Monday, January 24, 2022

5 Components Of A Startup That Will Bring Fulfillment

happy-startup-foundersBuilding a startup is hard work for low pay, it’s risky, and it requires total responsibility to make it work. Yet, many entrepreneurs are the happiest people I know. On the other hand, I know many unhappy individuals who are always partying, have minimal commitments, and little responsibility. I suspect the real parameters of happiness have eluded these people.

According to one of my favorite authors, Brian Tracy, in his classic book “The Power of Self-Discipline,” happiness is not even a goal that you can aim at and achieve in and of itself, but it is a by-product that comes to you when you are engaged in doing something you really enjoy while in the company of people you like and respect.

Tracy defines the five key ingredients of happiness that every potential and existing entrepreneur, including Mark Zuckerberg (and every non-entrepreneur), should evaluate relative to their own situation:

  1. Happy relationships. Fully 85 percent of your happiness – or unhappiness – will come from your relationships with other people. For entrepreneurs, that includes business colleagues, but it also still includes spouse, children and friends.
  1. Meaningful work. You must be doing things that you love and give you a sense of fulfillment, as well as making a contribution. Studies have shown that the three most motivating business factors include challenging work, opportunities for growth, and pleasant coworkers.
  1. Financial independence. The happiest of all people are those who have reached the point at which they no longer worry about money. That doesn’t mean unlimited funds, but enough that they don’t fear being destitute, without funds, or dependent on others.
  1. Health and energy. It is only when you enjoy high levels of pain-free health and a continuous flow of energy that you feel truly happy. For many, health is only a “deficiency need,” meaning you don’t think much about it until you are deprived of it.
  1. Self-actualization. This is the big one, the feeling that you are becoming everything you are capable of becoming. Before this can happen, you must first feel that all deficiency needs are satisfied, and you have achieved self-esteem:

  • Survival. Basic survival is the top deficiency need, meaning sufficient food, water, clothing, and shelter to preserve your life and well-being. You cannot be happy, and you will experience tremendous stress, until survival requirements are met.
  • Security. The second deficiency need encompasses financial, emotional, and physical security. You have to have enough money, security in your relationships, and physical security to assure that you are not in imminent jeopardy of any kind.
  • Belongingness. The final deficiency need reminds us that we are social people, and we need social relationships with others, both at home and at work. You need to be recognized and accepted by other people who count in your world.
  • Self-esteem. Your self-esteem is the core of your personality and largely determines how you feel about everything that happens to you. Are you liked and appreciated by peers, doing a good job and being recognized for it, and achieving your ideals?

According to Abraham Maslow, a noted psychologist, less than two percent of the population ever reaches this height of self-actualization and personal fulfillment. But the wonderful thing about self-actualization needs is that they never need to be completely satisfied. As you stretch yourself in this direction, you experience a steady flow of happiness and contentment.

In all of these areas, you need to exert self-discipline and willpower to overcome the tendency to take shortcuts. When you keep going in spite of all obstacles and hardships, you feel powerful. Your self-esteem and self-confidence increase, and then as you move, step by step, toward your ideals, you feel genuinely happy. Are you a satisfied entrepreneur?

Marty Zwilling

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Sunday, January 23, 2022

8 Reasons Why Great People Make Processes Repeatable

process-successEvery business needs repeatable processes to grow and thrive, but modern business processes need the right people to make them efficient and productive. In addition, today’s customers judge a company by perceived people relationships through social media, phone conversations, and sales experiences. The right people make productive processes, not the other way around.

Thus I believe that business leaders and entrepreneurs need to focus first on people leadership, rather than process leadership. As a business advisor and investor in new startups, I see how difficult it is to make any process work, no matter how well designed, if the team is dysfunctional. On the other hand, I see teams with almost no process that are tremendously productive.

Of course, some balance is required. That’s why I was pleased to see the balance on people versus process in a classic book on how to fix your organization, “The Diamond Process,” by Mike Diamond and Christopher Harding. These authors highlight the importance of both in their guidance on becoming a complete leader. Processes without people leaders will still be chaos.

