7 Reasons For Your Startup to Skip Stealth Mode

Every time I hear about a new startup that is in stealth mode, I wonder what problem they are hiding from whom. Of course they pretend that they are trying to avoid alerting competitors prior to launch, but too often it becomes an excuse to move slowly in a world that’s all about getting to market fast.

I believe stealth makes sense for large companies who can be sued for “pre-announcing” a new product to stall the market or kill a competitor. It also makes legal sense to never disclose the details of your patent application, before the product is ready to ship. But otherwise, startup companies should seek out publicity and the open sharing of information, from day one.

Openness is part of the business culture of entrepreneurs and technology centers around the world. People talk to people, and even competitors freely exchange news on trends and discoveries. Here are seven ways this can actually help your startup efforts, rather than hurt them:

1. Initiate media interest. These days, new technologies and social trends are fanned from an ember into a flame by the media and word-of-mouth. This takes time, and is more valuable than any advertising you can buy. It’s probably here that you need the “first-mover advantage” more than in the lab.

2. Get concept feedback early. No matter how good you are, your initial idea is likely to be at least partially wrong. The sooner you get that feedback from people who count, the better your chance of recovery, and the less money you have wasted. Don’t be so arrogant to assume you won’t need course corrections.

3. Find your real competitors. The sooner you disavow yourself of the notion that “we have no competitors,” the more likely you are to survive. “No competitors” may mean no market (give up now), or customers are happy with alternatives (keep their car rather than ride the new fast train). Face reality early, and you can deal with it.

4. Deliver minimum product and iterate. Stealth mode can give you a false sense of security that you can take additional time to get it right the first time. Time is your biggest enemy, and customer feedback is your biggest ally. A startup that has been incorporated for two years or more without shipping is already seen as a bad investment.

5. Prime the investor world. Don’t talk directly to potential investors until you have the business plan and other basics complete. But start networking with advisors, industry pundits, and domain experts early. Your direction will get back to potential investors, and create a sense of heightened expectations that can help you get in the door when ready.

6. You need time to pivot. The good news is that almost every mistake can be undone, if you have the time. Customers are more forgiving of early visible changes in direction, and the cost is much lower for you. With stealth mode, you can’t learn early enough to pivot gracefully.

7. Tune your website. Most startups need funding before shipping, and investors expect to see your website to validate your business plan. In addition, a website needs several weeks of presence for indexing by search engines, search engine optimization, blog activity, and link building. These things can’t be done while in stealth mode.

To enforce stealthy behavior, startups often require everyone, even potential employees to sign nondisclosure agreements, and strictly control who may speak with the media. This is a turnoff to everyone, and real investors never sign nondisclosures. It’s all an expensive distraction that doesn’t work.

Overall, I recognize that there are some startups, like biotech and semiconductors, with long highly technical development cycles and huge competitors, where early stealth makes sense. With most others, like web services, incubation time must be short, and secrecy can be the kiss of death. For these startups, stealth mode can keep you under the radar, just when you wish you could be found.

Marty Zwilling

How Much is Your Million Dollar Idea Really Worth?

A popular approach for aspiring entrepreneurs these days seems to be to corner anyone who will listen, with a pitch on their current “million dollar idea.” The initial monologue usually ends with the question “How much money do you think this is worth?” In my humble opinion, ideas are a commodity, and are really not worth much, outside the context of a visionary leader and a plan.

Over the past couple of decades, experts have perfected the art of brainstorming and other idea-generation techniques. Executives and investors are now increasingly exposed to a wealth of ideas. The result is that ideas are no longer in short supply, and no longer a differentiator in competition.

Visionary leaders, on the other hand, are not so common. A visionary is someone who can make sense out of the wealth of ideas, and weave together a plan for implementation that will make a difference in the world. Steve Jobs, for example, probably gets millions of ideas from his friends, but he seems to have been able to focus a few of these into initiatives that show real innovation.

What separates an idea person from a visionary leader? Most experts agree that a visionary leader not only has ideas, but also has a vision of where these ideas can lead, with strong core values, key relationships, and demonstrates innovative actions, as follows:

• Commitment to core values. Visionary leaders radiate a sense of energy, strong will, and personal integrity. This usually results in a focus on multiple related ideas, leading to real innovation, rather than bouncing from one idea to the next, looking for the “holy grail.”

• Positive inspirational communication. People with vision usually start by communicating an inspirational picture of the future, and then integrating individual innovative ideas into this fabric, and show how to get there. The best ones can make the impossible look easy, so everyone, including investors, line up to commit.

• Build strong relationships with strong people. Great relationships are key to every leader. They see people as their greatest asset, and listen as well as talk. Theirs is not the autocratic style of leadership, which tells people what to do and dominates them, but a style which treats partners, investors, and customers as family.

• Willing to take bold actions. These actions somehow always seem to embody a balance of rational (right brain) and intuitive (left brain) functions. Visionaries are often “outside the box” of conventional approaches and move toward long-term change and innovation. They are proactive and anticipate business change, rather than reactive to events.

• Radiate charisma. People with a real vision can communicate ideas with almost a spiritual charisma that energizes people around them to go a step beyond normal boundaries, to solve a technical problem, sign on as a team member, or invest resources, when conventional wisdom would suggest otherwise.

Every investor wants to fund the true visionary leader, but the truth is that these people often don’t need funding, or don’t ask for it. The best investor pitch, then, is to sell the vision with such conviction that people want to be a part of it, with their money, their skills, or whatever they can bring to the table.

But not every entrepreneur has to be a visionary. There is still plenty of room for incremental improvements, and creativity in providing solutions to short-term problems. This is really the realm of bootstrapped startups, and a small segment of the angel investor community that is looking for a “quick hit” with a quick return.

So my message to entrepreneurs is to tune your approach and your expectations accordingly. I’m always impressed with entrepreneurs who pitch how they plan to bootstrap an idea, but if you need a million dollars, you better be able to communicate and lead with a vision.

Marty Zwilling

10 Funding Quotes Every Entrepreneur Should Skip

In previous articles, I have occasionally mentioned “red flags” which every potential investor unconsciously listens for. Other writers, like Guy Kawasaki, have irreverently called some of these “entrepreneur lies,” but I prefer to think of them as innocent over-enthusiasm or over-confidence that can kill your deal.

At any rate, here is my summary of the top ten from my experience with hundreds of elevator pitches, business plans, and executive presentations:

1. “Our product is truly disruptive technology.” If your product really represents a paradigm shift, you probably haven’t figured out yet what problem it solves. At best we can count on it taking many years to catch on, just like other disruptive technologies before you. No investor wants to wait that long for his return, or fund the years of waiting.

2. “Gartner says our market will be $50 billion in 2015.” It always amazes me how an entrepreneur can define his market opportunity so broadly, 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 same features to compete with you.

3. “All we have to do is get 1% of the market.” This red flag is the flip side of “the market will be $50 billion.” 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.

4. “We don’t believe there are any competitors.” This is a terrible statement because there are only two logical conclusions. A first conclusion is that there must not be a market. Or worse yet, the entrepreneur is so arrogant that he hasn’t even used Google to figure out he has competition just down the street.

5. “Microsoft is too big/slow to be a threat.” Usually the reason the big companies are no threat is that the market is too small. Competing with IBM, Microsoft, and other large companies is a very difficult task. Entrepreneurs who utter this line are kidding themselves. They may think it's bravado, but investors think it's stupidity.

6. “We have the first-mover advantage.” That’s probably the soft way of saying, we don’t have a patent or any “secret sauce” for a competitive advantage. Unfortunately, a startup with no brand name and no intellectual property is a sitting duck for the big slow company, as soon as they see you gaining a bit of traction. Sleeping giants do wake up.

