Sunday, June 30, 2013

5 Rules of Relevance Every Startup Needs to Adopt

John-MackeySome investors seem to focus wholly on the strengths of the management team, or a sustainable competitive advantage, and in reality these are the core attributes for every funding equation. While these may be necessary for funding, they may not be sufficient to make your startup the great success embodied in your vision.

In the last couple of years, perhaps in reaction to some business atrocities leading to the recent Recession, I am seeing a renewed focus on other less tangible attributes which can set your startup apart. Examples include the Conscious Capitalism® movement, led by John Mackey of Whole Foods, The B Team, led by serial entrepreneur Sir Richard Branson, and the Benefit Corporation (B Corp) form of business now available in 14 states.

I have always struggled to communicate the multiple other relevant priorities, and the other intangibles required for a great execution. I found many of these in “Great From The Start: How Conscious Corporations Attract Success ,” by John B. Montgomery, which does a great job of laying out specifics.

It also starts with a good summary of the intangibles, summarized as the five rules of relevancy, by Mark Zawacki:

  1. A startup needs to be relevant and stay relevant. Relevancy for an early-stage company is the discovery and understanding of the real addressable market for a product or service. This is not the total opportunity out there, and not the total target market, but the subset of customers who have and will spend the money you need to cure their pain.

  2. A startup needs to find a voice relevant to its ecosystem. These days, you have to foster a community of support for your business. That means educating targeted supporters is key, even before you start to sell. Selling too early triggers customer defenses and drives them away. Everyone hates being sold to; we all prefer to buy.

  3. A startup must gain balanced traction. This is not just sales traction, but a proper balance between resources, product, and customers. It means building a viable and desirable product before selling, assembling the right team with funding, and recruiting and educating enthusiastic customers who will be your best advocates.

  4. A startup must form partnerships and alliances within its ecosystem. Today’s ultracompetitive global environment demands that you make alliances early. Startups often pay lip service to strategic partnerships, but they schedule these efforts far down the road. The right partnership strategy can make a company relevant.

  5. A startup must maintain a relevant laser focus. Too many early-stage companies are so desperate for customers that they operate in a frantic and random sales mode. They sell into multiple verticals, or pursue multiple revenue streams, such that they can’t develop a repeatable, scalable sales process, and don’t do anything well.

Of course, relevancy doesn’t work if you don’t have a winning business model. In the traditional business environment, this means the priority is an adequate return for your stakeholders, but today it also means your company should provide a material positive impact on society and the environment.

Great companies recognize that there are now multiple interdependent stakeholders, including customers, business partners, and social groups, who need to be part of your equation since they can drive or limit your success, in addition to management and stockholders.

In other words, your startup needs to be a “conscious” entity, constantly aware of the complex eco-system around it, and the factors driving change and evolution. This requires conscious leaders who are passionately committed to personal and professional growth, as well as the greater good of society. These leaders then cultivate the consciousness of their team members.

In reality, your people are the consciousness and relevance of your startup, and your customers judge your startup as they would judge a person. No relevant company can afford to focus on short-term wins over the long-term effects of its behavior on other stakeholders. How much time and how many measures has your startup applied regularly to the relevance issues above?

Marty Zwilling


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Saturday, June 29, 2013

How to Recognize Smart People for Your Startup Team

the-thinkerHelpers do what you say, while good help does what you need, without you saying anything. People who can help you the most are actually smarter than you, at least in their domain. Top entrepreneurs spend more time putting the right team in place to accomplish their objectives than they spend on any other components of their job.

Some entrepreneurs are so in love with themselves (narcissistic) that they insist on answering every question, and making every decision. That’s not only impossible, but also counterproductive. Effective entrepreneurs team with or employ people who can provide the answers directly, pertinent to their particular area of expertise.

True leaders also know how to move out of the way to let others do what they do best. If you’re working too many hours and following up on every detail you may want to look closer at your team to ensure you’ve surrounded yourself with the right people.

In short, if you can find people with more passion, more knowledge, and more desire to succeed than you have, it will push you to be better and take the organization to new levels. Here are some key characteristics to look for:

  1. Gets things done. Smart people know what’s required, or can figure it out, and are confident enough to make decisions without you. Getting things done is crucial to running a business. Often people with advanced degrees have academic smarts, but are not closers. You can’t afford to make every decision, or follow-up on every action item.

  2. Recommend their own ideas. How often do the people around you recommend sound ideas that you never knew were possibilities? If you’re teaming with people who are smarter than you, you should be frequently surprised with their new ideas and solutions. You will be constantly learning from them.

  3. Passionate and positive. The smart people you want are as positive and passionate about your business as you are. They take ownership and responsibility for their actions. They convince you with their actions and questions that they understand the big picture. They speak confidently and deliberately, rather than defensively.

  4. More listening than talking. Look for team members who are active listeners, where you can see yourself seeking them out for answers, rather than always the other way around. It’s great to team with inexperienced people who are growing so fast, that you can envision working for them soon, or having them take the helm of your business.

  5. Avoid the narcissists. Their energy, self-confidence, and charm make them look smart, but they resist accepting suggestions, thinking it will make them appear weak, and they don't believe that others have anything useful to tell them. Narcissists will take credit for all successes, and always find someone to blame for their failures and shortcomings.

One of the most important jobs of every entrepreneur, and definitely one of the toughest, is to find and nurture people who are smarter in their roles than you. Resumes don’t provide much of a picture in this regard. Supplement this with networking input, references, and your own personal interactions.

If you are looking for a potential business partner, count on building a relationship over several months, before you really know the person. The business relationship at that level is just as important as a personal relationship before marrying (no overnight affairs). If you are hiring, make sure you have multiple interviews, and input from multiple people on the team to balance your view.

In my view, one of the most important aspects of being a successful entrepreneur is surrounding yourself with people smarter than you. Don’t let your ego get in the way. It’s the best way for you to grow the business, as well as yourself.

Marty Zwilling


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Friday, June 28, 2013

10 Reasons for a Startup to Skip Outside Investors

ewing-marion-kauffman-at-deskI’ve always wondered who started the urban myth that the best way to start a company is to come up with a great idea, and then find some professional investors to give you a pot of money to build a company. In my experience, that’s actually the worst way to start, for reasons I will outline here, and also the least common way, according to a recent survey of new startups.

Based on the latest Startup Environment Index from the Kauffman Foundation and LegalZoom, personal money, or bootstrapping, continued to be the primary startup funding in 2012. Eighty percent of new entrepreneurs used this approach, with only six percent using investor funding. The remaining entrepreneurs borrowed from family and friends, or acquired a loan.

So before you become obsessed with scoring investors to fund your idea and minimize your risk, consider the following:

  1. Finding investors takes work, time, and money you can ill afford. Entrepreneurs who plan to complete a business plan the first month, find an investor the second, and roll out a product the third month are just kidding themselves. Count on several months of effort and costly assistance to court investors, with less than a 10% success rate.

  2. Anyone who gives you money is likely to be a tough boss. If you chose the entrepreneur lifestyle to be your own boss, don’t accept money from anyone. Every person who gives you money will want to have “input,” if not formal approval on every move. Be prepared to live with communication, negotiation, and milestones every day.

  3. Don’t give up a chunk of your company and control before you start. Even a small investor in the early days will take a large equity percentage, due to that pesky valuation challenge. At least wait until later, when you ready to scale, and have some “leverage” based on a proven business model, some real customers, and real revenue.

  4. You will squeeze harder on your own dollars than investor dollars. It’s just human nature that we remember the pain of earning our own dollars, versus those “donated” by someone else. Focusing on the burn rate and prioritizing every possible expense will keep overhead down, help you stay lean, and achieve a higher profit earlier.

