Every Entrepreneur Needs to Outwit the Devil

“The devil in the details” is a quote that we have all heard, and clearly applies to startups, where success in the long run is all about execution. But for you as an entrepreneur trying to get started, the devil is really in your mind, where you must prevent drifting, and maintain that confidence, commitment, and passion, to achieve your business dream.

This is highlighted well in a book just released, “Outwitting the Devil,” annotated by Sharon Lechter. It was written way back in 1938, by the famous author of “Think and Grow Rich,” Napoleon Hill. It was too controversial to publish then, due to religious connotations, but still has key lessons for every entrepreneur today.

The premise of the book is an interview with the Devil, where he admits that he dwells in idle minds, and finds it easy to control the minds of drifters. Drifters are people who do little or no thinking for themselves, and allow themselves to be influenced and controlled by other people and circumstances.

In an interview, the Devil confesses that all people need only follow some key principles to outwit him (adapted a bit here for entrepreneurs):

1. Do your own thinking on all occasions. Pursue your own dreams and your own thinking. Listen to others input, but make your own decisions. For success, entrepreneurs have to overcome any human tendencies toward laziness and indifference, which lead to procrastination and drifting.

2. Decide what you really want from your business. Set your goal, and create a plan for attaining it. Be willing to sacrifice everything else, if necessary, rather than accept permanent defeat. Drifters chase a business idea for all the wrong reasons, and then give up easily, like get rich quick, or to please someone else.

3. Analyze temporary defeat, no matter of what nature or cause. Extract from it the seed of an equivalent advantage. In business, it’s commonly accepted that you can learn more from failure than from success, if you choose to learn.

4. Be willing to give before you receive. Other entrepreneurs and investors will more readily help you, if you have helped them first. In addition, you dramatically increase your odds of success if you learn the business domain first, before you try to lead in it.

5. Recognize that your brain is a receiving set. Curb your output, and be an active listener, by providing feedback, an optimistic attitude, motivation, and a concern for people. A key part of receiving input is listening to what is not said.

6. Recognize that your greatest asset is time. This is the only thing except the power of thought which you own outright, and the one thing which can be shaped into whatever material things you want. Budget your time so none of it is wasted.

7. Recognize that fear generally is a filler. Fear rushes in to occupy the unused portion of your mind. It is only a state of mind, which you can control by filling the space it occupies with confidence and passion in your ability to overcome obstacles.

8. When you ask for help, do not beg. Take full responsibility, and don’t be the victim. Make sure you earn any help provided, and don’t forget to properly thank your benefactor. In a startup, there is no entitlement to funding, or to a second chance.

9. Recognize that business is a cruel taskmaster. Either you master it or it masters you. There is no half-way or compromising point. Never accept from a business anything you do not want. You can refuse, in your own mind, to accept it and it will make way for the thing you do want.

10. Remember that your dominating thoughts attract. To become the master of your destiny, you must learn to control the nature of your dominant, habitual thoughts. By doing so, you will be able to attract into your life anything you choose. Your thoughts create your reality.

I couldn’t help but think that these points are still so relevant today in our own recovering economy, even though they were written during a similar challenge over 70 years ago. I guess we all should take comfort in the fact that even though we live in a world of constant change, some things about human nature will always be the same. Can you outwit the Devil today to succeed in your dream?

Marty Zwilling

Ten Quotes Never Spoken By a Happy Entrepreneur

Some people are not cut out to be entrepreneurs. This is a good thing, or the business world would be chaos, with everyone trying to do their own thing. So what about you? How do you know if you should be running your own company, or concentrating on that queue of work that someone else has built for you?

I’ve hit this before, but I still hear from too many unhappy entrepreneurs. Now is the time to put aside your fantasies, and take a hard look at who you really are, before you commit to the entrepreneurial lifestyle. If you recognize yourself in many of these quotes, you WILL NOT be happy in that lifestyle:

1. “I like my life structured with clear decisions.” Entrepreneurs do not function well in traditional organizations and do not like being in the conventional management hierarchy. Most believe they can do the job better than anyone else and will strive for maximum responsibility and accountability.

2. “Handling problems causes me stress and pressure.” To an entrepreneur, stress is part of the job, and they are re-invigorated rather than discouraged by setbacks. They may actually be less comfortable when things are going well, and are not troubled by ambiguity and uncertainty because they are used to solving problems.

3. “My job is fun when everyone knows and does their job.” The best entrepreneurs relish the challenge of an undefined role, and enjoy the learning process as much as success. It’s even better when they can inspire and energize others to do things that have never been done before.

4. “I like to put my mistakes behind me and never think about them again.” Entrepreneurs accept things as they are and deal with them accordingly. They are quick to learn from their failures. They may or may not be idealistic, but they are seldom unrealistic. They want to know the status of a given situation at all times.

5. “Balance and family are everything in my life.” Entrepreneurs devote the largest share of their time to the business. During tough business periods, they will give their entire focus to business operations, and may essentially stay on the job for days. Even at home or at social events, the business is always top of mind.

6. “It didn’t get done today, but there’s always tomorrow.” Entrepreneurs have a great sense of urgency to develop their ideas now. Inactivity makes them impatient, tense, and uneasy. They have drive and high energy levels, they are achievement-oriented, and they are tireless in the pursuit of their goals.

7. “That’s not my job.” Successful entrepreneurs love to tackle complex situations that span the spectrum from planning, making strategic decisions, and working on multiple operational crises simultaneously. They are futuristic and aware of important implications, and they will continuously review alternatives to achieve their business objectives.

8. “I love to get awards for my efforts.” Entrepreneurs find satisfaction in the trappings of success from external sources, like the media and peer organizations. They like the business they have built to be praised, but they are often embarrassed by praise directed at them personally.

9. “I get frustrated when things don’t work.” Entrepreneurs have a "never, never, never quit" attitude. They are self-confident when they know what they're doing and in control. Most are at their best in the face of adversity, since they thrive on their own self-confidence.

10. “Risk and uncertainty cause me to lose too much sleep.” Some of the best entrepreneurs talk about the highs they get from taking a big risk, and the euphoria they feel when they beat the odds. They live for these feelings.

If you are an employee, and you recognize your boss in the quotes, you probably are not a happy employee. If you recognize your CEO or business founder in the quotes, then your business is probably failing. That’s how important it is for the right people to be in the right category.

In my experience, the most unhappy people are the ones who clearly fit in one category, but for various reasons believe they need to be in the other one (entitlement, more money, more prestige, family pressures). My message is do what you enjoy. Life is too short for the alternative.

Marty Zwilling

Entrepreneurs Confuse Product and Business Plans

Why is it that most of the business plans I see are really product plans? I define a product plan as a detailed description of your product or service, with a bit of business thrown in at the end. A business plan is a detailed description of your business, with a bit of product description thrown in near the front.

Don’t get me wrong. It’s definitely positive to have a product plan. A simple differentiation is that a product plan is designed for internal use, to get the product out. A business plan is an “outward facing” document for external investors, or for C-level executives within your own company.

The product plan tells your developers what to build, and the marketing team what to market. Because it addresses an internal audience, it can use technical jargon and assume the reader understands the technology. Here are the key components of a good product plan:

• Detailed features. For software, websites, and high-tech products, this is the “meat” of what you intend to build. Enough detail is required so that someone else can build it without you (outsourcing). Equally important, marketing and sales people should be able to identify benefits and marketing strategies, set prices, and validate a business model.

• Market research. This section defines the market, sizes the opportunity, and discusses the needs and requirements that will be addressed by your product and service. Establishing credibility is key, so this data should come primarily from industry experts, with footnotes to the source, rather than your passion that everyone needs one.

• Competition analysis. There are always competitors, or alternative ways to get the job done. Here is where you pick a few of these, characterize what they do, and position your own product to show your competitive advantage.