7. “Our projections are conservative.” A startup's projections should never be conservative. Plus I have never seen a startup achieve even their most conservative projections. We all know that financial projections are a confidence test on how committed you are to the project, so don’t try to minimize them.

8. “We have a proven management team.” If the entrepreneur and team were that proven, they probably would be funding others rather than asking for money. Truly proven in an investor’s eye is a team that has both failed and succeeded at least once, with success meaning 10x or more return to investors.

9. “A world-class CEO will be joining us after the funding event.” It’s easy to get your executive friends to express interest in the huge opportunity you describe, but don’t assume they will actually take the big leap down from their high-paying job to the meager salary you can offer. Rest assured the investor will ask for names, and place some calls. Hedges here by your candidates will definitely kill the deal.

10. “We have strong interest from a major customer.” The mention of unsigned contracts normally takes away more credibility than it adds. You can counter this position by bringing the interested party to the meeting for support, or at least showing a Letter of Intent (LOI). Otherwise talk about paying customers only.

I highly recommend that you screen your business plan and your executive presentation carefully for variations on any of these statements, and remove them. Your integrity and honesty are you best assets, so don’t jeopardize them with common over-statements, even if your intent is virtuous.

Marty Zwilling

Every Entrepreneur Needs to Embrace Team Conflict

Many entrepreneurs are not prepared for conflict, or actively avoid it. Their vision, passion, and focus are so strong that they can’t imagine someone disagreeing, much less fighting them to the death. But the reality is that startups are composed of smart people, with emotions as well as intellects, working in close proximity under much pressure, so conflicts will occur.

In fact, most business conflict is constructive and should be embraced in steering through the maze of innovation and change that is part of every successful business. Surround yourself with “yes” people, and you may feel good initially, but the brick walls no one mentions will hurt later.

On the other extreme, constant and unmanaged conflict will quickly drive your startup to be dysfunctional. Here are a few simple rules of thumb toward constructive conflict resolution, as summarized from a new book by Peter T. Coleman, “The Five Percent: Finding Solutions to Seemingly Impossible Conflicts:”

• Know what type of conflict you are in. The first step is to assess whether the conflict is win-lose, win-win, or mixed (some competing and some shared goals). Each of the three types requires different strategies and tactics. Learning how to identify and respond to each type is central to success. Try a good business mentor to get you on the right track.

• Not all conflicts are bad. Most often, conflicts present us with opportunities to solve problems and bring about necessary changes, to learn more about ourselves and the business, and to innovate – to go beyond what we already know and do. Avoid the ones that are irrelevant to your startup, but don’t hesitate to engage in the others.

• Whenever possible, cooperate. Research has consistently shown that more collaborative approaches to resolving win-win or mixed-motive disputes (the majority of conflicts) work best. Therefore you should always approach conflicts with others as mutually shared problems to be solved together.

• Be flexible. Try to distinguish your position in a conflict (“I need a raise”) from your underlying needs and interests in the relationship (“I want more respect for my contribution”). Your initial position may severely limit your options. Creativity and openness to exploration are essential to constructive solutions.

• Do not personalize. Try to keep the problem separate from the person when in conflict (do not make them the problem). When conflicts become personal, the rules change, the stakes get higher, emotions spike, and the conflict can quickly become unmanageable.

• Meet face-to-face and listen carefully. Meet in a neutral location, and work hard to listen to the other side in a conflict. Accurate information is critical, and careful listening communicates respect. This alone will move the conflict in a more friendly and constructive direction. Don’t mistake sending text messages and emails as listening.

• Be fair, firm, and friendly. Research shows that the process of how conflicts are handled in usually more important than the outcomes of conflicts. Always attempt to be reasonable, respectful and persistent, but do not cave in. Find a way to make sure your needs are met.

Applied correctly, these methods can move most of our conflicts in a positive and satisfying direction. But Coleman asserts that there are five percent that will always be “intractable.” These usually involve issues that won’t ever be resolved in the workplace, and should be avoided, like politics, religion, personal enmity, and cultural biases. Your best bet on these is not to engage.

For the rest, you must engage (avoidance just hardens positions and delays the consequences), and you must bring closure to the argument or conflict. Closure in business should include formalizing the result in a written document, with clearly outlined terms and activities, and follow-on milestones as required.

The most successful entrepreneurs are creative and skillful in handling conflicts, and actively seek constructive conflict with key stakeholders. The result is better decisions, more consensus, and better communication. In business, as in life, real change rarely happens without some pain. Learn to deal with it.

Marty Zwilling

10 Simple Ways to Maximize Business Plan Impact

If you want people to invest in your idea, then my best advice is first write a business plan, and keep it simple. Don't confuse your business plan with a doctoral thesis or the back of a napkin. Keep the wording and formatting straightforward, and keep the plan short. For minimum content, see my article “Investors Expect Ten Essentials in a Business Plan.”

The overriding principle is that your business plan must be easy to read. This means writing at the level of an average newspaper story (about eighth-grade level). Understand that people will skim your plan, and even try to read it while talking on the phone or going through their e-mail.

But don't confuse simple wording and formats with simple thinking. You're keeping it simple so you can get your point across quickly and effectively to team members and investors. With that in mind, here are some specifics updated from an old article on simple plans by Tim Berry:

1. Keep the plan short. You can cover everything you need to convey in 20 pages of text. If necessary, create a separate white paper for other details and reports. The one-page Oprah plan is a good executive summary, but it’s not enough to get the investment.

2. Polish the overall look and feel. Aside from the wording, you also want the physical look of your text to be inviting. Stick to two fonts in a standard text editor, like Microsoft Word. The fonts you use should be common sans-serif fonts, such as Arial, Tahoma or Verdana, 10 to 12 points.

3. Don't use long complicated sentences. Short sentences are the best, because they read faster, and reader comprehension is higher in all audiences.

4. Avoid buzzwords, jargon and acronyms. You may know that NIH means "not invented here" and KISS stands for "keep it simple, stupid," but don't assume anybody else does.

5. Simple straightforward language. Stick with the simpler words and phrases, like "use" instead of "utilize" and "then" instead of "at that point in time."

6. Bullet points are good. They help organize and prioritize multiple elements of a concept or plan. But avoid cryptic bullet points. Flesh them out with brief explanations where explanations are needed. Unexplained bullet points usually result in questions.

7. Don’t overwhelm the plan with too many graphics and flashy colors. Pictures and diagrams can effectively illustrate a point, but too many come across as clutter.

8. Use page breaks to separate sections. Also to separate charts from text and to highlight tables. When in doubt, go to the next page. Nobody worries about having to turn to the next page.

9. Use white space liberally, spell-checker, and proofread. Include one-inch margins all around. Always use your spell-checker. Then proofread your text carefully to be sure you're not using a properly spelled incorrect word.

10. Include table of contents. No investor likes searching every page for key data, like executive credentials, or exit strategy. Most word processors these days can automatically generate a table of contents from your section headings. Use it.

Investors hear from too many entrepreneurs that envision a great business opportunity, but don’t have any written business plan at all. They think they can talk their way to a deal. It won’t work. On the other end of this spectrum are entrepreneurs who present long product specifications with a few financials at the end. This is a failing strategy as well.

If you're not the type who can connect with people based on a simple message, told succinctly, then hire someone who can. In fact, simplicity and readability is one of the most effective strategies for selling even the most complex proposal. A business plan that is easily understood and looks professional is already half sold. Simple is not stupid.

Marty Zwilling

Some Entrepreneurs are Too Busy to Get Results

Too many entrepreneurs confuse motion with momentum and results. We all know someone who repeatedly tells us how “busy” they are, when it’s hard to see what they get done. Momentum is moving things forward (mass x velocity). Founders or employees in constant motion, but with no momentum, will kill any startup.