  5. Sometimes survival requires staying under the radar. People who give you money like to talk about their great investment, and competitors see you coming. Sometimes creative efforts need more time before launch, or your efforts to run the company need tuning. Investors like to replace Founders who don’t seem to be moving fast enough.

  6. Managing investors is a distraction from your core business. Fundraising and investor governance are never-ending tasks, which will take real focus away from building the right product and finding real customers. Having more money to spend, but spending it on the wrong things, certainly doesn’t pave the road to success.

  7. Entrepreneurs need to start small and pivot quickly. Start with a minimum viable product (MVP), as well as a minimum viable team. Investors like a well-rounded team, working in a highly parallel fashion. That takes more money and time to set up, and more people to re-train and re-educate when forced to redirect your strategy.

  8. The best partners are ones who share costs and risks. With no investors, you will work harder to find vendors who will absorb costs and associated risks for a potentially bigger return later. Since they now have real skin in the game, they will also work harder to show quality and value, which is a win-win-win for you, them, and your customers.

  9. You will be happier and under less pressure. You should choose to be an entrepreneur to be able to do what you love. Yet we all apply pressure to ourselves to do these things to our own satisfaction. Investor money brings so many additional pressures, that personal happiness and satisfaction can be completely jeopardized.

  10. Show you are committed to your startup, not just involved. When you put your own financing on the line, your partners, your team, and eventually your customers will know that you are committed to solving their problem. That increases their motivation and conviction, which are the keys to their success as well as yours.

Of course, some of you will say, I don’t have a dollar and my big idea can’t wait. Unfortunately, outside investors are not an answer to this problem. To investors, having no money indicates that you may not have the discipline to manage their money, and manage a tough business process as well.

In these cases, I would suggest you work in another similar startup for a while, to learn the business, save your pennies, and test your startup concept on the side. A startup idea executed hastily and poorly will be killed more completely than any timing delay. Are you sure the money you seek is really your key to changing the world?

Marty Zwilling


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Thursday, June 27, 2013

Many Entrepreneurs Over-Think or Under-Think Issues

bill-gates-thinkingStartups and entrepreneurs are drowning in the information overload, where the volume of data created is like a new Library of Congress every 15 minutes. That creates a huge gap between data and meaning, and makes quick decisions and action ever more difficult. We all need to take a little more time to think.

On the other end of the spectrum, some people “over-think” things to the point of inaction. Acting without thinking, and thinking without action, are both deadly to a startup. The challenge is to find the right balance, and to make the thinking deep and reflective thinking.

In his book, “Consider: Harnessing the Power of Reflective Thinking In Your Organization,” Daniel Patrick Forrester talks about how some successful entrepreneurs, like Bill Gates, former CEO of Microsoft, force some think time in their schedule by abandoning the office for a cabin in the woods every few months for some reflective thinking. Others simply reserve an hour every morning for private thinking, despite a densely packed schedule.

What are the issues and questions that these successful leaders reflect on within their own organizations, and related to their own behavior? Here are some key areas for reflective thinking, from my perspective, based on the research from Mr. Forrester:

  • Think before you assert control. While none of us can stop the flow of data and the creation of content that swirls around us, we can control how we structure the moments that arise and our responses. As leaders, the control we assert in problem solving sets a tone that will be followed by the whole organization.

  • Give full attention very selectively. Now we work in a state of giving our “continuous partial attention” to issues before us. While not all matters require deep thought, we find the ones that do are afforded equal footing with ones that don’t. We must come to a conclusion about the consequences of giving only partial attention to top initiatives.

  • Carefully select communication methods. If email or text messaging is the default way you interact, then you have already declared where it sits in your hierarchy. While technology allows for speed and immediacy, it doesn’t usually convey the texture and empathy of face-to-face interaction that is key to many important issues.

  • Recognize the limited value of disconnected short dialogues. In many ways, problem solving has devolved into a series of dialogues that take place across digital transmissions with occasional face-to-face interactions. Failure to think deeply about forward-looking events and big ideas will come at a cost.

  • Book time to compose your thoughts. With the tethering to technology that happens to us throughout the course of a day, it is clear that we treat time with our thoughts as a low-level priority. Even if you can’t book a week away to thin, it isn’t hard to book a meeting with yourself, when you are off-limits to everything but your thoughts.

  • Reflect carefully before delivering messages. When people demand immediacy from you, do you consider how the people on the other end will receive it, before you dash off a message? Sometimes multiple crafting and editing iterations are required as you think about the ramifications. Is an electronic message even the right answer?

Think-time and reflection don’t just happen when we are alone. Startups will inevitably engage in discourse and dialogue through meetings. You need to insure effective discourse in meetings (“thinking out loud”) by making sure there are no negative consequences to dissent and debate. Otherwise meetings will be perceived as a waste of time by the people who count.

While technology and the Internet allow you to act and react more quickly than ever before, you need more than ever to consider decisions reflectively before making them. In addition to solving problems the right way, make sure you are solving the right problems.

Marty Zwilling


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Wednesday, June 26, 2013

Entrepreneurs Court New Super-Angel Investors

David-S-RoseIt is no secret that the world of venture capital (VCs) was turned upside down by the recent Recession, and many other changes in the marketplace. I see now emerging a new wave of investors, popularly known as “super-Angels,” micro-VCs, or “super-seed” investors. Every early-stage startup should explore this new funding alternative.

Examples of some leaders in this space include Mike Maples in Silicon Valley and David S. Rose in NYC, who each make up to ten investments a year of up to $250,000. Business Week ran a more thorough analysis of this movement a while back, which I have updated below. I would conclude that the genesis of this trend comes from several forces, including the following:

  1. Less investment capital available. Venture capital dispensed quarterly to startups actually declined again in the first quarter of 2013 to $6.3 billion, the lowest quarterly total in more than two years. Due to the struggling economy as well, traditional individual Angel investors haven’t been able to fill the gap.

  2. New “up-and-comer” VCs focus on early-stage companies. VCs are finding that they don’t need the “large” funds of $100M to $500M to support a portfolio, if they focus on early-stage startups. It’s higher risk, but higher return, to pick the big winners early, before Angels have set unreasonable valuations and restrictive terms.

  3. Technology costs are plummeting, meaning you can do more with less. Twenty years ago, it cost $5 million to really launch a high-tech startup, when the same thing can be done today for $500 thousand. So, in effect, VCs need to come in at what was formerly the Angel stage to grab the gems and hold them.

  4. Many old-line VC firms have grown too big and unwieldy. More are realizing that they have forgotten how to build innovative companies, so they are going back to their roots, when firms were smaller and more nimble. They can plant more seeds, and place less dependency on the big win.

  5. Being “lifecycle investment partners” has a downside. As venture funds grew bigger during the dotcom bubble, and sized themselves to invest in every round of selected startups, they found it was very hard to stop investing in the underperforming companies. That model doesn’t seem to work any more.

  6. Great companies are made, not born. Conventional wisdom is changing from startups being born a winner (execution doesn’t matter), to being made a winner (more chances and more help early on). This means smaller amounts given to more entrepreneurs who get a chance to prove that they can build great businesses.

Of course there a couple of potential down sides to this movement:

  • As more startups are funded, without the big VCs on the other end, more companies will be looking for growth dollars and may languish trying to differentiate themselves in a crowded, but slow spending, consumer marketplace.
  • More sources of funding for early-stage startups may drive up valuations on these deals, which will lower the returns for the Angels and super-Angels willing to do these deals. That could cause this bubble to burst and hurt everyone.

I applaud the direction of investors who want to re-invigorate venture capital by taking it back to the real entrepreneur who needs help getting his venture off the ground. Too many founders today face the conundrum that they need capital to get started, and even Angels defer until after you have your product built, business model proven, and a real revenue stream.

