Monday, November 30, 2015

These 8 Disciplines Define A Fundable Entrepreneur

Palm with a plant growng from pile of coinsAspiring entrepreneurs often ask me what to do first when starting a business. Let me assure you, there is no absolute right or wrong, but there is real value in doing things in a sequence that minimizes the risks, optimizes your efforts and generates the best “first impression” on potential investors. Just don’t try to sell your business to investors before it is well established.

A popular approach these days seems to be for founders to regale investors early with a pitch touting the newest “million-dollar idea.” In fact, ideas are a commodity and by themselves won’t generate any funding interest, outside the context of a leader who can execute. Instead, entrepreneurs need to focus first on execution disciplines and timing. Here are my recommendations for establishing the right sequence:

  1. Nail down a specific problem and solution before incorporating. You shouldn’t try to create a business that hasn’t yet been defined. The name and the type have to fit, or expensive rework will be required later. The date of incorporation is the official start date for your business, so progress from this point will be scrutinized by investors. On the other end of the spectrum, a solution without a company will be seen as a hobby.

  2. Start with the simplest legal entity, to minimize liability and taxes. In the United States, this is a limited liability corporation, or LLC. A C-corporation is more complex and expensive, and is recommended only if you expect to pitch to professional investors who demand preferred stock, or to more than 100 potential shareholders. Don’t put your family assets at risk by assuming that a sole proprietorship or partnership will cover your business needs.

  3. Build your time line and momentum quickly after your business' start. Your credibility as an entrepreneur is at stake. Even new entrepreneurs should be able to move from an idea to a legal entity within a couple of months, finalize their business plan in the new few months after that and have a prototype solution built within six more months. Efforts that take years, or have many starts and stops, will not generate investor confidence.

  4. Find a partner and core team early to supplement your expertise. Very few individuals have the skills and energy to build a startup alone. If your strength is technology, find a co-founder who has a comparable strength in business, finance or marketing. A strong team has more credibility with investors than does a great idea by itself.

  5. Register some intellectual property to provide a barrier to entry. A large portion of your competitive advantage and your potential value to investors is the size of your intellectual property portfolio. Entrepreneurs who have no patents, trade secrets or trademarks are usually deemed non-fundable and non-competitive.

  6. Demonstrate a concentrated focus on customers early on. Investors look for entrepreneurs who are customer-centric, rather than technology-centric. Even before you build a product, you should be interacting with potential customers in person, and through social media. Accumulate customer advocates, testimonials and “letters of intent.”

  7. Ship a minimum viable product quickly, test the market and iterate. Startups that operate in stealth mode until their solution is perfect usually acquire customers and investors very slowly. You should assume that your first offering will likely need tuning, so nurture a culture and process for improvement and iteration from the very beginning.

  8. Prepare for investor attention once you are ready to scale the business. Seeking investors before you have a business plan, or a product or even a few customers, is premature unless you have built previous successful businesses. Fundable entrepreneurs have a proven business model and are ready to scale up the business.

Of course, your milestones and timing may vary due to personal constraints or technology requirements. The key is to communicate variances clearly while highlighting momentum. Do things in the right sequence, and show the results that you have achieved. For investors, it’s all about confidence in the entrepreneur. Confidence lost early can never be regained.

Marty Zwilling

*** First published on on 11/20/2015 ***


Sunday, November 29, 2015

4 Ways Entrepreneurs Can Create More Innovations

be-more-innovativeIn today’s fast moving world of business startups, learning trumps knowing every time. What established businesses know through experience keeps them from looking for the new and innovative ways to do what they do better, cheaper, and faster. I’m convinced that’s why most mature companies are slowing down or buying their innovation through acquisition, rather than building it.

In her recent book, “Rookie Smarts,” Liz Wiseman, one of the top thought leaders in business, amplifies this point as it relates to hiring and cultivating the curious, flexible, youthful mindset in keeping a mature company young and competitive, as well as keeping experienced employees more productive.

