Are You Too Old To Start Being An Entrepreneur?

I continue to see stories of really young entrepreneurs, like this article on Business Fastlane, with kids as young as 9 years old who have successful businesses. This makes me wonder what sets that entrepreneurial drive in kids, and how early parents and schools should start teaching the basics.

There are already a couple of good books out there for youth entrepreneurs, such as a new one from my friends Adam and Matthew Toren, Kidpreneurs: Young Entrepreneurs with Big Ideas. They assert, "It's never too early! Even children can be introduced to basic business principles and the rewards of entrepreneurship”. Another one is The Little Entrepreneur by Michael H. and Jay Arrington.

Even if you are not sure that your child is a budding entrepreneur, there are several practical reasons to introduce him or her to the basics of business. Here are a few facts from the National Council on Economic Education emphasizing the need for more business training, starting much earlier:

• Only 34% of teens can balance a checkbook
• The average teen thinks they will earn $145,000 per year
• 62% of 18- to 24-year-olds are saving very little or nothing at all
• The average college student graduates with $27,600 of debt
• 79 percent of high school students have never taken a course on personal finance

As early as grade school, with parental guidance and resources like these books, kids can gain some valuable experience in starting, managing, and growing a successful business venture. The positives include:

• Learn to make money. Even young children (ages 5-10) can and need to understand the concept of income – expense = profit. They need to understand that having money is not an entitlement, and not related to the volume of their demands.

• Start a summer business. The best way to learn is a “hands-on” approach like creating a simple business to sell lemonade or deliver newspapers. In this context, parents can explain how their own business works, and where the family income comes from.

• Bring the family together. All parents need to do things with their kids. A family that grows together, builds character and achieves financial success. The entire family can be active in the business venture.

• Understand how business works. A place to start may be a reality game like ThriveTime for Teens Board Game, where they will be faced with money and life decisions like buying cars, managing expenses, paying for college, using credit cards, buying stocks and starting businesses.

• Able to invest money wisely. Several companies, like Charles Swaab, offer programs like Money Matters: Make it Count, which teaches the financial basics to teens through Boys & Girls Clubs across the country.

If your child is old enough to get on the Internet, he or she is old enough to start learning business skills. Sites like MySpace already allow teens to customize their home base with graphics, blogs, and music to make it more attractive to their peers – that’s marketing. It’s not a big jump to e-commerce and the costs and decisions of running a business.

We all know that technology comes naturally and early to this generation. Gen-Y is already showing us new ways to use it to grow and profit in business. I can’t even imagine what the next generation will bring. You better start your business now, and have fun while you can, before we all branded as ancient relics.

Marty Zwilling

Seven Ways Universities Can Help All Startups

A little known, but valuable resource, every startup should investigate is a formal or informal connection to your local university. These resources are definitely are not limited to students, since every university wants and needs the real world exposure and experience of entrepreneurs who already have credibility in the marketplace.

Here is a short list of the areas where you should be able to find help, whether you are a student or an independent entrepreneur:

1. Finding an idea. Universities are brimming with new ideas from their students, their professors, and their own research, but need entrepreneurs from the real world to decide which ones are viable in the marketplace. Start by contacting a professor in your area of interest or expertise.

2. Research and development. Take advantage of the labs, equipment, and skilled students available and looking for real world problems to research. They are likely to be able to get grants to fund development for you in strategic focus areas, like alternative energy sources, that would otherwise cost you many thousands of dollars.<

3. Business plan creation. Every university has educational courses and can provide assistance on creating your initial plan. Look for evening courses, or special programs for entrepreneurs, like the ASU Technopolis program mentioned below, available to non-students.

4. Funding. Don’t look here for venture capital levels of funding, but certainly early-stage government grants, incubators, and entrepreneurship incentives are available from endowments and state funds. Collaborative efforts with companies, like Siemens Venture Capital, are available for certain technology and focus areas.

5. Legal advice. Most universities have some sort of an entrepreneurship legal clinic, to address concerns like protection of intellectual property. These may be available online, and are usually staffed by outside lawyers working on a ‘pro bono’ basis with the school. Start by contacting the school entrepreneurship support organization.

6. Finding a team. If you need part-time engineers to build a prototype, you can always find high-caliber grad students with the latest theory ready to work. If you need experienced executives, the best professors and entrepreneurship staff will have the contacts you need into the local talent pool.

