Wednesday, February 28, 2018

10 Rules For Business Success That Haven’t Changed

sunset-summer-golden-hour-paul-filitchkinIn this world of constant change, new technologies, and a thousand cultures, it’s evident and somehow comforting to me that the basic rules for business prosperity really haven’t changed in the last hundred years. Business success is still more about the people than the technology or idea involved. As an angel investor and a mentor to entrepreneurs I still see this every day.

I was just reviewing a collection of essays by and about Napoleon Hill, “The Science of Success,” who is most recognized as the author of the best seller “Think and Grow Rich” from way back in 1937. Hill attributes his ten rules of success to Andrew Carnegie, who was in his prime well before that, over a hundred years ago, but I believe the principles are still critically relevant.

Since language and implication have changed a bit since then, I’ll restate Carnegie and Hill’s original rules here, with my own current-day commentary and recommendations added:

  1. Definiteness of purpose. Every entrepreneur needs to start by setting a major purpose for embarking down a specific business path. This objective needs to go beyond making a parent or spouse happy, getting rich quick, or advancing a technology. For success these days, the purpose better focus on people, and solve a real problem for customers.

  2. Master-mind alliance. Building successful businesses still requires the ability to find and inspire the best people who “have what you haven't,” whether that be skills, knowledge, connections, or funding. Then you must extend these alliances to vendors, partners, customers, and even competitors (coopetition).

  3. Going the extra mile. Hill's eagerness to serve others gave him greater opportunities, and this Law of Reciprocity works the same today. Doing more than you have to do is the only thing that justifies raises or promotions, and puts people under an obligation to you.  This is still one of the most important competitive differentiators that you can offer.

  4. Applied faith. This is a level of belief that has action behind it. Anyone can have ideas, passion, and faith about an important business opportunity. Yet for most people it’s only a daydream, since they are not willing or able to commit the actions required to deliver. Results are still the only true measure of success in business.

  5. Personal initiative. Successful entrepreneurs do what they need to do without being told how to do it. Asking for insight is not the same as asking for the next step, or asking an advisor to make the decision. Great entrepreneurs are proactive, not only in selecting the right idea, but in implementing a product, setting a price, and choosing customers.

  6. Imagination. This is the number one skill required for creativity and innovation. Without imagination, entrepreneurs cannot look at a problem from a new perspective. Without imagination, entrepreneurs cannot visualize how various solutions to a problem would work. Without imagination, entrepreneurs can never dream up new ideas.

  7. Enthusiasm. This is the contagious quality that great entrepreneurs have to attract correlative passion, commitment, the best people, and customers to their idea and solution. Enthusiasm is one of the most powerful motivational tools in an entrepreneur’s arsenal, and no success will accrue without it.

  8. Accurate thinking. Accurate thinking is the ability to separate facts from fiction via deductive reasoning, and to isolate and use facts effectively that are pertinent to your own challenges and problems. When the necessary facts are not available, accurate inductive reasoning or hypothetical thinking is required to fill the gap.

  9. Concentration of effort. In current terms this is called focus and determination, to never give up and never be diverted from your purpose. With focus and determination, you and your team will understand what's most important for success, and drive your motivation through the execution steps required.

  10. Profiting by adversity. This simply means remembering that there can be an equivalent benefit for every setback. Successful entrepreneurs learn from funding failures, economic adversity, ruthless competitors, and lethargic customers. They insist on greater efficiency, try new business models, organizational improvements, and better cash management.

Carnegie and Hill understood how business success rules were tied to the entrepreneur way back in the early 1900’s, and the evidence is that those rules are still as applicable now as they were then. Business models and technology have improved dramatically, but the power of people with foresight, passion, and determination continues to supersede all these elements.

So the next time you are tempted to broadcast an abstract email to me and other investors on your new “million dollar idea,” make sure you include your track record on how well you stack up against these rules for business success. Investors still tend to bet on the jockey, not the horse.

Marty Zwilling

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Monday, February 26, 2018

7 Steps For Counseling Employees Who Need To Change

we-have-always-done-it-this-wayAs an advisor to entrepreneurs and new business owners, I’ve long observed that one of the toughest challenges is people change management in the team. It’s an area where you typically have little experience and training, and dealing with needed change is fraught with emotions on both sides. I have found that my years in a big company have paid huge dividends in this area.

For new business leaders who are unfamiliar and uncomfortable with people management, I try to offer an easy to understand process for dealing with situations where a team member or direct report needs to change. I found some help in this regard in a new book, “Power Your Tribe,” by Christine Comaford, who has been a business leadership and culture coach for the past 30 years.

Among other insights, she outlines a seven-step counseling process, called a feedback frame, for tough situations, which I will paraphrase here. I believe it will facilitate both you and any team member communicating to get a shared positive understanding of the requirement for change and resolution:

  1. First, before diving into specifics, set the stage. As a manager or executive, your pent-up emotion makes it tempting to open with an attack, which immediately puts everyone on the defensive. Instead, you should start with a summary of your goals and objectives for the role, and emphasize the need for a collaborative turnaround plan.

  2. State directly observed data examples and behavior. Only then should you describe specific behaviors that must change, and provide your specific examples so the team member can “step into” the past scenarios. Avoid any hearsay or anonymous sources, since these are likely not entirely accurate, and will provoke emotional debates.

  3. Quantify the impact on the project and other people. Examples might include instances where the team member missed a deadline, causing the project to fall behind, or poor responses to a customer resulting in lost business. These hurt the company, as well as the specific employee reputation. If not obvious, state the correction required.

  4. Ask for problem acknowledgment and playback. You will make no progress until the team member agrees that there is a problem in their work or behavior, and the problem now must end. If you don’t have agreement yet, it’s time to go back to step one. You need this common understanding before the employee will engage in finding a solution.

  5. Create a plan together for a specific time period. I recommend a time period of 30 to 90 days where you agree to meet weekly to track progress. Make the plan very specific in terms of what you need to see and when you’ll know the outcome is what you wanted. Clearly state the consequences if the turnaround doesn’t occur (lost job or demotion).