She outlines four distinct ways that business people doing something for the first time, whether they be entrepreneurs, or people in a new role in a larger company, tend to think differently than experienced veterans. With my focus on startups, I can translate very easily how her points lead to more innovation even in the entrepreneurial environment:

  1. Maintain an unencumbered mind. True entrepreneurs, like backpackers, are ready to explore new terrain, more open to new possibilities, and don’t get stuck in yesterday’s practices. They tend to ask the fundamental questions, see new patterns, and notice the mistakes of others. They are not afraid to act boldly, and tend to recover quickly.

  2. Seek out experts and return with ideas and resources. Startup founders need to be more like hunter-gatherers, seeking out experts and trying new ideas to address their challenges. They are not entrenched in their domain, and don’t look for data that confirms what they already know. They don’t hesitate to disseminate the knowledge to their team.

  3. Take small calculated steps, moving fast and seeking feedback. Experienced business professionals tend to take big steps, move at a comfortable pace, and are not on the lookout for changing conditions. Entrepreneurs have to be like firewalkers, take a risk, move quickly one step at a time, searching for milestones on the way to success.

  4. Improvise and work tirelessly while pushing boundaries. Great entrepreneurs, like pioneers, work hard, keep things simple, and focus on core needs. They don’t have a comfort zone or protocol to fall back on. They assume that new tools and structures will have to be built along the way. Progress on the learning curve is their satisfaction.

But even as an entrepreneur, you can fall back too quickly on prior experience, or settle into habits that are too comfortable. Here are some things we all need to do change perspectives and learn to learn all over again from time to time:

  • Transport yourself in time and place to your first professional role. Remember how you felt then, what you did, and how you approached work. Use this insight to reset your own thinking, and to provide great leadership guidance to other members of your team.
  • Multiply your expertise with additional experts. Avoid the temptation to jump in first, and consult other experts to bring new insights into the challenge at hand. Don’t give up until you have found new patterns to an area you thought you knew.
  • Reverse the learning role with new team members. By asking a junior colleague to mentor you, you will more likely hear new approaches or technologies and get new insights on your customer base or business challenges.
  • Expand your professional network to new groups. Actively look for people with views contrary to your own. As you change the stream of information and consider alternative views, your thinking will expand.
  • Take a step back and remap your terrain. Try to visualize your domain the way a newcomer would see it, without the filters you have already built in your mind. Map out the current players, rules of the game, cultural changes, and constituent alignments.
  • Swap jobs with a colleague for a day. Use the exchange to gain new business and customer insights, and to formulate the na├»ve questions that a newcomer might ask. The swap will be an exciting learning experience for both of you.

True entrepreneurs thrive on the experience of learning, maybe more than the experience of success. That’s why the best entrepreneurs I know can hardly wait for a chance to exit their current startup as it stabilizes, and start again down a less familiar but new learning path. Once you stop learning, you stop having fun, and you stop succeeding.

Marty Zwilling


Saturday, November 28, 2015

9 Business Leader Bad Habits That Sabotage Results

leaders-bad-habitsAfter working with dozens of entrepreneurs, I’m still amazed that some seem to be able to do the job easily and effectively, always in control, while others always seem to be struggling, out-of-control, and fighting the latest crisis. I am more and more convinced that it is the right business behavior that leads to success, rather than some exceptional intelligence or training.

In that context, entrepreneurs should carefully review the points made by Denny F. Strigl, former CEO of Verizon Wireless, in his classic book, aptly named “Managers, Can You Hear Me Now?” He outlines the behavioral habits he has seen in managers who are successful, versus the bad habits of ones who struggle. These habits apply even more directly to entrepreneur and startup leadership:

  1. Failure to build trust and integrity. Poor leaders often fail to build trust initially, or they erode trust during daily interactions and operations. Without trust, there can be little cooperation between team members. This results in little risk taking, diminished confidence among employees, and a loss of communication throughout the company.

