Monday, July 4, 2022

7 Keys To Balancing Business Against Personal Demands

4th of July Fireworks, Cambridge, 2011I know some entrepreneurs with successful businesses, and others who seem to have a great relationship with their family, but I can’t think of many who have both. Some people would argue that these two successes are mutually exclusive, but I’m not convinced.

Individually, they both take focus, commitment, and a variety of skills, all the strengths of a good entrepreneur. Assuming a person wants both a family and a business, the challenge is to achieve a balance that can satisfy both. This July 4th Independence Day Holiday in the USA is a good time for all of us to do a reality check on our own efforts.

From my observational experience, as well as my personal struggles on both sides of this equation, here are some of the key parameters of that balance:

  1. Start with a solid family and business foundation. A successful business won’t lead to a great family relationship, and vice versa. Don’t assume that your focus will change once your startup gets past the initial struggle. Keep in mind that your loved ones often see your business enthusiasm and energy as negative reflections on them.
  1. Be realistic about what brings happiness to you. Many entrepreneurs, especially women, gravitate to entrepreneurship because they see it as the way to balance work and family demands. That could mean they are forgoing happiness on the business side. Some men want a family relationship, but the business is what makes them happy.
  1. Find fun things in and out of work that are high priority. These don’t have to be expensive or hard-driving activities like sports competition. They can be simple in nature, like being present for school engagements, or regular Friday night “date nites” with the spouse. Practice consistency with “fun” and “high priority” elements.
  1. Assess your ability to compartmentalize the two roles. Achieving a balance requires an ability to put aside the burdens of work at the end of the day, and giving your full focus to important relationships. Separation of work and home are fuzzy for an entrepreneur, and it’s easy to find yourself on duty 24/7. Can you find the off switch on your cell phone?
  1. Be accountable for decisions you make. Remember, as the entrepreneur you are in control, and the business is not. Don’t let the urgent crisis of the moment become the priority of your life, to the detriment of your balance. Keep in mind that the sacrifices you make for the business also impact your family.
  1. Say “NO” and “YES” with equal frequency in both roles. Be honest in how your decisions will affect others in either role. Be in control of your priorities. The first step is to track yourself on these responses. Most people don’t recognize that they may have a habit of being negative in one role, and positive in the other.
  1. Communicate well and often at your business, as well as with family members. You need to keep an open mind and listen effectively to people in your business, and to people who are in your relationships. Pay attention to body language, emotion, and time spent speaking versus listening. Talking is not communicating.

Most people consider entrepreneurship as a lifestyle, rather than a job. Being married is a lifestyle, and raising a family is a lifestyle. Recognize that it’s harder to balance two lifestyles than it is balance a job with your real lifestyle.

Also mixing business with pleasure is one thing, but mixing business with family yields an altogether different, and often volatile, dynamic. Running a family business or “FamilyPreneurship” is even more difficult, and can derail or splinter cherished relationships.

Before you conclude that entrepreneurship is your chosen lifestyle, make sure you understand the balance it will require, and make sure those around you are prepared to accept that balance. A failure in this regard will likely cause you some fireworks you hadn’t anticipated.

Marty Zwilling

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Sunday, July 3, 2022

6 Reasons Earned Social Engagement Surpasses Paid Ads

social-media-engagementIsn’t it frustrating to think you finally understand something in business, like marketing with social media, only to realize that the landscape changed while you were looking at other priorities? For example, it used to be that marketing via social media meant banner ads on Facebook, buying search engine results, and sponsoring blog entries, but these don’t suffice anymore.

In a classic book on social media by Jim Tobin, “Earn It. Don’t Buy It,” he asserts that “earned” social engagement drives better business results than paid social exposure. Jim should know, since he is the president of Ignite Social Media, one of the best known social media marketing agencies. Here are a few bits of wisdom from both of us along these lines:

  1. Nobody clicks on Facebook banner ads anymore. Banner ads routinely average a .1% click through rate and Facebook manages to be about half as good as that. That’s 99.96% of people not clicking on those ads. When the glass is only .04% full, you should start looking for a new container.
  1. Where are the young social media users going? They are going to Instagram, TikTok, WhatsApp, and Snapchat. TikTok is currently the fastest growing social network, while Instagram is close behind with a bigger share globally of new sign-ups.

