BizBooks: Good afternoon BizBox readers......

Welcome to the third segment in the BizBooks Ask the Expert Series. Today with he have with us author and entrepreneur Ryan Allis.

By the time Ryan Allis had reached the age of twenty-one, he had achieved the financial goal most people just dream about: He built his company to one million in sales. Allis has since grown his company iContact Corp., a provider of Web-based email marketing and online communication software, to $10 million per year in sales, and has helped numerous clients increase their sales dramatically.

Today, Ryan is here to share the secrets of his lightning-fast success with you.

Welcome Ryan, let's get started.

Ryan Allis: I'm glad to be here everybody and looking forward to answering your questions about entrepreneurship and Zero to One Million!

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Dundalk, Md.: What's the best way to keep your most talented employees when you're strapped for cash?

Ryan Allis: Great question. You may wish to consider providing a piece of the pie--some ownership in your company. When we started iContact in 2003 we offered our first employee $1000 per month and 1.5% of the company. We were able to get a great person for very little out-of-pocket expense. I'd also recommending working to consciously build a unique culture--one in which people love going to work everyday. That will be a big added benefit that is often valued more than the cash.

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Madison, Wis.: Do you ever had issues getting capital or loans or partners because of your age? What are your recommendations for overcoming age bias for those of us who didn't make our first million by age 18?

Ryan Allis: Yes, we had a very difficult time raising capital initially. We were turned down for a loan from the bank and had to go to our friend of ours for a $5,000 "emergency" loan to cover the net loss we had in the first year in 2003. As a first-time entrepreneur, the best way to overcome age or experience bias is to get results and drive revenue. Revenue will speak for itself regardless of your age or revenue. Sell something successfully to somebody and all kinds of people will come out of the woodwork and be willing to provide loans or equity investment for your company. We bootstrapped for 3 years, then raised $500,000 from a local VC firm here in Durham. Then we raised $5.3M in 2007 to accelerate growth even further. While it was hard to raise capital initially, today I get 2 or 3 voicemails per week from private equity investors, venture capitalists, and hedge funds managers.

I share this story in more detail in part one of Zero to One Million.

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Washington, D.C.: What is more important? Smarts? or Passion and Drive?

Ryan Allis: I think passion, drive, and persistence is most important. There are many, many very successful entrepreneurs who were C-students in school. Intelligence matters--but not necessarily book smarts. Smarts to me is the ABILITY to learn quickly, not necessarily what you already know today.

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New York, N.Y.: How would you describe your management style?

Ryan Allis: We like to hire people smarter than us with lots more experience than us in their areas, give them some guidance and training, and then give them the freedom and space to get stuff done and create their own departments. We track metrics via quantitative objectives (QOs) that we track weekly and set every 6 months. I like to "trust but verify." I used to be a micromanager and learned early on that style was often not as effective.

Here are some tips from Zero to One Million on being a good manager:

1. Have a Vision and Communicate It.
2. Show Respect.
3. Share Your Success.
4. Dont Be Too Serious.
5. Work With Your Employees.
6. Have Your Door Open.
7. Listen & Build Relationships.
8. Commend More Than You Criticize.
9. Reward With Praise as Well as Salary.
10. Consciously Build a Culture

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Milwaukee, Wis.: With the recent credit crunch and banking crisis, what's the best way to get start-up capital for launching a new small business today?

Ryan Allis: You can often get a loan if you are willing to secure it with a personal asset (like your house). You can also apply for a loan backed by the Small Business Administration. I encourage early stage entrepreneurs to figure out how to start selling and gaining revenue by spending as little money as possible. One is often in a much better position to raise capital (both loans and equity capital) once they have $10,000 or $20,000 per month in revenue.

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Bethesda, Md.: What should parents do to encourage entrepreneurial children? Is it good to let them fail?