7. Mentoring. Similar to finding experienced executives, you can use university contacts who do consulting in the real world. Most schools also foster relationships with local executives whom they use to lecture in MBA courses, judge student business plans, and assign as mentors for spinoffs (I have done all of these).

For example, I live in the Phoenix area, home of Arizona State University. They have several "outreach" programs to help startups, including their Technopolis program to train you for a nominal fee on how to write business plans, provide executive mentors for six months, and provide office space at Skysong during your gestation period.

Other engineering departments at ASU often provide grad students to build prototypes, and even venture funding for certain projects. I have several contacts I use at ASU, I encourage you to build a similar set. Let me know if you need a connection there, and don't hesitate to search for comparable resources in your own academic geography.

The Thunderbird School of Global Management, also here in Phoenix, has a top-ranked International MBA program, an entrepreneurial incubator program, and facilitates institutional and Angel investments in qualifying startups. I’m involved with their community outreach program as well.

I’m not an alumnus from either of these schools, but I’ve learned a lot about startups from both of them. I’m betting that you can do the same.

Marty Zwilling

Let Interns Be Your Startup Competitive Edge

By Mark Babbitt

We’re all familiar in some way with the concept of “interns” in business. Quite possibly your perception is the young adult working dutifully in the company mailroom. Or, perhaps the hectic “get me coffee” and “make me copies” chores associated with climbing the corporate ladder.

That stereotype may be changing.

Due in large part to the current economy and an ultra-competitive job market, a Gen-Y entrepreneurial tsunami is already upon us. A recent Gallup poll shows that 7 out of 10 high school students aspire to own their own businesses. And today, more than 2,000 colleges and universities offer entrepreneurship courses – up from the just 70 schools that Boomers and Gen-X had to choose from in 1970.

Many entrepreneurial-minded students, graduates, and career-changers understand how important an internship is to their career path. More and more, they choose to intern at a dynamic small company or startup. Their goal is to gain career-critical experience while satisfying the predisposition to “create” in a small-team environment – something they can’t obtain interning for IBM or General Motors. For a startup or small business executive serving as mentor, the proverbial “win-win” is created as they benefit from an injection of essential bandwidth, youthful energy, and technical expertise.

The intense desire of Gen-Y talent to make an immediate difference is a compelling reason why an intern with entrepreneurial aspirations would choose to intern at a startup over a Fortune 1000 company. You’ll find that your company – no matter how small or early stage you may be – can benefit greatly from hiring an intern – and has plenty to offer the intern in return.

1. Confidence vs. Questions. In a small team environment an intern enjoys a unique opportunity to significantly impact the direction of a project (or even the company itself) while having more opportunities to submit their input and suggest new ideas. At a startup, an intern will gain the confidence needed to decide the direction of their future, as opposed to questioning their career-related decisions after an internship spent running errands and performing menial tasks.

2. Experience vs. Escape. An intern at a startup learns more about running a business than they’ll ever learn in a classroom or from a cubicle in a huge corporate department. Rather than watching the clock (in that “I can’t wait to get out of here” way) interning at a startup is a great opportunity to experience the challenge associated with being a responsible team member.

3. Creativity vs. Chores. Successful startups survive and prosper through their ability to constantly create and adapt to stay ahead of the game. Startup companies foster a creative spirit. Rather than negotiating bureaucracy with a corporate to-do list, an enthusiastic intern at a startup will help you by learning to make quick decisions, and doing more with less.

4. Responsibility vs. Rut. Like you, an intern will wear multiple hats at a startup – amazing training at ground level for a young professional. As opposed to performing repetitive tasks in a single department at a large corporation, your intern will be working side-by-side with your executive team – the people who had the ambition and passion to strike out on their own. You can delegate essential tasks and projects to your intern, allowing you more time to focus on running your business.

5. Satisfaction vs. Stress. Startups are typically project oriented, and the intern is expected (and expects!) to pull their weight. At a small company, there will be blocks of time where the intern doesn’t have someone to guide them through every step of the assignment, challenging them to take initiative. This combination of circumstances leads to a highly satisfying level of contribution, and a huge win for you through an energetic source of creative ideas. Perhaps your intern might be given the freedom to design and implement an entire strategy for your company (social networking, for example).

An intern program at your small business instills enthusiasm, creativity and youthful thinking. In return, the intern benefits immensely from the experiential education. Intern candidates intentionally seek out companies like yours for career-relevant experience and mentorship.

