Pat Sullivan Blog

Governor Jan Brewer called me!!

First let me apologize for not blogging more here about health.  I have actually been planning an update on getting well from chronic conditions.  My favorite topic.  But I have had a LOT going on in my life.  Some good.  Some not so good.  But my health is excellent I am happy to say.  And I want to share some things I have learned and I will soon.

Today though I wanted to say how honored I am to have been asked to serve on the newly formed Arizona Commerce Authority.  Basically it is an effort for public and private sectors to join together to help Arizona foster job growth here in this state.  It actually replaces the States Commerce Department.

Not only that, I was asked to Chair the Entrepreneurship Sector Group.  I was totally surprised 2 mornings ago when I got a call from Governor Jan Brewer and she personally asked me to do this.  It was cool getting a call direct from the Governor and unlike me, I was at a loss for words.  I couldn't decide whether to call her Governor or Madam Governor, so stupidly I called her Jan.  Later though, I gathered my wits and called her Governor.  It was also amazing that she called personally.  I would have thought her assistant or someone else would call.  But she said that this group is so important to her she wanted to call personally to recruit the people to head up the 4 key groups.  I got to meet her today. 

Needless to say I was honored.  The whole group is co-chaired by Jerry Colangelo.  He is very serious about making this work.  As for me, I feel a bit overwhelmed with having to figure out how I can make a difference and do something worthwhile for AZ.  I have lived here for 17 years now and love the state.

Here is the press release:  Download 2010-9-23 ACA Board Meeting NR

Entrepreneur: Being one and raising money

Here are links to 2 talks I have given the past 2 years.  The first one is about things I have learned the hard way being an entrepreneur.  Things you have not read in a book! 

The second is about raising money for a new venture where I reveal a few secrets I have learned along the way. 

I thought these might be useful in these days where people are either trying to find work or are trying to start a business so they can work.  And perhaps create jobs.  Hope you enjoy.

Being an Entrepreneur.

Raising money.

Become A Jigsaw Facebook Fan

Help us out and become a fan.  We are trying to get a vanity URL for fanpage.  We read somewhere that you needed 1000 fans first. Well, cmon people sign up and tell ur friends. And buy some Magnesium too!  http://www.facebook.com/pages/Jigsaw-Health/54296978481 .  Thanks!

The AIG Truth!!

Here is a great summation of many of the things I have been saying here for the past week or so.  What happened to AIG employees is an outrage.  The whole AIG outrage aside, America and the rest of the world, depend upon our "rule of law" and "sanctity of contracts"!  When Congress and a President comes to believe they can overrule law and contracts in order to punish who they wish, or who the "majority of people" want to punish then tyranny has arrived.

The Real AIG Disgrace - Wall Street Journal -subscribe online!!

    *
      By HOLMAN W. JENKINS, JR.

The stock market was intoxicated with the Obama administration's toxic asset plan. Whatever its contempt for the upper middle class that acquires wealth through salaried work and bonuses, Team Obama still has eyes for the hedge fund class, which will be ladled out taxpayer dollars to make one-way bets on problematic bank assets.
[Business World] AP

Andrew Cuomo and Tim Geithner.

Yet the AIG bonus episode, the administration's one true disgrace so far, will not soon be forgotten.

Tim Geithner is rightly on the hot seat for saying he didn't know about the bonuses until just weeks ago -- because he should have quelled this furor before it ever got started. Instead he played dumb and climbed aboard the outrage bandwagon -- and let Mr. Obama do the same.

There is not a shred of justice in the hysteria that followed. As AIG chief Ed Liddy explained on the Hill last week, the people receiving retention bonuses were not the same people who launched AIG's unhedged housing bets that brought the company down. Those people were gone. Their pay is already being clawed back.

Those who remained had been asked a year ago to stay and work themselves out of a job. In accepting the terms offered to them, they committed no offense (say, failing to pay taxes). Their only crime was possessing marketable knowledge -- all the more marketable because of the opportunity for hedge funds and other counterparties to profit from AIG's distress. Had the company submitted to Chapter 11 rather than a government takeover, a bankruptcy judge might well have authorized identical incentives to minimize losses and maximize recovery for legitimate stakeholders.

