Monday, March 1, 2021

How To Know It’s Time To Exit Your Company Gracefully

warren BuffettFor most entrepreneurs, their current business is not where they intend to stay until they die. At the right time, they all intend to make a graceful exit, and leave while still perceived to be on top of their game. The challenge is how to know and exit gracefully when the right time has come, without trauma to either the company or themselves.

I don’t have any solid insight on this subject, so I was intrigued by the classic book “Leaving on Top: Graceful Exits for Leaders,” by David Heenan, a business executive and Georgetown professor. He did some good research on 20 top leaders, and why some leaders ‘get out while they’re on top’ while others ‘overstay their welcome.’

First of all, both Heenan and I agree that most exiting business leaders can be categorized into one of four major groups:

  • Timeless wonders. With their skills very much intact, these white-haired prodigies have no need to call it quits. Warren Buffett and Rupert Murdoch clearly fall into this category.
  • Aging despots. Reluctant to leave the spotlight, they are past their prime and should turn the reins over to a new generation. We won’t mention any names here, but we al-l know a couple of these.
  • Comeback kids. Whether to return their enterprises to their former glory, or simply save themselves from boredom, these leaders left their company, but then returned with a vengeance. Steve Jobs and Howard Schultz are a couple that come to mind.
  • Graceful exiters. Quitting while ahead, these leave a sterling reputation as they move on. Bill Gates and Oprah Winfrey are business examples in this category.

After many stories of leaders in all these categories, he offers some good tips on how to get counted in the category you prefer:

  1. Know thyself. What matters most to you? Fame? Fortune? Family? Friends? Helping others? Listen to your heart. Look at yourself as objectively as possible and analyze what’s truly important. Be open and responsive to the inputs of others.
  1. Know thy situation. When everything is clicking, it’s easy to overstay your welcome. Staying power is elusive at best. Know where you stand, and don’t wait for the annual review. Move on before someone else decides to move you on.
  1. Take risks. Don’t shackle yourself to the past. Accept change as a natural part of your transition, just as you always have for your company. Strike out anew while you are still hardy enough to face new challenges. Push your comfort zone.
  1. Keep good company. Stay connected. Cast a wide net, including people inside and outside your fields of interest. Ignore the naysayers. Keep the company of sunny characters, those with an upbeat disposition. Avoid humorless people.
  1. Check your ego at the door. While we still treat some personalities like royalty, a new view of leadership is beginning to see them more as stewards than kings. In addition to muffling hubris, graceful exiters functions as talent spotters, so everyone wins.
  1. Keep learning. Graceful exiters remain curious. They are intellectually interested, alert, and adaptable. They read, explore new places, and engage their senses. The more diverse your experiences, the better the prospects for forging a new chapter in your life.
  1. Stage your exit. The transition to what’s next may take a while. Back into it. Live life incrementally. Break your departure into manageable steps. Take things bit by bit. By carefully staging your departure, you’ll build confidence for your new life.
  1. Know when to walk away. Many give up everything to stay in the saddle. As their legacy erodes, they fail to prepare for the next season of their lives. However brilliant they may once have been, their unbridled egos cost them soul and substance.
  1. Know when to stay put. If you are happy and productive, stick with your day job – the one you love. Give it your all. Remain passionate about it. Not everyone has to pack it in. A long, healthy, and productive life awaits those people who prepare for it.
  1. Start now! Life’s prolonged course offers everyone the opportunity to chart new horizons. But you need to set your priorities early and put the building blocks in place to achieve them. Don’t dillydally or let procrastination steal your dreams.

Leaving on top, and exiting gracefully, begins with recognizing that a job, like a life stage or a relationship, has peaked. After that, I’m reminded of the old quote by John Richardson "When it comes to the future, there are three kinds of people: those who let it happen, those who make it happen, and those who wonder what happened." Which category will you fall into?

Marty Zwilling

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Sunday, February 28, 2021

10 Strategies For Finding Stronger People Connections

positive-business-relaionshipsJust because you are an entrepreneur, or work in a startup, you can’t ignore the rules of building and maintaining relationships. Many despise these experiences in corporate environments, and leave for a startup, only to find that they have to be able to navigate a similar minefield there of workplace and business relationships to be successful.

