Here’s a quick video segment we did on KUSI-TV on a few helpful steps on starting your own business here in San Diego. There are a lot of tools and resources out there that can help you.
David Davis: San Diego has a lot of opportunity when it comes to starting your own business. It’s one of the leading cities in the country for that, and joining us this morning are several people that are going to help us kind of put together a toolkit for us to start your own company and get an interest in entrepreneurship. Steven Cox, Stacey Pennington, and John Belmonte.
Steven, you’re with TakeLessons. Tell me what that’s all about, and tell me what your expertise is in helping people.
Steven: Sure. TakeLessons is a marketplace where you can go to find any instructor that you’re looking for in literally about 7,000 different subjects – everything from music to Spanish to voice to parkour to dance. You name it, we’re the place to go to for that. The reason we started our business here in San Diego about six years ago is because we found that San Diego is an extremely collaborative place. One thing that’s important for our viewers to remember is there’s so many of that have ideas. We’re sitting on the couch wondering, “How do I get the business started?” and “Where do I go to get started?” What you’ll find in San Diego, first and foremost, is that there’s a huge, huge community of really collaborative people. So, you can take your idea from simply an idea in your head, all the way out to fruition. Groups such as connect.org has graduated over 3,000 companies and helped them get started. Groups like EvoNexus — they’ve had 68 companies that walked through their mentorship program, and they’ve raised over $573 million all through that program. So, there are a ton of programs out there that are available for the young entrepreneur, at universities whether they’re trying to get started there, or for folks who might be retiring and looking for a second income.
David Davis: Stacey’s with Makers Quarters. A lot of these companies are tech companies too that are coming out in San Diego, aren’t they?
Stacey Pennington: Absolutely. At Makers Quarter, we’re doing a bring-your-own work day, every single Wednesday from 1-5, and it’s a free, open collaborative space with free Wi-Fi. We’re about a month into it, and it’s just been amazing how many young entrepreneurs are really from this downtown startup tech community as well as all over the county who are coming out and meeting one another, holding pop-up job fairs, hosting interviews, and just really connecting.
David Davis: Because it can be really intimidating if you’ve got these ideas and never done something like this before. John, you’re with Cedar Ridge Ventures. I guess you see that all of the time—people that have got these ideas, but they just don’t know where to take the next step. (2:22)
John Belmonte: Yeah, one of the key milestones with building a company is raising money and getting the capital to grow your idea out. So, there’s tons of resources here in town to help you figure out how to do that if you’ve never done it before. I’ve got startup leadership programs. You’ve got the founder institute — they’ll train you on honing your pitch and making sure you have a great story on what you need the capital for. Really, in the end, the best thing to do is just get out there and network. Use Angel List. Use LinkedIn. Find folks in town who have done investments or have raised money and offer to take them to coffee. Pick their brain and find out. Whether it’s seed funds like Crescent Ridge Partners here in town; they’re always reaching out. Social Leverage. You know, we’ve got some of the best investors around—very active, and they’re happy to help.
David Davis: Don’t be shy about it. Just get out there and give it a shot if you’ve got something to go on. Thank you so much for being on. We’ll put your companies on our website as well, so people can get more information and go from there. Thank you very much.
From day one, we’ve built TakeLessons right here in the heart of San Diego. Over the past few years, I’ve personally seen an explosion of activity as more and more people become interested in working for themselves, starting a company, and running after their dream. Compared to yesterday, San Diego’s technology and innovation scene has become more organized and started to develop a true community where people are collaborating, celebrating wins, and helping their fellow entrepreneurs through the stumbles.
While we’ve came a long way, we still are young compared to the developed areas of Silicon Valley and New York. As a metaphor, it feels like we’ve planted seeds and we’re starting to see those seeds germinate above the ground. Now, it’s up to the San Diego tech scene to continue to cultivate our community so our seeds turn into strong trees with deep roots.
