. one America’s premier fashion brands today with products spanning shoes, clothing, bags, etc.
  • GMSC is a program that allows Emory MBA students work in teams to solve very complex, real problems for some of the world’s top companies.

So I’m going to share the short story about the founding of Cole’s company that highlights some of the creativity and persistence I enjoy so much about entrepreneurship and then some good sound bites from his talk… Sadly, I won’t be able to do his comedic side justice, but maybe you’ll have the pleasure of hearing from him live one day, too. Till then…

The Birth of a Shoe Company…

As any good presentation starts, Kenneth Cole open with a story on how his company was started. A newly minted graduate of EmoryUniversity, Cole wanted to start his own shoe company following in the footsteps (pun not necessarily intended) of his parents who owned El Greco, a shoe manufacturing company.
Cole applied for the “Kenneth Cole Inc.” as he started out – there was no Google to just search company names in the 70’s after all.
He started the company based on shoe designs he had incepted during his stay in Italy, and he knew the massive market and financial opportunity of America. He knew for success, Cole had to make an entrance at Market Week held at the New York City Hilton. However, he didn’t quite have the funds to pull it off.
Much like conferences today, it takes significant investment to grab a vendor booth – hundreds, if not thousands of dollars. However, many of the large brands would set up a secondary space located within blocks of the Hilton to showcase more products. For Cole, that was too much.
Cole was speaking to one of his friends about his predicament, and his friend offered up his 40’ trailer (who doesn’t have a friend with a 40’ tractor trailer?). However, it’d be insane to park a 40’ trailer on a busy NYC street. Cole would have to get a permit for that type of thing…
So Cole called the mayor asking for a permit to park the 40’ trailer on the street next to the Hilton – the show happening in 10 days. The skinny on that conversation: “No.” The mayor told Cole permits were only issued to utility companies and movie filming. So the only logical thing to do now was to ask friends and family for money to buy a booth. Just kidding.
Instead, the next day, Cole changed the name of his company from “Kenneth Cole Inc.” to “Kenneth Cole Productions Inc.” and applied for a permit to film a movie “Birth of a Shoe Company”. The permit was granted, and to top it off, the mayor provided a couple cops on set of the filming.
So what happened at the shoe show? Kenneth Cole sold 40,000 pairs of shoes in 2.5 days (!!!). And to this day, the company’s name is Kenneth Cole Productions Inc.
My Kenneth Cole wallet has served me for more than a decade – received as a present. I’ve received another high quality Italian wallet a couple years ago, but I’m not interested in replacing mine. Actually, I can’t remember where that new wallet is – don’t tell my sister.

Tassels, buckles, and more accessories

Kenneth Cole wouldn’t be the creative he is today without some witty, inspiring sound bites, so here are several of my favorite:
  • As it relates to resources and problem-solving, usually the most costly solution isn’t the best or the one that “wins”. Instead, the most creative solution pays off the greatest. Case in point: Cole’s request for a filming permit above.
  • The difficulty and honor of selling his brand is that he has to earn the right to be chosen. Nobody really needs another pair of shoes.
  • Kenneth Cole wants his company to be a vehicle for good citing his company goals intersecting with the needs of the community – its responsibility.
  • “Empower others to be change agents and change makers.”
  • “Build a platform that responds to change, not be stifled”. This is relevant to creating sustainable company despite rapid changes to fashion and technology today.
  • The brand is the greatest point of distinction, but today, everyone is creating their own brand and audiences. Kenneth Cole’s goal is to earn the right and convince everyone to include him in their brands.
  • The 4 top life tips:

1.      If you can’t change the world, be an accessory.
2.      What you stand for almost as important as what you stand in.
3.      When in doubt, wear my shoes.
4.      Good to be known for your shoes, but better to be known for your soul.
I enjoyed Cole’s speech a lot given how many of his talking points resonated with me as an entrepreneur – namely, points about being creative and the responsibility of a brand to the community. Real glad I got a chance to hear his keynote, and shake the Legend’s hand afterwards. (Now, if only I got a selfie with him… just kidding.)
Mr. Cole, I’ll be picking up a pair of your shoes soon… even if I don’t need them.