Startups with connections or warm introductions to super-Angels should count themselves lucky. These Angels typically don’t demand board seats, and are not as heavy-handed as VCs. Check them out, and find others, so maybe you too can be super-blessed by a super-Angel.

Marty Zwilling


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Tuesday, June 25, 2013

Many Entrepreneurs Pick the Wrong Advisors for Help

wrong-advisorIf you are an entrepreneur for the first time, or entering a new business area, it’s usually worth your time to assemble an Advisory Board of two or three executives who have travelled that road before. But if you select the wrong people, or use them incorrectly, the impact will not be positive for your company or your image.

For perspective, you need to remember that boards of advisors, unlike directors, have no formal power or fiduciary duties, but rather serve at the pleasure of you the business owner. But they are not likely to stroke your ego, or be cheerleaders. They need to tell you the truth about your business, good or bad.

Using them effectively requires real effort on your part. If you give and ask for nothing, you will get nothing. Used correctly, they will be your best advocates to investors, and can save you from making major mistakes. Here are some tips on using your advisory board effectively:

  • Select people who complement your experience. If your experience is primarily technical, get someone who has built a business. If your business is too small for a CFO, get an advisor with heavy financial experience. If the business area is new to you, find someone who has lived it. Balance is best.
  • Be specific on help needed. If you've chosen your advisory board members carefully, you're asking busy, successful people to carve even more time out of their schedule to help you. Let each one know how you see his/her expertise – it may be insight on trends, organizational advice, or funding connections. Set a fixed term, like one year.
  • Formalize the compensation. Most advisory board members sign up because the want to help you, not because of the compensation. Yet you should offer a small monthly fee and/or some stock options to show you are serious about the position. If you want out-of-town members on your board, you foot the travel expenses.
  • You need to drive to process. It’s smart to schedule a monthly Advisory Board meeting, with a formal agenda, as well as informal communication to keep everyone on the same page. Advisors can’t help you if they only hear from you once every six months. They expect you to initiate specific requests, rather than having to ask for updates.
  • Respect their time commitment. For a business executive, nothing is more annoying than a poorly run meeting where the presenter is unprepared, rambles, and wastes time. Make sure every meeting is facilitated well so that concrete action steps, deadlines and assignments result. Have someone take notes so that decisions are recorded.
  • Recruit the best for your real Board. Your Advisory Board is a pre-cursor to your Board of Directors, a bit further down the line. This is your chance to test commitment, chemistry, and contribution for that more formal position. It’s a great networking opportunity to expand your connections to include all their connections as well.

On the other hand, if you find your Advisory Board is a burden on you, or you find yourself hiding things from them, then you have the wrong people, or you are letting your ego get in the way. Members can provide a mirror so that you can see your company as experts see it, as long as you look in that mirror with eyes wide open.

If you are looking for someone to fill an operational gap, or to do product design, it’s usually more productive to look for a partner, employee, or consultant. These can help you when you don’t know what you don’t know, or to create what you don’t have.

If you use your advisory board to feed your ego, or correct your mistakes, you will likely be disappointed. Worse yet, your image as an entrepreneur will be damaged. That will inevitably spread through networking across the business community. You don’t need that kind of help.

Marty Zwilling


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Sunday, June 23, 2013

6 Reasons Why Focus is Job One for Every Startup

search-engineIt’s great to dream big, but your startup needs a laser focus in the beginning to get market and investor attention. Google did it with search engines, Apple did it with a personal computer, and even Wal-Mart did it through low prices. A business plan I saw a while back to combine all the good features of several popular social networks on one site does not do it.

Trying to do everything at once probably means that none of the items will be done well. Plus it’s almost impossible to craft a message that will make your offering stand out in the minds of customers. I can’t think of a company that launched to superstardom with a broad focus. Can you?

Here are the common sense reasons why a laser focus is more likely to lead to startup business success:

  1. Time to market is critical. It takes too much time to build processes and products to capitalize on a broad strategy. Meantime, small competitors will appear and seize your business opportunities and steal your targeted customers.

  2. Keep infrastructure costs low. Every business needs some basic equipment and infrastructure, and ongoing development costs. Attempting to roll out the big dream internationally all at once costs lots of money. Getting more money is hard, but not as hard as building the big infrastructure and getting it right the first time.

  3. Need to be nimble. Every successful startup I know has had to “dodge and weave” or pivot quickly as they learn what their customers really want, and what really works in product design and marketing. Bloated products and the grand unifying “theory of everything” won’t allow you to adapt quickly to market changes and mistakes made.

  4. Innovate to market leadership. Success requires market leadership in your product area, and it’s easy to see that pushing more products and services dilutes your focus and attention. Market leadership isn’t a one-time thing, it means continuous innovation, or you will be left behind.

  5. Maintaining quality is key. The more you try to do in parallel, the harder it is to maintain quality. Remember the old maxim that “you only get one chance to make a great first impression.” Customers are fickle, and good quality and good customer service is hard, even with a focused product.

  6. Personal bandwidth is limited. When things become too messy and complex, and even you are not sure of priorities, people get disillusioned, tired, lose motivation, and tend to give up easily. A laser focus is easier to communicate, easier to manage, and more likely to get done quickly and well.

As with everything, there are two sides to every coin. When applied appropriately, focus will result in rewards exceeding your expectations. Conversely, focusing on the wrong things will result in a downward business spiral. Focus on exploiting strengths and achieving success rather than resolving weaknesses and avoiding problems. Don’t get burned by focusing on the wrong thing.

Remember that most people can confidently and competently accomplish one thing at a time, and most customers are only looking for one thing at a time. After you saturate the market with your focused offering, then you will have the time and resources to broaden your offering.

Don’t give up your grand vision, since no investor wants to buy a “one trick pony.” But also don’t try to be the “one-stop shop” for all on day one.

Marty Zwilling


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Saturday, June 22, 2013

The 10 Worst Traits of Even the Great Entrepreneurs

Medvedev_and_Steve_JobsDoes it really take a few flaws to make a great entrepreneur, or are the rest of us just confused about what a perfect business person is all about? In the past I’ve written about the positive attributes of great entrepreneurs, so this time I thought I would focus on the negatives that I see often, and I challenge you to find someone that has all the positives and none of the negatives.

We’ve all heard the old adage that “nice guys finish last,” so I would quickly concede that positive and negative are relative terms, depending on the context. For example, if a customer is being particularly obnoxious or demanding, would a great entrepreneur respectfully show him the door, or accommodate his demands, with the positive goal of satisfying every customer?

The entrepreneur with the positive traits to calmly and patiently handle tough customers, vendors, and personnel situations, balancing all the issues, I would evaluate as a great one. Yet here are a few other traits that I see in great entrepreneurs, which don’t seem so positive for the entrepreneur, his team, customers, or investors:

  1. Multitasking to the extent of thrashing. Entrepreneurs often have a thousand things going in their mind, and switch so rapidly from one to the other that they leave many people confused, including themselves. The result is that important tasks get short shrift, and relationships suffer. Don’t let multitasking supersede focus and real listening.

  2. Demands perfection from all. Entrepreneurs who are perfectionists are never satisfied with their own work, as well as the work of others. This can cause delays and costs in the business, as well as friction and frustration in relationships with team members, partners, and customers. Steve Jobs survived this imperfection, or it made Apple famous.

  3. Strong convictions bordering on obstinate. The best leaders have strong convictions, but listen to others, and are willing to compromise when required, to move the ball forward. In business, if you refuse to compromise to meets the needs of customers, your competitors will replace you. Business is no place for stubbornness.

