http://kck.st/199xYmI

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Scott Warren served in the U.S. Army for 12 years from 1994 to 2006. He was a Ranger for the first 5 years and a Delta Force Operator for the last 7. He has a Purple Heart, a Silver Star, and a Bronze Star with Valor, as well as a smattering of other awards.

Sounds like someone not to be trifled with. If all I knew of Scott was his military résumé, and you told me he was also an entrepreneur, I would instantly imagine him to be the founder of some DoD contracting company focused in either security or intelligence. I would have never guessed that Scott started a company to help travelling parents read stories to their faraway children.

“I feel like it’s a long journey from being in one of the most elite war fighting units to building an application focused on emotional connection with children” says Scott. “This is not the typical path; yet, it doesn’t seem farfetched because it addresses issues I had while I was still working as an Operator.”

Before most of his military deployments, Scott would make DVDs of himself reading children’s books for his son. Then, while Scott was travelling and out of reach, his son could watch and read along with his dad. Although his son loved the DVDs, they would eventually grow repetitive. Scott would do his best to make time for Skype and phone calls, but time zone differences and the nature of travelling life always made it difficult. He was struggling to efficiently use his small amounts of free time to communicate with his son in another country.

Like many good entrepreneurs, Scott identified a pain point and decided to solve it. He created My Dad Reads To Me. The application allows parents to record themselves reading a digital children’s book via a mobile device or computer. The book and voice recording are synchronized and stored in the cloud, allowing a child to access it whenever they’re connected to the internet. Check out his 20 second demo to see it in action.


Originally, Scott designed it with military families in mind, but it turns out it’s perfect for any parents separated from their children. Now, a traveling parent can record a new book every few days, or even re-record the same book over and over. Their voice can be there when they can’t, and it’s easy.

One of Scott’s largest hurdles in getting My Dad Reads To Me off the ground was finding the right company to help develop the application. Scott was diligent and able to find a company willing to help. He recently launched a Kickstarter campaign to crowd-found the development. Check it out here.

Scott’s experiences so far have taught him several things about what it takes to be an entrepreneur. When asked what advice he would give to aspiring Veteran entrepreneurs, Scott replied “Simply start. Stop thinking about the great billion dollar idea and start building the very first version. Prove that your idea is worthwhile, and keep going.” Sounds like great advice for any aspiring entrepreneur.

One insight I find interesting is Scott’s perspective on failure. In most military settings, failure is not an option. “In the military, many times failure means you don’t live through the day. Not accomplishing your mission means you and your teammates might not come home. In new companies, failure is an option, and is even a way to learn. The repercussions of failure in a new company are minuscule compared to those in the military.”

It has been a pleasure watching Scott go through the steps of making My Dad Reads To Me a reality. I was lucky enough to meet Scott at the 2013 Patriot Boot Camp, and I’m glad to hear it has played a small part in helping start his company. In his own words “Techstars Patriot Boot Camp has been a phenomenal resource. I’ve continued to communicate and brainstorm with some of the people I met [there]. It has been pivotal in helping me charge forward.”

Thanks, Scott! We’re looking forward to seeing where you and My Dad Reads To Me go next.


 
Guest post by Taylor McLemore

The SBA announced a new initiative on November 8th to get more small business loans in the hands of Veterans. I heard some buzz from the Veteran startup community about this. I am always happy to see the government taking steps to support Veteran led businesses, but I never want to see a Veteran-led startup take the wrong capital.

Details from the announcement
  •  Starting January 1 and for the rest of the fiscal year, the SBA will be setting the borrower upfront fee to zero for all veteran loans authorized under the SBA Express program, which supports loans of up to $350,000.
  • Of all SBA loans that go to veterans, 73 percent are $350,000 and below.  The SBA Express Loan Program, which supports loans under $350,000, is SBA’s most popular loan delivery method, with nearly 60 percent of all 7(a) loans over the past decade being authorized through the program. Since the program’s inception, it has also been one of the most popular delivery methods for getting capital into the hands of veteran borrowers.

