We have been super busy these past months and we would like to give you an update on what we have been up to Pinterest style! (Don’t worry, we aren’t going to do an Instagram themed blog post any time soon.)

Over 350 people attended the networking portion of the evening, which was highlighted by Ido Leffler’s keynote speech.  During his entertaining presentation Ido spoke about the many challenges he was able to overcome early on in his life and when launching his company Yes-to-Inc. Ido also discussed how much of his success is attributed to the risks he was willing to take along the way, and the recent decision he made to step back from running the day-to-day operations of his company.

Check out photos from the evening’s festivities.

View Cem Erdem’s speech at the rally.

Watch interviews and coverage of the event from Tech{dot}MN

TECHdotMN TV: EO Rally | Segal, Halvorson, Fenner, Nash from TECHdotMN on Vimeo.

TECHdotMN TV: EO Rally | Justin Kaufenberg from TECHdotMN on Vimeo.

TECHdotMN TV: EO Rally | Parag Shah from TECHdotMN on Vimeo.

View the announcement of the Spring 2012 Cycle participants along with Cem and Casey’s interview with Jeff Pesek of Tech.MN

TECHdotMN TV 2.6: Headlines + Project Skyway from TECHdotMN on Vimeo.

Meet The Project Skyway 2012 Spring Cycle Participants:

PoliticalHarmony: (MN) Online tool that helps voters choose the right candidates and also serves as a polling platform for campaigns to reach hard-to-poll voters.From: Minnesota. Entrepreneurs: Kyle Welliver, Kevin Walker, Tyler Kent.

Energy Resource Insights: (MN) WestLaw for the energy space. The only aggregator of data from thousands of fragmented reports into one central database that can be accessed by consultants, agencies, and companies that require current info on regional energy programs. From: Minnesota. Entrepreneur: Mark Brown.

HypeSpark: (WI) Endorse your favorite brands via social media and earn rewards and freebies. From: Wisconsin. Entrepreneurs: Peter Kostka, Matthew Lea, Andre Gagnon.

YumZing: Yelp for menu items, not just the restaurant. Consumers discover and share the best dishes, coffees, and drinks in town while restaurants can promote the menu items that they want to be best known for. From: Connecticut. Entrepreneur: Jolina Lee.

Join us on March 13th for the Entrepreneur’s Rally Presented by Entrepreneurs’ Organization Minnesota.

Check out the flyer here or register now at http://tempotickets.com/entrepreneursrally

An investor wants to give you money for a certain percentage of your startup. Should you take it?

When Ning raised their prices the masses rioted. Zendesk was uber-transparent about their pending price jumps but still got vilified.  It’ll happen to you someday too. That’s because it gets emotional. When people want something, but the price isn’t where their world view tells them it should be, it kills their mood.  The feeling in their heart on how this customer-relationship thing should work gets demolished. Pricing is slippery like that. But so is equity. So I want you to use your head. Enter Paul Graham.

When you find a practitioner that lives what he preaches and has a laboratory unmatched by 99% of his peers you should listen to him more carefully then all of the other loudmouths. This is what makes Paul Graham absolutely money. And that’s why his take on equity is worth listening to.

1/(1 - n)

Let’s call this Graham’s Equation for Investment. It’s found in this essay of his on equity. It dictates when you should give up equity to an investor, an advisor, or an accelerator and when you shouldn’t. Let’s say that an accelerator takes, oh, I don’t know, 9%. Graham’s equation says: If your final outcome will be increased by 1/(1-.09), or 1.099, then it’s a net win. Entrepreneurs, buckle up. This means that:

• If Project Skyway (or any accelerator) will increase the chance of exit by 10%, you win. Or
• If Project Skyway will increase said exit price 10% (definition: The network you accumulate along the way enables more doors to open, it enables you to navigate your way into a bidding war, or it simply positions the company to be more acquirable). Or
• You’re not confident that the financial outcome will be better, but you believe that the journey will be 10% more fun, less lonely, less painful, or less embarrassing from falling on your face six times per month.

