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Welcome to SL #31! Join us for a very cool chat with Dr. Lawrence Kersten, the king of demotivation, and co-founder/COO of Despair.com.  He shares with us the fascinating (and hilarious) entrepreneurial story of Despair.com. Making lemonade from lemons is never easy, but these guys did it through viral marketing and persistence, and are rocking and rolling. We also talk a bit about Despair’s trademark of the “frownie” symbol.

The bus is back, and the finance guy brings the heat and rails about early-stage companies that get hung up on their valuation. Some great listener emails and a sprinkling of StartupLounge humor round out another great show. Enjoy!

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Shownotes and Interview Questions:

As usual, we had lots of related follow-up questions and side discussions, but here is a good sampling of the questions we asked on the show:

• Give us your elevator pitch for Despair.com
• It has been reported that, Despair Inc. was “inspired” largely by the failed promises made to you and other employees by the Internet Startup for which you worked.  Can you tell us about that?
• What was the response from Successories to the creation of Despair.com?
• It’s our understanding that you and co-founders Justin Sewell, and Justin’s twin brother Jeff come up with most of the material.  How much is “fan generated”?
• Has anyone ever bought the Chairman Edition of the Art of Demotivation?
• Explain the Noble Employee Myth!
• At what point did you determine there was a business in de-motivational products?
• Did you require capital to get started?  If so, how much did you need and where did it come from?
• Is Despair.com a durable business?  Do you ever have fear that your success is just a fad?
• How has your business been impacted by the current economic instability?
• Who is your typical customer?
• Despair.com seems to be a viral phenomenon.  What allows a company to go viral?  Can it even be done on purpose?
• How do Vodcasting and blogging fit into your marketing strategy and can you disclose how many viewers/readers you have?
• Your “frowny” trademark sent ripples through the intellectual property world.  Is that trademark ever seriously challenged?
• Have you ever thought about sending “Despair” packages to Fannie Mae or Lehman or Washington Mutual?
• Do you still have only four employees (the three founders?).  How do you run so lean?  Or rather, what about your model is so scalable?
• The Despair Inc. products have enjoyed popularity – enough to make you some money.   Does that say anything about our society or is that over-thinking the issue?
• Do you ever get asked to speak and if so, to which events are you invited?
• Which was the first de-motivator theme?
• What’s the best selling de-motivator theme/topic?
• What’s next for Despair, Inc?

Listener Emails Read and Answered on the Show:

Aby: I have an idea that came to me in Walmart yesterday. I spoke to a friend of mine last night, and he improved on the idea, to the point where we both believe it could be a viable product. I am not an engineer or a technician – I simply have an entrepreneurial mind. My question to you is simple, what do I do next??

John Kellogg: Just thought I would say how much I appreciate StartupLounge.  I just listened to the Noro podcast today and enjoy your ability as well as Mike’s, to interject humor into a very serious conversation.  Entrepreneurs are able to gain real insight from top professionals in your “most unusual” setting.  Thanks again and I look forward to meeting you tomorrow night at CapitalLounge.

Michael: We have never met. I live in Alpharetta. I have a friend who is retired and developed a unique outdoor storage facilty over 10 years ago. I have never seen anything like this product. It is 10-6 in dia. The floor does not move but the walls rotate 360 degrees. So there is no “back” of the building. He asked me to become the national distributor with this product recently. As mentioned he developed this building over 10 years ago and the individuals who attempted to sell and distribute this building did not do any market research. Consequently it failed. Mainly because there was no testing. So now he’s come to me to try to distribute this product. I work with facts, and risk. I want to test market it first as a greenhouse for consumers. My problem is I have a older gentleman who is very proud of his design, but is cash poor. He owns the patent rights. (but doesn’t have international patents…a big opportunity I believe) and he is impatient because he needs money now and looking elsewhere for investors. I believe in the product and that it could sell, but at the moment, not enough sales history. Your thoughts?

Roberto: Hi guys, love the podcast!  It has been a huge help as I get my new venture off the ground.  As a very early stage, pre-revenue company, I obviously don’t have lots of cash laying around to pay people for services.  In following one of Scott’s tips on his wonderful blog post about bootstrapping your company, I have been able to find a few services vendors to accept equity instead of cash for their services.  My question is this:  What % of equity makes sense when doing these types of deals.  Some of my partners are what I call “spot vendors”, as they provide very specific services work (legal, accounting, etc.)  Other vendors are more involved, especially on the technology side.  Any guidance you could give me would be greatly appreciated.  Thanks again and keep up the good fight!

Guest Bio:

Dr. Lawrence Kersten:

Lawrence Kersten started his career as a university professor, having taught at the University of Southern California, University of Nevada, Las Vegas, Iowa State University, and the City University of New York.

In 1995 he left academia to join an internet startup in Dallas. That company was acquired by Verio and he was tapped to become Verio’s first national Director of Customer Care. Verio was eventually sold to Nippon Telegraph and Telephone (NTT). While at Verio, he co-founded Despair, Inc., a publishing and media enterprise dedicated to the dissemination of contrarian wisdom.

He holds a Ph.D. in Organizational Communication from the University of Southern California and is the author of The Art of Demotivation and several of the company’s popular Demotivators products. He has appeared on, written for, or written about in the Wall Street Journal, Financial Times, NPR’s Marketplace, CNN, BBC’s Business Daily, Conference Board Review, Harvard Business Review, Washington Post, Business Week, and many other outlets.

Miscellany:

Enjoy! To play it, use the tools at the top of this post – you can play it via the embedded Flash player by pressing the big play button at the top, or download it to play on your computer or MP3 player.  You can also take advantage of our iTunes feed.

Podsafe music used within this episode:

• Neolith by Kevin MacLeod
• Pinata Boy by Derek Sonderfan
• All the Money in the World by Hutch

Our format is a little out of the norm as far as podcasts go. We treat our efforts as a true “show” rather than a super-concise (limited) vehicle for delivery of information. Therefore, the podcasts can run a bit long (actually, it is largely driven by the guests and their responses.) While we try to have very substantive discussions, we also try to have a lot of fun along the way (and that tends to elongate the programming a wee bit.) Our theory is that if we are having fun during the show, hopefully, you will be having a little fun listening as well.

Here is the breakdown for the show, in case you want to hop around.

A special thanks to Lawrence for coming in and hanging out with us!

We welcome your continued feedback as well! If you have an interest in appearing on the show, becoming a show sponsor (hint, hint), have some suggestions for topics, have feedback, or would just like to email us and tell us to “shove off”, we invite you to contact us.

Enjoy!