• Development and rollout. Show the timeline, milestones, costs, and people required to produce the product or service. Address proof of concept, performance considerations, quality certification, and support ramping.

Concurrently, or later, it’s necessary to build a separate business plan. Because this document is “outward facing” the tone and level has to change to be understandable by customers and investors. Here are some key components:

• Problem statement and solution. Skip the acronyms, write at an eighth-grade level, and talk in terms of “benefits” rather than “features.” Assume readers don’t know or share your vision, knowledge, and passion, so you have to sell them on your plan at all levels.

• Market research and competition. Reuse the two comparable sections above, making sure you refocus the words for an external audience, and remove the technical jargon. These are the only sections that these two plans have in common.

• Business model, executive team, marketing & sales, financials, and funding. These are all new and critical sections of a business plan. See my previous article “Investors Expect Ten Essentials in a Business Plan” for details on requirements here.

Actually, it’s most disconcerting when people approach me with neither – just a verbal description of their “idea,” looking for a business assessment of its potential. In frustration, I usually comment to them that ideas are worthless outside the context of a realistic business plan.

I realize that many of you entrepreneurs are technical types, and you feel certain that an exciting product plan will highlight an exciting business opportunity. Instead most investors will see it as a “solution looking for a problem.” That’s a big red flag, and will usually get your plan a quick toss to the circular file.

Marty Zwilling

Six Keys to Managing Your Reputation on the Web

Every startup fears that one angry and unfair customer who can jeopardize the business by a SCREAMING post on Ripoff Report, Yelp, or one of the hundreds of other consumer complaint and review sites on the Internet. Most entrepreneurs don’t even know how to keep track of what people are saying about them on the web, much less how to respond or remove it.

Web reputation management, both business and personal, has become a top priority requirement. On the personal side, these items can kill your career, as I discussed in a prior article “Google Yourself to See How Other People See You.” Luckily, the basic principles for reputation management are the same for both business and personal environments:

1. Your reputation is your responsibility. The first step is to recognize that you alone are responsible for managing the reputation of your business and your life. Doing nothing, or counting on more laws, is not an answer. Due to First Amendment rights, offensive content, once entered, is often untouchable, and the sources are immune from liability.

2. Actively monitor what people are saying about you. You may assert that monitoring the entire Internet space is an impossible problem. Fortunately, there are already tools out there, like Google Alerts (free) and ReputationDefender, which can do the work for you, and send you a daily email report of every link where your name or brand appears.

3. Proactively build a positive reputation. Maintaining a good reputation means you have to build one early and maintain it. There is a big difference between no reputation with one negative comment, versus 1000 indications of a positive reputation and one negative. Most people accept that no person or organization is perfect.

4. Quickly address every negative. Many negative customer experiences can actually be turned into positives, if you quickly and unemotionally acknowledge the problem, resolve it, and spread the positive message before the negative one gets amplified. Don’t emulate the “United Breaks Guitar” experience.

5. Push negative content out of view. In reality, most people will never find negative content, unless a link appears on the first page of search engine results. With the right focus on search engine optimization, or the help of companies like DefendMyName, you can usually push negative links out of sight into the swamp of the Internet.

6. Remove unwanted content, where possible. Removing your content from the Web is not as easy as canceling your accounts, nor is it completely impossible. You can easily remove content you own (comments on your site or accounts). Experts, like Reputation Defender, have proprietary techniques to correct or completely remove other unwanted content.

The upside to the difficulty of removing unwanted content is that it does justice to those who have come by their bad reputations legitimately. For curbing bad guys, the speed and visibility of the Internet can be a very useful thing. For all the rest of us, it’s nice to know that we can shout back quickly and broadly, when someone starts to whisper about us.

As I have discussed in previous articles, social networking sites like Facebook are now the most frequently used websites on the Internet. Unfortunately, they have also become some of the most abused websites on the Internet, due to the emotions of failed relationships and the immature whims of young users.

So the social networks are the early place to start, in learning the discipline of building and maintaining a positive reputation. If you get that right, the transition to your business will be easy. On the other hand, if you let your reputation slide early to be “cool,” it may take a lifetime to recover. It’s easier to make Google remember than to forget.

Marty Zwilling

Entrepreneurs ‘Up The Ante’ With Parallel Startups

Maybe it’s just me, but I seem to be seeing more and more parallel entrepreneurs these days. These are people who are working on multiple startups concurrently. On the surface, this seems like an extremely difficult and dangerous practice, but for the new generations which have been multi-tasking since birth, it may be just business as usual.

I’m not talking here about a bit of overlap between the winding down of one venture, while already gearing up for the next. I see entrepreneurs who have started two or more companies in the last few months, and continue to split their time between the efforts. Others tell me about people like Scott Rafer, former CEO of Feedster, who is now heavily involved in four other companies.

The new hot term for this practice is “multi-table” startups, which I understand is derived from the common online gambling practice of playing multiple poker games at the same time. In fact, I think that’s a great analogy, since the odds in a poker game may be similar to those of a startup.

On the other hand, I hear from committed parallel entrepreneurs that there are advantages to their approach, along the following lines:

• Leverage and hedging a portfolio. Other entrepreneurs, even serial entrepreneurs, are putting all their eggs in one basket. Investors have long argued the value of a portfolio to hedge and leverage the risk, so why shouldn’t entrepreneurs do the same?

• Shared access to advisers and investors. Advisors are busy people. In your monthly lunch, it’s as easy to cover multiple company issues as one. Investors building their portfolio love to hear about multiple startups in one sitting, to ferret out the best.

• Cross-fertilization of current market feedback. One thing that you learn in one company, at a given moment in time, is equally valuable or leveragable in a different way at your other companies. As your customer list grows in one, you own it for the second.

• Foster and enforce the art of delegation. For long-term success, every entrepreneur needs to know when to step in, and when to delegate. That’s a skill that may not get enough attention until too late by a single startup entrepreneur.

• Multiply the pay-back. Many parallel entrepreneurs have already achieved financial security through earlier efforts. Now they may see a way to multiply pay-back by active involvement with multiple startups. Of course, it’s like a double-down in gambling as well.

• High energy and bandwidth. Now we are back to the fact that there are people who love to multi-task, and anything less is simply boring. This is especially true of Gen-Y entrepreneurs, with fire in the belly to change the world. I see more emerging every day.

Of course, there are huge risks when you try to ride two horses at one time. At the very least, you may not do either well, or won’t be fully there when the going gets tough for either. See my interview with Rich Christiansen, a popular parallel entrepreneur, for other challenges.

Even single entrepreneurs who maintain a day job, for a steady paycheck, feel the pain of juggling multiple initiatives. Then there is the challenge of making sure the multiple roles do not conflict, legally or otherwise. Tread carefully there.

The most common way people move into the parallel entrepreneur environment, if they are so inclined, is to start another one, while still exiting the current one. The risk here is that winding down one takes much longer than you would expect, and starting something new consumes more energy than anyone predicts.

For the first-time entrepreneur, my sense is that trying to focus on more than one equally exciting idea is a recipe for failure. But with the cost of entry going down, and the multi-tasking bandwidth of each new generation going up, I suspect parallel entrepreneurs may soon be the norm rather than the exception. Are you ready to step up to this table?

Marty Zwilling

Six Reasons To Rethink Your Online Dating Site

Online dating sites usually fail because online dating usually fails. The simple reason is that everyone expects quick results, no one can make that happen, and users get very unhappy very quickly. Even the main industry rag, Online Dating Magazine, admits that the success rate is a mere one percent, compared to an estimated fifty percent for startups in general.

