9 Entrepreneur Habits That Lead To Long-Term Success

Being an entrepreneur is a lifestyle that requires staying power, because starting a new business is a long-term process with many tough challenges. As an angel investor, I look diligently for signs that an aspiring startup founder has what it takes to thrive and prosper for the long haul ahead. Passion and vision are necessary, but not sufficient, to really change the world.

Many of the best-known entrepreneurs who achieved long-term successes, including Howard Schultz (Starbucks) and Steve Jobs (Apple), shared a common set of attributes and habits, including the following:

1. They never gave up, despite some major setbacks. In investor circles, it is often said that the number one cause of startup failures is that the founder gave up too early. Great entrepreneurs will tell you that they may have pivoted many times, down to their last dollar, but have never given up. I look for that same determination in every new founder.

2. The founder talks about lessons learned, not excuses. Successful entrepreneurs are always ready, willing, and able to learn from challenges, rather than trying to find something or someone to blame. Howard Schultz readily admitted that early success created hubris and entitlement in his team, which took a major initiative to correct later.

3. They proactively replace their current offerings. When the revenue starts to flow, it is easy to ride the wave and only react when competitors start to cut deeply. Steve Jobs was quick to obsolete his own best-selling products every few months, to keep the momentum and the Apple brand image growing. That’s a challenging but winning long-term strategy.

4. They focus only on highly-differentiated solutions. The most common startup proposals I see are for yet another social media niche solution, or for solutions which are “all-in-one” integrations of multiple existing platforms. Entrepreneurs who think long-term look for innovative new solutions in large and growing markets, despite the increased risk.

5. They work hard on finding complementary channels and partners. Never assume that a great solution will sell itself, or won’t need the help of dominant distribution channels and partners with existing customer bases. Entrepreneurs with a habit of thinking long-term focus on their core competency to build a recognizable brand. They don’t try to do it all.

6. They spend as much time on relationships as the business. There really is something to the saying that a successful business depends on who you know, as much as what you know. That ability and determination to nurture win-win relationships with peers, potential partners, and competitors, separates long-term entrepreneurs from short-term flashes.

7. They surround themselves with strong and positive people. Great entrepreneurs have a habit of selecting associates who are smarter than they are, and provide complementary skills. These are not “yes” people, but they always offer a positive perspective, rather than reasons why something can’t be done. The result is that 1+1 equals three or more.

8. They know that making money is critical, but secondary to a higher purpose. Steve Jobs often attributed his long-term success to a desire to change the world, but suffered setbacks when he took his eyes off revenue flow for too long. Even the best cause does not sustain a business alone, and a higher cause is needed to drive long-term success.

9. They work harder and longer than most, and relish it. Not only do they put in more hours by habit, they get far more done than others. Yet they are known for their extreme focus on selected critical elements, and their extreme depth of knowledge on key subjects. They consistently embrace a workload that would seem crazy to others.

The entrepreneur lifestyle is all about vision, working hard, getting things done, and learning from every step, forward or backward. When investors see a founder with the habits described above, they hardly care what solution he or she is pitching – the odds are good of a long-term success. Have you checked your work habits lately, to see how well they project your staying power?

Marty Zwilling

*** First published on Entrepreneur.com on 04/20/2016 ***

7 Reality Checks On Your Funding Odds With Investors

If you expect an equity investment from reputable investors for your new startup, you need to know the boundaries that often limit their interest. In the jargon of investors, certain businesses may be viable but not fundable. For example, investors recognize that online gambling sites or a medical marijuana site may generate big returns but may tarnish their squeaky clean reputation.

There are many other more mundane reasons that your startup might be deemed non-fundable, depending on your own circumstances, where you live, or the case you have put together. As an active angel investor, here are some key ones I have seen, with some guidance on how to improve your odds.

1. Poorly written or missing business plan. If you recently sold your last startup for $800 million, you probably don’t need a business plan at all to get money for your next startup. On the other hand, if you are a new entrepreneur, a well-written and complete business plan demonstrates that you understand the issues and have a real plan for execution.

2. Team not a good match for the challenge. Outside investors bet more on the team than the solution. If you and your team have no experience in your chosen domain or no credentials starting a business, you will have trouble attracting investors. A solution would be to find a co-founder with the requisite background or investors who know you.