The Washington Post, which has consistently distinguished itself with its reporting about the real antecedents of this "scandal," yesterday followed up by detailing "months of assurances to Financial Products employees that the insurance giant would honor those contracts, according to numerous internal AIG e-mails and memos . . . ."

Whether Mr. Geithner knew the specifics is unimportant. The retention plan was known to his staff. The details had been disclosed over and over in public filings. As far back as October, New York Attorney General Andrew Cuomo had summoned the Treasury-appointed Mr. Liddy to hammer out a deal on AIG's pay practices. Said Mr. Cuomo in a statement afterward: "These actions are not intended to jeopardize the hard-earned compensation of the vast majority of AIG's employees, including retention and severance arrangements, who are essential to rebuilding AIG and the economy of New York."

The voluble Rep. Elijah Cummings had been railing about AIG retention bonuses almost continually, on air, in the print media, and in publicly released letters to Mr. Liddy, since Dec. 1.

On March 3, Mr. Geithner himself was quizzed during a congressional hearing in detail about the AIGFP retention plan by Democratic Rep. Joe Crowley -- a week before Mr. Geithner now says he heard of the plan.

It may be that the full picture was kicked up to him only when a political decision was needed, but by then his one decent choice was to insist on the bonuses' legality. However politically inopportune the bonuses may be, the president only dirtied himself by authorizing a feel-good, bipartisan hate storm aimed at innocent AIG employees. And it's hard to believe Mr. Obama would have done so, or the subsequent spectacle would have unfolded as it did, without Mr. Geithner's seminal prevarications (and we say this fully acknowledging that he's had a rough ride in an inhumanly difficult job).

Barney Frank, who doesn't have the excuse of being stupid, was last seen bullying Mr. Liddy to do what on any other day Mr. Frank would flay Mr. Liddy for doing -- violating the privacy rights of his employees. Charles Grassley? His early bloviating about the duty of AIG executives to kill themselves almost begins to look like a grace note, since it alerted the public to the hyperbolic playacting about to come.

Paul Kanjorski, before running off to host a hearing, proclaimed on CNBC that AIG's Mr. Liddy would be responsible if Congress now failed to summon the political courage to take necessary steps to address the financial crisis.

Pause to let it sink in. Mr. Liddy, who is doing his job with grit and personal sacrifice, is blamed in advance if Congress proves too cowardly to do its own job.

But the biggest lesson here is the old one that the price of freedom is eternal vigilance -- beginning with insistence on the rule of law. Americans clearly cannot trust their elected officials to defend their rights and interests, or care whether justice is served, when the slightest political risk might attach to doing so.

Which brings us back to Mr. Cuomo, whose office has been implicitly threatening to publish names of AIG employees who don't relinquish pay they were contractually entitled to.

Mr. Cuomo is a thug, but at least he reminds us: It can happen here.

Why capitalism works and what happens if it gets broken

My daughter sent me this cause she knew I would love it. I did. I hope you like it as well. This story could be told a million times over. Congress and the President are messing with the only engine driving our economy. It is called capitalism. If the mess enough with it, they will break it. Then we are all totally screwed!!  Enjoy!

Click Here

Holy Budget Deficits Batman!

Yikes, is about all I can say about this WSJ opinion piece.  If you don't get the online subscription to the WSJ, you should.

I will point out Obama's assumptions, and the Congressional Budget Office are both wildly bullish on growth beginning in 2010 and beyond.  Higher than we have ever seen.  AND this budget does NOT include Nationalized Health Care yet.  AND it does not include the fact Dems are now talking about making much of the Stimulus Package permanent, which they intended all along.  Where does all this money come from?  Not from the RICH.  Even the rich don't have this kind of money.   Not even close.  They must print/create it.  Inflation here we come in about 9-18 months.

Obama Sticker Shock - Wall Street Journal

President Obama's 2010 budget looks more astounding by the day, especially when someone other than the White House budget office is analyzing it. The latest case of epic sticker shock came Friday when the Congressional Budget Office published its assessment, which found that the proposals would increase the federal deficit by $2.3 trillion more over 10 years than the White House had claimed.

Hey, what's a little rounding error among friends?

