Friday, May 31, 2013

Great Entrepreneurs Lead People and Use Technology

Terry-PearceSome entrepreneurs forget that they can’t use people the same way they use technology to build a startup. Inventors, for example, are skilled in manipulating technology, but may have little interest or experience engaging people to make an effective team. Unfortunately, startups are not one-man shows, so entrepreneurs need to study leadership as much as they study technology.

In fact, we can all benefit from focusing on the keys to people leadership from time to time. Recently I came across the new edition of “Leading Out Loud: A Guide for Engaging Others in Creating the Future,” by Terry Pearce, who has been is this space for a long time, and I felt it spoke loudly to every entrepreneur looking to improve his leadership communication.

Pearce characterizes good leadership as the place where soul and science meet. He explains in detail how and why every entrepreneur needs to hone his skills and document his own personal leadership guide, comprised of the following four main parts:

  1. Establishing competence and building trustworthiness. Startup leaders recognize the need for strong credentials to demonstrate competence to team members, customers, and investors. But they must also display empathy, acknowledge resistance, and share personal motivation to build trustworthiness. These are the hard parts.

  2. Creating shared context. They also must share a common understanding of the past, and the urgency for creating a new, better future with the products and services on the table. Otherwise, customers and investors will see new initiatives as merely change rather than progress. On the average, change generates more fear than excitement.

  3. Declaring and describing the future. Entrepreneur leaders must be able to vividly describe a new world that is compelling and exciting to others. Focusing on the technology doesn’t do it. Customers can relate to painful problems today, and can relate to solutions that will make their new world less problematic.

  4. Committing to action. Personal action speaks far more loudly than any rhetoric. Startup leaders must reveal what they are willing to risk – what personal steps they will take – to enable the new reality to take shape. The team wants to see you in the pit with them. Investors want to see progress and traction. Customers want to see results.

Merely understanding what matters will not assure that you can communicate to inspire. Effective leaders have to be courageous enough to communicate authentically from the basis of their real values, whether they are pitching to investors, closing a customer sale, or conversing informally with the team. Their passion, commitment, and self-knowledge have to come through.

In the business and financial world, the choice and use of evidence in communication is also critical. Passion, excitement, and emotion are usually not enough to get investors and customers lined up. Evidence like the following leads to understanding and receptivity:

  • Data specifics encourage engagement. People equate specificity with certainty, so facts are far more powerful than generalities. Specifics allow comparison and judgment, engaging others in a mental process rather than treating them as passive receptors.

  • Make data relevant and meaningful. Use examples to make it possible for each constituent to directly and personally experience the relevance of the data you present. Put global data in a local context to make it familiar. This establishes a much closer connection.

  • Highlight quotes and support from others. Quoting an expert or customer who agrees with your idea generally adds weight to your evidence. For even more power, use personal relationships, audience members, or people who have actually impacted your own life.

Technology may be the key to building a great product, but people are the key to building a great business. Effective communication and leadership are a tremendous advantage in both cases. A great entrepreneur creates the future by declaring it and describing it in such a compelling way that people go there without fearing the change. Start today.

Marty Zwilling


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Thursday, May 30, 2013

Do We Really Need an Alternative Form of Capitalism?

alternative-form-capitalismIn my view, entrepreneurship has always been the ultimate embodiment of capitalism, and quite synonymous with free enterprise. Yet I find that more and more young entrepreneurs are uncomfortable with the term “capitalism”, somehow thinking that it prioritizes “making money” above all else. They are looking for a business model that makes the world a better place for humanity.

One step in that direction is the trend to “conscious capitalism,” as exemplified in the recent book by John Mackey and Raj Sisodia, “Conscious Capitalism: Liberating the Heroic Spirit of Business.” These authors argue that capitalism is simply misunderstood, and businesses run by ethical people create value and prosperity based on voluntary exchange, while reducing poverty.

In a recent blog, “Capitalism: Alternative Realities?” Scott McIntosh, an avid Angel investor friend and champion of conscious capitalism, makes the case that that true capitalism is about entrepreneurs driven, in part by profit motive, but more from motivation that stems from a simple desire to make a difference in the world. We shouldn’t let greedy or misguided people derail this.

Here are some of the alternatives outlined to enhance the negative image of “for-profit businesses” in the minds of many entrepreneurs. These also address the negative impacts of some well-publicized business practices on the environment, standard of living requirements, and missed opportunities to do good:

  1. Promote “Conscious CapitalismTM” as capitalism re-branded. Socially conscious capitalism, per Mackey’s book referenced above, adds four requirements to every business enterprise – focus on a higher purpose, stakeholder orientation, conscious leadership, and a conscious culture and management.

    Model business examples today include Whole Foods, Southwest Airlines, Costco, Google, Patagonia, The Container Store, UPS, and dozens of others. These set the model for aspiring entrepreneurs to achieve their dream of a good business that is also good for society as a whole.

  2. Adopt the B-Corp as a new conscious business model. To more strongly support startups who want to give top priority to socially conscious solutions, eleven states, including New York and California, have passed legislation allowing incorporation as a Benefit Corporation (B-Corp). Other states are close behind in this effort.

    A benefit corporation is a new corporate form designed for for-profit entities that want to consider society and the environment in addition to profit in their decision making process. The B-Corp status is meant to reduce investor suits, and gives consumers an easy way to spot genuine social commitment, without assuming it is a non-profit.

  3. Increase government regulation to level the playing field. Some advocate “fixing” capitalism as it is practiced today, by stricter regulations to prevent bad practices, and eliminate the cancer of “crony capitalism.” Crony capitalism, per Wikipedia, describes an economy driven by greed and business requirements from government relationships.

    These relationships result in success based on favoritism in the distribution of legal permits, government grants, and special tax breaks. In this environment true free enterprise entrepreneurs can no longer compete based on innovation, and everyone loses.

  4. Reduce government regulation to level the playing field. Others, including McIntosh in his article referenced above, argue that the answer is to reduce (not eliminate) regulation, limit the power of government, letting private enterprise market forces work their proven magic of the past 200 years in free economies around the world.

    What about the truly greedy business folks? We need to let market forces work and force them out of business. Those who truly abuse the system need to be held accountable rather than allowing a system of cronyism to provide undue protections.

I have to put myself in this last camp, since I’m not a believer that any government can regulate morality, respect for the environment, or concern for the common good. These have to come from the heart, and I’m happy to report that the entrepreneurs I meet are leading the charge. If making money is your primary motivation for starting a business, be prepared for a long and lonely road. Following your passion to change the world is a lot more fun. It’s time to have fun!

Marty Zwilling

*** First published on Young Entrepreneur on 05/23/2013 ***


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Sunday, May 26, 2013

8 Reasons All Angel Investor Money May Not Be Equal

money-equalA few angel investors have slipped or fallen from their lofty perch, so entrepreneurs must take great care to validate the character and reputation of every prospective investor. The entrepreneur’s tendency to be in a huge hurry to obtain the funding can end up being disastrous, and play into the hands of these less scrupulous investors.

Many entrepreneurs believe all money is created equal. As long as somebody recognizes their million dollar idea and writes them a check, the source really doesn't matter. In fact, most angels are pure, but there are some exceptions that may cost you more than an investment:

  1. Shark angels. These are the ultimate bad guys whose sole interest in early-stage investing is to take advantage of what they believe is the entrepreneur’s lack of financial and deal-making experience. If the term sheet process turns to pure torture, it may be time to respectfully bow out. Not all shark angels are on the Shark Tank TV show.

  2. Litigious angels. The litigious investor will look for almost any excuse to take you to court. This type of investor never really focuses on the returns your company can deliver, but instead tries to make money by intimidation, threats and lawsuits. They know you won't have the resources to fight them, so they count on you "caving.” Keep your attorney close by your side.