3. Business is a good cause, but has limited returns. Your plan may eliminate world hunger -- but hungry people don’t have much money. If you have a great social cause, perhaps you should be looking for philanthropists instead of investors. Other social ventures may make good family businesses, but scaling and profitability are limited.

4. 'Secret sauce' or competitive advantage is not clear. Investors are wary of startups with no intellectual property, even with a first-mover advantage. They know that showing market traction will attract big companies, like Apple or Google, who can easily overrun the best startup. It costs very little to file a provisional patent to begin your protection.

5. Revenue and profit projections are not credible. Attractive businesses to investors may show revenues that double every year but don’t exceed the gross national product of your country. Investors do expect gross margins that exceed 50 percent, and double-digit penetration rates by the fifth year. Find existing cases to validate your numbers.

6. Market is new or unproven, or your solution is 'disruptive.' When Facebook first started looking for investors, there was so social-media market. In these cases, you need to show more traction, or find highly motivated investors with vision. Also, disrupting an existing market typically takes too much time and money to interest the average investor.

7. Go-to-market strategy is missing or not clear. Entrepreneurs with exciting new technologies too often assume that the technology will sell itself. In fact, it is your job to show how the technology will be embodied in a solution that satisfies a painful customer need, what channels will be used for sales and what business model maximizes return.

My advice to non-fundable startup entrepreneurs is to look past individual investors for partnerships with potential acquirers, grants from related institutions and support from your rich uncle. If all else fails, I recommend bootstrapping your own efforts, at least until you get enough traction to relieve the qualms of accredited investors.

In any case, it pays to listen to investor feedback, update your plan and make the rounds of additional funding sources after each new milestone has been achieved. Real customer revenue and thousands of new users represent traction and are the best indication of fundability. The right business advisors can also build your investor credibility through market connections.

Even if you aren’t searching for outside investors, don’t forget that you are making a major investment of yourself into your startup. Thus, these reality checks should always be taken seriously. The odds of finding funding generally correlate highly to your odds of business success -- and your personal risk is even more critical than outside investor risk. Minimize both.

Marty Zwilling

*** First published on Entrepreneur.com on 04/15/2016 ***

10 Tips On Finding The Best Career Fit In A Startup

Today is the new age of the entrepreneur, and I see an increasing number of new startups as the economy stabilizes. For new aspiring entrepreneurs, that’s the good news and the bad news, as it increases opportunities, but also increases the startup risk. Thus I often recommend taking a job in a startup first, to build connections and learn what you can, before stepping into the lead role.

Yet finding the right startup for your job interests and skills, or having them find you, is no small challenge. Startups generally don’t have the money or time for executive searches or large job boards, and many don’t even know what to look for. Other entrepreneurs don’t even realize that they badly need a co-founder or team leader who can complement their own skills.

Thus the burden is heavily on the job seeker to sell their value, and proactively find the roles that will get their entrepreneurial career off on the right foot. Here are my top ten tips to get the best ones interested in you, as well as deciding if the entrepreneurial fit is right for you:

1. Optimize visibility and image on the Internet. No online presence these days may brand you as irrelevant, or not able or interested in contributing. A non-professional or negative image will likely eliminate you from consideration. How you manage your “personal brand” on the Internet is indicative of an ability to manage a startup brand later.

2. Extend network through startup organizations. The more people you know in existing startups, and the more entrepreneurs who know you, the more likely you will be found as a candidate for the right jobs, and will recognize potential bad fits or low potential opportunities. Despite the Internet, networking is still a person-to-person activity.

3. Build a list of startups to begin marketing yourself. If you wait for startups to find you, or limit your attention to posted job opportunities, you won’t convince anyone that you can be an entrepreneur. Demonstrate your communication skills and your marketing skills in researching opportunities to add value, and practice relationship building and closing.

4. Volunteer for temporary roles to get experience. Practical job experience is often more valuable than academic training in the startup world. In addition, working with people already in the business gives you connections to others and insight into areas where you may need to update your portfolio. It also prevents a gap in your resume.

5. Be an expert on new markets and new startups. Do your research on the top ten startups in your area of interest and be ready to best and worst attributes of each. Update yourself on their history, founder backgrounds, and competitors. With startups, the big picture understanding and value are more important than technical skill depth.