I wrote an op-ed piece for Xconomy on my thoughts how San Diego can continue to grow it’s innovation community. I’d love to here your thoughts on how we can all work together to build something great.
What we in San Diego need to focus on first and foremost is our attitude. We need to live and breathe a startup mindset. Anything worthwhile is always created twice: First, in our minds; and second, in reality. As members of San Diego’s entrepreneurial community, we must choose whether to focus on the challenges we face, or on actually making it happen by taking advantage of the strengths we have and moving forward, despite our challenges. It is up to us to make this change first. Inner victories always precede outer victories. Only by being in the right frame of mind will we see the manifestations of our city’s true potential emerge.
Ahhh, San Diego.
I’ve been a resident for over 15 years now and, hands down, the place rocks – both on the quality-of-life spectrum and the boundless opportunity.
Recently, Inc. magazined ranked San Diego as top city for innovation. The city ranked #1 for patents in telecommunications and patents in golf (yes, we work hard and play hard).
Wireless Hub: Sparked by Qualcomm’s founding there in 1985, San Diego now hosts some 800 telecom companies.
On the Green: San Diego is also No. 1 for patents on “games using a tangible projectile,” which typically means golf. More than 30 golf-equipment manufacturers, including TaylorMade and Callaway, have set up shop in the sunny locale, home to Torrey Pines and about 90 other golf courses.
In addition to the patents in telecom and sports, San Diego also has standout innovation activity in diverse areas such as cyber security, defense technologies, bioinformatics, life sciences, genomics, clean tech, and consumer internet. All of these top industries have aided to increase the number of good jobs in San Diego.
The city’s leaders are also focused on a high quality of life and eco-sustainability, which continues to help San Diego reinvent itself as a hub of innovation. In fact, 5 of the largest 15 companies located in downtown San Diego are now tech companies.
San Diego will always have beautiful beaches and bronzed bodies. Now, we can also add hot startups, really smart talent, and an entrepreneurial ‘can-do’ attitude to that list. San Diego isn’t only “America’s Finest City,” it’s an emerging tech hub.
Proud San Diego Resident
Marc Bailey: Earlier this month, Forbes magazine ranked San Diego #1 as the best place in the nation to start a small business this year. The publication surveyed 50 big cities and surveyed small businesses. Among the criteria used, those in high growth areas, those with Facebook pages, those with websites, and those that accepted credit cards. The magazine says that the categories demonstrate the community’s engagement and use of relevant resources.
If you’re trying to start a business, that’s why we asked Steven Cox to come in because he knows what he’s talking about. You started TakeLessons.com? You started it here in San Diego?
Steven Cox: Sure did!
M: And it teaches music? Music lessons online?
S: Not only music lessons, but tutoring, sports, fitness, wellness, arts and crafts, and more. if you think of eBay and how they have created a marketplace for both buyers and sellers. What we have is created a marketplace for parents or consumers who are looking for a great instructor. On the other side are instructors who are looking to earn more money and are looking for new students.
M: So, you match these people up? You just combine the two. Most of these ideas, when we break them down, the beauty of them and the commonality is we all look and say, “I should’ve thought of that.”
S: Or, “Man, I did think about that.” Yes, I get that a lot.
M: When did you decide to follow up on that and why? What was the motivation?
S: I’ve been doing tech startups since 1999. I moved down here to San Diego to take a little bit of time off and started wondering what I wanted to do next. I was living downtown in San Diego, and we came up with this idea. I happened to also be in a rock band as a bad lead singer. My drummer was looking for new students and was going to quit music and take an office job in order to pay in his bills. So, we put together this idea of helping him make a living do what he loved to do by helping him find students over the Internet, and that just happened to be my background. It kind of fell along this whole movement of being able to establish a business in a marketplace and then watch it grow here in San Diego, which is where we started, and then immediately start taking on new cities. Now, we’re in about 4,000 cities all across the U.S.
M: So, I’m going to say that’s successful, but it started right here in San Diego.
S: Yep, it started in a downtown office right here.