Thus I find that the best entrepreneurs and business leaders today are people-centric, but they never forget that efficient repeatable processes are required as the business scales up. There are many advantages to this focus today, including the following:

  1. It takes people to see the need and adapt to change. Today’s pace of change in the market and in technology is unprecedented. Business leaders who are people-centered understand that a learning culture, tolerance for mistakes, and innovative approaches are required to thrive. Process leadership focuses on repeatability and efficiency only.
  1. Customers demand more engagement and flexibility. People-centric leaders drive ownership and engagement down to their customer-facing team members. For this to work, team members must commit themselves and freely accept accountability for their actions. In the end, engagement drives customer retention, sales, growth and profit.
  1. Leaders need direct and open team communication. Effective communication in a rapidly changing environment must be two-way and continuous, from all levels of the organization. Leaders need to share their values and goals, as well as challenges, to get effective assistance and buy-in from team members delivering the company image.
  1. You need a team focused on the future as well as the present. Long-term business survival and success requires everyone taking calculated risks for future gains, rather than blindly following a hard-coded process that seems to work today, handed down from leaders on high. People-centric leaders encourage and reward thinking outside the box.
  1. Self-motivated people require less supervision and management. This means more time for leaders to concentrate on looking ahead and rewarding team progress, rather than managing corrective individual performance actions and motivational incentives. Self-motivated team members are known to be many times more productive than others.
  1. Priority is placed on employee mentoring and coaching. A primary focus on process leads to highly structured training classes, leaving little room for personal career development. Mentoring and coaching tend to improve commitment, motivation, decision making, and creative talents, which are required for a competitive business and career.
  1. Taking care of people generates a quid pro quo. What goes around, comes around. If you treat people as automatons who execute a process, your team will respond in kind. If you treat your team as peer business owners, they'll be there to support you as the business changes. Leaders who demonstrate trust and respect will gain that in return.

  1. People leave you a favorable legacy long after you are gone. The mark of a complete leader is the ability to leave on vacation, and be assured that all will proceed without change. The greatest legacy that any leader can leave is a team who remembers and continues to honor the right values and objectives, even after you are gone.

Whether you are building a new organization or fixing an old one, the leadership analysis and focus needs to start with the people, and extend from there through the level of process and productivity required by the size and scope of the organization. Process leadership is important, but it’s just not effective without people leadership first.

How much of your time as a manager or business leader today is spent on people versus process? Would everyone on your team agree and return the focus?

Marty Zwilling

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Saturday, January 22, 2022

5 Tips For Startups Looking For A Great Solution Idea

startup-great-idea-domainPotential startup founders are always looking for ideas to implement, when they should be looking for problems to solve. Customers pay for solutions, but there is no market for ideas. I’m often approached by people with a “million dollar idea,” but I haven’t seen anyone pay that for one yet.

Equally often, I see startups who are on the road to implementing an idea, but haven’t figured out what problem it solves – the business plan waxes on eloquently for 20 pages about how great this product and technology is, but never gets around to defining the problem (investors call this the “solution looking for a problem” syndrome).

A related “red flag” in a business plan is a missing competitive analysis section, or a short paragraph that essentially says, “this product has no competition.” My reaction is, if there is no competition, then there is no market demand for your product, so why are you building it?

Luckily, many startups are smart enough to keep morphing their idea, until it finally fits a real-world problem, and they can move forward in the marketplace. Unfortunately they could have saved themselves much lost time, money, and heartache if they had just focused on identifying the problem before they built a solution.

Smart startups also don’t forget that startup ideas are solutions for someone, and companies have to make money. The way to make money is to make something people or companies need (not necessarily what they want). Here are five solutions from a classic essay by Paul Graham on “Ideas for Startups” that I believe have even more potential in today’s fast changing environment:

  1. Automate a labor intensive process. This is the traditional realm of computers. Microsoft Excel applied it to accounting spreadsheets, and Google applied it to information mining on the Internet, but Henry Ford even applied this principle to auto manufacturing. There are still millions of these opportunities for startups out there.
  1. Fix something that’s broken. In business, it seems to me that the traditional banking business models are broken or at least no longer fit the purpose. On the other end of the spectrum, Internet dating sites don’t seem to work. There are new ones sprouting up every day, so they must be offering something people want. Yet they work horribly, according to most people who have tried one.
  1. Take a luxury and make it a commodity. People must want something if they pay a lot for it. Yet most products can be made dramatically cheaper as technologies improve. This opens the market opportunity, you sell more, and people start to use it in different ways. For example, once cell phones were so cheap that most people had one, people started adding functions and using them as cameras and Internet devices.
  1. Make something cheaper and easier to use. Making things cheaper means more volume and more profit. For a long time making things cheaper made them easier, but now even cheap things are too complicated. Computer applications today are cheap, but often still impossible to use.
  1. Take a current solution to the next level. Solve the currently intractable problems that impact all of us. Tackle the global warming problem, predict where earthquakes will occur, find alternative energy sources, cure cancer, and unlock the keys to aging. There is no shortage of opportunity here.

