Here on ReadWriteStart we are often providing resources and tips for young companies looking to raise funding from venture capitals and angel investors. This week’s recommendation for our Weekend Reading series, Money Magnet: How to Attract Investors to Your Business by Jacoline Loewen, is a book aimed at helping entrepreneurs learn how to deal with financing and how to make their businesses attractive to investors.

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Author Jacoline Loewen is a Canadian business consultant and strategy writer who has aided companies seeking capital and private equity. In Money Magnet, Loewen provides valuable lessons she has learned from her career on raising capital in a style that is “informative, relaxed and easy to understand,” according to book’s description. Though the book was published in 2008, and most of Loewen’s work involves multi-million dollar businesses, there are still some lessons startups can likely take away from the book.

Money Magnet is a bit like Fundraising 101. Loewen describes the various types of investors, how to meet and pitch to them, how to read term sheets and how to handle relationships with investors as companies grow. She also provides a run down of the important things investors look for from potential companies, as well as the “four brutal questions” they all ask. The first question most investors ask, she says, is “Are you the right people to make this happen?”

“The teams most likely to attract money will be those that demonstrate they will roll up their sleeves, get on with the unglamorous grunt work of operating plans and do things just a little bit better,” writes Loewen. “Anyone new to running a company who has a good idea and now wants funding, probably will not get the money, no matter how smooth they appear. No one, except your mom, is going to fund your learning curve.”

It’s interesting that she singles out all entrepreneurs with no experience and says they will most likely not get any funding for their idea. Depending on the VCs they seek out, this may be true, but there are plenty of opportunities for inexperienced entrepreneurs to get funding, though the odds are leaning against them. The other questions she says all investors will ask center around the investment opportunity, sustainability and return on investment - questions which will all essentially prove your readiness to get the company off the ground.

Loewen’s insider view into the investment process provides an unique perspective for startups looking to meet and woo potential investors. Most advice on the subject comes from either the entrepreneurs involved in the deals or the venture capitalists doling out the cash, so an angle from a consultant who has facilitated numbers of deals is certainly a fresh one.

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How can you tell a 1973 Batard Montrachet from a bottle of Boone’s Farm Strawberry Hill? Or a ‘45 Mouton-Rothschild from a box of Franzia? Well, you could taste the difference, presumably. But what if you had to discern between the ‘45 and one of the top years of the Eighties? Few could. And while the difference might be taste, it certainly is money.

People collect wines for a number of reasons, but one of the top ones is the fact that a good wine appreciates. If a counterfeiter is good at selling one similar wine as another it can make the difference between $2000 and $200,000. Now some wineries are using RFID to hold the counterfeiters at bay.

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In the wake of junk bonds, the “irrational exuberance” of the Internet and the housing boom, all now nothing more than echoes of collapse, the wine bubble is appealing to the skeezy, of which the wine world has no paucity.

So some wineries, like Vinyard 29 in Napa, California, are using small RFID tags, distinct radio frequency signatures buried in the labels. With smart phones gaining more muscle, users can often select one with an RFID reader built in. With such a phone, a consumer can just “phone up” a bottle prior to buying to make sure it’s legitimate.

RFID tagging in wine started at least as early as 2004. In 2005, Italy’s Arnaldo Caprai wineries began using the SmartCorq system. Now, the transmitters can fit in labels and foil.

Security is not the only use for RFID in the wine business.

eProvenance uses RFID to keep a coherent track of wines as they travel, often globally, from vintner to buyer, ensuring the wine’s safety, but also ensuring it has been kept at ideal temperatures during its voyage.

Bàcaro, a high-end retailer, has installed an RFID reader in a table at their Zurich airport kiosk. The customer places a bottle on a table. Its RFID tag is scanned and the scanner instructs an adjacent screen to show information on the wine’s region, vinyard and taste.

Things that go for a dime a dozen rarely serve as the proving ground for experiments with technology. But anything as valuable, easily counterfeited and constantly mobile as wine is going to attract many such experiments. RFID seems one that has gained significant purchase in that community.

If robots ever do take over the world, you can look forward to an illustrated tour through the wine-making regions of the Mosel valley. Then, of course, well, it’s kill, crush, destroy time, isn’t it?