M: Why San Diego? Now, again, we heard Forbes’ reasons why businesses are successful starting up here in San Diego, but what’s the deal? Why San Diego?
S: Well, first of all, I can say that being in the industry for the past several years, the tech industry and the San Diego startup community is worlds different from where it used to be five and six years ago. One of the factors that Forbes had mentioned was the clustering, which is the ability for a large number of startups to all be in the same area, and we’re starting to see that downtown. There are thirty or forty startups right off the top of my head just within this little radius of where the TakeLessons headquarters is down there, which is a super cool thing to see.
M: That’s good energy, and you can share information.
S: They share information. They collaborate. You kind of feel like you’re not alone.
M: Is that one of the keys? Collaboration?
S: Absolutely. You get that and also just the number of industries that are in kind of a high growth aspect. So, anything from consumer Internet to clean tech to bioinformatics, San Diego has all of those. In addition to a great environment to start a business, there are a ton of smart people, and if you compare it to some of the other cities out there, San Diego has better air quality than L.A. I’m sure that you would know that. It has better traffic. The cost of living is 40% cheaper than it is in Silicon Valley. Finally, San Diego, I don’t know if you’ve heard, but we have better weather than Boston and New York.
M: We’ve got to go, but give me the one misstep that people make. You’ve told people all of the positives. What’s the one thing that makes you say, “Don’t do that.”?
S: I’ve got to say that it is don’t believe that is super, super easy just to start an Internet business, and then the next day you’re going to be a success. It takes the exact same amount of work in order to grow a successful business.
M: That meaning you have to be totally committed to it.
S: That’s right.
M: Alright, Steven, thank you so much. Steven Cox, CEO of TakeLessons.com. So, check that website out, especially if you’re trying to match up your learning with a teacher. Great idea!
I’m happy to announce TakeLessons.com latest round of venture funding today. This round increases the total amount raised to $20mm and will allow us to accelerate our expansion into more categories outside of music, including tutoring, performing arts, and languages. We’ve even started to see new matches in categories such as welding, crocheting, robotics, and basic HTML.
We’ve tripled the number of instructors on the TakeLessons platform over the past year and continue to be excited about building a marketplace that helps consumers easily find the right instructor, while helping instructors make a better living doing what they love.
Congrats to the team and thanks to the San Diego Startup community for its support.
In February 2014 Christy Wang, a student at MIT Sloan School of Management, interviewed Steven Cox, CEO and Founder of TakeLessons.com for her Entrepreneurship class. Here is the transcript of the interview.
4. What makes a good startup business partner? Where can you find them?
There’s a line that I read from Stephen Covey, who wrote many successful books, including the “The 7 Habits,” but he also wrote a few business books. One of those things he talked about was developing a world-class staff. When you build your business, this is the number one thing you’re looking for – building the right team. Even if it’s just a two-man operation, you look for people whose strengths offset your own weaknesses. If it’s a team environment, you look for the weaknesses, and say, “Where do I play so that the strengths of one person make the weaknesses of another obsolete?” If you can find that and keep building that sort of team, over time, it becomes easier and easier for you to solve the problems.
Now, along those lines, I would also add that, in addition to finding people who have offsetting strengths and weakness, you need to find people who have a shared value system. While you’re not looking for robots, you are looking for someone that, when push comes to shove, your values are aligned. Second of all, your work ethic needs to be aligned as well. I think those two keys are critical, specifically in a very young company. Otherwise, you’ll just run into more problems later on.
5. What is the best way to find investors, and what is the most valued lesson you’ve learned from successful pitches?
I would say that the best way to find investors is through a pecking order, if you will. The first place to look is yourself. There are many people who have taken out money on their house, credit cards, or savings and started investing in their own startup; I think that’s one of the best investments that one can make. It is risky, and there is a high probability of failure, so one has to take that into account in trying to figure out if they should be their own investor. I funded TakeLessons.com right out of the gate, and it was my money on the line. I think that entrepreneurs have a tendency to work a little bit harder when it’s all of their own money on the line at the beginning. That money should be used to get some traction within the business, and from there, the place you look is for people who believe in you.