  4. Not a team player. Most entrepreneurs start their business because they perceive a need in the market not seen by others, and often they just don’t enjoy working with others. In time, however, every business requires a team, and giving up control becomes a constant struggle. Some entrepreneurs simply jump ship and start again.

  5. Over-confident to the point of being egotistical. Letting your ego drive decisions is not the same as confidence based on knowledge and trust. While entrepreneurs need a healthy ego for body armor, it can quickly become the negative trait of arrogance if not tempered. Many put Ted Turner and Larry Ellison in this category.

  6. Procrastination on certain challenges. Sometimes I see very smart entrepreneurs who struggle with tough issues, like hiring and firing people. They may ignore these, or hand them off to a capable business partner. The positive traits of learning, management disciplines, and timely decisions have to step forward consistently to grow a business.

  7. Paranoid reaching delusional proportions. The good trait of being alert and cautious when approaching new people and new partners can easily morph into paranoia, where the entrepreneur trusts no one, and thinks all deals are a potential plot. The best entrepreneurs believe they can find win-win relationships with partners and investors.

  8. Work-life balance and workaholic tendencies. Most entrepreneurs will admit to being a workaholic at some stage of their startup. Ultimately this dedication will be seen as a negative trait by partners, family members, and team members, and can limit your business growth. Migrate to the positive traits of delegation and organization.

  9. Often emotional and temperamental. Passion and sensitivity to people are key traits in every good entrepreneur, but in some cases, these can seem to escalate to mood changes and emotional outbursts for no reason. At this point the leader may make less rational decisions, and loses the loyalty and trust of associates and customers.

  10. Looks at the world through colored lenses. Successful entrepreneurs can easily lose sight of the real business world, once the perks of power and influence set in. Many say this happened to Tony Hayward, BP CEO, after the Gulf oil spill, and AIG executives before the recent Depression. The time to worry is when you start seeing humility as a character flaw, rather than a positive trait.

Every successful entrepreneur can probably relate to these not-so-positive traits, and in many cases, will attest that without one or more of them, their startup would likely have failed. The question is whether that makes them good traits, which should be learned and nurtured by every young entrepreneur who is striving to be great. I think not. There has to be a better way.

Marty Zwilling


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Friday, June 21, 2013

8 Keys to Award Winning Startup Customer Service

award-winning-customer-serviceMost leaders agree that poor customer service is a business killer today, in terms of lost customers, reduced profits, and low morale. Yet the average perception of customer experience continues to decline. Young entrepreneurs and startups, in particular, often remain naively unfocused, despite their passion, of what it takes to provide the high-quality service expected.

It’s a tough job, and inexperienced entrepreneurs just don’t know where to start, and how to do it. Chip Bell and Ron Zemke, who are experts in this area, provide some of the best specific insights I’ve seen, in their book “Managing Knock Your Socks Off Service.” Their eight initiatives should be required reading for every entrepreneur:

  1. Find and retain quality people. You have to start with hiring only people who are willing and able to make serious customer service happen. Make sure you know and communicate well exactly what you mean by high-quality service. Train them fully, give them authority, make them accountable, and tie their pay to customer satisfaction.

  2. Know your customers intimately. This means personally listening, understanding, and responding to your customers’ evolving needs and shifting expectations. Then make sure that everyone on the team does the same, and are motivated to improve the match with your startup. Seek out complaining and lost customers for the most important input.

  3. Build a service vision that everyone sees as clearly as you. This means articulating and living the customer service mindset for the team, in front of customers and in the board room. It must be understandable, written down, and verifiable, with regular measurements and metrics to make it real, benchmarked against the competition.

  4. Make your service deliver process “happy.” A well-designed service delivery process will make you easy to do business with. The process must be employee friendly, as well as customer friendly, and have feedback mechanisms to correct poor results. If service employees are not happy, the process isn’t working yet.

  5. Train and coach continuously. Companies with great service routinely spend 3% to 5% of salaries training team members – experienced as well as new. Leaders have found that keeping everyone on top of changes in technology, competition, and customer demands is critical to success. Service people need this as required team support.

  6. Involve, empower, and inspire. Involve team members in the fix to customer problems, as well as fixing the faulty process causing the problems. Empower them to look beyond simple rules for solutions, not out of habit, routine, or fear. Inspiration is the process of creating excitement, enthusiasm, and commitment, by your passion and actions.

  7. Recognize, reward, incent, and celebrate. By human nature, he team that works for and with you want to do a good job. The best incentive is to give them something good back in return. This should start with constructive feedback on how well they are doing, and what they can do to improve. Don’t forget recognition for accomplishment and efforts.

  8. Set the tone and lead the way. Like it or not, you are the personal role model for all the people in your startup. How they see you deal with and talk about peers, partners, team members, and customers tells them what the real rules of conduct are for customer service. You can’t con or manipulate people into doing quality work.

Customer service is not just handling exceptions, something that you can think about later, once the business is up and running. It’s a core process that must be up and effective when you deliver your first product or service. If you still doubt the consequences, consider the following facts from research by American Express and RightNow Technologies:

  • 95% of consumers said they “take action” after one bad customer experience
  • 91% consider customer service important when selecting a company for business
  • 85% of consumers said they would be willing to pay more for superior service
  • 82% claimed to have stopped doing business with a company due to poor customer experience.

In the past, competitive advantage was all about economies of scale, advertising power, and service versus price. With instant low price search, ordering via smart phones, and unfiltered online reviews via Yelp and Foursquare, the advantage today has shifted to companies who can make every experience positive. Prepare for it, and don’t jeopardize your future on the first day.

Marty Zwilling

*** First published on Young Entrepreneur on 06/13/2013 ***


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Thursday, June 20, 2013

Million Dollar Ideas Don’t Make Successful Startups

million-dollar-ideaWhen entrepreneurs come to me with that “million dollar idea,” I have to tell them that an idea alone is really worth nothing. It’s all about the execution, and investors invest in the people who can execute, or even better, have a history of successful execution. Execution is making things happen, and for startups it usually means making change happen, which is even more difficult.

For most people, execution is one of those things that seems obvious after the fact when done correctly, but is hard to specify for those trying to learn to do it better. I found a book on this subject, “The 4 Disciplines of Execution,” by Chris McChesney, Sean Covey, and Jim Huling, which seems to talk well to startups as well as the corporate world it was written for.

These authors argue effectively that the hard part of executing most strategies is changing human behavior – first the people on your team, then partners, vendors, and most importantly, customers. No startup founder or leader can just order these changes to happen, because it isn’t that easy to get other people to change their ways. Changing yourself is tough enough.

Here are four key disciplines that I believe the best entrepreneurs follow to expedite the change and forward progress implicit in the successful execution of a million dollar idea:

  1. Focus always on one or two top priority goals. We all live with the stark reality that the more we try to do, the less well we do on any of the elements. Thus focus is a natural principle. Narrow you and your team’s focus to one or two wildly important goals, and don’t let these get lost in the whirlwind of daily urgent tasks and communications.

  2. Identify and act on leading measures first. Some actions have more impact than others when reaching for a goal. Hold the lagging measures for later (results available after the fact), and focus on lead measures first (predictive of achieving a goal). For example, more customer leads are predictive of more sales revenue later.

  3. Define a compelling scoreboard. People on your team play differently when someone is keeping score, and even better when they are keeping score, and even better when they have defined how their score is measured. This is the discipline of engagement. If the scoreboard isn’t clear, play will be abandoned in the whirlwind of other activities.

  4. Create a frequent forum for accountability. Unless we feel accountability, and see accountability on a regular cadence, it also disintegrates in the daily whirlwind. It’s even better if team members create their own commitments, which become promises to the team, rather than simply job performance. People want to make a contribution and win.