6. Adjust your lifestyle to work for equity value. Whether you are working for a startup, or running your own, get prepared for living on Raman noodles, or depending on the support system of a spouse. Entrepreneurs are in it for the long-term payback, and have to be comfortable with the lifestyle constraints. Expecting a large salary won’t work.

7. Make a list of questions to validate viability. You won’t help your image or your experience by joining a startup that quickly fails. Be prepared to ask some hard questions, including current traction, burn rate, and runway before the next cash infusion. These are questions you need to understand well for you own business.

8. Ask questions and do more listening than talking. Practice active listening with advisors and startup founders. This is important for finding a startup job, and later when you have your own startup, it’s important for finding investors, business partners, and even customers. Practice exuding humility and confidence at the same time.

9. Be sensitive to culture and operating mode. Look for a fit in long-term values and mode of operation, as well as what you wear to work or to an interview. It’s smart to visit the office before an interview, or talk informally to other employees to make sure you understand what is expected. T-shirts and beer are not the norm at every startup.

10. Sign up for some career coaching and auditing. Not everyone is cut out to be an entrepreneur, or even to work in the unstructured environment of a startup. There is no time like the present to take a hard look at your strengths, weaknesses, motivations, and aspirations. This life is too short to go to work every day stressed out and unfulfilled.

As an entrepreneur, or while working in a startup, only you are responsible for your career. You won’t find a fine-tuned human resources organization to pave the way for you, or protect you. If that frightens you, then I recommend the more traditional corporate career path.

Just remember that according to most surveys, entrepreneurs have more fun, and a higher probability of really changing the world. Use these tips to join the revolution.

Marty Zwilling

*** First published on Entrepreneur.com on 04/13/2016 ***

Leadership Is From Experience, Mentoring and Failure

Committees don’t create successful startups. A single visionary entrepreneur almost always is the initial implementer of an innovative new venture, but that lone entrepreneur doesn’t have the bandwidth to grow the business alone. He or she needs the multiplier of growing from the “doer” to a team builder and leader. That’s a big transition, and many entrepreneurs never make it.

These entrepreneurs know instinctively what needs to be done, but they may have no idea how to get it done through others. Some will argue that people leadership is a skill you have to be born with, but I’m convinced that it can be learned from experience, mentoring, and failures. The ones who learn quickest are the ones who move from good entrepreneurs to good business leaders.

In my experience working with entrepreneurs and business leaders, I have found no magic formula or recipe to get you there, but there are some key leadership principles that anyone can aspire too and learn from, including the following:

1. Become an ardent student of leadership. Entrepreneurs who become business leaders study the successes of peers, and seek to emulate them. They reach to find mentors who have been there, read books on the subject, and participate in leadership development programs. Leadership requires focus and effort, and doesn’t happen by title.

2. Set personal leadership goals and solicit feedback. Business leadership requires spending more time working on the business, and less time working in the business. You can measure these activities yourself, and get validation from your team. How much of your time is spent on futures, strategizing, and coaching versus fixing daily crises?

3. Tackle new challenges outside your comfort zone. If you never push your limits, and never fail, you never learn new capabilities. As a new entrepreneur, perhaps you have no experience with hiring and delegating, yet these skills are not rocket science. Don’t be afraid to ask for support from more experienced peers and human resources experts.

4. Celebrate small successes and learning from failures. People who demand perfection from themselves are rarely good leaders. Learn to celebrate small steps in the right direction, and failures that are a source of real insight. Be humble and transparent in involving your team and even your customers in your successes and your mistakes.

5. Recognize and reward leadership successes around you. Working to recognize and celebrate leadership in others will supplement and solidify your own capabilities. The more often you walk in the shoes of leaders around you, the easier and more natural it will be for you to define and capitalize on your own leadership elements.

6. Demand strong performance and deal quickly with mediocrity. Recognized business leaders are known for their expectation of excellence from their team, and from themselves. They do not tolerate mediocrity around them, which keeps their teams highly motivated and proud to be associated with the leader as a role model.

7. Work on improving your communication skills. Effective leadership requires effective communication, including verbal, written, and body-language. Your team, customers, and partners need to understand your vision, goals, and what is expected of them, before they decide to follow you. Great leaders also practice active listening and full attention.