  2. Focus on things that don’t really matter. Entrepreneurs who struggle spend too much time focused on things that don’t really matter. If it doesn’t fit into one of the Four Fundamentals: growing revenue, getting new customers, keeping the customers they already have, or eliminating costs, they should rethink what they are doing.

  3. Shirk accountability and role model. Founders need to realize their behavior is in a “fishbowl” and thereby highly visible for the team to see and imitate. What the founder says and does in stressful situations sends a signal to imitate that behavior, even when they are not under stress. Poor performers thrive in an unaccountable work climate.

  4. Fail to consistently reinforce what’s important. Managers often stress a particular message or a program for a couple of weeks, and then assume everyone gets it. When they change their message too often, team members become confused about what’s important. People perform best when what they hear is consistent and frequent.

  5. Over-rely on consensus decisions. Some founders go too far to become consensus builders. This takes too much time in our super-competitive environment, and the result of a total buy-in is usually a watered-down version of the original decision or action they intended. Informed decision-making is not the same as consensus decision-making.

  6. High priority on being popular. The first priority of a founder is to deliver results, rather than building friendships. Happy team members don’t necessarily bring you stellar results, although stellar results almost always bring you a happy team. Good managers don’t worry about shaking up the status quo, and realize that change is never initially popular.

  7. Get caught up in their self-importance. Many founders fail because they get caught up in the “aura” of their position, and seek recognition and glamour for themselves. They love to give speeches to groups and in places that don’t really matter. These people seldom see what is causing their own demise in their attention to “all-about-me.”

  8. Put their heads in the sand. Many founders struggle because they only want to hear good news. Team members quickly learn to report positives, while hiding problems. As a result, productivity suffers, employee morale decreases, and targeted results are missed. Encourage open, honest, direct, and specific communication always.

  9. Fix problems, not causes. Don’t fix a problem without addressing the reason the problem occurred. The most common excuses given include lack of time to immediately address the cause, lack of resources to address the cause, or problem is outside of their control. Good managers always find the means to fix the cause.

In order to stop struggling and start delivering, entrepreneurs need to close the gap between what they know and what they do. Avoid the bad behaviors outlined here. Do the good things, day in and day out, until your behavior becomes habit for both you and your team. This can out-perform pure intelligence and lead to real success and positive results from everyone on the team.

Marty Zwilling

*** Published on on 11/27/2015 ***


Friday, November 27, 2015

6 Reasons Startups Should Skip the Big-Bang Launch

big-bang-launchBig-bang hard launches make sense for large enterprises like Apple or Microsoft, who are building on existing revenue streams and have the resources for lavish events, Superbowl ads and large inventory buildups. But for startups with limited resources and experience, I always recommend a soft launch or toe-in-the-water approach in a local market -- and scale up later.

In fact, for startups, it usually makes sense to announce your solution on social media and blogs even before you have built the first one. Think of it as an inexpensive way to do some real market research -- which big companies can’t do, for fear of getting an antitrust violation for announcing vaporware to impede the market. Smart startups are already doing it on crowdfunding platforms.

Then it’s time to evaluate response and feedback, make the necessary plan pivots, and try it again. Iterating this process, until you see some real traction, is far less risky and expensive than the big-bang rollout. Let me summarize the advantages of this to your startup:

  1. Immediate real customer feedback. Startups which insist on operating in stealth mode in fear of competitor response miss the more important customer response. In addition, with today’s fast moving market, the whole environment can change in the year or more you are hiding out to get the solution and your total infrastructure built.

  2. Small real revenue today is better than large later projections. All investors want to see real evidence that the dogs will eat the dogfood before they give any credibility to your hockey-stick projection curves. Funding to support a rollout is much harder to procure than funding to support a scale up, after an initial hint of success.

  3. Maximum agility for required pivots. It’s amazing to most entrepreneurs how fast their little startup can become a battleship, hard to turn in a storm. Executing multiple iterations while very small is critical for anyone with a limited budget and runway. Startups need the agility to test various business models and positioning messages.