It is true that motion in any direction is often better than no motion at all. But motion without momentum is even less productive than no motion at all. For a more thorough discussion of this phenomenon, see the book entitled “Fake Work: Why People Are Working Harder than Ever but Accomplishing Less”, by Brent Petersen and Gaylan Neilson.

So how do you fight this, and get real momentum going in your startup? Here are some key recommendations:

• Measure results, not work. Build your business plan and day-to-day operations around real results that are quantifiable and measurable. For example, a result is not forty hours of work, but a prototype complete, partner contract signed, or first customer sale.

• Focus and prioritize. There will always be more things to do than anyone has hours in a day. Focus means act instead of react, act on the important things. Don’t allow yourself to be interrupted by “urgent” issues of the moment, which may not be important.

• Live the 80/20 rule. Pick the 20% of your important tasks that will deliver 80% of the results. Judiciously apply the 20% of your energy where it will achieve 80% of the momentum you desire. Maintain that balance of work, family, sleep, and unwind.

• Communicate effectively. People can’t do the job you want unless you communicate effectively. So they scurry around trying to look busy, or work on random things that they hope might generate momentum. Tell people what results you expect, tell them how they measure up so far, and tell them how much you appreciate their efforts.

• Recognize the finish line. Don’t burn yourself and everyone out, by continuing a forced march after you pass the finish line, or even a major milestone. Gather your thoughts and savor the small successes along the way.

During the early start-up phase, most of the momentum in a new company derives from the entrepreneur's own commitment and self-sacrifice. You do almost everything by yourself, and your focus is on building enough cashflow so you can start bringing in people to help you. Watch yourself for wasted motion during this stage.

Cashflow is the element of momentum that allows you to hand over jobs to other people and do more of your core passion jobs, like creating content or designing new products. This creates more value in your business and increasing cashflow – more momentum.

What you then want is for the momentum to compound, with each new employee or outsourcer you hire to help, to give you get more time to create value and ultimately, increase profits. At this point especially is where you need to watch out for fake work, which thrives in less dedicated hires, outdated cultures, and old work processes.

Recent research indicates that across all business organizations, as much as 50% the work that people do in that stage is just motion not related to their company’s strategies. Think of the drag this can put on your momentum.

Starting a new business is a little like taking off for the first time as the pilot of a new airplane. You need to push that throttle all the way to the dashboard until your knuckles are white, but never forget the relationship between motion and momentum. Are you pushing the right throttles?

Marty Zwilling

5 Steps to Sell the Way Your Customers Want to Buy

Entrepreneurs always work hard to create an innovative product or service, but often count on standard seller marketing for sales. But the reality is that sellers are no longer in charge of the customer buying process. Recent reports suggest that 90% of today’s shoppers skip marketing pitches, to research online before they buy, and over 50% check user reviews before making a decision.

The Internet and smartphones have changed everything. Kristin Zhivago, in her new book “Roadmap to Revenue,” makes the point that the selling system is broken, since sellers no longer sell the way customers are buying. Here is my summary of her detailed roadmap to get you back on the right track with a “customer-centric” approach rather than a “company-centric” approach:

1. Find out what customers want and how they want to buy it. The best way to do this is with real customer interviews. Customers will tell you things when being interviewed that they will never tell you while you are selling to them. She recommends phone interviews by you, by appointment, with structured questions, and you document results.

2. Debate and adjust your offering to better match what customers want. Distribute an Executive Summary and Recommendations report, as well as transcripts of your interviews, to all the key players in your company. Schedule and run the necessary sessions to update strategic product offerings, processes, and marketing programs.

3. Align your business model to how your customers want to buy. Don’t start from how you want to sell. Start with a new understanding of the real customer need, their search process in finding you (referral, website, social media), and most desired payment model, like one-time payment versus subscription, or lease versus purchase.

4. Integrate the customer buying process into your support operation. Decide which parts can be automated, people resources required, and customer service points of contact. All of these processes should be documented, and should explicitly include the customer buying process and perceptions as the base. Their perception is your reality.

5. Build and deploy a revenue growth action plan. This is your rollout of the new product offerings, business model updates, and process changes to map to the new understanding of the customer buying process. Include planned measurements and metrics. Start where the customer wants you to be and work backwards.

As you start making the shift to customer-centric, if your team doesn’t “get it,” then you haven’t communicated effectively. Communicating change is always hard, so pay careful attention to the central message, repetition opportunities, and “walking the talk.” People are quick to make things up to fill a vacuum, and rumors or myths die hard.

Make sure your own motivation is strong, and don’t let anyone view these efforts as a one-time push. It has to be managed and sold internally as a culture change, requiring everyone’s help. Experience has shown that the best way to change a process is to set up the new way of doing things, then flip the switch (flip method), rather than making incremental changes (drip method).

Every business needs to take advantage of the new tools and technologies which can assist you in making this shift in strategy and measuring effectiveness. These range from basic search engine optimization (SEO) tracking, like Google Analytics, to a new generation of marketing platforms, like HubSpot.

There are multiple benefits to both you and your customer. The customers will get what they want, when they want it, and you will see more revenue, greater brand loyalty, real relationships, and a competitive edge. That sounds to me like the recipe for business success that every investor is looking for.

Marty Zwilling

Investors Love Top Startup Incubator Graduates

Business incubators for sharing services were all the rage back in the days of the dot-com bubble (700 for profit, many more non-profit). About that time the bubble burst, causing more than 80% of them to disappear. Now they are coming back, and the best even provide networking, technical leadership, and seed funding, as well as investors waving money at graduates.

Incubators I hear mentioned most often include YCombinator, led by Paul Graham in Silicon Valley, and TechStars, located in Boston, Boulder, New York City, and Seattle. TechStars has several excellent mentors on staff, led by founder and CEO David Cohen. Both provide excellent networking to investors, and on-site technical leadership, which I believe sets them apart.

By way of a definition, a business or startup incubator is a company, university, or other organization which provides resources to nurture young companies, helping them to survive and grow during the startup period when they are most vulnerable. The goal of most business incubators today is to strengthen the local economy, and commercialize new technologies. A few are still trying to make money doing it, but it is hard to make money off startups.

Most incubators today provide one or more of the following:

• flexible space and leases, often at very low rates
• business support services for a fee, including administrative support, telephone answering, graphic services, bookkeeping, copy machine access, and meeting rooms
• group rates for health, life and other insurance plans
• business and technical assistance either on site or through a community referral system
• assistance in obtaining funding, or direct seed funding
• networking with other entrepreneurs

Incubators differ from research and technology parks, in that most research and technology parks do not offer business assistance services, the hallmark of a business incubation program. However, many research and technology parks also house incubation programs. Another variation is technology business incubators, which nurture high-tech startups and present a technology oriented variant of business incubators.

To find what’s available in your area, take a look at the National Business Incubation Association (NBIA) web site, and use the lookup tool provided. This organization claims to be the world’s leading organization for advancing business incubation and entrepreneurship. Another sure-fire approach to finding what’s available is to check local university resources, or even websites, like TechCocktail, which recently ranked the “Top 15 U.S. Startup Accelerators and Incubators.”

The only down-side I have heard is that many business incubators used to be notoriously high-pressure environments where a lucrative exit strategy was more important than the half-baked products. If that’s the toughest problem you face as a startup, then you probably didn’t need an incubator in the first place.

Experts agree that the real value of an incubator is in the relationships, and relationships work best when the entrepreneur has selected a real market opportunity, with plans to address it in a unique, powerful, and direct manner.