Mr. Obama keeps saying he has "inherited a trillion dollar deficit," which is true. But he's hardly an innocent bystander. CBO shows that the President is seeing that $1 trillion and raising it again and again, as far as the eye can see. In only two months, since the last CBO budget review in January, Democrats have passed laws that increase spending by $134 billion in the last six months of this fiscal year alone, and $1.2 trillion over the next 10 years. And that's all before his 2010 budget proposals.

The White House responded that CBO, which is also now run by Democrats, has a more pessimistic economic forecast than do White House economists. But not by much. CBO expects growth this year to decline by 3%, while the White House's rosy scenario has it falling by only 1.2%. Both predict roughly the same growth rates in 2010 (2.9% for CBO vs. 3.2% for the White House) and 2011 (both 4%).

The big difference between the two guesstimates is in spending, with CBO calculating that Mr. Obama's proposals will increase federal outlays by $1.7 trillion more than the White House projects. Entitlement spending -- Medicare, Medicaid, and so on -- will increase by $1.1 trillion. In 2009 and 2010 alone, CBO estimates that Mr. Obama's budget will increase spending by $347 billion more than the White House claims.

As a share of GDP, CBO says this means spending will hit an astounding 28.5% in fiscal 2009, which ends this September, and still be at 25.5% next year, staying at close to 23% to 24% of the economy for the next decade. As CBO dryly notes, this is "above the average of 20.7 percent over the past 40 years." Even CBO's estimate is conservative because it assumes that most of the spending in the stimulus bill will be temporary, though Democrats are already planning to make much of it a permanent part of the budget baseline.

Where does this take the Obama budget deficit? Up into the great beyond. This year's deficit will hit 13.1% of GDP and next year's will still be at 9.6%, assuming a healthy recovery, and then never get below 4.1% for the entire decade. These deficits assume the passage of Mr. Obama's enormous tax increases in 2011 and $629 billion in new cap-and-tax carbon revenues. The share of debt held by the public will double -- to 82.4% in 2019 from 40.8% in 2008 (see nearby chart).

And by the way, all of this is without including the costs of Mr. Obama's plan to offer "free" health care for the middle class. The White House budget includes only a "down payment" on health care, with every serious person figuring it will cost at least $1.2 trillion, and probably more. Incredibly, Democrats on Capitol Hill are, with White House encouragement, talking about jamming health care through Congress with a special procedure that requires only 50 Senate votes.

At least after World War II, spending could, and did, decline rapidly when the country demobilized. In this case, with the bulk of federal spending geared toward income maintenance and transfer payments that have political constituencies, that won't happen. And that is part of Mr. Obama's plan. One unstated but clearly implicit goal of his budget is to put in place spending programs that make ever-more Americans dependent on government and that will require a permanently higher level of taxation to finance. All of this is being done in the name of addressing income inequality.

Republicans have an obligation to slow down this express train to a European welfare state, and to educate Americans so that they put pressure on Democrats who claim to be deficit hawks. If this budget passes in anything close to Mr. Obama's form, Republicans will spend the next two or three generations doing little more than collecting higher taxes from the middle class to finance the Obama revolution.

AIG execs should "kill themselves", Sen Grassley.

By Deal Journal

There is only one thing more outrageous than the outrageous $450 million AIG bonus payout.

And that would be the hysterical, bloodthirsty ravings of our politicians over the matter.

It’s too bad Robespierre is dead. Iowa Senator Chuck Grassley’s suggestion that the AIG execs kill themselves would have made him proud.

For those of you that enjoy this kind of populist hurly-burly–and it appears, that is most Americans, there is good news. The revolution will live on! As long as Washington can’t help itself from tinkering with our economic destiny, the outrages will keep coming.

Of course, the AIG bonus saga promises to get even better. Soon we’ll have a constitutional amendment to clawback all Wall Street bonuses. And in our fine nativist tradition, there are bound to be hearings on why all those bad European banks ended up with AIG’s good American money.

The highly anticipated Washington and New York State investigations of John Thain’s farewell bonus payments at Merrill Lynch are now underway. And you can count on an almost never-ending political brouhaha and mediafest over “appropriate” behavior by the TARP banks.

The John Kerry bill to kill golf sponsorships and Christmas parties and the Chris Dodd amendment to curb bonuses were just the start. Wait until Washington really clamps down on Wall Street pay.

It will go on and on.

