Monday, March 31, 2014

Set Your Online Reputation Before Someone Else Does

online-reputationThese days, your online Internet reputation is your reputation. Of course, having no reputation is usually better than a bad one, but don’t wait for someone else to establish a good one for you. It’s time for every business and business person to proactively create a positive presence, before someone else puts you in a defensive mode that is hard to win.

The first step in the process is to claim your online identity. This is simple in concept, but requires real effort and can be time consuming, and even expensive, if someone gets there before you and tries to sell you the rights to your preferred business or personal domain name. See my Forbes article on “Get A Domain Name Without Bankrupting Your Startup

Michael Fertik and David Thompson outline this issue and others in their book “Wild West 2.0.” After you claim your identity with placeholder domain names, accounts in social networks, and common blogging platforms, your next challenge is to create enough positive content as a “Google wall” to keep negative info out of the top Google search results.

Positive content, such as information and pictures on your accomplishments, achievements, and friends, paints you in a good light. Neutral content, including your membership in business associations, and company affiliations, can at best balance false negative information, or at least make the negatives harder to find.

Here are some of the easiest methods Fertik and I recommend for creating positive and neutral content:

  • Blogging. There are several major free blogging platforms you can use to claim your identity, including WordPress, Google Blogger, and LiveJournal. If you add new content periodically, it is likely to become a secure and important part of your online resume, and it will come out at the top of any Google searches on your identity.
  • Twittering. An even easier way of getting your positive messages to the top of Google rankings is “micro-blogging” through Twitter. This is especially useful in providing links to other positive and neutral content.
  • Profile sites. There are several free and paid services, such as LinkedIn and Naymz, that allow you to manage your professional profile and measure your social reputation. Simply engaging in forum discussions and exchanging comments establishes positive content.
  • Other user-created content sites. Sites like Pinterest, Instagram, and YouTube allow users to create and share photos and videos, and create short profiles. You can use these sites to your advantage by uploading relevant and positive content and prominently including your name in the subject or description.
  • Professional directories. Many professions offer free online directories of members or similar sites for professional networking. These sites are often highly ranked in search engine results because they are heavily linked. If there is a directory relevant to your business or profession, use it.

If you have already been a victim of online reputation damage (accidentally or maliciously), proactively reach out to friends and co-workers to explain the problem. They can assist you by linking to positive and neutral content about you, thus displacing or minimizing the negative content.

In fact, damage to reputation and brand has moved up to #4 from #6 in the Top 10 risks identified in Aon's 2013 Global Risk Management Risk Ranking, moving ahead of business interruption and failure to innovate to meet customer needs in 2011. Survey results also suggest there is now an 80 percent chance of a company losing at least 20 percent of its value in any given five-year period due to reputational issues.

The Internet has been a powerful and disruptive technology. The good news is that you can use it to advantage. But you can’t ignore it, and pretend there is no danger. Just like in prior generations with the Wild West, people who put up a good offense to protect themselves were the ones who survived and prospered. Take heed, and take action.

Marty Zwilling


Sunday, March 30, 2014

Some Entrepreneurs Get Big Value From An Incubator

YCombinatorTechStarsMore and more entrepreneurs are hearing about the successful graduates and investors queued behind a few well-known startup incubators, including Y Combinator, TechStars, and the Founder Institute. They dream of appearing at the door, with their idea on the back of a napkin, and popping out a few months later with investor money to burn. The reality is far different.

By way of a definition, a business or startup incubator is a company, university, or other organization which provides resources to nurture young companies, usually for a share of the equity, hoping to capitalize on their success, or at least strengthen the local economy. According to the National Business Incubator Association (NBIA), there are currently over 1,900 members in over 60 nations.

The good news is that a few of these do have an envious success record. Y Combinator, led by Paul Graham, claimed success in 2012 with 172 companies over 7 years, which then had a combined value of $7.78 billion. Founder Institute, led by Adeo Ressi, claims the most graduates, with over 1,000 companies annually worldwide, and 90% of these companies still running.

Yet success may not be any real indicator of help received, since once could argue that the really great entrepreneurs didn’t need any help from the incubator, and might have been even more successful without it. All the rest of us might be the real beneficiaries, with a lot more to learn. Here are several key lessons I assert you can learn from a good incubator:

  • Aptitude reality check. Adeo Ressi believes his preliminary test of applicants is predicting more and more accurately whether you have the DNA of an entrepreneur, before even being accepted. His tests focus on personality traits alone (ignoring your startup idea), looking for fluid intelligence, openness, and agreeableness. Why spend years struggling and all your money if entrepreneurship is just not your thing?

  • Initial funding. Many incubators do provide seed funding for entrepreneurs selected, usually in small amounts like $10,000 to $20,000, and usually taking 5% to 15% of your equity in return. This investment can get your startup off the ground in an otherwise impossible financial situation, but should not be viewed as the main reason for joining.

  • Expert mentoring and training. In my view, the quality of incubator leadership is the single biggest potential value provided and learning opportunity for entrepreneurs. Every successful incubator has strong leadership and staff with business and investment credentials. Skip the ones who seem to be offering you space and facilities only.