  6. Overtly check understanding at this stage. Clearly communicate your conviction that a positive resolution is possible and desirable, which will make the consequence irrelevant. Believe it or not, I find team members often still don’t fully understand why they need to change, or why the specifics you ask for are important to the team and the business.

  7. Jointly celebrate small steps and milestones. Launch the plan, and look for every opportunity to acknowledge and reward progress, rather than focus only on failures. Make sure that all concerned see the behavior change also. Verbal feedback should be supplemented by a written weekly summary to the employee, to prevent surprises later.

If you think these steps are a lot of work, you are right, but it’s the most important work you can do for your business, and well as for your team members. The health and success of your business is totally dependent on the health and productivity of your team. Managing the product and the processes is only half your job as an entrepreneur, or less. The rest is building the team.

Obviously, this task is easier if you hire and nurture the right people, to minimize these situations in the first place. You need resilient teams in these turbulent times, so it is well worth your time to understand what it take to maintain a team with the emotional agility to adapt to market changes and customer feedback. Of course, as the leader, it all starts with your own ability to change.

Marty Zwilling

*** First published on Inc.com on 02/13/2018 ***

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Sunday, February 25, 2018

5 Ways To Give Now For A Future Competitive Advantage

Elon_Musk's_Tesla_RoadsterBusiness partnerships have traditionally been agreements to drive more transactions than either company could do alone. The new paradigm, driven by disruptive technologies, cloud-served supercomputing, and the new generation of young adults with global empathy, is partnering and giving something now for a competitive advantage in the future.

An excellent example is the initiative by Elon Musk and Tesla Motors a few years ago to give away their battery patents, to infrastructure and competitive car providers, without transactional agreements. This will facilitate the expansion of battery charging and support facilities, and ultimately create more customers and growth for the whole industry, including Tesla.

Another partnering model example is the IBM Watson Group $1 billion investment to share cloud-based development and super-computing tools. A partnership was announced with the City of New York, to connect and grow NYC's startup ecosystem. This facilitates technology growth and innovation for startups in Silicon Alley, as well as positioning IBM for growth down the road.

These initiatives are what Bob Johansen and Karl Ronn call “The Reciprocity Advantage” in their classic book on how partnerships must work in the future for innovation and growth. Johansen knows this space, as a distinguished fellow at the Institute for the Future in Silicon Valley, and Ronn is a serial entrepreneur and managing director of Innovation Portfolio Partners in Palo Alto.

Their recommendations are consistent with mine in working with startups, as well as more mature organizations, to start future-proofing their growth in today’s world of relationships and conscious capitalism. The basic steps to adopting this reciprocity advantage paradigm can be summarized as follows:

  1. Identify your assets that have complementary value to others. Johansen calls this uncovering your right-of-way. Ideally, this is an existing platform where you already have established the ability to innovate with authenticity, and can afford to give access to others, with the potential to yield greater value later, like the Tesla and IBM examples.

  2. Find partners who can do what you cannot do alone. Here you are looking for formal and informal relationships that can increase your innovation potential in the long run, and not be inclined to undermine your own efforts. Some of the more interesting partnerships may be asymmetrical: very big companies partnering with startups, or even individuals.

  3. Learn by experimenting in low-cost and iterative ways. This is the new world of do-it-yourself (DIY) prototyping. FabLabs is an example of a new class of facilities for entrepreneurs to start experimenting early. Success is when both you and your new partners learn how to make money while experiencing new growth from the initiative.

  4. Scale it once you figure out what works. When you are convinced that your new business offering is desirable, viable, and ownable, then you are ready to scale. Cloud-served services will be an amplifier for almost any opportunity, not only in the developed world, but in the developing world as well. Social media relationships fuel the scaling fire.

  5. Maintain the agility to quickly pivot or quit. Not everything will work. Too many companies and entrepreneurs find it hard to stop a bad project. Key success indicators to monitor are passion level, and the ability to meet regular short-term milestones. If a plan doesn’t work, the key is to fail fast, create a new plan, but don’t give up.

The authors and I predict that the new forces of social structuring and the so-called digital natives (Gen Y and younger) will soon disrupt the traditional transaction model for doing business, as well as the current partnering model. Partnering will begin to happen across great distances, include reciprocity thinking, and even intellectual property will shift from a closed to a more open system.

It’s time for every individual, startup, and mature company, to uncover their shareable value, find complementary partners, and capitalize on their scalable advantages. I’m certain you will find it to be more fun and more productive than plotting every day to kill your competitors for growth.

Marty Zwilling

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Saturday, February 24, 2018

6 Tools To Drive You To Promote Yourself In Business

drive-your-own-careerToo many people, young and older, let their career and their lifestyle happen to them, rather than proactively making things happen based on their personal passions, skills, and interests. Others make decisions based on someone else’s interests, such as the father who wants his son to take over the family business, or dreams openly of having a doctor in the family. Neither of these approaches is likely to lead to a satisfying career or personal happiness for you.

These days, with the instant access to information and experts in every field around the world, and the wealth of personal assessment tools available on the Internet, there is no excuse for not exploring and evaluating the alternatives before you make a step forward. A very credible starting point is the classic book “Promote Yourself: The New Rules For Career Success” by Dan Schawbel, managing partner of Millennial Branding, a Gen Y research and consulting firm.

Among other things, he outlines some of the popular assessment tools that I also often recommend as a mentor to entrepreneurs, including the following:

  1. MBTI (Myers-Briggs Type Indicator). Myers Briggs is one of the most widely used and recognized career assessments in existence, and does an excellent job of identifying your personality type so you can connect it to the right career and lifestyle. It can also help you better relate to others and become more self-aware.

  2. Gallup's Clifton Strength Finder. The focus of this tool is to help you discover your top five strengths and learn how you can use them to excel and perform at a higher level. The creator, Dr. Donald O. Clifton, is widely recognized as the Father of Strengths-Based Psychology, and has helped millions of people around the world discover their strengths.

  3. Marcus Buckingham StandOut Assessment. This one builds on the positive premise that the most effective method for improving people is to build on their strengths, rather than correcting their weaknesses. It’s the one to use if you have tried other assessments that claim to tell you who you are, but don't tell you what you can do with that information.