These four disciplines must be implemented as a process, not as an event. That means your team needs to see them as a normal and continuous focus, not a one-time push which fades in the rush of other daily priorities. The team needs to see the process practiced by the startup founder, as well as preached regularly.

Startup founders also need to realize that building and managing a company is quite different from learning to search for and solidify an idea that can grow into a company. Every entrepreneur has to navigate that personal change from thinking to doing to managing.

It’s not only the change from thinking to managing, but also the change and learning from constant iterations. Major changes, called pivots, are terrifying to a team that has put months of constant focus into executing what they thought was a great idea. If you don’t have an execution process, you have chaos.

Overall, every entrepreneur should be concerned if they don’t regularly feel stretched beyond their comfort zone, meaning mastering the art of execution if you are mainly creative, or developing creativity if you are mainly process driven. Don’t forget that the fun and challenge is in the learning, so enjoy the ride. The entrepreneur lifestyle is not meant to be comfortable.

Marty Zwilling


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Wednesday, June 19, 2013

6 Key Marketing Do’s and Don’ts For Your Startup

dos-and-dontsMarketing is everything these days. You can have the best technology, but if customers don’t know you exist, or they don’t know how your technology solves a real problem for them, your startup will fail. Yet I see many entrepreneurs that focus on the basics of marketing too little and too late.

They skimp on the design of their website, procrastinate on the rollout to make sure the product is perfect, and get so excited about technology features that they forget about creating value for customers. In fact, this article was driven by a startup press release I just saw today, highlighting a startup’s “geo-fencing technology” as a new basis for discount coupons. How many customers will have any idea what this means to them?

On the marketing side of the equation, there are so many “marketing gurus” and “marketing resources” out there, the real challenge for most of us is to sort out the basic do’s and the don’ts that apply to startups. I found some help from marketing coach David Newman’s new book “Do It! Marketing,” which provides some pragmatic marketing advice for all small businesses as follows:

  1. Don’t tell customers how great you are. Parroting a generic message that you have great service, great value, and a great selection says you have nothing unique. You need to clearly convey what makes your startup the only choice for your customers. Give yourself the “So-what?” test and check for a compelling value-based answer.

  2. Don’t fall into the marketing-speak trap. Don’t fall for the temptation to make big claims, empty promises, and mind-boggling jargon. Learn to speak a new customer-specific dialect based on current research and homework. Go directly to the source – your real live customers, and get their priorities, issues, pressures, and challenges.

  3. Don’t waste your time networking with strangers. Start networking smarter and smaller. Invite key people for coffee or lunch one-on-one, and get to know them and their business. Aim first and foremost to make them a friend, and the connections to others will come naturally. Working the circuit of big groups of strangers is minimally productive.

  4. Don’t waste your time following up. If you are focused exclusively on prospects who are actively seeking to solve the problem you are positioned to solve, you won’t need five or seven attempts to get their attention. Craft a no-follow-up sales letter, after you have positioned yourself as the right expert, with powerful testimonials. They will call you back.

  5. Don’t dumb it down for social media. Many entrepreneurs fear giving away their very best insights, strategies, or tools via social media – it might diminish the demand and the profit. In fact, when customers perceive real value in what you give away, they begin to imagine how much more they might get as a real customer.

  6. Don’t put all your faith in passion. Passion is necessary, but not sufficient to grow your startup. Be passionate about what you do, but develop a really strong plan, and a strong plan B too. The more you think ahead of failure, and think beyond failure, the better your chances for success are.

Instead of asking themselves “How and when will this generate sales?” entrepreneurs need to focus more on who they are marketing to and why. Then give them a compelling, specific, and relevant reason to buy from you.

One of the best approaches is to sell the same way that you buy. You look for value in a specific solution, or at least a conversation about your own problem, headache, heartache, or challenge. You don’t buy based on cold calls, spam e-mail, or phone calls that interrupt your dinner. Give your own customers the same consideration. Good marketing is not rocket science.

Thus marketing is the first thing you need to think about and act on in growing your business, as well as the last thing. The only actions that create results are those that make you stand out above the crowd, attract, engage, and win more customers than your competition. Have you reviewed your startup marketing actions recently for the right do’s and don’ts?

Marty Zwilling

 


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Tuesday, June 18, 2013

Entrepreneurs Must Be Survivors in Their Own Mind

survivor_logoPeople with a victim mentality should never be entrepreneurs. We all know the role of starting and running a business is unpredictable, and has a high risk of failure. For people with a victim mentality, this fear of failure alone will almost certainly make it a self-fulfilling prophecy.

I’m sure you all know someone who is the perennial victim. The problem is that most of these people aren’t likely to accept your assessment, so it’s hard to help them. They don’t see themselves as others see them, and many simply refuse to accept the reality of the world in general.

According to an article by Karl Perera, called “Victim Mentality - You Don't Have to Suffer!” there are many indications of a victim mentality in a person’s thought process. Here are some key ones he mentioned, applied to the entrepreneurial environment:

  • “When things don’t work, I secretly believe I’m the cause.” Victims act as though each business setback is a catastrophe and create stress for themselves. These people feel more importance and ego when relating problems rather than successes.

    A survivor believes that bad things are an anomaly to be brushed off, or just another challenge to overcome. In fact, they look forward to the challenges, and get their most satisfaction from declaring success.

  • “When I talk to myself, I never have a positive discussion.” Second-guessing every decision affects mood, behavior, and happiness, and is likely to cause or intensify a victim mentality. If you are negative, you cannot see reality, leading to more bad decisions, confirming you are indeed a victim.

    Survivors continually relive their positives, and see themselves as miracle workers. They live in the present or the future, and rarely dwell on mistakes of the past. They have faith in themselves, and life as a whole.

  • “When others put me down, I‘m wounded to the soul.” Negative comments from others are devastating to a victim. Offensive behavior towards you actually says more about the other person. But if you have a negative mentality you will just take what they say or do at face value, and believe that you deserve to be the victim.

    The survivor always stands up and fights negative comments, and usually turns the blame back on the deliverer. He is quick to counter with all his positives. He builds boundaries around negative or toxic people, and avoids them at all costs.

  • “I believe in fate, even though it’s unfair.” If you succumb to fate, then you think you are responsible for all the bad things that happen to your business. The victim feels that he or she has been treated unfairly but is trapped. There seems to be no way out.

    Survivors believe that they can make things happen, rather than let things happen to them. They accept random turns in their life as new opportunities, rather than unfair punishment.

  • “Everyone is punished for a reason.” Religious beliefs can have a positive or negative affect on your life. If you believe in a Supreme Being who is responsible for everything, it’s easy to believe that your pain and misery is punishment for something you did wrong.

Survivors obviously take it the other way. They enjoy a personal relationship with the Supreme Being of their understanding, and feel a gratitude for everything positive in their life. They may ask their Supreme Being for help, but rely on themselves for results.

This victim mentality is not a good thing under any circumstances, but it’s particularly lethal when applied to an entrepreneur. If you would like to be an entrepreneur, remember that you don't have to be a victim. Take a hard look in the mirror. Truly the only one who makes you feel like one is the same person who can make you a survivor - you!

Marty Zwilling


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Monday, June 17, 2013

Investors Seek Out Entrepreneurs With Resilience

Dean-Kamen-SegwayIf you haven’t had a failure, you aren’t pushing the limits. If you are really an entrepreneur, you are a risk taker and less cautious by nature, so failures should be expected. Wear you startup failure as a badge of courage. Don’t go after failure, but embrace it when it does happen and grow from it.

