I know, some of you may want to rely on your husband’s or your wife’s income and coverage, or your family’s wealth, but an accident or a crippling disability may last a very long time, well beyond the tolerance of others and their resources. And besides, what if your partner loses his or her job or business or practice?   Insurance companies were created to provide exactly this kind of coverage.  If we are going to pay them for coverage, then they should provide it.

Long-term care insurance is usually considered insurance that old people get as they confront their mortality.  But we must widen our perspective.  Long term care is not an issue only for the elderly — we can encounter an accident (car?  rock climbing? skiing?) or an unexpected illness that requires extensive care at any age.

Long term care coverage is based on your inability to perform any two of six basic tasks in your own care, such as dressing, bathing, eating, toileting, continence, transferring (getting in and out of a bed or chair), and walking.  The payments cover help in your home, or in qualified facilities (assisted living, nursing homes, Alzheimer’s care facilities, etc.).  In my long-term care policy, there is a calculation that my total premiums would cover 81 days in a care facility if paid out of pocket (without the insurance).

Lots of variations to choose from, in each kind of policy:  get help

Long term care policies last as long as you pay the premiums, which are lower based on your age and health, so earlier coverage is better.  Disability insurance replaces a percentage of your established income (the insurance company determines the percentage), and lasts until you are 65.   Both kinds of policies have an exclusion period (30-90 days).  There are variations among different policies and you can design one (or a combination of both) that fits your conditions and budget with the help of a Certified Financial Planner (I particularly like Scopp & Associates for excellent knowledge and strategy).  Take your spouse or life-partner with you for a joint policy for long-term care, which will offer a discount for policies covering you both.

So, yes, I recognize the dread and the avoidance of paying for more insurance.  And I also know that these protections are needed, especially as we live longer and healthier lives, as breakthroughs in medicine keep us living beyond 100 (especially you GenXers and Millennials), and as we may well outlive our incomes, our intentions and our supportive communities.  The time to plan is now.

I was reminded of this recently when two friends of mine let me know they needed immediate treatment for different kinds of cancer.   One has disability insurance, one does not. Both are independent consultants and looking at long-term treatment that will interrupt their practices and their income.

Nearly 20 years ago, Ken Scopp (a certified financial planner) and I designed a disability policy for my practice, with lots of bells and whistles no longer available in today’s market.  Then, 10 years ago, in 2003, we converted part of that policy to another program that covered long-term care.  So now I carry both, for the same annual cost.  Why?  Because disability insurance payments, important as they are, get determined by the insurance company (are you 40% disabled for the type of work you do?  70% and so on), and end when you reach 65.  And because, long term care is not just for the elderly, but for anyone who has an injury or disability that will last longer than six months and will need assistance in the home, or in a care facility.  Long term care lasts as long as you pay the premium, which gets locked in (in most policies) at the time of purchase, so the younger you begin, the better the deal.  (Look for a separate article on long-term care, soon).

So, if you are a significant income-generator for yourself or your family, it is important to protect yourself against the unknown.  I am one who believes that any insurance is a necessary evil.  My insurance costs are a significant portion of my overall business expenses.  Because I maintain a strong cash flow, I treat insurance as protection against catastrophic events, for the most part.  But your situation may differ, which is why some strategic help from a financial adviser is useful.

In any case, it is wise to educate yourself on these kinds of protections for your income, especially if you are the one who creates the income and runs the business.

Consider what we see and hear:

• We are told that the venture-funding model is “broken.”
• Venture companies complain that ROIs are low.
• We are in the midst of a flourishing boom of new companies built in garages.
• There is a huge range of newly developed early-stage funding sources (Incubators, Accelerators, Angels, Super Angels, and crowd funding).
• We see new secondary markets.
• There are strategic sales with extreme multiples.
• And we see the return of IPOs.
• We hear we may be in a “bubble” again.

So, what’s going on?  Can all this be so, all at the same time?

Well, yes:  this is the picture of disruption, not only in technology, but in the marketplace itself.   And the disruption is the result of the last 30 years of technology development coming to fruition.  It is what we’ve been working towards, this chaos of opportunity and the optimism it brings.

Since the release of the first PCs in 1981, through the release of the “new media” in 1991, to the opening of the worldwide Web in 1993, to the beginning of standardization of pricing and distribution channels with the iTunes Store (2003) and the App Store (2008), we have been on our long journey to now.

This last decade has been difficult economically:  a tech downturn in 2000 (the crash of the dot.com bubble), a national economic downturn in 2001 and a global economic downturn in 2008.