  • Peer support. In addition to the formal mentoring, the peers you’ll be working alongside at startup incubators provide much more than emotional support. You will find expertise in areas you need, as well as quick advice from entrepreneurs just ahead of you in every phase of the business cycle.

  • Facilities support. Of course, we can’t eliminate the value of affordable office and meeting space, administrative support services and advanced communications technology to struggling entrepreneurs. But don’t believe the myth that incubators are all about ‘cheap rent,’ and avoid business incubators in otherwise vacant buildings.

  • Learn by doing. An incubator allows entrepreneurs to get their ideas out of their mind and out of the classroom, while still retaining a modicum of structure and discipline. That’s as close as possible to real experience, and there is no teacher like experience. It’s an opportunity to succeed or fail fast, with a minimal investment to time and money.

  • Follow-on funding and connections. Success in an incubator means likely access to venture capital, and connections to industry gurus and business opportunities. About 80% of TechStars startup graduates go on to raise venture capital or a significant Angel funding round, versus maybe 1% of all startups who seek funding.

The bad news is that the odds of getting in are still hugely stacked against even the most dedicated entrepreneurs. At Y Combinator, maybe 80 out of 1000 applications are accepted per cycle, and more than half of these fail to complete the program. You can get into less famous ones more easily, but the learning and chance of getting funded at the end go down accordingly.

You also may be hearing more about “business accelerators” as an alternative or improvement on the incubator model. The key difference between them, according to purists, is that accelerators compress the timescale for startups, to drive entrepreneurs from ideas to marketable products in a matter of months. Overall the learning opportunities are essentially the same.

My conclusion is that the best incubators can really help you, but are no shortcut or substitute for the right mindset, hard work, and a real solution to a real problem with a big opportunity. Then it’s time for due diligence on the incubators in your area, to see who has the track record and credentials you need. The success of your career and your business depend on it.

Marty Zwilling


Saturday, March 29, 2014

Entrepreneurs Can’t Do It Without The Right Team

Schmidt-Brin-PageEntrepreneurs are usually highly creative and innovative, but many innovative people are not entrepreneurs. Since it takes a team of people to build a great company, the challenge is to find that small percentage of innovative people, and then nurture the tendency, rather than stifle it.

A few years ago I read a book titled “The Rudolph Factor,” by Cyndi Laurin and Craig Morningstar, which is all about finding the bright lights that can drive innovation in your business. The story most specifically targets big companies, like Boeing, but the concepts are just as applicable to a startup with one or more employees.

The core message is that real innovation and competitive advantage are more people-based than product or process-based. Every good entrepreneur needs a people-centric focus to ferret out creativity and innovation in his team, and to build a sustainable competitive advantage.

The authors observe that people who behave as mentors tend to have an uncanny ability to recognize and nurture people who have innate capabilities along these lines. Here are six of the characteristics they and you should look for:

  1. Thinkers and problem solvers. Innovators are naturally creative and love new challenges. Some may appear a bit eccentric to people around them. They generally promote unconventional ways to solve problems and have an easier time than most at identifying the root cause of a problem.

  2. Passionate and inquisitive. These team members are passionate about their work and light up when talking about their role or a particular project they are working on. They often ask “Why?” even when it is not the most popular question to be asked.

  3. Challenge the status quo. They believe that questioning is of value and benefit to the organization. This is also how they discover what they need in order to solve a problem, so they aren’t rocking the boat just for the sake of rocking the boat.

  4. Connect the dots. Innovators have the ability to quickly synthesize many variables to solve problems or make improvements. To others, it may appear as if their ideas come out of the blue or that there is no rhyme or reason behind their thinking.

  5. See the big picture. They tend to be natural systems thinkers and see the whole forest rather than a single tree … or just the bark on the tree. They may express frustration if people around them are having conversations about the bark, rather than the forest.

  6. Collaborative and action oriented. They are not loners, and have the ability and confidence to turn their ideas into action. They act on their ideas, sometimes without knowing how they will accomplish them. The “how” is always revealed in time.

Your challenge is to go forth with this new awareness and thinking, to find and mentor those bright lights that will drive innovation and competitive advantage. The next step after finding innovators is to integrate them into your team. A key aspect is establishing a team-based culture that is a safe environment to share and execute ideas.

In fact, this safe and nurturing environment has to extend beyond a single team to the highest levels of the organization. It should embody a style of leadership that is essentially a commitment to the success of the people around you. That opens the door for anyone in the organization to lead from where they are, rather than waiting for management to “do something.”

Innovation is at the very heart of every successful startup. Everyone wins when you look at things very differently and wonder “why”, not “why not.” What better way to extend this power than to surround yourself with more highly creative people? Then you can make the world a place of possibilities, as well as probabilities.