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Took a hike on Saturday morning to the top of Stone Mountain to catch the sunrise. There are a million reasons not get up this early, but if I hadn’t, I wouldn’t have caught this beauty.
If you’re a mountain biker, you know the importance of picking a line, attacking it, and driving your legs to get through tricky terrain. Turns out, this line-attack-drive mentality is actually pretty applicable in the world of startups and entrepreneurship, too, but not just in navigating the treacherous terrain of entrepreneurship, but also in just starting out.
When I was younger, my buddy and I biked around the neighborhood looking for “mini-off-road adventures”. That meant going down stairs around the ‘hood, flying through the wooded backyards of neighbors, and occasionally, fording a creek bed near the neighborhood pool.
The creek had rocks and dips in addition to the slow current of the creek, so it made for a “risky” adventure – hey, we’re in the suburbs. The key to navigating the traps and obstacles was to find a line, attack it, and keep churning your legs.
At first, my buddy had trouble fording the creek either stopping well before entering the creek or right smack in the middle. But once he focused on a clean line free of rocks and big dips, finding momentum into the line, and then driving his legs, he was crossing the creek almost effortlessly.
I’ve recently sat down with several “wantrepreneurs” and musicians, and so many of them are stuck in this “I’m not ready” phase or “I’m waiting for… [insert ‘stars to align’ here]”. But as they’re waiting for the right people to come aboard to help or for themselves to have the confidence to try, years have passed by. And in most cases, those ideas are now yesterday’s someone else’s successes.
So why are people holding back? How do you just “pick a line, attack it, and keep your legs driving”? Everything’s easier said than done, but maybe being conscious of what’s holding you back is a step towards accomplishing the goals you’ve set forth for yourself. So here are a few thoughts:

Surprise! You’re afraid of what others think.

How many times are we afraid that others won’t like what we’re doing, or they “disapprove”? Funny thing is that everyone has their own priorities, and you should too. That priority? Yourself.

I happened to meet a young girl in high school who said she liked to sing, but she didn’t consider herself a singer or musician. In fact, when my friend and I asked her why she didn’t share her music more, she mentioned “mean girls” at her school. Wow. That was truly sad. She was holding herself back from her passion, afraid of being teased by others who really didn’t care for her. Meanwhile, those who did care for her encouraged her, but it was the rotten apples in the group with nothing positive to say who held her back.

What you’ll learn in any marketing exercise, especially in startups, is that you’ll have multiple levels of the market, and those who your message resonates with are the ones who matter the most. It’s that depiction of a funnel where the right audience who comes through at the end. And believe me that there are plenty of people who will care about what you do and say.

You think you’re not ready.

“If we wait until we’re ready, we’ll be waiting for the rest of our lives.” – Lemony Snicket

Truth is, I don’t think we’re ever truly ready for a lot of things. Couple examples:
  • I hear from my friends who are now parents of little ones that they didn’t think they were fully ready, and even when their kids were born, they weren’t. But they learn on-the-fly.
  • As I’ve started consulting independently, I’ve had to rely a lot on my own experience and skills and my ability to quickly learn. Once I sold myself on projects and started working on them, I’ve continued learning which has been my way of powering through (the drive). Sometimes, it’s smooth, sometimes it’s not. But each time has been a great learning experience.

When we pursue a dream or a passion like entrepreneurship, we have to be strong, smart, and vulnerable enough to ask for help. Those capabilities you think you may lack can be learned, and asking for help is one of the best ways to do that.

It’s amazing what happens when we actually push ourselves and keep our legs churning – we accomplish what we didn’t think we could.

With more time (and falls), you seek the path of least resistance.

I was hiking on Stone Mountain this weekend, when I realized I started picking lines on the trail with the smallest “steps”. I remember I used to love jumping down the larger boulders. Now, I’m nursing a sprained ankle (I’m like Mr. Glass these days), and I’m consciously more cautious of what line I take.
When I was younger, I would dream about mountain biking up and down this granite. Now? Now I’m slowly, cautiously stepping down each boulder. Ah, how the years have affected my risk aversion…
As we all get older, “wiser”, we’ve got more experience and scars that keep us from both getting hurt and attempting anything too risky (like a growing family). Sure that can be a good thing, but it can also hold us back as we settle into a pattern. It’s important to weigh risks against the opportunities and realize, too, that some risks aren’t really risks at all. Instead, they’re just excuses.

You don’t think you’re good enough.