  4. Career Key. This one helps you identify careers and even college majors that match your set of interests, traits, skills, and abilities. It was developed by Lawrence K. Jones, a professor Emeritus in the College of Education at North Carolina State University, who specializes in the areas of school counseling and career counseling and development.

  5. MAPP™ Career Assessment. The MAPP career assessment is perfect for students, graduates and working adults. You'll get a wealth of information to help find the right career that matches your unique assessment profile. The MAPP career test was one of the first comprehensive career tests online for consumers, with over 8 million customers.

  6. Leadership Motivation Assessment. This one tells you how motivated you are to be a leader. After all, it takes hard work to become an effective business leader; and if you are not prepared to put this work in, or if, deep down, you're not sure whether you want to lead or not, you'll struggle to lead people effectively, and not be happy doing it as well.

If after taking one or more of these, you are still stuck on what domain you fit best into, whether you should be an entrepreneur, and how to get started, the following questions should help get those introspective juices flowing into action:

  • When have you been the most committed and passionate toward something in your life?
  • What talents do you use the most and what are your strengths?
  • Which roles and activities did you like and dislike in the past?
  • What aspect of those roles did you like the most and least?

After you get your own thoughts and assessment results together, it helps to get some feedback from people you respect, including parents, industry experts, and mentors. An outside perspective can be incredibly valuable as well, and help you narrow down what may seem like a long list, and relate that to the real world. Something you feel passionate about that doesn’t put food on the table, for example, may not be sustainable.

But the time to start is now. The most important point is to plot your own path, rather than be a victim of unpredictable circumstances and someone else’s whims. Don’t let other people be winners at your expense.

Marty Zwilling

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Friday, February 23, 2018

8 Keys To Migration From A Consultant To A Freelancer

consultant-vs-freelancerBeing a consultant is a role that works with big companies, but I have found that it doesn’t get much traction in small businesses and startups. The image of a self-proclaimed expert who can generate a report, make a great presentation, and leave you to do the implementation, is just not attractive when you don’t have a staff, and you are already overloaded with the crisis of the day.

I learned this the hard way, when I left IBM a few years ago to share what I had learned with the exciting world of startups in Silicon Valley. I found out that they weren’t looking for consultants, and were even a bit leery of anyone who had spent time in the world of big business. Startups need outside experts who can do the work, as well as relate to the challenges of a new business.

Luckily, I had always been a “hands-on” professional, and I had learned the pragmatics of people leadership, marketing, management tools, and funding. Thus I quickly dropped any mention of consulting, and was able to find some challenging roles. Over the years since, I have honed my own list of rules for those of you who wish to migrate from big business to this new world:

  1. Re-focus your efforts from consulting to freelance. Freelance or contract work implies an execution role, versus an advisory role. In startups and small businesses, there is always a need for a hands-on project leader or interim executive. Freelancer is the modern term for someone with expertise who is not seeking a long-term commitment.

  2. Promote yourself with a title to match your expertise. Simply defining yourself as a marketing specialist, designer, or project leader minimizes the stigma of the consultant role. Specialists and certified professionals are already seen as experts who do the work, rather than just make recommendations for others. Use social media for more visibility.

  3. Adopt a project-based revenue model with metrics. Agreements based on projects to be completed, rather than an hourly rate, put the focus on quantifiable business outputs versus time spent. For example, a marketing project would be the number of leads generated or ad impressions, instead of recommendations for improving the process.

  4. Market yourself and work at all organizational levels. Leadership by example works at all levels of a company. It is not limited to the realm of the top executive or board of directors, who could bring in consultants for studies and analysis. Freelancers can justify their cost based on more direct return on investment calculations at all operational levels.

  5. Treat every business as a customer, not a client. A client relationship suggests that the consultant is in charge, whereas the customer designation recognizes the more modern model of the customer in control. It also highlights all aspects of required customer service, satisfaction, testimonials, and referrals to friends in the business.

  6. Be responsive to all modes of modern communication. Many consultants have been hard to contact between scheduled meetings, due to their use of formal communication processes. It’s time to adopt your customer’s favorite mode of communication, whether that be texting, phone calls, or social media, and not limit your responses to office hours.

  7. Adapt your style to the new business work models. If your customer’s dress code or decision process is informal, you should adapt yours to fit in, rather than continue to act and look like an outsider. If the startup team is distributed around the world, your challenge is to meet their process requirements, rather than expect them to meet yours.

  8. Above all, deliver results rather than recommendations. PowerPoint presentations are not business results. If your customer needs service and support procedures, then your deliverables should include customized creation, implementation and training, rather than simply recommendations on what to include.

Remember that as a freelancer, you are the brand, and you can’t rely on your big company name or relationship. You need to use the modern vehicles for promotion and relationship building, including a professional web site, social media, and industry conferences to show your expertise, credentials, and connections. That need to market yourself hasn’t changed since consulting.

Another positive is that the number of small businesses and startups makes your opportunities an order of magnitude larger than the number of big companies, and also includes them. Another positive I found is that it’s more fun to actually do a job, rather than just make recommendations. What could be more satisfying than having fun, and making money at the same time?

Marty Zwilling

*** First published on Inc.com on 02/08/2018 ***

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Wednesday, February 21, 2018

7 Keys To Leading Your Team And Business To Success

lead-business-and-teamOne of the realities of being an entrepreneur is that you have to keep learning and changing to survive. Everyone on the startup team knows there is no buffer, and no personal isolation from impact based on your job description that can save you. Thus everyone has to make sure they are focusing on what is important, and making leadership decisions to save the business.

That is what business leadership is all about. Unfortunately, in mature companies, a larger and larger percentage of employees forget company survival and customers as the objectives, and focus only on their own personal gain. Risks to the business drift off their radar screen, resulting in poor business decisions, as well as less job satisfaction and declining professional success.