Has your startup taken the initiative to find a motivated intern yet?

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Today’s guest blog is presented by the founder of YouTern, Mark Babbitt. His company is dedicated to matching the best young talent to leading companies through internships. He has worked for large corporations as well as Internet startups, and speaks from years of experience in human resources. Check out his site, and contact him directly at mark@youtern.com.

How Dare They Block My Facebook at Work?

If you are addicted to Facebook, you may be in for a big shock when you go to work in the corporate world. Based on a survey just last year by Robert Half Technology, over half of today’s companies block social networks completely, while another 19 percent only permit it "for business purposes." The blocking percentages are still going up, rather than down.

Beyond wasted productivity and network bandwidth, here are ten additional reasons given by employers in a recent Network World article for why they continue to place these restrictions:

• Data leaks – social networks are all about easy sharing, and employees go too far.
• Social networks have become a great vector for Trojans like Zeus and URLZone.
• Keep out social networking worms, like Koobface and other botnets.
• Phishing bait – Facebook was a lure into FBAction and fbstarter.com
• Shortened links (bit.ly and tinyurl) obfuscate sources, masking malware installs.
• Twitter accounts are being used as a command and control center for botnets.
• Advanced persistence threats (APT) – opens the door to a new class of intelligent application cracking tools.
• Cross-site request forgery (CSRF) – technique used to spread networking worms.
• Impersonation – Twitter accounts hacked to spread false info and malware.
• Users haven’t learned not to trust all social applications.

On the other side, here are the major arguments I hear from Gen-Y (Millennials), on why they can’t live without Facebook and Twitter, and are ready to go to war, overtly and through subterfuge, with any employer who would dare impinge on their access to their favorite site:

• Email is dead, takes too long, and it also is a major source of viruses.
• Hate to pick up the phone or find the person every time I needed something.
• My clients and customers use it, and I need to stay in sync.
• You need to be plugged in to be career competitive with hyper-networked peers, and keep ahead of competitors.
• Best online collaboration platform for project teams.
• Flexible, easily customizable productivity tools.

They also point to the fact that, for some roles and professions, like real-time monitoring of news and consumer issues, these sites can be leveraged as effective business tools, now about one in five companies actually requires their use for work-related purposes.

The net is that most companies do dare to put restrictions on social networks “at work.” An obvious complication is that it is becoming more and more common to be “on the job”, but not “in the office.” Consider these examples:

• Employee works at home with company computer equipment.
• Employee works at home with personally owned computer.
• Contractor, temp, or outsource worker off site.
• Campus student environment with resources provided by University.

In these cases, the company often can’t control the social network activity directly, so they have to rely on corporate policy, personal integrity, and personal ethics. This is uncharted territory for some companies, who are struggling to write the “guidelines” and “code of conduct” manual.

To me, the answers are clear. When you work for a company, whether as an employee or an agent, everything you do is viewed by the client or customer as a reflection on the company, good or bad. Just as you are measured by the integrity and image of your company, your company is also measured by your image and integrity, on company time or your time.

I don’t see this as an entitlement issue, on either side. In fact, in the grander scheme of things, this is really a momentary issue. Over time, specific tools like Facebook will morph or go away, so I can’t imagine wasting any energy and jeopardizing your career for something so trivial.

Marty Zwilling

Many Great Entrepreneurs Use Servant Leadership

Startups provide leadership in the market. Entrepreneurs provide leadership to their startup. There are many styles of leadership, like dictatorial, bureaucratic, and democratic. One that I will highlight here, which I believe is the most appropriate for startups, is called “servant” leadership.

What is servant leadership? The servant leader serves the people they lead through mentoring, direct assistance, listening, and acting on their employees input. It’s the opposite of self-serving, domineering leadership, and makes those in charge think harder about how to respect, value and motivate people reporting to them.

The concept was developed by Robert K. Greenleaf in 1970. Servant leaders are felt to be effective because the needs of followers are so looked after that everyone reaches their full potential, hence perform at their best, individually and as a team.