8. Go forward with passion and a positive attitude. No one wants to follow a habitually grumpy or negative entrepreneur. Business people are naturally attracted to passionate, motivated, and enthusiastic peers. A side benefit is that you will feel happier and more fulfilled when surrounded by similar positive people. This is a self-fulfilling prophecy.

To grow from being an entrepreneur to a business leader is a personal challenge, and not one that everyone can deal with. The core principles are the same for both – develop and articulate a vision, act decisively, and build personal relationships. The leadership multiplier is required to effectively incent others around you to do the same. How well is that multiplier working for you?

Marty Zwilling

*** First published on Entrepreneur.com on 04/08/2016 ***

The Number-One Rule Is to Stay Business-Focused

After listening and working with hundreds of entrepreneurs, I have heard many focused only on their next million dollar idea, but very few make any money from an idea alone. On the other end of the spectrum, others focus totally on building a product, assuming a great product will assure business success. Both groups are missing the essence of an entrepreneur – the business focus.

A focus on business execution certainly includes selecting the right idea and developing a marketable solution, but it also requires selecting a viable target market, attracting customers, winning against competition, and delivering a value proposition which is attractive to customers as well as the business. Most importantly, it requires the discipline to integrate all of these.

In my experience, there are several key elements to this discipline, which always include the following:

1. Staying customer-centric in all business actions. Every startup requires countless tradeoffs in time, money, and priority. It’s easy to let your personal passions and interests fill in for objective customer data. With today’s access to social media, interaction with customers is easy, and must be used for technical, financial, and opportunity data.

2. Prioritizing activities weekly, and focus on the top three. People who try to do too many things only succeed in doing everything poorly. Even with a limited focus on the most important items, don’t allow the chaos of daily crises to break your discipline of completing and communicating the high priority activities to the right constituents.

3. Managing cash flow daily – into and out of the business. It’s not unusual for technical entrepreneurs to find finances difficult to understand, intimidating, or a boring distraction. It does require a discipline of relentless focus. A business can be on budget, but still run out of cash, or worse yet, profitable but broke. Investors rarely give you a second chance.

4. Setting and communicating compelling targets for the team. Everyone must be actively engaged to grow a business, and the team won’t have an engagement discipline if they don’t know where they are going, or don’t have any targets to fight for. As well as setting targets, you have to keep score to prevent random high motion but no progress.

5. Selling is a job for everyone all the time. It may not be in their job descriptions, but everyone in a new business should be selling. The very first moment that you have contact with an investor, or a customer has contact with your team, a perception is set. That perception is your reality, and you only get one chance to make it a good one.

6. Defining leading and lagging measures on progress. You can’t manage and make rational decisions on things you don’t measure. Structure and monitor leading measures first, such as customer leads and solution costs. Lagging measures come later, including volumes achieved, cost of customer acquisition, and market penetration.

7. Insisting on and nurturing total team accountability. Getting things done effectively in a new business requires total individual and team accountability. You can’t afford excuses and multiple people doing the same job. The best entrepreneurs are role models of accountability, with no excuses, not punishing mistakes, and rewarding results.

8. Keeping team members as well as customers motivated. An unhappy team can’t create a satisfied and loyal customer base. Highly motivated and engaged teams create customers who work and feel like part of the team. Add sustainability and social responsibility initiatives, and you can double team productivity and business growth.

Every entrepreneur needs ideas and the focus on building a great solution. But these are not enough. The winners also bring key business disciplines to the execution, which stretch even the best beyond their comfort zone. Don’t expect the process to be a cakewalk, so make that part of the fun and the learning. Enjoy the journey as well as the destination.

Marty Zwilling

*** First published on Entrepreneur.com on 04/06/2016 ***

8 Innovation Inhibitors Challenge Every Entrepreneur

I’m a practical guy, so I recognize that expecting the real world to be fair is a dream that every entrepreneur needs to put aside as they reach the age of majority. As a business advisor, I see entrepreneur passion often so focused on an innovation that is certain to change the world yet ignores the potential impact of one of the many business inhibitors that kill too many startups.

As an example, I am intrigued with the innovation and technology associated with flying drones of all configurations. I especially like the newest personal flying car, introduced at the most recent Consumer Electronic Show (CES) in Las Vegas. Yet, I anticipate a long hard road for startups in this space due to the practical reality of innovation inhibitors, including several of the following:

1. Dependency on new infrastructures and support. It’s easy to see the value of electric power versus fossil-fuel engines, but we are a long way from the network of drone service stations and mechanics that exist today for conventional transportation. Necessary infrastructure is an inhibitor to many startup innovations and can take generations to fix.