  1. You need influencers more than advocates. Brands need influencers working on their behalf because they provide the third-party credibility and social proof that validates their products. 92% of people trust “recommendations from people I know” and 70% trust “consumer opinions posted online.”
  1. Where did your friends go? While Pinterest and Tumbler have seen activity increases approaching 100%, The Verge reports that Facebook usage has declined in the U.S. by 15 million users since 2017, as young people ages 12 to 17 migrate to Snapchat and Instagram.
  1. Maybe they just don’t care. As far back as 2013, Pew Internet & American Life Project started reporting that their focus groups found “waning enthusiasm for Facebook” among teens, that Facebook has become a “social burden” for them, and that “users of sites other than Facebook express greater enthusiasm for their choice.”
  1. New can turn old very quickly. Friendster was a fad, Second Life was a fad, MySpace was a fad, and Facebook suddenly seems old school. Don’t connect the latest platform, which may be transient, with the larger phenomenon of digitally enabled social conversations. If you can figure out why people care about your product, you’ll have success regardless of the platform du jour.

Earning social media clout for your business, rather than buying it, seems to be all about engagement. Engagement occurs when customers and stakeholders become participants by sharing ideas with you, or talking to their friends about you, rather than merely viewing what you publish. Each participant becomes part of your marketing department, as other customers read their output, and become part of the conversation. It’s the principle underlying “viral marketing.”

So how do you facilitate engagement and conversation with your solution? According to an explanation I first saw on Social Fresh, it’s really a cycle consisting of three key phases:

  • User to product (engaged user base). This part isn’t new. In order to build any following, you need a solution that solves a real problem, not just technology that wows you, or great functionality with a painful learning curve. How engaged people are will depend on how much value they see, and how much they enjoy using the product.
  • User to brand (engaged audience). Once someone is engaged with your product, you’ll want to get them engaged with your brand. This happens today when you talk to people through social media and responsive customer service. Get in the habit of having genuine conversations with your engaged users to create an engaged audience.
  • User to user (engaged community). Now you have an engaged audience of people who feel an emotional connect with your brand and product. Time to start connecting them with each other. You can do so using conversation platforms like forums, Facebook groups or build something yourself.

So that’s how you earn customers through social media, rather than buying them with banner ads. But don’t be misled, social media marketing to get customers and brand recognition through engagement still costs money (and time and effort). There is no free lunch. But don’t spend your money on things that don’t work anymore. That won’t build any competitive advantage.

Marty Zwilling

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Saturday, July 2, 2022

All New Venture Opportunities Come With Unknown Risks

Opportunities-come-with-riskOutside of dreams, there is no real business opportunity without risk. Serious entrepreneurs know that, but too many “wannabes” still fall for that elusive get-rich-quick scheme with no risk. As an active angel investor, I still hear entrepreneurs asserting large opportunities with minimal risk and no competition. My conclusion either way is that they have no market, or haven’t looked.

According to the classic book by serial entrepreneur and former race car driver Tom Panaggio, “The Risk Advantage: Embracing the Entrepreneur's Unexpected Edge,” smart business owners embrace two essential risks to every opportunity – decision and change. First, they decide on a direction to jump, and then they make adjustments and innovations to keep going and growing.

In simple terms, the way you balance risk and opportunity is to look at both as two sides of the same coin. Obviously you are looking for the opportunity side to be bigger than the risk side. Great entrepreneurs have learned how to realistically assess and manage both sides of the coin in the following business opportunity and risk categories:

  1. Strategic. Visionary entrepreneurs tend to identify and map strategic new opportunities, rather than grow existing current ones, based on market insights emerging technology. The risks in new opportunities are usually not evident, so the challenge here is to reduce the probability that the assumed risks actually materialize and to improve the company’s ability to manage or contain the risk events, should they occur.

  1. Financial. Both risks and opportunities in this area can arise from many aspects of your startup, before and after product development. First you need to assess the risks and value of investor funding and carrying debt. Then you walk the delicate balance between burn rates, revenue flows versus expenses, investment in marketing, and employees.

  1. Operational. Once a business is operational, the opportunity can be maximized, and risk managed through best-of-breed processes, and a rules-based control model. Examples are the risks from employees’ unauthorized, illegal, unethical, or inappropriate actions and the risks from breakdowns in routine processes.