For that reason, I am a strong proponent of incubators that screen prospective clients carefully, selecting only the best ones, and track whether they can handle responsibilities, like paying the rent. All startups are expected to “graduate” in a timely fashion to stand on their own two feet.

To convince you it can work, SiteBoat recently aggregated the combined valuation of the top 21 companies graduated by YCombinator at $4.7 billion. However, if you are looking for an incubator for “free” money and services, you should think again. Look for the best mentors, and the toughest regimen for program survival. They can make the real world look like a walk in the park, with investors dropping money along the way.

Marty Zwilling

10 Ways Startups Build Highly Responsible Teams

Getting things done effectively in a startup requires total individual and team accountability. You can’t afford excuses and multiple people doing the same job. In my view, “taking responsibility” is the core element behind accountability. Many people hear responsibility as an obligation, but I hear it as “the ability to respond.”

Unfortunately many people don’t have the ability to respond, because they lack confidence in themselves, or simply don’t have the skills required. Therefore an entrepreneur’s first requirement is to hire or team only with people who are accountable (already have the confidence and skills you need) – training them on the job is prohibitively expensive when you have minimal income.

Even with the best people, accountability must be nurtured, since it can be killed more quickly than it can be grown. Here are some characteristics of business leaders who foster responsibility, and keep it growing:

1. You need to walk the talk. Above all else, you as the founder or executive have to be a role model of accountability. You need to exemplify the “buck stops here,” and never play the blame game. Reward accountability consistently and often.

2. Communicate continuously. You need to make sure that your team members understand your expectations, and you need to proactively listen and understand the expectations of all stakeholders. Frequent and consistent communications, both verbal and in written processes, are required. Take away the “I didn’t understand” excuse.

3. Measure objectively. Goals and objectives must be unchanging and measurable, based on results, with benchmarks for comparisons. Accountability assessments must be based on facts, not distorted by opinions, politics, and desire for power. Frequently changing expectations does not lead to accountability.

4. Give control before expecting accountability. A sense of responsibility and accountability requires a sense of control. If several levels of approvals are needed for a specific decision, no one will feel accountable, and no one can be held accountable. Real delegation is required.

5. Align functional groups with business goals. If key inputs are not under the control of the proper group, then they will cede accountability as well. If your sales group is measured on profitability, but is required to process leads from outside sources paid by volume, you have a conflict where everyone loses.

6. Manage up the line and support your team. You need to be the sponsor and the advocate for every member of your team. Team members who take risks through accountability need to see your overt support up the line, with no blame and no scapegoats.

7. Provide timely feedback on performance. High performance teams need immediate and useful information on how to improve, as well as regular full performance reviews, individually and as a group. Help people, including yourself, look in the mirror and see reality.

8. Conduct humiliation-free problem analyses. Getting to the source and fixing problems should never be a “name and shame” game. Leaders need to provide safe havens where difficult issues can be discussed without assigning blame. The goal should always be to solve problems, not hurl accusations.

9. Provide tools to support accountability. No tools and no data lead to total subjectivity and biased interpretations. Absolute dependence on tools leads to abdication of personal responsibility. Provide adequate tools, but trust the people.

10. Differentiate accountability from entitlement. Accountability is hard, so no one is entitled to be right every time. Don’t punish people for making a mistake, but make it clear the mistakes have consequences, sometimes painful ones, that we all have to live with. Higher responsibility means more work and more skills needed.

Many executives subscribe to the misguided notion that you can hold people accountable. This is usually a ploy to control others and hand off responsibility, without being accountable yourself. People need to make themselves accountable, and accept the consequences of their actions. Remember that you are the model, and what goes around, comes around.

Marty Zwilling

Entrepreneurs Needed to Keep Web 3.0 From Fading

For some reason, I haven’t heard much about the next generation of the Internet (Web 3.0) lately, which probably means it isn’t happening as fast as everyone predicted. It’s already a couple of years behind schedule from my perspective. I suspect the real challenge is not the semantic web technology, but new attractive business models from smart entrepreneurs.

After some work, I’m still convinced that much of the Web 3.0 buzz has always been hype, but things are changing on the Internet, and bits and pieces of Web 3.0 are appearing. According to Michael Tasner, in his book “Marketing in the Moment: The Practical Guide to Using Web 3.0 Marketing to Reach Your Customers First,” here are the five key components to watch:

1. Micro-blogging. This is the ability to share your thoughts with a minimum number of characters. People are busy, with limited time, so why not get right to the point of the story, in 140 characters or fewer? Examples include Twitter, Plurk, and Jaiku.

2. Virtual reality worlds. These are places users visit to interact with others from around the world in a 3-D setting. Meetings are conducted in these spaces, and trade shows are being replaced with virtual reality shows. Examples include Second Life and Funsites.

3. Extended personalization. Web 3.0 will allow visitors to create an ever more personal experience. They are starting to expect their name to appear at the top of Web sites, personalized e-mails, and even advanced checkout options that suit their habits. Examples include SendOutCards, Google, and Amazon.

4. Mobile smart phones. There are billions of cell-phone users throughout the world, a number much larger than those who use PCs. Consumers are surfing the Web, purchasing products, and becoming instant photo journalists from their iPhone and Blackberry.

5. Real time on-demand collaboration. Users can now interact in real time on documents, collaboration, including making changes. Many software-as-a-service (SaaS) applications now allow on-demand collaboration. Examples include Google Docs, Salesforce.com, Slideshare.net, and Box.net.

According to Tasner, who is a marketing guru, business models and marketing in the Web 3.0 environment will need the most dramatic changes to be consistent with the new culture and technology. These include:

• Adapting to mobile, the largest and fastest-growing Web 3.0 trend. Marketing messages have to be adapted and directed to the smart phones, which all have web access, e-mail, video, texting, as well as voice.

• Accommodate the resistance to sharing all information with everyone. People are more and more worried about personal privacy and identity theft. This is driving a trend towards micro-community sites and smaller, more specialized social sites. Marketers need an effective presence on these sites for credibility and trust.

• Facilitate virtual communication versus face-to-face meetings. It’s too expensive to fly across country for marketing trade shows and big sales meetings. Virtual trade shows, GoToMeeting, and WebEx are attracting new customers like crazy.

• People on the Web now include everyone. Twelve-year-olds are running million-dollar-social networks, your grandma is tweeting, and your long-lost cousin runs a popular tribe on Second Life. This trend is escalating, and will not change.

The key driving factors to Web 3.0 include mobile and residential phones with high quality video, virtual shows surpassing live events, more intelligent semantic search information, and the openness of the Web. If you are a true entrepreneur, by now your head should be spinning with the possibilities. What do you see as the throttle?

Marty Zwilling

With Great Startups It’s All About The Execution

A startup begins with a great idea, but all too often, that’s where it ends. Ideas have to be implemented well to get the desired results. Good implementation requires a plan, and a good plan and good operational decisions come from good people. That’s why investors invest in entrepreneurs, rather than ideas.

People and operational excellence have to converge in every business, large or small. Microsoft found this out last year when their market capitalization, once at $560 billion in the year 2000, had fallen to $219 billion, allowing them to be passed by Apple at $222 billion, who grew from $15.6 billion during the same period. Both had access to the same technology, people, and market.

So what could have happened here? I found a good summary of the relevant keys to business operational excellence in a new book by Faisal Hoque, called “The Power of Convergence.” His focus is on repeatable practices to maximize business opportunities in large companies, but I’m convinced that these apply equally well to startups:

1. Clearly define your value chain. Your value chain consists of customers, partners, vendors, internal systems, and your own team. Make sure you understand this chain, as well as market dynamics, to drive operational innovations and every decision. Apple has been able to innovate at an amazing pace to define and meet new market opportunities.