Emo Kid says "Be a thinking entrepreneur"

Last week we had an ambitious entrepreneur tell us we’re too expensive at 9%. This doesn’t faze us in the least anymore because I know accelerators lower that put up with people bashing them for being a bad deal as well. It happens almost hourly on HackerNews. But have the haters done the formula?

There is no doubt that in 4 years we’ll see accelerators at 4%, maybe even 3%. But who cares? The question is whether the accelerator has what you think you need.

We’re proud to offer a software development team at your disposal for 3 months — fully paid. We’re proud that we’re the only program that teaches you how to maximize them (and any outsourced developer). We’re proud to take solo founders and non-technical CEOs. They have different, perhaps bigger hills to climb, but if you’re one we can help you. We’re not just another TechStars, which is why we’re not priced like them (or like Momentum MI or Sproutbox or the hundred others). Time will tell if we’re on to something, but for as long as we can we plan on pulling out all stops for our entrepreneurs and doing everything we can to help them succeed. After all, we’re entrepreneurs ourselves. We’re not spending someone else’s money here. It’s ours.

Entrepreneurs: Separate emotion from equity. Equity is a tool. Use the right formula. Is an accelerator right for you? I don’t pretend to know, but just don’t be emo about it. Be calculating.

Along with the extension, we’re moving our start date of this upcoming cycle from February 1st to March 1st.

You may have questions. This is good. We’ve got answers.

Q: Does anything else about the program change?
A: Nope. All companies that make it in will have access to the same awesome stable of mentors and experts. The same thoughtful curriculum to help entrepreneurs run better companies. The same development team that you get to tap for free. And of course, the same seed funding of $6k per founder.

Q: Is my company a fit for the program?
A: There’s a million things we look for in an applicant. As long as you are truly an online play, don’t worry so much whether you’re a good fit, just apply. Here’s the best reason for you to apply: Even if you don’t get in, you’re on our radar. This bodes well for you down the road whether you re-apply or not.

Q: How can I help?
A: Spread the word. FAQ is here and application is here. Tell your friends about Project Skyway.
Our success is your success as we continue to build an even stronger tech community here in Minnesota.

If you have any further questions that we didn’t cover here, please holler at us at join@projectskyway.com

I’m an entrepreneur, or so I thought after starting my first company, A & D Lakeside services.

Let me tell you my story. I was recruited to be the CTO and co-founder for a very young property management company that had intentions to build software tools to make property management easier. I quit my comfortable, safe, and secure corporate job to join forces with the founders of this company to start from scratch and build a business. I introduced this company and its founders to Minnesota’s tech ecosystem. After extensive talks with some of the gurus in this ecosystem we came to the conclusion that it would be more advantageous to commercialize these software tools. With this business model, we decided to apply to Project Skyway, Minnesota’s first technology accelerator program. While the application window for Project Skyway was open I attended a Project Skyway orientation meeting with Casey Allen. To quote Casey during that meeting “If you’re wondering if you should apply, just go do it, it will only take a half hour of your day.” We started the application process, worked on it, tweaked it, slept on it, created a video, and three days later submitted it!

In the last 12 months we’ve learned a lot, built a lot, partied a lot, and are excited to help hundreds more entrepreneurs launch and grow better. As long as they don’t claw-back employee stock options, at least.

Why we do this? We do this all in an effort to create startup density.

You see, Silicon Valley gets much love, and deservedly so, because they’ve achieved an unparalleled level of startup density. On the transit. In the coffee shop. At the Verizon store. Everyone around you is in tech or startups or, very likely, both. That’s density for you. It’s what gives the Valley an overwhelming sense of “startup community”. And it’s what we hope to help build with many more cycles of startups to come, our next being in February 2012.

But we at Project Skyway didn’t make this first cycle happen by ourselves.

We had help. A lot. In fact, it took an ecosystem.

That’s why, even though this post may not make an entertaining read, I still want to carve out several paragraphs to personally thank all of the folks inside of this ecosystem that actually etched out time from their busy lives, companies, firms, consultancies, families, and overflowing inboxes to add value to what we’ve done and continue to do, which is to build an environment rich with resources that helps ambitious tech entrepreneurs kick ass.

Launch

Props go out to several individuals who saw the vision, loved the vision, and also contributed heavily to the vision and executed way back in the early days when were were merely talking about PS.