Top photo by Darin Barry
Bottom photo by jsgphoto

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RedHat recently announced that premium enterprise subscription customers are now able to move their Red Hat Linux licenses to the Amazon cloud in the form of EC2 instance. Amazon EC2 is the first cloud provider that Red Hat is supporting for this service.

If you have a block of Red Hat Linux licenses, you can now enroll with the company to enable these to be authorized on an EC2 instance with your Amazon account. We took a few moments to sit down with the team from Red Hat to learn more about the details of the partnership.

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Going Elastic

One of the big reasons motivations is the ability to support enterprise use cases, such as web hosting, that are increasingly including a part of their service in the cloud. Red Hat is committing to make the latest versions of Red Hat Linux available on Amazon EC2 at the same time as their normal release. This includes both 32 bit and 64 bit versions of Red Hat Linux.

Red Hat is already supported on virtualization platforms such as VMware and (of course) KVM, so this move is a natural extension in giving IT the ability to run a Red Hat image wherever and however they host their compute resources.

A Few Considerations

One nice thing about Red Hat in the Amazon cloud is that the company is proving updates to the OS to the Amazon customers as well.

Of course, this is available today in the normal subscription service, but in talking to the company we were able to envision a cloud future where your Red Hat instances on EC2 “report in” through a messaging service that they are ready to be updated. We can see a time where provisioning updates, including pulling servers out of the pool gracefully, reconnecting them, could be triggered by a Red Hat update and automated through the pool of services.

Red Hat emphasizes that when hosting your licenses on Amazon EC2 that you will be billed for what you use. Just like you can configure instances spin-up and down based on need, your license pool can extend as well. Like the core computing billing the license tally will follow this pattern. Something to consider when you are allocating licenses. We wonder if there will be an “elastic pool” someday, or if the company will offer deeper incentives for scaling.

Getting Started

The Red Hat Cloud Access subscription feature is available for Amazon EC2 now. To learn more about Cloud Access, visit http://www.redhat.com/solutions/cloud/access/

Here’s a few more resources we found that are a good starting point:

• Getting started
• Red Hat in the Amazon cloud
• Subscriber guidelines
• How to enroll

Red Hat Linux in Amazon’s cloud makes sense for enterprise customers. We like the fact that the company launched in a way that supports existing license holders and enables license portability.

Red Hat is also helping companies build clouds with its virtualization technology and large asset in Linux. The company is positioning itself to be a force in cloud computing by continuing its legacy of open software.

We wonder: Will all software platforms move to Amazon? Will there a be a time that the “cloud distribution” is the first priority at Red Hat and other operating system releases?

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The new version of Tweetie, the iPhone Twitter application acquired this month by Twitter Inc., says it contains a surprise. What’s the surprise? When you pull down the stream of Tweets to refresh, a slot machine appears.

The slot machine’s wheels spin, then stop. Some percentage of the time you’re rewarded with a little graphic telling you that Tweetie will soon be known as Twitter for iPhone (congrats to you!). This sure looks like the future home of advertising on Twitter for iPhone, doesn’t it? Twitter’s Sean Garrett says that’s not the case, “The slot machine thing is just a fun way to get the word out about the upcoming change from Tweetie to Twitter.” It sure looks like prime real estate, though.

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Now, there may not be ads up there in the future, but offers, promotions, paid inspirational haiku - something? That placement just seems too valuable for the company to let it sit there empty. Just as ads are coming to Twitter (relatively unobtrusive sponsored Tweets at the top of search results) so too can we imagine the free iPhone app will have ads. This seems like as good a place as any to put them. It’s an easy assumption to make: tech investor Dave McClure freaked out on Twitter today calling them ad units, and the thought certainly crossed our minds when we saw them yesterday. Time will tell…

Storm trooper image from MotivatedPhotos.com.

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On Wednesday of this week, Flickr and Hunch co-founder Caterina Fake wrote a provocatively titled blog suggesting that wanna-be entrepreneurs should drop out of college. She based this opinion on the amount of successful companies founded by drop-outs, including Facebook, Twitter, Apple and Microsoft, as well as the drop-outs she finds herself investing in as an angel. But should education play such an insignificant role in entrepreneurship? The answer is not as simple as some think.