Patrick McKenzie (of Kalzumeus Software) wrote a post about the need for salary transparency in Talking About Money, but he also shared a little nugget of truth about skill growth. Patrick increased his consultancy rates dramatically from $12K per week to $30K to $50K (PER WEEK!!) DESPITE his skill levels being largely the same. Instead, it was his ability to continue to market and sell himself that drove up rates.
When we’re afraid to venture out on our own or to share our music or our ideas, most of the time, it’s because we THINK we’re not “good enough”. However, in most cases, we are. Patrick continued growing his consultancy rates by learning and iterating over the years. It took practice to learn and iterations… practice and iterations he would never have if he never started.

You put others and others’ obligations ahead of yourself and your own.

I was talking to my musician friend the other day. I’ve heard his stuff, and he’s genuinely a great musician, but due to his work with others, he hasn’t put out any new music in years. At least, he hasn’t shared it. It makes me sad a bit.
I explained it to him like his personality… he’s a great guy, has a good heart, and has some deep, creative thoughts. However, most people don’t know him that way because either he doesn’t open up to others or strangers don’t just say hello. I just happened to be the Curious George to say hello.
His music, like his personality, will never be liked, disliked, or even known it ever existed if he doesn’t share it with the world.
It’s easy to be so focused on the day-to-day that our true passions fall to the wayside while we earn the paycheck that puts food on the table. Important, sure. However, perhaps it just takes being conscious of the lack of effort we spend on what we’re truly passionate about to seize the opportunity and share.

The most successful DO-ERs know that stagnation is a trap, and it’s got this gravitational pull that keeps us there. They know that the only way to success is to… well, DO. Pick your line (your direction), attack it (you do), and drive through it (learn, iterate, keep doing). 
How would you use the Line-Attack-Drive mentality to achieve some goal you’ve set? What other step do you think is missing from this?
What’s more motivating for you — learning how to fish or the fish itself? (Image Source: http://thelakemurraynews.net/wp-content/uploads/2014/04/Fishing.jpg)
I was talking to an intellectual yesterday about an idea of his. He’s an entrepreneur in the marketing realm, and wants to get a technology idea off the ground. He’s also an author and PhD with a wide breadth of exciting experiences; hence the “intellectual”.
So we were talking about his idea, and it’s in the realm of politics. I know diddly squat about politics. I’m sitting there and understanding what he’s proposing conceptually, and at the end, he asked me to get back to him if I’m interested in taking on the project in some capacity, but also, if I’m not passionate about it or the subject at all, then no worries.
That little bit made me think about if I need to know or “care” about politics, or if there was another drive that would motivate me to take this on. It made me think of what I’m passionate about, what challenges I find rewarding, and to some extent, what am I scared of – the domain of an idea or building the idea.
Throughout our talk, I was leaning on my experience building startups in thinking about the venture as it relates to marketing, user experience, and largely, the technical mechanics of it. It’s not technically difficult to be honest, but I don’t know politics necessarily. So all this time, the hamster in my head is running furiously thinking about the building aspect of the idea, not really politics. That’s what drives me.
I’ve long called myself an opportunist. I mentioned in prior posts like “The Next Act for an Entrepreneur With Breadth, Not Depth – Am I A Product Manager?” that I don’t necessarily have a specific domain expertise, but look at what I’ve done, and you won’t necessarily find much commonalities in domains. Instead, you’d find the BUILDING part of my ventures as the common thread. It’s the thrill of the strategy formation, hypothesis testing, implementation, learning, and then the recycle.
Thinking about this “domain” vs. “build” concept, I suppose I can relate “build” to the “work”, “implementation”, or “delivery” of other occupations or even in the corporate job world. Or better yet, “domain” would be the “what” question and “build” would be the “how” question. For me, it doesn’t so much matter about what an occupation or idea is in. Instead, I’m interested in the “how”. What scares me when I’m building iOS apps right now, for instance, is how to mechanize an idea. How do I use the iPhone’s GPS, if I’ve never used it before?

Taking the old proverb, “give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime”. But perhaps the more relevant question is if the man even wants fish. What if he’s allergic?! So fishing, in this case, is the “HOW”. And the “fish” is actually the “WHAT”.