  4. Partners and distribution channels will take you seriously. In many business arenas, brand-name partners and distribution are a prerequisite to scaling the business. A validated early customer following will get their attention, and allow you to negotiate the support you need in time for the real business surge.

  5. Build your audience and the product at the same time. With social media and inexpensive website tools, you can build momentum in the marketplace without the need to spend money on a big-bang rollout. With these tools, it’s easier to measure impact and progress and make required changes than trying to measure big-bang results.

  6. Time to train and prepare staff to deal with customers. A soft launch is less stressful to the team and lets them more gradually re-acclimate from a development environment to a delivery environment. It takes time to learn how to do customer service, interviews and demonstrations. A few missteps can totally destroy your big-bank launch.

But an iterative rollout or soft launch should never be used as an excuse for poor planning or an untested solution. Especially with a minimum viable product (MVP), every feature included must be high-quality, documented well and properly marketed. Free give-away products and beta tests are not the same as rollouts -- you get no validation of the business model.

In any launch, it’s important to have the right training and controls in place to prevent a visible marketing or delivery disaster. Customers have long memories, and they can spread the word very fast with social media, so negative reviews can easily be non-recoverable. It is much smarter to make a few people very happy than to leave many people or even a few unimpressed.

Most of the superstar companies we know like Facebook and Google have never had a big-bang rollout. They started slowly, in limited areas such as one university or city, and then expanded slowly, based on customer demand and resources available. Even big brands like McDonald's and Walmart entered the scene one store at a time.

Yet some entrepreneurs find it hard to resist the urge to get their product or service into the hands of a large number of people at one time. They are so certain that customers are poised and waiting that they forget the costs of a hard launch -- and the risks of a highly visible failure. It’s one of the few times in a startup when it actually pays to be less aggressive. Proceed with caution.

Marty Zwilling

*** First published on on 11/18/2015 ***


Wednesday, November 25, 2015

8 Myths That Can Inhibit Innovation In Your Business

george-barbeeStarting an entrepreneurial business, or maintaining the competitiveness of a mature business, requires innovation. Yet everyone I know seems to have a different perspective on what constitutes real innovation, and why is seems to happen so rarely. Another challenge is to debunk some of the common myths that seem prevent many from even assuming they can innovate.

As a starting point, I like the Wikipedia simple definition of innovation as “the application of better solutions to meet new requirements or market needs.” I also enjoyed a new book, “63 Innovation Nuggets for Aspiring Innovators,” by George E. L. Barbee, based on his 45-year career and work as an innovation guru with several Fortune 100 companies and the Darden School of Business.

Some of the most common innovation myths that Barbee mentions or I have encountered in my work with entrepreneurs around the world include the following:

  1. True innovation can only come from R&D and geniuses. In reality, the best business process innovations usually come from regular employees on the front line of your business, just trying to do a better job and better serve customers. Many product innovations come from quality improvement focuses, like the Japanese Kaizen initiative.

  2. Innovation must be driven top down by visionary leaders. Some innovations are clearly implementations of visionary ideas, but anyone at the operational level can think outside the box, individually or as a team, to suggest and implement innovations. Many innovations, including Post-It notes and superglue, were even invented by accident.

  3. Real innovation only happens in entrepreneurial organizations. Startups may be quicker to adopt innovations, but there are clearly some large problems than can only be solved by companies with large resources. Other innovations, such as the ones from Kaizen initiatives, can only come from established organizations and processes.

  4. Innovation is random, and can’t be orchestrated. Current research indicates that innovation is a discipline, it can be maximized, measured, and managed through formal processes. Peter F. Drucker outlined the key elements of this discipline, including methodically analyzing seven areas of opportunity, in a classic article on the subject.

  5. Individuals who are innovators are born, not bred. Research published by Harvard in a book, “The Innovator’s DNA,” concludes that innovation is about 30 percent individual genes and 70 percent learnable and driven by motivation. The focus must be on five discovery skills of associating, questioning, observing, networking, and experimenting.