But soon Wall Street’s outrages will have competition as Washington turns its attention to the doomed U.S. auto industry. The Presidential auto task force may be making noises about delaying the tough decisions on GM and Chrysler. But rest assured, there eventually will be outrage here, too.

Like AIG, we are talking big numbers. Mark Zandi at Moody’s estimates the total taxpayer price tag on a Big Three bailout to run to $75 billion to $125 billion. And certainly there is negligence and incompetence. After all, the U.S. car industry has been dying for decades.

But expect a more nuanced drama in Detroit than on Wall Street. For one, it’s harder to pick out the villains. Will it be the evil CEOs? The intransigent, greedy bondholders? The naysaying Republicans? Or perhaps, even the lazy, overpaid workers?

In a Senate hearing room, the outrage could take almost any direction. Look at Chrysler. The company is owned by a bunch of rich folks. It is run by a rich CEO. A rich guy who once was Treasury Secretary now lobbies for its bailout money.

And now the rich folks, with the UAW’s blessing, have joined hands with a second rate, cash-starved foreign car company. And together, they want to bilk the U.S. taxpayer of another $10 billion or $15 billion to churn out cars nobody wants.

Now, that’s an outrage.

But the Washington populists ought to tread carefully. It’s one thing to stir up the mob, it’s another to control it. Eventually, the public will tire of the old outrages and look for new ones. And suddenly some of the things down in Washington will start to look pretty outrageous, too.

Like Senator Ted Stevens, a convicted felon, receiving $122,000 a year from a government pension. Like Congressman Charlie Rangel, the man most responsible for the U.S. tax code, failing to pay taxes on his Dominican vacation home. Like Rep. Maxine Waters doing favors for a bank in which her husband was a stockholder and former board member.

And like President Obama vowing to rid Washington of earmarks before signing a bill that had almost 9,000 of them.

La revolution devore ses enfants, said French revolutionary leader Georges Danton, before he was guillotined by Robespierre. Three months later, Robespierre himself was executed.

Senator Grassley, please take note.

One term Obama

That is my prediction.

No talented person will work in a company where the President of the US can retroactively and arbitrarily rescind a contract (bonus/commission) because he thinks it excessive.  Any company who has received bailouts will see a mass exodus of all the talent needed for that company to ever turn around.  All the companies bailed out will fail unless they find a way to return the money to govt fast.  Taxpayers will give them trillions more not to fail but they will fail anyway because all the talented people will have left.  This is inevitable. 

Obama et al are either showing a total ignorance as to how companies actually work, or they don’t care because they know they can take advantage of the chaos they have created to ram down the throats of all Americans policies they know Americans would never stomach in rational times.  Chaos has been used many times in history by leaders for the overturn of long standing laws, policies, governments and ways of life.  “Don’t let a good crisis go to waste” said Rahm Emmanuel, Obama’s chief of staff.  These are very smart people taking advantage of the ignorance of the majority of Americans as to how our financial system actually works. 

 

This about a direct attack on “rich people” who this administration has targeted.  They don’t want any more rich people.  They want everyone to basically earn the same.  Earn what government thinks they should earn.  This is a total affront to life, liberty and the pursuit of happiness.  Once called “inalienable rights”. 

I predict Obama is a one term President.  Hillary or some other smart Dem or Rep will take advantage of the destruction this man (along with Pelosi, Reid, Frank etc) will cause over the next 2- 3.5 years.  The recession will last his entire administration and he will run out of the ability to blame Bush in the fall of this year.  The chaos will get worse.  Threats to our liberties will grow everyday for the next 3.5 years, hopefully less.  The dems have 1.5 years to have a super majority because many of them will get thrown out in the interim election.  The Republicans then elected stand a very good chance of making things worse unless there is someone with insight and wisdom into how the world really works leading them. 

 

“Government is not the solution to our problems, it is the problem.”  Reagan.  Some govt is needed!  Massive government always becomes tyrannical. 

 

Obama Seeks Legal Authority to Stop Future Bonuses

By JONATHAN WEISMAN

WASHINGTON -- President Barack Obama said he will seek legal authority over the financial system that will give the federal government power to step into contract issues, such as the one that has allowed American International Group Inc. to pay out $165 million in retention bonuses to employees of the tottering insurance giant's financial products group.