And of course, you have more questions that can and will motivate you as you choose a new job, a new venture, etc. including WHO, WHEN, WHERE, and my favorite… the WHY.
  • The Who question can address who you work with (want to work with your best friend?) or who you serve.
  • The When question can address if timing is right – if the market’s ready, if you’re ready, etc.
  • The WHERE question, similarly to WHEN, can address if the location’s right. 
  • The Why question is a tough one, and yet so easy… this can answer if you’re in sync with the purpose of a company. Is the company pursuing a mission you’re proud of and feel strongly about?

But with the Intellectual, the questions that raced into my mind that concerned me the most were that of the domain (the WHAT) and how mechanizing the idea would work (the HOW). At least with this opportunity, I wouldn’t be able to tell if BM would or would not be someone WHO I would want to work with. I will have to consider the WHEN question before I get back to him given my bandwidth now and in the foreseeable future. And as for the WHY, this opportunity would allow me to learn a lot from a brilliant, well-connected individual that would perhaps be a great stepping stone for something later I could be even more passionate about.
Of course, for me, I have to be wary of that the building process only lasts for so long before the product reaches maturity and stability. And thus, the challenge dissipates, but perhaps, the challenge actually transforms into another type of build… like building a company, or building new innovative ideas… but in a better case, the WHAT becomes just as appealing as the HOW.

What are your thoughts about what excites you about your job or a new opportunity – is it the domain or the build? How do you consider the other questions (who, when, why) as you evaluate options?
So last month’s installment of Finance of Startups, I covered “par value” after encountering the term in Etsy’s S-1. In it, recall that par value is the price at which a security is issued and redeemed at. Well, par value really leads into a much longer conversation around a particular security called Bonds.
In gist, Bonds are similar to loans or “IOUs” (read: debt) whereby you, as an investor, lends money to a company, government, other institution with the promise of paying you back with interest. So in this case, par value is the amount the bond is issued at, and multiplied against the number of bonds issued, equivalent to the money lent.
To understand bonds, we’ve got to explore a few concepts of bonds including:
  • Maturity date
  • Coupon rate
  • Premium vs. Discount

I’m happy for you, and Imma let you finish, but first… let’s recap par value

So “par value” actually arose from recently looking at Etsy’s Form S-1 as they’re seeking an IPO.
So I’m going to dive into par value, especially in relation to bonds. Yes, the S-1 is for stock issuance (equity financing), but to give you a better picture (and for myself), I’ll paint this in the light of bonds (debt financing). Then, I’ll circle back around to par value for stocks. Also, yes, I’m about to get a little technical!
Par value (also known as par, nominal value, and face value) refers to the original price a security is issued at (and redeemed). Par value is more typically referred to in bonds where bonds are issued at and redeemed after its maturity period at par – typically $1,000 or $100.

Now, let’s talk about your Maturity

The maturity date (period), in the case of bonds, is the date at which the bond expires (bond is redeemed at the par value at this point). Oftentimes, bonds have a maturity period of 30 years.
There. That was simple. Next!

Coupon rate and payments

Going hand-in-hand with par value is the concept of the coupon rate which is similar to a fixed dividend and is a percentage of the par value – payments referred to as coupon payments. As a bond is bought and sold, traded, its coupon payment is exactly the same for the life of the bond till it hits maturity no matter the actual price of the bond at the time of the transaction – because the coupon payment is based on the par value (original issue!). Okay, here are a couple examples:
Example 1. 
Bond AA is issued with a 30-year maturity, coupon rate of 8% and par value = $1,000
Year 0
Bond is bought at $1,000
Year 1
Coupon payment is issued at $80
Year 2
Coupon payment is issued at $80
Year 3
Bond is sold and bought at $1,100
Year 4
(New buyer) Coupon payment is issued at $80
Year 5
Coupon payment is issued at $80
Year 30
Bond is redeemed for $1,000
Example 2.
Bond BB is issued with a 30-year maturity, coupon rate of 4% and par value = $100
Year 0
Bond is bought at $100
Year 1
Coupon payment is issued at $4
Year 2
Coupon payment is issued at $4
Year 3
Bond is sold and bought at $98
Year 4
(New buyer) Coupon payment is issued at $4
Year 5
Coupon payment is issued at $4
Year 30
Bond is redeemed for $100
Make sense so far? Okay, so if you’re looking at the above, you might be savvy and ask why bonds would trade above or below par – depends on the economy’s interest rates! Depending the interest rate of the company, due to the fixed returns of bonds, financiers may opt to invest in bonds or choose an alternative security that pays higher.