I certainly understand why everyone wants to take a shot at it – the “need” is huge. In the U.S. alone, the target demographic for these services is 90 million singles that are between 19 and 45. Then there are the forty percent of frequent users that are already married. Some say that’s a billion dollar “recession proof” opportunity.

But make no mistake about it, this is a tough and oversaturated market to enter at this stage. Here are six key reasons, from a business perspective:

1. Direct competition is huge. There is no opportunity for “first mover” advantage here. The same Online Dating Magazine estimates that there are more than 2,500 online dating services online in the U.S. alone, with 1,000 new online dating services opening every year. Some estimates say there are 8.000 competitors worldwide.

2. No longer a growth market. After years of dramatic growth in the 70-80 percent range, online dating revenues have leveled off in the U.S., according to a recent report. Subscriber numbers are actually falling slightly. Lawsuit claims and Nigerian con artists are up, and disillusionment is growing. The honeymoon is over.

3. Entry cost is very high. This business suffers from what Paul Graham calls the ‘chicken and the egg problem‘ – no one wants to use a dating site with only a few users. So sites have to invest heavily in viral marketing to achieve critical mass, which competes with current social networks, while users expect to join both for free.

4. Intellectual property is tough. It’s hard to invent and patent more “scientific” methods on how to match people. Most people, especially women, don’t even want to feel like they can be ‘matched’ by a computer. E-harmony.com has already defined the 29 DIMENSIONS® of compatibility, how many more could there be?

5. Social networks. “Social networking” is really the new term for dating, with mega-sites like Facebook, and the hyperlocal site Foursquare. After all, isn’t dating all about making new “friends,” and finding them in all the right places? If you want a more intimate (virtual) encounter, try the Facebook SuperPoke application.

6. Sophisticated search engines. I’m already seeing search engine parameters that can match image features, so singles will soon be able to search cyberspace for their ideal partner, without the need to join any dating site. How about the next generation search engine, answering the question, “Who is my ultimate soul mate?”

Perhaps I shouldn’t suggest that no one can win in this space. However, because 99 out of 100 fail, and because some have an unsavory reputation, you won’t find many Angel or VC investors who are interested. Plan to focus on that other popular tier of investors – founders, family, friends, and fools.

Certainly if you expect to get any traction in this market, you need some real innovation. The trend is to more niche markets. But you better hurry, because potential winners like Women Behind Bars, Herpes-Date.com, and eHarmonyPets are already taken.

So please don’t send me any more business plans along these lines, looking for investor funding, with no marketing budget, and promising huge returns. Investors are looking for real innovation, not copycats with more bells and whistles. So are customers. Let’s give it to them.

Marty Zwilling

Finding the Right Business Mentor is Value Squared

Every first-time entrepreneur, or even an experienced founder stepping into a new business area, needs a mentor. Nothing you have ever done raises so many questions, or has the potential to be so fulfilling, or so risky, as starting a new business for the first time. A mentor is a confidant who has been there and done that, and is willing to guide your steps.

In case you think mentors are only for “wimps,” you should know that most great entrepreneurs are quick to give credit to their mentors. Bill Gates always revered the early guidance he received from Dr. Ed Roberts, creator of the Altair 8800. Later, the great Warren Buffet became his mentor on many corporate matters.

In a reverse fashion, most of the recognized business gurus always found time to be a mentor. For a fortunate, surprisingly large club of CEOs, the late Peter F. Drucker was the single most lucid, eloquent, and encouraging force in their lives. With experts like this willing to help for free, why should you be the one to go it alone?

The best mentor candidates are the most experienced professionals you admire, and from whom you can learn, to accelerate your progress and avoid the deep potholes in the road ahead. Martin Yate, in his new book “Knock 'em Dead - Secrets and Strategies for Success in an Uncertain World” succinctly outlines the key criteria for choosing mentors:

• Mentoring is not a group activity. Mentors are not like lovers. You can have more than one at a time. But my advice is to start with one, or certainly no more than one in an area of expertise. It could make sense to have a business mentor, as well as a technology mentor, but a committee of your friends won’t work.

• The best mentors are older than you. Although age and wisdom don’t always go together, it is better to find a mentor older than you, because they will have skills you don’t and the wisdom of greater experience. You need both.

• Let the relationship develop naturally, over time. Mentor relationships, like any other human relationship, don’t happen overnight, and need to be nurtured on a person-to-person basis, rather than remotely or anonymously. The best mentors will even introduce you to their support network, which can multiply the value.

• The mentor should not have a direct reporting relationship with the protégé. The protégé should be able to feel free to speak about issues which may be plaguing him without fear of repercussions from a major board member, investor or boss.

• The mentor must be committed to being a mentor. Mentoring is an incredibly important responsibility. If the mentor does not want this responsibility, he will view the time spent mentoring as a nuisance. Being committed means being available, listening well, and able to keep confidences.

• Find someone who will tell it straight. Telling it straight means having direct discussions that are constructive, respectful, and specific. Both sides need the courage to stop if the relationship isn’t working. Life is too short to waste their time or yours. Is this context, it’s also important to find someone who matches your values.

Remember that a good mentor doesn’t relieve you of any responsibility in running your business. Be aggressive and take charge of your own decisions. Don’t expect the mentor to do the work for you, or even the research required to get a job done. In other words, don’t abuse the mentor, by asking them to be your boss, or respond to every thought that pops into your head.

In business as in life, the smartest people are the ones who know they don’t know it all. But smart people learn quickly. Not far down the road, you will be ready to mentor entrepreneurs who are where you were only a year or two ago. You then become a contributor to business leadership in the same way your mentor was to you. That’s value squared.

Marty Zwilling

Startups Needed For Cloud Computing Gray Areas

Cloud computing is still all the rage in the business world these days. Yet I find that most business people don’t understand and fully trust it, and I defy even the technologists to define it in ten words or less for business people. Many say it’s just marketing hype applied to old principles that have been around for a long time.

A typical definition (from Wikipedia) is that “cloud computing, is Internet-based computing, whereby shared resources, software and information are provided to computers and other devices on-demand, like a public utility.” That’s about 25 words which I’m certain doesn’t paint a very precise picture to the entrepreneurs I know.

Putting aside the acronyms and technical jargon, I think I can distill the essence of the cloud computing vision to the following five key points:

1. Buy service from a central utility, rather than buy assets. Now you can pay for a metered service delivering compute power, data, and storage, based on your business demand, through the Internet. No need to buy and manage these as assets. This is a great cost leveling advantage to businesses, which used to be called time sharing.

2. Maintenance and support are provider responsibilities. Small companies no longer need an IT staff, with the inherent costs and management responsibilities. That allows them to focus on their core competencies, reduce overall costs, and be more agile in responding to market changes.

3. Access to new services and data is instantly global. Employees don’t need to come to an office to do their job, and customers don’t need special software installed access a new application. International standards and localizations are assumed from the beginning, rather than added much later.

4. Availability is 24/7, just like your electric utility. No more down time on weekends, or during the nightly backups. The Internet is a huge power grid that services computing needs (cloud computing) of businesses and consumers, just like the electricity grid services power needs (cloud power).

5. Easy integration of customized applications. People have traditionally bought their own computers simply to provide a common platform where all their applications could talk to each other, even though customized, and share data. The cloud provides these transformations with security and integrity.

Make no mistake about it, these are the dreams, not the reality today. Even the pundits agree that cloud computing is still for “early adopters,” meaning it’s not all there yet. Many people can quote cloud computing successes, like businesses using Amazon Web Services for huge scaling, or failures, like the Google App Service major outage a while back.

Other gray areas include how to do secure credit card transactions in the cloud, tax considerations for international operations, multiple virtual machines in one cloud, and properly addressing differing geographic regional requirements in a single cloud. Then there is the connection problem of sharing data with standard applications not in the cloud.