2. Visualize abnormal or suboptimal performance. Recognizing and understanding deviations enables a startup or any business to take corrective action quickly. This requires executives and a team that understands the parameters, and is focused on customers, quality, and continuous improvement.

3. Facilitate the power of your team. Startups need to empower their people to take action in the absence of orders. That doesn’t mean abdication in setting corporate policies, which provide parameters to ensure that individuals have to ability to act collectively in the company’s best interest. Steve Jobs has a committed team.

4. Communicate effectively with the team and customers. Communication is a challenge in any organization, but it’s a particular challenge when you’re working in a startup, where customers, products, processes, and the team are new. Most founders forget that communication becomes exponentially more difficult as the business grows.

5. Measure value flow and performance. Measuring performance may seem self-evident, but many entrepreneurs mistake this task as a point-in-time or a one-time event. In operationally excellent startups, performance measurement is an ongoing effort throughout the process chain, not just at the outcome.

6. Define response mechanisms. Anticipating and planning for worst-case scenarios, and having a Plan-B, will enable the quick-response and pivots required to put a startup back on track. Metrics are required for ensuring the return to a known good baseline.

7. Maximize technology architecture and standards. Continuous innovation to maintain your competitive advantage does not mean that you can ignore current architectures and standards. These must always be leveraged produce optimal intended product outcomes.

What every business needs is a convergence of business and technology elements to optimize return and competitive positioning. All too often, entrepreneurs posit a new technology or idea, without understanding that a successful business is a never-ending process of adapting and improving all the elements in a business – especially business model, processes, and people, as well as technology.

Apple, with Steve Jobs, has demonstrated a rare convergence of technology, market understanding, business process, and people. Are you focused on all the right execution principles in your startup to do the same?

Marty Zwilling

Entrepreneurs Need to Think Global From Day One

New entrepreneurs who want to survive, and optimize the growth of their startups, need to think globally, and act locally, from day one. This approach, popularly known as “glocalization,” means you have to design and deliver global solutions that have total relevance to every local market in which you operate.

Recognizing this is as much about culture as about language, ensures an understanding of regional motivators, cultural taboos and local customs – so that your solutions are ideally designed and marketed to deliver value that has genuine local relevance.

What all this doesn’t mean is that you should roll out your product in every country at the same time. But it does mean that you think about the global implications at every step of the process:

• Pick your company and product names carefully. Don’t pick a name for your company or product that has a negative or totally different meaning in another language. Remember when the Chevy Nova required a rename, once Chevrolet realized that Nova meant "no go" in the Spanish market (not a great name for a car).

• Anticipate greater growth outside of North America. Not every international market matters, but some are larger than life. The middle and above-middle class population of China will grow from 172 million in 2010 to 314 million in 2015. Just the middle class in India is equal in size to the entire population of the United States. And aging populations in Europe and Japan will join the retiring baby boomers in the U.S. with demands for new products and services. Be ready.

• Reinforce your brand in international markets. An international brand will command higher prices and additional customer demand. This is called brand goodwill, a hard-won value resulting from the trust that a strong name engenders among buyers and partners. As you begin to saturate the demand in domestic markets, let your brand take you international at low cost.

• Balance your business between geographies. When buyers in one region start to slow down, look for buyers in other geographies to take up the slack. Companies with diversified portfolios can focus their energy on other global markets that are doing well.

• Speak the customer’s language. People tell me that a multi-lingual website can double your local online business in many parts of the U.S. These days, customers begin their buying cycle online, where they can get answers to their frequently asked questions, product information, and transactions — all in a language they really understand.

• Find global sources now. This may not be politically correct these days, but smart startups are looking globally to source their products from the very beginning. Software can be developed “offshore” for a low cost, manufacturing volumes are quickly available from China, and European designs have increased opportunities in every country.

• Selectively protect your intellectual property worldwide. At present, no world patents or international patent process exists, so you need to apply in every relevant country. Trying to get patent protection worldwide at the beginning is prohibitively expensive, so pick your geographies and timing carefully and strategically.

These days the world is a single market. It is both homogeneous and heterogeneous. The communication revolution and the advent of the Internet has brought about a new age of globalization. Easier access to international markets is creating limitless sales opportunities on a worldwide basis.

The result is that every startup company now needs to consider every aspect of management, sales and service on a global basis. However, to gain a true competitive edge, you still need to implement effective solutions first at the local level. Don’t try to do it all at once.

Marty Zwilling

8 Ways Starting a Business Helps Your Job Search

If you are one of the many people who lost your job during the recent depression, you should be working on starting your own business, in parallel with looking for that ideal replacement job. Let me explain why this is a win-win deal, no matter what the outcome.

You have probably secretly always wanted to run your own show, but with a full-time job, never had the time to consider a startup. Then there was always the risk of failure, which of course doesn’t apply now since your real job is gone. Also, for most of us, not having done it before, we have no idea where or how to start.

Here are my recommendations on how and why initiating a startup while looking for a job is the right thing to do:

1. No gap in your resume. Instead of an embarrassing gap in your resume for your period out of work, you have an entry for your startup business, showing initiative, leadership, and breadth of experience.

2. Fun learning experience. It’s more fun tackling the challenges of a startup in between job search activities, than sitting around feeling sorry for yourself and waiting for status callbacks on interviews (which seem to have gone out of style).

3. Find a partner. Unless you are a true loner, you need someone like-minded but complementary in skills to help you with the startup plans. It’s always good to have someone to test your ideas, keep your spirits up, and hone your business skills. Now you have a reason for talking to people who may become lifelong friends.

4. Incorporate an LLC. First, pick a name for your company and do the paperwork on starting a Limited Liability Corporation (LLC). Almost anyone can handle this without professional help, and the cost is less than $100 in many states. It shows everyone you are serious, and limits your liability on any mistakes.

5. Develop low-cost plan. Pick a startup business that you can do for minimal cost, like a services business with the skills you have. With simple software available today, pick a domain name and implement your own website. Use social networking and blogging to get your message out. You don’t need an investor for this approach.

6. Get business cards made. Nothing says you are serious about a business like handing out professional business cards at local events and Chamber of Commerce meetings. Do them on your home computer for a few dollars. Offer to help a couple of customers free, just to get your act together and your presence known.

7. Highlight your startup efforts in job interviews. Work your startup efforts into every job interview and application. It will definitely show off your energy and vision, and will make you a more competitive candidate for any role.

8. Make the decision – job or business. Obviously, at some point you will need to decide whether your startup business is better than the job opportunities. That’s good because it’s always nice to have an alternative, rather than feeling that you just have to take the first dead-end job offered.

There are other startup related points I could make here, like joining an existing startup as a “volunteer” for a time, just to learn more about what is required. Also, in most geographies, there are organizations springing up, and university workshops, to mentor people out of work and contemplating a startup. Get some help from them if you need it.

Just remember that problems are really just opportunities in disguise. Don’t miss out on what may be the best opportunity you will have in your lifetime for a new career. Start up now.

Marty Zwilling

Driving Your Startup to Profitability is Job One

A question that I often hear debated these days is whether a new startup should focus on growth or profits. First of all, the glory days of “dot.coms” are gone, when investors “didn’t care” about profitability, and all the money went to growth.

In the long run, everyone wants both profitability and growth, but the question is still which comes first. Most startups and investors I know don’t have unlimited funds, so the first question they should ask and do ask today, is “When is your company going to be profitable (self-sustaining)?”

Of course, growth is implied in that equation, and is also required for maintaining a sustainable competitive advantage. The challenge is not to undermine growth by a blind focus on profits. You might sell one of two of your widgets for $1M each, entering profitability immediately, but then die because you can’t grow sales at that price.