In a classic book exploring these issues, “Lead to Succeed: The Only Leadership Book You Need,” Chris Roebuck, an expert on transformational leadership, highlighted the positive impact of entrepreneurial leadership. I have worked in both large companies as well as startups, and I have observed first-hand the principles that he highlights:

  1. Total focus on delivering to the customer. Every startup team member is close to the customer front lines, so they see how every function does or does not add value to the service they give to the customer. People in larger organizations move away from day-to-day contact with the end customer, and focus becomes company internal and isolated.

  2. Optimizing risk, not minimizing it. Calculated risks must be taken to enable change, to improve, and meet new customer needs. Minimizing risk will eventually cause any company to fail. Mistakes will happen, so the objective should not be to eliminate all mistakes, but to catch them before they create disasters, and become repeatable.

  3. Constantly being creative and innovative to get better. Mature organizations forget that change is an opportunity, not a threat. Yet nothing stands still. Change allows everyone to be push the limits in response, to improve their opportunity for personal growth, improve the company competitive position and odds for long-term success.

  4. Taking personal responsibility for organizational results. The attitude that creeps into big companies is that individual employees have no results responsibility outside their own objectives. This causes company-wide inefficiency, poor communication, and poor alignment, and also tends to reduce the effectiveness of every individual leader.

  5. Understanding the wider picture. To get individual and team performance to the highest level, everyone has to be committed to the organization’s vision, values, and strategy, just as much as their personal objectives. An attitude of no responsibility outside of individual objectives is almost always detrimental to the company.

  6. Keeping things simple. Over time, people in large organizations tend to make things more complicated than they need to be. This may be to impress others with their expertise, or their desire to minimize risk. Entrepreneurial leaders know that complexity actually increases risk, as well as mistakes, and ultimately reduces customer satisfaction.

  7. Inspiring people around you with a clear vision and target. People need a customer-driven vision and some form of end destination to give meaning to why they do things, and engages them beyond their internal view. They also need step-by-step targets to help them visualize the journey to that destination, and see that it’s possible to achieve it.

In fact, large organizations need entrepreneurial leadership and thinking just as much as startups. The challenge to build and maintain this perspective is the same everywhere. It has to start with leadership from the top, hiring people with the right skills, giving them the right training and tools, and motivating them with the right leadership objectives, compensation, and growth opportunities.

I’m convinced that we are entering a new era of the entrepreneur. The cost of starting your own company is at an all-time low, and all the information and tools you need to lead are readily available on the Internet. More and more people are doing their own thing, freelancing, working from home, and starting their own companies.

But this doesn’t mean that everyone should start their own company to be an entrepreneur. Entrepreneurial leadership and thinking like an entrepreneur have just as much value, both to you and to your company, in big organizations as well as small. You can lead to succeed wherever you are. Do it now.

Marty Zwilling

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Monday, February 19, 2018

8 Smart Tips To Soliciting Friends And Family Funding

piggy-bank-fundingIt’s great to start with a big dream as you contemplate a new business, but finding the money you need takes more than dreaming. As an advisor to young entrepreneurs, I find that many are a bit naïve about how the investment process really works. For example, I just read an otherwise impressive business plan last week from a first-timer who asked for $10 million to get started.

In my first working session with this entrepreneur, I suggested ways to break this request into stages or tranches, based on showing traction, with the first amount in a more affordable range of $50 thousand or less. Even with that, you should expect your first seed investment from friends, family, or business associates, who know your capabilities and believe in you more than the idea.

In fact, according to a classic article on Fundable, and other statistics, friends and family are still the major funding source for new ventures, investing over $60 billion annually, more than all professional sources combined. Of course, the average beginning amount per startup is low, and usually in the form of a convertible loan, rather than an equity investment.

Large amounts from professional investors come later, when you have proven yourself, and are ready to scale the business. To me, this is a logical step function, and confirmation that the right founders are always more important than the right product. Yet, even with friends and family, as well as professional investors, you need to approach them right to be viewed as the right people:

  1. Ask for a specific amount based on a specific milestone. Shy introverts may be great technologists, but they won’t be entrepreneurs until they learn to respectfully ask for funding, after nurturing relationships, and practicing their elevator pitch. Waiting for someone to offer you a gift with no specific objective is likely to be a long wait.

  2. Be prepared with a formal agreement and a thank you. The vehicle of choice is most often a convertible note, which is really a loan with a specified duration and interest, with an option to convert it to equity when professional investors come in later. Review with an attorney to make sure the terms are fair. This shows respect and professionalism.

  3. Pitch your personal investment and commitment to date. Friends and family are quick to differentiate between a passionate hobby and a sincere effort to change the world. Show them that you have done your homework with industry experts and potential customers, and convince them you are not asking for charity or a donation.

  4. Get started first on your own time and money. We all know people who are good at talking, but never seem to risk anything or find time to get started on the implementation. Every good entrepreneur needs to invest skin in the game, to show credibility and leadership to others. Even family investors want to be followers, not the leaders.

  5. Be sensitive to the limits your friends can afford to lose. In other words, don’t be greedy, and remember that you value relationships with these people even if your startup fails. Ask for the minimum amount you need to reach a significant milestone, with some buffer for the unknown, rather than the maximum amount you can possibly squeeze out.

  6. Communicate your plan and the risks up front. Remember that no investment is a gift, and everyone who buys in deserves to hear what you plan to do with their investment, and expects regular updates from you along the way. Be honest with naïve friends and trusting family members, since more than 50 percent of startups fail in the first five years.

  7. Focus first on friends with relevant business experience. A wealthy uncle may seem like an easy mark, but a less wealthy friend who has connections and experience with startups in your domain can likely help you more than any amount of money. Remember that you are looking for success, not just money to spend.

  8. Tie investment return to revenue rather than a fixed date. Rather than set a date-driven repayment schedule, tie investment returns to a percentage of new product revenue, or a plan to convert the debt to equity. Use the minimum viable product concept to get revenue early, and allow market and product pivots at minimal cost.

In my experience, if you can’t find any friends or family willing to take the plunge with you early, or you have none of your own skin in the game, professional investors will likely take that to mean they shouldn’t be risking any money on you later.