If you are leading a startup, remember to raise money for the right reasons and ensure the source of capital is aligned with your vision and expectations. To borrow from Mr. Paul Graham:

Don'traise money unless you want it and it wants you.
Such a high proportion of successful startups raise money that it might seem fundraising is one of the defining qualities of a startup. Actually it isn't. Rapid growth is what makes a company a startup. Most companies in a position to grow rapidly find that (a) taking outside money helps them grow faster, and (b) their growth potential makes it easy to attract such money. It's so common for both (a) and (b) to be true of a successful startup that practically all do raise outside money. But there may be cases where a startup either wouldn't want to grow faster, or outside money wouldn't help them to, and if you're one of them, don't raise money.

SBA loans are not a source of risk capital. This is not the answer for a "rapid growth" company, a startup. 


Why?
First, a commercial bank will review the application. Let’s just say loans to risky startups are not in the wheelhouse of most bank underwriters. If we were discussing a loan to start a business with a reasonable expectation of early and predictable cash flows, it is a different story. Opening a franchise of a national food chain in a good location or building a consulting practice would make sense for this SBA program. Even if a bank did approve it, my main issue is the collateral requirements. The SBA provides the following parameters:
  • Collateral requirements are the same as SBA Express for loans up to $350,000. 
  • SBA does not require any collateral for loans or lines of credit under $25,000 (but the lender may). 
  • For loans over $350,000, lenders are required to either obtain all collateral or enough collateral so the value is equal to the loan amount

Most startups fail. Do not use your house or some other asset critical to your financial stability as collateral for debt to fund a startup. Startups provide a powerful opportunity for Veterans to dictate their own employment and generate growth in the economy. There are sources of capital that fit this need and can support the Veteran startup ecosystem—that does not include loans with collateral requirements equal to the loan value.

Based on the parameters above, one could read my argument and say, “well, then I will get a loan for $24,999 to get my startup off the ground.” I would caution against that just as much. Play out the downside scenarios. I am sure default on such a loan, even without collateral, would result in a very nasty ding on the personal credit score (there are probably other impacts I am not even considering).

Since it is common for "rapid growth" companies to raise more than one round of capital, it is important to understand that every decision that impacts your cap table will have downstream impacts and create precedent. Brad Feld does a good job of outlining the typical options for first round funding:
  • Convertible Debt
  • Preferred Equity

I think it is really important to note that in his description of Convertibles notes (more posts at Ask The VC on convertible notes here) there is no mention of collateral. In fact, the most important features of the Convertible Note are related to capturing the upside of investments (via a discount or warrants).

Risk capital is not "loan to own" debt. Good angels and early-stage investors get the risks.

I don't think the SBA pushed this program out for Veteran entrepreneurs trying to build rapid growth companies, BUT I think it is very important Veterans think twice about using it for such ventures.

My last recommendation is to take a look at Paul Kedrosky’sKauffman Sketchbook video, “Money Game” if you have not already. He provides a great summary on the realities of entrepreneurial capital sources:




Enough about that…how about a few posts about Veterans accessing capital intended for startups?
 
Veteran’s Day conjures up many feelings for me as I am sure it does with many veterans.  For veterans it is a time to reconnect with past comrades, to remember fallen ones, and to celebrate experiences and relationships from our prior and current service.  John had asked me what he should write about for his blog this Veteran’s Day.  Instead of offering him ideas, I gladly volunteered at the opportunity to share a story that I felt was appropriate.

It was the year 2008. I and many of my friends from Iraq and Germany found ourselves living in wonderful Buckeye country, more commonly known as Columbus, Ohio.  It was Veteran’s Day and we had the entire day planned.  We would start at Applebee’s for our free lunch, head to the VFW for the afternoon, and then head to a different Applebee’s for our free dinner.  While at the local VFW- we made friends quickly.  There is an unexplainable connection that veterans seem to make with other veterans. The Commander of the post was there that day and informed us that the Post’s anniversary dinner was the following weekend. He said he needed volunteers to help set-up and serve. With all of us feeling patriotic and with a desire to give back, we all volunteered to help. 