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As with many blogs by intellectual authors, the comments they elicit are often as good, if not better reads that the original post itself. As for Fake’s post about dropping out of college, this is certainly the case. The notably civil discussion ignited in the comments by Fake’s intentionally comment-baiting title and post are some of the most interesting perspectives on entrepreneurial education I’ve yet to read.

A commenter by the name of “Anonymous Coward” pokes holes in Fake’s argument about successful companies founded by drop-outs with an exhausting list of companies founded by college grads (some even with masters and doctoral degrees). Some of these companies include Adobe, Cisco, Sun, Google and Intel, all of which are fairly high-tech companies likely benefiting from their founders’ educations.

Another reader, David Whiteman, rebukes the Jobs/Gates/Zuckerberg/Williams argument by pointing out that “they became successful entrepreneurs after they dropped out but that doesn’t imply causation.” One of the sentiments largely agreed upon by the commenters is that there are valuable lessons learned and resources gained by attending college, and that it shouldn’t be avoided all together.

Whether Fake intends to say that entrepreneurs should either drop out or avoid college altogether is unclear, but most agree that being a drop-out may indeed be a good strategy. Instead of ignoring college and starting a company, the best solution may be to attend college, learn the early basic lessons, gain access to resources and contacts, and begin the early stages of your company while still enrolled. Then, if the company takes off, leave school. If it doesn’t, then you didn’t drop out for nothing and you can continue your education and even attempt another company.

Aside from the argument for or against attending college, there is an interesting point Fake brings up about college that got me thinking: “College works on the factory model, and is in many ways not suited to training entrepreneurs. You put in a student and out comes a scholar,” she says. “Entrepreneurship works on the apprenticeship model.”

While I think this is largely true among most universities, I also believe this trend is changing. Steve Blank argued recently that business schools need to evolve or branch into entrepreneurial schools. Most business programs prepare students for Fortune 500 companies with traditional business practices, which are still practical lessons for students looking to go down that road. But a student looking to found a startup has different needs.

Some schools are doing more than others to provide entrepreneurial training. One school whose name I continually hear as the alma mater of new startup founders is Babson College, which topped Entrepreneur Magazine’s list of the top programs in the nation. Others aren’t doing so well keeping up. Some of the startup-minded people in my area criticize the local universities for their paltry entrepreneurial efforts, and other business schools are stuck in their old ways of teaching more traditional business practices.

Can true entrepreneurial education work in the current university system? Will these colleges start losing students to smaller schools with highly focused entrepreneurial programs? These are some of the more deep-thought questions derived from this discussion, and the answers could change over time. Right now, I don’t think entrepreneurial training is working as well as it could in the current college system, but there are things to be taken advantage of.

Entrepreneurs can potentially make the system work for them by attending college for the resources and contacts and founding their companies while still enrolled. As Steve Blank pointed out, TechStars, Y Combinator and other incubators are the early stages of true entrepreneurial education systems. These could one day grow up into full blown specialty schools, challenging the more traditional business schools that are slow to change. As for whether to go to college, avoid it or drop out, I think one commenter on Fake’s blog, who goes by Stephen, summed up the college question best.

“About the only thing that you cannot (okay you can, but at your own peril) do, is nothing,” says Stephen. “So, drop out of college - or don’t …. but get after something, cause it’s all up for grabs - and quite frankly I’m thrilled about that.”

Photo by Flickr user Herkie.

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Tomorrow (May 1, 2010) Google will turn off FTP updating for Blogger.  The old FTP-based Blogger blogs can migrate to a new Google-hosted site where FTP won’t be necessary.  If a blog migrates, then all the posts in its archive will receive new URLs, all links to the old URLs will be redirected, all posts will carry their old page-rank to their new addresses, and Google will start indexing the new versions of the posts and stop indexing the old.  If a blog doesn’t migrate, it will die.  Its archive may remain online, but it cannot be updated with new posts.