Jan Yager, Ph.D., an author and speaker on this and related subjects, outlines in her classic book “Productive Relationships: 57 Strategies for Building Stronger Business Connections.” From my experience and hers, here are ten top relationship strategies, as practiced by Richard Branson and other well-known startup leaders:

  1. Create a favorable first impression. You only get one chance for a first impression. Don’t miss an opportunity for face-to-face communication, where you can use body language that welcomes relating, estimated at over 50% of all communication. Limit the use of e-mail and texting for early interactions.
  1. Avoid negative personality types. By recognizing negative personality types, like the control freak, the blameless type, the idea thief, and the entitled, you will have a better chance of not taking his or her behavior personally. Avoid associating with them.
  1. Proactively form relationships with positive types. These are the people who will help you to thrive and prosper. They include real mentors, facilitators, visionaries, motivators, and negotiators. Of course, it still pays to keep your eyes open and carry your own weight.
  1. Find a way to motivate others to want to get along with you. Understand your own agenda, and figure out the agenda of others, hidden or obvious, to make it a win-win relationship. How can you appeal to others on an emotional level to work together?
  1. Reexamine your attitude toward conflict. Some conflict is inevitable. The key is how to deal effectively with it. Recognize points of view, respond to what happened, resolve what needs to be resolved, and reflect on the lessons learned. Then move on.

  1. Deal with the “back-off” before it turns antagonistic. Rather than have a confrontation, someone backs off. You can’t make someone want to deal with you, but you can try to increase their motivation to deal with you – like getting together for lunch, or trying to communicate in another way.
  1. Benefit from harsh feedback about your work. Receiving criticism is never easy. Try some recovery techniques, like taking a deep breath, give yourself time, and look at the issue from their perspective. Keep your initial response short and sweet and in control.

  1. Cope with the “lonely at the top” syndrome. One of the prices that you pay for being a CEO is giving up a lot of the social relationships within the company. There is a line beyond which you cannot go. You cannot compromise what is right for the company just to be liked. Join associations, or rely on your family for support and feedback.
  1. Say goodbye, if leaving is the best option. Sometimes it’s better to just move on, rather than endure extended pain. Even if you cannot quit this instant, you can at least start looking for a new job. Be proactive in planning for your next position.
  1. Use social networking to improve your work relationships. Savvy workers at all levels are using these sites to develop and strengthen their business relationships as well as to reconnect with previous business connections. Make your own luck by giving and seeking referrals.

Compounding these strategies in today’s startup environment are two divergent concepts: a heightened degree of competitiveness, and a greater emphasis on teamwork. This means you need even more emphasis on effectively engaging others, and learning to deal effectively with potentially negative work relationships.

The startup world of the past, run by a couple of autocrats, no longer works. To succeed in today’s collaborative, customer-driven, networked economy, requires real business relationship efforts by everyone involved. No matter where you are in the spectrum, there is no time like the present to kick it up a notch.

Marty Zwilling

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Saturday, February 27, 2021

8 Ways An Incubator Can Accelerate Your New Venture

startup-incubator-iconMore 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 1,200 members in 30 nations.

The good news is that a few of these do have an envious success record. Y Combinator, led by Paul Graham, claims success with 3000 companies over 15 years, with a combined value of over $300 billion. Founder Institute, founded by Adeo Ressi in 2009, claims over 4500 graduates, now up to 1,000 companies annually worldwide, with 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:

  1. 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?

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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

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Friday, February 26, 2021

10 Keys to Remaining Cool And Calm Despite Pressures

stress-business-pressuresOne of the most valuable attributes of a good business professional and leader is to be able to control emotional outbursts, to maximize your credibility and respect, and to maintain your own health. The best of you train yourselves to show emotions sparingly and strategically, while the rest are convinced that emotions cannot be controlled, and are a function of culture and genetics.

Based on my own many years as a business executive and advisor, I have seen many professionals “mature” from hotheads to cool and calm under pressure, becoming better leaders and decision makers in the process. With some coaching and mentoring from other leaders, I was able to do it myself, so I know you can do it too, by committing to the following strategies:

  1. Train yourself to always look for positives, not negatives. Optimistic business leaders see value in every new business challenge, rather than stress and risk. You must recognize that change is the new norm in business, so problems represent opportunities to learn something new, improve your productivity and competitiveness of the business.

  2. Write down your top 5 core values and review them often. Pressure and emotion in business is often an indication of core value conflicts. Once you see and understand the conflict, it’s easier to make a decision, respond rationally, or simply remove yourself from the role. Don’t try to be someone you aren’t, or be everything to everyone.