When a vendor starts talking about his paradigm shift to a dynamically scalable and virtualized solution in the cloud, with SaaS (software as a service), PaaS (platform as a service), MSP (managed service provider), or web services in the cloud, tell him to skip ahead to the chart which shows you how well he does on the five points above, and the five gray areas outlined.

Even though “the cloud” is a familiar cliché for the Internet, cloud computing is still very much an opportunity for startups, with lots of room for innovation and better solutions. Now is the time to jump on board, but a cloud usually means you should expect a few storms ahead before you see the sunshine.

Marty Zwilling

We Need More Gen-Y Entrepreneurs to Fuel the Wave

The business world has been watching this emerging generation with trepidation, and a lot of us haven’t been sure who would be the winners, and who would be the losers. Can they survive as entrepreneurs, and do they have the passion it takes to run a startup and attract investors?

My own perspective is that the recession has been good for Gen-Y (Millennials), because it has forced them to face reality, often for the first time in their life. In the last couple of years, even college grads with advanced degrees don’t have job opportunities waiting for them. But I’m happy to report that I see more and more of them impressively stepping up to the entrepreneurial plate.

It now reminds me of previous generations, per the qualms raised about Gen-X back about 20 years ago, and about the Baby Boomers some 20 years before that. Yet now Gen-X’ers are seen as the major facilitators of change, and Boomers are the angels and business advisors for hot new startups.

We should look ahead to capitalize on evidence of the positive attributes of Gen-Y from a business perspective, including the following:

• Confidence. Raised by parents believing in the importance of self-esteem, they characteristically consider themselves ready to overcome challenges and leap tall buildings.

• Goal and achievement oriented. Many Gen-Y’ers approach the business world with solid personal goals. They expect to create something that is technically challenging, creative, fun, and financially rewarding.

• Multi-cultural. They expect to succeed in a workplace that is fair to all, where diversity is the norm—and they’ll use their collective power if they feel someone is treated unfairly. Diversity is a key to innovation, and big new business opportunities.

• Civic minded. They were taught to think in terms of the greater good. They have a high rate of volunteerism. They expect companies to contribute to their communities—and to operate in ways that create a sustainable environment.

These attributes have already driven several well-known Gen-Y startups, like Facebook and Groupon. Yet it’s too early to totally forget the potential shortcomings and idiosyncrasies of Gen-Y. According to Winograd and Hais, there are still some of worrisome attributes relative to the role of entrepreneur:

• Need to be scheduled. Gen-Y’ers were tightly scheduled as children and used to a full schedule of structured activity. Many still struggle with handling free time and time management in general. A startup is the most unstructured entity I know.

• Minimal “street smarts.” They grew up in a time of increasing safety and protection (car baby seats, no failing grades, no walking to school). They were rarely left unsupervised. They may have good academic credentials, but less business sense.

• Consensus driven. Gen-Y members have been reared in a way that makes it difficult for them to conduct business negotiations in an entrepreneurial manner. Rather than seeking to come out on top in zero-sum games, Gen-Y strives for consensus.

My challenge to Gen-Y, and to the rest of us, is to capitalize on the positive attributes and continue to work on overcoming any remaining negatives. I’m still convinced that “real change only happens when the pain level gets high enough.” The pain level has been high, but the business climate is improving, so let’s not slip backward.

Gen-Y is now experiencing their wake-up call, just like previous generations did with Vietnam and the 1980 recession. From the quality of interactions I’ve had recently mentoring a number of Gen-Y members, I’m happy to report that many are emerging as the new entrepreneurs of the digital age. I’m sure you agree that we need them.

Marty Zwilling

Ten Learning Steps from Entrepreneur to Manager

Entrepreneurs often have formidable technical expertise, key to developing a new product or service, but a great naïveté in management skills. They run into difficulty when their business reaches the $1-2 million annual sales range, or their employee count exceeds 5-10. It’s here that entrepreneurs must shift their thinking from tactical and operational, to strategic and managerial.

I’m convinced that management is a learnable skill. It can come from experience, or from training in a prior company, and it can even be self-taught from the Internet by smart entrepreneurs, just like they learned the skill of establishing a company, negotiating a contract, or filing a patent.

There are also many books on this subject, including a new one from the master on management, Brian Tracy, “Full Engagement!: Inspire, Motivate, and Bring Out the Best in Your People.” In it, he outlines a long list of key management principles for success. I’ve extracted here some key ones most relevant to startups entering the growth stage:

1. Communication clarity is essential. Management is “getting results through others,” not doing it yourself with the assistance of others. That means your chief responsibility is to communicate clearly about what you need done, and who has the responsibility to do it. Your growing team doesn’t automatically know what you are thinking.

2. Planning has priority over doing. Planning is one of key learning areas, in moving from an entrepreneur to a manager. Your ability to plan, to think through what needs to be done, in advance, on paper, is a critical skill that largely determines your entire future. Your job moves to determining what is to be done, instead of how it is to be done.

3. Organize your work before you begin. Most startups begin first, and think about organization later. Organizing means bringing together the necessary resources, and assembling the right people, then assigning work to specific people to be accomplished at specific times to specific standards of performance.

4. Delegate effectively and often. Delegation doesn’t work when you are creating your startup. ‘Not delegating’ doesn’t work when you are growing it later. Remember that delegation is not abdication. It’s still your company, so you have to follow-up, step in for disaster recovery, and keep the interplay between tasks and organizations working.

5. Staff properly at every level. This is not the same as finding a partner with complementary skills to start your business. It means not only hiring, but training and measuring performance. It means mentoring less experienced team members, and quickly replacing incompetent staff members. These are all skills you can learn.

6. Focus on high productivity. For growth and success, you need to continually look for ways to increase output, while lowering costs. That’s a big step from one product for one customer. The three R’s for attaining higher productivity are reorganization, reengineering, and restructuring. No entrepreneur is born with these skills.

7. Set the standard with visible actions. You can only lead by example, and set equally high standards for the people around you. You learn and gain credibility by committing to excellence, and asking customers and team members for feedback and ideas.

8. Concentrate on the important tasks. All successful managers never forget to concentrate on their most important task and stay with it until it is done. As a startup grows, it’s easy to try to do too many things at once, while doing nothing particularly well.

9. Identify constraints and their source. Between you and any goal is a constraint setting the speed at which you achieve that goal. The best managers are the most creative in overcoming constraints. Constraints follow the 80/20 rule – eighty percent are from inside, and 20 percent are from the outside. You need to tell the difference.

10. Concentrate on continuous improvement. No company that is static can grow or survive. Continuous improvement requires strategic planning to set new objectives and work toward them. Every growth company needs to innovate continually, maybe spending 20 percent of your revenues on research and development.

Some entrepreneurs, on seeing all this, will decide they have no interest in being a manager. They should voluntarily bow out early, to start another business. Others will get pushed out, with some pain, by investors who see the need for a new team to lead the growth stage. Even more painfully, too many others won’t bother to change their style, resulting in everyone being unhappy, and a business that stagnates, or even fails.

Things that great entrepreneurs have in common with great managers are that both are results-oriented and action-oriented. They have a sense of urgency, and move quickly. Thus it should be easy to apply those attributes to the learning required for the next stage of your company. Just start now, and do it!

Marty Zwilling

Procrastinators Rule Among Wishful Entrepreneurs

If I had a dollar for every time someone has said to me, “One of these days, I’m going to start my own company,” I’d be rich. If this day ever comes for all these people, we will be overrun by startups. Yet I don’t lose any sleep over either of these possibilities.

Most people procrastinate from time to time, but I suspect that the challenge here is somewhat deeper than that. So I did my own informal survey of business books, to gather the key reasons why most people never start the journey. If you recognize yourself in any of these categories, you may be more of a “wanna be” than a real entrepreneur:

1. You are a dreamer, not a do-er. Most people in this category actually prefer to think of themselves as “idea people,” rather than implementers. In reality, the dreaming part and the idea are the easy parts, and the hard part is building a workable plan and making it successful. A strong vision is required, but that’s different from the dream.

