44: Attempting to Control the Uncontrollable in Business with Alison Gerlach

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Alison Gerlach is a seasoned, strategic management consultant, serial entrepreneur, investor, business executive, and lecturer with expertise in, and a passion for, building businesses. Ms. Gerlach has done extensive research in optimizing the business start-­up process and has founded and built businesses in industries that include consumer packaged goods, media, technology, and professional services. Prior to her entrepreneurial endeavors, she was a strategic management consultant with Booz, Allen & Hamilton working with Fortune 100 media and consumer companies.

Today, Ms. Gerlach continues to build and invest in companies in a variety of stages and industries. As a strategic management consultant, she continues to advise select companies, as well as work with multibillion-­‐dollar asset management and alternative investment funds on their investment allocation strategies.

Time Stamped Show Notes

[4:01] In Alison’s present role, her favorite things to do is to lecture at various universities and mentor students. She enjoys keeping her finger on the pulse of today’s business and interacting with young entrepreneurs

[10:24] Here we learn about the “Greater Fool’s Money Theory”.  This is where an investor invests in a company, not to bring up the value instead investing in a company with the belief that someone will buy it for more. In other words, investors were putting money in so someone would buy the same company for more money.  

[11:46] To further explain the theory, Alison discusses short term greed versus long-term, capitalistic, value-generating intention.

[12:24] Alison starts her first business in 1998 after graduating from MIT in 1996. Her company was a technology based company that blended entertainment and media called City Access Provider. The company was described as an online concierge service, which was a highly innovative company, especially in 1998.

[15:24] Here we learn the acronym EENASWASI (Every Entrepreneur Needs A Spouse With A Steady Income) Very clever and self-explanatory. It is a huge help and support to starting a business, and this is how Alison self-funded at the beginning.

[18:16] After 18 months of self-funding and success, Alison realizes she needs to capture some VC money. After meeting with an investor who wanted tried to give her more money than her valuation.

[20:08] The over-valuation of the investor was an example of the “Greater Fool’s Money Theory” in action. This type of activity was what made dotcom into “dot-bomb”.  This is when Alison stepped away from seeking VC money, and instead sought out angel investors.

[25:06] In her fifth year of business, the company and weathered the dotcom implosion and 9/11. Fortunately, Alison had been educated to prepared for the downturn in the economy with an economic model.

[27:27] At this point, Alison knew her company needed funding.  She secured an investor, but after months of work, lost the funding due to circumstances completely out of her control.

[34:20] Alison describes the steps she took to wind down her business in good standing, which was a six-week process.

[41:14] Failing Forward Segment

  • Why did this failure experience happen to you?  “I don’t know, that is the best answer I can give.  It is happening has made me a more astute entrepreneur.”
  • What is the single most important lesson you learned from it? “To prioritize the needs of the business vs the wants of the business”
  • Who do you turn to when you need help? “I wish I could say I had one person and there is nothing more valuable to have a mentor. I am still searching for that one person. I do have an incredibly supportive spouse. My EENASWASI”
  • How do you protect yourself from failing in this way again? “I think the best way to protect is not so much to protect from future failure. I think to be open to the fact it will happen, but hopefully you have mitigated your chances because you are smarter”
  • What advice would you give to someone in a similar position? “To be a good listener to the all the well-intentioned people trying to support you, and have the wherewithal to separate the well-intentioned advice from the constructive advice. If you can check your ego at the door, you will go further.”  

[47:12] Alison has a podcast called The Unapologetic Capitalist and can be found at http://unapologeticcapitalist.com/. If you’d like to reach her directly, you may email her at theuc@unapologeticcapitalist.com or follow her on Twitter @abgerlach.

[48:12] Final thoughts from Alison: “I can think of no ride more thrilling than the entrepreneurial ride”

To hear this episode and many more like it on your mobile device, you can subscribe to How To Lose Money on iTunes or Stitcher.

Quotes:

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