In any case, I’ve never seen a new venture yet that couldn’t be started for less than $10 million. The challenge for every entrepreneur is to come up with creative ideas for financing, to match their innovative solution. Every investor I know believes funding creativity is what separates successful entrepreneurs from the dreamers. First impressions are everything in this business.

Marty Zwilling

*** First published on Inc.com on 02/06/2018 ***

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Sunday, February 18, 2018

6 Dream Team Members Will Energize Any Tech Startup

startup-cofounder-dream-teamIn my years of advising startups and occasional investing, I’ve seen many great ideas start and fail, but the right team always seems to make good things happen, even without the ultimate idea. That’s why investors say they invest in people (bet on the jockey, not the horse), rather than the idea. Yet every entrepreneur I meet wants to talk about the idea, and rarely mentions the team.

Thus I was happily surprised when I found the classic book, “The Tech Entrepreneur’s Survival Guide,” by Bernd Schoner, PhD, and cofounder of ThingMagic, which leans heavily on the people side of the equation. He gives a wealth of practical advice on building a successful technical startup, including some specifics that I like on what constitutes a dream team of partners:

  1. The technical guru. You need to have a technical genius on the team to get your startup product off the ground. Outsourcing your core competency does not work. The technical skill can be highly specific, and the person may be a prima donna, but the role is required. If you’re lucky, your guru also brings some commercial contacts to the table.

  2. The trusted leader. Running a new company cannot always be a consensus-driven process, especially when hard decisions need to be made that affect everybody’s lives. Being the leader doesn’t mean more equity, nor does it mean the leader will necessarily be CEO. It just means that the cofounders trust one of their own and are willing to follow.

  3. The industry veteran. It takes a long immersion in the marketplace for someone to be a true insider, understand the subtleties of the competitive landscape, recognize the people who are true assets (independent of titles), and look through the propaganda of technical collateral and PR campaigns. These people also have the credibility to attract investors.

  4. The sales professional. Young high-tech startups are at constant risk of forgetting that they actually need to sell the wonderful technology they invented. A sales fanatic on the founder team helps to contain that risk. The combination of technical insight, founder authority, and sales experience is a hard-to-beat advantage in a competitive market.

  5. The financial suit.  You need a trained CFO to fill the financial gaps on your team. Outside professionals are always available, but they may have their own agenda, such as building a career, making money quickly, or managing up the stock price for a quick exit. If one of your cofounders has the necessary skills, your team will make the tradeoffs.

  6. The operations superstar. In the midst of high-tech development, funding, and selling, someone has to keep the office network running, get processes documented, and manage to keep everyone happy and busy. Fortunately, no combination of eccentricity, nerdiness, and charisma is required. Hard work and attention to detail are the key.

I’m not suggesting that you need all six of these as cofounders initially, but I always recommend a minimum of two founders with different perspectives. The rest can come from early hires (with stock options to assure commitment), equity investors, or even strategic partners. Outsourcing any of these critical roles is very expensive, and usually not very effective.

If you can’t recruit all of these onto your direct team, the next best alternative is to build a first-class Advisory Board of outside people, with the requisite skills and a wealth of experience. These should be hand-picked, come with a proven track record, be willing and able to help, and be completely trustworthy. The best startups have both strong cofounders and strong advisors.

What if you are convinced that your idea is great, but you just can’t seem to pull together the team and advisors you need? It’s time to think about licensing what you have to an existing company already in business, and give up developing and marketing it yourself. Remember the old adage that a small percentage of something is better than a large percentage of nothing.

Their success with your idea will at least give you the connections and the credibility to get the right team together on your next idea. Another alternative is to rely on that famous first tier of support, called friends, family and fools. Or you can always bootstrap the idea yourself, get some traction, and build your first startup organically. It’s a longer road, but may be more satisfying.

We all love the dark horse who comes from the rear to lead the pack and win the race, but very few of these really happen. Schoner and ThingMagic are now part of JADAK within Novanta, a multibillion-dollar public technology company, so success is possible without that initial dream team. My message is that it can be a lot more fun if you engage the right team at the beginning.

Marty Zwilling

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Saturday, February 17, 2018

10 Strategies To Isolate Smart Risks In A New Venture

roulette_gambling_gameThere is an old saying that good lawyers run away from risk, while good businessmen run towards risk. Entrepreneurs see “no risk” as meaning “no reward.” In reality, all risks are not the same. Many risks can be managed or calculated to improve growth or provide a competitive edge, while others, like skipping quality checks to save money, are recipes for failure.

The challenge is to avoid the bad risks, while actively seeking and managing the smart risks. There are no guarantees in business, but it pays to learn from the experiences of entrepreneurs and business experts who have gone before you. As a long-time mentor to entrepreneurs, here is my collection of smart risks that investors and I look for in new startups:

  1. Focus on a tough customer problem rather than a fun technology. Investors hate technology solutions looking for a problem, due to the high risk of no customers. If the customer need is obvious and large, the calculated risk is in the quality of your solution, your team, and marketing. These are risks that can be mitigated with the right resources.

  2. Schedule frequent updates to your solution to maintain growth. Assuming that you can quickly recover after competitors kill your cash cow is not a smart risk. You need a plan to regularly obsolete your own offerings, with continuous innovation, before customers send you negative messages. It’s hard to recover from a tarnished image.

  3. Plan to deliver a family of products, rather than a one-trick pony. Even a great initial product, with no follow-on, won’t keep you ahead of competitors very long. A smarter risk is to build a plan, with associated greater resources, that will put you in position to expand your product line and keep one step ahead of competitors.

  4. Implement a modern real business model. Providing everything free, and growing users to the max for years, like Twitter and Facebook, is a high risk approach requiring deep pockets. Risk is more manageable with subscriptions and even freemium pricing. Even non-profits need revenue to cover their costs, and continue to provide services.

  5. Find a strategic partner to accelerate growth. Everyone wants to forge ahead all alone, and kill every competitor in sight. Almost always, risks are more predictable when you use coopetition for access to new customers, economies of scale, and shared resources. Finding win-win deals is a manageable risk, versus a battle with one winner.