Are you trading at a Premium or a Discount?

If the coupon rate is 8% and interest rate is 5%, bonds may trade above par value (called a “premium”) because the bond yields a greater return. This is what happened in Year 3 for Bond AA example above.
If the coupon rate is 4% and the interest rate is 5%, bonds may trade below par value (called a “discount”) – Bond BB in the examples above. Make sense?

Recall again…

“So all this talk about bonds, but Etsy and other companies are issuing stock with some par value. What gives?”
Well, companies will typically attach a very, very small par value (like Etsy’s S-1 shows above) to a stock or no par value at all. This enables Etsy to limit or avoid altogether liability should a stock drop. For example, if Company Not Great issued stock with a par value of $10, and its stock started trading at $5, then it would technically be liable to the shareholder at $5 per stock!

Conclusion

Okay, that was technical. Does that make sense?
  • Par value for stocks à very little, or none to limit liability. For bonds, par value is the “face value” (or nominal value) of the bond that it is issued or redeemed at maturity.
  • The par value works with a coupon rate to determine fixed annual payments.
  • And depending on the economic interest rates, the bond may be traded at a premium or a discount (because you could get better returns either through the coupon payments or via other investments).

As always, feel free to email or tweet at me @TheDLu if you’ve got more questions, or if you want me to do some financial research for you for next month’s Finance for Startups.

I don’t have a thought-provoking post today, but instead, I’m going to share a few pictures I took of the door to the men’s bathroom at Atlanta Tech Village back in January. Why? Because in the spirit of entrepreneurship, 1) I think these pictures are great representations of user experience not matching its intended design and 2) lean startup methodology for a short-term resolution.
So the first picture here is of the door leading to the bathroom on the first floor. Looks pretty simple and straight forward, right? Except, it’s not.

You see, design-wise, this simple entrance and exit would normally mean you turn this little doodad:
Yes, a door knob. Except, when you go to turn it, it doesn’t turn. So, it’s pretty common to see people walk up to the door, attempt to turn it, find it “locked”, and either wait for someone inside to open (thinking someone’s inside), or leave altogether.
Upon closer inspection, the door jam is stuffed with paper. Instead, this door is meant to be pushed [from the outside]. See, this door knob is really arbitrary, and actually, it’s misleading. Here’s an example where design and engineering aren’t matching.
What this door should have is a simple “push” plate/ handle like you would find in any other push/ pull door. Yeah, like this one:
Or something like this:
You get the point.
Anyways, leave it for someone to implement a really simple solution in a rather lean startup way…
I don’t have a picture of the door since January, but I’ll update this post after Friday when I stop by ATV to see what’s changed. Last I remember, it hasn’t quite changed. Instead, I’ve just gotten used to ignoring the door knob and pushed through.

[EDIT] Here’s a picture of the door today (as of April 24, 2015)…

They implemented a push plate — there you go…
So the point here is really very simple: design simply and ensure user experience matches the design you intended. Sure in this example, users can get upset or worse have a kindergarten accident (hopefully not likely). But in today’s technology world, we as entrepreneurs, designers, and builders sometimes do not get second chances before users dump our app or SaaS in favor of a simpler, accurate, and engaging user experience.
Also, sometimes the most effective solution is really a lean startup-like solution in the short-term. In this case, a simple note taped to the door notifying the user to “Push” is sufficient for now. Most people will overlook the tackiness of this approach before you can actually replace the whole door knob in favor of one of the “Push” handles later.
Characters from CBS’s “How I Met Your Mother”
Barney Stinson from CBS’s “How I Met Your Mother” makes introductions look easy. And in actuality, you’d think introductions and referrals should be extremely simple, but unfortunately, they can be utterly complicated. I’ve always valued relationships believing that success can be attributed to the people who put us in position to “win”. In the professional world, leveraging relationships is “networking”, and the greatest networkers are less about who they connect with as much as who they connect to who.
I’m going with the assumption that by reading this you already understand the opportunities networking and connecting affords. But a few examples anyways:
  • Connecting to others can open doors to the right customers you’ve had your eyes on for months.
  • Connecting to the organizer and chairperson of a tradeshow may get you introduced and in-the-know of everyone else attending the tradeshow. They are, after all, the common point.
  • Connecting with your old college buddy’s company’s Vice President can land you your dream job.