  3. Create a short to-do list at the beginning of each day. A mind overloaded with a large and growing list of critical items is not efficient, and will always be prone to burnout and emotional outbursts. I recommend a three-item high priority list for focus. Then limit the external interruptions, so you can comfortably and effectively address each, and more.

  4. Practice delegation and decline unreasonable requests. Learn how to courteously turn back requests outside your realm of responsibility, and recommend others who may be more qualified. The most respected business leaders know their limitations, and are not afraid to admit them. Do the same for any commitments to the community and family.

  5. Never schedule more than 80 percent of your time. Pressure and emotion become dominant when your schedule is overloaded, or too many predictable interruptions occur. Of course, most professionals are optimistic, so they tend to over-commit and underestimate work requirements. We all need a buffer to handle those special cases.

  6. Put more focus on building the right relationships. Since business is generally not rocket science, relationships with peers, partners, and customers are often more important than skills. Find time in your work schedule for networking, working lunches, and business conferences, where you can test your ideas, learn, and generate support.

  7. Define a clear break between work and private activities. Practice a ritual, such as a cup of coffee with a peer, to define your workday beginning, and maybe tea with your spouse to reset to family time. Then diligently don’t let these worlds intrude on each other, except in emergencies. Use the transition to reset stress pressures and emotions.

  8. Never use emotion as a substitute for preparation. Effective business professionals always prepare for tough issues and key meetings, by doing their own research, and getting early counsel from experts and coaches. Not only do they do the homework, but they prepare mentally and physically to be at their best, rather than on the edge.

  9. Take satisfaction from wins to balance against setbacks. No one in business wins every battle, so frustration on any issue needs to be offset by other wins and achieving incremental thresholds along the way. For most of us, this requires setting aside some contemplative time on a daily basis to measure key item progress and enjoy small wins.

  10. Maintain at least one non-work passion for energy balance. Everyone needs a focus outside of work, such as a hobby, exercise regimen, or sports, to grant relief from work pressures and reset emotions. Lack of cool, and emotional outbursts are often indicative of burnouts and pending meltdowns. Spread your energy to family as well as work.

Because business is not rocket science, don’t let anyone tell you that what you can accomplish is limited by your culture or old habits. Everyone has the ability to control their own actions and emotions, which I find to be the keys to success in most business roles. I encourage you to learn and practice the strategies outlined here, to minimize stress, and enjoy the journey as well as the destination.

Marty Zwilling

*** First published on Inc.com on 02/12/2021 ***

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Wednesday, February 24, 2021

7 Keys To Scaling A Startup into A Thriving Business

business-people-growthAs an advisor to many startups today, I still see that most of you entrepreneurs see yourselves as the sole driver of your new solution, and the key driver of your new business. That’s not all bad in the beginning, but as you scale, every business has to build a team to keep up with the wide range of skills needed, fight new competitors, and respond to changes in the marketplace.

For many, it’s hard to make the switch from that top-down order-giving culture, and it’s hard to find the time to recruit and coach the new team members you need to scale the business to success. Many new businesses fail at this stage because they don’t build the required team culture to keep teams engaged and committed, and founders burn out trying to do too much.

Based on my own experience in large companies, as well as small ones, here are seven key strategies I recommend for building the teams and culture that will drive business success:

  1. Admit to yourself and others that you need help. Don’t let your ego and passion prevent you from building a team around you, listening to others with complementary skills, and delegating decisions as far down as possible. We all need to be humble and recognize that what we need to know about technology and the market changes daily.
  2. Identify a business purpose and goals that motivate any team. Today, modern teams are engaged by a higher purpose, such as improving the environment or helping the underprivileged, more than just money and profit. You need them to make a personal commitment to customer service, improved quality, and change to improve the future.

    Blake Mycoskie, TOMS shoes founder, set a goal of donating a pair to the needy for every pair sold, and maintains team commitment by providing international trips to assist partners in distributing shoes in interesting places, including Nepal and Honduras.

  3. Encourage your team to make decisions and take action. Many teams I know are frustrated by the never-ending debates and constant requests for more analysis by management. Satisfaction and commitment come from choosing a path to move forward, evaluation results and customer feedback, and learning from all their best efforts.
  4. Keep teams small, diverse, and collaborative. I find that teams greater than 8 or 9 people often get bogged down on internal politics, and have trouble really sharing data effectively or reaching consensus. People all need to trust each other, and be able to recognize the value of diverse perspectives. Avoid long and never-ending projects.