Greenleaf says that Martin Luther King, Gandhi, and Jesus were good examples of servant leadership. What do you have in common with them? If you recognize yourself in most of the following questions, you may not be another Gandhi, but you are well on your way to becoming a servant leader:

• Do team members believe that you want to hear their ideas and will value them?
• Does your team believe that you have a strong awareness of what is going on and why?
• Does everyone follow your direction because they want to, as opposed to because they “have to”?
• Do others on your team communicate their ideas and vision for the organization when you are around?
• Do people believe that you are committed to helping them develop and grow?
• Do people come to you when the chips are down, or when something traumatic has happened in their lives?
• Does everyone have confidence in your ability to anticipate the future and its consequences?
• Does the team believe you are leading the organization to make a real difference in the world?
• Do people believe that you are willing to sacrifice your own self-interest for the good of the team?
• Does everyone feel a strong sense of community in the company you lead?

Some of the characteristics implied in these questions come more naturally to some people than others. Experts argue that some are inherent, and are difficult to learn. But characteristics such as listening, awareness, persuasion, and building community are all learnable skills.

You should reflect and thoughtfully assess the degree to which you have what it takes to be a servant leader. If you are committed to being the best servant leader than you can be, I urge you to continuously work to develop these characteristics.

For some executives, serving people's needs creates the image of being slavish or subservient, not a very positive image. In addition, leaders need to serve the needs of customers and stakeholders, as well as those of team members, so a sense of balance is required.

I encourage you to take a look in the mirror, and check your management style. Just to make sure you are not looking through rose-colored glasses, ask a few of your most trusted associates what they see. If the answers surprise you, it may be time to find a servant leader mentor.

If not you, then who do you know who fits this definition? Let’s give them a little recognition and appreciation by mentioning them in the comments. Maybe someone will do the same for you some day.

Marty Zwilling

Role Model Entrepreneur: Brad Bergersen Interview

A few days ago I met a 26 year-old entrepreneur with an attitude that exemplifies what I believe it takes to succeed in this new economy and new world. After doing well as a teen in the jewelry business, he made his first big jump as an entrepreneur by buying a failing store to begin his entrepreneurial career, but quickly found that the road can be a rocky one.

Marty: Welcome to Startup Professionals interviews. Tell us what you do.

Brad: My name is Brad Bergersen, and I am the President and founder of 24K Brokers, Inc. We are a national full-service jewelry wholesale corporation. Our mission is to revolutionize the jewelry industry and fundraising as a whole, by helping non-profits run money-raising events.

We have been able to raise thousands of dollars very quickly with this program, by paying wholesale prices and giving a large % of the profit back to the sponsoring organization. 24K Brokers has been featured on ABC-2 and Fox45 news channel in Maryland, as well as on Radio One and the Huffington Post.

Most recently, I was selected to be one of seven entrepreneurs for the upcoming reality TV show "Good Fellas Of Baltimore" which centers around businessmen giving back. We are committed to helping fund any legit fundraiser nationwide as “The Company With The Heart Of Gold.”

Marty: When did you know that you were destined to be an entrepreneur?

Brad: This may sound cliché, but I was born to be an entrepreneur. Since a young man, I had a knack for making things happen. So from selling candy on the black market in elementary school to closing deals worth over a million, my attitude has never changed.

I choose to live by “Positive Closing Mental Attitude (PMCA)!”  Whether you are trying to close a sale, open a business, or overcome an obstacle in your life, PCMA will get you through anything!  I found the concept of closing escapes many, so I’ve written a book (scheduled out this year) “Close The Damn Sale.”

Marty: Was your first business venture a positive and learning experience?

Brad: Probably my first 100 ideas were not successful. Why? Because I did not do what it took to succeed. I can’t really even say they were ventures, as I did not put in the financial capital needed, nor the effort to see any of them through to success.

Now I understand that the reason I never succeeded in my previous entrepreneurial concepts is because I was trying to be something I wasn’t. I wanted to make a lot of money and tried to hop on the bandwagon with whatever the “in” thing was to get rich. Finally I realized that the only way I would become truly successful was to find something I was truly passionate about.

Why go away from your niche? Once I stopped making excuses for myself and took ownership of my actions, my life changed. I went from an idea to action quickly; because of my commitment to excellence, I now have a hot commodity for investors to feast on.

Marty: Are you willing to share any personal challenges you were able to overcome to get to this point?

Brad: At 22, I was making great money and had the respect and admiration of many as the top performer of the #1 family owned national jewelry store. There was only one problem, I was an idiot. I made $150K a year and lived like I made $500K.