The following weekend arrived.  I got to the VFW eager and ready to help. We set up tables, helped prepare the food, and then helped serve it as the people came in.  After everyone had a chance to eat we made our plates and sat at the back of the room while some of the members got up to the podium to speak. It was one gentleman in particular that I remember. He was a chaplain with over 70 years of membership. Yes 70! He was now approaching his 90th birthday.  He slowly walked up to behind the podium. A little shaky, he began to speak of his time in the war, but only briefly.  He quickly moved on to his time after the war, specifically about the VFW. He told stories of how the VFW was a haven for him.  A place that he could go and connect with people who understood him, understood what he had been through.  He said he loved his family dearly but there were some things he didn’t feel comfortable telling them. It wasn’t that he didn’t want to share his experiences with those he loved, but because he didn’t want them to worry about him. He went on to say that he honestly didn’t know what he would have done without the VFW, and that they were as much a part of his family as his real family. As tears trickled down his face and with a trembling in his voice, he ended his speech by saying thank you.

I, as well as most of the people listening, also had tears running down our faces. His story inspired me to want to become a part of this organization, if not for me then for everyone else that held this place so dearly. After the dinner ended I grabbed an application, filled it out immediately and asked the Commander how I could help.

Unfortunately the VFW has the stigma of being a smoky room with nothing but old men sitting around the bar. I am sure that for some posts this isn’t far from the truth.  I didn’t care though. I was on a mission to save the VFW. The post became a haven for me as well.  They were like my second family. I was of course the youngest officer by almost 20 years and the only female, but I didn’t care. I actually kind of liked it. I liked the idea that I was creating change. As we all know, change comes very slowly in the military, the VFW is no exception.  


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About a year later I took a job in Afghanistan and had to leave the post.  The members had a surprise dinner planned for my departure.  A couple of the members stood up to wish me luck and to come back safely.  Then the Chaplain, the same Chaplain that inspired me to join a little over a year ago, stood up and he thanked me. It felt amazing to mean as much to them as they did to me.

Upon leaving I felt an extreme feeling of humbleness and gratitude for these people who had hesitantly accepted me into their family. Unfortunately, I didn’t get to do nearly as much as I wanted in my time as the Jr. Vice Commander of Post 4719. My goal was to attract the younger vets of OIF and OEF to the VFW. I desperately want this legacy to live on.  I know, more than anyone that something has to change.  There has to be a way to get our service members to utilize what the VFW has to offer.

I would love to hear suggestions on how we can do that. Please carry on the conversation by connecting with me on Twitter (@PatriotStartups) or shooting me an e-mail at patriotstartups@gmail.com. I would also encourage you to go check out your local VFW and find out how you can become involved.  Maybe you too can find a home there. John and I just transferred to VFW Post 1 in Denver and we’re looking forward to doing what we can to help out.

Below is a link to a short video illustrating some of the struggles hundreds of VFW Posts now face.

http://usatoday30.usatoday.com/video/vfw-struggles-to-remain-relevant/1553774953001



 
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As any active duty service member or veteran knows, the support of friends and loved ones can make all the difference during your military career. Deployments and jumping around to different duty stations places a significant amount of stress on relationships. In my opinion, many military relationships are successful because of the strength and commitment of the military spouse.

I’m sure you’re wondering what this has to do with veterans in entrepreneurship. Perfect segway to Jen Pilcher. I had the pleasure of meeting Jen this past summer at the 2013 TechStars Patriot Boot Camp. She’s a tenacious and motivated woman, exemplifying many of the qualities you would expect from an officer who has led a company of soldiers. I never would have guessed she was a military spouse until she told me.

The Patriot Boot Camp is open to not only active duty service members and veterans, but also their spouses, and Jen Pilcher is an awesome example of why. Military spouses make great entrepreneurs for many of the same reasons that veterans do. They understand risk, leadership, sacrifice, and responsibility. One responsibility many military spouses must accept is managing family affairs without the help of their significant other. That’s a huge undertaking, arguably more difficult than being the deployed soldier.

For these reasons and more, Jen Pilcher makes a great entrepreneur. Starting at a young age she knew she wanted to be her own boss. While in high school she started a tennis lesson program called Racket Time Tennis, the only such service in her home town. Later, she became a Speech-Language Pathologist with the goal of starting her own practice; however, the nature of being a military spouse made this difficult. She’s been married to her husband, an O5 Navy pilot, for the past 16 years and raising 2 children,  ages 10 and 7.