    As an example, CEO Jeff Bezos at Amazon is known for his two-pizza rule: no meeting or team should be so large that two pizzas can't feed the whole group. He is convinced this assures maximum productivity, and that no one's ideas get drowned out or ignored.

  5. Practice active listening and open team communication. As the size and number of your teams grow, the amount of time you spend listening and communicating must also grow. Resist the urge to limit what teams need to know, interrupt negative messages, or jump quickly from listening to a solution. Promote the sharing of ideas and feedback.
  6. Foster a culture of constant learning, even from failures. Many new business leaders can’t wait to implement fixed team processes to improve productivity and minimize risk. While productivity is important, the bigger risk is not learning from customers and the market, and falling behind. Reward new ideas, experiments, and critical team feedback.
  7. Be the model of customer focus for the team. Too many business leaders I know retreat farther and farther from the customer as their business scales. Make sure you schedule time for regular customer visits, and make sure your team understands that providing value to more customers is your definition of growing the business.

As your business grows from a startup to a sustainable business, you too have to grow from an entrepreneur to a business leader. Of course, if your interests and passion don’t lean in this direction, you can always bring in an outside CEO who already has the skills, or you can merge or sell your startup to another enterprise, and move on to start your next new venture.

Just be aware that a winning team makeup and culture won’t happen by default. It takes recognition of the need and effort on your part. I urge every entrepreneur to take a hard look at their own situation – you may be a key part of the problem, or the driver of the next unicorn business solution.

Marty Zwilling

*** First published on Inc.com on 02/09/2021 ***

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Monday, February 22, 2021

8 Keys To That First Investment From People You Know

funding-friends-familyMost entrepreneurs have learned that it’s almost always quicker and easier to get cash from someone you know, rather than angel investors or professional investors (VCs). In fact, most investors “require” that you already have some investment from friends and family before they will even step up to the plate.

You see, investors invest in people, before they invest in ideas or products. Since they don’t know you (yet), their first integrity check on you as a person is whether your friends and family believe in you strongly enough to give you seed money for your new idea. If they won’t do it, they why would I as stranger invest in you?

Friends and family will likely not expect the same level of sophistication on the business model and financials as a professional investor, but they do expect to see certain things. Here is a summary of some key items to think about as an entrepreneur before approaching friends, family, or even fools:

  1. Don’t be afraid to ask, carefully. If you set around quietly waiting for someone you know to offer you money to fund a startup, you will probably have a long wait. On the other hand, if you open every conversation with “I need money,” you won’t have any friends or any money. Practice your “elevator pitch,” and end it by asking for the order.
  1. Be upbeat and respectful. Nothing kills everyone’s optimism and desire to help quicker than a negative or arrogant attitude. If they are going to put cash into your company, chances are that they will expect to spend a fair amount of time together, either helping you or certainly discussing progress. Nobody likes a downer.

  1. Be passionate about the idea. Friends and family will quickly detect your level of sincerity and thought behind the idea. You need to convince them that you have been working on this vision for a long time, and have done the “due diligence” on all the potential knockoffs. Daydreams and “the idea of the moment” won’t get much respect.

  1. Demonstrate progress and your own “skin in the game.” Saying that you need money to start is not nearly as convincing as saying that you have built a prototype on your own dime, but need more to roll it out. We all know people who can talk a good game, but never get around to building anything.

  1. Ask for the minimum rather than the maximum. We would all love to have a million dollars of funding to “do it right” and build the company of our dreams. But your chances are minimal of finding someone who will give you that much to start. Set some milestones for three or four months out, and show what you can do, then ask for more.
  1. Communicate the risks, and write down the agreement. Be honest with naïve family members and friends about the inherent risks of a startup – at least 70% fail in the first five years. Don’t take money from family or friends who can’t afford to lose it. Think hard about the consequences of a possible startup failure and the loss of their funding.
  1. Show some incremental value along the way. Look for ways to get some traction with a minimal product, while you are still developing the main event. In high technology, this is called “release early and iterate,” which allows you to make corrections as you go, as well as adjust for the market changes. It also shows progress to early backers.
  1. Network to build investor relationships before you ask for money. Having a real project, rather than just an idea, is a strong positive when networking for Angels or VCs. Now you really have something to discuss, and real credibility as an entrepreneur. Build the friendship first, ask for advice on a real project, then maybe money later.

