Forbes Small Business reports on KnowNow

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From: Kragen Sitaker (
Date: Mon Sep 25 2000 - 19:55:51 PDT

And they say there's no such thing as bad press. :)

Adam's off on travel, so I guess FoRKing this devolves upon me:


        Rohit Khare is trying to save his company. He has burned
        through $300,000 in the last six months trying to get a new
        company off the ground, and he hasn't got much to show for it.
        He has no product, no revenues, no customers, no profits, and
        no hope of seeing any in the near future. All he has is a cool
        new technology and just enough money in the bank to cover one
        more week of payroll for his seven employees. He needs help --
        and fast. Which is why he's here on a ranch in western Montana,
        500 miles from his office in Seattle, valiantly defending his
        business plan as it is being shredded -- along with his ego --
        by the last man to give a damn about his dying dream.

        That last man is Rob Ryan, a rich, retired tech mogul whose
        notion of early retirement is to wrestle new companies and
        their founders into shape at his Roaring Lion ranch. Today's
        project is Khare, who has just set off on a breathless
        monologue, outlining his grand plan to revolutionize the
        Internet. His idea is to get other new companies to embrace his
        technology. Revenues will soar. Profits will follow. Khare, 25,
        is spinning a wonderful fantasy, but Ryan isn't buying it. With
        a single verbal skewer, he punctures the entire pipe dream,
        telling the young entrepreneur that his plan is deeply flawed.
        Why? For one, he says, Khare's customers are as financially
        wobbly as he is. "You're a pygmy," Ryan says, shaking his head
        in bemusement. "They're pygmies. Two pygmies dancing is a bad

. . .

        Getting into Camp Ryan isn't easy. Some 1,000 entrepreneurs
        apply each year. It's free; Ryan says he wants to help
        bootstrappers. Most of them hear about the camp from other
        alumnae or through a grapevine that twists through the nation's
        high-tech hot spots. Ryan also meets a lot of candidates at
        MIT, where he lectures frequently. From among those applicants,
        Ryan picks about twenty to come to Roaring Lion. He's looking
        for companies that have a hot new technology but lack the
        management skills and the financing to bring it to market.
        "You're not talking about the cream of the crop of Silicon
        Valley," Ryan says. "These are companies that would have
        trouble getting funding."

. . .

        Some of the lessons are painful for recruits. In some cases,
        Ryan has to instruct his trainees in the dangers of violating
        the rules of business etiquette. Two years ago, Creditland
        founders Tony Wilbert and Henrik Johansson flew out to the
        ranch from San Francisco, so thrilled to have won a slot in
        boot camp that Tony bought brand-new army fatigues for the
        occasion. But they forgot to set their watches ahead an hour to
        local time. The next morning, they didn't show up on time for
        their first meeting with Ryan. Incensed, Ryan marched into the
        log cabin where they were lounging and shouted, "Where are you,
        you morons?" He followed that query with a string of familiar
        four-letter words.

. . .
        And what about Rohit Khare, the chastened founder of KnowNow?
        First, some pre-camp background. Khare conjured up his idea, a
        next-generation version of "push technology," while working
        toward his Ph.D. in computer science at the University of
        California, Irvine. (Push technology allows information to be
        delivered to computers via the Internet.) He promptly took a
        leave of absence from school to market his technology. Khare's
        software will track certain Websites -- say, one in which game
        schedules are posted for Little League -- and notify users of
        changes by e-mail, page, cell or instant message. Khare had
        come to boot camp full of arrogance. But in his first meeting
        with Ryan, one of the first questions made clear the danger
        facing his little company: How much money was left in the bank
        account? At the current burn rate, Khare answered, one week.
        Khare had planned to hit up some venture capitalists for funds.
        But Ryan cautioned against that, saying the business plan was
        too immature to take on the road. Timing is everything, he
        said. For quick cash, he advised appealing to the bank of last
        resort: Mom.

        Next, Ryan tore apart the business model. Khare's plan was to
        woo companies' Webmasters, the techies who handle production
        tasks at Websites. Ryan shot that proposal full of holes. "My
        gut works in conjunction with my brain, and it is telling me, I
        don't think so,'" Ryan says. "The Webmaster is low on the totem
        pole, and he's not controlling a fundamental budget." He
        suggests that Khare sell to vice presidents, who actually have
        funds at their disposal. They have "large buckets of money,"
        Ryan says.

        Some of the advice doesn't go down well with Khare. On a hike
        through the woods with his chief technology officer, Adam
        Rifkin, the young entrepreneur agonizes over the tough
        decisions he has to make. And wonders if he's wasting his time
        away from the office. "I can't say I'm happy about standing
        here by the river when I have next month's payroll to worry
        about," Khare gripes. Near-death experiences are getting to be
        a monthly ritual at KnowNow, and he knows the company can't
        continue on that path. But Ryan's bootstrap model doesn't have
        a lot of appeal for him. He fears losing ground to other,
        faster competitors if he opts for slow, steady growth. "We
        have momentum," Khare says. Rifkin counters, "But how do you
        determine if momentum is a snowball or a runaway train about to

        Such moments are typical and necessary in the life of a
        start-up, says Ryan, especially when the founders are young and
        inexperienced like Khare and Rifkin. "This is normal," he adds.
        "We don't have a good answer. Right now, we're reviewing all
        the bad answers."

        Was it worth it, Rohit? Seems so. Two months later he's still
        in business, having survived the crisis thanks in large part to
        the advice he got from Ryan. He left boot camp with a new sense
        of mission and quickly laid off three employees, reducing the
        monthly burn rate from $75,000 to $60,000. He convinced his
        angel investors to toss in another $500,000, rescuing the
        company from the brink of insolvency. And he's planning to open
        an office in Silicon Valley to chase down the corporate
        customers Ryan recommended he target. Ryan's take? "Basically
        they were running around with technology and no way to make
        money. I suspect I'll get a call saying everything you said was

<>       Kragen Sitaker     <>
Perilous to all of us are the devices of an art deeper than we ourselves
                -- Gandalf the Grey [J.R.R. Tolkien, "Lord of the Rings"]

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