Marty Zwilling


Monday, March 24, 2014

How to Move Your Marketing From Hunter To Gardening

hunter-based-marketingHave you noticed that more companies beg you to participate in their business today? It started with an email survey on your last stay at their hotel, but now includes requests for online product reviews, to social media input on the design of future products. They do it because engaged customers become loyal advocates and buyers. Welcome to the “Participation Age” of marketing.

Some say it’s happening today because it’s new, and technology makes it possible. Others say it stems from Intrinsic Motivation Theory, which asserts that people have always been motivated by a desire to join, share, take part, connect, and engage, and find that experience rewarding. In any case, your business needs it today to rise above the crowd and edge out competitors.

If you want all the specifics, you must follow the new wave of marketing experts, like Daina Middleton, and her recent book “Marketing in the Participation Age.” I’m most intrigued by one aspect that I believe relates to every business - the move from a hunter-based metaphor to a gardening metaphor – nurturing what we have planted, based on the following five rules:

  1. Embrace test-and-learn values. That means constantly trying new marketing elements, understanding quickly what works, and immediately scaling, then moving on to the next alternative. Nurturing marketers reserve a minimum of 10 percent of their marketing budgets for testing and learning. It’s a dynamic customer environment out there.

  2. Innovate; don’t perfect. The nurture approach leverages from the best of the moment, quickly adding value before someone else does it first. The concept of continual innovation is crucial, because the best may not last long. Pick something that is good enough and embrace the flaw as an opportunity to learn. Adapt quickly and move on.

  3. Act quickly and motivate others, including participants, to act on your behalf. Motivate people, including your customers, to do something to improve your marketing today. Inspire your organization to act quickly and create an environment that rewards moving quickly. Estimate and act; because if you don’t, your competitors will.

  4. Mix and blend; don’t invent. Partner with others to create unique solutions that might benefit your brand, product, or solution. Choose an agency partner who is pushing the envelope and remember to consider technology, media, and creative opportunities. Look for elegant blends of all three, not an elegant single media solution.

  5. Embrace risks and champion failures. Prepare to learn from mistakes and accept that failures are inevitable in finding success. Partner with agencies that are willing to put skin in the game and get paid only if they deliver results. It often takes several failures to find opportunities that yield the best results.

In the current world of escalating change and information overload, marketing is not a luxury, and participative marketing can be the key to success, even for very technical solutions. We often see a mediocre product with effective marketing outperform a good product with little or poor marketing. Big marketing budgets alone and single blockbuster campaigns don’t assure results.

The message is simple. Ask your customers and partners for ideas, try them all, measure results, and scale up the ones that work. The participants, not the marketers, are in control, and they are demanding a relationship, not just a marketing message. If they don’t find value in the relationship, they move on. The choices and opportunities are theirs.

The situation is not unlike the attraction of current major social media sites, like Facebook, successful multiplayer game sites, like Activision, and today’s real world sports and politics. Gen-Y members were born participants, and they are a major force in every business domain. People thrive on continually learning, feeling empowered, and providing input to the world they live in.

So if you are a startup, or even a mature business, you need to nurture these intrinsic desires and develop more meaningful customer relationships that yield greater revenues. Marketing is no longer a one-way conversation. Does your marketing include listening as well as talking?

Marty Zwilling


Sunday, March 23, 2014

Founder’s Stock Is Gold, If You Know The Rules

goldIn reality, so-called “Founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. But that’s only the beginning of the story.

These shares are allocated and committed, but not really issued and owned (vested) until later. Typically, vesting in startups occurs monthly over 4 years, starting with the first 25% of such shares vesting only after the employee has remained with the company for at least 12 months (one year “cliff”). Vesting always stops when an employee leaves the company.

Even though the class is common stock, Founders can negotiate special vesting and other terms as part of their stock restriction agreement upon venture investment. Here are some typical special terms and considerations for Founder’s stock:

  • Negligible real value. Since Founder’s shares are usually issued at the time the company is incorporated, they essentially have no real value. As the company builds value, shares allocated later for employees or partners will have an appropriate price.
  • Vesting with no cliff. Most Founder vesting is not subject to the one year cliff because partners should already know and trust each other. Thus, most Founders will start vesting their shares from the date they actually started providing services to the company.
  • Right of repurchase in favor of the company. This clause gives the Founder the first right of refusal to buy shares back from a partner who decides to leave early, or otherwise makes a troublemaker out of themselves. This right usually "lifts" over time, meaning that as time goes on, fewer shares are subject to this repurchase agreement.
  • Accelerated vesting conditions. They might also have special terms in the case of termination or demotion that accelerate vesting. These have less to do with the type of stock and more to do with who the person is and how strategic they are to the organization.
  • Stock dilution control. While most employees would see their vesting rest when the “Series A” round closes, a Founder might retain some percent of their shares. Everyone wants to minimize dilution of shares, so this special clause is common.

Unfortunately, Founders often make the mistake of waiting until they have received a strong indication of interest from an investor before they decide that it is time to incorporate. Forming a company so close in time to raising capital can create a significant tax issue.

For example, if Founders issue themselves stock for one cent per share when they form the company, and then within a short period of time outside investors jump in at $1 or more per share, it might appear in an IRS audit that the Founders issued themselves stock at significantly below the fair market value per share.