The president said he spoke with House Financial Services Committee Chairman Barney Frank this morning about granting him "resolution authority" similar to the power the Federal Deposit Insurance Corp. has over the thrifts it regulates. That would allow his administration to potentially abrogate contracts that it can show does not serve the good of newly regulated entities like AIG.

Reuters

President Obama (right) makes remarks about AIG outside the White House Wednesday as Council of Economic Advisors Director Christina Romer (left) and Treasury Secretary Timothy Geithner look on.

Mr. Obama said he needs the regulatory power "to allow us proactively to get out in front, to separate bad assets from good in dealing with contracts that may be inappropriate."

Mr. Obama spoke with reporters outside the White House as he headed toward his helicopter en route to Andrews Air Force Base for a trip to California. He acknowledged that the furor around the AIG bonuses had consumed Washington, "and rightfully so because they represent what we all of consider an inappropriate use of taxpayer funds."

But the president urged Americans to look beyond the bonuses, which appear nearly impossible to retrieve, and to consider broader issues of re-regulating the financial system to prevent the kinds of institutional collapses that have dragged the entire economy down with firms like AIG, Bear Stearns, Fannie Mae and Freddie Mac. (These companies did not fail for lack of regulation!!!  They failed because the value of homes fell upon which the entire house of cards depended.  You cannot regulate the price of homes!!  I am certain they will eventually end up trying to though.- Pat Sullivan)

"We've got to have tools that under our legal authority we can do something about this," he said.

He also expressed his full faith and confidence in his embattled Treasury secretary, Timothy Geithner, (I predict Geithner will get fired and blamed for much of the chaos.  Right or wrong!  They need more scapegoats to blame to take the focus off the real culprits and real problems!! - Pat) who he said is dealing with more crises from the outset of his tenure than any of his predecessors, perhaps with the exception of the first Treasury secretary, Alexander Hamilton.

"He is making all the right moves in terms of playing a bad hand," the president said.

Write to Jonathan Weisman at [email protected]

 

Bonus Rage

See the below WSJ article after reading my opinion.

The whole outrage about bonuses is a rouse to take America’s attention away from things that really do matter!  Like why did we bail these people out to begin with?  Why are we pouring 100’s of Billions more in?  Like why is $20BB given to AIG going to foreign banks?  Why is $15BB going to Goldman Sachs through AIG?  

The fact is, these people receiving bonuses are the people who do the real work that HAS to be done if we have any hope of getting through this crisis the way we have chosen to try to get through it.  You have to have these talented and experienced people, who are used to being paid large $$$.  They could leave and then who would do what they know how to do?  A congressman?  A bureaucrat?  Someone who has no idea what a Credit Default swap actually is??  How it works?  What it is worth?  How to unwind it?  Negotiate it?

 It is a farce and outrage to castigate the very people you need to fix the problem.  These people did not create the problem, their CEO’s and upper mgt did (most often at the urging of laws passed by congress and congressman themselves.)  These people executed the plans laid out by the Execs, most of whom have quit or have been fired!!  It is somewhat like firing a Professional Coach, and then refusing to pay the contracts of the players because they have been losing!  You can’t.  You have to pay their contracts!  It is that simple.  Otherwise contracts and contract law mean nothing. 

If congress and this administration manages to destroy contract law and property rights law in America, then America as we know and love it will cease to exist.

Bonuses Expected at Fannie, Freddie

By JAMES R. HAGERTY and AARON LUCCHETTI

More financial companies that are being propped up with federal money are facing political heat over bonus payments to executives.

Fannie Mae is due to pay retention bonuses of as much $470,000 to $611,000 this year to some executives despite enormous losses at the government-backed mortgage company. Fannie's main rival, Freddie Mac, also plans to pay such bonuses but hasn't yet provided details.

Fannie's bonuses are smaller than ones paid by American International Group Inc. that have caused a political firestorm for that company. Seventy-three AIG executives got retention payments of $1 million or more recently, according to New York Attorney General Andrew Cuomo.