2. Unable to learn the new skills. This starts happening to people immediately after school, who think that academia is where skills are acquired. Actually, schools are only for learning how to learn. Specific expertise is self-learned from experience, not books. The ability to learn doesn’t decline with age, unless confidence and interest declines.

3. Unhealthy fear of failure. A wise man I once knew said “He who is never afraid, he’s a fool.” Successful people overcome their rational fears, and move on to get the job done. Others are debilitated by their fear, and never start. Expecting some failure, and learning to deal with it, is one of the most effective ways to learn. Investors know that all too well.

4. Hidden fear of success. Believe it or not, many people fear success, and stop short if they see it approaching. There is, in fact, plenty of evidence that it takes a strong person to manage their life after success – note the many failures after success in winning the lottery, or after topping the charts in their chosen profession.

5. You are a perfectionist, not a pragmatist. A new product or service will never be perfect in a rapidly changing world, so why start? At the other extreme, I know inventors that have been working on the same idea for thirty years, and have nothing to show for it. A proven path to success in business is to get something out, and iteratively improve it.

6. Not focused, or easily distracted. Successful entrepreneurs have a strong vision, and don’t let anyone or anything lead them astray. In business, this means you have to keep your priorities straight, and separate the important from the urgent. Learn to commit, focus, organize your work, and delegate when appropriate.

7. Always finding excuses. The first principle of entrepreneurship is that “the buck stops here” – you have to accept ultimate responsibility for whatever happens, good or bad, Excuses are artificial barriers for not starting something, or ways of convincing yourself that someone or something else is responsible for your failures. Neither is productive.

8. You are not a self-starter. If you need someone else to tell you when to develop your business plan and organize your time, then “one of these days” will probably never come for you. With the entrepreneurial lifestyle, it’s up to you to set the standards, be the model, and actively do the follow-through.

According to Psychology Today, some twenty percent of people identify themselves as chronic procrastinators. Among wishful entrepreneurs, I think the percentage is nearer to ninety. If that is your current state, it need not be a life sentence by default. Some of you will change your outlook and your behavior, one of these days. When will you get around to it?

Marty Zwilling

Entrepreneurs Build Big Dreams Without Big Money

One of the biggest myths I still see in the community of new entrepreneurs is the assumption that “All I need is a good idea, and some investor will give me the big money I need to build the business.” In reality, investors fund good business plans, not big dreams. It’s all in the execution.

A related myth is that it takes a lot of money to start a business. Investment requests of $500K and $1M seem to be the most popular. In reality, most business today can be built and reach breakeven for much less than these amounts, maybe $10K-$50K, with the exception of some medical related ones, and high technology content solutions.

Starting your business with a very low investment is called “bootstrapping,” and these entrepreneurs usually have the most fun. They retain full control of their business, they don’t have an investor “boss” second-guessing their every move, and they don’t have to spend months begging for money. According to experts, up to 99% of businesses are started this way.

Here are some fundamental principles for starting and growing your business with a limited budget, as outlined in a book last year by Patrick Snow, “Creating Your Own Destiny”:

• Run your business from the comfort of your home. Even though the cost of commercial office space is down, you still need to sign long-term contracts, make payments up front, outfit the space, and staff it. With a good website built in your basement, your business can look big, and be small.

• Match your business to your passion. You can’t be successful doing something you don’t enjoy. Passion isn’t really a substitute for money, but if you love something enough, you will find a way to get it done without paying much cash up front.

• Don’t hire any employees. Managing employees is a whole separate discipline, and most true entrepreneurs aren’t very good at it anyway. Running a business is not rocket science, so you can learn how if you have enough passion. Make sure any employees needed are a function of your “bandwidth,” not your confidence or interests.

• Build a low-budget plan. This is the opposite of starting without any plan. Operating without a plan is a sure way to spend lots of money. Low-budget also means avoiding businesses that are capital intensive, or even a franchise, which often requires a big up-front investment.

• Make money whether you are working or sleeping. E-commerce on the Internet is a good example of this. There you can sell your products and services 24 hours per day, seven days a week, on a global basis. Other examples are recurring revenue streams, like subscription fees, or referral fees, or subcontracting where you take a percentage.

• Minimize inventory, or let the manufacturer carry it. Have you ever wondered who owns all the new cars in dealer lots? It’s not the car dealers. Another example is the Amazon.com model, where they order your product for direct shipment, only after they get your payment. Consultants don’t need any inventory

• Barter your skills or equity for services you need. An example would be getting free office space by agreeing to be the property manager for the owner. Exchanging equity for services is worth negotiating with legal counsel, accountants, engineers, and even sales people.

Most experienced investors are convinced that too much money is a bigger risk than too little money. Good entrepreneurs can often find a substitute for money, but there is no substitute for time and determination. So keep your eyes and your heart focused on the business vision and the tips given here, and you won’t need a big budget to achieve your biggest dreams.

Marty Zwilling

No Entrepreneur Sets Out To Demotivate Their Team

Assuming no one would demotivate their team intentionally, then why do we see it happen so often? I believe it’s because too many entrepreneurs and leaders are so self-centered that they really don’t see what impact their actions have on others. What these leaders need to do is spend more time eliminating their own demotivating habits, rather than delivering more motivation.

Maybe it because there are plenty of tips, seminars, and books on the motivation side of the equation, starting with the basic Motivating Employees for Dummies, and so few resources on elements of demotivation. To learn about ways that your team is demotivated, most leaders would need to look no further than feedback from their own team, for comments like the following:

1. Be sure your team doesn’t know what is important to you. You do this by changing your mind on an issue several times a day. Or by making sure your answers to employee direction requests run counter to ones given previously. Keeping your team guessing may keep them alert, but it is highly demotivating.

2. Never explain your actions. Just because you are the boss, that doesn’t mean you don’t have to explain your actions. They are watching you carefully, but they can’t see what’s going on in your mind. Non-specific directions like “make it better” or “get it right next time” are not helpful or motivational.

3. Hire team members who will follow your instructions. Then you have to make sure they are punished for taking any initiative that you personally did not authorize. These people may appreciate having a job in these tough economic times, but they won’t be motivated to take any risk, or lead your company through the competitive minefield.

4. Keep people on their toes with a threat of consequences. This may be as simple as withholding opportunities and rewards, but people need to understand that you are serious about punishment for mistakes. Even implied threats are demotivating, yet most employees say their supervisors do hold threats over them on a routine basis.

5. Team meetings are for delivering the latest decisions. Bring your team members along to all the meetings, but make sure they listen carefully rather than speak or provide input. You may ask them to bring you up to date on what they’ve been emailing you, but you’ve been too busy to read.

6. Agree to milestones and then accelerate them. After you hear the latest sales projections, you can’t resist adding a “stretch” objective, just to keep people challenged. For development projects, you prefer milestones just after major holidays, so people have the option of working through the holiday for extra credit.

7. Thank your employees for the little extras. You recognize the need for positive feedback, but it’s less risky to apply it to potential problem items, like “Thank you for doing the job manually, rather than waiting for your computer to show up,” or “Thanks for coming to my house to fix my kid’s home computer.”

8. Be careful not to get too involved in your employees own goals. If you help them too much, they will just leave you for a bigger opportunity. They need to understand the commitment of meeting your goals first, so you send reminder emails to them at midnight on Saturday, marked urgent.

If you recognize yourself in any of the points above, or find this article on your desk chair one morning, it’s never too late to change. Rethink your own behavior in order to ferret out any unintentional or intentional demotivational acts.