People who are afraid of failing should not become entrepreneurs. They can't overcome the psychological fears of making a mistake, and are afraid of losing money. They are better off keeping their day job. Successful entrepreneurs, on the other hand, tap into the positive power of failure. Here are three examples:

  • Steve Jobs was fired by Apple Computers in 1985, the company he helped to create. He went on to acquire Pixar, made it a success, and then came back to reinvent Apple as a very successful consumer products business.
  • Dean Kamen, the creator of the Segway Human Transporter, several successful biomedical device businesses, and holder of 440 patents, jokes that his biggest failure is “that I have too many to talk about.”
  • Thomas Edison invented the electric light bulb, central power generation, and the phonograph, but failed in his effort to extract low-grade iron ore from sand. He brushed this off, and went on to many successful media and transportation businesses later in life.

According to investors I know, young entrepreneurs who have failed at least once are more likely to get funding from them, compared to entrepreneurs with a perfect track record. Investors know that founders often learn more from a failure than they do from a success, so don’t be so quick to delete a failure from your bio. Serial failures, on the other hand, send a different message.

A failure can be a milestone on the road to success, if you celebrate that failure for what the mistakes taught you – and use the experience to move to the next idea. Here are three points of learning that many famous failures emphasize:

  1. Accept responsibility, don't spread the blame. It’s easy to blame partners, investors, customers, and the economy. If you blame someone else, you'll never learn from your mistakes. Remember, you volunteered to be the entrepreneur, so you are not the victim.

  2. Capitalize on the good relationships you found. In every bad deal, there are always some good people. Many entrepreneurs have taken on one of these as a new partner, and gone on to make millions of dollars. The good investors will fund you again, and the good customers will gladly take your next offering.

  3. Study and profit from your mistakes. Mistakes are priceless lessons, so you should learn from them, rather than run from them. Making mistakes and becoming smarter is the job of an entrepreneur, while not making mistakes is the job of an employee.

Failure is not usually a single event, but a collection of mistakes and circumstances that add up to test the patience of the founder. Failure combined with a strong sense of business ethics can motivate and produce innovation, while failure due to a lack of ethics can lead to desperation. Certain types of failures, like failures of integrity and ethics, are harder to recover from.

Failure, even multiple failures, can be the first stage of a very successful journey. Success usually comes to those willing to keep coming back. Resilience and agility are really the only sustainable edge in business. So when you experience your first failure, just give up your ego, let it go, and get back to work smarter on your next success.

Marty Zwilling


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Saturday, June 15, 2013

Savvy Entrepreneurs Look for More Than Funding

MAC6-incubatorSome entrepreneurs start polling venture capitalists for that multi-million dollar investment before they even have a business plan. That’s like trying to sell part of something to a stranger for big money when you haven’t fully defined it yet. It won’t work, it costs time and money, and hurts your credibility when you need them later.

Every entrepreneur needs help and support along the way, from developing the initial idea, to selling off the successful business (exit strategy). The challenge is finding and using qualified affordable support organizations for each stage. Don’t waste your resources on the wrong ones.

It’s helpful to think of startups as proceeding through several stages, which I have defined before from a funding perspective. Let’s take a look here some similar stages from a support perspective:

  • Idea stage. The first step toward a business with any idea is to write it down, and build a business plan around it. If you need help at this stage, look for a local university teaching online courses on entrepreneurship, or how to build a business plan. The alternative is to work with an innovation institute to evaluate your technology, or hire a consultant. If you need money now, is has to come from friends and family.

  • Early or embryonic stage. The most common support organization at this level is called a startup incubator or accelerator, and these exist in most countries, usually sponsored by a university, local government organization, or even local individuals. Usually these will not give you money, but will provide very inexpensive space to work and office services.

    Their real value is your access to senior advisors with experience, and other startups in the same stage. Sometimes these will ask for 5%-15% of your equity for their support services. They are not trying to make money, but simply to recoup their costs over time.

    Separately at this stage, you may look for small funding amounts from Angel investors, called seed investments. Funding of $25,000-$250,000 may be available from Angels, who are private individuals spending their own money. The incubator organization can help you find them, or show you how to apply for a government grant.

  • Funding or rollout stage. This is the time for you to step out on your own, find office space, and open your business. Once you have some traction, you can approach venture capital organizations, with funding amounts of $1-10 million for the real rollout, often referred to as the “A-round,” or first institutional funding.

    Support organizations at this stage are usually professional financial advisors, or investment banks, which have nurtured relationships with institutional investors. These usually charge you a fixed fee up front, and then perhaps a small percentage of the raise.

  • Growth and exit stage. Companies at this stage must have a large market, good traction, and be focused on scaling infrastructure and market adoption. This normally means more then 30 employees, and more then $1 million in revenue. Support organizations are investment banks, similar to the preceding stage.

As startups pass through each stage, they need to use support resources wisely to minimize costs, wasted time, and maintain credibility to support movement to the next stage. Typically, they must also change and tune their executive team, to keep up with the increasing demands of a growing company on process discipline and sustainable success.

Obviously, if you bootstrap your business, you can avoid all the investment implications, but you still need a business plan and professional support. Otherwise, not paying attention to the expectations associated with each stage will likely jeopardize your business success. Do it right and enjoy real progress in each step of the journey.

Marty Zwilling


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Friday, June 14, 2013

How Many Entrepreneurs Really Need a Business Plan?

On a regular basis, I am approached by entrepreneurs who assert that business plans are a waste of time. They cite sources like a recent BusinessWeek story, “Real Entrepreneurs Don’t Write Business Plans” and this NY Times article. From my perspective as a professional investor and long-time advisor to entrepreneurs, much of this urban legend advice is just plain wrong.

Of course there are scenarios where a written business plan is not critical, but I haven’t seen one yet where a well-written 15-page document, or at least a 10-slide pitch, is a negative. Let’s look at some common scenarios, and put this into perspective for entrepreneurs:

  1. You don’t need or want investors or a loan. With bootstrapping, no business plan is expected by anyone. Yet I would suggest that creating one is still a valuable exercise, since you need the plan as the blueprint for your company, team communication, and progress metrics, unless your management style makes this a waste of time.

  2. You have built a successful startup, and plan to use the same investors. If you have a proven track record, investors don’t have to see a written plan to believe you can do the job. In fact, they are probably in such a hurry to give you money that they don’t want you to waste time writing anything down and passing it along to new investors.

  3. You need funding, and plan to get it from friends and family. Hopefully you know your friends and family better than I do, so you decide when a business plan is required. If your rich uncle is an accountant, or has his own business, I recommend a good business plan. On the other hand, your mother probably won’t read one.

  4. You need an investor, and want a document to mass-mail to everyone. Creating a business plan for this purpose is a waste of time. In fact, the whole process is a waste of time. Most VCs and Angel investors don’t read unsolicited proposals, unless they have met you first, or have a glowing recommendation from another investor or acquaintance.

  5. You need money, and plan to do crowdfunding. Although technically the major crowd funding sites today, including Kickstarter and Indiegogo, don’t request a business plan, they do require essentially the same information in a project format. Thus building a business plan ahead of time will improve your application and chances of success.

  6. You need an investor, and want to solicit professionals online. Major platforms are available online to find Angel groups or VCs, including Gust and AngelList. These platforms, and every investor who uses them to find entrepreneurs, expects to find a good business plan posted. You won’t even be considered without a business plan.

  7. You find an interested investor, and need to close the deal. Most professional investors, even if they like your story, and were properly introduced by a friend, will ask for a business plan at the due diligence stage. They want to see if you have done your homework, have reasonable expectations, and are willing to commit to something.

You might fairly conclude from these points that a business plan is only “required” if you want to close funding from professional investors who don’t already know you or know your track record. Since the best VCs deal primarily with known and proven entrepreneurs, it’s easy for them to say that they don’t read business plans.