And through it all, with good years and bad, the American engine of innovation keeps chuffing along, building new tools and toys and technology that we distribute to the world.

And not only does this engine build technology, it re-creates what it needs to keep moving forward: new funding approaches, new ways to lower or share the risk, new models to support the boom of new companies now exploding.

The tech boom is exploding because we have, after 30 years, solidified our infrastructure, standardized our technology platforms, built the off-the-shelf tools to build new products quick and lean, and stabilized our distribution channels and pricing.

So, is the funding model broken?  The old model is, but the new models are already in play.  And the investors still standing from earlier days are wiser now, and the new investors tend to have created their wealth from the success of building their own companies.

Are the exits too good to be true?  No:  the IPOs are mostly companies with 8-10 years in the marketplace.  And some over-zealous acquisitions seem to have a strategic thought behind them.  And to some degree, this doesn’t matter, as long as there is an exit path open to spur on the initial capitalization of all these new companies.

Are we in a “bubble”?  I doubt it… we are in the moment of bursting expansion that arrives when we have done our homework over decades, when the spirit of the entrepreneur is alive and well (because of and in spite of the current economic and job markets), and when we let loose our new generation, born with a mouse in their hands, to build what they think the world needs to give consumers and companies the magic of the chip only promised up until now.

I am excited.  I think, after all these years working on each new edge of new technology, that we have arrived at the beginning of our promise to change the world.

To get your projections more realistic, but still hold true to your business model, it is best to reduce your assumptions, allowing the world to interfere with your planned scenarios. This allows you, as a CEO, to acknowledge that your “best laid plans” can easily run into market conditions you can not anticipate.

So, what to fix?  Here’s a list.

• Reduce the rate of adoption of your product/service.
• Increase the rate of attrition of your customers.
• Decrease the rate of conversion of “free” to “premium” customers (if you have that model).
• Decrease the time of the conversion of “free” to “premium” customers (if you have that model).
• Add significant time (double?) to your ideas about the “time to market” of new features and benefits.
• Add significant time to the receipt of subsequent revenue from adoption, conversion and retention of customers, and from their “upsell” to new features, benefits and versions.
• Add 10% -15% (or more) to all costs.

This is a path to rational financial planning.  You can sustain your inherent business and revenue models, and the vision of the greatness of your product and company.  What needs to be rational is the efficiency of your execution.

I read recently that all our current economic troubles, from the Great Recession of 2008 to our tumultuous stock market of these past weeks, stems from debt.Debt in the personal and governmental and worldwide theatres.Debt as indulgence.Debt that began in the mid-1960’s when Bank of America released the first credit card (ultimately, Visa) to young Boomers.So, who wouldn’t spend easy money?

Twenty years later, in the mid-1980s, it became politically and financially important for banks and governments to prevent recessions, so they created low interest rates, creating lots of cheap money.

Twenty years later, mid-2000’s, found us with a debt habit and low interest rates, to which the Banks, seeking their own reward from new “financial products,” added low credit criteria on home mortgages, which increased the wealth of those Banks writing the mortgage papers, as they were paid on volume and not on the quality of the loans.

Without bringing too much drama around these facts that we already understand, here is where we are:the tumble began 3 years ago and continues, with little reassurance that the Wizards behind the Curtain can get us home to Kansas.Poor Toto!

Tactics & Attitudes

So, some ideas and attitudes I’d like to share on a new defensiveness against further and future economic downturns.These might be good tactics for you.

Avoid debt.

If you are one who craves stuff, this discipline may be difficult.But it can be learned.My father, a successful, self-made entrepreneur, taught me that I couldn’t have something I couldn’t pay for.He didn’t even have a mortgage, buying our beautiful home for cash.Now that may fly in the face of your tax games, but you can adjust for tax shelters.The secret?Don’t go into debt for anything you cannot cover if the loan fails, or that you cannot do without.

Live within your means.

There is a great freedom that comes from owing nothing to nobody.Without seeming either old-fashioned or conservative (I am neither), there is great freedom of choice in not being beholden (now there’s an old-fashioned word!) to the Big Bank, the Government, the landlord, or your brother.

Don’t believe the Big Institutions have your best interest at heart.

Banks, insurance companies, the government don’t care about you or your individual woes.Each is driven by its own bottom line:to make profits, to avoid claims (and therefore make profits), and to get re-elected (and therefore to gain power, for good or no).If you look calmly at the motivation of any institution, you will learn to protect yourself.You will not be indebted to the Bank, because it can call your loan at any moment, and will only lend you money when you don’t really need it and can prove you can pay it back.You will take painstaking steps to document what you own that the Insurance Company claims to be covering (because if the claim comes due, they will want detailed proof you owned it all, in order to pay).When you vote—yes, you should vote every time as you get the government you elect – do not listen to the rhetoric, look at the voting record.Do those votes reflect what you believe in?