2. Demand for safety and usage regulations. New technology solutions often raise the specter of new government regulations. Even the most obvious rules can take years to get debated and passed nationally or internationally. Witness the struggle of the Segway human transporter, introduced back in 2001.Technology can change faster than laws.

3. People are slow to change and embrace technology. For most people, an “easier to use” innovation means change and new learning effort that can easily offset the value of the change. Investors have a rule of thumb that simple cost reductions of less than twenty percent are not enough to convince most users to change to a new solution.

4. Investor risk tolerance limits. Every investor has a risk bias against specific innovation types based on investment experience. They like risk, up to a point, after which your startup will always be told that more traction is needed. Trusted business advisors can tell you the real issue, and recommend alternative investors or risk reduction techniques.

5. Closed community of owners or experts. Some business domains and technologies are so dominated by a small group of “owners” that outside innovations are discouraged or actively attacked by incumbents. Attempting innovation in these domains without first penetrating the fortress is extremely risky. Do your homework first to improve the odds.

6. Low startup founder resilience and persistence. The best innovators never give up and are not discouraged by setbacks. Thomas Edison failed more than 10,000 times before finding the right light bulb design. Challenged by contemporaries, Edison responded: "I have not failed. I have just found 10,000 ways that won't work."

7. Qualified and motivated team members are hard to find. It takes more than a single entrepreneur with an innovative idea to build a business. Every startup needs a team with the right skills and experience to complement those of the founder. The right people are hard to assemble due to low near-term returns, high risk and lack of training options.

8. Limited availability of financial resources. I put this constraint at the end, but it’s an important one. There is never enough funding to deal with the development and rollout costs required for big innovations. Every entrepreneur knows that he or she could do more -- and take more risk -- with more help. The best are able to do more with less.

I’m not suggesting that you let any of these inhibitors keep you as an entrepreneur from tackling the innovation of your dreams, but simply realize that fore-warned is fore-armed. Understanding the constraints up front gives you a tremendous advantage in overcoming them, and it can save you from serious pain and frustration. The entrepreneur lifestyle has always been a fun and satisfying experience. Let’s keep it that way.

Marty Zwilling

*** First published on Entrepreneur.com on 04/01/2016 ***

Too Many Bells and Whistles Will Not Sell a Product

Technical entrepreneurs love to compare the number of features in their product to competitors, and they love to keep adding features -- just because they can. Unfortunately, this approach often turns off mainstream customers, who find the result hard to use. Even worse, this “feature creep” often makes the final product late to market, sluggish and more expensive than competition.

“Focus” is the key to success in a startup, and a minimum viable product (MVP) that does a few things better than anyone else will get more attention quicker from your market. From that base, you can then iterate more effectively, based on customer feedback, to add additional features that really expand the market. Early adopters, who love to count features, are not your major market.

As a former developer, experienced technical entrepreneur, and an advisor to many startups, I recommend that every technical startup adopt and live by some strict strategic and organizational rules to counteract the urge and risks of feature creep. These include:

1. Separate requirements gathering from product implementation. Every startup team needs a “product owner” role who is not an engineer or coder to collect from customers, prioritize and document required features. Then developers size the implementation alternatives, and startup executives draw a line based on vision, costs and funding.

2. Define and enforce role and decision authorities. Developers should get the last word on implementation, sizing and duration alternatives. Marketing and product owner negotiate the minimum viable product level based on competition and customer expectations. Financial executives set staffing budgets and monitor spending.

3. Communicate and commit to a formal development process. With agile and other incremental development processes, schedule and track the allowable time boxes -- one to four weeks -- per cycle. In my experience, where development cycles and timeframes are completely open-ended, the number of features goes up, and the quality goes down.

4. Update or substitute features as required, but keep the same total. The team must deal with changes from the market and technology but resist any urges from anyone to add features without pruning or removing others. Maintain role responsibilities as previously defined including executive sensitives to overall progress and opportunity.

5. Focus on stability, usability and performance of key features. The urge to add more features often takes priority over confirming that the basics have been implemented with a competitive level of quality and ease of use. A bloated product with more features done poorly will not survive against a simpler product that does a few things very well.