I think you will find that most investors will relate to the following formula for keeping the right perspective and getting the profit versus growth balance right:

• Pick an idea that has the potential to make money. That means it solves a real problem for real customers who are ready and able to spend real money. The number of current potential customers is large and growing. Solutions that may be viewed as “nice to have” or “satisfies a higher-level need” won’t get funded.

• Design a product or service that you can sell. Sure, you may need to give the product away for free to get traction, but assume you will have to sell something some day to get profitable and stay alive. Twitter, for example, doesn’t have a real revenue model today, and they are growing, but I’m not sure who can ever sell 140 character tweets. Don’t count on finding investors for that model on your new startup.

• Build a business plan for profitability in your lifetime. This simply means you need to be sensitive to costs, revenue projections, and a timeline, such that there is light at the end of the tunnel. Most Internet businesses should show profitability in two years, while new medicines may take ten years to pass FDA and other safety tests. Investors will look at competitors in your industry for the norms.

• Identify the total investment required for profitability. A very common mistake of early stage startups is to request a small investment to get started. They are usually thinking only of costs required to get “in business,” rather than the total costs of marketing, scaling up, and going international. Be ready to answer the investor question “Is that all you need to get profitable?”

So unless you are building a non-profit, I say focus on profit all the time, every time. Of course, growth is implied in every focus, and profit enables growth. But some of you will surely say “What about Facebook and Twitter, who focused on growth first and are clearly successful?” So let’s take a look.

Facebook is indeed the largest growth site on the web, with more than 750 million user accounts, all free. It actually is still only marginally profitable, with revenue only from advertising. What most people don’t realize is that the total outside funding so far is estimated at over $800M, which is a bit more than you will get from any Angel investor.

Yet I can’t argue their success in the value proposition, since they turned down a billion dollar offer from Yahoo way back in 2006, and value themselves today internally at $4B or more. It has taken them six years to get to this point, and some very deep pockets, so now you know why I smile when you tell me your plan emulates the Facebook model. Twitter has no model.

I’ve heard all the arguments that a push for early profits on new business models will lead a company to fall back to a lesser model that provides short-term results, but stunts risk-taking that could lead to more long-term value creation. That’s a great argument if you have unlimited means, but if you are just one of the “rest of us,” I suggest you focus on getting to cash-flow positive first.

Marty Zwilling

Ten Tenets To Live By When Starting a Business

If you expect to succeed in the thrill-a-minute, roller coaster ride of a startup, let me assure you it takes more than a good idea, a rich uncle, and luck. In fact, the idea is often the least important part of the equation. Investors tell me that they look at the people first, the business plan second, and only then at the idea.

If you want some tips to beat the insurmountable odds, take a look at the following concepts, adapted from Richard C. Levy’s book, “The Complete Idiot’s Guide to Cashing in On Your Inventions.” He was talking about inventions, but I think his concepts apply perfectly to any entrepreneur starting a business:

1. Don’t take yourself too seriously. Don’t take your idea too seriously, either. The world will probably survive without your idea. You may need it to survive, but no one else does. But there is no excuse not to love and laugh at what you are doing. I’m convinced that people who love their work are more innovative, as well as happier.

2. The race is not always for the swift, but for those who keep running. It’s a mistake to think anything is made overnight other than baked goods and newspapers. You win some, you lose some, and some are rained out, but always suit up for the game and stick with it. It’s not speed that separates winners from losers; it’s perseverance.

3. You can’t do it all by yourself. Entrepreneurial success is almost always the result of unselfish, highly talented, and creative partners and associates willing to face with you the frustrations, rejections, and seemingly open-ended time frames inherent to any business startup.

4. Keep your ego under control. Creative and inventive people, according to profile, hate to be rejected or criticized for any reason. An out-of-control ego kills more opportunities than anything else. While entrepreneurs need a healthy ego for body armor, it can quickly get out of hand and become arrogance if not tempered.

5. You will always miss 100 percent of the shots you don’t take. Don’t be afraid to make mistakes. If you don’t put forth the effort, you won’t fail, but you won’t succeed, either. Inaction will keep opportunities from coming your way.

6. Don’t start a company just for the financial rewards. We all want to make money. That’s only natural. But you should be motivated by the opportunity to “make meaning” as well. People who do things just for the money usually come up shortchanged.

7. If you bite the bullet, be prepared to taste gunpowder. Not every idea or decision works. For every action, there is always a criticism. Odds are, you’ll encounter far more criticism than acceptance. Learn from your mistakes, and don’t blame someone else.

8. Learn to take rejection. Don’t be turned off by the word “No,” because you’ll hear it often. Rejection can be positive if it’s turned into constructive growth. My experience is that ideas get better the more times they are presented. “No” means “not yet.”

9. Believe in yourself. One of the first steps toward success is learning to detect and follow that gleam of light Emerson says flashes across the mind from within. It’s critical that you learn to abide by your own spontaneous impression. Allow nothing to affect the integrity of your mind.

10. Sell yourself before you sell your ideas. Be concerned about how you are perceived. You may be capable of dreaming up ideas, but if you cannot command the respect and attention of associates and investors, your proposal will never get off the mark, and you may not be invited back for an encore

As with all the other “principles of success” articles I have seen, you should take these tenets with a grain of salt. Yet I’m betting that every entrepreneur out there can relate to these principles and practices, and most of the long aspiring and unhappy entrepreneurs have broken one or more of them. Maybe it’s time to learn from your mistakes, forget the past, and go for the trophy.

Marty Zwilling

Human Consultants in Business are a Dying Breed

Let’s face it, consultants have a bad image. Businesses want experienced people who get their hands dirty, rather than experts who give presentations, make recommendations, and disappear. Even consultants don’t like their job, since they don’t often get to see results, and too much of their time is spent looking for the next gig.

The Internet has changed the world. If you need to know how to do something, just look it up online. You will probably find more current alternatives and more recommendations on any given subject than any consultant could muster. For example, there are a dozen articles like this one for every area of expertise.

But certainly the Internet doesn’t do the job for you. My message today is to avoid the consultant stigma by signing up to do the job, not just talk about it. Then lead by example. There are a myriad of ways to make this happen in the world of startups. Here are a few:

• Take the end-role directly. An approach I suggest these days is for freelancers to contract for the actual role, probably part-time, of startup CFO, VP of Sales, or President. In this mode they take on the “doing” role directly, rather than any “consulting” role.

• Specialist versus consultant. Small groups of consultants have now become groups of specialists – CFO Services, Marketing Services, or Management Services. Specialists are consultants who do the work, rather than just make recommendations.

• Charge by task or fixed-rate. Another mistake many consultants make is to charge by the hour, and customers lose track and lose confidence as things change. A fixed rate will make sure there is no surprise at the end, and you will stand out in the crowd.

• Report within the organizational structure. In the past, consultants were taught to report only to the top executive, and to assume leadership rights in the organization. Today’s specialists have to earn their leadership, and prove their contribution to the department executive.

• Dress to fit in. Gone are the days when you can make a great impression by over-dressing. Dress to fit into the company culture, no more, no less. Share the everyday life of the startup team you are working with.

• Produce results. “Results” these days are not PowerPoint slides, or theories and recommendations. If you are the CFO, showing results means you set up the accounting system, and generate the first P&Ls. Speak to people, rather than write a document every time you want a change.

• Have "customers", not "clients." This is a minor semantic point, but an important one to the customer. A "client" implies that the consultant is in charge, while "customer" suggests that the service provider is beholden. All aspects of customer service apply.