I was immature, irresponsible, and thought it was a good idea to buy 2 homes and 4 cars and live off plastic. I hit rock bottom when I used my piggy bank to pay my electric bill in July, 2008. I decided that night I would take control and change my life for good. I was over-indulging in food as well as materialistic possessions, and I was overweight.

I made some big decisions, and in a year lost 100 pounds, stopped spending like a fool and started creating my dream business. I don't know exactly how, but I still believe I am destined for greatness. I am dedicated to doing exactly what it takes to get there. "In the pursuit of perfection, excellence will be tolerated" became a way of life.

I have had many people doubt me, and thought I was crazy last year in a rough economy to leave a job and small side business making 200K a year with a pregnant wife at home and 3-year-old son to take a 125K pay cut and pursue my purpose in November, 2009. Yet I now have a million dollar business which has grown over 1000% in the last 6 months.

Marty: What’s the most challenging aspect of being an entrepreneur these days from your perspective?

Brad: I’m learning to give up the concept of perfection. I will always strive for excellence and continue to raise the bar for myself. I know that overcoming yourself in the biggest challenge you will face.

That means that you must block out all negativity and doubt you experience. You must always operate with PCMA and do what it takes to succeed. You must always look to find a solution, to never give up on your dreams no matter how gloomy your situation is.

Marty: Any advice you would like to give to someone contemplating a startup?

‎Brad: "Without imagination, there are no dreams. Without dreams, there is no reality. Without reality, there is nothing worth living for!" Follow your dreams, and make sure you are passionate about the business you aspire to build. Excuses are monuments of nothingness; if you commit to not making them, you will succeed! Good Luck!

Marty: Brad, thank you very much for some great insights and your role-model leadership for all of us! You can find out more about Brad’s entrepreneurial activities or contact him directly through his business site 24KBrokers.

Marty Zwilling

Six Artificial Barriers to Startup Innovation

A few months ago I had the privilege of meeting Dr. Roy McAlister, who has been a prolific inventor for thirty years, and a recognized authority on the use of hydrogen as the ‘fuel’ of the 21^st century. While he still remains upbeat, I can sense the frustration that comes from years of facing barriers to innovation.

In his world, and many others that entrepreneurs inhabit, the problem is not a lack of ideas or technology. It’s not even a lack of money or opportunity, but a whole series of artificial constraints which seem to be getting more prevalent rather than less. Here are some of the key ones I see:

1. People are too comfortable. One of my favorite sayings is that “Real change doesn’t happen until the pain level gets high enough.” In Roy’s world, most people proclaim that we must do something about global warming and our dependence on fossil fuels, but the real impact to them is only a minor annoyance so far. People tend to complain about minor annoyances, but spend money on entertainment.

2. The inertia of infrastructures. It’s easy to see value in electric, natural gas, or hydrogen engines, but these all need a huge new investment in service stations, maintenance, training, and manufacturing. Replacing the existing infrastructure is painful to its constituents (oil companies and auto companies), so it will take generations.

3. Government regulations. Especially after the banking debacle a couple of years ago, everyone seems to want more government regulations. Even the best ones take years to get through our democratic process, and take even more years to change when innovation would suggest changes. The result is minimal innovation.

4. Risk avoidance. You never get anywhere unless you take a chance. Is it just me, or are more and more people afraid to challenge the “status quo?” Risk aversion has in many cases now moved to the extreme, called ‘entitlement’. No risk, guaranteed reward.

5. “Silos” of knowledge. Areas of study in many domains have become so narrow and deep, that experts fail to see the forest for the trees. This is rooted in our educational system, but extends beyond. In other words, universities should be preparing students to think and problem solve innovatively (outside the box), rather than using a microscope.

6. Low persistence levels. Thomas Edison failed more than ten thousand times before finding the right design of the light bulb. Challenged by his contemporaries, Edison soberly responded: "I have not failed. I have just found ten thousand ways that won't work." Some Gen-Y’ers have been raised by doting parents who tried to protect their kids from even one failure. That does not lead to innovation.

The world needs more innovation, and I’m looking to the entrepreneurs out there for the energy, vision, leadership and hustle to make it happen. They should be striking partnerships with inventors like Dr. Roy McAlister to find the limits of technology that can be commercialized (see Roy’s book for examples, “The Solar Hydrogen Civilization: The Future of Energy Is the Future of Our Global Economy”).

