On the first flight by Richard Branson's Virgin Atlantic Airways in 1984, one without passengers but necessary for certification, a flock of birds flew into and destroyed one of the jet engines.
The money needed to replace the engine was more than Virgin's banker was willing to lend.
How Branson got out of the fix was one of the instructive tales that came out of a recent conference in Marina del Rey, Calif. The event proved a hotbed of ideas for entrepreneurs and investors trying to get ventures off the ground.
Branson came home that evening to find the bank manager at his doorstep. The banker proceeded to set forth conditions that threatened to send his fledgling airline company into bankruptcy.
"I don't believe in losing my cool, but it was the first time I walked over to someone and pushed them out the door," Branson said. "I went to every person I had dealt with in the last 10 years to get the money."
Three days later, Branson managed to secure a loan from another banker and saved Virgin Atlantic.
"There's a very thin line between survival and success. Staying on the right side of that line is critical, and cash is king," he said.
Serial Entrepreneurs' Advice
Branson was the keynote speaker at the conference, called "The Perfect Pitch," attended by about 450 people on Oct. 26 and organized by PerfectBusiness.com. The event covered topics such as how to raise money, create a business plan and succeed in business.
Branson, known for his flamboyant and competitive style, launched his first business at 16, a magazine called Student. Today the Virgin brand is stamped across more than 200 companies, from music stores and cosmetics, beverages, fitness clubs and mobile phones. One of his more recent ventures, Virgin Galactic, will offer suborbital space flights.
Among his keys to success in business, Branson said, has been to motivate employees through praise.
"The best leaders genuinely care about all their employees, always looking for the best in them, never criticizing," he said. "If you have a temper, suppress it. It's counterproductive."
As with most business startups, entrepreneurs ultimately face the hurdle of raising cash. The bulk of small-business owners succeed by tapping personal lines of credit and borrowing from friends and family. Going bigger requires calling on angel investors, which typically lend in the hundreds of thousands, and venture capital firms, which fund in the millions.
Presenting the perfect pitch to potential investors requires the appearance of "energy, enthusiasm and excitement," said Mark Suster of GRP Partners, a venture capital firm. When meeting with investors, the entrepreneur needs to quickly explain "the problem that needs to be solved and what you can do to solve it," Suster said.
Tim Draper, managing director at venture capital firm Draper Fisher Jurvetson, said: "It has to feel like you're already in business and you have to make the investor feel like they need to get in on it."
Cracking Valuation Puzzles
Investors who commit to funding typically get a percentage of the company, a calculation that requires deciding what the company is worth.
"A lot of deals don't get done because entrepreneurs are stuck on valuation," said Scott Sangster, an angel investor at Tech Coast Angels. "You have to take what the market is willing to give you in the first round because the risk is high and so much is unproven," he said. "If you're just starting you'll get told what (the company is worth) and you have to decide if you want to go forward or not."
Jeff Tinsley, CEO and founder of MyLife.com, a people search Web site, had several comments about creating a business plan at a conference entrepreneur panel.
"Your business plan will change," he said. "That's a guarantee. Be open-minded, embrace change and be willing to change your business plan, because you won't get it right the first time."
Steven Lipscomb founder and chief executive of World Poker Tour, which runs a series of televised international poker tournaments says winning in business requires a deep-seated passion.
"To succeed in business you have to care about it, think about it and talk about it every day to the point that your family and friends will be tired of hearing about it," Lipscomb said. "You have to be so crazy to think that there is no way you can fail. It's part of the sickness that comes with being an entrepreneur."
And when you finally do succeed, be ready to be attacked by rivals or people who are envious of your success.
"No matter what you create or how great you are, you will be attacked immediately upon your success," Lipscomb said. But have faith: "The demons of success will outstrip the demons of failure."
At a panel titled "Wisdom from Serial Entrepreneurs," Nolan Bushnell whose credits include founding Atari and Chuck E. Cheese's (CEC) said succeeding in business requires intense research of the business you're in.
"You have to answer every question anyone can come up with," he said.
Bushnell also founded Catalyst Technologies, a business incubator that spawned Etak, the first company to digitize maps of the world, and Axlon, which created a high-tech talking bear and other consumer electronic products, among several other ventures.
Beware Of Partners?
Asked by the panel's moderator about whether having a business partner is a good idea, Bushnell advised against it.
"Partnerships are the worst business model you can have, bar none," he said. "I won't do it unless I control a majority of the shares." But if he does take on a partner, Bushnell designs the contract so that if the partner leaves the company, the partner gives up control of those shares.
"If they are not going to see it through, they lose," he said.