Protect yourself from Carpetbaggers and Flimflam men

There will always be cons who want to take you.It’s the nature of some folks.And usually they are charming.And there are always Carpetbaggers, who swoop into a trouble zone or a market sector or a devastated community to take advantage of an easy opportunity, usually to your disadvantage.Try to remember, the most charming person can be a theatrical persona, if you do not know him (or her).And also remember, if a deal is too good to be true, it likely isn’t.

Save for the next crisis

Just like avoiding the credit card interest fees and other kinds of debt, I know it can be difficult to put money aside.It takes discipline, and the understanding that a consistent small amount creates significant accumulation over time.Truth is, you don’t know when the next economic or industry crisis will hit.And if you see it coming, you can do some avoidance or damage control, but you probably can’t prevent it or fix it.You can only take care of you and yours, and a buffer of capital solves a lot of problems, and creates freedom and new options that do not exist without the buffer.Make a simple savings plan and stick to it.

Keep your sense of humor

Now, I don’t mean to say the world is full of bad guys.There are lots of wonderful people and companies and institutions and causes in the world.And there are lots of con men and self-interested players at the world table.The wider world is full of every sort of person.

Keep your sense of humor.A charming flimflam man can be great company, as long as you keep your wallet, or, if working for them, get paid in advance before you begin.Banks and insurance companies and governments serve their purpose, but they care more about their own self-interest than they do about yours.You can make all these factors work for you.Just enjoy your life without inviting control of it from the Others.

I care about emerging technology entrepreneurs and early-stage, risk-taking founders and investors. My challenge is to guide you to success, wealth and the freedom to build the next new thing, again and again.

I am so blessed.  I get to do the most challenging work with the best and the brightest of clients who are creating disruptive technologies that change the world.   I get to have balance between the professional and the personal.  And I live near the beach in the paradise of Southern California.  How lucky can a girl get?

Building technology companies from the ground up for the success of entrepreneurs and their investors has been my challenge and my delight since the early days of the PC.  I have helped my clients to IPOs, strategic sales, and other creative exits that allowed them a new freedom to live their most creative lives.

Some of life’s most important moments are expressed in creating a new technology, a new company, a new team ~ your first or your tenth. I support my clients to gain these moments.

And the wealth that can be gained from the ongoing business, or its exit, spurs new economies and workforces, and offers new opportunities to everyone involved.

So, to my clients, and those that follow these works, thank you.

The famous “panic” of A.D. 33 illustrates the development and complex interdependence of banks and commerce in the Empire. Augustus had coined and spent money lavishly, on the theory that its increased circulation, low interest rates, and rising prices would stimulate business. They did; but as the process could not go on forever, a reaction set in as early as 10 B.C., when this flush minting ceased. Tiberius rebounded to the opposite theory that the most economical economy is the best. He severely limited the governmental expenditures, sharply restricted new issues of currency, and hoarded 2,700,000,000 sesterces in the Treasury.

The resulting dearth of circulating medium was made worse by the drain of money eastward in exchange for luxuries. Prices fell, interest rates rose, creditors foreclosed on debtors, debtors sued usurers, and money-lending almost ceased. The Senate tried to check the export of capital by requiring a high percentage of every senator’s fortune to be invested in Italian land; senators thereupon called in loans and foreclosed mortgages to raise cash, and the crisis rose. When the senator Publius Spinther notified the bank of Balbus and Ollius that he must withdraw 30,000,000 sesterces to comply with the new law, the firm announced its bankruptcy.

At the same time the failure of an Alexandrian firm, Seuthes and Son due to their loss of three ships laden with costly spices and the collapse of the great dyeing concern of Malchus at Tyre, led to rumors that the Roman banking house of Maximus and Vibo would be broken by their extensive loans to these firms. When its depositors began a “run” on this bank it shut its doors, and later on that day a larger bank, of the Brothers Pettius, also suspended payment. Almost simultaneously came news that great banking establishments had failed in Lyons, Carthage, Corinth, and Byzantium. One after another the banks of Rome closed. Money could be borrowed only at rates far above the legal limit. Tiberius finally met the crisis by suspending the land-investment act and distributing 100,000,000 sesterces to the banks, to be lent without interest for three years on the security of realty. Private lenders were thereby constrained to lower their interest rates, money came out of hiding, and confidence slowly re-turned.