Instead of going out and trying to convince someone that, not only that your idea is good, but also that you are investment-worthy, find people who already believe in you. Finding money becomes much easier because they already believe in you.. You’re a go-getter and a hustler. You’ve proven that you can turn a dollar into ten bucks. That’s the next set of people. From there, once they’ve invested, ask them who else they know and whom they vouch for that could also listen to your pitch. I find that that’s the next best group to go after. It’s all through referrals.
In this business, the people who invested early with me were people that I just knew personally. Some of them, I had never done business with before, but they knew my character. My very first investor’s name was Steve Martini, a San Diego commercial real estate broker, and I had bought a car off of him three or four years before he invested. We just kind of got to know each other and hung out and took a look at a couple of deals together, but we never ended up doing something together. But, when the time came for me to raise money, I told him that I had already put my money in, and I showed him what we were doing. His words were: “Well, listen, I have no idea what you’re doing, and I have no idea if it will work, but I believe in you, so here’s a check.”
That’s normally the best way to get the deal done; it’s through people that believe in you. I will also preface that by saying that, in order to get those people, you have to be the type of person that other people want to do business with. Your character has to precede you asking for the money. If you’re a crappy guy or girl or you shyster people or you’re dishonest, good luck. You shouldn’t be in business to start with. Integrity is the key. There are no promises in start-ups, but these investors think, “I know this a gamble, but I’m willing to gamble on this guy.”
[Have you ever encountered any investors who also wanted to take control and make decisions?]
There are two kinds of investors. The first are what we call “passive investors,” and those are people who simply put their money in and don’t have much input in the business. The second are people known as “active investors,” and those are people who truly do add value to the company. They have a wealth of knowledge within the space that you play in, and it would be a crime to not use them to try to grow the business. Sometimes, we add those people on purpose as an investor or an advisor in order to grow the business. They become very, very useful within the context of what the business needs.
The issue and pain comes from investors who should be passive, but try to become active. These sorts of investors do not have higher amounts of knowledge or skill than the entrepreneur and may get in the way. I find that if you are clear upfront with the investor about their role, it helps manage expectations of what you can expect from them, and they can expect from you.
6. What is the biggest challenge of being an entrepreneur, both in personal and business life?
I read somewhere that, unless you have a high threshold of pain and are comfortable knowing that there’s a 90% failure rate, don’t be an entrepreneur. In fact, go work for someone else because it’s much more safe and secure. I think that’s true. There is a high risk of failure. There is a lot of competition. You have to have an incredible amount of persistence, drive, and belief that you can add value in the world. It’s got to be something inside you that drives you because it’s extremely difficult; it’s tough.
There will probably be days when you don’t know if you’re going to make it, and there are days when you’re down to not knowing if you can pay the bills. There’s a lot of pressure to build something out of nothing. Some people are built for that. Some people get a high off of that, and some people don’t. People should be very honest with themselves; there is equal nobility in both building a company as an employee as well as a founder or entrepreneur. The key is finding out what is right for you.
For me, I had to learn balance. I have lost friends and girlfriends over my business. I did not balance my life correctly. I’ve gotten physically run down and sick from the stress and pressure. But I’ve decided not to do that anymore. I needed to make sure that I took care of myself – and those important to me – just as much as I took care of the business.
If you’re going to do a start-up, it is going to require a lot of time and a ton of effort. What you might learn over time is that your business is not you. It is a separate entity from you. That’s a key distinction. This allows you to tether the spikes and ride out the drops. It allows you to find a good balance so your personal life doesn’t experience the same torrid whipsaws of your business.
There will be days in business where it is incredibly horrible and other days where it is incredibly high. You learn over time not let the lows get you low and to not let the highs get you too high. You acclimate to both the struggles and victories, and you learn to move forward no matter what. I think there’s a peaceful understanding that comes over time with knowing how to achieve that balance of emotional security with the imbalance of entrepreneurship.