  3. Superior angels. A number of successful business people, some of whom become angels, develop the belief that they are destined for greatness because of their clear superiority over everyone else. These are usually overbearing, negative people who are hypercritical of every decision you make. Don’t be intimidated into bad decisions.

  4. Control freak angels. This angel starts out looking like your new best friend. Once you are funded, he waits until you hit your first pothole and then points out “gotcha” clauses in your agreement that give him more control. This escalates into a requirement that he must step in to run your company himself. Only your Board can save you here.

  5. Tutorial angels. The tutorial investor is not after control, but wants to hold your hand on every issue. The mentoring offer always sounds good up front. But after they write the check, it soon becomes apparent that their desire to be helpful 24 hours a day is a nuisance at best. Initially, your gratitude for their investment may prompt tolerance, but eventually the burden wears you down. Keeping your distance is the best solution.

  6. Has-been angels. These tend to appear with every perturbation in the economy. They are usually high-flyers with a liquidity problem. They are still at the country club every day, but are now running up a tab. They will meet with you, and ask a thousand questions, but never get around to closing the deal. Learn to ask the closing questions.

  7. Dumb angels. Wealth is not synonymous with business savvy. You can spot dumb angels by the questions they ask (or don’t ask). If they ask superficial questions or don’t understand business, a successful long-term relationship is not likely. But don’t forget that people with wealth usually may have some savvy friends to meet.

  8. Brokers posing as angels. These people are all over the place, often posing as lawyers and accountants. They have little intent to invest in your company, and will eventually solicit you to sign a fee agreement to pay them to introduce you to actual investors. Brokers are often worth the fee, but don’t be misled about who is the angel.

How do you avoid most of these? Whenever possible, only accept investments from individuals in credible, professional angel investing organizations - not people who solicit you. Even then, do your own due diligence in the business community. Ask what other companies they've invested in, and talk to the CEOs of those companies to find out what kind of investor they've been.

Also, make sure your lawyer writes the initial investment document or term sheet - not the investor. This document should be standard for all your investors and not negotiated on a one-on-one basis. Watch out for any attempts to add clauses that can come back to bite you. Not all angels these days are even trying to earn their wings.

Marty Zwilling


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Saturday, May 25, 2013

7 Reasons Why Fun at Work Makes Winning Startups

startup-fun-perksI’m convinced that people who have fun at work are more innovative, as well as happier. I don’t have any big scientific studies to prove this, but in my considerable business experience, I haven’t seen many successes come out of a group of fearful pessimists or unhappy people.

As I was looking through the literature, I did find evidence that many strong business leaders, like John D. Rockefeller, knew how to laugh at themselves. Humble leaders with this trait seem to create cultures that don't take themselves too seriously; cultures willing to take risks; cultures capable of creating and supporting a greater number of ideas.

Current popular startups, like Foursquare, with their break-up music and "Slow Jam Fridays" are a model of this new fun world. I can postulate several reasons why laughing and having fun at work might be linked with creativity and innovation. Here are a few:

  1. Escape the inhibitions. Laughing tends to remove inhibitions. Under the spell of inhibition, people feel limited and stuck. This is what we refer to when we say “thinking outside the box”. Encourage everyone to be open to new ideas and solutions without setting limiting beliefs. Innovation is more about psychology than intellect.

  2. Willing to make mistakes. People who take themselves too seriously are afraid to be seen failing. Failure while having fun is not usually seen as life-threatening. Expect that some ideas will fail in the process of learning. Rather than treating the mistakes as failures, think of them as fun experiments.

  3. Reset to a positive attitude. Under the pressure of a difficult problem, or if you are stuck on something, nothing innovative is likely to emerge. Do something fun to shift your thoughts back to the positive. Come back to the work problem with a fresh and more creative mind.

  4. Productive group activity. In teams, people feed off each other. A “downer” in a group takes the whole group down, whereas a fun person can bring the whole group to a more productive and innovative plane. This allows the group to “suspend disbelief” and really brainstorm new alternatives.

  5. Likely to be seen. Successful people surround themselves with people they enjoy and respect. If you are unhappy, or take yourself too seriously, you are less likely to get the attention and trust of people who can make a difference, or even recognize your innovative ideas.

  6. Likely to be heard. Communication effectiveness is the final hurdle for creativity and innovation. No matter how great your idea is, it won’t happen if it is not heard. People like to listen to fun people, and they close their mind to all the rest. If you want to be heard, write down the message and deliver it in a positive tone.

  7. Be perceived as a leader. By definition, people who project negativity are not going to be perceived as leaders. Nobody will charge a hill led by someone who says it can’t be done, or someone who emphasizes the risk of death.

Some people seem to want to make fun an enemy of business. I believe you will accept that premise only at your own peril. Fun is all about creativity, innovation, play, experimentation, progress, and seeing real things come to life. The most innovative people don’t see any dichotomy between work and fun.

So I encourage you to go out of your way this season to nurture fun at work, as well as passion and motivation. Learn to pay attention to laughter. Where there is laughter, there is an idea that holds people's interest. If you don’t take yourself too seriously, the pleasant by-product is that work becomes more enjoyable, and your innovative side will be more visible.

Marty Zwilling


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Friday, May 24, 2013

A Business Rebound is Not All Positive for Startups

michael_e_porterAs the business economy rebounds, many entrepreneurs are thinking that life will soon get easier, and their opportunity can only grow. In reality, the business world gets tougher every day, with new entrants, new technology, and competitors more easily entering the fray from around the globe.

Way back in 1979, Michael E. Porter proposed his Five Forces framework for analyzing the competitive environment which I think makes even more sense today. Every existing business, as well as every startup, needs to reassess their product or service in the context of these five forces:

  1. Intensity of competitive rivalry. This is where most current business plan analyses focus today. These plans just list a few key competitors out there now, compare feature richness, quality considerations, and pricing. This is an important first step, but it’s only the beginning.

  2. Threat of new competitors entry. Startups that target profitable and growing markets with high returns should realize that these will draw many new entrants. It will certainly also decrease profitability over time, as well as test your sustainable competitive advantage. That leads to switching costs, sunk costs, brand equity, and a host of other considerations, commonly called “barriers to entry.”

  3. Utility of alternative solutions. You are never the only alternative, hopefully just the best, in price, utility, and satisfaction. If you new vehicle costs too much, people take the bus. At some level of function, availability, and price performance, customers jump ship away from you. These elements are referred to as “barriers to exit.”

  4. Bargaining power of customers. This is the degree to which customers can put your company under pressure, or leverage prices, delivery, features, and quality (market of outputs). A key is your differential advantage from alternatives. Small differentials and more competitors give customers higher leverage.

  5. Bargaining power of suppliers. Suppliers of raw materials, components, labor, and services to you can be a source of power over your ability to compete (market of inputs). You need to identify substitute inputs, supplier concentrations, and employee solidarity (labor unions), which can limit you or give you the advantage.

A few years ago, Andrew Grove is credited with postulating a sixth force in the marketplace – government, pressure groups, and the public. This force adds the concept of “complementors,” and has led to the growth of partners and strategic alliances to balance the competitive environment.

These forces make up the micro environment of a company, which affect its ability to serve its customers and make a profit. A change in any of them should be your cue to re-assess the marketplace. All startups need to remember their core competences, business model, or network, which are the factors that allow them to maintain a competitive advantage.

One of the key sections of every entrepreneur’s business plan is the analysis of the competition. I especially love the ones that start and end by saying “We don’t have any competitors.” Investors take that to mean either 1) there is no market for your product, or 2) you don’t understand the concept of business and competition. Either way you lose.