Combine these with the value of a good understanding of promising new technologies, and the value of having associates with complementary skills to extend your thinking. Problem solutions are the ingredients that startups are made of. Start solving a problem today that you can use as the basis for the “idea” for your next startup.

Marty Zwilling

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Friday, January 21, 2022

5 Key Attributes Of A High-Performing Business Leader

Howard-Schultz-Starbucks-FounderEvery business leader I know struggles with the challenges of leadership, and is constantly honing their formula for success. We all wish it could be boiled down to a short list of actions, but we continue to be surprised and frustrated by new situations that seem to be beyond our thinking. Thus, ever after years as an executive in IBM and other companies, I’m still looking for the magic.

I was impressed by a recent book, “The Leadership Star,” by Brian Hartzer, an experienced business executive, offering a concise leadership framework that I believe embodies the key attributes that I recommend. I challenge each of you to review his list for completeness, as paraphrased here, and take a lesson or two from it to improve your own leadership impact:

  1. Show genuine care as the foundation of engagement. Great leaders strive to treat each person in their organization as a valued individual, rather than as a “human resource.” That means showing that they value each person for who they are, take interest in their development and growth, and care about excellence and results.

    This focus on individuals, often called servant leadership, is building a larger and larger following. Howard Schultz, former chief executive of Starbucks, credits servant leadership with driving his company to scale so quickly to now almost 34,000 stores in 80 countries.

  2. Help constituents find meaning in what they do. Strong leaders define and explain the organization’s purpose (why), priorities in delivering on that purpose, and demonstrate their own personal commitment to each. They help people see how their individual roles link to and support that purpose, and how the work aligns with their own personal values.

    Of course, finding personal meaning also requires effort on the part of your employees. They must recognize and appreciate what they are good at, realize what makes them happy, follow their passion for adding value to the world, and contemplate their legacy.

  3. Ensure team members know what is expected of them. Leaders need to give clarity to individual roles, expected behaviors, goals, and consequences, through regular formal and informal feedback. Ideally that feedback allows you to understand both absolute performance against goals, and your relative performance in the broader organization.

    In my consulting as well as leadership roles, the gap I found between what a leader expected versus what team members heard amazed me. I found that I needed to deliver the same message, in different forms, several times before it was really aligned.

  4. Be proactive in helping knock down progress barriers. This means really listening to team members and asking what’s getting in the way, personally looking for barriers they may not see or recognize, and taking action to remove those barriers. You must take the initiative to talk to customers, suppliers, other employees, and understand the process.

    The key here is to adopt a “proactive personality.” Many business leaders tend to become more and more reactive, as the volume of issues and challenges grows as your business scales or struggles. Keep your focus on the future, and what you can control.

  5. Publicly recognize individual contributions and success. The most effective leaders create a culture that regularly recognizes the value of individual day-to-day efforts, and celebrates major milestones, such as the achievement of quarterly or annual results. They utilize a variety of peer and team-leader programs, both formal and informal.

    Studies show that public peer recognition programs are often more effective than big bonuses or cash rewards. If you provide recognition for the right behaviors consistently, the desired results will accrue, and team members will be advocates for your leadership.

In all of these elements, the character and behavior of you as a leader is critical. You must demonstrate strong personal values and purpose, empathy for others, sustainable energy, and self-awareness. As well, you must continuously communicate through multiple channels, such as walking-the-talk, email, and town hall meetings. Keep listening and adjusting based on feedback.

Even with all this, I have learned that good business leadership is a journey, not a destination. You have to be willing to learn from your mistakes, humble enough seek help and advice regularly from peers, mentors, and coaches, and smart enough to recognize good people are the key asset of every organization, even more important than good processes.

Most important of all, you must seek to enjoy the journey, if you hope to enjoy the success.

Marty Zwilling

*** First published on Inc.com on 1/07/2022 ***

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Wednesday, January 19, 2022

5 Keys To Being Seen As A Valued Contributor At Work

Business-Teamwork-CooperationAs I talk to business owners and entrepreneurs, I’m surprised at how many complain about team members who feel taken for granted, or have contributions not appreciated. As an advisor and mentor, I’m always looking for more ways to improve communication, get people more engaged, and get more done. Great communication inside the organization and outside is the key to value.

I was pleased to see some specific guidance on how team members can better communicate their value at work, without self-aggrandizing, in a new book, “Influence and Impact,” by Bill Berman and George Bradt, who speak from experience as a psychologist, and years of coaching in companies across multiple industries.