  6. Use metrics to measure results of marketing initiatives. Too many entrepreneurs put all their resources in one big make-or-break effort they can’t measure, or they count on word-of-mouth and viral marketing, which are totally unpredictable. I like marketing plans that come from both inside and outside the box, but have milestones and measurements.

  7. Recruit the best team members and provide incentives. Trying to save money by recruiting family members, or hiring only interns, is a bad risk. Great team members may take more time to find, and cost you stock options, but a qualified and highly motivated team that stretches your budget is a good calculated risk.

  8. Build your business with minimum outside funding. More money is not more likely to solve your problems or reduce your risk. Investors know that startups with too much money fail just as often as those with not enough. Strategically, you need a plan to survive through organic growth, with outside funding to effectively accelerate scaling.

  9. Don’t rely on conservative forecasts to reduce risk. Investors don’t fund conservative forecasts, nor wildly optimistic ones, since both imply a lack of commitment or homework. Opportunity and revenue projections based on deep market and customer analysis are a smarter risk. Measurements and business intelligence along the way also mitigate risk.

  10. Be a leader rather than following in the footsteps of another. Many entrepreneurs think they can reduce and predict risk by emulating previous winners like Google and Twitter. But stepping into a crowded space to steal customers is more risky than attracting new customers looking for a solution. Customers like leaders, not followers.

The risks you want to take are the ones that you planned for in your resources, set up metrics to measure, and manage on an ongoing basis. All the rest are bad risks, including problems you didn’t anticipate, competitors you didn’t know about, and customer expectations that you can’t meet.

An age-old measure of startup health is how much time top executives spend on containing bad risks, versus proactively exploring new risk opportunities. If the majority of your time is in recovery mode, your whole startup is likely a bad risk.

Marty Zwilling

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Friday, February 16, 2018

7 Strategies For Anticipating Future Customer Trends

technology-future-trendsThe market is changing so fast these days, and if you are not planning a solution today for tomorrow’s customers, you may be setting yourself up for failure and don’t even realize it. There are always new competitors who are planning their arrival tomorrow. As an angel investor, I routinely toss business plans that focus too much on today, and don’t talk about tomorrow.

As an example, I was just reading a plan for a new dating app with a tagline of moving users quickly from the virtual world into the real world of offline dating. That may be a boon to dating today, but if your business is making money from apps, it seems like your success will convince users that they no longer need your product tomorrow. Tomorrow is never mentioned in the pitch.

I was happy to see a real focus on preparing for tomorrow highlighted in a new book, “Start a Successful Business,” by Colleen DeBaise, who has made a career of studying and writing about entrepreneur challenges. She offers seven ways that business owners can identify and evolve with future trends, which I agree with and amplify here:

  1. Take advantage of industry research and trend reports. I often hear entrepreneurs who seem to rely wholly on their own passion, and the view of a few friends. With today’s Internet instant access to all the latest reports and white papers of industry experts, there is no excuse for not staying current with outside perspectives, to temper your own views.

  2. Regularly follow reviews and influencers in your industry. Of course, you may not have the time or desire to read through every document in your space, but it’s not so hard to find and follow some key influencer blogs on social media. These experts will curate the information, point to the best sources, and summarize implications for you.

  3. Use tools and analytics to identify trends and directions. There are many free generalized tools, including Google Trends, which can be used to track customer behavior in looking for things that don’t exist yet. In addition, most advanced CRM systems will help you analyze your specific customers for directional behavior.

  4. Make it a point to surround yourself with smart people. An easy way to connect with people you can learn from, and keep your pulse on where things are heading, is to hire team members who are smarter than you in complementary business areas, including marketing and sales. Spend more time with people who can help, rather than be helpers.

  5. Build and listen to an effective group of advisors. Find mentors and advisors who have more relevant business experience, insist you see things that aren’t on your radar, and spot what’s coming around the corner. A good advisor will tell you what you need to hear, not what you want to hear. You don’t need friends and family as business advisors.

  6. Ask the right questions, and listen to your customers. Don’t be afraid to ask current customers what’s on their wish list, and what they see as future needs in their areas. Beware of linear thinking on their part, so it’s your job to expand their scope with ideas outside the box, and ask them for a view of the business several years down the road.

  7. Learn to accept, and even schedule change regularly. The alternative is to be into the mode of playing catch-up, which can cause you to make mistakes in execution, or even get there too late. Sometimes you have to kill the cash cow, or make personnel updates before the crisis, to assure long-term business health.

I once served on the Advisory Board of a technical software executive who refused to believe that his product was no longer competitive, and insisted that sales and marketing were no longer doing their job. Unfortunately, we were unable to convince him to initiate a broad product upgrade, until the damage was severe. Thus no amount of input will help, if you are not listening.

In today’s market, it takes more than listening to stay ahead of the crowd. It takes initiative, a mindset of planned obsolescence and innovation, and a concerted effort to “see around the corner,” to see things that your customers will need, even if they don’t realize it yet. What have you done lately in your business to survive against the next Steve Jobs?

Marty Zwilling

*** First published on Inc.com on 02/01/2018 ***

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Wednesday, February 14, 2018

8 Strategies For Regularly Reinventing Your Business

Eastman-Kodak-cameraSometimes entrepreneurs are so focused on making change happen for customers that they forget that continually changing themselves and their company is equally important. Some get stuck in a rut and get run over by competitors with new technology, like Eastman Kodak, and others get pushed into a crisis, like Apple did, before they reinvent themselves into a new market.

Everyone and every company needs to continually learn from their experience and adapt to a changing world to thrive. “If it ain't broke, don't fix it” is an old adage that really doesn’t work in today’s business world. If you don’t plan to reinvent yourself regularly, your competitors will make you obsolete, and any success to-date will likely be short-lived.

In his classic book “Invent, Reinvent, Thrive,” Lloyd E. Shefsky, Entrepreneurship Professor at the Kellogg School, highlights this message, and provides some expert insight on how entrepreneurs can apply the principles to their own career and company. Here are the key recommendations from both of us, based on my own business mentoring insights:

  1. Re-launch using your enhanced core competency. Use that same technical and business expertise that served you well on this startup to find the next opportunity. I’m sure you have seen many new ones, and now understand even better the due diligence required to validate the opportunity, and the executions steps required to make it happen.