  1. Growth. The way you scale your business is a huge balancing act between risk and opportunity. You can grow organically, or stretch out with big capital investments for volume and reach. Grow too fast, and risk quality and delivery ability, or go slowly only to be overtaken by your competitors or a new technology. Find the balance.

For entrepreneurs, both Panaggio and I agree that the first step is adopting a winner’s mindset, and not become a prisoner of hope. When entrepreneurs become prisoners of hope, they look for others to solve their problem. After they decide to be a winner, the key is to embrace risk, rather than fight it, which gives you the real advantage:

  • Embrace the risk of failure. Every entrepreneur must realize that failure is not defeat, but a signal that it is necessary to invoke the two essential risks: decide that change is necessary, and change. Every investor believes that entrepreneurs learn more from failures than from successes. Short-term failures lead to long-term successes.
  • Embrace the risk of proactive marketing. Marketing is fraught with risk, but playing it safe or no marketing is the ultimate risk. Proactive marketing is a marketing strategy that focuses on one objective – to generate customers now. Look at marketing as an investment, not an expense. Risk being known for who you are, as well as what you sell.
  • Embrace the risk of standing in your own line. All entrepreneurs should face the risk of being one of their own customers, by using their own products and standing in their own customer service lines. Only shortsighted leaders assume that customers have unreasonable expectations, or their demands will increase once you have a relationship.

Embracing risk and learning from your mistakes really is an entrepreneur’s edge, since only startups and small businesses can afford to fail quickly, maybe multiple times, and all the while having the ability to pivot quickly to achieve success. In fact, these are the keys to balancing risks against the opportunities. When was the last time you felt your business was in balance?

Marty Zwilling

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Friday, July 1, 2022

Should You Negotiate Ownership Options In A Startup?

negotiate-stock-optionsWouldn’t you like to be one of the lucky people who joined Google and Facebook when these were startups, and now be a multi-millionaire or better? So people ask me “How many shares should I ask for or expect when I join a startup today?” In reality, the number of shares doesn’t mean anything – it’s your percent of the total that you need to negotiate.

For example, 200,000 shares may sound like a lot, but if the startup has issued 20 million (a common starting point), that’s just 1% of the company. By the way, you will normally only be offered “options,” which vest over a 4-year period after a 1-year “cliff.” That means you will get none of these until after you work for one year, and the total only if you stay for four years.

Plus you have to remember that these 200,000 shares could still be worth nothing in four years, depending on the “strike price” today, compared to the market price four years from now. Many employees forget that there isn’t even a market for startup stock, until after the company has gone public, which hasn’t happened positively to many companies in the last few years.

Thus, options don’t “pay the mortgage” today, so to speak. Unless you have a sizable nest egg, or a working spouse with an income to support you, I would recommend that you consider any stock options as a “potential bonus,” rather than a key part of your compensation for joining a startup.

With all that said, here are some “rule of thumb” guidelines on what might be a reasonable offer, as summarized from a classic article by Guy Kawasaki, and based on discussions I hear rattling around the investor community.

  • CEO brought in to replace the founder, 5 - 10%
  • CTO, CFO, VP of Marketing or Sales, 1.5 - 3%
  • Chief Engineer or Architect, 1 - 1.5%
  • Advisory Board Member, 1%
  • Senior Engineer, .3 - .7%
  • Product Manager, .2 - .3%

If you are not on this list, just worry about getting whatever your peers are getting. It never hurts to ask in a job interview what stock options are available, and don’t fall for the offer which promises to “work out the equity terms later.”

Obviously, what you get will vary depending on what you bring to the company, and what the market will bear. The numbers I mentioned don’t have a level of precision that can be associated with a particular geography, or a particular business type. Offers near the high end of a range will likely come with a lower cash salary, maybe even 50% of the going rate.

Any offers of equity compensation before the first round of institutional capital should be considered purely speculative. You should also assume that your percentage will go down through dilution as the company raises additional rounds, and offer sizes will go down as the company grows.

Your compensation is the total package of stock plus salary plus benefits. At best, you should view stock as “deferred compensation” or a “bonus,” which has no value today, and a risk for the future that is much higher than mutual funds, or a conventional balanced public stock portfolio. Yet it has been a source of great wealth to a tiny percentage of people.