For so many reasons, I love introducing the good people I know with other good people. However, it can be tricky business, especially when others don’t value relationships quite like I do. So here are some simple thoughts on introductions and networking:

  1. It’s your reputation and your relationship. The people you introduce together are representatives of you vis-à-vis the people you associate with. Be cognizant of this. If you’re one of the people being introduced by someone, be considerate of the person making the connection.
  2. Are all parties equally interested in meeting? Not everyone is interested or “have the time” for new connections. What you’ll find when making connections is that there really needs to be hooks/ motivations for both parties to be connected together. As the person making an introduction, you should be clear why you want to make the introduction (explicit motivation).
  3. Ensure both parties are able to and committed to connect. I remember an instance where a new connection (“requestor”) wanted an introduction to a staff member (“requestee”) at my grad school. I sent a quick intro email, and within an hour, the requestee sent an email to the requestor excited to connect. The requestor, though, went silent. No response for weeks citing “really busy”. *Palm, meet forehead.* After that debacle, before I make an introduction, I now explicitly ask both the requestor and requestee separately if they’re interested in connecting with the other and if they can be responsive within two days.
  4. Help spark the introduction. If you’re making the introduction, you’re the catalyst. Remember those parties back in the day when the shy boy is too shy to talk to the shy girl? Try to nudge-start the conversation. This isn’t necessary for all introductions, but sometimes, it’s appropriate to ask one person to introduce him/ herself – I like the requestor to start the conversation.
  5. Know how, why, when to ask for introductions. If you’re ever looking for an introduction to someone, nail down the purpose, share it with the mutual connection, and get feedback if that works. Again, it’s her connection so asking for her feedback ensures she’s comfortable and she’s more bought into connecting.
  6. Warm is always better than cold. Some entrepreneurs have a “me against the world” mentality and don’t want to leverage relationships for introductions. Perhaps they like the challenge of thinking they can build something great on their own. However, anyone in sales will tell you warm trumps cold any day of the week. Use your connections.
  7. Thanks.People are taking the time out of their days to either set you up to meet that person you’ve been longing to meet, or you’re meeting someone who could change the trajectory of your company. Thank everyone involved for making the introduction individually.  
(image source: http://1.bp.blogspot.com/-Czi-rTRRhsE/UwYNolZvcJI/AAAAAAAAFyw/WNss2XELITw/s1600/have_you_met_ted_2013-08-01_23-44-40.gif)
Introductions shouldn’t be hard, but I’ve been burned plenty of times to know that introductions can be tricky. I’ve also met some great people benefiting personally and professionally through introductions so it’s clear the power of relationships. At the end of the day, I’m more cautious of making introductions, and it’s shown to create better introductions for both sides.

As all relationships showcase and to the first point above, connections and introductions are about trust – trust in individuals representing themselves and you accurately and appropriately.

What are some of your tips for making introductions both what to do and what not to do? What traits does a person have that you’d have no problems making introductions for?
Alicia Carr and The Purple Pocketbook
At 51.5 years old, you wouldn’t expect Alicia Carr to be an avid iOS programmer — I chuckled when she included the “half”. She’s a mother to three children and an energetic grandmother to seven grandchildren. She looks way too young to have so many grandchildren. Even as she’s busy running around taking care of everyone, in her waking hours, she’s buried in her MacBook coding away iOS apps.
Alicia sparked up a conversation with me at Starbucks yesterday out of the blue. She saw my Windows PC pulled up with my MacBook right next to it. It was obvious the moment she asked me, “What do you do?” that she was up to something of her own, and it wouldn’t take much time for her to spill the beans on her current passion and idea — The Purple Pocketbook.
The Purple Pocketbook can be found in the Apple App Store and on the Google Play Store
Over the course of the next 30 minutes, Alicia shared more of her story, her aspirations, her family, and her goals of the Purple Pocketbook, and given her passions in app development, I was intrigued to learn more about the Purple Pocketbook.
In 2005, Alicia lost her best friend to domestic violence. She put on a brave, stoic face telling me about how her friend was murdered in a front yard. Three gunshots. She was also a witness to her mother’s abuse, and her aunt was even on the brink of death after being stabbed multiple times by her then boyfriend. Then, there are countless friends and, yes, even daughters and other family members of hers who endured domestic abuse. To say Alicia has an intimate understanding of domestic violence and its ramifications would be an understatement, and that’s what set Alicia on her way to helping others understand and deal with domestic violence.
Alicia first became a Certified Empowerment and Relationship Life Coach in 2009 to help others. However, Alicia knew to help the masses, there would be a better way… building The Purple Pocketbook would be that way – the app empowering users to recognize domestic abuse and seek help safely.

