The Economy of Favors

Entrepreneurs Tina Wells, Alexis Ohanian and Nick Friedman take part in a panel discussion at the White House on November 28, 2011.

Image: David Pond

Some of today’s most successful young entrepreneurs met at the White House today with high-school and college students who have started, or plan to start, their own businesses.

One piece of advice stood out: Seek out mentors who can help you develop your venture. They can also end up being investors in your business. And, if you do succeed, become mentors yourself to the next wave of entrepreneurs.

“There’s a wonderful economy of favors…that powers the world of entrepreneurs and startups,” said Dina Kaplan, cofounder of Blip.tv, an independent Web-video network.

Kaplan’s venture got its first revenue deal with the help of Geraldine Laybourne, founder of the Oxygen cable network. All Laybourne asked, Kaplan said, was to “pay it forward.”

And that’s what Kaplan has done by founding the Calliope Group, an organization for women entrepreneurs on the East Coast.

Today’s event also was an example of paying it forward. It was put together by the Young Entrepreneur Council, which Scott Gerber founded a year ago to help young people launch successful businesses. The White House cares about this because that’s how America is going to maintain its competitive edge. And it's not a bad message to get out there with Election Day now less than a year away.

“This administration believes in the young people of this country,” said Jon Carson, director of the White House’s Office of Public Engagement. “This administration believes in the entrepreneurs of this country.”

Carson told the students attending the event that he hoped they would tweet or otherwise tell others about what they learned, because too many people view Washington as a “bad reality show.”

Speaking of bad reality shows, the event was hosted by MTV’s Sway Calloway, who started his own record label, launched a marketing firm, and put together a hip-hop concert tour before becoming a television personality.

Calloway hyped the panel of young entrepreneurs by saying they “are to the business world what Jay-Z is to the pop world.”

In that spirit, here are a couple of the panel’s greatest hits:

• An entrepreneur’s job in his or her early days is “to filter the advice of mentors,” said Jeff Avallon, vice president of business development at IdeaPaint, a company whose product can turn any paintable surface into a dry-erase whiteboard. Seek out different people with different perspectives, and constantly be open to new opportunities. In Avallon’s case, his network of advisers became a key source of his company’s capital.
• But don’t start off trying to raise a lot of money. In many cases, an entrepreneur’s first idea turns out not to be a good one, said Jeremy Johnson, chief marketing officer of 2Tor, which helps universities develop online educational programs. The only way to realize that is to not have enough capital, he said. Entrepreneurs who get too much money for a bad idea continue on a path that’s not sustainable, instead of moving on to a new and better idea, he said. That can “kill you,” Johnson said. Kaplan added that the Internet video companies that raised the most money failed. “Money is useful when you know what you want to spend it on,” Johnson said.

Besides, as Gerber noted, thanks to the Internet, you don’t need a lot of capital to get started. You can start a business “bootstrapped to the hilt,” he said.

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