I always remind startups that this section of the business plan should not be a negative one, merely listing competitors, with their advantages and head start. It’s your opportunity to highlight and emphasize your relative advantages, whether they be price, features, bargaining power, or any of the six forces outlined above.

On the other hand, there is more at stake for startups than enterprises because startups do not have the same financial capital of their bigger rivals. But with a clear understanding of where the power lies, you can take advantage of a position of strength, improve a situation of weakness, and avoid stepping into a pack of wolves with no protection. It’s a painful end.

Marty Zwilling


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Tuesday, May 21, 2013

Recent Gen-Y Startup Successes are an Emerging Era

gen-y-entrepreneurThe business world has been watching this emerging generation with trepidation, and a lot of people haven’t been sure who would be the winners, and who would be the losers. Can Gen-Y, much less the new Generation Z (1995-2010), survive as entrepreneurs, and do they have the passion and commitment it takes to run a startup and attract investors?

My own perspective is that the recession was good for Gen-Y (Millennials), because it forced them to face reality, often for the first time in their life. In the last few 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.
  • Socially conscious. 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, Zappos, 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 past pain level has been high, but the business climate has improved, 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 to fuel the wave.

Marty Zwilling


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Monday, May 20, 2013

6 Strategies for Transforming Ideas Into Results

ideas-actionSuccessful startups are all about turning ideas into action quickly and efficiently. These actions must be the hard part, since entrepreneurs always seem to come to me with ideas, and ask me for help on the actions. That has always seemed strange to me, since the magic is supposed to be in the ideas, and the actions are the same for every business.

In fact, the actions required to start and run a business are well documented, the subject of many books, and taught in college courses across the land. As confirmed to me by John Spence in his book on this subject, Awesomely Simple, turning business ideas into action consists of six essential strategies:

  1. Build a vivid vision. Having a clear, vivid, and compelling vision in your head is without question an essential component in building a successful company. But that’s not good enough. The vision has to be documented and communicated in a way that makes it vivid to every member of your team, your customers, and your investors.

  2. Team with the best people. The best people are highly talented and motivated individuals who are also masters of collaboration. The future of your startup is directly tied to the quality of talent you can attract and keep. You must create a winning culture that people love.

  3. Practice robust communication. Open, honest, frank, and courageous communication, both inside and outside the organization, is critical. The key skills can be learned, and include deep listening, logic versus emotion, and reading body language. According to Spence, this is the biggest problem he has to deal with in client organizations worldwide.

  4. Cultivate a sense of urgency. Get things done. A fast, agile, adaptable organization makes the important things happen now. Urgency is allergic to bureaucracy. Reward fast action. You set the model for your startup. You become what you focus on and become like the people you spend time with.

  5. Enforce disciplined execution. Build a performance-oriented culture that demands quality in every operation, encourages continuous innovation, and refuses to tolerate mediocrity. Most organizations execute only 10 to 15 percent of their major goals. Do a periodic effectiveness audit to check your operation. Then fix it.

  6. Show extreme customer focus. Put feedback mechanisms in place to know that you are consistently delivering what customers truly value. Attitude and listening are the keys. Superior customer focus can drive as much as an 85 to 104 percent increase in your profitability.

It should be pretty easy to see the interdependence and synergy among the six principles, each building on the next, all the various elements working together to create a highly successful business. But you don’t have to go out and address all six principles right now. Pick one that will create leverage immediately, and begin with it.

Spence defines three simple watchwords that will lead to business excellence – focus, discipline, and action. If you are missing any of these, the outcome will most certainly be mediocre. Once you start accepting mediocrity, you become a magnet for mediocrity.

Your great ideas deserve more than mediocre actions. Simple actions done in an outstanding fashion are far more effective than complex and time consuming actions done poorly (thrashing). Also, don’t be fooled into thinking that “simple” means “easy to implement”. Start now to turn your innovative ideas into action. Every entrepreneur loves a challenge.

Marty Zwilling


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Sunday, May 19, 2013

How an Entrepreneur Can be Open But Stay In Control

charlene-liThe emergence of social networking and the Internet has caused a new focus and value on “openness,” which leads to a new element of leadership, called “Open Leadership.” The mantra of open leadership is “Be Open, Be Transparent, and Be Authentic.” This is counter to the traditional business premise of “control,” so many companies are still pushing back.

Charlene Li, in her book “Open Leadership,” shows leaders how to tap into the power of the social technology revolution and use social media to be “open” while still maintaining control. I support her ten elements of the basic framework and vocabulary of open information sharing and open decision making:

  1. Explaining: creating buy-in. This element is sharing information through the new video, audio, and interactive media about, and the logic behind decisions, direction, or strategy with the goal of gaining buy-in to the idea so everyone is working toward the same goal.

  2. Updating: capturing knowledge and actions. New publishing tools, like blogs, collaboration platforms, and even Twitter provide updates that are easily available. These have the added benefit of being searchable and discoverable.

  3. Conversing: engaging in a dialogue with others. Employees can share best practices with customers on social network platforms and customers can help each other. When done well, an organization’s online community can become a competitive advantage.

  4. Open microphone: encouraging participation. Everyone and anyone is welcome to contribute through new collaborative tools with no preconditions. Search, combined with ratings and reviews become key in separating the useful from the rambling.

  5. Crowdsourcing: solving a specific problem together. The goal here is to grow the sources of new ideas and gather fresh thinking to create a new product or service. It can also be for solving everyday problems, like logo design or open source code.

  6. Platforms: setting standards and sharing data. Ebay is an example of open standardizing on how items are listed and how transactions are handled, enabling millions of individual sellers. Common platforms enable open data access at any level.

  7. Centralized. The key challenge of making centralized decision making more open is to open up information sharing in both directions, so that those in power have the right information and also have the commitment to share it back out to the organization.

  8. Democratic. Increasingly, voting is used to allow people to choose from a set of equally viable options, with the result is that employees feel a greater sense of ownership in the process. This is also becoming prevalent in decisions with customers on products.

  9. Consensus. Social technology tools now allow this process to be done quickly and less chaotically, with tremendous buy-in from everyone affected. This process works well in today’s extremely flat and non-hierarchical startup organizations.

  10. Distributed. This is a hybrid of all the preceding decision processes, in that it pushes decisions away from the center to where information and knowledge actually reside, typically closer to the customer. This mode requires more discipline and planning.

I’m still waiting to see how all this works out in real life. The challenge is to be open without abdicating all control, or spiraling into chaos. Hopefully, by embracing social media rather than banning it, leaders can transform their organizations to become more effective, decisive, and ultimately more profitable in this new era of openness in the marketplace. What do you think?

Marty Zwilling


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Saturday, May 18, 2013

Inspiration Without Perspiration is a Dull Startup

Genius-is-perspirationI’m fully convinced that both inspiration and perspiration are always required in a startup. Yet many people seem to be stuck on one end or other of this equation – all perspiration with no dream, or all inspiration with no reality. Success is the right balance of both for fun and profit.

Aspiring entrepreneurs ask me why their great idea hasn’t sold; they talk about it endlessly, and they expect others to do the development, finance, and marketing work for them. Those at the other extreme don’t look up from the grindstone long enough to notice whether all their work is producing sweat equity or just sweat.