The greatest thing about being an entrepreneur is the freedom to innovate and do what you want the way you want. You can connect with clients, friends, colleagues, and competitors on your own terms to figure out if you are doing things right or need to make changes.

Don’t let the artificial constraints described above slow you down. The cost of delay usually exceeds the cost of mistakes. We need you!

Marty Zwilling

Why Adversity Makes an Entrepreneur Stronger

We all know entrepreneurs who have overcome adversity, like this current business recession or personal setbacks, and achieved success. There are famous people like Walt Disney and Nelson Rockefeller, who overcame learning disabilities, and people like J. C. Penney and J. K Rowling who struggled through personal bad times before finding their true legacy.

I’ve always been interested in how this works, and why it’s true. I’ve listened to several speakers with personal stories of overcoming adversity, and the message is always that tough times can make you stronger, wiser, and better. I’ve seen real examples, so I believe it, but the how and why are more elusive.

In a recent book example, titled “The Power of Adversity,” Al Weatherhead details his personal story of overcoming family and personal obstacles, including alcoholism, heart disease, and serious arthritis, to become an inventor, a wealthy entrepreneur, and active philanthropist. For most, I think it starts with having the survivor instinct, rather than accepting the victim role.

Beyond that, Al outlines his techniques for mastering adversity, which I believe can add value for every entrepreneur out there. Hopefully, your adversities are not as disastrous as his, but applying the same principles should still have a strengthening effect:

• Use the power of positive attitude and mindset. Developing a positive attitude about adversity seems essential to tapping its power to enhance and improve your life. A wise man once said, "Adversity has the effect of eliciting talents, which, in prosperous circumstances, would have lain dormant."

• Meditation is the art of letting go. Practicing meditation creates and sustains your positive mindset. Don’t think of meditation in the classic Zen sense, as exercising or swimming daily is also a way of letting your mind go. You may realize that adversity is just another name for the series of choices called life.

• Communicate your goals and desires. A great gift of adversity is coming to understand that you can only resolve your problems when you share your life with others. You simply must reach out to others, or you will never overcome adversity.

• Practice sharing, not controlling. Don’t confuse the need to control with connection. As you truly connect with others – revealing, extending, and expressing yourself – the layers of adversity will peel away like an onion. Surround yourself with strong people who can help you get through the tough times.

• Acceptance is the key. Adversity at some point in your life is inevitable. The more you refuse to accept it and deal with it, the more you will lose. Denial and running away never helps. Those who choose to be strong, rather than choose to suffer, will overcome it and may actually thrive.

• Embrace the bounce. In business and your personal life, it’s all about being resilient. That means look beyond the challenges of the moment, and identify and integrate the new insights and convictions that adversity so often presents.

Your challenge, like Al’s, is to turn adversity into success. He believes that you have to be both creative and patient to discover the multiple solutions that will unravel the knots of your adversity. In these ways, you will move ever closer to mastering it, and be that much more at peace.

But even with all this, I’m still not sure that I understand why this works. I’m sure many of you out there have been through more adversity than me (my life has been a walk in the park, compared to Al). Help me understand what worked for you and why.

Marty Zwilling

Internet Video is Hot, But Not a Money-Maker Yet

The buzz on the Internet these days is that if you want traffic, your website better have video. They point to YouTube as the big gorilla, but also social networking with video (Bebo), and video job sites (VisualCV). One video blog (now called vlog) on YouTube has over two million subscribers.

But the word on the street is that very few, if any, of the video-only companies are making money. Even the veritable YouTube doesn’t seem to be bearing as much fruit as Google clearly thought it could when it paid $1.65 billion for the site in 2006.

One large Internet information provider, comScore, says U.S. online video watchers generated a 40 percent increase in consumption in a single year, and there’s no reason to think it will go away. According to predictions and what I see on the many sites I have visited, there are still positives and negatives to consider:

• YouTube is already gigantic, so the interest is there. It claims to serve two billion video views per day. There are now more than 24 hours of video uploaded every minute to the site. Their revenue from advertising may approach one billion dollars this year, with most consumed by bandwidth and associated costs, YouTube isn’t even profitable yet.

• The biggest trend in online video is watching it anywhere on the new smart phones. Video is going mobile with the high bandwidth like all new applications. Video segments must be shorter, and match the interests of these users. At least 66% of Internet users watch at least one video per month online.