The difference in value between what the Founders paid and the fair market value of that stock based on actual sale to outside investors will be characterized as compensation income resulting in what could be significant tax liability to the Founders.

The way to avoid this risk by filing an “83(b) election” with the IRS within 30 days of the purchase of your Founder’s shares and paying your tax early on those shares. Failing to file the 83(b) election is common mistake of Founders that you should avoid.

There should be no tax concern for a Founder investing more of his own money any time in the process. All the tax concerns relate to "outside" investors coming in shortly after incorporation. Valuation has very little meaning until an outsider invests.

So my advice is to incorporate and allocate Founder’s stock as soon as you are starting real work on the company, but at least six months before you anticipate any outside investors. But don't incorporate too early, as investors will measure your growth and progress since the incorporation date. Several years of apparent inactivity since incorporation will make it look like there is a problem with you or with the company.

Of course I have to add my caveat that I’m not a lawyer, and these comments do not constitute a legal opinion. See a qualified business attorney if you anticipate multiple investors or a complex company structure. Don’t let a positive investor decision take the joy out of your future.

Marty Zwilling


Monday, March 17, 2014

Getting Things Done Trumps Great Ideas In A Startup

bill-gates-problem-solvingWhen someone introduces me to an “idea person,” I automatically jump to the down-side conclusion that this person doesn’t do follow-up. Of course there are people who are great at getting things done, but haven’t had an original idea in their life. Great entrepreneurs, like Bill Gates, are great at both.

I was with IBM in the early PC days when Bill worked with us to provide PC DOS and other software. He was relentless in his focus on getting a project done, and he always assigned himself the toughest tasks. At the same time, he was always pushing the limits of our business relationship with new ideas.

That’s the bar you should aspire to. I can think of several related aspects of starting and running a business where follow-up, or lack of it, can make or break your startup. Here are a few:

  • Business networking. For entrepreneurs, effective networking is required to find investors, partners, and customers. It doesn’t work if you don’t follow up on networking opportunities, networking referrals, and ongoing networking relationships.
  • Investor negotiations. Serious investors expect founders to have their homework done before the first interaction – documented executive summary, business plan, and financial model. They expect prompt formal follow-up to questions. Too many entrepreneurs try to talk their way through all of these.
  • Product development. For a great idea person, the product details keep changing for the better, but nothing ever gets finished. Lists of project milestones and technical issues are created, but nothing happens on time, because follow-up on issues is missing.
  • Time management. Some struggling entrepreneurs are totally event driven. They are too busy with the “crisis of the moment” to focus on follow-ups that may save a major customer, close a partner deal, or solidify a process that isn’t working well.
  • Effective marketing. Guerrilla marketing preaches the importance of prospect follow-up if you even hope to succeed in business. If you collect business cards at a trade show, make sure all have follow-up within 72 hours, and at least three more times after that.
  • Customer retention. More customers are lost to apathy after the sale than poor service or quality. Many experts suggest it costs six times more to sell something to a new customer than to an existing customer. A numbing 68% of all business lost in America is lost due to lack of follow-up after the sale.
  • Professional relationships. How many people do you know who have a thousand emails in their inbox, or just a few awaiting follow-up for over a week from people who matter? These procrastinations jeopardize your integrity and your relationships.

Everyone likes to be pursued, rather than the pursuer. There’s a reason that many people say that the fortune is in the follow up. When you follow up properly with people, your reputation will benefit, your business will benefit, and eventually your pocketbook will benefit as well.

As an aside, I would suggest that you should never aspire to be a manager or an executive if you don’t do follow-up. You won’t be happy, and you won’t do a good job, because that’s what they do most of the time. The idea time for most executives is in the shower, or during other non-work activities.

So which is the most important, the idea or the follow-up? If you intend to be a great entrepreneur, you need both. But I know some very good ones built on great follow-up with incremental improvements to existing products. On the other hand, a great idea without a business plan is a non-starter.

Marty Zwilling


Sunday, March 16, 2014

How To Size Your Marketing Budget For Funding

marketing-moneyIt’s not uncommon for me to see a startup business plan “mission” to be the “premier brand” for their product, yet their marketing budget in the financials is trivial. This combination will almost certainly get your plan tossed by potential investors, who understand all too well the need and cost for marketing in today’s environment.

When questioned, founders usually mention word-of-mouth, viral marketing, and a top quality product. These founders need a reality check on what recognized brand names have spent to reach that threshold, and how long it is likely to take. Viral marketing costs real money these days, which usually means adding at least an extra zero to budget estimates.

Recognized brands like Facebook and each required over $50 million and several years to get to be premier brands. We know that existing big brands like Apple and Nike spend millions per year just to maintain their brand recognition. In fact, the average spent by Inc 500 companies for sales and marketing expense continues to hover around 10% of overall revenues.

My first recommendation then is to confine your “premier brand” comments to the long-term vision section of your business plan. Concentrate elsewhere on the near-term marketing activities (which are also expensive) for this round of funding. By the way, if the marketing section is missing or un-budgeted, you will also likely be “branded” as unfundable.