Starting a business may be fun, but it’s not easy. No matter how many times you’ve done it – the stresses are tremendous. It can also be very inspiring, as you watch your dream morph into reality, or as you feel each little element of success:

  • Watch your team develop new skills. There is nothing more inspiring than seeing the results of your mentoring and leadership. Your own learning should be the biggest inspiration of all.
  • Your solution fills a real market need. Truly satisfied customers are a joy to every business person. Watching the orders come in, or the product moving off the shelf, is the feedback you have been looking for.
  • A business model that works. You have figured out how to undercut your competitor’s price, and still hold your margin. Taking that first salary after a long dry spell is an inspiring moment, and a great celebration with friends.
  • Love that sustainable competitive advantage. Working on that unique design, or completing the breakthrough for an innovative patent, are moments of inspiration that you will never forget, especially if they become your competitive edge.
  • Bask in the success as it happens. Maybe it’s that first customer testimonial, or that first congratulations from someone you respect, or seeing your story in the newspaper. You knew all along that you could do it.

Of course, never forget those ongoing perspiration items that seem to haunt you every day:

  • Create intellectual property. Incorporate, register your domain name, trademarks, and copyrights, then patent if possible. Reserve the same names on the leading social networks and blogs.
  • Marketing is top priority. Start even before the product is ready. Word of mouth advertising and viral marketing cost big bucks these days so budget for it. It takes leverage, effort and money to get in the public eye and stay there.
  • Reign-in expenses. Review every expense with a miserly hand. Do not delegate this task! Make every effort to do things “in house”, rather than rely on outside services, accountants, and law firms.

Though innumerable factors are a part of every success, it’s arguable that the ratio of effort to inspiration can make the difference between just spinning wheels, on the one hand, and ideas that never come to fruition, on the other.

Some say the Internet is a metaphor for our brains. Both are networks. Maybe inspiration is feeding your brain as much information as possible and then figuring out how it connects when the time comes. Perspiration is the lubrication to keep your senses open to all the possibilities.

Marty Zwilling


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Thursday, May 16, 2013

For Entrepreneurs, Conversations Are All Business

conversationsWhether you are trying to motivate your team, close a deal with a customer, or get funding from an investor, a casual conversation is usually a waste of your valuable time. These result is a founder who is always “too busy,” but never seems to get the business done and the team moving. All real business is conversations focused on creating results.

Shawn Kent Hayashi, in her new book “Conversations That Get Results and Inspire Collaboration” makes my point very well as she outlines the top twelve types of conversations that relate to working together in business, and provides tips on how to make each of them more effective for all concerned:

  1. Conversation for connection. Connecting with others happens when we slow down our talking enough to be in the present and really listen to one another. Rapport building requires listening, more than talking. Powerful listening causes trust to grow.

  2. Conversation for creating new possibilities. The questions a manager or colleague asks help us to understand a situation better, if we ask good questions and really listen to the answers. Conversations can also be the triggers to professional development.

  3. Conversation for structure. When we know what we want to create, the next step is to devise a plan. We build our plans with the steps as we become aware of them through conversations, with ourselves as well as with others.

  4. Conversation for commitment. For each identified action step, we identify potential candidates and then seek their commitment to produce the result that corresponds to the task. The commitments we make to ourselves are the most fundamental.

  5. Conversation for action. What actions will make your tasks and goals come alive? We’ve all seen people get stuck in a project because they do not know what to do next. They’re not asking themselves or anyone else the right questions, and not listening.

  6. Conversation for accountability. After a conversation for commitment has occurred and the expectations are clear, being accountable for engaging others in what you want to do is a sign of respect. Sometimes people need to be guided into better outcomes.

  7. Conversation for conflict resolution. Many people will avoid conflict in work relationships at all costs, which is nonproductive. Others feel fear when the smell of conflict arises. A few overuse this conversation type. Conflict is normal, so deal with it.

  8. Conversation for breakdown. Anger indicates that something or someone has crossed one of our boundaries, and is a signal to address the issue. Breakdown recognition is vital to moving forward. Asking for what we want might actually clear up the breakdown.

  9. Conversation for withdrawal and disengagement. It is unrealistic to think that all work relationships will be enjoyable or friendly forever. Often it is best to end a tenuous connection, so that we can invest our time in ones that are meaningful and productive.

  10. Conversation for change. Your ability to change the direction of an individual, team, or an investor occurs through conversations. By design, you can change the conversation in the office, at board meetings, and with peers who seem to have gone off track.

  11. Conversation for appreciation. Think of the last time you felt really appreciated at work. Undoubtedly someone showed appreciation of your efforts using language that works for you. Affirming others through conversation builds relationships and momentum.

  12. Conversation for moving on. You have conversations for moving on when leaving a community or transferring or retiring from a company. One day you might reconnect, but for now you have closure, with no expectations of future conversations.

Being successful as an entrepreneur begins in a conversation with ourselves first, and then extents to others, focused on what we are passionate about, and the solutions we are bringing to market. None of these are casual conversations, where you don’t really listen to the response. How committed are you when someone is obviously not listening to your responses?

Marty Zwilling


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Wednesday, May 15, 2013

7 Rules for Savvy Customer Service Required Today

CustomerServPriorityCustomer service has always been reactionary, meaning someone has to wake up and answer website email requests. That’s just not savvy enough to hold today’s fickle, less loyal, and ready to jump customer. Great startups are getting ahead of the game with “anticipatory customer service,” like providing smart phone access to product and account data to head off complaints. This exemplary customer service is just savvy marketing.

Self-service technologies, social media, and smart phones have created a new set of expectations for high-tech consumers today. You should assume that they will want discounts to match competitors, and answers to technical questions in real time, rather than waiting in some phone or mail queue.

Thus you need a new generation of self-service that goes way beyond the now old-fashioned and frustrating automated phone audio response messages. I found a good summary of these new expectations in a book recently published by Micah Solomon, “High-tech, High-touch Customer Service.” Here are seven rules derived from his insights to start your thinking:

  1. Customers expect a choice of channels. Customers should never be told by a clerk to call customer service, or told on the phone to see the website. You need to anticipate the channel they might choose, and be ready to handle it, or they will look elsewhere, and trash you on Twitter and Yelp.

  2. Self-service needs to have escape hatches. It’s time to end the automated email responses with the “do-not-reply” address. Always end self-help postings with “Did this answer your question?” and provide a next step for those who answer “No.” That means guiding your customer to the top, rather than hiding the top decision maker.

  3. Respect your customer’s view of usability. Usability is recognizing what users have learned from past experience, rather than an abstract science. So don’t move the search bar from the top of a web page, or select a digit other than “0” for getting a human on the phone. Scientific updates to your interface to reduce keystrokes may be self-defeating.

  4. Customers need to be able to shift channels without regression. How many times have you shifted from automated response to a human, and been asked for all the information anew? Anticipate this, and use today’s technology to make the experience seamless. You probably won’t get a second chance.

  5. Self-service has to be monitored and updated regularly. Customer expectations go up as rapidly as the delivery technologies change. Social media apps like Twitter and Pinterest are the latest sources for what’s catching people’s attention today, both positively and negatively. You should be watching.

  6. You and your staff need to regularly use your self-service channels. For the staff, they need to understand customer issues, and you need to test the tone and culture of the people behind the scenes. It’s getting tougher and tougher to outsource this tone and technology to other cultures halfway around the globe.

  7. Ugly upsells through self-service are a brand killer. Amazon handles upselling in a gently suggestive way, with a “frequently bought with” message. Harder sells can backfire, since people like to be pulled in with personalized messages, rather than pushed along with the crowd.

Technology is great for adding speed and flexible delivery to anticipatory customer service, but people are still required to add the heart and the personal touch. More than ever, a startup needs to build an emotional connection with every customer. Reactionary customer service won’t generate the loyalty you need to survive. When was the last time you took a hard look at your service?

Marty Zwilling

Disclosure: This blog entry sponsored by Visa Business and I received compensation for my time from Visa for sharing my views in this post, but the views expressed here are solely mine, not Visa's. Visit http://facebook.com/visasmallbiz to take a look at the reinvented Facebook Page: Well Sourced by Visa Business.