• The largest video social network, Bebo, purchased for $850 million, was just sold by AOL in a “fire sale,” after it lost half its membership of 10 million users last year. During the same period, Facebook approached 500 million users worldwide.

• Video ad network BrightRoll claimed profitability last year, but took a $10M third round of financing just recently. They now have 50M unique viewers per month, and have closed a $10M third round. They are most optimistic about video advertising, rather than vlogging or other applications, since video ads have been the norm for a long time.

• It looks like YouTube has a lock on the video blogging, which is still coming of age and yet to make money. An early high flyer in this space, MoBuzz, couldn’t make a business and folded a couple of years ago.

• Hulu is a popular website offering streaming video of TV shows on demand in the United States, and movies from NBC, Fox, ABC, and other studios. Hulu is for TV what NetFlix is for movies, but its growth has been dropping off sharply.

• There is now even a search engine, called Clicker, which is geared to find the online video and Web TV content to be able to watch it. Clicker has just raised $11 in funding, and is hoping that traffic will now follow. They provide a fast, free, and easy way to search for online video all across the Web.

Thus my recommendation is that you integrate video into your website offering, but don’t make it the only offering. Video is one of the ways to deliver customer value, but it is not THE value, per se. In some cases, video can detract from your message, by taking a long time to load, by forcing extra clicks, and giving the negative impression of being forced to listen to a commercial.

As with all businesses, website success is driven by delivering the right mix of value to the customer, in the right format and context. Of course other things, like the market, founder dynamics, funders’ indulgence, and luck will have a part in your success or failure. But if you’re lucky enough to have a little runway left, add some video value. It’s necessary, but not sufficient.

Marty Zwilling

Five Drivers of Real Opportunity for Startups

One of my favorite sayings is the “Real change doesn’t happen until the pain level gets high enough.” There aren’t many of us who love change, just for the opportunity to learn something new, and even we won’t pay much for it. Entrepreneurs who search for real pain points, and build solutions around them, have the best chance of changing the world.

In my opinion, real pain points for most people do not require a new user interface for Facebook, a new programming platform for app development, or even the Apple iPad. So why do I see some many funding requests for products along these lines?

As an alternative, if you are an entrepreneur looking for the next big thing, where should you look? Here are some key drivers that should lead you to a fundable idea:

1. A business crisis. The recent meltdown of major financial institutions and process is causing us all pain, and finally forcing change. Maybe we haven’t seen the results yet, but there are thousands of startup opportunities to offer new products and services, to replace those in crisis.

2. Some kind of natural or man-made disaster. The BP oil spill in the Gulf, the volcanic eruption in Iceland, and recent earthquakes in Haiti and Chile, all suggest that real opportunities for change are needed in pollution control, just-in-time manufacturing, and building materials. Usually, people pay to relieve pain before buying luxury items.

3. When the world gets smaller. When globalization or technology shrinks distances (Internet), painful missing needs become evident, and opportunities abound. Other countries can provide e-commerce with different business models, outsource manufacturing at low cost, and a huge market for new products.

4. The impact of global instability. Unpredictable forces, such as unrest in the Middle East, can quickly change energy cost equations, or availability of critical products. Many of the current opportunities in alternative energy are the result of these forces, as well as the lack of effective government coalitions to conserve other resources.

5. Truly “disruptive” technologies. I hear this term every day, wrongly applied to new user interfaces, or a new search engine. I’m looking for things like the next Internet, cold fusion, or a technology to cure cancer. Recent “paradigm shift” technologies, like the cell phone, still spawn major opportunities.

Of course, there are caveats to every opportunity. Many of the biggest and most obvious ones have non-business and non-technical hurdles, including the following:

• Government regulations. New medical initiatives and new energy alternative technologies can be delayed or bogged down for years by existing bureaucracies and irrelevant political agendas.

• Existing infrastructure. Companies with huge existing install bases and infrastructures, such as oil companies or phone companies, often present major roadblocks to the implementation of alternative solutions outside their control.

• People are slow to accept change. Change is hard for most people. Therefore, it takes time, sometimes whole generations, of education, communication, and incremental proof to get momentum going and overcome old fears.

Professional investors know all of these too well, and are sometimes hesitant to fund any innovation that is deemed to be too disruptive. Of course, you can choose to play it safe with more incremental, modest innovations, There’s nothing wrong with modesty. That’s the great thing about being an entrepreneur. You get to choose your pain.

Marty Zwilling