Ben Damman, Erika Lyremark, Sarah Young, Darren Cox, Jeffrey Miller, Paul Taylor, Lois Josephson, Judy Carter, and Curt Prins. These folks dedicated serious time even though they all run companies, and, along with hundreds of others that contributed to our vision through our open meetings, helped Cem and I shape what Project Skyway is quickly becoming. We call them PS Initiators.

Bootcamp

For those of you that don’t know, getting into Project Skyway is no easy process. But we make that 2-step process as fun as we can as well as educational for the companies that are invited.

One of the educational parts of our round 2 bootcamp is the Mentor-Go-Round in which entrepreneurs move from table to table spending 20 minutes with startup experts, each table representing a different topic. Entrepreneurs can ask our “gurus” any question they want about legal, technology, partnerships, and other good-to-know things.

Somehow, on a Saturday, we were able to get the best of the best to come and dispense valuable insights to entrepreneurs for several hours. Massive thanks to:

Kevin Spreng, Doug Ramler, Bjorn Stansvik, Aaron Kardell, Rob Weber, Kim Garretson, Steve Borsch, Curt Prins, Paul “MN Headhunter” DeBettignies, Ben Edwards, Chris Carlson, Shane Erickson, and Bill McGuigan.

Every single one of these came to interact with the 25 startups and 51 co-founders to be a resource, connector, and friend.

First Cycle

We have a great list of mentors (we call them Skyway Captains). 31 folks that have all started or been part of the founding team of tech companies. Amongst that mentor list are 15 exits and 13 companies that raised over a mil. Doers, not talkers.

What’s cool is that we’re adding yet more Captains to our next cycle. Stay tuned for word on that shortly.

Captains add value in all types of ways. They come to our weekly dinners, they come in to riff to the group and meet one-on-one with Skywalkers. They’re available via email and Skype and endless coffees for our entrepreneurs. Every single mentor volunteers (with no equity or compensation) for one sole reason: To help a younger version of them. We would be nothing without them.

Separately, speakers (what we call Gurus) come and share their expertise on topics that they are rockstars. Special thanks to Rick Gardiner, Jeff Sauer, Ernest Grumbles, Michael Cohen, and Sam Richter. Also thanks to active investors John Lilly, John Alexander, Bill McGuigan, Joy Lindsay, Michael Gorman, Mark Marlow, Rob Weber, Kenan Aksoz, Anton Medved, for spending precious time during the program teaching the ways of the game and tearing apart pitches.

Chris Carlson, aptly called “The Pitch Doctor”, made a lasting impression on all of our Skywalkers and made for an impressive Demo Day with over 50 investors, Captains and supporters there to watch and support the Skywalkers. Our CEOs probably put a combined 500 hours into their presentations. Chris helped made everybody better story tellers.

I had a super helpful team that allowed us to get things done. Chris Murphy, our PR and marketing geek who worked with the companies and helped things move along communications-wise internally. My two Project Mavericks (known in more boring circles as “interns”), Ryan Reilly and Solome Tibebu absolutely tore it up. You can try to hire them but you wouldn’t be able to afford them. I feel honored to have worked with both of them.

Last but not least, our amazing startup attorney, Kevin Spreng. He’s the one startup attorney I’ve found I can talk to no differently than I do my tech CEO friends. Awesome.

The word “community” is overused to the point of being meaningless. That’s why you hear the word “ecosystem” out of us constantly. Community just means people. Ecosystem means people that are doing. That’s also why we partnered with CoCo and the awesome team that has built a place of action. If you want to be where the action is, the Brain Exchange is where the doers live.

We love our ecosystem, look forward to a lot more fun, and hope that every startup, every entrepreneur, and every event that we play a role in bringing to life makes the entire platform more robust for everyone.

All in the interest in building startup density.

1. The Entrepreneur’s Nod:

Other entrepreneurs acknowledge, either silently or out loud, that they realize tough things occasionally happen. A term sheet that gets pulled. A CTO leaves. A company runs out of runway and has to shut down. These things happen. A lot. Everyone in the entrepreneurial community knows it and acts with empathy rather then disdain or laughter.