My days of heavy blogging at Open Access News are behind me.  In July 2009, I curtailed my blogging to make room for my new work at the Berkman Center, and in January 2010 I cut back even further –essentially to zero– in favor of the Open Access Tracking Project, a more comprehensive and scalable alert service for the now very large and very fast-growing OA movement.  OATP was not designed to do what OAN once did.  But for several years now, the high volume of daily OA news has made it impossible to keep doing what OAN once did, even with an assistant.

Despite that, my plan was to keep Open Access News alive and contribute sporadically.  But now Google has forced my hand.

I’ve decided not to migrate OAN.  At first I worried about the risks to the large OAN archive:  more than 18,000 posts in more than 400 files.  I use the archive every day in my own research and I know that many of you use it too.  It’s still the best source for news and links about any OA development in the last eight years, and I didn’t want to take the chance that even part of it might not survive the migration or might disappear behind broken links.  Blogger has been very good about answering my anxious queries and I’m persuaded that the risks are low.  But the fact remains that migration is irreversible.  

(I especially want to thank Blogger’s Rick Klau.  He always had time for my questions even though the migration must have caused a huge spike in his workload.) 

In the end, a more decisive factor was that I’ve essentially stopped blogging at OAN and don’t have plans to resume.  The safest way to keep the archive intact for research is also the most realistic about my future:  freeze this blog as it is and start a new one later if I feel the need to do so.

If I do start a new blog later, it won’t be a daily news blog about new OA developments.  I’ve been there, and the future for that task is the crowdsourced approach of OATP.  But if a new blog wouldn’t carry on the job of OAN, then it needn’t be OAN.  It would be nice to have the old page-rank of OAN, but if I do start a new blog –by no means certain– I’ll start from scratch like everyone else.

I’ll still be able to update the OAN About page.  If I have any blog-related announcements too late to blog, look for them there.

I’ve often thanked the Open Society Institute, SPARC, and the Wellcome Trust for the financial support that made OAN possible.  But I’ll never be able to thank them adequately.  OAN was more than a mere job and more than a full-time job.  Without their support I would have watched from the sidelines.

Do you remember Google Wave? After a lot of hype around the initial launch of Wave - which some pundits billed as an “email killer” at the time - things have been rather quiet around the service. The latest update to Wave, however, could push the service back into the public eye. Publishers can now easily embed waves on their sites and readers can see them without having to be logged in to Wave, which makes Wave a great live blogging platform.

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Wave for Live Blogging (and more)

At first glance, this looks like a minor update, but for the first time, you can now easily embed waves on your own site. Google notes that you could use Wave for real-time RSVPs with the Yes/No/Maybe gadget and to publish documentation via embedded waves. For us, however, the real potential here is live blogging with Wave.

The interesting thing about using Wave as a live blogging platform, of course, is that readers can see what a blogger is writing in real time. Live blogging doesn’t get more real time than that.

Wave allows users to easily style text and embed images and videos. Adding additional writers to a wave is also as easy as adding another contact to the wave.

Wave Elements: Embedding Waves Made Easy

Until now, embedding Waves took a bit of work and users who weren’t logged in to Wave weren’t able to see your updates. Thanks to the newly released Wave Element tool, however, embedding a wave is now simply a matter of copying and pasting a snippet of JavaScript into your site or blog post. To make a wave public, you also have to add the public@a.gwave.com account to your wave.

You can see an example of what an embedded Wave looks like below.

One Caveat: Doesn’t Work With Internet Explorer Yet

The Wave team, however, also points out one major deal-breaker: the embedded waves don’t work with Internet Explorer yet (even with Chrome Frame). The team plans to resolve this issue soon, however.

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I said last week that “When the level of evil plummets…I wonder, for instance, if Tinhorns the world over aren’t taking the week off to apply neat’s foot oil to their collection of rubber hoses.” I had no idea how right I’d be.

Cuba arrests blogger Diana Virgen García. Garcia, who covers issues of free speech in Cuba, and supports the Ladies in White movement, was arrested on April 22. The next day she was “sentenced” to a year and eight months in prison for unannounced “charges.”

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Gizmodo reporter’s computers seized. After writing about the new iPhone, based on a leaked handset, whose origin is unclear, the California Rapid Enforcement Allied Computer Team, a U.S. law enforcement authority, seized the reporter’s electronics.