Ryan Allis: I think it's important to allow your children to learn real-world lessons by letting them "succeed by failing." Thomas Edison failed 3,635 times to find the right combination of elements that would come together to create a filament for the incandescent light bulb that would not burn out when electricity was applied. But he did not see those 3,635 tries as failures but rather as having successfully eliminated something that did not work. In the real world the only way to learn is through mentors and through trial and error (aka experience). Let you children learn their own lessons through trial and error--and also be a mentor to them when appropriate.

I very much encourage all parents to help their children develop a love for reading and for traveling. If you have the resources to take your children to Asia, Europe, S. America, or Africa and haven't already--do it. It will develop an awareness that will be critical to their development and individual growth. My mother is from England so we often traveled and it was very helpful in my learning and development.

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Lorton, Va.: What is the one thing that inspired you to start your own business?

Ryan Allis: I was a computer consultant in Florida starting at age 11, then got into web site design around age 14 when a client asked me if I could create a web site for her pearls business. When I was 17 I worked underneath a mentor in a company that sold an arthritis product. That company grew very quickly in just a years' time and that opened my eyes up to the power of entrepreneurship and made me know that a young person who worked hard could change the world and make a positive difference. I went off to UNC-Chapel Hill for college in 2002 inspired and motivated to start my own company and soon thereafter founded iContact with my partner Aaron Houghton. I share the story of my growth from age 11 through today at 23 in the book Zero to One Million as the first part, and then move on to discussing the ten step process that anyone can use to build their own company to $1 million in sales and beyond.

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Baltimore, Md.: So I have a dream of starting my own business - however my idea is not unique and the market is already saturated - should I just plug ahead on the thought that my idea is better (it is) or should I wait and try to come up with something new?

Ryan Allis: Check out the MAR Model for Opportunity Evaluation in the book. There are some critical questions that you can ask yourself to determine if your idea is a true business opportunity. There were a number of competitors in our space when we started in 2002 doing the same thing, but we were able to position the product well online. We got some initial sales and then used those funds to reinvest in making the product even better, hiring great people, and in customer acquisition.

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Wilmington, Del.: I don't have a lot of experience with technology... are most new small businesses all web and tech start-ups?

Ryan Allis: No, not at all. Most small businesses are franchises and consulting firms. There are many, many more small businesses that are restaurants, stores, accounting firms, consulting firms, agencies, etc. than there are web and tech start-ups. Sometimes the tech start-ups get a lot of attention but the large majority of companies that start-up today are not selling a technology product.

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Washington, D.C.: Do you have any regrets?

Ryan Allis: No regrets. I've definitely made my share of mistakes and would do some things differently if I started over, but no regrets. It's been a great ride and we've got a long way to go.

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Columbia, Md.: How do you know you have a rock solid idea for a new business?

Ryan Allis: Talk to people who are likely customers and ask them what they think--rather than just talking to friends, family, and colleagues. Take a look at the section of Zero to One Million about opportunity evaluation.

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Hanover, Mass.: How can you tell a small business will become profitable in the long run?

Ryan Allis: You often cannot. One can only try by creating a "pro-forma" profit and loss projection and trying to estimate revenues and expenses in each category based on the best educated guesses you can make. It can get complex as they are both fixed expenses (overhead) and variable expenses. Mapping these out and then graphing your projected net income and aggregate net income by month will allow you to determine your monthly cash flow breakeven and total breakeven points.

One can often test to determine if there is demand for what you are selling with pilots, surveys, and prototypes before launching fully. If you can make a unit economic transaction (one sale of one product) profitable and do that over and over again, you'll have a profitable business.

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Richmond, Va.: How do you find really good employees?

Ryan Allis: We use referrals from existing members, word of mouth, LinkedIn, Craigslist, HotJobs, Monster, and CareerBuilder. One has to develop a good filtering process (we use job-specific questionnaires).

When we are interviewing candidates, we look for people who show they can:

1. Communicate well;
2. Take initiative;
3. Work hard; and
4. Learn quickly

We care more about how fast you can learn than how much you know. For senior level positions we also look closely at track record. We look for people who have a demonstrated record of driving projects to successful completion.

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Edina, Minn.: What drives you to be an entrepreneur?

