Cast Blog: #SILICONVALLEY

What's Ben Worth?

Kim Talks Shonova

Ending the Friendship with Sarah

David's GoalSponsors Progress

David's Start-Up Advice

Kim Quits!

Hermione's Start-Up Meltdown

Is Sarah the White Oprah?

Ben and Hermione's Brawl

Sarah Defines Date-Cheating

A 'When Harry Met Sally' Relationship

Sarah's Guide to Dating Geeks

Sarah, Jay, and Hermione's Love Triangle

"Dating in Silicon Valley Sucks!"

Stuck in Between Sarah and Jay

The SXSW Debacle

How (Not to) Pitch for Investment

Just Say "Yes"

No Such Thing as a Free Lunch

David's 'Twilight'-esque Complexion

What's Ben Worth?

Ben explains why he's seeking out investors rather than investing his own money.

It seems crazy that raising larger amounts of money is easier than smaller amounts, however this is the paradox of raising money. The reason for this is simple -- above a certain investment level (normally around $1m) the money switches from seed investment, which is normally a wealthy individual who wants to take a punt to venture fund money. When it switches to venture money, then the people running the fund get a percentage of the fund to manage it, so as a fund what takes less work? Doing 10 deals at $10m or a 100 deals at $1m, you invest $100m either way, but by investing more you work 10 times less and expend much less resource and ultimately make more money.

That’s the case with raising money for our solar company. Currently we are raising a billion-dollar fund for our solar company in the USA, and we have raised hundreds of millions already for our UK solar company. So why bother raising $500K when I have already raised hundreds of millions for my other companies, why don’t I just invest myself?

Well firstly and most importantly, it comes down to a metric I hate: “How much are you worth?” It is the first thing that the media asks, and then if you don’t answer the question, they try and work it out based upon the value of your companies. The last time the media tried to pin me to a figure they worked it out at $10m, but what people don’t understand is that is not how much cash you have in the bank; net worth is theoretically what you could sell your companies or assets for, in fact hardly any millionaire would have more than $1m in cash in the bank as it is a very inefficient way to hold wealth. Why then don’t I just sell some of my companies so I can invest the $500k myself? Well lets look at somebody like Mark Zuckerberg. He may be worth close to $10b but the reality is the vast majority of that is in stock. If Mark tried to sell all his stock at the same time, the market would panic, the share price would drop, and he may get 1/10th of what he would have gotten if he had waited and sold the company for the full value its worth. The same is true if I wanted to sell my companies quickly. I can’t tell you whether I am worth less than $10m or more than $100m, all I can tell you is that I have 45 companies, some very successful and some failures, but I know if I had to liquidate them to raise money I would probably be loosing 90% of the value I have spent ten years creating.

But why ask an investor to risk their money when you could invest your own? Well ultimately an investor is taking an educated bet on an investment. I have been a seed investor in many companies myself, and I know that maybe 1 in 10 will be successful, but you hope that 1 will pay for the rest, and normally it does, otherwise people would not do it!

Ignite needs to raise money, and to do so we have to push everything to the limit including our partners. It may seem that it is unfair to get our partners to take that risk with us, but ultimately business is business and they are taking the risk with us to get a profit in the end. Everything in business is about taking the right risks.

Ending the Friendship with Sarah

David reacts to Sarah's accusations.

Building a product is hard enough, but launching it and putting a big event together to generate marketing buzz for it at the same time was almost enough to put me over the edge! But I've been working my butt off to get GoalSponsors out the door and launched, and after several months of effort, I was able to have a successful launch event and gain enough buzz to get a great set of beta users to test out the product! It's live in the app store if you'd like to give it a try:

https://itunes.apple.com/us/app/goalsponsors/id563679640

I'm proud of myself, for sure, but I definitely didn't do it alone. There were several other companies that have helped me quite a bit, including NoXcuses Fitness and especially Appcelerator, who has gone above and beyond the call of duty to help me make my app and my launch a success. A good number of people showed up to the launch event -- not an AMAZING number, but a strong 100-150ish, and after all the beta signups, I've been able to test my product out on real people, get feedback, and launch something that's now helping people achieve their biggest goals in life! In fact, the total weight loss of our users is in the hundreds of pounds, and we've only been live for the past month or so! On the business side of things, life is going well.On the personal side of things, not everything is so great. It's really hard to see someone that you've been close to turn around and do something to hurt you. When Sarah asked me to meet with her that day, she sent a text asking if I had time to get together and when I asked what it was about, she alluded to it being about business, and then quickly changed the subject. Nevertheless, I showed up in generally good spirits, so I was caught completely off guard when she accused of "physically assaulting," even "tackling" her -- thank goodness the world was able to see the moment she was referring to, in which she tries to interrupt Hermione's presentation at my event and I come to her calmly and escort her away from the stage, smiling and being generally friendly, as I didn't want to create drama at my own event.

So that hurt me quite a bit. Also, she was upset that I didn't provide a booth for her, but she literally never asked me, and the truth is (and I told her this) that if she wanted a booth, all she had to do was tell me and I would have given it to her. Ben and Hermione asked, and that was why I gave them one. Sarah never did.

There's a lot more to that conversation at the Four Seasons, from accusing me of trying to keep her and Hermione apart to trying to take credit for someone else's work in helping put together my event, the list of things she threw at me that day was quite large, and to this day I don't understand why she did it, knowing that I was her confidant, that I was there when everyone else was against her... why me, of all people? Was it just to create drama? Just to establish herself as the queen bee or, dare I say it, the villain?Needless to say, that was the last conversation I had with Sarah. I'm all for second chances when people make mistakes that were unintentional, but the kind of cold calculation Sarah did that day made me realize that it is better for me to let the friendship end and not do anything further to try and continue it. For once I was a part of the drama, not just the instigator of it -- and boy was that a reminder that it's better to be on the sidelines when the poo hits the fan!

Thanks for watching Start-Ups: Silicon Valley! Feel free to check out my app, follow me (Facebook, Twitter), or book me for speaking engagements by emailing the address listed at the bottom of my website!

Cheers,
Dave