• Be exceptionally easy to find. When your customer phones or emails you, his timer starts, so it behooves you to return his call or email quickly. Scheduling of a meeting at the end of the next week definitely tags you as a consultant whose focus is elsewhere.

So for all you consultants, maybe it’s time to consider changing your mode of operation as well as your title. If you have real experience in key business roles, or you are an expert in any one, then you have a good set of modern credentials. Use your credentials to figure out how to join a startup team.

Don’t be an outsider in attitude, recommendations, clothes, or rules of engagement. Every startup I know is looking for more team members, but none are looking for more consultants. If you find the right team, and do the right work, you won’t even need to look for a next gig.

Marty Zwilling

10 Top Content Marketing Tips for Your Startup

These days every new entrepreneur understands that an innovative product or service is necessary, but not sufficient, to start a business. You have to build a web presence with marketing content to get visibility above the 50 million other new websites created every year, and attract the customers you need. But most entrepreneurs don’t know where to start.

Of course, there is a plethora of “experts” emerging out there, who are anxious to lead you down that path, for a large price. So I’m always on the lookout for some real experts, and some pragmatic guidance on how to attack this issue. Recently I was reviewing a new book on content marketing, “Accelerate!” by an expert and friend in this space, Arnie Kuenn, which offers guidance and examples on new and modern approaches for the rest of us:

1. Build a blog. According to Hubspot, websites that have blogs get twice as many inbound links, 400 percent more indexed pages, and a more than 50 percent increase in traffic, compared to websites without blogs. Search engines and people love blogs these days.

2. Join the conversation with Community Forums. A forum is a discussion site on a relevant subject, hosted and moderated by you, which adds authority, content, and traffic to your website. The registration process to join can give you a very targeted email list.

3. Curation, the most efficient content. Curation is humanly aggregating, filtering, and re-posting the best-of-the-best content on the web, relative to your product or service area. This shows your knowledge and positions your company as a thought leader.

4. Win with engaging contests. Not a new idea, but when used creatively, can entice new prospect traffic and backlinks to your site. People these days love to submit stories, vote on other entries, and receive the recognition of even small prizes or product rewards.

5. Traditional publishing out, self-publishing in with eBooks. You don’t need a real book as a base for electronic books, as people now prefer something akin to a “white paper” on steroids. It’s just another way to demonstrate credibility and attract traffic.

6. Keep them engaged with eNewsletters. These are regular updates, usually monthly, via website and email that help with customer retention, and again remind your customers that you are the expert in your industry. Supplement text here with video and audio.

7. Widgets and badges. A widget is a mini-app that displays or updates data either locally or on the web – to share something of value and interest. A badge is a simple graphic designed for fun, to show support, or promote certain standards online. All highlight you.

8. Look like an expert with Interviews. Here we are talking about interviewing industry experts. By having frequent conversations with experts in your industry, you rank yourself among the top, and show you are connected. You are the company you keep.

9. Videos, stories in motion. Simple videos, less than five minutes in length, you can do yourself and upload to YouTube for display on your website, can turn a blasé idea into a winner. Keep the atmosphere relaxed and fun, to increase traffic, and maybe even go viral.

10. Provide convenience through podcasts. A podcast is basically a non-streaming webcast, usually audio only, for those who want the convenience of downloading and listening via iPod or mobile phone while commuting or working out at the gym. It’s cool.

There are a lot more items of content that could be on this list. But don’t let the number overwhelm you. You don’t need to tackle them all – just pick a few that you think you can do well, and consistently. The key is new content on a regular basis to attract the attention of search engines and new customers.

Most importantly, don’t wait until you have perfect content. Start creating content today. The more you create, the more momentum you build, and better you will get.

Marty Zwilling

How to Get Over Mourning Your Startup Demise

Your startup is gone, it’s never coming back, and you are in mourning. An entrepreneur whose business fails grieves similarly to anyone who has lost a loved one. The pain of losing a business is not only about a significant loss of income, but can send an entire identity into turmoil.

Most entrepreneurs define themselves by their business projects. They calibrate self-worth by what they accomplish or do not accomplish. In other words, if a project fails, then they are failures. If a project takes off, then they are wonderful. It’s the universal entrepreneur reaction.

The loss of a startup is very much like losing your job, as characterized by Debbie Mandel a while back, so don’t be surprised if you experience:

• Sleep disturbances, and difficulty waking up in the morning
• Eating and craving the wrong foods or stimulants
• Fatigue
• Irritability
• Cocooning at home
• Loss of ambition; the perception that there are no other opportunities out there
• Submissive or abusive behavior

The knee-jerk reaction is to ask, “Why me?” or to cast the blame on the powers that be: “The economy killed me,” “My partner was a jerk,” or “Investors stole my business.” However, the blame game is an energy drain and will leave you without the energy to move on.

We have to assume responsibility for our actions, rather than play the part of a victim. Try answers like: “My timing was wrong,” “I picked the wrong partner,” or “I’m better at bootstrapping.” Everyone will respect your integrity, and you will be ready to tackle the world again more quickly.

Similar to Dr. Kubler-Ross’ five stages of grief for a death, losing a business requires processing each stage in order to adapt to the changing daily activities. Everyone falls down, but not everyone picks himself up. Here are some suggestions to survive the normal stages and turn failure into triumph:

1. Denial: The psyche needs to protect itself and absorb what has happened little by little, instead of all at once. Recite the business loss story over and over to take the sting out of it; distract yourself with positive friends, outdoor activities or your community center.
2. Anger: Release anger in a healthy way through exercise, visualization and breathing. Exercise intensity or length of time should correspond to your anger level. Reinterpret the scenario with compassion; be kind to yourself, and everyone else.
3. Bargaining: This is “the what if or I should have” stage. Be aware of negative thought streams to objectify them, and have a logical discourse with your thoughts. Then you can invest your energy into moving on.
4. Depression: The sadness sets in and the feelings need to come out. Maybe you need to have a good cry. Laughter is always a wonderful pick-me-up. It will release feel-good chemistry. This will help reset a realistic optimism. Tap into positive friends.
5. Acceptance: This is the point where we think and feel that the loss really happened. We accept the blow to our self-esteem and the disappointment. This is the time when we are ready to rebuild our balance and confidence.

It is how we handle this failure that will determine our next success. Because we are acquainted with loss and failure, we will not fear it again like the first time.

The best way to stop mourning a failed business is to start another one, using all the lessons learned from the previous experience. You may even conclude that losing that particular startup was the best thing…

Marty Zwilling

What Entrepreneurs Can Learn From Reality TV

I’m not much of a television person, but my family loves one of the popular “reality” shows, called “So You Think You Can Dance,” so I’m sort of forced to watch it every week on Fox. Over time, I’ve concluded that even startup entrepreneurs can learn a few things from this one. Of course, you must ignore the pomp and circumstance of the TV staging.

I’m on the selection committee of our local angels group, so I know that every CEO approaching our group for funding goes through ten minutes of creative “dancing,” to give us a basis for selecting startups that are most qualified and “ready” to proceed to the next level. If selected, they go through it again in the real meeting of 20-40 investors. It’s tough and not fun for either side.

The business “dance” obviously has different particulars than TV dancing, but there is serious business and artistry involved in both cases. Here are some observations I can offer to startup founders looking for funding, analogous to the aspiring dancers on the show, hoping to move to the next level:

• Judges evaluate the person first. Investors want to look the CEO in the eye, and be convinced that he or she can lead the company to success – it’s more important than the creative idea. On the TV show, I’m sure you all see contenders that have lost before they start, just because they lack the enthusiasm, presence, and confidence of a winner.