But the Fannie bonuses are still considerable and come at a time when Fannie and Freddie are receiving increasing amounts of funding from the Treasury. For 2008, Fannie and Freddie reported combined losses of about $108 billion, largely stemming from a surge in home-mortgage defaults. The U.S. Treasury has agreed to provide as much as $200 billion of capital apiece to Fannie and Freddie in exchange for preferred stock. The two companies have said they will need a combined $60 billion of that money to cover their losses so far.

Bonuses for executives at companies that have received federal backing are "definitely wrong," said U.S. Rep. Edolphus Towns, a New York Democrat. "They are rewarding folks who have not done a good job." Rep. Towns also questioned whether executives would bolt if they didn't get retention bonuses. "Where are these people going?" he asked. "Everybody's laying off."  (Stupid politician!!  There are ALWAYS places for talented people to go and earn what they are worth! He is clueless!!)

On Tuesday, Sen. Robert Menendez (D., N.J) wrote to Treasury Secretary Geithner, asking him to "use every legal means available" to stop $3 billion in previously disclosed retention payments to brokers at the new joint venture being formed by Morgan Stanley and Citigroup's Smith Barney unit.

"These payouts constitute misuse of taxpayer money and are an insult to hardworking families who are saving every penny," wrote Sen. Menendez.

Morgan responded in a statement that the payments aren't bonuses, but loans that won't start paying until 2010 and cannot be kept in full unless the broker stays at the firm for nine years. "The program is necessary because our financial advisers are being poached by competitors," the statement added.

Morgan and Smith Barney's venture will be jointly owned by Morgan and Citigroup, both of which have taken an investment from the U.S. government after they ran into trouble during the credit crisis. But unlike some of the people who have received bonuses at AIG, the brokers getting extra money at the new Morgan Stanley Smith Barney haven't been directly involved with billions of dollars in write-downs at their parent companies.

James Lockhart, director of the Federal Housing Finance Agency, of FHFA, which regulates Fannie and Freddie, said the bonuses they are paying are "critical" to retain people needed to support the mortgage      market and work on foreclosure-prevention efforts. After the companies' chief executives were ousted in September, "it would have been catastrophic to lose the next layers down and other highly experienced employees," he said. Mr. Lockhart added that compensation has declined for many employees because other types of bonuses weren't paid last year and "past stock grants are virtually worthless."

A recent Fannie securities filing says that Michael Williams, the company's chief operating officer, is due to receive cash retention awards of $611,000 this year, atop a similar award of $260,000 in 2008. His base salary is $676,000 a year.

The company also disclosed plans to pay retention awards this year of $517,000 to David Hisey and $470,000 each to Thomas Lund and Kenneth Bacon. All three of them are executive vice presidents.

The bonuses this year are to be paid in two installments, one in April and the second in November. Those installments are to be paid only if the executives remain in their posts at the payment dates.

Hundreds of other Fannie employees also are eligible for retention awards, but the company disclosed only the largest of the bonuses. It said there are no plans for a retention bonus for the chief executive officer, Herbert Allison, who elected to serve without any salary or bonus in 2008.

Freddie has a similar retention-bonus plan but hasn't yet disclosed the amounts due to be paid to its top executives. That disclosure is due by the end of April.

The regulator seized management control of Fannie and Freddie in September under a legal process called conservatorship. That resulted in a crash of the companies' stock prices to less than $1 as investors concluded that the companies will be unable to pay dividends to common shareholders again for years, if ever, as they struggle to support preferred-stock dividend payments to the Treasury. Until last year, Fannie and Freddie executives were compensated largely in the form of common stock, no longer an appealing option.

Flypaper and DNA

February 6, 2009 – 9:17 am

By Pat Sullivan, CEO of Flypaper Studio

Pat Sullivan, CEO

I have been involved in several startups in my career. It is always fascinating to see how a product and a company both grow from the original germ of an idea. Early in the history of ACT!, a mentor of mine asked an interesting question. “Is ACT! a product, or is it a company?” He was asking about ACT!’s DNA. Our DNA controls much of what we grow into as humans. The same is true with products and companies.

I heard a Salesforce.com exec (John Dillon) during the early days of SF.com give a similar answer. He was asked why SF.com was rapidly overtaking the first truly SaaS CRM application. An application called Upshot that had a two year head start on SF.com. His quick and astute answer was simply, “better DNA.” How true.