Ryan Allis: I'm driven to be an entrepreneur by a passion to make a positive difference, give back, create good jobs, and create a product that helps people.

To me, the definition of an entrepreneur is someone who re-arranges resources to change the world. Often times when we think of entrepreneurs we just think of business entrepreneurs--but there are also social entrepreneurs, artistic entrepreneurs, and scientific entrepreneurs. I hope to be both a business entrepreneur and social entrepreneur in my lifetime as well as someday work in public service.

I'm also driven by a passionate desire to work to reduce poverty and hunger here in the United States and in developing nations and increase access to education, healthcare, technology, and opportunity.

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Ann Arbor, Mich.: Do you think it is important to create fun, supportive environments for workers that maybe cost a bit more in perks - but keeps people longer and attracts better people, rather than sticking with old "office" settings?

Ryan Allis: Yes, absolutely. We have ping pong and foosball tables, free drinks and sodas, Monday bagels, and monthly lunches. We have lots of celebrations and do company activities like Habitat for Humanity builds, baseball outings, company picnics, brainstorming retreats, hockey games, and more. We keep our culture fun and focused on caring about each other as if we were a surrogate family, while working hard.

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Little Rock, Ark.: Any reading recommendations (besides your book of course)?

Ryan Allis: Absolutely. Top 5 are:

1. Think and Grow Rich
2. Rich Dad's Guide to Investing
3. Lexus and the Olive Tree
4. Rich Dad Poor Dad
5. Good to Great

Other favorites are:
Commonwealth, The End of Poverty, The White Man's Burden, The Commanding Heights, Good to Great, Built to Last, Zero to IPO, Seven Habits of Highly Effective People, The Tipping Point, Blink, Collapse, One Bullet Away, Guns Germs & Steel, Giants of Enterprise, Political Ideologies and the Democratic Ideal, Reinventing the Bazaar, The Worldly Philosophers, Rich Dads Guide to Investing, The World is Flat, The Secret History of the American Empire, My Life, Losing My Virginity, Valley Boy, Confessions of An Economic Hitman, Understanding Power, The Difference Between God & Larry Ellison, Ready Fire Aim

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Seatle, Wash.: Everyone knows that starting your own business is exciting and also very time consuming - do you find it hard to balance work and life?

Ryan Allis: Work is certainly a big part of my life. As an entrepreneur, it's a lifestyle. I'm fortunate to be at a point in my life where I can work 80 hours on iContact and 20 hours on social ventures each week and still be healthy and focused. I am sure I will slow down someday, but for now I love the pace. I am looking forward to having a family someday and will certainly adjust my schedule then. Outside of work I do enjoy improv comedy, hip hop dancing, sports, and hanging out with friends.

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Montevideo, Uruguay: Was your social environment (family and friends ) supportive of you?

Ryan Allis: Yes, my Mom was a social worker and my Dad was an Episcopalian priest. They were very very supportive of me. I've been able to develop some good friends here in North Carolina and elsewhere that have been very encouraging and positive.

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Silver Spring, Md.: You mention that using the Web allows you to try cutting-edge marketing technologies. Can you break some of those ideas down? I'm a novice when it comes to utilizing the Web.

Ryan Allis: Sure--there's a chapter in Zero to One Million called "Your Web Marketing Plan." In it I talk all about how to sell your products or services online. It talks about search engine optimization, email marketing, affiliate marketing, online advertising, and social media marketing. I hope it's helpful. Feel free to email me if you have any questions. My email is ryan[at]icontact.com.

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Detroit, Mich.: I have a provisional patent on a product, how do I get my product to market. How do I find a manufacturer?

Ryan Allis: I would suggest finding individuals who have already produced products similar to yours and asking them who they used for manufacturing.

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Alexandria, Va.: Of all the new business ideas you hear ever year... what percentage of them are actually viable? In other words, what's more important... having lots of start-up capital with an okay idea, or a little bit of money and a truly amazing idea.