The Page serves as a space where small business owners can access educational resources, read success stories from other business owners, engage with peers, and find tips to help businesses run more efficiently.

Every month, the Page will introduce a new theme that will focus on a topic important to a small business owner's success. For additional tips and advice, and information about Visa's small business solutions, follow @VisaSmallBiz and visit http://visa.com/business.


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Tuesday, May 14, 2013

The Most Admired Entrepreneurs are Servant Leaders

its-not-about-meStartups provide leadership in the market. Entrepreneurs provide leadership to their startup. There are many styles of leadership, like dictatorial, laissez-faire, and democratic. One that I hear discussed more these days, in this age of relationships, is called “servant” leadership.

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

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

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

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

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

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

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

For comparison purposes, autocratic leaders tend to make decisions without consulting their teams. Laissez-faire and democratic leaders normally allow people within the team to make most of the decisions, based on consensus. In reality, the very best leaders are those who can use a variety of leadership styles effectively, and use the right style for each situation.

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

Marty Zwilling


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Sunday, May 12, 2013

Is Your Startup Moving Fast Enough to Stay Ahead?

Kentucky-Derby-OrbIn today’s business startup environment, if you don’t move fast, you get run over. Without a sense of urgency, people and businesses just can’t move fast enough. Speed is the driver because customers have a zero tolerance for waiting, and there are always competitors gaining on you.

John P. Kotter, in "A Sense of Urgency," delves into the how-to required of entrepreneurs on that first step, avoiding pitfalls along the way. He is convinced that increasing the sense of urgency is the toughest of the steps necessary for effective change.

Urgency is not frantic activity born of excess energy, anger, or frustration. These do result in high activity levels, but results will be slow in coming and often misdirected. Here are six more positive steps to increasing a true sense of urgency, according to Kotter:

  1. Behave with urgency every day. Always demonstrate your own sense of urgency in meetings, interactions, memos and e-mail, and do so as visibly as possible to as many people as possible. You are the role model for everyone in your organization. If your tone or actions lack urgency, it percolates quickly to everyone, and you reap what you sow.

  2. Consistently communicate urgency. Urgency is a set of thoughts and feelings, as well as a compulsive determination to move and win now. Aim for the heart, not just the mind. Look for the element of every story that will compel employees into action. Make employees feel empowered, not stressed, to buy into the need for urgency.

  3. Create action that is relentlessly aimed at winning. Make sure your actions are exceptionally alert, and focused on success. Show some progress each and every day, and constantly purge low value-added activities. Be quick to reward the winning actions of everyone on the team.

  4. Bring the outside in. Be on the lookout for compelling data, people, video, websites and other important messages from outside the company. Strive to connect internal activity with external happenings and challenges. Highlight competitor wins in the marketplace, and continually challenge your own team to do better than competitors.

  5. Find opportunity in crisis. Always be alert to see if crises can be a friend, not just an enemy, in order to destroy complacency. Think of crises as potential opportunities, and not only dreadful problems that automatically must be delegated to the damage control specialists. But don’t assume that crises inevitably will create the sense of urgency needed to perform better.

  6. Deal with the urgency-killers. Remove or neutralize all the relentless urgency-killers, people who are not skeptics but by their actions keep a group complacent or create destructive urgency. Examples are people who are always “too busy” or stretch every task delivery beyond reasonable limits.

One of the main obstacles to a sense of urgency is complacency, which often sets in after a success. When the CEOs and employees are riding high on a wave of profits, complacency can creep in unnoticed. It's easy to hand out rewards and praises without looking down the road and outside the box. Eventually a competitor comes along to trample you into the dust.

Another frequent obstacle is the false sense of urgency. The enemy of urgency is a full appointment calendar, when everything becomes urgent. Here you need flexibility, smarts, and guts to reprioritize less important tasks, or purge them altogether.

Finally, eliminate fear, both fear of failure and fear of success. Fear thrives in an environment where people get punished for mistakes and discouraged from experimenting. Fear of success means people worry that success will bring uncomfortable or distasteful changes.

So my challenge to each of you is that you wake up each day with a sense of urgency both at work and in your personal life, and practice the recommendations above. Constantly critique your business and look for opportunities to improve. Lead by your actions, and the team will follow.

Marty Zwilling


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Saturday, May 11, 2013

How Entrepreneurs Qualify for Funding from Banks

bank-fundingA common question I get is “How do I get a bank loan to fund my startup?” The default answer is that it probably won’t happen, because most banks just don’t make bank loans to startups. The failure rate is just too high, and startups typically don’t have the assets or revenue stream to back up the loan. That’s why Angel investors are so sought after by entrepreneurs.

In my experience, some startup founders do overcome these odds, but you need to be realistic and do your homework. Here are some tips and rules of thumb to improve your odds and help you understand when a bank loan or line of credit is possible, and how to get it:

  • Write a good business plan first. Approaching a banker without a business plan, and asking for money, is a sure way to be rejected and leave a bad first impression. Pay particular attention to the financials, and have a CPA friend review for reasonableness before presenting.

  • Clean up your credit rating before you apply. Good credit ratings, both personal and business, are essential to getting a loan or line of credit. This is just common sense, since every loan has a repayment schedule, and your credit score reflects your track record of paying bills on time.
  • Pick a business domain that is squeaky clean. Certain business sectors have historical high failure rates and are routinely avoided by banks and investors. These include food service, retail, consulting, work at home, and telemarketing. Also, don’t expect enthusiasm for your gambling site, porn site, gaming, or debt collection business.
  • Show a significant personal investment. Most loan programs, and most investors, want to see that you have “skin in the game’ before helping you. If you have nothing at risk, your own level of commitment is suspect. As a general rule, your investment should be at least 20% of total projected loan requirement.
  • Demonstrate an ability to repay from revenues, not collateral. Bankers will insist that you have collateral to back the loan, like equipment, or even your home. They actually prefer to see that you have a revenue stream to repay the loan, since they don’t want to own another home. The more conservative ask for two years of positive cash flow.
  • Demonstrate experience in starting a business, ideally in this domain. Bankers, like investors, fund people rather than ideas. Your idea alone will not get you a loan, but your experience running businesses may get you a loan, even if not intimately related to the current proposal.
  • Conduct meetings at your site, not at the bank. You have an advantage if you can get them on your turf, and even get several key employees to tag-team the presentation. If you are a startup operating out of your garage or basement, you are likely too early in the cycle to get banks interested.
  • Eliminate your salary from the use of funds. Most startup founders don’t take a salary for the first year or two, since most investors as well as bankers won’t give you money so that you can pay yourself. The most positive use of funds is to buy raw materials to build product for existing customer orders. In fact, customer orders are great collateral.

Even if you can’t meet all these criteria, it’s definitely worthwhile to utilize the free services of the Small Business Administration (SBA) and SCORE in the US to get their help in preparing for the loan option. They have contacts with the more “startup friendly” banks in your area, like Silicon Valley Bank, and might even be able to arrange a “loan guarantee” if you meet these criteria.

In all cases, the loan option should be investigated before looking for an Angel investor, since the “cost” of a loan is usually considered less than giving up a large share of your company equity and control to Angel or venture capital investors. I’m told that 21 companies on the Inc 500 list started with bank loans, so you can do it too.

Marty Zwilling


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Friday, May 10, 2013

7 Startup Habits Investors Read as Staying Power

startup-habitsI’m always looking for evidence of early startup characteristics that might be predictors of long-term success. Every investor has his own list, usually based on his own very small sample, or simply his gut feeling. Of course, we would all like to have a magic list based on more definitive tracking of many real startups over time.