(If you didn’t know, Purple is the color associated with domestic violence and used to raise awareness much like pink is known for breast cancer.)
Alicia’s actually a tech-savvy woman having learned HTML back in 1995 before dabbling in JAVA and SQL. But it was years before Alicia really got into full-blown programming, and learned how to code for Apple’s iOS ecosystem. This was actually a funny story…
Back in 2011, Alicia recalls standing in line at the Apple store waiting to get her hands on the iPad. Being the ever extrovert and curious woman, she noticed a 16-year-old boy waiting to pick up the iPad himself. She was astounded his parents just gave him the cash to buy it, but when she asked the boy about the money, the boy told her that it was actually his money. He was actually a millionaire [self-proclaimed, anyways]. He built an app years prior and it had done very well. You can imagine what Alicia said next… “I want to do what you do!” 
She had always wanted to build and program, and given the quality of resources available to domestic violence victims, Alicia knew she could provide a better tool vis-a-vis an app teaching users what to look out for, laws and aids available to victims, local shelters, and the like.
In September 2013, Alicia started her iOS path with a 3-month online course. 
With the single course under her iOS belt, Alicia took on building the first version of the Purple Pocketbook in January 2014. It was all her own, and a challenge she was thrilled to undertake. 
She finished the app in March, but had to go through several refinements before Apple finally accepted Purple Pocketbook into its App Store on May 2, 2014. Alicia recalls this fondly and breathes deeply as if it was today. She remembered how much she wanted to just pack it all up after failed submissions, but her friends and family continually pushed her and supported her, willing her across the finish line.
The Purple Pocketbook includes the key points to educate users for the prevention of domestic violence and where/ how to seek help if in a domestic abuse situation
So today, it’s been a year since she “first finished” Purple Pocketbook. She’s focused the app on Georgia users as curating additional content including state laws and shelters requires extensive time researching. She hopes to one day go national, though. She’s got a little traction, but as most entrepreneurs will say, building an app is one thing, but the real challenge is getting users. For now, Alicia’s learning new areas she had never experienced including marketing and promoting the app — she’s continually reaching out to shelters across Georgia, reaching out to bloggers, tweeting, and the like. However, she’s still struggling with marketing.
We talked about a few routes including blogging. For Alicia and what she’s trying to accomplish, blogging and driving inbound traffic is important. Tweeting and Facebook posts are fine, and should be done. However, especially in domestic abuse, victims are not going to Twitter or Facebook for help. They’re likely going to Google for help, so adding content to her site and her app will help drive traffic and get her exposure.
Additionally, we talked about the opportunities for success stories, shelters, and the like to help guest write thereby helping her overcome her self-professed FEAR of writing. 
As with any entrepreneurial endeavor, there’s a host of things to do to market and “sell” the app, but it’s important to focus on the key points. However, she’s on a good path, and can focus more attention on marketing and getting users. Relying on others to help promote is much like outsourcing coding. For her, it makes more sense to continue to keep things “in-house” and find ways to market. 
Since she’s started coding, Alicia has also been attending several startup events and is an active member of Women Who Code. Perhaps her passions helping others, coding, and teaching will be an opportunity for her in the future to teach victims of domestic violence how to code as part of a recovery tool.
Alicia’s story is very inspiring as she’s working against the currents. She mentions how others constantly ask her why she’s learning how to program at a later age. She also mentions the difficulty in obtaining a full-time job in iOS development being a black woman; so instead, she takes on contract roles. For Alicia, she’s found a revitalizing formula in self-challenging and self-empowerment while striving for her greater purpose with coding and The Purple Pocketbook.
Would you like to get in touch with Alicia? You can email her at purplepocketbook@gmail.com or follow her @purplpocketbook. You can download The Purple Pocketbook on the Apple App Storehere or on Google’s Play Store.