The conventional wisdom about how to raise start-up money is to use your own, use credit cards or ask family or friends. I've never used any of those in the three companies I've started. I consider raising money part of my due diligence on the feasibility of the idea. If I can't convince strangers that this idea is worthy of investment, maybe it isn't.

For the same reason, I don't like to ask people who owe me a favor to give me start-up money because they can't really look at it objectively either. I don't want people to do me a favor by investing in a company I start; I want them to do themselves a favor. Either they think this idea has a reasonable probability of success and would give them a good return on investment, or they shouldn't invest in it.

Some people will see an idea as a good investment and others won't. That's fine. One of the things I've learned over time is that some people are selling GE stock today because they think it's overpriced, and other people are buying it because they think it's underpriced. That's a good thing. That's what makes a market.

That isn't to say that I don't believe in sweat equity. I do. In fact, when you're working on something and getting it going, but you're not bringing in money yet, it's costing you because you have to put bread on the table and pay your mortgage.

So it's costing me, and you can say I'm making an investment, but it's not the same kind of investment as when you put cash on the table. Sweat equity is more of an emotional investment. It's my baby. And I haven't met a person yet who can objectively judge his or her baby. Nor am I a good judge of how great my idea is. In the final analysis, it's the world out there that will decide whether it's a good idea or not -- not me. And I have a built-in bias.

While I was talking about this in one of Frank Demmler's classes at Carnegie Mellon University, one guy challenged me. I always enjoy good challenges and, in fact, he made a good point. "What about all the successful entrepreneurs who just know in their guts they're onto something, but can't convince anybody out there?" he asked.

Well, that's a problem if you want their money. But, more to the point, I have a hard time visualizing that situation because I am a strong advocate of respecting the judgment of educated, experienced investors and venture-capital people who make their livings investing in ideas and the teams that will execute them. That's all they do. Whose gut would you trust?

One of the characteristics I value in entrepreneurs is persistence. Plain doggedness. There is a huge amount of evidence in quantum physics that we should be able to walk through walls -- replicated, absolutely valid scientific evidence from some of the smartest men and women in the world that walls are almost all air. But try going through one half a dozen times, and a reasonable person will admit that maybe there is still a piece missing from quantum theory.

A characteristic I value even more than doggedness is the belief "let truth win over." Just because it's your baby doesn't make it beautiful. And just because it's your idea doesn't make it great. And if all the smart people you know directly or indirectly say, "Thank you, but no thanks, I don't want to invest," I think it's time to reconsider whether you have a great idea. It's true that sometimes you have to march to your own drummer, but I would say that's the exception, not the rule.

And then there is the question of valuation. Investors look at risk and reward. And maybe you have a difference of opinion on what the risk and reward are. At $10 million you get a "no"; but at $3 million maybe you get a "yes." At $3 million the investor feels it's worth a chance.

And there is one more thing I would look for in an investor -- experience. One time with my third company I had just given my dog-and-pony show, and one executive got enthused. So he came to me and asked, "How much do you think it will take to get a prototype off the ground?"

I said $200,000, maybe $300,000.

He thinks a while and says: "I can manage that. Come back next week and I'll have a check for you."

Sure enough, I come back next week and he hands me a check for $200,000. I said: "Before I accept this, I have to ask you a personal question. What's your net worth?"

"Jack," he said, "You have it. I sold every bond and share of stock that I own; everything that I could put my hands on. That's what I'm worth. Hell, I paid $3,000 in brokerage fees."

I said, "Well, I'm not taking the money."

Now he takes me wrong. He thinks I don't want him to make a zillion dollars.

I said: "Do you understand that if I was so sure this company would be successful, I'd be mortgaging my home. But I'm not doing it. Why should you? I have some stocks I'm not selling, why should you?" And the more I talked, the more convinced he became that I was trying to keep some big bucks away from him.

I said: "I'll take $30,000. But you are not giving me any more than that. And I hope you make millions on that $30,000, but I won't take anymore. I am not going to stay up nights worrying whether you might lose all of your money or not. I don't want to worry about mine; I don't want to worry about yours." I gave him a check for $3,000 to make up for his brokerage fees.

He did not make a million dollars, but neither did he lose all his investment. And I slept better.