It’s time to move to the positive side of the motivation curve, from the team’s perspective. Motivation is one of the most powerful driving forces toward entrepreneurial success. In these tough competitive times, you need all the help you can get. Don’t try it with a demotivated team.

Marty Zwilling

Smart Startups Think Global But Act Hyperlocal

Even though the world is getting smaller, due to easy global connectivity, people still feel alone if not well-connected locally. There is also more going on in every location, so this personal need and super sensitivity to the local community has spawned a new breed of Internet startups, called “hyperlocal.” The term first appeared five years ago, but the model is now very common.

At first this was limited to news sites that concentrated on a segment of a community, like West Seattle, but the concept is now being applied to advertising and promotion sites, blogging sites, and even legal services sites. These hyperlocal sites don’t have to compete with global sites, and always have unique content, community advertising, and local issues.

Foursquare is good example of a modern hyperlocal site, which describes itself as “50% friend-finder, 30% social city guide, 20% nightlife game.” It also shows how such a website can scale by adding new cities. When you enter one of these cities, you simply check-in to tell the service where you are, and you begin to earn points and unlock badges for discovering new things.

Much of this is still evolving, but I think it has great potential. Here are some of the dimensions of hyperlocal, summarized by Alex Gamela in an interview with Adrian Holovaty of EveryBlock:

• Geographic granularity. Give people a way to follow news around a particular block. This is the main focus of EveryBlock, where they give each city block its own Web page, its own RSS feed and its own e-mail alerts.

• Geographic customization. Give people a way to draw custom geographic boundaries to specify their area of interest. Their “custom locations” feature lets you draw an arbitrary area in your neighborhood that selects the streets you’re interested in following.

• Geographic messaging. Give people a way to post news to specific geographic areas. Their “Notify your neighbors” feature lets people post messages (news reports, classifieds, etc.) to their blocks, with a sophisticated level of targeting.

• Subject matter granularity. Give people information that’s “too small” or otherwise not important enough for mainstream news sites, such as restaurant inspections, building permits, and fire department dispatches.

• Topic customization. Give people ways to control which types of information they get and how often they get it. For example, EveryBlock lets you choose which types of information you want to get daily, weekly or “as it happens”.

When you extend this to include social media marketing, you can imagine that startups and small businesses are in fact at an advantage over their less flexible big brothers. They can offer real-time feedback and immediate rewards for hyperlocal activity, by members of that community, for members of the community.

Hyperlocal blogs like My Ballard can find unique content that doesn’t compete with major players and newspapers for attention. They are free to write about neighborhood events, charities, schools, and local causes. The big news outlets don’t have the staff or resources to chase these types of stories.

I predict that hyperlocal services sites will continue to emerge and flourish. Many years ago, a community law firm could have a rewarding law practice, financially and personally fulfilling, by becoming a part of the community. In the new digital age, it’s possible again, even easier and faster.

With the advent of the iPhone and Blackberry, location-based apps are becoming commonplace. Especially in local communities, people want to know where the sales are, and who is hanging out where. This is not just a fad.

Hyperlocal can be the “beginning” for your startup, allowing you to test your business model and your marketing plan before you scale. Or it can be the final destination, if you are looking for a fun family business in the new world. Just like Mister Rogers neighborhood, I recommend it as a familiar place for your startup to “learn the ropes” before you take on the whole world.

Marty Zwilling

Learn to ‘Do the Right Thing’ for Your Startup

Did you ever wonder how a new entrepreneur knows how to “do the right thing” for his business? Most experts believe that the essence of doing the right thing is ethics. Translating that into business value, a study by Wirthlin Worldwide concluded that 80% of customers still base a good portion of their buy decision on their perception of that firm’s ethics.

Ethics are generally defined as a set of societal standards that encompass the norms of the community. These norms are not genetic, and they have to be learned. At the base of these are moral values, but in my view most of the rest are gleaned from experience, parents, and formal education.

In the real world, the latest updates come from good business books, like the new one by David M. Shedd, “Build a Better B2B Business.” This one focuses on the generic attributes, as well as specific processes, which add up to the ethically right thing for most businesses.

The generics include integrity and honesty, as well as the above mentioned moral values. The specifics for business include providing leadership in building the business, but also in contributing to the greater good:

1. Communicate your values and business goals. Doing the right thing for the business starts with defining core values. Then create business goals to tackle the few critical issues and opportunities for the business. To be effective, communication has to be two-way and continuous, to keep the “right thing” as “top of mind” for all team members.

2. Align the organization to your values and goals. Ensure everyone is in alignment to live the values and focus on and execute the goals. Make the tough decisions to ensure the success and profitability of the business, and make the tough personnel decisions to put the right people in the right positions, giving them the training they need.

3. Manage priorities for the short-term as well as the long-term. Just as people must manage their personal and work responsibilities, so, too, must companies balance their priorities. Prioritize on the constraint in the business – that which is important, not on what is most urgent.

4. Endeavor to beat, not meet, industry standards. Doing the right thing is not just “getting by,” or squeezing within the letter of the law. It means knowing and living by the spirit of the law, as well as not waiting for new laws and regulations to fix problems. The same is true of employee standards, and social responsibilities.

5. Create winning teamwork. Leading people to do the right thing as a team is one of the most challenging things to teach and coach. Making a team work well requires constant communication, demonstrating accountability, ensuring motivation, recognition, and continual learning.

6. Look at yourself from your customer’s perspective. The right thing is for every business leader to value every customer and realize the importance of each in building the business. Your appreciation of your customers and focus on delivering value to them is a pre-requisite to customer satisfaction, growth, and success.

7. Balance work and life. We are all in business to be successful, but we are all people too. Another way to send a strong message about doing the right thing is to step up to the thorny “quality of life” issues, including balancing one’s work and personal life, work at home, and providing the right health, social, and spiritual needs.

Since ethical behavior is the base, the traits to foster this must always be sought out and nurtured. These traits include day-to-day work consciousness, enhanced discipline to foster a combined business and ethical acumen, and empathy for a high level of engagement. This insures that everyone is joined together, feeling a common imperative to do the right thing and make the right decisions.

So don’t assume that “doing the right thing” comes naturally, and doesn’t require any effort. Yet the evidence indicates that a startup which consistently does the right thing has a competitive edge, and a higher success rate. Are you ready and willing to take the high road for the ethics of your team and your company?

Marty Zwilling

How to Have a Thousand Friends and Still Be Alone

The Internet and social media have totally destroyed the meaning of the word “friend” and even changed it from a noun to a verb. On Twitter and MySpace, many young people follow hundreds of friends before age twenty, all without ever having said or heard a word from most of them. Top Facebook users proudly proclaim their “whale” status, with 5,000 friends or more.

On the other hand, we shouldn’t confuse online friends with real friendships. Real friends help each other. In my experience, many of the people who “friend” me online today have only their interests in mind, and they aren’t interested in knowing me or helping me at all.

According to most dictionary definitions, a friend is a person you know well and regard with affection and trust. This definition seems totally lost on many people today. In my opinion, it’s impossible to know, like, and trust someone you have never met. Maybe that’s why so many people are hurt or defrauded every day by someone they assumed was their “friend” on the Internet.

So how many friends are enough for people? I did some scouting through the Internet to find any academic studies on the subject, and here are a few tidbits:

• Everyone needs at least one friend. Most psychologists agree that starting from a very young age, a friend is critical to the building of social skills, and help develop a balanced view of morality, integrity, and right versus wrong. That’s why good parents play an active role in selecting others for their children to interact with as friends.

• Limits of the human brain. Robin Dunbar, Oxford professor and anthropologist has posed a theory that the number of friends is limited by the size of the human brain, specifically the neocortex. “Dunbar’s number,” as this hypothesis has become known, is 150. Facebook cuts you off now if you try to exceed 5,000.