In that context, I came across an old study of 27 startups featured in Inc’s annual “Anatomies of a Start-up,” done for “The Journal of Business Venturing,” and published by George Gendron in Inc Magazine. As it turned out, 17 of the 27 companies were still in business seven years later, which is at least double that of other studies. The points all still ring true today.

To determine what factors made a difference, the researchers compared the 27 companies using numerous variables. Of all those variables tested, only seven proved to be reliable predictors of survival. Here is my own net of those seven habits:

  1. Founder is ready, willing, and able to learn. We have all known entrepreneurs whose egos are so large that they can’t be bothered listening to any advice from friends or experts, and they insist on doing things their way. Effective entrepreneurs are always open to learning, no matter what their prior experience.

  2. Seek out established suppliers and channels. The challenge of a creating a new product or service is tough enough, without insisting on a new supply chain, and a new distribution channel. The most effective startups focus on their core competency, and work hard to pick the best of the rest for partners.

  3. Pays close attention to new potential competitors. Effective startups are never comfortable just because the features they plan for rollout in six months are ahead of what competitors have now. Things move fast in the startup world, and real competitors never stand still. Reassess new entrants and competitors every month.

  4. Spend more time on initial positioning. Like the old saying, you only get one chance for a great first impression. Overcoming a bad image, or even changing a non-image, takes lots to time, money, and effort. Your initial business identity can make or break your startup.

  5. Do your homework on minimal capital requirements. Usually that means have a Plan B and Plan C, just in case your initial source doesn’t materialize, or takes much longer to finalize that you expected. Running out of capital in midstream is a brick wall that can derail even the best plans.

  6. Offer customized products or services. It’s very difficult for a startup to jump quickly to the volume required to sustain them as the low-cost producer. Big gorillas with deep pockets find it hard to scale products that are designed or produced to order.

  7. Choose a large market in a growth industry. By definition, a growth industry has a history and an outlook of at least double-digit annual growth. A large market means at least $500 million in potential sales if the company is asset-light, and $1 billion if it requires plenty of property, plants and equipment.

This study jibes with other academic research in showing that no single factor is a reliable predictor of success, but taken together they do add up to a considerable advantage. In my view, a necessary but not sufficient first predictor of success is the habit of building a plan.

It’s the plan building process that provides the value, and gives you real insight into your market, your customers, and the competition. After that, it’s all about learning and execution. If you see a startup with the execution habits listed above, that may be the horse you want to bet on, and ride to the finish line.

Marty Zwilling


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Thursday, May 9, 2013

A Sustainable Business Requires Time and Practice

practiceEntrepreneurs seem more quickly frustrated these days when their “million-dollar idea” doesn’t turn into a sustainable business overnight. They don’t realize that it takes many skills to build a business under the best of circumstances, and today’s world of instant gratification doesn’t leave room for the patience and practice to develop these skills.

Successful sports figures and musicians have long understood the value of time and practice in perfecting their skills. So why do entrepreneurs think that building a business is intuitively obvious, and should happen overnight? Building a business is a complex task, like building the product or service, and requires the same focus, discipline, and practice to get it right. Even the revered Steve Jobs of Apple didn’t get it all right the first time.

In his latest book, “The Practicing Mind,” Thomas M. Sterner outlines how people learn the necessary skills for any aspect of life, from golfing to business. He emphasizes the importance of a practicing mindset, and provides some clues on how to offset our modern culture of habitual multitasking, short attention spans, and giving up quickly in the face of any setback.

He believes, and I agree, that creating the practicing mind, and acquiring any skill, without stress and futility, comes down to following a few simple disciplines:

  • Keep yourself process-oriented. As entrepreneurs, we have a very unhealthy habit of making the product or service the focus, instead of the process of “changing the world,” which was the big vision in the first place. When you focus on the process, and see progress and learning with each small step, all pressure drops away.
  • Stay in the present. In business, the world of customers and competitors changes every minute, so you learn by iterating and listening, taking all feedback as positive progress, rather than delays and mistakes. Don’t lose touch with your original dream, but fixating on the “final” solution is not productive or satisfying.
  • Make the learning process your goal. Use the original dream as a rudder to steer your efforts. Success in business comes to those who learn most quickly, and adapt their processes most effectively. Don’t get caught up in achieving the exact product or service of your entrepreneurial dream, because it’s almost always wrong anyway.
  • Be deliberate, and keep a clear picture of your destination. A random walk does not lead to business success. Deliberate intention is focused on a destination, but realizing that every step need not be predicted. Being deliberate is making each iteration land nearer to the destination, focusing on positive thoughts and positive actions.

Most of the anxiety that entrepreneurs experience comes from the feeling that there is an end-point of perfection in every product and business. The reality is that there is no ultimate product or business, since each improvement or business growth increment brings a whole new set of challenges, requiring more learning, more practice, and more skills.

Practice is required to replace bad and unproductive habits, like too much multitasking, with desirable habits, like solving important challenges more often than the crisis of the moment. Building new good habits is important, since they allow you to do required things effortlessly and without overt planning each time.

Even this is a process that must be practiced. First you have to be self-aware, and decide on what you want to be a habit. Then set up triggers to help you remember the action and the time, and finally make sure you have clear motivation for the action. Practice is the required repetition on this action with patience, until it’s effective and automatic.

Entrepreneurs should not be afraid to use the terms failure and practice interchangeably, since investors often conclude that startups learn more from failure than from success. Obviously, it’s to your advantage to make your practice steps small ones in time and cost. Successful professionals actually enjoy honing their skills through practice. Are you having fun yet?

Marty Zwilling


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Wednesday, May 8, 2013

Startups Should be Wary of Disruptive Technologies

Mark-Zuckerberg-fileHow many times have investors heard startups start their pitch by touting that their technology is “disruptive?” What entrepreneurs forget or don’t realize is that most customers are initially wary of any technology, that educating the market on new technology is expensive, takes a long time, and people buy problem solutions rather than technology anyway. Investors will wait for more traction.

The concept of disruptive technology was first introduced by Clayton M. Christensen in “The Innovator’s Dilemma” way back in 1995. Such technologies, like the digital camera and mobile phones, introduce such novel concepts that they displace existing technology quickly by societal standards. Unfortunately this “quickly” may be too slowly to save initial startups in the space.

In this time of constant change, it’s easy to conclude that everyone is an early adopter, and we all tend to forget quickly the time and stages we go through while adapting to new technologies, and then loving them. I saw a recent article on HBR “The Five Stages of Disruption Denial,” by Grant McCracken, comparing technology adoption to Kubler-Ross’ five stages of grief:

  1. Confusion. We don't quite get it. We sign up for the new app, or buy one of the new devices after we see our cool friends using it. We give it a whirl, and quickly complain that things were easier the old way. By this time, gurus are reassuring us that it is the greatest thing ever. But that doesn't help. We decide to wait another year for the next version.

  2. Repudiation. There are many people who don't get the new technology, and now social life is a little like a competition to show that we're not "falling for it." At this point, there can more social capital in saying that we don't like the technology than that we do. We now hear snappy one-liners like, "Twitter. What could I possibly say in 140 characters?"

  3. Shaming. This is when we are so persuaded that we're right and the new innovation is wrong that we are prepared to make fun of the credulous among us. "This Twitter thing. It's just a fad. Give it a couple of months and it will go away." We heard a lot of this sort of thing about Pinterest in the early days. Now it's valued at $2.5 billion.

  4. Acceptance. By this time, the innovation is taking off. The middle adopters are signing on. It is clear now even to late adopters (the great majority) that there is at least one useful aspect of the new technology, and it’s here to stay. Confronted by accomplished, irrefutable fact, the rest of us cave in, sign up, and brag about how modern we are.