The authors agree with my own assessment that there are many ways, both subtle and not so subtle, that you can coach team members on how to communicate their value, what they are capable of, and what you are looking for from them. Here are some of the key practices that the authors and I both recommend you emphasize:

  1. Focus on delivering and over-delivering, consistently. Coach them that working hard, over long hours, is not enough. You are expecting relevant results, and have little sympathy for hard work that misses your expected target. They need to openly accept misses, make no excuses, and explain clearly what they have learned to get results.

    Some good team members I know can’t resist the urge to say “yes” to all new requests, even when it jeopardizes their ability to deliver existing high priority work. Ask them to not let ego or optimism get them tagged as someone who promises but rarely delivers.

  2. Find opportunities to innovate, change, and accelerate. Helping your organization adapt and get ahead, with results, will have a positive impact on everyone, and you will remember. Ask them to raise their hand when opportunities come along to address a problem or streamline a process. You need people willing to accept a challenge.

    Every year, new things happen, like the current COVID pandemic, which raise the challenge of how to deal with new situations, new technology, and changing business trends. It pays to keep up with the world outside the office, and communicate inside.

  3. Solve problems for the business and peers. Everyone can start by building business relationships with other team members and owners, so they know the common goals, priorities, and challenges. If they can solve problems for you, you will see them as making an impact, and capable of taking on more responsibility.

    When was the last time you sat down with individual team members and asked for an update on their view of priorities and key challenges? I’ve been on both sides in my career, and often been surprised by how views can differ. Understand their values.

  4. Prioritize stakeholders essential objectives first. Be able to provide a current understanding of these objectives by regularly asking for feedback from stakeholders, including vendors, customers, and peers, and really listening to what they need. At the same time, make sure everyone understands your goals, and the results you expect.

    I’m not suggesting that you forgo your own objectives in favor of others, but most often I find there is common ground that you can capitalize on. Then your work becomes a win-win result, rather than win-lose. That means double the value and credit for all efforts.

  5. Show perseverance and adaptability to the mission. Building agility and timeliness are critical components of modern leadership, due to the pace and complexity of change today. Ask everyone to demonstrate a relentless focus on the company goals, with the mindset to initiate a variety of tactics to get to the desired objective.

    Some people believe that perseverance means not asking for help or guidance when the going gets rough. Assure everyone that the most valued performers are actually ones who are not afraid to seek guidance from peers and experts, and communicate well.

Notice that while each of these practices requires good communication, all of them stop short of asking for blatant self-promotion, which can be grating to others, and actually work against value. You do have to make it clear that you want team members who will take on new and bigger responsibilities, but don’t let them assume that more influence and impact will come with time.

Build good relationships with the people who count in your organization, and focus on what your organization really needs from them. The result will be a greater sense of satisfaction from your efforts, and new opportunities to benefit from all the team can really do to grow the business.

Marty Zwilling

*** First published on Inc.com on 1/05/2022 ***

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Monday, January 17, 2022

8 Growth Practices That Every Startup Needs To Follow

Facebook-growth-lessonsMany new business owners I know have learned the hard way that you can never be everything for everyone. As a startup, you need to use your limited resources to excel at a few core things for your best customers, in order to stand out and get the momentum going. Focus on a few key principles is the key to success, and it takes discipline and determination to make this happen.

I found some good lessons in this regard in a classic book, “Becoming Facebook,” by Mike Hoefflinger, the former Head of Global Business Marketing at Facebook. He talks in detail about ten of the key challenges that Facebook faced in their growth, to move from a tiny social media upstart to one of the most successful companies in the world.

Based on my experience advising new businesses, all of the principles that he outlines, including the following subset which I generalize here, should be taken to heart by every entrepreneur:

  1. Give customers fewer things that matter more. Your customers’ biggest need is not for more things. Your best strategy is to find more customers that fit the things you do best, rather than building more things. Too many choices confuse all customers, and make your job in marketing, distribution, and support much more difficult. Less is more.
  1. Pick a single metric that is the focus for all growth. Today’s world is full of metrics leading to business growth, including customer logins, revenue per customer, retention, and average solution price. Facebook’s winning strategy was a laser focus on increasing active user counts and time spent online. Revenue and competitive position followed.
  1. Speed is a key feature in every customer experience. Customers today have adapted to a fast-moving world, and they expect every business to keep up. They have no understanding or patience for extra steps and delays caused by bureaucratic processes, disengaged employees, complex networks, or software usability problems.
  1. Strive to cross the chasm from early adopters to mainstream. Many new companies become bogged down with the more vocal early adopters, who have an appetite for more function and new players. The mainstream majority want simplicity and base function, and we they get it they will come in droves, and be very reluctant to jump ship. Get there.
  1. Disrupt your own success before someone else does. In this age of technology, the advent of a better alternative is inevitable. To retain the initiative – especially when you’re winning – shape the disruption through your own moves instead of falling victim to those of others. Waiting for the crises of customers often means an impossible recovery effort.
  1. Maximize employee engagement by fitting roles to strengths. Employee engagement starts with looking beyond experience, to talent, determination, results, and a fit to your company values and culture. On an ongoing basis, engagement requires a focus on motivation, match to strengths and interests, and active career planning.
  1. Take care of business, but always play the long game. For many companies, the long game is choosing the right strategic partners and acquisitions. For others, including Facebook, it is penetrating China despite political constraints, and India, where only thirty percent of the population is on the Internet. But never take your eye off today’s customer.