Twitter takes down a Tweet. Responding to a U.S. Digital Millennium Copyright Act notice, Twitter eliminated a user’s post on a leaked music album.

Chávez starts a Twitter account. After frothing about how Twitter is terrorism, primarily because opposition members use it to good effect, Venezuela’s president, Hugo Chávez, has started his own account.

China institutes yet another repressive online law. The law is nothing new. It merely “legitimizes” the gun-barrel instructions the state’s law enforcement agencies issue to ISPs and others to cooperate with state secrets issues.

Brazil objects to Google government request data being published. Google published government requests and Brazil “won,” making the most data requests of any country, 3,663, and the most removal requests, 291. They claimed the number was accounted for by child porn investigations, which doesn’t seem to be the case.

Nay Phone Latt, imprisoned Burmese blogger, honored by PEN. The PEN writing group honored the young blogger who is serving a 20-year sentenced after blogging about the 2007 Saffron rebellion in Burma.

Tunisia blocks Flickr. On the 28th, Tunisia added Flickr, the photo-sharing site, to its list of blocked services and sites. Chief among these are individual blogs critical of the government and video-sharing sites.

United Arab Emirates plan to monitor cybercafe users. The country’s Interior Ministry plans to require cataloging of cybercafe users under the guise of child porn. “The move to keep Internet-users under observation comes at the same time as a population census is being held in the countries of the UAE along with a standardisation of ID cards for all citizens.”

Belarus seizes journalists’ emails. A senior Belarus police officer allowed police computer experts to access the email and Skype accounts of independent journalists as part of an investigation for a defamation suit by a former KGB official.

Thailand arrests Facebook user. One of Thailand’s favorite tools to stifle dissent is “lese majeste,” the law that makes it a crime to criticize leaders, in this case the royal family. Unfortunately, there is no proof that Wipas Raksakultha did any such thing when he was arrested on the 29th.

India arrests man for fake Facebook profile. The unidentified man was arrested by the Dehli police for allegedly creating a fake profile of parliamentarian Rajiv Pratap Rudy. This is reminiscent of the arrest and imprisonment of Fouad Mourtada for doing the same thing for a prince of Morocco in 2008. The same questions needs to be asked now as then: what role did Facebook play in providing law enforcement with private user information? Or is there such a thing any more when it comes to Facebook?

United States Senators fault Facebook. Sens. Charles E. Schumer (D-N.Y.), Michael Bennet (D-Colo.), Mark Begich (D-Alaska) and Al Franken (D-Minn.) sent a letter to Facebook questioning the company after it made a huge change in its site that enforced a site-wide change in privacy. Schumer also sent a letter to the Federal Trade Commission calling on them to enact clearer privacy guidelines for social networks.

Egypt indicts videographer and blogger Wael Abbas. Abbas, who is most famous for posting videos of police abuse, including rape, of arrested citizens, is being pursued by the Egyptian courts. His appeal opened yesterday in Cairo on charges of selling communications services without a license. “Neither he nor his lawyers were informed of his trial on these charges and he was sentenced to six months in prison and fined 500 Egyptian pounds (65 euros) in his absence.”

Kazhakstan ISP blocks news sites. State-owned Kazakhtelecom has been blocking two news sites that are critical of government corruption.

Top photo by Andrian van Leen
García photo from World Women International
Abbas photo by Elijah Zarwan

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Jeremiah Owyang was the last speaker of the day. Notes from his talk:

Who do customers trust? Customers trust friends and families. People turn to each other for help.

Rings of social influence: Prospects, Customers, Employees, and Brand

In the past, the brand was the only thing that communicated, typically faceless.

Employees as example – best buy is encouraged to use @twelpforce – anyone at Best Buy using twitter can respond.

(reminder to myself) Social media brands punkd (thanks KrisMcDonald21 for the link!) – google this for shining examples of doing it wrong.

Zappos customers trust other customer product reviews.

OK – not much here in the way of notes. It was the end of the day, and Jeremiah said lots of good stuff in his talk and the next day’s small group sessions that I need to process further (and will probably blog about – stay tuned!).

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Title – Location Based Social Networks

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