Like most good entrepreneurs though, Jen was always on the lookout for the next opportunity to fill a market need:

“As a military spouse for over 15 years, I was frustrated with military resources and opportunities being spread across the internet.  I wanted to create an extremely user friendly platform for everyone who is connected to the military to access and get the information they need...in one click.  I also worked for a large social media company in NY and saw how large companies and brands wanted to connect with the military community … but they did not have a platform to do this successfully.” 

Jen connected the dots and started MilitaryOneClick by bootstrapping it in January 2011. It is a content marketing platform creating brand influence throughout the entire military community. They are able to reach millions in this community by socially sharing the best opportunities and resources through their website, social media, e-news, news media and boots on the ground events. 

Some recent highlights for Jen and MilitaryOneClick include being accepted as the first military spouse owned company to the Military Spouse Employment Partnership through the Department of Defense awarded Joint Base Andrews Military Spouse of the Year 2012, SCORE DC client of the year 2013, pitch contest winner for Count Me In and Capital One, member and alumni of TechStars Patriot Boot Camp, and an Inc. Magazine Military Entrepreneur Alumni and Special Delegate 2011, 2012, 2013.  Being part of these organizations has dramatically improved the success of Military One Click. They have actually grown over 700% in the past year.

One major challenge for Jen has been the hours of dedication required to run her company:

“I thought this would be a nice part time project I could work on as a stay at home mom.  I was wrong.  I completely underestimated how long everything takes and how hard this is.  But, I am hooked.”

I think that’s the case with most entrepreneurs. Her advice to handle the demanding life of starting your own business is to “keep a sense of humor and outsource everything but your soul!”

“Communication is my strength and I have "outsourced" everything else to amazing military spouses who have talents and strengths in other areas.  Build your team one person at a time.  You can't do it all - grow your team as your budget allows.  I now have a team of 7 military and civilian spouses stationed throughout the Country and together we make one powerful team!”

Connect with MilitaryOneClick.

Visit the MilitaryOneClick website.
Like MilitaryOneClick on Facebook.
Follow @Military1Click on Twitter.
Follow Jennifer Pilcher on LinkedIn
jennifer@militaryoneclick.com 



 
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In August of 2012 I met Dave Cass at orientation for my MBA program at the University of Colorado (CU), where he was explaining his role in the Career Services office.

Dave is a good guy. First and foremost, he’s a family man with a wife and two children. He served 10 years on active duty as a Navy helicopter pilot, did two deployments in support of OEF and OIF, and is currently a reservist and volunteer adviser for CU Veteran Affairs. He’s also the founder of a company called Uvize (more about them in a minute). I’ve had the pleasure of working with Dave, and occasionally had a few beers with him. Dave is a good guy.

But, as Dave will tell you himself, there’s nothing particularly special about him that sets him apart from the troves of other Veterans trying to be successful entrepreneurs. Maybe that’s the point though. Anyone can do it, especially those of us who have served our country. Just ask Dave:

“I think military leaders are risk managers, different than risk takers. We also have a mentality of ‘failure is not an option’. This mentality translates well into entrepreneurship. The reason I say 'risk managers' are different is because we manage risk by constantly listening to intelligence in the military. In business we constantly listen to intelligence as well (the market), and we adjust and pivot accordingly.”

Dave’s journey down the entrepreneurial path started like most entrepreneurs. On some level, he was always interested in start-ups. Even during his time on active duty he was starting programs like a personal finance class for enlisted troops while deployed at sea. While on active duty as an ROTC instructor Dave also took night classes to earn an MBA. This is where his nascent entrepreneurial leaning turned into a full on sprint.

Dave remained at CU as a teacher after completing his MBA but started focusing some of his time on furthering his start-up interests. This is when he identified the first market problem he wanted to solve:

“Veteran students struggling to adjust to college academics is a real problem. I started a class hosted in freshmen orientation and it seemed to help students, but only a little because we were limited in time. Trying to address the problem during school was also a problem because it was happening concurrent to their classes. Preparing for academics during school is sort of like training for the war during the war. After interviewing students we found that Veterans struggle due to lack of academic skills, and also a lack of team.”

Uvize was originally started as a book sales and publishing company, but it quickly became apparent there was potential to solve a much larger problem. Time, iteration, networking, and mentor feedback molded Uvize into what it is now.