Couple all this with the fact that working at a startup is much tougher than working at bigger companies – despite all the hype you see about startups which provide free food, foosball tables, and totally flexible hours. Generally, less structure means more stress, and fewer people means higher expectations, longer hours, and a job that may be gone tomorrow.

The bottom line is that you shouldn’t even think about joining a startup, stock or no stock, unless you believe in it and are ready for the adventure of your life. It will always be a learning experience, but it may be a bumpy ride to nowhere. It’s a huge gamble. How many gamblers do you personally know that have won big?

Marty Zwilling

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Wednesday, June 29, 2022

5 Unfair Advantages To Help You Succeed In Business

unfair-advantagesOne of the things I’ve learned over my years as a business mentor and investor is that life isn’t fair when it comes to succeeding in business. You may think that passion and hard work are all you need, but I believe we all have unique strengths, and you need to recognize yours, and capitalize on them above all else, in order to get the advantage you need to win in business.

In this context, I’m convinced that most of you already have, or can acquire, what it takes to succeed in business. I see a good discussion of the relevant strengths and issues in a new book, “The Unfair Advantage,” by Ash Ali and Hasan Kubba. These authors speak from their own wealth of experience in creating and growing technology startups, marketing, and fundraising.

Here are the key elements of the strengths framework they have developed, with my own insights and experience added for your consideration:

  1. Money: the capital you have, or can easily raise. While it is indeed honorable and impressive to run your business on a shoestring, there is no argument that having access to more money, or relevant assets, is a strength you should take advantage of. It can expedite growth, acquire competitors, cushion mistakes, and lengthen your runway.

    In the business world, your ability to raise money is often paramount to your success. In that environment, you need to look broadly and work effectively on all the available sources of capital, including friends and family, angel investors, and strategic partners.

  2. Intelligence and insight: book and street smarts. Book smarts represent your current depth of understanding of technology and business concepts. The more you have, the greater your potential. Street smarts are largely about people skills, which require emotional insights. Use friends and mentors with extensive experience to gauge both.

    In my experience, emotional intelligence (EI) is a better predictor of business success than IQ. EI rates a person's ability to recognize emotions, to understand their effect, and to use that information to guide your next move. Fortunately, you can develop this skill.

  3. Location and luck: right place at the right time. I’m a proponent of the old adage that you make your own luck in business. If you need venture capital, maybe you need to spend more time in Silicon Valley or Boston. If you like your current location, tackle an opportunity that is big there, rather than trying to solve a problem elsewhere in the world.

    I always recommend to every business professional that they have a goal, and then be willing to maneuver. This is called the serendipity mindset. What seems like the wrong place or a chance meeting might be the start of an important partnership or opportunity.

  4. Education and expertise: formal and self-learning. Don’t believe the myth that a formal education is not an advantage – it teaches you how to learn effectively. Not many of us are self-learners by default, and experience and failures take a long time. The key is to keep learning, from mentors, books, and online. Focus on business as an expertise.

    In any career, an advanced degree, such as an MBA or PhD, will at least give you entrée into more opportunities. From that point forward, results and creativity are the drivers. In my view, going back to school midway in your career will likely make you a better leader.

  5. Status: network, connections, and personal brand. To prepare you to build outer status advantages, you need to develop and demonstrate first an inner status advantage of confidence and self-esteem. Motivation and recognition are usually tied to increasing our status, and people around you will unconsciously look for and react to your status.

    Personal branding is how we market ourselves to others, and is very important in this Internet age. The days are gone when you could hide behind the company brand. I recommend that you get more visible at industry conferences and on social media.

After reviewing these strengths and recommendations, you may find that you already have what it takes to succeed, but haven’t been using it effectively. Now is the time to assess your own position, get input from constituents and mentors, and focus on improving your position where you can. Only then can you enjoy the advantages you deserve, and have more fun as well.

Marty Zwilling

*** First published on Inc.com on 6/15/2022 ***

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Monday, June 27, 2022

10 Indications That It’s Time To Ask For Help At Work

business-man_ask-for-helpIf an entrepreneur doesn’t find themselves in over their head at least 20% of the time, they are probably not pushing the limits, not taking enough risk, and probably not working on an idea that’s worth doing. The challenge in to know when and how to ask for help, and not let bravado and ego mask anxieties. The best people know when they don’t know, and know how to find the right help.