So what are some credible marketing and promotion steps you should consider for your startup? There are many more, but these should get you started:

  1. Create a professional website and blog. With these, your business presence can look big and credible even when you are small. There are multiple low-cost website tools available, like Adobe Dreamweaver, which allow you to do your own work and save thousands of dollars, but a budget of $10,000 is a good starting point. A blog is critical, and essentially free (your cost is creating content).

  2. Get exposure for your expertise. Use social media and Search Engine Marketing (SEM) to start. Create meaningful content and engage others online (free downloads, white papers, webinars, regular blogging). Put out regular press releases for search purposes and general visibility. Pitch your story to newspaper journalists, radio, and television news reporters who cover your local area or industry.

  3. Do something unique to get customer attention. Promotions and free give-aways are all the rage these days. This step requires thought because you need to identify what can set you apart from your competitors and how to retain customers. Promotions that appeal to the wrong customers won’t help you.

  4. Generate leads for your product. Gather leads online from your social media initiatives, mine your contacts, attend trade shows, and use lead-generation services. Here is an area where you need to be creative, and not just spend big money. For example, exhibiting at trade shows is very expensive, and usually not very productive. Figure out what is valuable to your audience.

  5. Establish partners and referrals. Customers who enjoy doing business with you are more than happy to spread the word. Create referral marketing opportunities within your business community that maximize the potential for customer referrals. Find partners and channels which are complementary, and not directly competitive.

Good marketing often is the only thing that separates the successful startup from the not-so-successful startup. There is no doubt that marketing overall has become even more critical for startups over the past several years.

Despite the fact that social networking and other online processes are essentially free, good marketing still costs money. If your early-year budgets for marketing aren’t 10% of projected sales or more, plus an early kicker for setup, you are probably underestimating reality, and jeopardizing your credibility with investors.

Marty Zwilling


Saturday, March 15, 2014

Most Startups Get Stuck In The Early Struggle Stage

predictable-successEvery startup wants to be a predictable success, yet so few ever achieve this enviable position. In reality, getting there is not a random walk, and requires an understanding of the stages that every business must navigate and the organizational characteristics necessary at each stage.

Les McKeown, in his book “Predictable Success” outlines these stages and characteristics for any business. He points out, for example, that every business should anticipate the early struggle stage, a possible fun stage, and probably a turbulent whitewater phase, before they can hope for the predictable success stage.

This predictable success stage is defined as a point where you can set and consistently achieve your goals and objectives with a consistent, predictable degree of success. Unlike previous stages, where you may not know how or why you have survived, you now know why you are successful, and can use that information to sustain growth in the long term.

His studies show that companies at this stage show five key characteristics, which I believe every startup should strive to achieve from the very beginning:

  1. Decision making. The ability to readily make and consistently implement decisions. You need a sense of flow – decisions are made without the decision-making process placing a burden on the organization, or the leader. Decision making is delegated and decentralized, freeing management to concentrate on what they can do best, rather than micromanaging others.

  2. Goal setting. The ability to readily set and consistently achieve goals, and really being in control. It has to happen seamlessly, as part of the day-to-day operation of the business, not as the resource-sucking, do-it-at-the-last-minute event that it is in so many organizations. Goals are hit more than missed, and people are willing to take timely, corrective action.

  3. Alignment. Structure, process and people are in harmony. Otherwise, a lot of time and energy is expended by people because they have to manipulate the organization’s processes and/or structure in order to get things done. There is just the right amount of process and structure to efficiently get the job done.

  4. Accountability. Employees become self-accountable, in addition to being externally accountable to others. When empowered to make decisions of genuine import about their own jobs and responsibilities, and given the resources and freedom required, each employee personally buys in to the overall success.

  5. Ownership. Employees take personal responsibility for their actions and outcomes. This results is everyone pulling together, rather than by the manager group constantly “pushing.” There is a deep sense of co-dependency, where managers are dependent on their teams for delivering, and employees are dependent on managers for guidance.

As challenging as it may seem to achieve these characteristics in your business, the bigger challenge is to retain them for the long haul. Many businesses slowly slide into a treadmill stage, where they become over-systematized, or on toward the big rut where creativity disappears (“the way we have always done thing”), on into the death rattle, where the market moves faster than the company.

As a startup, you need to walk before you can run. That means starting early to practice and implement the techniques that will lead to predictable success. Remember that the lynchpin of the entire framework comes down to your own personal ownership and self-accountability. There is no room here for excuses or half-way efforts.

Marty Zwilling


Sunday, March 9, 2014

One Of These Days, You May Not Be An Entrepreneur

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

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

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

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

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

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

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

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

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

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

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

Marty Zwilling


Saturday, March 8, 2014

Be A Business Leader As Well As A Thought Leader

Steve_Jobs_with_MacBook_AirBy definition, most entrepreneurs are thought leaders. They have the ability to recognize a market need, the skills to design and implement a solution, and the drive to start a business from that solution. It all comes from within themselves. A business leader does the same thing and more through the people around them. Most entrepreneurs are not both.

In reality, a successful startup can be built by a thought leader, but growing a successful business requires a business leader. That’s why venture capital investors often replace startup CEOs as a condition of their scale-up investment. That’s why so many startups plateau after gaining some initial traction, and are run over or acquired by their competition.

Much has been written on this subject, including the integration and update of two famous business books by Steve Farber (former partner of Tom Peters), this one called “The Radical Leap Re-Energized”. I like Farber’s highlights of the the traits of radical and profound leaders (extreme leaders) as follows:

  • Cultivate love. Successful leaders model the intensity and energy that it takes to stay ahead competitively and meet ever more ambitious goals. They do this because they love what they do. As they continue to pursue their passion, they remain focused on the contribution made to others and to the surrounding community.

  • Generate energy. Ask yourself this question – Do I generate more energy when I walk into a room, or when I walk out of it? Do your actions create positive energy for those around you, or are you an “energy vampire,” sucking the life out of your workplace? Hopefully you are the former, and not the latter.

  • Inspire audacity. This is a bold and blatant disregard for normal constraints. Thinking and acting, “outside the box.” Audacity inspires people to do something really significant and meaningful. It enables them to change the business, the world, and themselves, for the better.

  • Provide proof. How do we prove to ourselves (and to others) that we are really exercising extreme leadership? The simple answer is “Do What You Say You Will Do” (DWYSYWD). The best leaders achieve their own success by raising the self-esteem of followers. They build credibility by looking for ways to respond to the needs and interests of others.

In this extreme leadership model, leaders aren’t afraid to take risks, make mistakes in front of employees, or actively solicit team feedback. Farber asserts that most of us, at some level, have the innate ability to become a business leader. Getting fully in tune with who you are, and then following your heart, goes a long way towards helping you discover the leader you can become.

Many entrepreneurs who are great thought leaders are unwilling to listen and network. They can’t imagine that their vision for the business can be improved, or even implemented by others. They don’t hire people until it’s too late, because no one else can do the job up to their standards, or with their commitment. At best, they hire “helpers” rather than help, and are too busy to train the helpers.

Obviously some people who call themselves business leaders are only posing. They wear the label and assert the title without putting their own skin in the game. The best leaders approach the act of leadership as an extreme sport, and they love the fear and exhilaration that naturally comes with the territory.

Business leadership is not a solo act. Real leaders accept the job of recruiting, cultivating, and developing other leaders as priority one, as well leading on the thought side. Learning to be both a thought leader and a business leader can make you great. Steve Jobs is an example of someone who struggled with this one, and won. Where are you along the spectrum?

Marty Zwilling


Friday, March 7, 2014

Adopting Good Work Habits Beats Dropping Bad Ones

darrenhardyMost of the entrepreneurs I know realize they have some bad habits, like maybe procrastination or not listening well, so they focus on dropping these. New studies indicate that a more productive approach would be adopting new good habits and behaviors that clearly move your business forward, like good time management and implementing customer recommendations.

These two approaches may sound similar, but actually require different skill sets. For example, learning to stop smoking may leave you with a gap to fill, but finding activities that remove your urge to smoke really gets you where you want to be. I recommend the following six techniques for solidifying good habits from “The Compound Effect,” by successful entrepreneur and writer Darren Hardy:

  1. Set yourself up to succeed. Any new habit has to work inside your life and lifestyle. If you want personal healthy think time at a gym, don’t find one that is thirty miles away, because you won’t go. For better time management, tell everyone that you will be closing the door to your office during specific times of the day, and ask for their support.

  2. Think addition, not subtraction. Instead of focusing on what you have to “sacrifice,” think of what you can “add in” to improve your business effectiveness. For example, most founders find that adding good customer discussions has a more satisfying payoff than just eliminating expensive marketing consultants.

  3. Go for a public display of accountability. Put your commitments of a new good habit, like rewarding good performance, on public display by announcing a recognition event to be held each week in the office. Now you will be motivated to follow through, and the whole team will give you the positive feedback you need to keep it going.

  4. Find a success partner. There are few things as powerful as two people locked arm in arm marching toward the same goal. If your bad habit is staying late at the office, link with one or more of your other key executives to retire to the gym at 5pm sharp three times a week. You will all get out of the office, feel better, and make more decisions.

  5. Use both competition and camaraderie. There is nothing like a friendly contest to whet your competitive spirit and immerse yourself in a new habit with a bang. It’s easy in a new business to inject a fun rivalry and a competitive spirit into improving your marketing programs, or improving production cycles.

  6. Celebrate each small step of success along the way. All work and no play is a recipe for backsliding. You’ve got to find little rewards to give yourself every week or every day, even something small to acknowledge that you’ve held yourself to a new behavior. Measure results and promise yourself a real pot of gold at the end of the rainbow.

Change is hard. That’s why so many people don’t either give up their bad habits, or adopt new good ones. Successful entrepreneurs are the extraordinary ones that make the changes anyway. They just do it, and keep doing it, and the magic of compounding rewards them handsomely.

Another challenge is that your brain is not designed to make you happy. It is programmed to seek out the negative and optimize survival, and is always watching for signs of “lack and attack.” That’s why every entrepreneur spends so much time worrying about failures, lack of customers, and competition. We have to teach our minds to look beyond these, through discipline and being proactive about what we allow in.

But learning and discipline without execution is worthless. In the big picture, the habits you develop and nurture shape your destiny. Little everyday habits will take you either to the life you desire or to disaster by default. Spend more time instilling good ones, and the bad ones will disappear for lack of attention, making you a more savvy and successful entrepreneur.

Marty Zwilling


Monday, March 3, 2014

How To Decide If A Celebrity Can Help Your Venture

Justin Timberlake - Andrew Garfield - La red social - MadridMost startups dream of attracting a celebrity endorsement, and assume that it will take their startup to the stars. Startups such as Chirpify have managed to flourish and raise millions with endorsements from folks like Lil Wayne and Snoop Lion. Others go the way of 12Society, an LA subscription commerce startup with six celebrity sponsors, but still couldn’t get any traction.

Startups using celebrities is such a hot topic these days that Gary Vaynerchuck, noted author and entrepreneur, has coined a new term “star-ups” for the phenomenon. New books are popping up on the subject of how and when to seek celebrity endorsements, including “Will Work for Shoes,” a popular one by Susan J. Ashbrook, who has courted celebrities for twenty years.

She helps you decide if celebrity endorsement is a viable and reasonable alternative for your business, and how do you go about selecting and approaching the right celebrity. Following is a summary of the challenges that Susan and other “experts” have outlined:

  1. Finding a match between your offering and a celebrity. That means finding the perfect person for your brand. Their values need to match your brand image, including the perception of quality, educational value, as well as recognition by your target demographic. Be sure the celebrity really believes in your product.

    You should start with a service like Q Scores, which attempts to measure the appeal of various celebrities within your target market. If you are selling to young consumers, Miley Cyrus or Justin Bieber may be high on your list. For technology products, well-recognized investors such as John Doerr or Ron Conway are seen as celebrities.

  2. Funding the relationship. Celebrity endorsements don’t come cheap. Does your marketing budget allow you to roll out the red carpet to meet celebrity lifestyles, including the investment in appearances, videos, and perks? Big fat advance checks and long-term royalties are often the norm.

    On the other hand, maybe you can emulate, whose official spokesperson, William Shatner, agreed to do the spots for free in exchange for stock in the company. The arrangement turned out to be quite profitable for Shatner, who has since made approximately $600 million from, despite the bust.

  3. How to find and connect with the celebrity you want. As with all aspects of business relationships, funding, and partners, nothing beats a pre-existing relationship, or at least a warm introduction. Beyond that, the place to start is with publicists, agents, and other handlers. Major groups include CelebExperts, Baker/Winokur/Ryder, and 42West.

    One of the inside secrets of finding and meeting the right people is working with charities. Celebrities have a passion for giving, and they respect people and companies who share their passion.

  4. Potential for celebrities funding you. More and more celebrities are jumping on the entrepreneurship wagon. For example, Ashton Kutcher not only has the most Twitter followers of any “entrepreneur” (16 million), but he has actively invested in several startups. He's poured $100 million into companies like Airbnb, Spotify and Foursquare.

  5. Make the endorsement part of a bigger campaign. Building a brand and a successful company is a lot bigger than just getting a celebrity endorsement. The endorsement relies on a major marketing campaign to get the message out and setting the context for a successful delivery on the promises implied.

  6. Prepare to handle endorsement success. Customers are a fickle bunch. You must be ready with the right array of retail partners, manufacturing, and distribution arrangements before the demand hits. Marketing momentum fades fast in the face of disgruntled potential customers and long waits in line.

Many entrepreneurs and investors assume that the fascination with celebrities is a passing fad, and not worth the effort. But the evidence is just the contrary. With the advent of the high-speed Internet for videos, real-time messaging via Twitter, and everything going mobile via smartphone, I don’t see things changing any time soon. The world now has an insatiable appetite for anything and everything celebrity. Take a hard look for your own startup.

Marty Zwilling


Sunday, March 2, 2014

Respect The Key Influences To Your Startup Culture

positive-business-cultureStartup work environments are always chaos, but they can still be great environments to work in, or they can be terrible. Whether yours is terrible or great, that same tone flows out to your customers, and regulates your productivity inside. You as the founder are the starting point and definer, so you need to get it right.

What does it take to create a positive workplace culture? I did some research on this, and compared it with my own experience. I’ve concluded and the experts agree that it’s all about understanding people, and overtly optimizing the factors that drive them at work.

Ed Muzio, in his book from a while back “Make Work Great: Super Charge Your Team, Reinvent the Culture, and Gain Influence One Person at a Time,” summarized the key influences which I have also seen as follows:

  • We are driven by peers. According to many studies and observations, group pressure entices us to rethink our own opinions, and can even change our actual perceptions. That’s a good thing if your business peers are positive about what is happening, and it can cause a spiral into the ground if goals, priorities, and issues are not understood.

  • We are driven by authority. Stanley Milgram, a famous researcher in the 1960s, concluded that “Ordinary people, simply doing their jobs, and without any particular hostility on their part, can become agents in a terrible destructive process.” It’s up to you, as the authority figure, to define the standards and communicate roles correctly.
  • We are driven by expectations. Around most people at work is a core group of six to eight people (your “role set”) who send you expectations about what you should or should not be doing, along with implied rewards or punishments. Our satisfaction is strongly driven by this role set. Find compatible and complementary people for your role sets.
  • We underestimate the impact of the situation. The pressure of a situation actually can override the prior three forces. Thus you always must be very sensitive to the context, since unfair blame based on situational factors will negate all your positive influences. Don’t make the mistake of assuming people act from personal choice alone.

You as an individual team member, and you as the authority figure, must make a conscious choice to drive the culture around you, rather than be driven by it. Psychologists have noted that going passively along ‘on automatic’ if often our worst enemy. It doesn’t get the job done, and it’s not even satisfying.

The most effective way for you to drive the culture is to understand yourself and to be explicit on the following items to your role set and others:

  • Your personal goals and purpose
  • Your intended impact (‘So what’)
  • Your incentives and motivation
  • Your progress as it happens
  • The resources you need
  • Your capability (share your knowledge)

By default, the at-work culture is just “how we do things around here,” based on problems faced “back then.” The problems you face today are different, and the solutions from back then were likely not the best. That means there is always a premium on culture teachers, compared to culture followers.

So don’t ask yourself how you can influence the culture, by rather how you already are influencing it. Are you a beneficiary of precedent or a slave to it? Choose to choose to make your work environment great.

Marty Zwilling


Saturday, March 1, 2014

7 ‘Words of Wisdom’ Messages For Every Entrepreneur

Words-of-wisdom-bookWhen you have been on the startup firing line, you quickly learn that any insight from experts and entrepreneurs who have been there before you can make the difference between failure and success. Yet, many new entrepreneurs brazenly assume they are bulletproof, and march blindly into the fray. The result is that half or more of startups fail in the first two years.

I don’t think anyone proclaims to have any silver bullets, but there are common failure threads that appear all too often. There are many books written about failure in startups, and I don’t recommend any of them. I prefer the more positive approach of getting you better prepared up-front, as outlined in the popular book “It’s Your Biz” by Susan Wilson Solovic.

Susan has years of experience in the small business trenches, and really focuses on what it takes to succeed, with realistic caveats from my perspective, including an excellent summary of ‘words of wisdom’ messages that every entrepreneur should take to heart:

  1. Don’t chase your tail. As you are building your business, take introspective looks at yourself weekly. How many days have you had lots of activity going on, but at the end of the day, you’ve accomplished nothing to move your business forward? Measure results to make sure you are not chasing your tail, like your favorite puppy dog.

  2. Keep moving forward. Never let a day go by in which you haven’t done at least one activity that directly relates to a key business goal. Establish deadlines and milestones for yourself and track your forward progress. Keep you eye on the ball, and don’t be distracted by seemingly attractive options that lead you away from your core business.

  3. Listen to your instincts. It’s important to ask and listen to others for advice and guidance, but measure these inputs against your own instincts as well. Blindly following someone else’s strategy doesn’t help as an excuse for failure, and doesn’t help you learn along the way.

  4. Manage growth wisely. Overextending yourself and your resources by taking on too much too fast can kill your business. Growing a business is like a marathon, you don’t want your company to be a flash in the pan. Remember, according to Seth Godin, the average overnight success takes six years.

  5. Look for collaborative opportunities. In business, it’s tough to survive on an island. Strategic alliances allow you to take on bigger contracts, offer more services, and cover larger geographic territories. In addition, two heads are better than one, so collaborative brainpower is a significant asset.

  6. Expect the unexpected. You can’t predict natural disasters, and economic fluctuations. Yet too few entrepreneurs have a current list of business essentials, emergency contacts, or documented backup procedures. Even better, you need a “Plan B” for survival when the unexpected arrives.

  7. Learn to manage your stress. The stress of growing your business will take its toll, unless you take care of yourself. Be realistic about what you can expect of yourself and don’t over-commit. Learn to say “no” and really mean it. Schedule some time each week that is just for you, and for your family.

Overall, we all emphasize that you need to keep purpose, promise, and principles as the cornerstones of your business. It’s amazing how many business owners and their teams go through the motions of running their businesses on a day-to-day basis without ever understanding the purpose behind what they’re doing.

Businesses without a purpose don’t have a heart. Or if the principles and values aren’t yours, then it’s not your heart. If it’s not your heart, then you will be making promises to your customers with your fingers crossed. Remember that if you don’t deliver for your customers, they won’t deliver for you. That can make the normal business trenches a deep hole. Read and heed.

Marty Zwilling