• With age, count becomes less important than quality. By the time we reach 30 years of age, our desire to socialize and maintain friendships already is shrinking, according to a study by psychologists at the Institute for Social Research (ISR). Fewer friends is often viewed as a good thing, and good friends are the real value.

• Trusted friends are on the decline in our society. Between 1985 and 2004, according to a survey by Duke and the University of Arizona, people with no trusted friends doubled, and now totals almost one quarter of the population. My guess is this is more a statement of a decline in overall values, rather than people not needing trusted friends.

• Although total friends are up, the number of confidants is down. Only trusted friends can become confidants. In the same survey above, people also admitted that confidants are down even more than trusted friends, by almost a third. To me, this follows from earlier points – it hard to have confidants when you don’t have friendships.

In these days of social networking and business networking, it seems that all cultural pressures point to more friends as being better. Yet lots of people like me, who are not so gregarious, find that real friendships take lots of energy. One is probably enough, and I can only handle a few comfortably. More leads to stress and drama.

With business clients and even peers that you believe are friends, you also have to remember not to break the first rule of business relationships, which is to quickly spill your troubles. In a business context in the real world, this is usually taken as a sign of weakness. Expose yourself to family and real friends; otherwise keep on your happy face.

So one of these days, when you are texting your “bff” (best friend forever), that you have never met, think about the meaning as well as the words you use. I fear that real friendships may be slipping from our grasp, and that is sad.

Friendship is the glue of meaningful personal relationships, and the lubrication that expedites business transactions. It’s not the number of friends, but the quality of the friendship that makes the difference. If you don’t want to be alone despite many friends, spend more time on quality, and less time counting.

Marty Zwilling

Innovation Takes Real Effort, Even For Startups

It seems to be an accepted fact these days that big companies normally innovate by buying a startup with innovative products, rather than focusing on in-house innovations. This is a good thing for entrepreneurs and investors, who can win big, but it’s not a given. I see many startups who seem satisfied with a “me too” approach, building yet another social network or e-commerce site, rather than being truly innovative.

Much has been published on this subject, including a new book “Look at More: A Proven Approach to Innovation, Growth, and Change” by Andy Stefanovich, which is really a guide to established companies for unleashing creativity within their organizations. He asserts that the problem is lack of inspiration, and he supports this with twenty years of real case studies from his own experience.

The good news is that most entrepreneurs and startups have more inspiration than almost anything else, and it sometimes leads to success despite their lack of resources and business skills. Yet even entrepreneurs need to focus on the most effective way to unleash innovation, and maximize their chances for success.

Andy offers a simple mantra for innovation, expressed as “Look at more stuff; think about it harder.” This mantra is complemented by a framework known as the five M’s, which are five key principles for unleashing creativity in any environment:

• Mood. Inspiration and creativity requires the right context of attitudes, feelings, and emotions. Every business leader who wants innovation must constantly monitor and set the proper mood for the environment. You can set the right mood by purposefully disrupting the status quo, initiating change, asking provocative questions, and listening.

• Mindset. This is the intellectual foundation of creativity, the baseline capacity each of us has for getting inspired, staying inspired, and thinking differently. Four thinking disciplines which produce a creative, inspired mindset include changing your perspective, taking risks, finding your passion, and challenging assumptions to embrace ambiguity.

• Mechanisms. These are the tools and processes of creativity that help you engineer inspiration into the way you work and empower your organization to embrace the kind of behavior that fosters innovation. Four key steps include building a context, generating ideas, filtering ideas, and building a blueprint for implementing the best ideas.

• Measurement. Even creativity needs guidance and critical feedback on the qualitative and quantitative performance of individuals and organizations. Measurements send a strong signal of what is important and where people should focus their passion and energy. In addition to measuring results, you need to measure mood, mindset, and the mechanisms above.

• Momentum. This is accomplished by the active championing and celebrating of inspiration and creativity that foster a self-reinforcing cycle for increasing innovation. Momentum is an organizational priority for inspired leaders who have a clear understanding of the other four M’s.

Not everyone has to be a leader for innovation to work. Research has indicated that followers are just as important to consider as leaders when thinking about creating the mood and momentum for creativity, inspiration, and innovation. Likewise, the right mindset alone isn’t enough. You have to be able to convince others and sell your ideas.

Thus, even entrepreneurs must not assume that their efforts and their team will be creative and innovative. “Me too” startups don’t get funded, and they certainly don’t get bought for a premium by the sleeping giants who are looking for outside innovation to kick-start their growth again. Thus I suggest that every entrepreneur and every startup review their own environments for the five M’s, to avoid getting tagged as a “has been” before they even “have been.”

Marty Zwilling

How to Balance Entrepreneur and Family Lifestyles

I know some entrepreneurs with successful businesses, and others who seem to have a great relationship with their family, but I can’t think of many who have both. Some people would argue that these two successes are mutually exclusive, but I’m not convinced.

Individually, they both take focus, commitment, and a variety of skills, all the strengths of a good entrepreneur. Assuming a person wants both a family and a business, the challenge is to achieve a balance that can satisfy both.

From my observational experience, as well as my personal struggles on both sides of this equation, here are some of the key parameters of that balance:

• Start with a solid relational and business foundation. A successful business won’t lead to a great family relationship, and vice versa. Don’t assume that your focus will change once your startup gets past the initial struggle. Keep in mind that your loved ones often see your business enthusiasm and energy as negative reflections on them.

• Be realistic about what brings happiness to you. Many entrepreneurs, especially women, gravitate to entrepreneurship because they see it as the way to balance work and family demands. That could mean they are forgoing happiness on the business side. Some men want a family relationship, but the business is what makes them happy.

• Find fun things in and out of work that are high priority. These don’t have to be expensive or hard-driving activities like sports competition. They can be simple in nature, like being present for school engagements, or regular Friday night “date nite” with the spouse. Practice consistency with “fun” and “high priority” elements.

• Assess your ability to compartmentalize the two roles. Achieving a balance requires an ability to put aside the burdens of work at the end of the day, and giving your full focus to important relationships. Separation of work and home are fuzzy for an entrepreneur, and it’s easy to find yourself on duty 24/7. Can you find the off switch on your cell phone?

• Be accountable for decisions you make. Remember, as the entrepreneur you are in control, and the business is not. Don’t let the urgent crisis of the moment become the priority of your life, to the detriment of your balance. Keep in mind that the sacrifices you make for the business also impact your family.

• Say “NO” and “YES” with equal frequency in both roles. Be honest in how your decisions will affect others in either role. Be in control of your priorities. The first step is to track yourself on these responses. Most people don’t recognize that they may have a habit of being negative in one role, and positive in the other.

• Communicate well and often at your business, as well as with family members. You need to keep an open mind and listen effectively to people in your business, and to people who are in your relationships. Pay attention to body language, emotion, and time spent speaking versus listening. Talking is not communicating.

Most people consider entrepreneurship as a lifestyle, rather than a job. Being married is a lifestyle, and raising a family is a lifestyle. Recognize that it’s harder to balance two lifestyles than it is balance a job with your real lifestyle.

Also mixing business with pleasure is one thing, but mixing business with family yields an altogether different, and often volatile, dynamic. Running a family business or “FamilyPreneurship” is even more difficult, and can derail or splinter cherished relationships.

Before you conclude that entrepreneurship is your chosen lifestyle, make sure you understand the balance it will require, and make sure those around you are prepared to accept that balance. Your success, your happiness, and your family relationship depends on it.

Marty Zwilling

Investors Expect Ten Essentials in a Business Plan

People ask me if they really need ANY business plan, unless they are looking for an outside investor. In fact, a business plan is needed more by you than investors, as the blueprint for your company, team communication, and progress metrics. Things that make it investment-grade for outside investors will also benefit you, since you are the ultimate investor.