  5. Forgetting. This is where we destroy the evidence, even in our own mind. Now we are inclined to act as if we always understood and approved of a world instilled with new innovation. One minute, we are too smart to be fooled by Twitter. The next we are fully on board. It's a like high school. We are captives of what Mark Earls calls "the herd."

In the old days, it typically took 20 years for this process to happen. Now it happens much faster, but it still takes longer that the survival lifetime of a struggling startup. Smartphone acceptance is now around 50%, about six years after the first Apple iPhone was introduced. There is other evidence that may be the new norm.

Marketing guru Seth Godin mentioned in an article a while back that “it takes about six years of hard work to become an overnight success.” Mark Zuckerberg spent about 7 years and $150 million before Facebook became cashflow positive. MySpace and several others, who arguably pioneered the disruptive social media technology, never really survived to enjoy it.

Too many of the startups I know who highlighted their disruptive technology early ultimately ran out of money and had to shut down for being “ahead of their time.” They did everything right, but the market just wasn't ready. Sometimes this is just an excuse for other problems, but don’t forget the old investor saying: "being early is the same as being wrong."

Overall, I think more startups do fail by being too early to market than fail by being too late. This is probably a hard message to swallow, but it’s usually the second mouse that gets the cheese. What are you doing to avoid this trap with your disruptive technology?

Marty Zwilling


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Tuesday, May 7, 2013

What is Your Entrepreneurial Leadership Potential?

successful-entrepreneursEntrepreneurs inherently understand that they have to be the initial leader of their startup, but often they don’t have the experience or the training to know where their leadership competencies lie, or how to build a leadership team. For new entrepreneurs, leadership development efforts may be more valuable for achieving startup success than business skills development.

Very few people know their own leadership style, or strengths and weaknesses, despite their many years of living and working in the real world. To assess where you are, and to unlock your full potential, there are many courses available, as well as seminars and gurus, but a good place to start is a book on the subject, like the new one from John Mattone, “Intelligent Leadership.”

Mattone has a wealth of insights, based on years of helping Fortune 500 leaders overcome their self-imposed limiting leadership habits. He identifies and distinguishes between nine distinct leadership traits that I see in all entrepreneurs, to some degree. The most effective entrepreneurs know their own predominant traits, and how to build a team with all the rest:

  1. Helper. Mature Helpers are considerate and genuinely the most sensitive and caring of all the leadership types. They are excellent mentors and coaches, but have a strong need to be admired and respected in return. Strengthen this trait by being more conscious of your need to be liked, and don’t be possessive or controlling.

  2. Entertainer. Entertainers gain the respect of others with drive, determination, hard work, and the ability to win over people. But they can become fixated with appearing successful, showing more style than substance, or undermine themselves by exaggeration, inflating their importance, or trying to win or one-up all the time.

  3. Artist. Artists are perhaps the most creative and innovative leaders. They tend to move people deeply, and bring out the most in people. As they become more mature, they draw less inspiration from themselves, and more from others. Improve your artist side by avoiding negativity, procrastination, and focus on self-discipline.

  4. Thinker. Thinkers like to analyze the world around them, and may prefer thinking to doing. Mature Thinkers quickly understand problems, can explain them to others, and make sound and logical decisions. Strengthen this trait by not jumping to conclusions, seeking advice, and working cooperatively with others you trust.

  5. Disciple. Disciples are able to form strong and cohesive work groups, but sometimes appear incapable of action without permission of an authority figure or belief system, and don’t seek out leadership positions. This trait can be strengthened by accepting accountability, reducing reaction to stress, and cutting ties to authority.

  6. Activist. Activists are good at lifting the spirits of team members and managers, and are usually optimistic and confident. They tend to bury themselves in activities, but can be impulsive and select quantity over quality. Improvement efforts would include listening more to people, thinking about details, and learning to say no.

  7. Driver. Drivers are the most openly aggressive leaders, who enjoy taking charge, and can make things better with their immense self-confidence. Unfortunately, they may feel the need to dominate every situation, and make every decision. Mature ones act with more self-restraint, let others win, and work with others.

  8. Arbitrator. Arbitrators tend to be the most open of all types. What you see is what you get. They find ways to bring people together, and ways to involve everyone. To be a better Arbitrator, you need to be more assertive, more open, share your feelings, and work on developing your listening skills.

  9. Perfectionist. Mature Perfectionists are capable of being highly noble leaders, with their deep sense of right and wrong and ethical principles. They are usually highly critical of themselves and others, and often frustrated by reality. To improve, they need to learn to relax, listen to others, and remember that no one is perfect.

In all cases, to reach your highest leadership potential, you have to stay true to yourself, rather than trying to conform to other people’s images of the best you. If you truly commit to learning more about yourself and becoming the best that you can be, while possessing a great attitude, you will discover that all challenges are really the seeds of opportunity.

Most recognized entrepreneur leaders admit that their biggest challenge was to break through their self-imposed limiting thoughts, emotions, and habits, to reach the next level. How many of these leadership traits have you mastered, how many are you working on, and how many of the other strengths have you built into your team to help you? That’s intelligent leadership.

Marty Zwilling

*** First published on Young Entrepreneur on 04/29/2013 ***


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Monday, May 6, 2013

10 Tips For Entrepreneurs on How to Hang Tough

hang-toughIn sports, mental toughness is defined as the ability to focus on and execute solutions, especially in the face of adversity. If anyone in business ever needed mental toughness, it’s an entrepreneur. Investors tell me that startup success is all about execution, all while facing determined competitors and overcoming customers’ resistance to change.

Dr. Jason Selk, in his book “Executive Toughness,” talks about mental toughness with analogies between sports and business, but he never takes it all the way to entrepreneurs, where I believe it can have the most impact. So here is my interpretation of the fundamentals he outlines, adapted to the language of a startup:

  1. Define the win for your business. A startup is not a parlor game. With a for-profit startup, it’s all about solving a problem that embodies real pain, for real customers who are willing and able to pay for a solution. For social entrepreneurs, it’s all about making the world a better place. Figure out early what it takes to win, or you will lose by default.

  2. Adopt a business vision that fits your self-image. In every case, you need a long-term vision that drives self-fulfillment and self-image as well as business success. Assess your strengths and weaknesses, and visualize how these will lead to business success. If the vision doesn’t fuel your passion and match your skills, you won’t like the lifestyle.

  3. Establish real business goals and processes. It’s hard to achieve things that have not been defined, and the steps to get there are not clear. I recommend a business focus on a one-year timeframe, with a limit of three product goals and three process goals.

  4. Prioritize the priorities. Prioritize or perish should be every entrepreneur’s mantra. Accountability requires splitting your big product goals into daily process goals and scheduling them to completion. Don’t get distracted with the unimportant.

  5. Practice accountability through self-evaluation. Learn to look in the mirror every day. No evaluation means no awareness of how you are doing, which gives you no basis for improvement. Good performance does not require perfection, which is unachievable.

  6. Control your emotions to control your performance. Learn to control the degree to which your nerves and emotions are engaged and on alert. By maintaining basic mental stability and physical fitness, and preparing yourself intellectually you will function more effectively and successes will grow.

  7. Prepare to say the right thing. Practice your response to the three most common situations you face. Creating and documenting scripts, like your elevator pitch, for key interactions help you and your team maintain focus. They build confidence and reduce the anxiety that often gets in the way of leadership performance.

  8. Prepare mentally every day. Your mind can be strengthened every day, just like a muscle. Complete a mental workout every day to dramatically improve your focus and ability to execute consistently. It’s one of the most effective methods known for training your body and mind to stay under control and perform to your potential.