On the other hand, don’t forget Angel investors, who fund 60 times as many startups, to the tune of $20 billion last year, who start their search primarily from platforms like the ones mentioned above. A business plan may be a small investment to get a shot at that opportunity.

For the rest of you entrepreneurs, consider the value of a business plan when it is not required. Clemson University professor William B. Gartner looked at data a while back from the Panal Study of Entrepreneurial Dynamics, and found that writing a plan increased the chances by two and a half times that a person would actually go into business.

Of course, building a plan is not an alternative to getting out there and doing something. There is no substitute for knowing your customers first hand, and iterating on a minimum viable product to find the most marketable solution. Writing it down promotes both understanding and commitment.

Overall, I sense that not writing a business plan is more often an excuse rather than a time saver. Building a business is a long-term non-trivial task, like building a house. Would you give money to someone, without a plan, who had never built a house before? Hopefully you wouldn’t even build your own house without a plan. You should treat your new business with the same respect.

Marty Zwilling


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Thursday, June 13, 2013

Beware the Long-Term Pitfalls of Entrepreneurship

Pitfalls-of-EntrepreneurshipMost entrepreneurs expect to face the “normal” challenges of starting a business, which include finding the right opportunity, building and executing a winning plan, and financing their venture. But many forget the pitfalls associated with traditional business jobs which can apply even to the smartest and most dedicated people running their own business.

Often these facets of entrepreneurship don’t rear their ugly head until well down the road. Yet before you start, you should think about what the impact might be on your psyche, and how to neutralize these challenges in your own plan. I’ll summarize key ones here, from the positives and negatives in “Build a Business, Not a Job” by David Finkel and Stephanie Harkness:

  • Long-term daily job grind. Sometimes entrepreneurs are so set on creating a successful business, they forget to create one that they love to work on every day. After a time, they find that they have merely created a job for themselves, with the same rote responsibilities and stress that they experienced in a prior corporate world. Daily attendance is mandatory in order for the business to succeed and be profitable, and the so-called freedom is hard to find. Vacations and time-off don’t happen for years.

  • No formal training courses. Larger enterprises are always sending their “high fliers” to leadership refreshers, new technology updates, and training on employee performance management. Entrepreneurs find themselves all alone in the trenches, without the time, money, or incentives to do these things. The result is a sinking feeling after some time that you are no longer vital and competitive in your own domain.
  • Personal wealth management. Entrepreneurs find that the business skills needed to grow their business are not the same as the personal wealth skills needed to manage a healthy personal wealth plan for their family and their retirement. Their business is their entire portfolio. They are at the mercy of innumerable catastrophes, making this a huge risk.

    For these individuals, a lack of financial fluency often leads to poor decisions after they no longer have their businesses. They wake up one day without their business, and with nothing to show for the years spent building it.

  • How society perceives you. As a young entrepreneur, everyone looks up to you for running your own business. But later you find that you may be perceived by many as a person without job security, unlike your classmates or ex-colleagues, who are sought after or being placed in well-known large company or multinational positions.

    Even worse, you find that your business domain has developed a negative stigma through no fault of your own, as has happened to investment banks, mortgage brokers, and many nightlife businesses. It’s no fun to hide your business role rather than proudly proclaim it.

  • Business must be more than the money. Years into a successful business, owners often wake up one day facing a painful question: Is this all there is? To truly be successful your business must be about more than the money.

Good entrepreneurs find a great personal adventure, like Richard Branson, or great philanthropy, like Bill Gates. Guy Kawasaki says the best reason to start an organization is to make meaning – to create a product or service that makes the world a better place.

Every business startup has to have a viable idea, but it also needs a strong sense of realism on the possible pitfalls. Starting a company as an entrepreneur should be viewed as the beginning of a lifetime career, not a work project that you expect to be over in a few months. As such you should consider the long-term challenges as well as the short-term ones.

Life is too short to end up with pain and regret after a “successful” career.

Marty Zwilling


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Wednesday, June 12, 2013

A Business Requires Collaboration But Not Consensus

CollabAny entrepreneur with a vision can postulate a new business, but it takes a collaboration of many people to make it a success. Today the complexity of forces required for success include multi-disciplinary skills, competencies, and experiences in which the whole is greater than the sum of the parts. Entrepreneurs who embrace the “lone wolf” approach usually live to regret it.

A while back I read “The Collaboration Imperative,” by Ron Ricci and Carl Wiese, which makes the case very well for why collaboration matters in every business, as well as startups. Every entrepreneur should heed the following lessons on collaboration derived from the authors work on the culture, process and technology of collaboration in hundreds of companies:

  1. Consensus is the enemy of collaboration. Collaboration leaves everyone with a feeling of “win-win,” while consensus is “win-lose” or even “lose-lose.” Collaboration opens more possibilities, while consensus narrows them to a compromise.

  2. Collaboration has to start at the top. Company culture is not set by words, but by the actions of the founder. That means treating everyone with respect, and providing regular constructive feedback. Trust is required for every successful collaboration.

  3. The biggest barriers to collaboration are not technical. They are cultural and organizational in nature. Startup executives need to first build a culture and processes with communication and shared goals, rather than internal competition and bureaucracy.

  4. Collaboration cannot be deployed – it must be embraced. Executives and managers must be willing participants, modeling collaborative behavior and embracing the technology tools, not just taskmasters. All team members must be committed.

  5. Good ideas come from anywhere, so the more voices the better. These are critical in arriving at a clear idea of what is important, exploring what is possible based on constraints, and coordinating effective actions to produce successful outcomes.

  6. Collaboration enhances personal communication skills. As team members interact and play to their strengths, they learn to be authentic and genuine, which increases their effectiveness as well as their skills. They reach agreement faster and communicate more.

  7. You get out of collaboration what you put in. According to a global study of business conducted by Frost & Sullivan, the return on a collaboration investment progressively improves as better tools are deployed and a collaborative culture takes shape.

  8. Collaboration success means changing both roles and rewards. This means creating processes that allow more perspectives, but make it clear who has decision-making rights. It’s essential to provide incentives to change ingrained behavior.

  9. More interaction opens opportunities to create more value. Within any given startup environment (market, industry structure, competitors, product/service mix, etc.) opportunities exist that are often missed unless everyone is listening and communicating.

  10. The average return on collaboration is four times the initial investment. From the study referenced, measured gains ranged from three to six times. This ROI comes from cost avoidance, cost reductions, business optimization, and faster business decisions.

In today’s highly competitive and unpredictable environment, it’s not enough to do one thing better than your competitors. You need to change your organization so that it can rapidly recognize and adapt to new opportunities and new threats.

Collaboration is the new imperative. It may be the only way to accelerate innovation, improve agility, increase adaptability and cut costs all at once. But building a collaborative culture is not an easy transformation for the traditional fiercely independent entrepreneur. How long has it been since you have taken a hard look at your own startup?

Marty Zwilling


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Tuesday, June 11, 2013

Your Health and Balance are Key to Startup Health

Improve-Employee-HealthA couple of years ago, I saw firsthand what can happen to a founder, and the business, when the founder practices unhealthy habits such as working 20 hours a day. A typical “Type A” personality, with boundless energy and enthusiasm, she aggravated some previous health limitations until she was bedridden, and the business floundered.

Many entrepreneurs are too focused on their dream to take notice of health warning signs, which leads them to ignore business health signs as well. If you can’t remember the last time you had a relaxing evening with the spouse, or read a book, you may be overworking and that could negatively affect your health in the long run.. If your business won’t run for a day without you, then the business isn’t healthy either.