Unfortunately, too many entrepreneurs I know are terrible at finding and accepting help. Perhaps it’s because they jumped into this lifestyle because they are passionate and stubborn about following their own vision, and they enjoy being their own boss. Too often they are also hesitant, inexperienced, and fearful of hiring people or finding a mentor to be the partner they need.

In the spirit of mentoring and helping entrepreneurs recognize their own weaknesses, here are ten key indications from my experience that you as an entrepreneur may be nearly broken, and it’s time to look for some help:

  1. You start seeing every business problem as a personal affront. Your business is not all about what is best for you, but what is best for your customers. In reality, your customers care more about your product and service, so feedback on product shortcomings or service glitches are meant to help your business, not hurt you.
  1. Startup challenges become more depressing than energizing. The best entrepreneurs thrive on being able to push the limits, and tackling the tough challenges that ultimately result in real innovation which can change the world. If you find yourself dragging in to work, and dreading the next surprise, you may be in over your head.
  1. You have no idea how to pivot with the latest market trends. Successful entrepreneurs pride themselves on always having more ideas than can possibly be explored, so they are never at a loss for new alternatives to explore. If you don’t see a new trend as a new opportunity, you may be in over your head. Seek help or get out.
  1. You are completely surprised by a negative event you should have foreseen. At the end of a given month, you suddenly are totally out of cash. You know you should have been tracking the burn rate, or inventory requirements, or late receivables, but have found yourself totally distracted by a flock of emergency daily issues.

  1. You know what is required, but you continue to procrastinate. Sometimes it’s obvious that closing a deal requires some tough negotiation or sales calls at the top, but these are not your forte, so you can never find the time or energy to get them done. Maybe it’s time to find an advisor, or a board member with the right connections.

  1. Angry outbursts become more common than real leadership. Too many executives revert to bullying and micromanaging when they are in over their heads. In the long run, this tactic does not work, and your business suffers, as well as all those around you. If you catch yourself acting out in anger, get some help before more damage is done.

  1. You start playing the blame game. We all know entrepreneurs that are quick with an excuse for every problem, like we were too early for the market, the vendor let me down, the economy took a downturn, or my competitor is cutthroat. Every startup founder has to remember that the buck stops with them, and they must learn from every mistake.
  1. Living in a state of denial, and misrepresenting the truth. When an entrepreneur is in over their head, they can’t face the hard facts of business losses and missed customer commitments, and they can’t face their team. Thus they find themselves communicating less and less, and downright lying to people, while rationalizing that this causes less pain.

  1. Jeopardizing your integrity to hide shortcomings. If you catch yourself saying things and doing things that violate your own sense of ethics, you are likely in over your head. These could include cutting quality corners, shorting vendor payments, and sabotaging team members. Now is the time to get help before you destroy yourself and your startup.

  1. Letting a sense of entitlement show through. It’s easy for an entrepreneur in over his head, and frustrated with all the challenges, to convince themselves that they are entitled to that fancy sports car or a six-figure salary once the first investor money rolls in. They let the burn rate go up too fast, and the business burns down before it really starts.

As a serious entrepreneur, you need to differentiate these symptoms from the plateaus we all feel from time to time as we jump from one learning curve to the next. In most cases, if you focus for a couple of months, you will find yourself happily afloat at the new level. That is just getting in over your head in a healthy way, rather than an unhealthy one.

According to Whitney Johnson in a Harvard Business Review article on this subject, the smart recovery is to send out an SOS (stop, organize, secure) before you drown, when you find yourself really in over your head. As an entrepreneur, you are expected to swim in unexplored waters, so there is no shame in accepting life preservers, as long as you learn from the waves.

So remember, none of us is perfect, and almost no entrepreneur gets it right the first time. If you never make mistakes, you are not taking enough risk to win in today’s market. But always be self-aware, and not be afraid to take a hard look in the mirror. Do you like what you see, and are you willing to change it?

Marty Zwilling

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Sunday, June 26, 2022

The Pros And Cons Of A Secret Business Relationship

secret-business-romanceWe all have to communicate and collaborate with other people at work, but most of us start out instinctively trying to maintain an emotional distance from others in the work environment. In fact, most employee training courses recommend the distance if the work relationship crosses management levels, and most management policies strictly forbid fraternizing with the team.