  9. Develop a relentless and optimistic solution focus. Replacing all negative thinking is one of the most critical pieces of your mental toughness puzzle. Approach all solutions one step at a time, where a step is any improvement to the current situation. Remember that a focus only on problems will likely cause more problems.

  10. When you set your mind to do something, find a way to get it done, no matter what. While a relentless solution focus is the mental step, discipline is the action step that makes solutions materialize. In this way, discipline delivers success. Make discipline a habit by limiting temptation and conscious practice.

We all need these fundamentals of mental toughness to succeed and lead in today's business environment. It takes more than market knowledge and technical skill alone. That’s the fun part of the challenge to most serious entrepreneurs. If it was easy, anyone could do it. Are you ready to step up to the plate?

Marty Zwilling


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Sunday, May 5, 2013

9 Steps to Entrepreneur Real Social Media Results

social-media-bullseyeIf you are an entrepreneur these days, or trying to grow an existing business, everyone is telling you that you need to use social media. There are many ‘experts’ out there telling you how to do it, or even offering their services. But very few are talking about how to measure your results, and the right metrics for optimizing your marketing environment.

Jim Sterne, who has written many books on Internet advertising, marketing, and customer service, tackled this complex world of social media metrics in his book titled "Social Media Metrics." He has one of the first books on this subject, and he breaks the process down into nine steps, as follows:

  1. Get focused and identify goals. Social media is the realm of public opinion and customer conversations. If you don’t have a clear idea of why you are there, anything you measure will be useless. He suggests you begin with the “big three” business objectives of higher revenue, reduced costs, and improved customer satisfaction.

  2. Get attention and reach your audience. Measuring message delivery in social media is a lot like measuring it in classic advertising, so classic metrics apply. With social media, it is also important to identify how many people see your message as remarkable. That leads to the extra reach of word-of-mouth, commenting, and telling their friends.

  3. Measure respect and find influencers. Your task now includes reaching the people who are key influencers, and understanding their impact. Therein lies the multiplier effect. Your message multiplier velocity and reach are the signals that your offerings have the right scope, spread quickly, and resonate with your target audience.

  4. Track the emotional sentiment. Counting is fine, but analyzing the outpouring of millions of souls can reveal attitudinal shifts. Tracking public sentiment over time provides invaluable insight and gives you the chance to stay right on top of changes in the marketplace and your organization’s brand equity.

  5. Measure customer response and action. If they read it and like it, do they click through to your web site, or engage with your organization in new and different ways? Action is when people are drawn into a profitable and sustainable relationship with your company. That’s where the money is.

  6. Get the message from your customer. With the customer in control, you need to make sure you are getting the right message from the right people at the right time. That’s real-time market research, and you need to measure how well you are hearing it and acting on it in your business strategy planning.

  7. Drive business outcomes and get results. Now it’s time to cycle back around to measuring what sort of business impact your efforts are having. Measure to see if you have an increase in revenue, a lowering of costs, and improvement in customer satisfaction. Then it’s time to re-examine your goals to look beyond the “big three.”

  8. Get buy-in from your colleagues. Some executives are slow to understand and embrace new communications methods. Use your results to convince them that social media is a vital part of your marketing mix, and deserves the resources necessary for proper implementation and measurement.

  9. Project the future. Start now to look at where social media will be in two to ten years, and prepare for it. Don’t let the changes takes your organization by surprise, or allow your organization to be the last to implement and measure you in the new world.

The tools to help you with all these actions are still evolving. You can scan the Internet for the many offerings to gather data, but the evaluation of the ‘why’ behind the results is still largely manual. That’s the insight you need to support your efforts to reach higher performance goals. The sooner you find these insights, the quicker you can make better decisions to positively enhance your bottom line.

Marty Zwilling


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Saturday, May 4, 2013

10 Tips From Entrepreneurs Who Made Their Own Luck

Dennis-PerkinsDid you ever wonder why some entrepreneurs always seem to have all the luck and success, while others never seem to catch a break? As an Angel investor, I quickly learned that luck has very little to do with it, and I now look for some personal characteristics and leadership styles that separate the potential winners from the losers.

These differences are the reason that investors say that they invest in people, rather than ideas. As I was reminded recently in a recent book by Dennis Perkins, “Leading at the Edge,” this isn’t a new concept. He illustrates this by comparing the acts of numerous teams which faced the edge of life and death as early Antarctic explorers in the 1800s.

He was able to identify ten strategies that were the common threads to survival in the winning explorer teams, which I believe apply equally well to the survival and success of business startup teams today:

  1. Never lose sight of long-term goals, but focus real energy on short-term objectives. Don’t be afraid to pivot, and commit to new objectives with as much passion and energy as the original. Andy Grove of Intel fame started making memory chips, but switched to microprocessors with a vengeance when Japan totally undercut his pricing.

  2. Set a personal example with visible, memorable symbols and behavior. Under the stresses of a startup, visible leadership cues can make the difference between success and failure. When McDonald’s was still a small company, Ray Kroc, the CEO, had a penchant for asking a store manager to help him clean up trash in their parking lot.

  3. Instill optimism and self-confidence, but stay grounded in reality. That means you must first find optimism in yourself. Then it extends to the hiring process. Herb Kelleher, while CEO of fledgling Southwest Airlines, said he only wanted people with positive attitudes. He also famously said," We don't do strategic planning. It's a waste of time."

  4. Take care of yourself: Maintain your stamina and let go of guilt. Evidence shows that effective entrepreneurs have high levels of energy, and handle stress well. But no one is superhuman. I once worked for a CEO of a startup company who insisted on working 20 hours a day, until a health crisis almost killed her, and did kill her company.

  5. Reinforce the team message constantly: “We are one – we live or die together.” Teamwork is the hallmark of high-performing startups. Establishing a shared identity is the first step to creating unity. The Google team stayed tight as they developed the technology, first working out of Larry Page’s dorm room at Stanford, then a garage.

  6. Minimize status differences and insist on courtesy and mutual respect. CEOs who talk, and really listen, to everyone in the organization gain the highest reputation. Amazingly, Tim Cook, current CEO of Apple, has surpassed Steve Jobs high score, and was ranked by a Glassdoor Survey as the #1 respected CEO as voted by employees.

  7. Master conflict – engage dissidents, and avoid needless power struggles. Some entrepreneurs go to great lengths to avoid interpersonal friction, or engage the wrong way. Those of you who viewed the movie The Social Network, saw some examples of entrepreneurs dealing with conflict poorly, almost leading to the demise of Facebook.

  8. Find something to celebrate and something to laugh about. Especially under the constant pressures of a startup, the ability to lighten up, celebrate, and laugh can make all the difference. Herb Kelleher, mentioned earlier, is one leader who also understood the power of humor in business, with his own antics, and focus on “fun ware.”

  9. Be willing to take the Big Risk. Risk aversion does not always result in disaster, but neither does it create change. Risk takers make things happen. Think of the risk taken by CEO Todd Davis of LifeLock when he posted his Social Security number online, to assure customers the he could protect them from identity theft. It worked.

  10. Never give up – there’s always another move. Rather than expecting things to go right, entrepreneurs have to assume things will go wrong, and solutions are elusive. Colonel Sanders started at a late age to build his chicken recipe into KFC (Kentucky Fried Chicken). It took two years of persistence to get the money. The rest is history.

Investors (and team members and partners) find that it’s more effective to assess an entrepreneur’s fit to these personal characteristics than it is to assess the real potential of an idea, or the probability of good luck. We listen to you and judge how many of these are practiced by you. When it’s time for due diligence, we will talk to your team. Their perception is the only reality. What do you think they will say?

Marty Zwilling


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