  1. Getting acquired or going public should be a result, not an intent. A focus on looking good as an acquisition or IPO candidate has undermined many startups. Zuckerberg had so much confidence and determination to stay independent that he turned down an early $1 billion offer from Yahoo. Now Facebook’s market cap is nearly 900 times that number.

Facebook may seem like an overnight success, but in reality it faced the same challenges as any new business, including existing well-known social media competitors like MySpace and Friendster. Facebook competed against the model of free customer use paid by advertisers of Google, and the sophisticated data delivery infrastructures of YouTube and Netflix.

I’m convinced that the lessons outlined here can help you become the next Facebook or YouTube in your business domain. How many do you already practice today?

Marty Zwilling

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Sunday, January 16, 2022

Every Online User Platform Needs Revenue To Survive

success-profit-user-countA question that I still hear debated often is whether a new online platform startup growth strategy should focus on user count or profits. First of all, the glory days of “dot.coms” are gone, when investors “didn’t care” about profitability, and all the big money was focused on user count growth.

In the long run, everyone wants both profitability and user growth, but the question is which comes first. Most startups and investors I know don’t have unlimited funds, so the first question they should ask and do ask today, is “When is your company going to be profitable (self-sustaining)?”

Of course, growth is implied in that equation, and is also required for maintaining a sustainable competitive advantage. The challenge is not to undermine growth by a blind focus on profits. You might sell one of two of your widgets for $1 million each, entering profitability immediately, but then die because you can’t grow sales at that price.

I think you will find that most investors will relate to the following strategy for keeping the right perspective and getting the profit versus growth balance right:

  1. Pick an idea that has the potential to make money. That means it solves a real problem for real customers who are ready and able to spend real money. The number of current potential customers is large and growing. Solutions that may be viewed as “nice to have” or “satisfies a higher-level need” won’t get funded.

  1. Design a product or service that you can sell. Sure, you may need to give the product away for free to get traction, but assume you will have to sell something someday to get profitable and stay alive. MySpace, for example, boomed after launch for five years without a revenue model. When their deep pockets went empty, Facebook stepped in, but demanded revenue from ads. MySpace wasn’t ready for this, and it soon faded. Don’t count on finding investors willing to support growth alone on your new startup.
  1. Build a business plan for profitability in your lifetime. This simply means you need to be sensitive to costs, revenue projections, and a timeline, such that there is light at the end of the tunnel. Most Internet businesses should show profitability in two years, while new medicines may take ten years to pass FDA and other safety tests. Investors will look at competitors in your industry for the norms.
  1. Identify the total investment required for profitability. A very common mistake of early-stage startups is to request a small investment to get started. They are usually thinking only of costs required to get “in business,” rather than the total costs of marketing, scaling up, and going international. Be ready to answer the investor question “Is that all you need to get profitable?”

So unless you are building a non-profit, I say focus on profit all the time, every time. Of course, growth is implied in every focus, and profit enables growth. But some of you will surely say “What about Facebook and Snapchat, who focused on growth first and are clearly successful?” So let’s take a look.

Facebook is indeed the largest growth site on the web, with almost three billion user accounts, all free. Yet it took almost six years to become profitable, with revenue only from advertising. What most people don’t realize is that the total outside funding to get it there has been estimated at over $800 million, which is a bit more than you will get from any angel investor.

Yet I can’t argue their success in the value proposition, since they turned down a billion dollar offer from Yahoo way back in 2006, and their market cap today is over $900 billion. It has taken some very deep pockets to get to this point, so now you know why I smile when you tell me your plan emulates the Facebook model. Even the popular Snapchat is still struggling to generate revenue and profit.

I’ve heard all the arguments that a push for early profits on new business models will lead a company to fall back to a lesser model that provides short-term results, but short-circuits risk-taking that could lead to more long-term value creation. That’s a great argument if you have unlimited funding, but if you are just one of the “rest of us,” I suggest you focus on getting to cash-flow positive early.

Marty Zwilling

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