I learned from a good friend of mine when I was starting my business. I think we had raised maybe $1.5 million or something like that—just a small amount. His business had raised $80 million. It went bankrupt after about five or six years, and his dream ended. I called him on the phone and said, “Hey, I read about your business, and I’m sorry about that, man. How do you feel?” He said, “I feel fine.” I then asked, “What do you mean you feel fine?” He said, “We gave it our best shot. We knew there was big risk going in. I would have liked it to have worked, but it didn’t. I’ll move on.” I asked him, “Isn’t it your baby? Don’t you feel crushed by it?” He said, “No. I’m not defined by the success of my business. I am the same person with or without the success of my business. I wanted it to be a huge success, but I am not defined by that success.”
I would ask this simple question when looking back over life: if an entrepreneur has a very successful business, but his family falls apart and his kids won’t talk to him, is he or she a success?
That’s something that each person has to answer separately. That’s a question I’m not sure too many entrepreneurs ask, but it’s important.
For me, I ask, “How do I have a wonderful life that entrepreneurship is a part of?” There is a tradeoff in life. That tradeoff is this: how much money, satisfaction, or happiness are you willing to trade your life for? Because that is what you’re doing every single day that you go to work.
Entrepreneurship is one of the best ways to make a living and to make an impact on people. For me, that’s what the juice of life is about. How do I make a great living for my family as well as make a difference in the world? If it’s used as a tool to create a higher objective, it’s a wonderful experience. If you can combine your work into your mission and into your long term goals in each aspect of your life, then you’ve got an incredible formula for life.
7. Have you ever had a moment of self-doubt? If you did, what was it and how did you deal with it?
I can only speak for myself. I do have self-doubt, but here’s the key: I believe in my team. I believe that we’re making a difference. I believe in myself. In addition to that, I also have days where I doubt myself, and I wonder, “Am I growing as quickly as I want?” There are times when I screw up. Honestly, I screw up a lot, but I don’t mind it. I used to think, “Oh man, if I screw up then that’s the end of the world, and I’m a horrible person.” I used to think all of these things, but what I got very comfortable with was knowing that life and business is full of potholes. I got very comfortable with moving quickly and not making the right decisions all of the time. That’s called life. When I have those doubts and I don’t know for sure that I’m making the right decision, I am confident it’s the best with the information I have.
For me, I have confidence in knowing that I can improve, and that goes back to our core values. I know that I’m constantly getting better, and that we’re constantly improving. As long as we’re doing that, I feel like we’re being successful. When those moments of self-doubt come in, I’m able to see a bigger picture in knowing that we are making a difference and knowing that there are people out there who are able to make a better living because of what we do. That gives me a great sense of pride and a great sense of humility at the same time because I know that what we’re doing is working. A lot of it has to do with what you tend to focus on as well. Self-doubt comes from your current state of what you’re focusing on. If you focus on all of the negatives and what is going wrong, doubt will continue to grow. If you focus on asking yourself better questions, things can go right. For instance, instead of asking, “Why did this happen?” or “How can I be such an idiot?” I ask questions such as “What did I learn, and how can I become better and not make the same mistake anymore?” By simply focusing on a different set of questions, you get different outcomes in your life.
[Have you ever had a dilemma between making your own decision and listening to your team’s decision?]
Of course. I think that’s a key for good leadership—admitting that I don’t have all of the answers. I try to put a team around me that’s smarter I am in many areas. If that is so, I should not be coming up with all of the right decisions. If I can come up with all of the right decisions, I don’t have a strong enough team. That’s absolutely what I believe. To counter that, there’s also times that when push comes to shove, I make the call. With those calls, I don’t necessarily agree with my team, but I feel like we’re making the right decision for the business. It’s never about who comes forth with the idea; it’s about choosing the right idea.