It’s largely what makes up an entrepreneurial community.

2. The Outsiders’ Snark:

People outside of this community, however, are accustomed to things planned by committee and never seeing the light of day until it’s totally de-risked. So when they see a post-mortem, a team of two co-founders going separate ways, or an awkwardly handled crisis they’re quick to focus on the negative. They say what they would do.

Quite simply, outsiders see unintended results as a failure. And of course, failure seems to be bad and preventable.

If there’s one thing that every successful entrepreneur I know has as a common denominator it’s this:

Failure isn’t bad. It’s a step.

Every entrepreneur has to painstakingly endure outsiders telling them why they will fail, why their attempt did fail, and why they should stop failing and just do something safer. We’ve all lived it.

What every beginning entrepreneur needs to know is that the only failures that really matter are:

• Breaking promises. With anyone.
• Not delivering. (See the above bullet.)
• Hurting others to justify your end. Irreparable.

Lessons From the Trenches

We know for certain that Project Skyway entrepreneurs will go through tough, gut-wrenching times and nothing will change this fact. Some people want to portray these as failures for the community, the program, or the entrepreneur. However, since we have a unique laboratory I’d like to use some cases as examples in hopes that minds can be refocused away from “failure” and towards “what’s next”:

Example 1: We had two companies decide to opt out before the first cycle got under way. Our hope is that two people are pretty committed before they get married. Failure on theirs or our part? Only a naive perfectionist would say so. Not failure by a mile. Smart decision making.

Example 2: We had a company of three co-founders decide to split up and go separate ways 2 weeks into the our first cycle. There’s no way they’ll say this was a bad thing. They would say it was both necessary and that they were lucky it happened early rather than later. In fact, since one of them continued to participate in the program he feels that without a doubt that it was one of the best things that ever happened in his life.

Example 3: In the same cycle we had another company decide, after changing their original idea, to move to NYC part way through the program. They felt their new idea could be better launched there. Again, no one close to the situation would say it was a poor move. We wouldn’t and they wouldn’t. End of story. In no way is it a failure when a company decides to move to a market they strongly feel is better suited for them.

Many startups will eventually hit the deadpool. Many will have teams break up. Many will change form entirely, reinventing themselves. Out of five Minnesota companies that attended Y Combinator, the uber-successful Silicon Valley accelerator, one broke up and one closed shop. It seems Y Combinator isn’t the magic wand everyone wants it to be. But I don’t know a single entrepreneur that would point at those two companies and decry them as failures. Not one.

Failure is just a step. One that we see as our mission to help our entrepreneurs go through with empathy, guidance, and persistance.

Failure will happen. The key is to get up and keep fighting.

Note: the following profile on Alex Reilly of CribFrog was written by Miranda Taylor, a senior at the University of Minnesota majoring in public relations.

“Good ideas are a dime a dozen,” says Cribfrog founder Alex Reilly. “It’s all about how you execute.”

Building a business around a social networking platform that enables communication between apartments or condos and their tenants, this 24-year-old entrepreneur and St. Cloud State graduate is trying to make it in Minneapolis’ prevalent technology startup scene.

He has no small task ahead of him. Today’s entrepreneurs are facing tough economic conditions, combined with a dwindling number of investors willing to risk their funds on a business proposition that may not work out.

To overcome the hardships of the marketplace, Reilly applied to Project Skyway’s technology startup acceleration program last April. The program promised to offer him mentoring, industry know-how, opportunities to meet investors and, most importantly, opportunities to forge connections with influential people in the Minneapolis tech-business scene.

Being accepted into the program, Reilly says, has been one of his biggest achievements to date, “It’s a pretty prestigious place to be.”

Despite having to give up much of the time he used to devote to socializing, deer hunting and ice fishing on Rush Lake to complete Project Skyway’s rigorous application process, entrepreneurial boot camp weekend and endless idea-pitching, Reilly notes that the work is well worth it. “Reward will come when it’s ready,” he says.

Accepted into the accelerator alongside his two former business partners, Reilly originally intended to pursue VanquishAP, a real estate management company. However, just three days into Project Skyway, VanquishAP broke up disagreeing over where their company was headed and Reilly was left wondering what to do next.

