Primer on Accepting Credit Cards

I've been shopping around for a credit card merchant for awhile now, and to be frank, the whole system seems rather opaque and rife with potential for fraud, waste, or both. I was glad to find this Forbes article a couple days ago, which does a decent job of giving a primer on the whole process. Some links to preferred merchants and examples of best rates would have been helpful (as would have some notes on e-commerce businesses specifically), but it was good nonetheless. I recommend it to anyone who is looking to set up a merchant account in order to accept credit cards.

Founding, Equity, Vesting, and other Things that Make your Brain Hurt

Today I stumbled upon an informative piece by Joseph Hadzima, a Senior Lecturer at MIT's Sloan School of Management. It provides a good overview of some of the inner workings of founders' compensation, vesting, the law surrounding such matters, etc.

He contends most" ventures fail because of people issues and are really a failure of the relationships among the team members" and says the best way around this is fully discussing and disclosing equity structure from the start. Good, common sense, advice that apparently goes unheeded too often.

Tinkering: Worthwhile Reads

If you look to the right, you'll notice I've added two new sections to this blog: Worthwhile Reads and Good Reads. The first is through Google Reader, and the second is through WidgetBox. Google Reader allows you to share selected items from your various daily reads list while the widget pulls all the items from whatever RSS feed you select (in this case, one that aggregates Venture Capital items).

I'll keep experimenting with each in order to (a) hopefully provide some interesting/useful items and (b) explore how or if they might work on the final Referral Union site once it's launched.

If you'd like to use either of these, click the links above. They were both rather painless to set up once I figured out RSS feeds (almost all news sites support them now). WidgetBox has its own cache of supported feeds (about 1000 at the moment). While you're at it, sign up for my feed!

Dissapointment

One of the two interns I decided to bring on was disallowed by his academic department. The department refused to give him academic credit interning for a company less than three years old. This is rather disappointing from one of Money.com's "10 Cool Colleges for Entrepreneurs." The university also recently submitted an application to the Kauffman Foundation for a grant to

"assist in developing the Institute for Entrepreneurship, Leadership, and Innovation (ELI Institute). This Institute will unify the university's current approaches to stimulating entrepreneurial behavior on campus and throughout the extended community."

Shame the university's policies do not reflect its rhetoric.

Back to School

After a lot of deliberation, I decided to accept the University of Chicago Graduate School of Business' (hereafter, GSB) offer for admittance to their MBA Class of 2009. While I received offers from the University of Virginia and Oxford, the choice really came down to either the GSB or London Business School (LBS, although people there hate the acronym).

Several factors informed/muddled my decision.

They are both great programs, and I believe most people would argue they're both in the top ten internationally. Chicago was actually #1 in Business Week's latest rankings, and it's consistently top five or ten in all others. LBS is similarly ranked and certainly the best program in the UK.

They both offered me the exact same financial aid package, although LBS said I could have all the money right away, which would have been nice. The GSB's package is split evenly over the two years.

How they differ:

Chicago allows you to select all (but one) of your classes, which is rather revolutionary in the world of business education. Most programs, including LBS, have a required packet of classes all first years have to take, usually in a cohort with the same students. The GSB only has one required class, five or six required categories of class (e.g. you pick one of four financial accounting classes), then a bunch of electives from which you build your concentration(s). LBS allows you to pick your own classes the second year, for the most part.

When visiting the schools, I got a rather different vibe from each program. Chicago seemed to be more about independence and customization with staff support to make sure you don't wander off and get a JD on accident. LBS was rather more nanny-like in its approach, which was sort of annoying. I almost expected them to tell me about curfew and required meals.

The students at LBS seemed more well-rounded and sort of unique, but that might just have been because I spent some time outside of class with them getting drunk off surprisingly strong Belgian beer...I was done after four or five pints. The GSB's rep over the years has sometimes included social awkwardness and extreme nerdiness, but any program with a Thursday Night Drinking Club (TNDC), weekly free-booze events called Liquidity Preference Functions (LPF), and a gambling club (creatively named the Risk and Gaming Club) can't be too bad, people-wise.

Each school's living experiences differed significantly, and living in London would have certainly been a more unique "experience" than Chicago. Chicago is a great town as well, though, as I understand. Many students from both programs chose to stick around after they graduate.

Chicago's brand is more powerful in the US and Asia, while London is well-recognized in Europe. However, I feel that an MBA from Chicago would transfer better to the EU than one from LBS to the US.

Finally, Chicago's Polsky Center, which runs all its entrepreneurial activities, hosts several competitions each year and really seems to put a lot of effort into helping its students either get their businesses off the ground or invest in someone else's.

In the end, I think LBS might have been a more "fun" choice, but the GSB will better prepare me to become a ninja assassin businessman. And if all fails, I can find my own fun in Chicago.

2/1/2007: Edit: I just received the "why didn't you come here" survey from London. It was quite lengthy, but I have included some of my selected answers below (my choices in bold):

1.4 Please indicate how you think we compare with your chosen school
Brand/Reputation: Worse
Cost of programme: Similar
Cost of living: Worse
Availability of student housing: Similar
Scholarships: Similar
Length of programme: Similar
Class size: Similar
Curriculum content/electives: Worse
Language requirement (In addition to English): Better
Quality of faculty: Worse
Career placement: Worse
Admissions service: Much Worse Facilities - IT/Library: Worse

Equity and Adult Supervision

Browsing through the Chicago GSB admitted students forum the other day, I came across several blogs and such that deal with tech in Chicago, various start-ups by current MBA candidates and the like. I'll post them once I have a more comprehensive list.

Until then, I'd like to mention a program/opportunity I stumbled upon in the process. TechStars is a group of entrepreneurs in Colorado who are starting what might be best described as a summer camp for entrepreneurs. They are going to choose ten founders (or groups of founders) to come spend the summer in Colorado, where they will provide incubation, mentorship, some classes, a bunch of networking opportunities, and in the end a small amount of seed money in exchange for equity: $5K per founder (up to $15K) for a non-voting 5% stake in your company.

In my opinion, $5-15K in exchange for 5% of your equity isn't a great trade off, but it's the other services they provide that really make it worth it. The incubation includes free legal help (including incorporation), shared office space, phone, internet, conference rooms, and other office-like amenities. This in addition to the speaker series they run, all the other entrepreneurs you'll meet, access to venture capitalists, angel investors, private equity types, etc, and all the fresh new ideas and perspectives you'll be introduced to (to which you'll be introduced? I hate dangling participles). Who knows if someone you meet there, an idea you generate, or whatever could be the catalyst that really gets your (my) business moving? It's certainly worth a look.

On another note, I think they have a great business model. They essentially get a slew of business plans to choose from, pick the ten best, lay out between $5-15K each, and get 5% equity in all of them. I obviously don't have access to their finances, but I can make some rough assumptions:

• 10 groups x 3 founders each x $5K per founder = $150,000
• Rental of office space, utilities, furniture, etc amortized each year = $250,000
• Speakers and mentors = probably free
• Legal help = free
• Servers = free
• Random Stuff I didn't think of = $100,000

So they lay out about $500K each year in exchange for a 5% share of what they consider to be excellent ideas/start-up companies. This is obviously a gross simplification, but if one of their sponsored enterprises gets acquired for $10M each year (or two for $5M, etc), they make their money back. I get the feeling they'll do quite well with this while helping a lot of people out. Win win, just like Referral Union (hopefully).

At any rate, I filled out their relatively painless 28 question application and sent it in. I'll keep you posted on our status....

In the meantime, check out their blog. It's full of interesting info, answers, and pretty pictures. Here's another take on the entrepreneurial boot camp.