6. Incrementally add features in small numbers to follow-on releases. Including too many features into initial release dramatically increases time-to-market and the likely need to pivot. Customer requirements should be re-confirmed and re-prioritized after each release. Plan incremental releases every few months -- but not too frequently.

7. Avoid adding features for a single customer to close a sale. Sometimes it pays to say “no.” Features added which have not been evaluated to have general appeal make your product more difficult to support, dilute your development effort for important features and complicate the usability and installability for all customers.

8. Build multiple products versus a single product with many features. The advantage of a multiple-product strategy, with integration capability, is that it allows a natural planning cycle for market requirements, resources required and marketing efforts. Customers are not “forced” to buy features and complexity they don’t need.

In reality, most customers and marketers can’t remember or name more than a half-dozen key features of any solution, so extending your implementation to double or triple this number is counter-productive. The negatives outlined here of “feature-itis" in a startup far outweigh the potential positives of appealing to more customers. Don’t let your business be a victim of feature creep.

Marty Zwilling

*** First published on Entrepreneur.com on 03/30/2016 ***

8 Reasons Online Dating Sites Are a Business Dead End

Aspiring entrepreneurs often approach me as an angel investor, touting their innovative idea for yet another online dating site. I agree the need is out there, with over 91 million interested singles between the age of 19 and 45 around the world. Yet almost no one in this business makes any money, since it comes with a larger list of challenges than most other opportunities I see.

Thus, I encourage you to consider these challenges as reality checks for your own business idea -- dating or otherwise -- before spending all your time and someone else’s money in vain.

1. The market is already oversaturated with competitors. According to statistics, there are more than 5,000 dating sites worldwide with 1,000 new ones appearing every year. If you check your market on Google and find numbers like these, I suggest you look for another opportunity where the number of competitors you can find is less than 10.

2. This business suffers from the 'Facebook model' startup problem. Many business opportunities, like this one, need thousands or millions of existing users before new users and advertisers are interested to pay real money. Thus, the investment in time and money required before payback is huge. Facebook spent $150 million before positive cash flow.

3. Barriers to entry are difficult to establish. For a new startup, the best way to assure survival is to file patents or other intellectual property to keep future competitors from copying your success. Dating is not a highly scientific process, and the first-mover advantage has already been taken. Think about this challenge for your best idea.

4. Separation from existing major businesses is small. In reality, dating is a form of social networking, so Facebook could easily enhance their services in this direction, if the market traction of others was evident. Google or other search engines could add image-matching or other focus to capture this market. The best startups have real differentiation.

5. Business area is fraught with misrepresentation. Online dating scams to get money or attention are a very common and growing problem, according to several articles on the Huffington Post. For starters, 40 percent of frequent site users are already married. If your new idea has that same potential for misuse, is it worth the risk to your reputation?

6. The customer value proposition is difficult to quantify. Investors and customers alike want to see return that can be measured against the costs. Value propositions such as “easier to use” or “find better partners” rarely compete with terms like “half the cost” or “50-percent faster.” Make sure your new innovation has a quantifiable value proposition.

7. Beware of high turnover and minimal loyalty situations. Loyal repeat customers who become locked in by a high cost of switching are the dream of every investor and smart business. Dating services lose customers quickly when they find a match -- or when they don’t find a match. Look for a business opportunity with low customer churn potential.

8. Steer clear of business areas that are not squeaky clean. Dating sites are tagged as having historically high failure rates and a hint of business hustle, so they are avoided by professional investors. Others in this category would include online gambling, debt collection and work-at-home offerings. Your new opportunity should avoid these qualms.

Yet the online dating market, like every other one, has many new opportunities for those entrepreneurs willing to think further outside the box. Recent ones that I have noticed include DoggiesMatch for pet dating, OurTime for singles over 50 and SupernaturalDating for paranormal enthusiasts. Even though these all sound interesting, please don’t ask me to invest.

I always tell entrepreneurs that even if you are bootstrapping and not looking for investors, it’s still important to apply external investor thinking to your new venture. As founder, you are always the biggest investors and should apply the same reality checks. How well does your latest startup idea avoid the challenges outlined here? Your success and livelihood may well depend on it.

Marty Zwilling

*** First published on Entrepreneur.com on 03/23/2016 ***