“I was given a very cool opportunity by [Project Skyway founders] Cem and Casey to move forward in Project Skyway. I could build anything,” says Reilly.

With only two-and-a-half months left in the program to do it, Reilly decided, “I wanted to move forward.”

“Since 2005, I’ve lived in nine different places; six were multi-tenant apartments … I’ve thought, wouldn’t it be cool if I could get to know who my neighbors are, if I could get to know if there’s anyone around here that I want to meet?” says Reilly.

Using “crib”, the pop culture word for a person’s place of residence, and the current tech-business trend toward animal names, “Cribfrog” was born.

When deciding if the idea for the Facebook-like platform of Cribfrog was feasible, Reilly asked apartment and condo dwellers time and time again, “Would you use it?”

His hairstylist, for one, provided an answer Reilly says he has heard repeatedly.

“I recently moved into a new apartment building,” she said. Then, she echoed the concern that makes Reilly believe there is a demand for a website like Cribfrog, “I wish I knew more people there.”

Reilly thinks Cribfrog has the potential to create community where it is hard to find or simply does not exist today. Starting with places like the Calhoun Beach Club apartments, Reilly will promote Cribfrog’s potential to help apartment and condo residents find other residents from their building that they might not meet otherwise. Cribfrog also has the added benefit of eliminating two-year long email threads between landlords and their tenants, and of keeping some of the bad press that buildings receive on a private platform, between the tenant and the landlord alone.

“I wanted to be a self-made guy young,” Reilly says.

From his first business venture as a 16-year-old plowing snow from neighborhood driveways in his hometown of Stanchfield, Minn. to today, Reilly has always felt an entrepreneurial spark.

He has co-founded a lake dock installation and removal company, worked as a social media marketing consultant for the Minnesota Small Business Development Center and served as a VMware administrator through his employment at ING Direct in St. Cloud.

All of this led him to where he sits today as one of the five companies expected to launch as Project Skyway’s first cycle draws to a close.

“[Project Skyway] has connected me to opinion leaders and gurus in the Minnesota technology ecosystem and I’ve learned a lot from them,” Reilly says. “It’s been awesome.”

A pilot of Cribfrog is expected to launch at the end of November.  To learn more about Cribfrog, please visit: cribfrog.com

Cribfrog recently participated in Project Skyay’s inaugural Demo Day on Wednesday, Oct. 26 along with the four other Project Skyway companies. A recording of Demo Day is available here at Tech{dot}MN.

We have investors coming from both coasts and other hot tech markets to meet and talk with our inaugural class, which are some of the hottest tech companies coming out of MN. These companies beat out applicants from 10 countries and 19 states to have the opportunity to participate in Project Skyway’s 3-month long, mentor-driven, program.

Access to Demo Day is for the founding teams of our companies, our captains and investors we have invited.
TechdotMN will be doing a live stream of demo day that the general public can watch at the following link.

Here are the five companies that will be participating in our inaugural Demo Day:

  COR² Technology provides hyper-secure* cloud storage, collaboration, and work flow automation – for the paranoid professional (*PCI/HIPPA Compliant, DOD Certified) cor2.com

  CribFrog empowers tenants to create a closed loop social network around their neighbors cultivating vibrant and connected communities. cribfrog.com

Naiku engages students through their mobile devices and our dynamic testing to improve student achievement. naiku.net

  Nitch is a social network and search engine for the B2B market. nitchbiz.com

  TelemetryWeb produces an online platform called AgSphere that enables agricultural technology manufacturers to build web-connected solutions using data harvested from the farm. telemetryweb.com

That evening we’ll also be hosting a Minnesota Tech Entrepreneur Rally with TechdotMN at CoCo Minneapolis to celebrate our first graduating class and the culmination of TECHdotMN TV season 1.

Guest speakers/sponsors include:

Andrew Ecklund – Ciceron
Justin Kaufenberg – TST Media
Rob Weber – W3i
Jim Wolford – Atomic Data
Lief Larson – Workface
*First round of drinks on Fredrickson & Byron (thank you Kevin Spreng!)

There are still some seats available for the evening event. To register, please click here.