• You only get a few minutes to make the case. In fact, your case is usually won or lost in the first couple of minutes. In business, as on the show, wins can turn to a loss if you bungle or skip relevant basics in the short time allotted. Everyone wants a longer time or second chance to win you back, but it would rarely ever change anything.

• Skip the bravado, but don’t be immobilized with fear. I subscribe to a quote from another TV show too old to mention, where the hero said “He who is not afraid – he’s a fool.” Let your adrenalin help you deliver an outstanding performance, but trying to wow investors with jokes or stories of unending success will not move you up a level.

• Play to the audience in front of you, and adapt your message. If the panel is looking for value and return for the investor, skip the technology pitch, or customer sales pitch. Some entrepreneurs give the same talk, no matter what the audience. If you have only one dance, don’t be surprised if it wears thin quickly with the judges.

• Dress appropriately and professionally. Under-dressed may impress on TV, but it’s better to be over-dressed in the business world. Business casual is the standard for investor presentations. Remember that most investors are from a generation where faded and torn jeans were on the wrong side of success in business.

• Practice, practice, practice. Even if you are an experienced dancer, you practice your craft with renewed determination before a big show. Business entrepreneurs need to do the same thing, maybe in “presidential debate” style with their team for critics, until they master the timing and can handle every unanticipated slip or challenge.

Even though I’m certainly no expert on dancing (I’ve taken Beginning Ballroom Dancing three times now), most of the reviews I have seen call the TV show realistic, with the panel of judges giving reasonable critical and technical feedback. That’s a welcome relief from Donald Trump's pompous calls on "Celebrity Apprentice."

Depending on one's perspective, this is either the perfect time or an awful one to start a business. So, if you plan to face a business version of the dancing challenge soon, watch the show and check the recommendations above. Show some energy and enthusiasm, and don’t let the technical steps required overshadow your creativity. Break a leg!

Marty Zwilling

Startups, Avoid 10 Common Million-Dollar Mistakes

It’s a well-accepted axiom in the investor community that entrepreneurs learn more from their failures than their successes. Thus a well-explained startup failure often can actually improve your odds of funding in the next go-round. Yet, there is no doubt that the best strategy is to learn from someone else’s mistakes, so you can enjoy the millions that someone else lost in learning.

Certainly there are innumerable possible mistakes to be made, but there is a thread of common ones that I see across the range of all startups. Ryan Blair, a serial entrepreneur who admits to his share of million dollar mistakes, as well as some multi-million dollar successes, sums these up nicely in his current bestseller “Nothing to Lose, Everything to Gain:”

1. Don’t make wildly optimistic sales forecasts. Test and adjust your projections, based on experienced advisor input and industry norms, rather than the Google high exception. Excel spreadsheets can easily project dramatic growth, with no connection to reality.

2. Don’t hire people who like your ideas all the time. Flattery feels good, but it doesn’t pay the bills. Look for the thoughtful challenge to your ideas, and practice active listening, when you are selling your vision. High three-digit intelligence has value.

3. Don’t focus too much on the competition. It’s always more productive to focus on making your offering successful, rather than killing your competitors. Doing things like dismantling their leadership team, or highlighting their shortcomings is lose-lose.

4. Don’t waste time caring what others think. No matter how hard you try, you won’t make everyone happy. Don’t be afraid to follow your vision, learn from your mistakes, and pivot the business, just because someone will see the change as a disappointment.

5. Don’t mix business with pleasure. This is especially true of relationships. Do not fraternize with your employees, and choose your partners wisely. Thou shall not “do your business” where you do business.

6. Be quick to fire and slow to hire. Pull the trigger fast when a new hire isn’t working, but don’t forget to be human and follow all the steps. On the other side, hiring after one interview is like hopping a red-eye to Vegas to get married after one date.

7. Don’t put your company before your people. A company is an entity that can be pivoted at will. Your team of people has a collective passion and intelligence with a real worth that’s hard to manipulate. Make the company fit the people, rather than vice versa.

8. Don’t under-forecast cash needs. When you have people and their families depending on you for their paychecks, and you are out of money, that’s another lose-lose situation. Even if you can find someone willing to help, it’s a very, very expensive proposition.

9. Don’t try to do too much all at once. You hear about all the parallel entrepreneurs, like Steve Jobs running Apple and Pixar at the same time. Make sure you have the aptitude to run one business well, with one product line, before you start a couple more.

10. Never write something you wouldn’t want to come back to you. Every one of us has sent a sensitive email to the wrong party, or had it misinterpreted by the receiver. Save the hard and easily misinterpreted messages for face-to-face calm discussions.

There are more, but I think you get the idea. Of course, the biggest mistake is failing to learn from the mistakes of others, or even from your mistakes. You can only learn from your mistake after you admit you’ve made it. Wise people admit their mistakes easily, and move the focus away from blame management and towards learning. Wise people can become great entrepreneurs. Where are you along this spectrum?

Marty Zwilling

7 Skills Not Found at Birth in Most Entrepreneurs

Many people believe that good entrepreneurs are naturally born, rather than trained or experienced in the art of business. I believe there is a natural born component required, but often I tend to agree with Peter Drucker, who said “It’s not magic, it’s not mysterious, and it has nothing to do with genes. It’s a discipline, and like any discipline, it can be learned.”

On the natural born side, some entrepreneurs seem to have a strong vision and the ability to inspirationally lead others. It is this vision that is the beacon to drive the right people behavior, leading to the success of the business. If you don’t feel a vision in your heart, or if you don’t have the strength to inspire people, entrepreneurship is probably the wrong road for you.

If you feel you have the vision characteristics, you still could benefit from some of the key learnable skills that can improve the success and impact of every entrepreneur, assembled from an interview with Herb Kelleher of Southwest Airlines and other executives:

1. Ability to set priorities and focus on goals. Many people allow themselves to be driven by the crisis of the moment. Personal discipline is the key word here. Set yourself some priorities and goals, and live by them.

2. Able to identify important issues. Some people call this common sense; others call it “street smarts.” In the normal startup environment, there are multiple forces competing for your attention every day, and you need to learn to delegate or ignore many. It relates back to experience and knowledge, more than genes.

3. Conviction to be a passionate advocate. When you believe in something enough to turn your passion into action, you have become an advocate. That power and voice is then used to persuade others to make the correct decision. An effective advocate requires conviction, usually acquired during related first hand experience or training.

4. Broad knowledge and experience. Experience allows one to tackle challenges with confidence in a given area. Broad knowledge facilitates the same success in other business areas. Entrepreneurs need this, because their challenges are across the spectrum from technical to legal, operational, financial, and organizational.

5. Active listening skills. Above all, the ability to listen and understand the real meaning of what people are saying (and not saying) is paramount, because the most important information never arrives in reports or email. Some people pick this up from experience, and others find classroom courses most helpful in setting the focus.

6. Sound judgment. I don’t think anyone is born with sound judgment; it has to be learned, but can be started at a very early age. Every entrepreneur must have the capacity to assess situations or circumstances shrewdly and to draw proper conclusions.

7. Pleasant skepticism. Skepticism is not doubting, but applying reason and critical thinking to determine validity. It's the process of searching for a supportable conclusion, as opposed to justifying a preconceived conclusion. It is a learned skill.

These all revolve around the larger theme of team building. In short, to succeed, the entrepreneur must see and articulate a vision in order to attract and motivate a team, then be able to identify the key issues, challenge the views held within the team, and make judgments from among the varying perspectives in the team.

Every entrepreneur enters the game with a unique combination of genes and skills. If the things mentioned here feel natural to you, and you are young at heart, have a healthy curiosity and zest for life, the entrepreneurial world may have a place for you, too. Give it a try. If you are having fun, you probably have what it takes.

Marty Zwilling