Banks? VCs? Who needs them? Well, many of us do-but there are some mere mortal entrepreneurs who have found another gutsy way to bring the bucks into their start-ups: finding a well-known personality with deep pockets and influence.
The Entrepreneurs: Brian Lee and Brian Liu. Lee, 32, is president, and Liu, 35, is CEO of Los Angeles-based LegalZoom.com, a company providing a legal documentation service.
The Approach: In early 2000, when Liu and Lee were in start-up mode, they wanted a big-name attorney on board. They asked Robert Shapiro, whom they felt was the one lawyer who got through the O.J. Simpson trial with reputation intact. Liu remembers: "We called late at night, hoping he would be the one to pick up the phone. You have to resort to tricks to get past the secretary."
What Happened Next: Shapiro answered the phone and agreed to see them. Three meetings later, Shapiro said, "Yes, I'll help you." Three more meetings later, Shapiro insisted he become a partner. Liu declines to say how much money Shapiro kicked in, but it was "significant, though not in the millions."
The Payoff: Today, LegalZoom is a multimillion-dollar firm with 60 employees. Shapiro doesn't work at LegalZoom, but he's "intimately involved" in the company's strategic planning.
The Entrepreneur: Stacey Belkin, co-owner of Stacey's Café in Pleasanton, California
The Approach: Belkin got to know Dilbert creator Scott Adams when, as a server, she often waited on Adams and his wife at a favorite eatery. "Stacey mentioned that her long-term goal was to start her own restaurant," recalls Adams, "and as great coincidence would happen, that was also my long-term goal, but I wanted to put in the money and have somebody else be the expert." Because Adams didn't know Belkin well, he casually suggested she put together an extensive business plan. "If it looks good," Adams said, "I might be interested in investing."
What Happened Next: "She followed up the next day," recalls Adams.
The Payoff: With 2003 revenues at about $1.8 million, Stacey's Café opened a second location in Dublin, California, in November 2002, which had $1.7 million in 2003 sales-making Belkin too busy to even pause for an interview. "Stacey has an innate ability to create a vision and get other people to work toward it," says Adams of his business partner. "If you spend five minutes in a room with her, you'll leave the room believing whatever she believes. She is a force of nature."
The Entrepreneur: David Steinberg, CEO, chairman and founder of InPhonic Inc., a provider of wireless software and services
The Approach: Steinberg, 34, saw former CEO of Apple Computer John Sculley talk at a Young Presidents' Organization conference. After Sculley left the stage, Steinberg strode up and asked him if he'd seen the TV movie Pirates of Silicon Valley about Bill Gates, Steve Jobs and Sculley. "He got so excited and said, 'Yeah, that movie's great,'" says Steinberg, who followed up with: "John, listen, I have an idea for a company. . ."
What Happened Next: Steinberg was only hoping for advice, but Sculley invited him to his office to discuss the company. "I was dumbfounded," says Steinberg, who went to New York City for what was supposed to be a 30-minute meeting. "I went in at 9:40 a.m. and left at 4 p.m. with a commitment from him to invest and join our board of directors."
The Payoff: InPhonic has more than 5,700 customers and affiliates, more than 400 employees, and brought in $50 million in revenues in 2002. "We probably wouldn't be half of what we are now without that meeting," says Steinberg of Sculley, who is vice chairman of InPhonic.