Overall, don’t think of friends and family funding only as a last resort. There are massive advantages, like sharing profits with friends and family, as well as the strategic credibility than can be gained from funding from someone you know, rather than from a professional investor.

I hope all of these points seem like common sense to you, and you wouldn’t think of handling it any other way. Yet, I’m continually amazed at how often I am approached as a professional investor by strangers asking for a million dollars to fund an idea, without hitting even one of the above points.

We can all recount horror stories of families and friendships torn apart by money lost on someone else’s speculative dream. In these cases both the entrepreneur and the funding partner are the fools. Don’t be one.

Marty Zwilling

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Sunday, February 21, 2021

Why Every Startup Needs To Select Customers Carefully

Customer family magnifying drawingMost startups are happy to find any customer, and will hang on for dear life to every one. Only later do they realize that some of these cost more than they are worth, or lead into commitments they can’t sustain, but no business wants to violate the golden rule that every customer needs to be treated as if they were the only customer.

In reality, the real world is full of pragmatics. Every smart entrepreneur needs to realize that trying to treat every customer the same, with limited resources, may mean that you are treating them all poorly, or at least limiting your own growth. Mike Michalowicz, in his classic satirical book “The Pumpkin Plan,” makes some excellent points with the analogy of how growing a business is like a farmer who struggles to grow championship-size pumpkins.

They generally treat all pumpkins with respect, but they don’t treat them all the same. Likewise, you have to rank your customers, fire the troublemakers, and eliminate unfit ones. Then you can focus your energy on the core client group, and keep these folks so happy that they will never leave you for the competition. Here are some key principles we both recommend along the way:

  1. Favoritism . . . it’s a good thing. Playing favorites is nothing to feel guilty about. It’s simply good business, and mandatory for your success. Your top clients or customers need to know they are special, to feel special. Go out of your way to help them grow their own business. Don’t try to make every pumpkin a giant pumpkin, because it never works.
  1. The customer isn’t always right. But the right customer is always right. Make them your favorites. Think of your business as a membership organization, with reasonable rules to join. The rules are for you and your team only, so no potential customer needs to feel excluded. Your goal is to grow every joining member into a record-breaking pumpkin.
  1. Under-promise and over-deliver. This ability seems to be a lost art these days, which makes it so powerful in making your special customers feel special. Masters of this process plan to have the work done before it’s due, so there is no panic and no freaking out. Remember, you will be measured by your actions, not your words.
  1. Don’t hide the secret sauce. With the Internet, the days are gone when you could hide your key advantage, to keep competitors from catching up. Be the first to share the knowledge that demonstrates you are better. Secrets make people nervous. The more they trust you, the more they rely on you, buy from you, and sell for you.
  1. Keep yourself an inch ahead of your competition. It only takes an extra pound to beat the world record. Equal isn’t good enough. But manage your focus and resources carefully to be a little bit better, a little bit more helpful, and a little bit more creative for the long haul, as well as for the moment. Both you and your customers will be the winners.

On the other side of this equation, how do you fire a customer that doesn’t fit your business? Mike suggests the following approaches, which do take effort and discipline, and need to work within accepted norms and legal business practices:

  • Prioritize the stars. When the best clients call, they get services first. The cringe-worthy customers get pushed to the back of the line. Each will get the message you are trying to send, and you will have the differentiation you want.

  • Eliminate services. Sometimes this simply means you need the will power to not accept customer requests that you can’t satisfy. Another approach is to explain that you have shifted all your resources to another segment, and can no longer help this customer.

  • Raise prices. If you really want to see bad clients run for the hills, raise your prices. If your prices go up, your perceived value will go up, and you may no longer be the whipping boy of commodity customers. Point them to big-box providers for low prices.

  • Refuse to two-time. Another way of breaking ties with a demanding client is to explain that you have an agreement with a major client that prohibits you from servicing anyone else any longer. Introduce them to an alternate vendor, to make it positive.

The net message from “The Pumpkin Plan” is to plant the right seeds, weed out the losers, and nurture the winners, for maximum growth. Discover the unfulfilled needs of the customers you want, innovate to make their wishes come true, and over-deliver on every single promise. Just be aware that it’s easier said than done. Maybe it’s time to take an audit in your own startup, to check your own words versus actions, and the results.

Marty Zwilling

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