  2. Ignore the voices of dissent again. Negative advice on an unknown is easy and safe to give, so every entrepreneur hears it over and over. As an entrepreneur with some success, you had the confidence to prove them wrong once, so don’t lose your nerve and try to play it safe now. Proven problem solvers only get better with practice.

  3. Listen and act on the ideas of others around you. Take advantage of the fact that you have surrounded yourself with key people who have good ideas, but may lack the skills or confidence to act on them. Skip the arrogance of “not invented here,” and re-invent your current company, or start a new one, before a crisis occurs.

  4. Move to a higher platform. Many entrepreneurs get their first taste of success running their own consultancy or practice. A few are able to move to higher platform, like moving from a sole practitioner physician to create and run a much larger medical organization. That’s a type of re-invention that can give you a major advantage over competitors.

  5. Changing times call for a new skill set. Smart entrepreneurs in any given industry, like publishing, recognize the appearance of new technologies which threaten their survival, including digital publishing and print-on-demand. The best immerse themselves in these technologies, and invent new businesses, rather than fight in the old one to the death.

  6. Seek out customer trends before they become an avalanche. Don’t stop doing the in-depth communication with customers that brought you initial success. Plan an annual set of customer sessions that you don’t delegate to subordinates. If customers don’t convince you to re-invent a part of your business each year, you probably aren’t listening.

  7. Find mentors who have the skills you lack. Proactively seek out mentors who will tell you what you need to hear, rather than what you want to hear. Work on the new skills you acquire from your mentor, and test incrementally what you have learned. With each new skill you acquire, your likelihood of long-term success is improved.

  8. Expand your investment alternatives. If your business success so far is based on family and Angel investors, perhaps it’s time to start working with institutional investors and external business partners. Their expectations and insights will broaden your view, and may incent you to upgrade your strategy, or re-invent a portion of your business.

Entrepreneurship is not a one-time transformation that qualifies you long-term success. It is a lifestyle, like many others, which requires constant effort to keep you ahead of the crowd in a rapidly changing business environment. Standing still is falling behind. What is your action plan to continually re-invent yourself and thrive?

Marty Zwilling

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Monday, February 12, 2018

How To Win Key Decision Points With Today’s Customers

New-car-purchase-decisionToday’s customers are much more in control of their buying decision, as they have more choices and more information than ever before. Almost instantly, via the Internet or on their smartphone in the store, they can find the lowest price alternative or their favorite features, without waiting for push marketing or listening to your best sales person.

This can be an advantage to startups who don’t have the resources and brand awareness of mature businesses, if they understand and position themselves to win in the decisive moments of the new customer buying process. These decisive moments, and how to respond, are outlined in Robert H. Bloom’s classic book, “The New Experts: Win Today's Newly Empowered Customers.”

Bloom is a widely known expert on managing business growth, and he starts by summarizing the three key weapons of current customers, which include an instant summary of choices, prices, and features. His research indicates that they don’t have any old-fashioned customer loyalty, and they want precisely what appeals to them at the moment, preferably customized just for them.

New startups actually have a flexibility advantage over more mature businesses in anticipating and reacting to the four key decisive moments that Bloom outlines and I have observed in the new customer buying process:

  1. Survive the now-or-never moment. You only get one chance to make a great first impression. If you can’t get a positive customer perception at this first moment, you will likely never get another chance – with so many other alternatives. The key to winning in that moment is to think like a buyer, not the seller. Build a relationship and trust quickly.

  2. Win the make-or-break moment. You win here by getting the customer immediately engaged, and keeping him there, by knowing their interests and expectations better than any competitor or alternative. Avoid the extended period of evaluation and negotiation during which the customer will likely move to other transaction alternatives.

  3. Sustain the keep-or-lose moment. The buying process is just the beginning of the customer experience, and it has to remain a good one throughout the time that your customer actually uses your product or service. Great startups manage to continually improve the relationship through outstanding follow-on support and service.

  4. Capitalize on the multiplier moment. Of course you want your customer to come back, but the best ones also become your evangelists in bringing their friends to you, and broadcasting their positive experiences to the world through social media. This is a key moment where your customer acquisition costs go way down, and your profits go way up.

This new world is all about empowered customers. As an entrepreneur and startup, you should love this environment and cater to it. Many existing businesses see it as a big problem, and can’t adapt easily. That’s your chance to step in and compete at every moment of the customer buying process, usage experience, and follow-on events.

As you bring on employees to facilitate your growth, they have to embrace the new reality. Empowered customers required empowered employees, and your internal business processes have to be aligned with the same principles and the same smartphone and Internet technologies. Make sure you adopt the right hiring practices and training to keep your team responsive.

Then you have to trust the team to think and act proactively on behalf of your vision and mission. Of course, both you and they will make mistakes, which are the best learning experiences. Continuous innovation and change are the keys to staying current, reducing complexity, and delivering the winning customer experience to keep you ahead of the competition.

What most companies don’t realize is that businesses don’t drive customer trends anymore, customers drive business trends. Consumers are well aware of the latest technologies, and their expectations are usually ahead of even the most forward-thinking startups. It’s up to you to understand and capitalize on the decisive moments of empowered customers, or you will become a “has-been” before you even start.

Marty Zwilling

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Sunday, February 11, 2018

7 Strategies To Enhance Agility In The Face Of Change

business-agilityMost small businesses have now forgotten the last recession, and are back to “business as usual.” They don’t realize that business as usual is gone forever. With social media and smart phone apps, real product information spreads at astounding speeds. Entrepreneurs that are not listening, not engaging, and not changing are destined to be left behind even in the best of times.

Business agility is defined as the ability to adapt rapidly and cost efficiently. It is required today for new innovation strategies, analyzing markets for new opportunities, and organizational changes. Today’s customers are much more proactive in going online for the latest information, rather than simply reacting to the “push” messages that businesses traditionally use to drive commerce.