  6. Solution innovations need to be perfected before going to market. These days, with markets and technology changing so rapidly, it’s impossible to verify an innovation before taking it to market. Thus I recommend the minimum viable product (MVP) approach with iteration, to test innovations until the product or service really meets today’s customers.

  7. “Thinkers cramp” and “organization cramp” limit innovation. Innovation and creativity are two different things. Creativity is more about ideas, while innovation is all about implementation. The “writer’s cramp” type of block on ideas need not apply to the implementation of measurable and specific improvements and innovations in business.

  8. It’s impossible to innovate in a staid complacent culture. Innovations come from people, not culture. When people change, due to new leadership, new motivation, or business changes, innovations occur, which can lead to culture change, rather than the other way around. Complacent cultures cause business failures for reasons well beyond lack of innovation.

You probably know more of these myths, but the message here is that initial innovation is critical to every startup, and continuous innovation is critical to the survival of every business. The market and your competitors never stand still, so every moment your business stands still, it is losing ground. Don’t let a few outdated and unproven innovation myths stop your business from achieving the impact and lasting legacy of your long-term vision.

Marty Zwilling


Monday, November 23, 2015

7 Criteria For Selecting an Entrepreneur-Confidant

business-mentor-selectionMost entrepreneurs are too stubborn to seek a mentor for guidance: They have so much confidence in themselves and their ideas that they don’t see the need to ask anyone for advice. The best entrepreneurs, however, actually claim multiple mentors: Mark Zuckerberg relied on Steve Jobs at Apple and Washington Post chief executive Donald Graham, almost 40 years his senior.

Mentoring does not happen by accident, or require large stipends. Both parties have to be proactive in making the relationship work, and the communication and learning have to go both ways. The best mentors are confidants who have already "been there and done that," yet are looking forward to learning from someone whom they respect, and who often is from another generation or industry.

  1. Select mentors to fill your strength gaps. If your strength is technology, perhaps you need a business mentor. Friends, family and subordinates are not good candidates. It’s plausible to have more than one, but not likely that you have the bandwidth for more than two. Mentors tell you what you need to hear, while friends tell you what you want to hear.

  2. Look for street smarts rather than book smarts. Anyone with knowledge can help you, but real-world experience is usually the best teacher. Age is irrelevant, but, normally, experienced retired executives have more time and interest in helping new, aspiring entrepreneurs. Busy top current executives may be interested but not available.

  3. Take your time to build a personal relationship. Good chemistry is a key to a productive mentor-mentee relationship. Initial mentor exchanges should be face-to-face, rather than by email, texting or phone only. Full communication is critical, including body language and context, to build the trust and credibility required for maximum value.

  4. Look for someone with a legacy of business success. A renowned college professor or a brilliant psychologist may seem like a good prospective mentor, but these people can’t offer you the pragmatic advice and guidance you will need as an entrepreneur. Think about what you personally want to achieve in business, and look for someone who has already achieved it.

  5. Find a mentor who is willing to learn as well as advise. The healthiest and most sustainable mentor-mentee relationships are ones where each party adds value to the other’s life. Both people need to be genuinely interested in the other, and willing to share elements of their private lives as well as their business strategies.

  6. Look for someone who has personal characteristics you admire. If you are shy and introverted, for example, seek out someone who is an extrovert. Good mentoring is not limited to words and advice. Style and body language can be just as motivating and instructive. Observing habits that instill trust and credibility is a learning opportunity.

  7. Develop and share your vision of what success means to you. Choose a mentor who can relate to your own, personal vision. Some entrepreneurs want to be financially independent and others want to change the world, while others see "success" as a balanced family life. The best mentor must understand that equation, and align his or her advice with your objectives.

In any case, don’t expect a mentor to make your decisions for you, or relieve you of the task of doing the proper research into issues and opportunities. Obviously, too, he or she should never be used as an excuse for a failure you've had; your mentor should never be the target of an emotional barrage because you've had a bad day. If you don’t take responsibility for your own actions, no mentor can or will help you.