Yet the 2019 Office Romance Survey by Vault, Inc. found in polling more than 700 professionals at companies nationwide, that 58 percent had participated in an office romance, and almost three-quarters of those who’ve had relationships said they’d be willing to engage in another one. So recently I started looking for some expert guidance on the pros and cons on this issue.

One source I like is the classic book “Who’s That Sitting At My Desk?” by Jan Yager, who has a Ph.D. in sociology, and is a coach and speaker on work issues and friendship. She outlines the potential benefits of “workships” (work relationships) evolving into friendships and romances as follows:

  • Improve communication and productivity. Even casual friends at work are more likely to understand your requests, be convinced of the value of your ideas, and more likely to work in concert with you on projects. That’s a win-win situation for both sides as more positive things happen more quickly. Warm feelings also make the work seem easier.
  • Offer support through tough times. Positive workplace relationships can help balance some difficult issues you are facing outside of work. Even at work, if you are struggling with a difficult project, getting some help and support from friends there can easily make the difference between success and failure. We all learn more from people we trust.
  • Aid in self-esteem. Work places provide that day-to-day interaction opportunity that is a key to self-esteem for many. Friends are more likely to provide the positive feedback and accolades that we all need from time to time. Friends are also less likely to exhibit aggression and rudeness, which can lower the self-esteem of any receiver.
  • Can be a competitive advantage. Despite accusations of favoritism, if your friendship with the boss is one of many factors in why you get promoted, that friendship may be a big plus for you at work. If you easily make friends with people at work, it means that you have good relationships skills, which is a key requirement as you move up the ladder.

Of course there can be negative consequences to close friendships and romances at work as well:

  • Work-related betrayal. According to most experts, romantic betrayals are the most frequent type of friendship betrayals, with work-related issues a close second. Betrayals at work run the gamut from telling lies, coloring the truth, plagiarizing work, to saying negative things to the boss. Of course, all these things can happen in any workship.
  • More vulnerable emotionally. Through friendship you open yourself up to acceptance, being liked, admired, respected, trusted, and appreciated. You also open yourself up, as do others when they befriend you, to the greater possibility of disappointment, rejection, and misunderstandings. Success is the best antidote to emotional vulnerability.

  • Competition over salary, promotions, and position. Sometimes friends share too many details on salary levels, work habits, and promotion expectations. This can cause feelings of unfairness, and initiate emotionally competitive efforts. The result can be a loss of friendship, and even loss of any working relationship.
  • Hard to keep work-related disagreements separate from personal relationship. Work-related disagreements break up many romantic relationships, and broken personal friendships break up many businesses. In this new age of collaboration, unemotional different perspectives and disagreements have been proven to lead to better decisions.

If you are contemplating a transition from a workship to a more intimate relationship, according to Yager, you should make sure that it satisfies the following three conditions:

  1. Make sure the move is a shared wish. There are three distinct kinds of friends: casual, close, and best. A fourth category is more intimately romantic relationships. None of these four work well if they are "one-sided,” meaning only one of the parties is committed.
  1. Be ready to reveal and involve your non-work experience. Some people find that they have much in common in workplace duties and perspectives, but have nothing in common outside of work. Or they really don’t want to share their personal life details.

  1. Expect increased pressures from trust and discretion issues. All relationships bring increased demands for your time, and bring expectations and pressures during any changes in your life, or at work. Make sure you both have the shared values in your personal life, as well as at work.

In my view and experience, the benefits of more friendship at work far outweigh the disadvantages. Socializing at work today, contrary to a couple of decades ago, is considered collaborative and productive, rather than a waste of time. Today the trend is to “open” office spaces, even for executives, versus the private and quiet offices of yesterday.

Going further in the friendship direction, to a romantic relationship, is still almost always a negative at work, because the emotional ties and tolls often override rational actions. As an example, I find that most Angel investors still decline to fund startup founders that are romantically involved, citing the high risk of breakup.

Work relationships are in vogue, inside a company for collaboration and teamwork, and outside to customers and partners through social media for loyalty and interactive marketing. But all good things can be overdone. Are you maintaining the right balance in your work relationships?

Marty Zwilling

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