First of all, any good business plan should demonstrate that you have done the homework to be an expert in your industry, and in what it takes to build a successful business from your idea. I’ll skip the basics here, and highlight only key elements that investors focus on:

1. Define the problem. Every plan must start with the problem you are solving, not a description of your company and product. Explain in terms your mother could understand, and quantify the “cost-of-pain” in dollars or time. Terms like “every customer needs this” and “next generation platform” are far too soft, and should be avoided.

   Many entrepreneurs scare away potential investors by claiming that their technology represents “truly disruptive technology.” What that may mean is that you haven’t figured out yet what problem it solves, or it may take many years for people to get it. No investor wants to wait that long for his payback, or fund the years of waiting.

2. Solution and benefits. This is not the place for a detailed product specification, but an explanation of how and why it works, including a customer-centric quantification of the benefits. Skip the technical jargon and hyperbole. Do describe your intellectual property and “secret sauce”.

   Focus is the keyword here. Pick a specific solution that you have built or prototyped, rather than rambling about all the possible things that could be done with your idea. Clearly define the customer, channel, and revenue model associated with this solution.

3. Industry & market sizing. Start with the evolution of the overall industry, market segmentation, market dynamics, and customer landscape. Remember that investors like industries that have a billion dollar opportunity, and a double-digit growth rate. Data from accredited market research groups like Forrester or Gartner is required for credibility.

   It always amazes me how an entrepreneur can define his market opportunity so broadly, and then assess his competition so narrowly in the next breath. You won’t impress investors by claiming that everyone in China needs one, and nobody else has exactly the right features to compete with you.

4. Explain the business model. This is how you will make money, who pays you, and gross margins. In this section, you need to be passionate about revenue, profit, and volume growth. Many people seem to use the social network advertising model for revenue, but forget it assumes at least 100M users and $50M investment.

   Avoid any statements like “All we have to do is get 1% of the market.” There are two problems with this assertion. First, no investor is interested in a company that is only looking to get 1% of a market. Second, that first 1% is the toughest of any market, so you look naïve implying it's easy to get.

5. Competition and sustainable advantage. List and describe your competition, direct and indirect, including customer alternatives. Asserting you have no competition is not credible. Then detail your sustainable competitive advantage, and highlight barriers to entry which will keep your competitors at bay.

   Often I see statements like “Microsoft is too big/slow to be a threat.” Usually the reason the big companies are no threat is because the market is too small. But investors know that sleeping giants do wake up, the moment your company shows some traction. Competing with IBM, Microsoft, and other large companies should never be minimized.

6. Marketing, sales, and partners. Describe your market penetration strategy, sales channels, pricing, and strategic partnerships. Here is also a good place for a rollout timeline with key milestones. Convince investors that you have lined up sales channels, strategic partners, and a viable marketing strategy.

   Be careful with assertions like “We have strong interest from a major customer.” The mention of unsigned contracts normally takes away more credibility than it adds. You can bolster this position by including a Letter of Intent (LOI), contract summaries, or even testimonials.

7. Executive team. Investors invest in people - not just ideas. Convince investors that your team is experienced in starting a new business, and have great expertise in the selected business domain. Include Advisory Board members and key industry people connections.

   Sometimes I see statements like “A world-class CEO will be joining us after funding.” Rest assured that potential investors will ask for names, and place some calls. Soft responses from your candidates will definitely kill your credibility.

8. Funding requirements. Explain how you calculated the funding requirements, and show details on planned use of funds. Quantify existing skin-in-the-game, by insiders and outsiders, including sweat equity and capital. Include a current valuation estimate.

   The most credible sizing approach is to do your financial model first with the volume, cost, and pricing parameters you want. See where your cashflow bottoms out. If it bottoms out at minus $400K the first year, add a 25% buffer, and ask for $500K funding.

9. Financial forecast and metrics. Project both revenues and expense totals for next five years, and past three years, if relevant. Show breakeven and growth assumptions. Details should be available in a separate financial model, but not included here.

   Remember that investors are looking for large, scalable, high-growth opportunities. Attractive deals show double-digit positive growth per year, and revenues that are projected to $20M or more within five years.

10. Exit strategy. This section is only required when you expect outside investors. These investors want to know that you are thinking about a liquidity event – when and how they will get their money out, with ROI. For a family business, don’t project an exit.

    Otherwise, identify your preferred exit strategy, including specific candidates for merger or sale, and timeframe. “Going public” (IPO) is another alternative, but not common. Show how your rate of return would be attractive to investors.

An investment-grade business plan is a professionally prepared document, preferably about 20 pages, to satisfy both angel investors and venture capitalists. In preparing it, try to look at your project through the investors eyes. If your plan is missing one or more of the above elements, it will likely be deemed not “fundable”, and rejected.

The best plans are not usually the fanciest or the longest. They are not measured by the quantity of impressive graphics or the size of the revenue projections. Investment-grade ones attempt to answer every question an investor could possibly ask, except maybe “where do I sign”?

Marty Zwilling

The Connectivity Wave Needs Entrepreneur Leaders

Entrepreneurs are always looking for “the next big thing,” when maybe in fact it’s a lot of little things that are only recognized after the fact as components of a big evolution or revolution. In my view, the Internet “connectivity anywhere” has already spawned several of these, but the global change has only begun.

Emily Nagle Green, in her recent book “ANYWHERE,” argues effectively that the future of the world and business is ubiquitous connectivity, the total interconnection of people, ideas, and products through a global digital network. Every person will have access to virtually anything in the world from virtually anywhere he or she happens to be at the moment. Key vehicles already include wireless for communication, and RFID for product location.

The implications for startups in this context are huge. On the hardware side we need better technology to provide a common digital network around the world, better broadband to satisfy the demand, and wireless ubiquity for connecting people, devices, and businesses. The needs for new software and services are just as pervasive.

So how do entrepreneurs train to lead the Anywhere Revolution, rather than be dragged along by its wave? Here are some principles I have adapted from Emily’s work:

1. Be eternally curious. You need to be an eager investigator, avoiding the temptation to write things off before you’ve opened your eyes to all the possibilities they offer. Don’t let yourself be talked out of powerful ideas. Develop a keen sense of customer appetites, as well as current solution strengths and weaknesses.

2. Be a ubiquitous connector. Some people are naturally “connectors,” using their links with others to create or promote opportunities between them. The Internet dramatically reduces the cost of being a connector. In fact, now we can all be connectors, and should be.

3. Be an analytic thinker. Already today, your skills in searching for information and then synthesizing that information, looking for patterns, and interpreting it, can be more valuable than the actual information you’ve amassed in your experience as a person and as an employee.

Entrepreneurs should be asking themselves for every consumer and business product, how can we add “anywhere” connectivity to this item? This is called the connectivity diffusion.

• If you can enhance the user’s experience with sending, or getting, real-time information, you should.

• If you can add value to the product with connectivity – perhaps contributing to the cost, too, and thus defraying the price of the product for the customer – you should.

• If you can extend the life of the product in the customer’s hands by providing service or updating it with new features, you should.

• If you can partner with a firm that can do any of these things to bring your service or message to more “surfaces” in the customer’s life, you should.

Also, put your marketing hat on and realize the wealth of new potential opportunities to create more awareness and consideration of your product or service in the future of ubiquitous connectivity. Whether it’s coupons, or advertisements on the mobile, the connected device with geo-location that’s always in a pocket or purse is literally a whole new world for marketers.

As an entrepreneur, don’t apologize for your self-interest and profit motivation. Be an optimistic adopter of connectivity. Be a connectivity evangelist and embrace the connectivity future that is opening before you. That’s a win-win for everyone anywhere.

Marty Zwilling