This wonderful piece arrived in my Inbox without credit to its original creator — thank you, anonymous writer.  It is humbling to realize how long our financial errors have been repeated without our learning our lessons, from history or from our own pain. ~joey

The first year (1999), when we were riding the dot com boom, iSuppli’s vision was huge, and its early capital strategy carefully staged. iSuppli’s CEO, Derek Lidow, first recruited a “dream team” of the leading experts from the leading companies in his market sector (I remember interviewing one successful candidate from IBM over that Thanksgiving weekend – the only time he could cross the country to meet with us discreetly). When you hear investors say they invest in strong management teams, this is what they mean.

Over the past 11 years, iSuppli has demonstrated the qualities of leadership and savvy management that have created its value: refocusing its strategic direction after the dot com bust, careful capitalization strategy throughout its 11 years of challenging economic changes, and carefully controlling capital during downturns.

And beyond the financial story, the company created loyalty among its employees (the 10th anniversary party included even folks who had moved on to other ventures, and lasted very late into the night), and consistently kept its focus on creating value for its customers.

And the happy news is that iSuppli’s new home with IHS is both a strategic and cultural fit, with shared values.

All this is easy to say, and challenging to execute. A success story for our times. I am proud to have been a small part of its early days, and favored to have watched its evolution over these years.

Congratulations, everyone at iSuppli.

The design of your intellectual property is one critical strategy. You should build your technology so that you can retain and protect certain parts of the core IP (your “secret sauce”), while allowing yourself to license out other layers of your complex application to OEM or SaaS customers, and to resellers.

Another critical strategy is planning for your sales and revenue through indirect sales channels (partners, OEMs, resellers, bundlers). With the growth of SaaS technology, I am getting more and more requests to help companies build their channel strategies, so that my clients’ technology can be bundled, integrated and otherwise re-sold through partners. These partners add their own technology or services and need my clients’ technology to enhance their offerings. There are many variations on the deals that can be made, and new strategies for the outreach to reselling partners.

But if the intellectual property has not been designed in the beginning to separate the secret sauce from the applications that can be re-sold, the growth through these new channels will not succeed.

And, as a capital strategy, you may ultimately be able to spin off and sell off a particular application to a buyer with a combination of non-exclusive and exclusive licenses. I often use this selling of a particular application, into a vertical market or a defined territory, as a creative way to infuse new capital into a company without loss of equity.

To do this, the IP must be designed and patented carefully from the beginning of development. This is a case (again) of considering capital strategy, sales strategy and exit strategy in the very early stages of a company’s development, in order to create wealth at the exit.

This coming week Tuesday & Wednesday October 19th and 20th, I will chair two panels on venture funding at Digital Hollywood http://bit.ly/91TW5z  & http://bit.ly/b6SuaP. In preparation for these, I have been in communication with all the panelists. On one panel, four of the six panelists want to discuss M&A – mergers and acquisitions – and how hot this exit strategy (a market in its own right) is becoming. Of course, as I am chairing the panel and representing the audience of entrepreneurs, the panel will need to answer my questions on how they think we should prepare our companies toward this exit strategy.

Now, to be fair, I have insisted that my clients determine their exit strategy from the time we write the pitch piece for early stage investment –and that the growth strategy we implement on the way to that exit must stay focused on the exit.

One of the most difficult tasks of my shadow-CEO work is to keep the CEO focused on the opportunities which drive the valuation up for that exit, and which keep it on the path to the exit, which sometimes means turning down sexy new chances at other markets that lead away from that path.

Some years my approach to exit strategy is in style, other years not. I have chaired 3-4 venture panels each year for more than 10 years now. The panelists vary – mostly venture capitalists and investment bankers, and a few deal-making attorneys — and their positions on exit strategy move up and down like the stock market.

During a boom year, one of them said, “If an entrepreneur brings me a business plan with an acquisition exit, I’m not going to look at it. I’m not spending any bandwidth on any company that cannot command an IPO.”

During the crash years, when venture capitalists are consolidating their portfolio companies to save their cumulative-portfolio ROIs, they don’t talk about exits at all. They are trying to survive until they can raise their next Fund.

During growth years (after a crash), when a couple of IPOs are on the horizon and the market looks strong again, M&A activity heats up. The last cycle of this a few years ago found one panelist saying, “We like to see the plans for a strategic acquisition early on.”

Looks like 2011 is going to be one of those years. I’ll report back after the panels next week.

Join me at Digital Hollywood/Santa Monica next week Tuesday & Wednesday for 2 venture capital panels: http://bit.ly/91TW5z  & http://bit.ly/b6SuaP.