Ryan Allis: Ideas are a dime a dozen. Execution is what matters. I'd rather invest in a driven, passionate entrepreneur who will absolutely nothing get in his or her way than an individual with a great idea but no drive.

Between your choices, I'd rather have a little bit of money and a great idea. But more so than either of those, I'd rather have a driven person.

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Arlington, Va.: For someone looking for a great idea for a new business - how do you come up with an idea for a business - and how do you know that it will be successful?

Ryan Allis: Here are some tips for coming up with business ideas from my book Zero to One Million:

1. Evaluate the products you use everyday. How can they be better? What need or pain do you have that could be fulfilled by a product or service that is not currently being provided?

2. Go to networking events, conferences, and seminars like this one. You may find someone with a good product or a good idea that is looking for partners.

3. Get a job at a company in the industry you are interested in. Work there to get experience and build contacts. Often you will see product ideas in the course of your work that your company will choose not to pursue.

4. Consider starting a franchise with an existing good idea.

5. Find a partner with a business idea that you can join up with and exchange business cards.

6. Connect with engineers and scientists. Look at the tech transfer department at your local universities.

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Columbus, Ohio: Did you run into any problems getting your business started because of your age?

Ryan Allis: Sure, but there were just as many advantages to being young (such as lower monthly expenses, people being will to help you) as there were disadvantages (harder to get capital, people not taking you seriously).

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Woodstock, Ga.: Where do I find products to market?

Ryan Allis: Check out product sourcing catalogs. They often have lists of products you can buy at wholesale and then resell via the web, catalog, or stores.

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Atlanta, Ga.: Is there anything that you look back on that you would change?

Ryan Allis: I would have set bigger goals at the start. When we started our goal was to build the company to $1 million in sales. Today, we're at about $14 million in annual sales. We didn't even fathom that this was possible when we started. Setting big goals (and writing them down and framing them!) has been very important to my growth and progress to date.

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Seattle, Wash.: How do I develop a sales plan?

Ryan Allis: Here are some questions to help get you started on developing a sales plan from Zero to One Million. Check out more information on building sales and marketing online and offline in the book.

1. How will the product be sold? In a retail store, online, by direct mail, by catalogs, by infomercials, through distributors, or by a combination?
2. Will you sell your product at wholesale, at retail, or both?
3. Is your main market businesses or consumers?
4. Where do customers currently go to look for the product?
5. How can we be positioned so that were in these places?
6. Could the price point support a telesales force?
7. Could the price point support a direct sales force?
8. What is my unique selling proposition? What will make my product so different that customers will buy it rather than competing products?

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Boston, Mass.: What is your number one tip for a budding entrepreneur?

Ryan Allis: Take action today.

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San Diego, Calif.: You started out very young. Did your parents encourage you? Or were you just naturally driven?

Ryan Allis: My parents definitely encouraged me. I was always a competitor. I became even more passionate at age 17 when I learned what was possible as an entrepreneur and when I learned about the great challenges our world faces and that as a generation of young people who care about changing the world we can as entrepreneurs and social entrepreneurs make a difference.

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Toronto, Ont.: We are an outsourced accounting department for small businesses. What do you think would be the best way to market our services?

Ryan Allis: I'd suggest using Google Adwords CPC ads, Yellow-page ads, search engine optimization, and local word-of-mouth.

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BizBooks: Looks like that's all the time we have for today. Thank you Ryan for taking the time to answer our questions. And thanks to everyone for joining us.

Ryan Allis: Thank you very much for having me here today!

Please feel free to connect with me on LinkedIn, Facebook, or MySpace. My email is ryan@icontact.com and my blog is at http://www.ryanallis.com/blog.

If you want to read more I'd encourage you to buy a copy of Zero to One Million: How I Built A Company to $1 Million in Sales... And How You Can Too. You can buy the book on Amazon, Barnes & Noble, or at your local bookstore.

We've got many challenges and opportunities in the coming decades to make a positive difference as entrepreneurs, and I look forward to working with you to make an impact.

Let's change the world together!

Ryan Allis
Durham, NC
April 4, 2008

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