The best way to choose and treat a mentor is to look ahead and put yourself into that role. Given the business success you expect to come from your experience as a mentee and businessperson, you yourself will likely be asked to be a mentor somewhere down the road.

So embrace your search for the right mentor. And, once you do select this confidant, choose someone who can prepare you to "pay it forward," just as he or she is paying it forward to you. That way, we all get a payback.

Marty Zwilling

*** First published on on 11/13/2015 ***


Sunday, November 22, 2015

7 Principles Define A New Win-Win Model Of Business

win-win-modelAs an entrepreneur, it’s never too early to set the culture you need for a thriving business, as well as thriving employees, customers, partners, and vendors. In fact, in my experience, cultures are very hard to change, so if you don’t get it right the first time, the road ahead will forever be difficult. “The Art of War” culture as an analogy for business just doesn’t work anymore.

I’m seeing more and more business success stories like the one in a recent book “Uncontainable: How Passion, Commitment, and Conscious Capitalism Built a Business Where Everyone Thrives” by Kip Tindell. He is the CEO and Founder of the very successful Container Store, while still making Fortune magazine’s 100 Best Companies to Work For list for fifteen consecutive years.

He offers a set of seven principles and values for his ultimate win-win philosophy and harmonic balance among all stakeholders, as a roadmap for any company to develop a profitable, sustainable, and fun way of doing business. I recommend that every aspiring entrepreneur and serious business professional take each one of these to heart from day-one of their startup:

  1. Talent is the whole ball game. When you surround yourself with hugely talented, passionate, dedicated, and genuinely kind people, you will succeed in whatever you do. Tindell’s mantra is that one great person is equal to three good people. Start with only the very best people, demand excellence, and train them to stay ahead of the pack.

  2. Craft mutually beneficial relationships. This requires spending the extra time needed to really get to know your employees, vendors, and customers, and letting them get to know you. Know the issues they face, and search for ways to help them, make them happier, more productive, and more profitable. The result is more win-win than win-lose.

  3. Reframe selling as an activity that improves customer’s lives. If you get to know your customers well enough, you can provide solutions that make selling and service the same thing. It’s a win-win deal that keeps customers coming back, helps your company, and incents customers to bring in their friends through word-of-mouth and social media.

  4. Great communication is the best leadership. How can people trust their leaders if they’re not being fully informed about what’s at stake? The objective is to communicate everything to every person. It starts with daily ongoing communication between team members, and extends to the top with executive updates and informal listening sessions.

  5. Simultaneously deliver the best selection, service, and price. Stick with what you know and do it better than anyone else. Keep is simple, and think solution rather than item-based, for the proper perspective. The best relationships with vendors give you price and selection leverage, and the best service relationships bring customers back.

  6. Team members must act intuitively, based on training and motivation. Intuition is nothing more than the outcome of previous training and experience. More training on your solutions and customer needs means better intuition and anticipation of how to help customers. Happy and motivated employees won’t be afraid to use their intuition.

  7. Build and maintain an air of excitement in your company. Faithfully following the first six principles will build that sense of excitement where everyone wants to be there and feels the sense of energy, customers and employees alike. You can’t force that feeling of warmth and caring, it has to be authentic and come from the hearts of talented people.

The great management guru Peter Drucker once said, “Culture eats strategy for breakfast.” Today company culture is more important than ever in driving strategy and value, not the other way around. A great culture in an entire business infrastructure of executives, employees, vendors, and customers working together to achieve a common goal of everyone thriving.

No leader can “create culture,” but they must create the environment where the desired culture can emerge and flourish. Leaders do this by driving values, values drive behavior, behavior drives culture, and culture drives performance. High performance makes new leaders. This is the self-reinforcing circle of excellence every business needs to succeed. Are you driving the right values in your business?

Marty Zwilling