Liz is the founder and President of Upstart Ventures, where she has incubated many start-ups including her latest venture, ApplyWise, an online college admissions counseling company. With her mother, Joan Hamburg, Liz co-hosts the WOR radio show Launchpad, a weekly segment focusing on entrepreneurs and small business.
Liz was part of the founding management team of Vimpel Communications, Russia’s leading cellular company, and has launched television and gaming products for Reuters Tokyo and Japan’s Fujisankei Communications.
Your career is so multifaceted. What’s your “cocktail party answer” when people ask what you do?
Typically, that I’m a serial entrepreneur and work with startups in digital technology and communications. When I used to say “serial entrepreneur” at a party, people would sort of turn away because they didn’t really know what it meant. Now, that’s a more acceptable answer.
Right out of college, you worked with a Japanese media company in sales and marketing. How did you make the leap from that background to starting your own companies? How did you gather the capital?
I was involved with starting new businesses within the Japanese media company, so I got some great experience and then I went back to business school. I was very lucky. I was able to found my companies with great partners and was able to attract investors early on.
On our radio show, Launchpad, we talk to many entrepreneurs who keep their day jobs and do things at night and on weekends, like starting a jewelry business, for example. The biggest thing is proving that sales are coming in. Most of the time, you need proof of concept before you can attract investors. The other approach is to go out immediately and try to get funding. It’s getting easier, but it’s not a slam dunk.
It’s still hard, particularly for women. Only five percent of equity capital goes to women-owned businesses. The odds are stacked against women. I’ve been actively working on that issue through my company, Upstart Ventures, and also through my board work on non-profit groups Astia and the Women’s Initiative for Self Employment.
So what advice could you offer aspiring entrepreneurs?
Don’t be afraid to ask for what you want, and definitely don’t negotiate against yourself. We all do it. I’m the worst, asking for $100,000 but then offering to take $75,000.
Also, build a network of mentors and advisers. I find that women are very flattered if you cold call them for advice.
You often speak about the difference between debt and equity when it comes to creating a small business. What’s important for our readers to know?
There are two approaches. One approach is to create a small business that’s self-sustaining to have as your own. If you’re taking debt to do this–we’re talking about bank loans–many small business owners have to back it with a personal guarantee. You own 100 percent of the business, so you guys are personally on the hook. It’s still very hard to find available money. Still, sometimes all it takes is a small business loan to get started.
The other approach is, “I’m going to start a business and get venture capital and build it up and sell it and make a ton of money.” Equity investors, for the most part, are looking for an eventual exit. The most logical way is the sale of the business or an IPO. But be careful. Take, for example, all the hype about Facebook and Instagram lately. The reality check, for women-owned businesses in particular, is that out of 10 or 11 million of those businesses, only about 250,000 have revenue over $1 million.
What do you think is the biggest mistake of would-be women entrepreneurs?
Not thinking big enough. The idea that, “Oh, I’ll just have a lifestyle business,” instead of something bigger.
What are you most proud of in your career?
I am so proud that I was involved with VimpelCom, the Russian cellular start-up. It was once in a lifetime. I was amazed by how people’s lives were changed by what we built. Our partners were literally rocket scientists. We were able to guide them to become some of the best marketers and sales people in the country.
What’s been most challenging?
Going through some of the bubbles; I merged a new company right before 9/11. Its offices were in the South Street Seaport, near the World Trade Center. We had to camp out at someone else’s offices as we were in the middle of trying to merge two different companies’ cultures. We ended up selling the company, but it was a challenging time.
If you knew early on in your career what you know now, what would you do differently?
Pick partners you trust and work well with together. Have an open level of dialogue in which differences of opinion are fine.
Stick to your guns and beliefs, and never get talked into something you feel strongly against. I went through a situation where I got talked into changing our original business model very significantly even though I felt very strongly that we should have stuck with our original model with some slight tweaks. In the end, I still believe that I should have been stronger about standing up for what I believed in.
What’s your financial advice to young women?
Don’t be afraid of numbers. I hated math. I’m not a finance person at all. But as an entrepreneur, you have to know your cash flow. It’s critical. I had one extreme situation where we asked a CEO, “What are your revenues?” She said, “You have to ask my husband.”
With you own financial life, being comfortable with numbers is important. I have friends from business school, MBAs, even in finance, who say, “I don’t deal with that.”