There is no single formula for how to stay healthy while starting and running an exciting but demanding new business, but here are a few suggestions, depending on your lifestyle:

  • Stay fit and rested. You will have more energy and think more effectively if you are in shape and rested. In addition, you’re a role model for partners and employees. Real job performance is more a function of productivity than hours worked anyway.
  • Find a stress reliever. For some people, it’s quiet meditation, and for others it’s a vigorous workout at the gym. Find something you really enjoy that doesn’t have anything to do with your business. These will help you unleash the creative side.
  • Work and family balance. Family-work balance is an issue that involves financial values, gender roles, career paths, time management and many other factors. Entrepreneurs can be so focused that they ignore the family, resulting in an unhealthy situation for everyone.
  • Regular medical checkups. No one is immune to the random attacks of a disease, and something recognized sooner rather than later can often be treated with minimal lasting effect. Undiagnosed and untreated problems, resulting from ignored or unknown symptoms, are a health disaster well worth avoiding.

At the same time, don’t forget that there are things you must do to maintain the health of your business, and send the right message to your employees on priorities:

  • Reward employee health. Lead by example, of course, and encourage employees regularly to pursue a healthy lifestyle. You might even give special recognition for sticking to a wellness program, or sponsor a healthy team outing or other activities.
  • Quarterly business reviews. On a regular basis, at least once a quarter, you need to take a hard look at all your key metrics. Maybe it’s time to tackle a new geography, or figure out how to exit some clients who are “high maintenance.”
  • Quality improvements. Continuous improvement is the key to quality production. Make sure your processes are working. A constant increase in the quality of products and services, including more innovation and creativity, all lead to a healthier business.
  • Improve customer service. Make sure all employees are empowered to provide the same customer service they would want for themselves and their own business. Measure how well you are doing with surveys and personal contacts.

Healthy companies need healthy employees and healthy processes. Workplace health promotion is not, as some might think, a charitable gesture towards employees but an investment in the company. It can be a life or death issue with you personally, as well as your company. Don’t wait, like my friend, until you’re already overworked.

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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Monday, June 10, 2013

How Many Key Leadership Principles Do You Practice?

mark-zuckerberg-sergey-brinCreating and building a business is not a one-man show. It requires a team effort, or at least the ability to build trust and confidence among key players, and effectively communicate with partners, team members, investors, vendors, and customers. These actions are the hallmark of an effective leader.

Behind the actions are a set of principles and characteristics that entrepreneurial leaders, like Mark Zuckerberg and Sergey Brin, seem to have in common. Look for these and nurture them in your own context to improve the odds of success for your own startup:

  1. Clarity of vision and expectations. You must be able and willing to communicate to everyone your vision, goals, and objectives. Just as importantly, you have to be absolutely clear about who you are, what you stand for, and what you expect from everyone around you. People won’t follow you if they are in the dark or confused.

  2. Willingness to make decisions. It is often said that making any decision is better than making no decision. Even better than “any decision” is a good decision made quickly. Business decisions always involve risk, at times a great deal of it. Smart entrepreneurs always balance the risk with facts, when they have them, rather than their gut.

  3. Experience and knowledge in your business area. Effective leaders set a personal standard of competence for every person and function in the startup. It must be clear that you have the knowledge, insight, and skill to make your new company better than your very best competitor.

  4. Commitment and conviction for the venture. This commitment must be passionate enough to motivate and inspire people to do their best work, and put their heart into the effort. Behind the passion must be a business model that makes sense in today’s world, and a determination to keep going despite setbacks.

  5. Open to new ideas and creativity. In business, this means spending time and resources on new ideas, as well as encouraging people to find faster, better, cheaper, and easier ways to produce results, beat competition, and improve customer service. Be a role model and guide others to excel.

  6. Courage to acknowledge and attack constraints. An effective leader is willing and able to allocate resources to remove obstacles to the success of the startup, as well as removing constraints on individuals on the team. It is believing that where there is the will, there will be a way.

  7. Reward continuous learning. You have to encourage everyone to learn and grow as a normal and natural part of business. That means no punishment for failures, and positive opportunities for training and advancement. Personally, it means upgrading your own skills, listening, and reading about new developments and approaches.

  8. Self-discipline for consistency and reliability. An effective leader is totally predictable, calm, positive, and confident, even under pressure. People like to follow someone when they don’t have to “walk on eggshells” to avoid angry outbursts, or assume daily changes in direction.

  9. Accept responsibility for all actions. Everyone and every company makes mistakes. Good entrepreneurs don’t want to be seen as perfect, and they have to be seen as willing to accept the fact that “the buck stops here.” No excuses, or putting the blame on the economy, competitors, or team members.

The good news is that all of these principles of leadership are learnable. The bad news is that it’s not easy. Don’t assume that success as an entrepreneur is only about great presentations, killing competitors, or having insanely great ideas. It’s really more about leadership, understanding the needs of your prospective clients, and communicating your solutions with clarity.

Marty Zwilling


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Sunday, June 9, 2013

Every Startup Should Assume Pivots Will Be Required

PivotsThe traditional mode of starting a company is to plan a serial process, where you complete once all the steps, leading to the “big bang” launch of the company. I strongly recommend a dramatic departure from this model, called “planned iteration” or Lean Startup methodology, where you assume you won’t get it right the first time, so you launch with a minimum viable product (MVP).

This idea was first articulated by Paul Graham in an old essay, called “Startups in 13 Sentences” in which he talked about “making a few people really happy rather than making a lot of people semi-happy.” One of his key points is that “launching teaches you what you should have been building,” and I agree.

All you old software development types will recognize the analogy to the traditional two year “waterfall model” of software development, which has been totally replaced with the Agile iterative methodology. Agile assumes and plans for iterative development, where requirements and solutions evolve as more is known and markets change.

Don’t mistake this for a license to launch an incomplete or poor quality solution. Your strategy today should be to define and excellently prepare the absolute minimum product that will excite a selected small segment of your intended customers, and roll it out to them – as a Beta, early promotion, or even a give-away.

Then you assess feedback, adjust your offering, and iterate until you get it right (have some very satisfied customers). Plan on multiple small launches, with iterations, rather than a big launch. Here are the advantages I see with this approach:

  • Faster time to market. If you launch fast, you can be working with real customers in 4-6 months from your start, rather than 1-2 years. In today’s fast moving marketplace, needs, competitors, and costs change rapidly, so even if you were right, two years later the wave has moved on. Equally likely, your first target was wrong, and you will need to adjust.

  • Show some traction before funding. Let’s face reality, the angel or VC funding process now takes 4-6 months of almost dedicated effort and time, and usually fails because you don’t yet have a product or customer. By using a laser focused approach for the first iteration, you may actually produce something and get a customer without funding. Now investors will pay attention, since scale-up funding is less risky and has a time frame.

  • Fail fast and cheap. Since you can predict that your first iteration will somehow miss the mark, speed and cost of pivoting are critical. We all know how hard it is to turn a battleship. With a minimum viable product, your startup remains much more agile. The planned iterations can then be applied more productively to enhance the right offering.

  • Find customers, partners and channels early. There is nothing like a real customer pipeline to convince you that you need partners and channels, and to convince partners, channels, and investors that you are real. Get out there personally and find that first customer. It will narrow your development focus, and adjust your strategy for you. Spend your time finding renewable sources of customers and iterate.

  • Use social networking to start the wave. Costs are low these days to set up a credible website, do some search engine optimization, start blogging, and start mining the social networks for interest. It won’t cost you your whole funding pot to start some momentum, or to realize that your original strategy needs major tuning.

Think about it. Where did Google, eBay, and Facebook come from? They inched their way into public view before the first multi-million dollar funding rounds, and they have never had a big public launch. New product companies in the offline world start one store at a time, or in one geographic area.

Big bang product launches are the domain of big enterprises, and you can never match their clout and budget. The biggest advantages you have as a startup are speed and agility. Use them.

Marty Zwilling


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