“After deciding to make it a technology company, I recruited an Air Force veteran as a tech partner, went to the Patriot Boot Camp with an idea, changed the idea a bunch of times, got into the TechStars Rising Stars program, built a demo, applied to TechStars-Kaplan, got in, and never looked backed,” Dave said.

Uvize is now an innovative software platform that delivers online academic orientation and preparation to incoming veterans through partner universities and colleges. It also builds community by connecting students with their future veteran classmates, mentors, and advisers. By building skills before school starts and fostering community throughout college, Uvize helps increase the success rate of veterans. And best of all, it’s totally free to veterans.

As with any new venture, there are always challenges along the way. For Uvize, finding co-founders and building a team has been one of the biggest hurdles. “It took me one year to find the right co-founder, and hiring initial team members is a huge challenge. You need the perfect combination of culture fit, passion for the mission, and skills,” Dave said.

Thanks to his time moving through the TechStars funnel (Patriot Boot Camp, Rising Stars, Kaplan), Dave wasn’t alone as he navigated the challenges of getting his company off the ground. One of the most important assets to any entrepreneur, as Dave will tell you, is their network and mentors:

“I'd say the most positive thing I took from the Patriot Boot Camp was the network...network of peers and network of mentors. I reached out to mentors beyond the Boot Camp and all responded.

“I can’t say enough about the need for a good mentor. Our most impactful mentor has been Jason Mendelson of The Foundry Group. Jason is a true coach. He helped us set and measure goals. He drove us hard and continues to support us.”


After finishing the TechStars-Kaplan program in New York City, Dave returned to Boulder, CO. Most of his efforts are now spent building Uvize and its team, and he’s also back at CU teaching.

Dave is a busy guy, but he still plays a major role in the veteran start-up community. In fact, he’s been a huge asset to the Patriot Boot Camp by giving back in kind. This past summer he was a keynote speaker at the Boot Camp and offered his time as a mentor, and I’m sure he’ll continue to do so in the future.

Take Dave’s advice (and offer), “Find other veterans who have done it. Helping each other is in our DNA. Call me directly if you’d like- 303.330.6930.”

Dave is a good guy. But there’s nothing particularly special about him. Which is exactly why we can all learn something from him.

Every veteran has the skills to be a successful founder. We just need to use them.

 
Since this is my first post on the blog, I thought it best to make it about something timely. Thus, I wanted to touch on the government shutdown and how it affects Veterans. My goal with this blog is mainly to highlight Veteran entrepreneurs and their excellent companies and/or ideas. If you would like to be highlighted, or know someone who should be, please contact me at patriotstartups@gmail.com. 

Republicans and Democrats haven’t been able to agree on much of anything recently, so it’s not clear when they’ll find common ground to open back up much of the government. The effects of the shutdown at midnight on Monday are already significant and scary, but at least Congress was able to agree on one thing.

On Monday, the Pay Our Military Act was rushed through the House and Senate and signed by President Barack Obama to protect pay and allowances for members of the Armed Forces, despite the government shutdown. The only problem is that it does not do much for Veterans or separated service members.

The Department of Veterans Affairs will remain open, but many of its services will be hit hard without a new budget. Services like VA medical centers and clinics have advanced appropriations for 2014 so those will remain open for now. There are still funds available for claims processing and payments in the compensation, pension, education, and vocational rehabilitation programs, but those run out at the end of October. Thankfully, the Office of Small and Disadvantaged Business Utilization will remain functioning. In my opinion, this is a great resource that all Veteran startups should use. Check it out when you have the chance.

One aspect of the shutdown hitting fairly close to home is the suspension of the Veterans Benefits Administration Education Call Center. As a student, I rely heavily on being able to call somebody and ask key questions about my benefits. Luckily, I’m not currently experiencing any issues with my benefits, but there are a lot of people who are.

In July of this year, I helped organize the TechStars Patriot Boot Camp. While there I met a lot of Veterans with great ideas and startups focused on government and defense contracting. I’m assuming the shutdown will have significant implications for them as they venture into an already risky industry. Funding is always a touchy subject and contracts change regularly.

Needless to say, things will get urgent for a lot of Veterans fairly quickly if the impasse is not broken. Please take a moment to comment about how the shutdown will affect you or a family member, and what, if anything, you’re doing to help mitigate those effects.

If you have questions about how the shutdown might affect you, checkout these resources: