Monday, September 29, 2014

Joining A Startup As CFO Is A Good Path To The Top

Every investor is looking for the “dream team” of executives to put money on. Often I find that experienced investors scan ahead to the management page of a business plan, even before they read the product description. That’s how important the people are. The Chief Financial Officer (CFO) role is usually considered second only to the CEO, because financials are critical.

In fact, about 25% of CFOs make it to the CEO position, although not necessarily in a single step, like Indra Nooyi, PepsiCo's CEO. The latest Crist Kolder report finds that the percent of female CFOs, as well as CEOs, continues to rise and is at an all-time high.

"It's not often, if ever, that we get a client saying, 'We've got to have a CEO who has been a CFO,'" says Kolder. "It's more the reality that CFOs are better prepared than ever for taking the role of CEO." Here are some key attributes of CFOs who fit the dream team definition, based on an old article by Mark Macleod from StartupCFO:

  1. “It’s all in the details” - A professional accounting designation (CA, CPA) is the foundation. A few years ago it was all the rage to have MBAs in the top finance role. These days, with Sarbanes-Oxley and all the new SEC regulations, an MBA does not begin to cover the accounting, process, and tax knowledge needed to steer a company’s finances.

  2. “Let’s make a deal” - The dream team CFO not only runs the deal process for fundraising, but should also bring deal flow into the company. They should have a track record of originating and closing equity deals, and should have a long list of potential financing sources that are willing to take their call. Also you want someone who can stretch your funding by knowing which expenses to cut without harming your business.

  3. “Time to get organized” - Your CFO should take a leading role in bringing operational excellence into your company. It means installing just the right amount of process, reporting and structure. Not so much that it slows you down, but enough so that you smoothly run and grow the engine.

  4. “What happens in the company stays in the company” - Your CFO should be a trusted advisor to the CEO and other executives. Running a company can be lonely. Your CFO can be a key, objective source of advice and counsel as you make the big and the small decisions.

  5. “Jack of all trades” – Able to perform other duties (e.g., human resources, technology, legal, and information technology) as needed. It will be a long time before you have in-house counsel, and you can’t afford an outside law firm for every NDA to sign. So, choose a CFO who is very comfortable with legal documents, as well as finance.

  6. “Been there, done that” - Building a software company is much different than a manufacturing one, or services. The differences are just as apparent in the financials as they are in technology. You need someone who knows the ropes in your industry.

  7. “I have a dream” - The startup road is guaranteed to be long and hard. Investors look for someone who loves the challenge, looks and sounds like he can weather the storm, will always see the bright side despite adversity, and never gives up.

The job of a startup CFO is very different from one at a “big” company. The latter is much more of a hands-off role focused on investor relations, deal making (financing, M & A), governance, reporting and other back office matters. In stark contrast, the startup CFO is much more hands-on and integrated into the day-to-day of the business.

As you probably noticed and Mark points out, only one of these CFO attributes actually deals with accounting. The reality is that companies are increasingly looking for leadership from their CFOs. If you are looking for funding, as well as a good career path to a CEO down the road, consider this one.

Marty Zwilling


Sunday, September 28, 2014

Smart Entrepreneurs Learn The Most From Their Team

entrepreneur-learning-leadershipStarting and running a company is a team effort. Yes, it takes a leader (entrepreneur), but you can’t do it alone, without a team. Maybe only you and a co-founder comprise the team at first, to provide key skills, back you up, and test your ideas. As the startup grows, the team has to be able to really push you in making growth decisions, rather than you pulling them along.

The responsibility for leadership rests on you as the founder or CEO, and your leadership style. Many entrepreneurs still fall back to the traditional “control” leadership paradigm, but I don’t see it working so well any more. I agree more with Dr. Roger Schwarz and his book, “Smart Leaders, Smarter Teams.” He outlines eight keys to an effective mutual learning approach as follows:

  1. State views and ask genuine questions. When you state your views and ask genuine questions, you are convincingly open and curious. Understand that curiosity doesn’t mean agreement, and all questions are not genuine. Recognize that rhetorical questions seek to make a point or make people do something, not come up with a real answer.

  2. Share all relevant information. All team members need all the right information, before they can make, understand, and implement forward-looking decisions. That means sharing timely information that doesn’t always support your view, or might upset others. You should disclose your feelings, and any limiting factors like privacy or legality.

  3. Use specific examples and agree on what important words mean. If you hear someone on the team using a word or term that you think is unclear to others, ask for a specific example. This usually requires naming real names, rather than “someone,” and asking what you really want to know, without generalizing the question.

  4. Explain reasoning and intent. Teams are hardwired to make meaning out of problems. When you share your reasoning and intent, you reduce the need for others to figure out reasons, or assume something is being withheld. Start every meeting with one or two sentences that explain what you want to talk about and why.

  5. Focus on interests, not positions. Positions represent specific solutions from a given team member, whereas interests are the underlying needs that drive people to their position. You need a decision that meets all key interests, in order to get total commitment to the best solution from the team.

  6. Test assumptions and inferences. Assumptions are conclusions with no information. Inferences are conclusions about things you don’t know based on things you do know. Avoid assumptions, and test every inference by checking it against behavior confirmed by someone else. Untested inferences are among the main reasons a team gets stuck.

  7. Jointly design next steps. When you jointly design next steps, you design them with others instead of for others. It increases the chance that you will get a genuinely workable solution and that the team will be committed to implementing it. Keep in mind that joint design doesn’t mean that you give up your prerogative of making the final decision..

  8. Discuss un-discussable issues. These are topics relevant to a solution that team members won’t address in the team, due to fear or compassion. Examples include disruptive actions of a team member or a boss. Leaders may start the discussion outside, but must address it, with respect, inside the team for mutual learning and resolution.

Where you as the leader may be part of the problem in the mutual learning process, it may be necessary to ask a third party inside the organization, or a consultant from outside the organization to facilitate the transformation, or the resolution of a tough change issue. True leaders know how to move out of the way to let others do what they do best.

The results are improved performance, stronger working relationships, and greater well-being for you, your team, and your company. In the long run, every entrepreneur needs to remember that it’s the team, with their broader range of skills and experience, that builds the leader’s success – and not the other way around. This rarely happens with total control leadership.

Marty Zwilling


Saturday, September 27, 2014

Entrepreneurs Need To Reality Check Their Ideas

Pebble_watch_emailIn my experience, consummate entrepreneurs tend come up with more startup ideas than they can ever implement, and some of the ideas may not even make business sense. But how does any entrepreneur know which ideas to implement, and which ones are best left behind?

After all, most great breakthroughs, like a computer in every home, seemed like a crazy idea before Steve Jobs and Bill Gates made it happen. Now we soon expect a computer on every wrist.

That doesn’t mean that entrepreneurs should ignore business and market realities, under the assumption that success is a random phenomenon. Passion, optimism, and determination are necessary but not sufficient to assure a successful startup.

Some analysis and due diligence along the following lines should be performed on every idea, as a reality check, before committing your efforts and other people’s money to building a business:

  1. Look for places where competitors are few. Even if the idea sounds unique to you, it’s worth your time to do a few Internet searches using relevant keywords. If you find more than a dozen solutions that loosely match your idea, it may be time to skip that one and try another. Don’t forget to consider customer alternatives, like trains versus airplanes.

  2. Check for intellectual property barriers in your way. These days, you can find existing patents and trademarks through Google and the US Patent Office online site without spending thousands of dollars with your favorite patent attorney. Of course, existing patents don’t stop you from innovating, but charging ahead into a wall is no fun.

  3. Find a recognized billion dollar and growing market. If you will be looking for professional investors to help you along the way, recognize that they expect to see data from credible market analysts on the size and location of your solution opportunity. Look for double-digit growth data from Nielsen, J.D. Power, Frost & Sullivan, or others.

  4. Separate nice-to-have ideas from ones solving painful problems. All your friends may love your idea on how to find the nearest bar or gym, but how many others are willing and able to pay money for your solution? Even good social causes need to bring in revenue to continue their worthy efforts. Ask domain experts to quantify value for you.

  5. Choose projects with financial resources within your reach. These days, you can build a new e-commerce website to sell home-made wares for a few hundred dollars. New smartphone apps cost only a few thousand, if you have the programming skills. Unless you have a rich uncle, it’s probably not smart to challenge Intel for the next computer chip, which would require several million dollars in investment.

  6. Minimize infrastructure dependencies. Sometimes your solution is impressive, but mass acceptance requires a big culture change, a large support system, or government legislation. For example, the Segway personal vehicle was proven technology 13 years ago, but is still constrained by right-of-way laws, liability issues, and charging stations.

  7. Availability of necessary skills and team members. Most startup projects require special skills and a motivated team. Entrepreneurs with ideas may not have access to the support skills required, or the ability to put together a motivated team. A successful startup is more about the right people and the right execution than the right idea.

Despite what you hear from some Internet spammers, there are no slam-dunk entrepreneur ideas that can make you rich with no risk and minimal effort. In fact, from painful experience, every real entrepreneur I know could probably add at least one item to this list of reality-check items. Thus I’m suggesting that you do your due diligence carefully, and pick the right idea before you start.

Sometimes I have to tell wannabe entrepreneurs that their million-dollar-idea is actually worth very little, in their own hands. It may indeed be better to freely donate your idea to a more qualified entrepreneur or team, rather than foolishly running it into the ground or sitting on it. One hundred percent of zero is still a small number.

Martin Zwilling

*** First published on on 9/19/2014 ***


Monday, September 22, 2014

Great Startups Are Where Soul and Technology Meet

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

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

Pearce characterizes good leadership as the place where soul and science meet. I fully espouse his explanation of how and why every entrepreneur needs to hone his skills and document his own personal leadership guide, to be comprised of the following four main parts:

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

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

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

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

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

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

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

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

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

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

Marty Zwilling


Saturday, September 20, 2014

Startups Need To Build Solutions, Not Technology

Anybots_robot_montyTechnical entrepreneurs love their technology, and often are driven to launch a startup on the assumption that everyone will buy any solution which highlights this technology. Instead, they need to validate a customer problem and real market need first. Don’t create solutions looking for a problem, since investors ignore these, and customers other than early adopters are hard to find.

Exciting new technologies these days range from the easier to use social media software platforms I see almost every week, to new transportation models, like consumer space travel and hydrogen fuel autos. These founders all seem to be pushing their technology, rather than highlighting their solution to a painful need. Customers buy solutions, not technology.

In fact, outside of those few early adopters, technology by itself has negative value to the majority of potential customers. Most people are wary of change, and know that new technologies take time to learn and stabilize, so customers prefer solutions based on tried and tested proven technologies. Smart entrepreneurs build market-driven solutions, per the following principles:

  1. Size the opportunity and customer interest first. Your passion isn’t enough to create a market. If there is a growing opportunity, an accredited market-research group such as Forrester or Gartner will already have data to quantify your excitement, and help make your case.

  2. Look for customer willingness and ability to pay. Just because users support your free trial doesn’t mean they will pay for the solution. Nice to have does not motivate a revenue stream. Creators of technologies that cure world hunger may find that hungry people don’t have money, but government agencies as customers are a very long sales cycle.

  3. Limit the features and complexity. Technologists tend to add more features, just because they can. More features usually means more complexity in operation and support. The best solutions, from a customer perspective, are able to mask the technology with a very simple and usable interface that focuses on their problem only.

  4. Take a hard look at alternatives and competitors. New technology does not necessarily make better solutions. If you claim no competition, investors may perceive that you have no market, or you haven’t looked. Neither is positive. Customers may be perfectly happy with existing alternatives and competitors.

  5. Work in a familiar domain, on a problem you have experienced. The most successful entrepreneurs tackle problems that have caused them personal pain, in an area they know well. Every business domain looks simpler to outsiders who have no insights into the complexities that increase your risk.

None of these principles is meant to imply that technology is not important in building new solutions. In fact, some technology leaps are so great that they enable a whole new class of products, or a whole new market. These are called disruptive technologies or the next big thing, in the sense that existing markets or economies of scale are disrupted by the scope of change.

Examples of solutions from disruptive technologies include personal computers, smartphones, the Internet and the first social-media platforms. Even for these, which can indeed change the world, the aforementioned principles still apply, in conjunction with a couple of additional considerations:

  • Time frames for acceptance are longer and the risk is higher. Based on history, the acceptance period for major technology changes is much longer than innovative evolutionary changes -- sometimes taking 20 years or more for pervasive acceptance. Investors thus tend to shy away from these startups, meaning you need deeper pockets.

  • Disruptive technologies require customer education to create a new market. Customers tend to think linearly, so existing customer feedback is unlikely to lead to, appreciate or pay quickly for the new solutions from world-changing technology. This means more time and money for viral marketing, product iterations and promotions.

So the more you emphasize the technology of your offering, the more you need to be prepared for increased costs, reduced investor interest, slow customer acceptance, and a longer wait for any return. On the other hand, the longer-term impact and return of disruptive technologies is likely to be huge, if they survive the early challenges.

My recommendation for first-time entrepreneurs, and the rest of us who don’t have deep pockets, is to focus on customer problems that are causing pain today, and customers who are willing and able to spend real money on a solution.

You will more likely get the investor resources you need, the guidance from existing experts, the opportunity to hone your business skills, and the confidence from success. Then when you sell your first company for several hundred million, you will be ready to tackle that favorite disruptive technology leading to the next big solution to change the world.

Martin Zwilling

*** First published on on 9/12/2014 ***


Friday, September 19, 2014

10 Entrepreneur Beliefs That Defy The Stereotype

Page brin_by_origaMost people agree that entrepreneurs have to think differently and take risks to have much chance of building a successful business. Yet I have found that serious entrepreneurs usually go way beyond these platitudes in their actions and thinking, and often won’t volunteer their real views, for fear of alienating “regular” people, and being branded a fanatic.

In his book from a while back “The Entrepreneur Mind,” by serial entrepreneur Kevin D. Johnson, he outlines 100 essential beliefs, insights, and habits of serious entrepreneurs. Most of these are predictable, like think big and create new markets, but I found a few, like the ten below, that will likely raise the hackles of many people outside this lifestyle, and many “wannabe” entrepreneurs.

Yet, based on my own years of experience “in the business”, mentoring many entrepreneurs, and following stalwarts like Larry Page and Sergey Brin of Google, even these potentially controversial mindsets ring true to me:

  1. All risk isn’t risky. Entrepreneurs surely understand the high probability of failure, but they don’t necessarily like to gamble. Instead, they take calculated risks, stacking the deck in their favor. They must have enough confidence in themselves, supplemented by expert knowledge, solid relationships, or personal wealth, to see the risk as near zero.

  2. Business comes first, family second. This view isn’t a selfish one, but a recognition by serious entrepreneurs that family well-being is dependent on the success of the business, not the other way around. This is why airlines ask you to put on your oxygen mask first. Should you forego closing a million dollar deal to attend a ball game with your son?

  3. Following your passion is bogus. Look for a good business model first. Your passion may be for a good cause, like curing world hunger, but it may not be a good business. In any young business, you inevitably find things that are not enjoyable, but need to be done, like cold calls or firing unproductive employees. Just doing fun things is a myth.

  4. It’s not about being your own boss. Great entrepreneurs aren’t interested in being bosses at all. People who crave the freedom to do what they want when they want generally make terrible entrepreneurs. In order to be a successful entrepreneur, discipline is a must, and accept your new bosses as investors, partners, and customers.

  5. Fire your worst customers. We have all had customers who take advantage of us, to the detriment of other good customers. The best entrepreneurs are quick to make the tough decisions to bypass bad customers, with proper respect, to minimize frustration, resource drain, and reputation loss. You can’t please everyone all the time.

  6. Ignorance can be bliss. It’s great to be highly familiar with the industry in which you plan to compete, but many times people see too many challenges, and never start. In other cases, entrepreneurs are opening up new business areas, so no one yet knows the challenges. Serious entrepreneurs trust their ability to beat a new path to the opportunity.

  7. You’re in no rush to get an MBA. If you are already an entrepreneur, more education, including an MBA, will only slow you down. Consider it a waste of time. If you plan to become an entrepreneur, and already have business experience or an undergraduate business degree, skip the two-year delay and cost of the MBA.

  8. You are odd, and it’s OK. Entrepreneurs, especially those in technology, usually don’t start out as well-rounded, well-adjusted leaders. In fact, being odd is quite the norm. According to other studies, attention-deficit disorder (ADD) is common, as well as host of other personality disorders. It’s actually cool to be a geek in this lifestyle.

  9. A check in hand means nothing. Every entrepreneur remembers their na├»ve days when that first customer check bounced. When you receive a new purchase order, a check, a verbal agreement, or even a written agreement, don’t get too happy and excited. Save the celebration until you have cold cash in hand, or the funds are verified.

  10. There’s no such thing as a cold call. If you are an elite entrepreneur, you don’t go into anything cold. With the Internet and a plethora of other resources, you can warm up any call quickly, and not waste your time or theirs. Doing your homework first is one of the best ways to get an advantage over your competition.

If you think Johnson is on the right track, see his book for 90 more challenging insights. Even if you disagree with some of these, try to open your mind to the value of the seemingly backward way of thinking required to be a great entrepreneur – others seek refuge, they take risks; others want a job, they want to create jobs; others follow the market, while they define the market.

Have you caught the entrepreneur bug yet? If so, prepare for a lifetime commitment, and learn from the elite. There is no turning back.

Marty Zwilling


Monday, September 15, 2014

Startups Need To Capitalize On Every Conversation

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Marty Zwilling


Sunday, September 14, 2014

Dread Startup Problems Or Learn To Enjoy Challenges

business-problem-solving-stressIf you can’t solve problems and enjoy it, you won’t make it as an entrepreneur. By definition, an entrepreneur is the first to undertake a given business, and firsts never happen without problems and people frustrations. The toughest problems are people problems, like personnel issues, but there are tough operational problems as well, such as vendor delays and quality surprises.

The real entrepreneurs I know are good at overcoming both people problems and business obstacles, and get satisfaction from the challenge. Some people think this is a talent that you must be born with, but experts disagree. You can definitely train yourself to be a problem solver, if you haven’t already. It’s a key skill for success in every business role, from accountant to customer support. Here are some basics rules:

  1. Practice active listening. Whether it’s a frustrated employee, or a dissatisfied customer, what you first hear is usually someone yelling with emotion or talking so fast that you don’t know what they are talking about. The first thing to do is resist the urge to vocally jump into the fray, and listen attentively without interruption. Often the person will solve their own problem as they are unloading.

  2. Promise action but manage expectations. Calmly commit to resolve the problem, but don’t immediately promise any given solution. Let the person know that the situation is not simple, and you need some time to investigate the circumstances and alternatives. Then give an expected time frame for an answer, and move to the next stage.

  3. Investigate thoroughly. There are at least two sides to every problem. Don’t assume anything, and gather facts from all relevant parties. If it’s a judgment or fair treatment question, practice your active listening with each party. If a problem requires special expertise, like a tax question, do your homework or call an expert.

  4. Provide regular progress updates to all. Status communication is critical, if the resolution time is going to be longer than one day, even if you have given an expected time from longer than one day. This is probably the most important step and probably the most neglected. If they hear nothing, unhappy people get progressively harder to satisfy.

  5. Make a timely decision. Meet your committed time frame for a resolution. Schedule enough face-to-face time (not email or text message) to lay out your understanding of the problem, facts you have assembled, options that you considered, and your decision reached, with reasoning behind it. If possible, let the person with the problem chose from alternatives, so you get more “buy-in.” Put the decision in writing to prevent ambiguity.

  6. Follow-up. No matter how smooth the resolution, you need to re-confirm the decision with affected parties within hours or days. This reaffirms your commitment to the process, their satisfaction, and avoids any secondary problems. If the problem was a business process, get the process update documented and communicated to all.

It’s critical to train everyone in your team on these principles, if you want an effective business. Your goal in all of this is to be a role model and get respect for you own position, as well as to empower team members to effectively solve problems for you and for your customers directly.

Problems happen, that’s part of life and people usually understand that. Problems are an everyday part of every business and personal environment. In fact, every business is about solutions to customer problems – no problems, no business.

Entrepreneurs who are great problem solvers within the business are the best prepared to solve their customers’ needs effectively as well. But in both cases, forcing a smile is not an alternative to the techniques described above. Your team and your customers will see right through it.

Marty Zwilling


Saturday, September 13, 2014

7 Reasons To Think Positively About Competition

Mens_100m_finals_Olympic_TrialsMost entrepreneurs spend far too much time thinking negatively about competitors, and can’t resist making derogatory statements about them to their own team, investors and even to customers. This approach only makes these important constituents question your integrity, intelligence and your understanding of business basics. Pointing out flaws in others does not give you strength.

As an investor, I always listen carefully to what an entrepreneur says, and does not say, about competition. Every business area has competition and every customer has alternatives, so a smart entrepreneur needs to acknowledge these as a positive in defining a big market, and position the features of a new solution in this context. Here are seven key ways to do this:

  1. Frame the competition as manageable. Investors want to see evidence of your sustainable competitive advantage. They don’t want to hear there are no competitors or a long list implying a crowded space. Use three generic categories, and relate your position to a key player in each.

  2. Highlight your positives to suggest competitor shortcomings. Talk about competitors with positive statements about the advantages of your own product. For example, “While product X has worked well in the server market, my product also provides cloud support to drastically reduce IT costs and maintenance.”

  3. Emphasize intellectual property and a dynamic product line. Patents and trade secrets are more powerful advantages than missing competitive features, which might be quickly filled in as you gain traction. Be careful with the first-mover claim, since big competitors have deeper pockets and can accelerate to quickly eliminate your lead.

  4. Demonstrate expertise on the range of competitors. You don’t need to talk about every competitor, but you better know every one just in case someone challenges you. Do your research thoroughly on the Internet and with industry experts and advisors. Build your credibility by presenting information on competitor leadership and team histories.

  5. Become a thought leader on industry evolution. Make it evident that you have learned and evaluated competition from a higher perspective -- meaning the evolution of industry technology and trends. Show that you have thought about indirect competitors and alternative solutions, such as airplane technology versus a better train.

  6. Develop a timeline showing continuous innovation. Make your competitive position a long-term advantage by presenting a timeline of technology evolution, rather than a comparison at the time of first rollout. Investors don’t like an apparent “one-trick pony” or a momentary advantage that can be quickly overcome by smart competitors.

  7. Position your solution in the world market. Every market and every opportunity these days is global, so successful strategies and positioning are done with that in mind. Your rollout needs to be focused and targeted locally in the near-term, but competition needs to be addressed in a much broader, long-term way.

Don’t forget that the primary objectives of every competitive positioning are to demonstrate your business acumen and integrity, as well as the strengths of your solution. Any overly negative comments you make about competitors doesn’t help you on either of these objectives and will kill your momentum with investors and potential customers.

Spot comparisons are also less and less valuable these days, as the market tends to change quickly, and competitors can pivot and recover just as quickly. Remember that smart competitors are likely working on new features with resources greater than yours, and timeframes to delivery that may be shorter.

In addition, thinking positively about competitors is what your customers will do, and what every smart investor or potential business partner does. You have to get on the same wavelength to optimize your solution, maximize your credibility and minimize the competitive risk. Besides, being an entrepreneur who is full of negativity is no fun.

Martin Zwilling

*** First published on on 9/05/2014 ***


Friday, September 12, 2014

Smart Entrepreneurs Plan Ahead For A Startup Exit

AccentureNYSEThe last thing a new entrepreneur wants to think about for a new startup is how it will end. Yet one of the first things a potential equity investor asks about is your exit strategy. The answer you give can make or break your ability to get an investment, so you need to have the right answer ready before anyone asks. Here are three important reasons for the question:

  1. Good investment paybacks normally require an exit event. Equity investments are not loans, so there is no loan payback period or interest payments. Equity is stock, but private company stock has no market value until the company goes public or is sold or merged with another company. These events may take three to five years at a minimum.

  2. Startups with no exit planned will minimize investor returns. If the entrepreneur plans to grow the company into a family business, or keep it private, they will either never be interested in buying out investors, or will certainly not be motivated to provide the 10x return that investors are looking for. Investors hesitate to invest under these conditions.

  3. Most entrepreneurs like the startup role, but not the big-company role. Investors know that the fun of a startup turns into managing production processes, sales processes, and personnel in a few years. You probably will do that job poorly, unless you plan your exit early, to move on to your next startup role, to do that better the next time.

Of course, if you are able to bootstrap your startup, and don’t anticipate the need for outside investors, you can technically ignore the first two points. Even still, in the context of all three points, I recommend that you evaluate the most common exit alternatives and considerations, and integrate the right one into your startup strategy and plan:

  • M&A - merger or acquisition by another company. This should be perceived as a win-win event, where your startup is bought or merged into a larger peer or competitor, allowing both you and investors to cash out. The resulting entity will gain complementary skills, economies of scale, new customer sets, and hopefully a larger growth opportunity.

  • IPO – public company initial public stock offering. According to recent National Venture Capital Association statistics, only 20% of venture-backed startups now use this alternative, due to high liability concerns, demanding shareholders, and high costs. Most experts don’t recommend this approach as your default strategy anymore.

  • Find a private equity firm or friendly individual. This alternative differs from an M&A, since the result is still your original single company. Yet it is an opportunity for you and your investors to cash out. The buyer has the challenge of scaling the business, and managing all the operational growth requirements. You can kick-off your next startup.

  • Position the company as a cash cow to fund spinoffs. If you can convince investors that your startup will generate a solid revenue stream, and the market won’t go away any time soon, they may see an opportunity for an ever larger return. You can maintain ownership, and even find someone you trust to run it for you, as you focus on spinoffs.

  • Liquidate the assets, cash out investors, and keep the rest. This is not a recommended strategy, since business shutdowns are usually seen as distressed situations, meaning the value of hard assets will be highly discounted. Less tangible assets like the brand name, business relationships, and even your reputation may be lost or damaged.

  • No exit. If your startup strategy is to be a lifestyle company, or a family business that will grow organically and never go public, then no-exit is a valid exit strategy. This alternative is often paired with a personal no-exit strategy. If you expect investors to help your startup scale, it probably won’t happen, as discussed in the first points of this article.

While exit discussions may somehow seem negative, an exit strategy should always be seen as positive. It’s a plan to develop the best opportunity for you, your startup, and your investors, and capitalize on it, rather than a plan to get out of a bad situation. Think of it as a succession plan, to keep you and what you have started growing. It may be the end of your startup phase, but it should be the beginning of a more mature and stable business.

Marty Zwilling


Wednesday, September 10, 2014

Size Up Your Investors Before Accepting Their Money

green-moneyEven though the color of their money is always green, all startup investors are not the same. Struggling entrepreneurs are often so happy to get a funding offer that they neglect the recommended reverse due diligence on the investors. Taking on equity investors to fund your company is much like getting married – it is a long-term relationship that has to work at all levels.

Investor due diligence on a startup is not a mysterious black art, but is nothing more than a final integrity check on all aspects of your business model, team, product, customers, and plan. Reverse due diligence on the investor is a comparable process whereby the entrepreneur seeks to validate the track record, operating style, and motivation of every potential partner.

If all this checking sounds a bit paranoid and unnecessary, it may be time to take another look at some questionable investor practices and onerous term sheet requests. Beyond the technical issues, if the chemistry isn’t right, the impact on your startup and future business is likely to be similar to that of a bad marriage. It’s no fun for either side.

Thus, here are the minimum steps that I recommend to every entrepreneur in completing an effective reverse due diligence effort:

  1. Get a perspective from peer investors. Of course you need to discount any investor competitive positioning, but local investment group leaders will quickly tell you the strengths and terms of active investors in your area. If your investor is unknown, or peers offer no positive attributes, take it as a red flag. A sample of three views is adequate.

  2. Personally visit another startup funded by this investor. Through networking with other entrepreneurs, you should find one or more to visit that have relationships with this investor. Another approach is to ask the investor for references, where their involvement has made a real difference, leading to success.

  3. Do research on investor visibility via Google and social media. Start by checking the profile and credentials of investor principals on LinkedIn and industry associations. Check for positive or negative news articles, press releases, relationships, and support of community organizations.

  4. Invite the investor to dinner or fun-related activity. Outside of work is where you can best evaluate the chemistry match, and decide whether you can enjoy and learn from the relationship. Enjoy a sports event together, or find common non-profit causes to participate in. As with any relationship, it doesn’t pay to close in a heated rush.

  5. Conduct a routine credit and background check. Look for investor experience in your business domain, as well as evidence of integrity and trustworthiness. Check the content of the investor’s website, and pay particular attention to the source of funds. Personal funds imply the most commitment, and offshore funding is most suspect.

Investor agreements should always be reviewed by an attorney who is familiar with startup equity investment deals. To get the terms you want, it’s better to start with your own term sheet. It’s even better to let the attorney do the negotiating, since many innocent-sounding protective and governance provisions can have long-term negative consequences to you.

While I recognize that there continues to be a shortage of venture capital for new entrepreneurs, compared to the demand, don’t succumb to the temptation to take funds from investors that you are not totally comfortable with. The result will likely be business demands that you can’t meet, loss of key personnel, potential lawsuits, and certainly not the fun lifestyle you expected.

The only successful entrepreneur-investor relationships are win-win ones. That means you and your business must benefit from both the money and mentoring from the investor, and the investor will win from getting a larger return sooner. Win-win relationships get better over time, whereas win-lose go downhill fast and rarely survive the honeymoon period. Know your partner well before you get married.

Marty Zwilling


Monday, September 8, 2014

Every Entrepreneur Needs Help In Getting Things Done

to-do-listThe universal challenge of every startup founder is to get everything done that needs to get done, and still have a life. Even outside of business, everyone wants to accomplish more, while working less. I’ve been a student of these techniques for some time, but some time ago I saw a great summary that seems to pull all the key principles together.

Stever Robbins, known on the Internet as the Get-It-Done Guy, outlines his strategies in his classic book “9 Steps to Work Less and Do More.” These steps are not aimed specifically at entrepreneurs, but I see how they can be applied there as follows:

  1. Do what you know and enjoy. Figure out what’s really important to you as an entrepreneur. For most, it’s following a passion to show customers your better solution. Live your lifestyle, do what you love, and identify your top priorities. Then you will get things done, and it won’t even seem like work.

  2. Stop procrastinating. Procrastination is a killer when it comes to being effective. One of the best ways to stop procrastinating is to break things down into small chunks, using tiny steps to move forward. Break time into pieces. When there’s an end in sight, it’s a lot easier to get down to business.

  3. Conquer the technology you need. Cellphones, laptops, and other electronic devices are supposed to give users additional freedom, but far too often, they create time traps. Separate yourself from technology on a regular schedule to not allow a machine’s interruptions to set your day’s agenda.

  4. Maintain your focus. You need to set boundaries and say “no”; to stop multitasking; and to find ways to group similar tasks or similar contents. Don’t forget to delegate to other team members, and don’t be tempted by the current “crisis” to postpone the important tasks of strategy decisions and monitoring the progress of the business.

  5. Stay organized. Many people confuse ‘organized’ with ‘neat.’ In fact, organized means a place for everything and everything in its place. When you stumble over something that doesn’t have a place, either throw it away or make a place for it. If you don’t have any more room, throw something away – don’t rent a storage unit.

  6. Stop wasting time. Work is whatever you need to do that most matches your business goals as they are today. Use the 80/20 Rule to pick and then complete those taks. Stop trying to do things perfectly. “Good enough” is the antidote to perfectionism. Make faster decisions by limiting the options you consider.

  7. Optimize your efforts on every task. Stop doing what isn’t working so you’ll have the time to optimize the rest of what you do. Some of the best ways to optimize include using team feedback to identify blind spots that could be limiting effectiveness; recognizing when it’s time to call in an expert to get the job done; and listening to your own advice.

  8. Build stronger relationships. Build a network of contacts to allow you to harness the power of others’ strengths. Superficial relationships don’t help. Giving is the best and quickest way to strengthen a relationship. Conflict takes energy to sustain, so work to prevent conflicts from arising, and work to end conflicts quickly that do arise.

  9. Leverage technology. Use technology thoughtfully to automate things that take a lot of time, thus gaining leverage. Reuse things rather than re-inventing them. The most valuable computer function in business is “cut and paste.” These days, on the Internet you can find samples of every document and contract you will ever need, so use them.

With each of these steps, you will reclaim more control of your business and your life. You will find yourself honing in on the things that actually move the startup forward and make you happy, and learning the skills you need to resist the rest. You too can be a get-it-done guy.

Marty Zwilling


Sunday, September 7, 2014

Do You Have The Mentality To Be An Entrepreneur?

Employees_discuss_in_officeAs an angel investor and a mentor to aspiring entrepreneurs, I’m always disappointed to see founders who seem stressed out most of the time, and more annoyed than energized by the abundance of challenges they see in building their startup. The entrepreneurial lifestyle is a tough one under the best of circumstances, and it’s one you have to love in order to succeed.

Obviously, it’s not that simple, but making the right first impression is critical for an entrepreneur, not just with investors, but also with partners, customers and even yourself. Even though I’ve been working with entrepreneurs for many years, I’m sure I’m not the only person who can quickly spot the ones whose mentality for the role is suspect.

We would all prefer that aspiring entrepreneurs take a hard look in the mirror early, before they assume they can step easily into the role of a Mark Zuckerberg, Richard Branson or Bill Gates. Here are some key mentality attributes to look for, which I believe are essential for every entrepreneur to see in themselves:

  1. You relish the role of leading the charge. Being a visionary or an idea person is not enough, you have to be anxious to jump in and get your hands dirty. Most success stories in business are not about envisioning the next big thing, but about making that change happen. Investors and strategic partners look for entrepreneurs who can execute.

  2. Ability to balance right-brain and left-brain activities. Most technical entrepreneurs are left-brain logical thinkers, even perfectionists. Yet every business today needs a focus on visualization, creativity, relationships and collaboration, which are normally in the domain of right-brainers. Successful and happy entrepreneurs have that rare whole-brain focus.

  3. Enjoy being outside your comfort zone. New businesses are an adventure into the unknown. You need to be mentally prepared to enjoy the roller coaster ride, rather than face it holding your breath with your teeth gritted at every turn. Only then can you enjoy the thrill of victory when you survive a major turn, and be energized for the next one.

  4. Proactively seek input, but make your own decisions. Great entrepreneurs seek out critical customers and industry experts, and actively listen, but are not afraid to trust their own judgment as well. Ultimately they accept the responsibility of “the buck stops here,” meaning they live by their own decisions, and never make excuses.

  5. Willing and able to do a little bit of everything. Technology experts tend to have a very deep level of knowledge, but not very wide. If your real interests are not very broad, then building a business will likely be frustrating and expensive. Startups have limited resources, so the founders have to enjoy trying things and learning from their mistakes.

  6. Viewed by others as a successful problem solver. The best ideas for a new business are solutions to a real customer problem, rather than great ideas looking for a market. Creating a new business means tackling one difficult problem after another, until success suddenly appears. Entrepreneurs see problems as milestones to success, not barriers.

  7. Don’t demand or expect immediate gratification. Seth Godin once said, “The average overnight success in business takes six years.” He is an optimist. For some entrepreneurs that success is financial. For others it is a legacy of good deeds. Because it takes so long to get there, it is important to be happy with the journey.

I’m not suggesting that you need to fit every aspect of my view of an entrepreneur’s mentality for success. Certainly there are winning businesses run by people from every background and personal style. But if you are looking for investors, team members and demanding customers, it helps to understand what their biases might be in committing to and helping the ideal partner.

I do believe that if every aspiring entrepreneur spent at least as much effort looking inward, understanding their own drivers and preparing as they do in working outward by building solutions, seeking investors and writing business plans, the startup success rate would go up.

Overall, the entrepreneur mentality is a state of mind that enjoys the activities and requirements of starting a business. Happiness is more likely to lead to success, than success leads to happiness. Are you certain that your desire and expectations of being an entrepreneur are being driven by the right perceptions?

Martin Zwilling

*** First published on on 8/29/2014 ***


Saturday, September 6, 2014

6 Principles For Building A Winning Business Culture

Sponsored by VISA Business

winning-business-culture-diversityI’m seeing a renewed appreciation of culture and values in business these days. Maybe it’s just another example of nature abhorring a vacuum, but I prefer to think it’s a natural evolution of the pervasive social networking communities where people relate to, and expect to interact with businesses and products they like. They drive the market, rather than the other way around.

“Your values as you create a startup are the key to creating an enviable culture that attracts more customers,” says Ann Rhoades in her book Built on Values. She would assert, and I agree, that you need to get it right the first time because first impressions are critical, and changing your values and culture in the eyes of customers and employees is extremely difficult.

I believe in a startup culture that strongly transmits the values of integrity, customer focus, and results. Ann outlines six fundamental principles that are key to building this culture, or changing an existing culture to improve financial return, customer satisfaction, and employee performance:

  1. You can’t force culture, you can only create environment. Every culture is the culmination of the leadership, values, language, people processes, rules, and other conditions, good or bad, present within the organization. No leader can “create culture,” just the environment where the desired culture can emerge and flourish.

  2. You are on the outside what you are on the inside. The service you provide for your customers will never be greater than the service you provide to your employees. You can’t force people to treat customers well if they feel ill-used themselves. Hire a diverse set of people who fit your desired culture, and treat them the same way.

  3. Success is doing the right things the right way. By defining your values and behavior by the right actions, you simplify and enable everyone to make the right decisions on the front line. Empowering and educating everyone to make the right decisions at every opportunity leads to happy customers and business success.

  4. People do exactly what they are incented to do. Your expressed values will be perceived as hollow and meaningless unless you base compensation and rewards on the behaviors that go along with the values. It takes diligence and courage to hire only people with these values, and fire ones who have lost them.

  5. Input = output. Your organization will get out of values only what they are willing to put into them. Communicate your values often, and use values-based performance metrics to gauge your results, measure the level of implementation, leadership development, and succession planning.

  6. The environment you want can be built on diversity, strategic values and financial responsibility. Conscious actions, beginning with determining a set of shared values and fostering diversity, can set up the necessary conditions for encouraging a culture that will make a startup into a leader. Values are most critical when making tough decisions, but that is also when they come in handy to illuminate the way forward.

Startups are the only businesses able to set their culture and values from a clean slate. Values start and emanate from you, the founding entrepreneur. Your values are not what you proclaim on your mission statement (if you have one). They set the culture by what you live by and project on the front line in day-to-day actions.

Strategy matters, but without a winning culture and the right values to drive it forward, your strategy will take you nowhere. Good leaders matter, but you need a culture with positive values in order to attract the best leaders and compete effectively.

Leaders drive value, values drive behavior, behavior drives culture, and culture drives performance. High performance makes new leaders. This is the self-reinforcing circle of excellence every startup needs to succeed. You can’t afford to wait on any of these, so get your culture right sooner rather than later.

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 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


Wednesday, September 3, 2014

Modern Entrepreneurs Need To Learn How To Write

Arabic_calligraphyEven in this age of videos and text messages, the quickest way to kill your startup dream with investors, business partners, or even customers, is embarrassingly poor writing. Being very visible in the startup community, I still get an amazing number of badly written emails, rambling executive summaries, and business plans with one paragraph per chapter.

In the competitive realm of business, you only get one chance to make a great first impression. You have to be able to communicate effectively in all the common forms, including business writing, as well as talking, presenting, and producing videos. Lack of the requisite skills or discipline will get you branded as a poor business risk before the message is even considered.

Business writing is not a skill that anyone is born with, but one that everyone can learn. Since we both lose when an entrepreneur with a great idea is held back by a failure to communicate, I would like to offer a quick summary of business writing basic principles. Keep these in mind as you look for others to join you in supporting your idea to change the world:

  1. Get to the point in the first sentence. In this age of data overload, everyone has learned to tune out if they can’t quickly decipher a relevant purpose and focus for your message. That context needs to be set before your sales pitch or background story makes any sense. Before you start, make sure you understand your own objective.

  2. Plan the message flow to a logical conclusion. Random thoughts or lists of facts do not constitute effective business writing. Most commonly, your message is informational or meant to persuade, so every element should be consistent with that intent. Always include the key document elements of an opening, main body, and a conclusion.

  3. Key points should be highlighted and positive. Action items should be underlined, or separated into bullets to provide visual recognition in a quick scan. Positive messages have more impact, so keep negative and emotional statements to a minimum. Avoid flowery language and excessive use of adjectives. Tight wording clarifies the message.

  4. End with a clear call to action. If you are looking for an investor, a partner, or a customer, make sure the next step is clearly stated, and not just implied. Contact information should always be included. Ending with “May I ask for an hour on your schedule next week to discuss details?” is better than “Don’t miss this opportunity.”

  5. Talk uniquely to each recipient. Generic messages aimed at groups of people do not make a good first impression, especially if the greeting is non-specific and email is directed to a long list of addresses. Smart business people tailor their conversations to each recipient, and the same consideration should be applied to written messages.

  6. Use professional formatting. A badly formatted document, in all caps, mixed fonts, or all one paragraph will destroy even the best message. If you are asking for a million dollars, don’t send your message in smartphone or texting shorthand, ignoring spelling errors. Show your recipients professional respect, and you will get respect in return.

  7. Keep your writing voice friendly and courteous. If your writing tone is angry, cynical, or arrogant, don’t expect any reader to be open to what you have to say. Tune your use of language to the reading level of the recipient or below. Trying to impress or intimidate the reader with technical terms or acronyms doesn’t work with confident professionals.

As a general rule, text messages or emails from a smartphone should never be used for business purposes with someone you don’t know well. Emails are acceptable, if kept to one page, with minimal attachments, addressed to a single recipient, with a relevant subject line, and professionally formatted.

If the business criticality is high, or the subject is sensitive or easily misinterpreted, skip the written communication entirely, in favor of a phone discussion or a personal meeting. Written communication can never convey emotions and body language effectively, which may be fifty percent or more of the message.

Every entrepreneur needs to remember that they are selling themselves in every written communication, even more than they are selling their idea or funding request. Poor use of the writing technology generally available, including formatting tools and spell checkers, will be read as an inconsiderate or risky partnership. You can’t afford that competitive disadvantage.

Martin Zwilling


Monday, September 1, 2014

Will A Business Incubator Help Hatch Your Startup?

Incubator_Baby_DuckOne of the reasons that now is the time to be an entrepreneur is the explosion of startup assistance organizations, usually called incubators or accelerators. According to the National Business Incubator Association (NBIA), there are over 7,000 of these locations worldwide, and even new online versions like Pitchswag springing up here and there.

Most of these are non-profits, set up by a university to commercialize new technologies, or a municipality to foster business development for the local economy. A few are still trying to make a profitable business out of nurturing startups, but it’s a challenge to make money when your customer startups don’t have many resources to give.

But there are notable examples of for-profit incubators that are thriving, including YCombinator, led by Paul Graham in Silicon Valley, and TechStars, led by David Cohen and located in several key cities around the country, that have an excellent reputation and track record. I believe their competitive advantage is their top on-site leadership, exclusivity, and connections to investors.

Variations on the incubator theme are sometimes called business accelerators, science parks, or the Small Business Administration's Small Business Development Centers (SBDCs) in almost every state in the US. Accelerators generally accept startups at a slightly later stage, and attempt to compress the timeline to commercialization into a few months, instead of a year or more.

Common resources provided by most of the incubators and accelerators today include the following:

  • Access to shared office facilities for multiple startup teams at a very low cost.
  • Shared business support services, including telephone answering, conference rooms, teleconferencing, administrative support, and a business mailing address.
  • Mentoring and technical assistance from volunteer or paid experts.
  • Direct seed funding, for a share of the equity, and introductions to investors.
  • Peer-to-peer networking with other startups and founders in the same stage.
  • Health, life, and other insurance at group rates.

If you don’t need these common resources, but need specialized technology services, you should look for technology parks and research facilities, often sponsored by leading companies in specific technologies, like Intel New Business Initiatives and Google Ventures. As well, these companies usually bring real new venture funding opportunities to the startups they sponsor.

To get started, go to the National Business Incubation Association (NBIA) web site, and use the lookup tool provided to see what’s available in your area. This association is definitely one of the world’s leading organization for advancing business incubation and entrepreneurship. Another good online approach is a simple Internet search for articles like the “The 15 Best Startup Accelerators in the U.S.

But don’t expect incubators to magically convert your pre-hatched idea into a successful company. The good incubators are highly selective, and expect you to demonstrate your commitment and a hard work ethic to meet expected milestones and show continuous progress. In a recent cycle, YCombinator had a thousand applicants for thirty slots, and several of these fell out before completion. Think of that challenge like competing for limited venture capital.

I believe the real value of an incubator is in the relationships you can build there, with peers as well as domain experts, investors, and potential strategic partners. An incubator won’t help you if the market opportunity is small, the competitors are large, or your solution doesn’t address a real need.

As evidence that it does work, TechCrunch recently aggregated the combined valuation of YCombinator graduates at $14.4 billion, with the total amount raised topping $2 billion. That’s over 500 successes in less than ten years. However, if you are looking to find an incubator like YCombinator for easy money and free services to hatch your startup, it probably won’t work.

Growing up and surviving in the entrepreneur world requires a fine balance between an independent determination to be self-sufficient, and a humble willingness and ability to listen to and learn from the best and the brightest startup mother-hens out there. Are you and your startup ready to make the cut?

Marty Zwilling