The DNA of a startup includes all sorts of things. What is the problem the product is trying to solve? How it is designed and coded? How is the product envisioned by the founders? How fanatical are the creators about the details of the product? What marketplace itwill compete in? How much money does the startup have? How will the company monetize? What about the founders’ talents, personalities and experience? How will it be sold and distributed? What is the influence of outside investors and advisors, if they exist? What is the price point? What is the economy doing at the time? Just like DNA, these factors and many others are extremely complex. What eventually emerges is a product of the interplay of the many elements that make up that startups’ DNA. The major challenge for the entrepreneur is to recognize just what this product is!! And the earlier the better! At ACT!, we struggled many times with this.

We had already created the Contact Management category in the first few years of the release of the first version of ACT! We gained a 90 percent market share at one point. But as time went on new competitors were introducing Sales Automation products and then CRM products. We were tempted to try to make ACT! fit into those categories as well. But I always found myself saying, “if it walks like a duck, swims like a duck, quacks like a duck, IT’S a DUCK.” We could not change the DNA of what ACT! truly was. It was and still is today, a contact manager. That was its DNA.

With Flypaper the same is very true. It has been four long years in the making. And during its history many influences affected its DNA. But at its core its DNA was really very clear. If only we could see it. As I said, that is the entrepreneurs’ biggest challenge.

At first we tried to make it fit into the cool consumer market where you give a version of the software away to millions and hope that enough people will buy the “pro” version. Well that did not work. And it did not work because it was simply not the products’ DNA. Then we tried to alter the marketing by giving a 30-day free trial to consumers, and that did not work. Again, not in the DNA.

So what is Flypapers DNA? About five months ago, it became crystal clear to me and the other execs here. The problem Flypaper was designed and built to solve has nothing to do with consumers wanting to do cool stuff with Flash for their Myspace or Facebook page. Flypaper was built to solve the problems of companies building mid to large scale Flash projects for eLearning and Marketing.

Don Pierson, the founder of Flypaper has 20 years experience of building large scale Flash projects for large and midsize companies. He saw the problem. Flash was very cool but could only be used by talented and expensive programmers. It could not be edited or maintained by the customer. It took enormous amounts of time and money to build these projects. It involved much collaboration and many approval cycles. Arguments would arise about who approved what and when. This created many billing and payment issues. While building a project in Flash was the best way to do it in terms of a quality result, it was truly a nightmare getting it done. He reasoned, “There has to be a better way!”

That was the beginning of the DNA that ultimately produced Flypaper. Trying to make it something else, as it was being birthed, was a big mistake. But mistakes are common in startups. The good news is that we recognized it soon enough to allow it to become what it today is. Flypaper – The Leading Flash Content Management Platform.

If you look at our brand new, built from the ground up website at www.flypaper.com you will finally see what Flypaper really is. It ain’t for consumers playing around with Adobe’s Flash. It is only for serious producers and consumers of Flash projects. It solves the problems that Don saw years ago. You can now really build Flash projects in a third to half the time. You can collaborate online with all the people involved in the project in really productive ways. You can actually solve virtually all the problems with approvals and billing that inevitably arise. And, on yeah, you can also save a ton of money. Many of the companies we are working with estimate Flypaper will allow them to save millions of dollars a year.

And with Flypaper you get a lot more than you got with the Flash projects you built the old way. Each project you build inherently is tracked in a Dashboard. You know what the viewer has looked at. How long they spent on what pages. If they emailed it to anyone else, you know it and you know what those people did with it. You can edit and maintain your own projects without being dependent on Flash programmers who don’t really like to do the mundane maintenance anyway. Marketing can produce Flash projects that salespeople can easily personalize specifically to the prospect they are trying to sell. And marketing gets to control what elements sales can personalize. Salespeople use the Dashboard to see exactly what a prospect is doing with the marketing materials they sent. The stories (projects) also provide a way for the prospect (or learners in an eLearning application) to communicate with the sales person either by email or even live chat (coming soon).

Flypaper unlocks the power of Flash for everyone in the corporation. It releases Flash from the domain of experts and niches, and unleashes its power for the whole company to sell more and train more effectively. Content creators both inside and outside the company can now work together in ways they could not do before. To our knowledge, there is nothing like Flypaper. I could not be more excited about the potential of Flypaper. I like its DNA!!