According to a classic survey conducted by Dimensional Research for Zendesk, 90 percent of respondents asserted that positive online reviews influenced buying decisions, and 86 percent admitted buying decisions were influenced by negative online reviews. Yet there is current evidence that as many as 30 percent of businesses still don’t even have a website or go online.

If you as an entrepreneur are not “listening” to your online reviews, and not moving quickly to make changes, you are losing ground. Moving forward, you should expect the market volatility to increase, driven not only by customers, but by new technology, changing government regulations, and a surge in new competitors.

For a business, volatile markets are a source of great opportunities, as well as great risks. Every entrepreneur must be alert enough to spot the change early, and agile enough to adapt quickly. Here are some key strategies to maximize the agility required for you to survive and prosper:

  1. Stamp out organizational inflexibility. Bureaucracy can appear quickly in startups as well as large companies. The real problem is inflexible people. Every organization must constantly review its hiring practices, training, and leadership to make sure the focus is on people who are motivated, open-minded, and empowered.

  2. Continually watch for new opportunities. Don’t wait for your competitors to uncover new markets that you wish you had jumped into early. An agile business doesn’t wait for their current product line to fail, before planning some enhancements. The days of the “cash cow” are gone. Make sure you have a process in place to find your next big thing.

  3. Rotate team members into new roles. If a key person in your organization has never changed roles, that person is likely limiting their personal growth, as well as the growth of your business. Maybe it’s time to find the real strength of your team by giving top performers additional new responsibilities, and rotating the lower performers out.

  4. Define a continuous innovation culture. Innovation doesn’t happen without active leadership, a mindset of commitment from the team, and a defined process. Discipline is required to continually track results, return on investment, and customer satisfaction. Let your continuous innovation become your sustainable competitive advantage.

  5. Foster a performance culture, and avoid analysis paralysis. A strategy of speedy execution is required. If you organization routinely thinks in terms of months or years to make any change, it’s falling behind and probably already obsolete. Don’t wait for expensive outside consultants to tell you it’s time to change, or make it happen.

  6. Practice small change experiments often. The “big bang” theory of change, where innovations only come through huge and expensive new projects, with big rollouts, is a thing of the past. New innovations should be seen as experiments, which are inexpensive, measurable, quick to fail, and without retribution if they don’t work.

  7. It all starts with agile leadership. If you are the entrepreneur, or the top executive, you set the model and the tone of your business. You can’t have an agile business without effective communication, an empowered team, and a constant influx of new ideas. Managing an agile business means managing change, not solidifying a status quo.

Business agility is simply to ability and intent to make small changes, on a daily basis, to penetrate new markets, add new revenue streams, reduce costs, and prune out products that are no longer carrying their weight. All you need to win with customers is to be slightly more visible and have a few more evangelists in the marketplace.

It’s time to take a hard look at your own business. Is it pulling ahead, or falling behind? Standing still in not an option.

Marty Zwilling

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Saturday, February 10, 2018

Take Your Idea To The Next Level With A DIY Prototype

HCC_3D_printed_turbineThese days, everyone wants to be an entrepreneur, pitching their latest and greatest new idea, and looking for someone to give them money. Angel investors, like me, have long figured out that asking to see the prototype is a quick way to separate the ‘wannabes’ from serious players. Talk is cheap, but entrepreneurs who show you a working model of their idea know how to execute.

In reality, it doesn’t take a huge investment of money and time to build a prototype today. If it is hardware, look for one of the ‘makerspaces’ such as ProtoStripes, with all the tools you need to prototype almost anything yourself. Software products and apps can be quickly wire-framed with free tools such as MockFlow, or even Microsoft Powerpoint to lay out the key screens.

Here are six results that you can achieve by building a prototype, which are really the reasons that investors and partners will give you a whole new level of credibility as they evaluate your startup for potential funding:

  1. Something you can touch and feel helps validate opportunity. When you wave your arms and describe your future product, everyone sees what they want to see, and it looks great. With a realistic prototype, you can get more accurate feedback from customers on their real need and what they might pay, before you invest millions on the final product.

  2. Quantify the implementation challenges. Many ideas I hear sound great, but I have no idea if they can be implemented. Building a prototype at least allows both of us to ask the right questions. Visions and theory are notoriously hard to implement. A prototype has to be real enough to be convincing, without looking like science fiction.

  3. Give yourself time to pivot without dire consequences. It doesn’t matter how certain you are of your solution, it’s probably not quite right. Every entrepreneur has to deal with the realities of constant change in today’s market, and it’s much easier to pivot the pre-production prototype than to dispose of unsellable inventory.

  4. Show investors that you are committed, and past the idea stage. Without a prototype, most professional investors won’t take you seriously. In reality, the process of designing, building, and validating a prototype does dramatically reduce the risk, and allows everyone to hone in on the real costs of going into production.

  5. Reduce the time to production and rollout. For both software and hardware technology, multiple iterations are usually required to achieve production quality and performance. Time is money, and may be your primary competitive advantage. Don’t spend your whole development budget, before finding that you need another iteration.

  6. Support early negotiation with vendors and distribution channels. A three-dimensional prototype is always better than just a documented specification when negotiating contracts for manufacturing, support, and marketing. As a startup, you need all the leverage you can get.

If you are not comfortable or skilled enough to build a prototype yourself, it’s time to find and engage a co-founder who has the interest and background to at least manage the work. You should never outsource the management of your core technology. At worst, maybe you can find a trusted friend to guide you, or a nearby university with expert professors and the proper tools.

Of course, there are many commercial resources available on the Internet, including the Thomas Registry, which is an online database of 500,000 specialty manufacturers, distributors, and prototype developers, across every state and country. There are also a wealth of invention support sites, such as InventorSpot and IntellectualVentures.

Unfortunately, working with any of these outside services is hard to manage, risky in results, and some have developed a reputation for taking advantage of unsuspecting entrepreneurs. The amount of money you spend on their services is never an indication of potential success. There is no magic formula for success while inventing. Proceed with your wits about you.

Overall, building a prototype is still a great way to bring your idea to life, for yourself, your team, investors, and future customers. Your target cost expectation should be one-tenth of the total commercialization cost, with the assumption that it will be throw-away. Even still, I can’t think of a better way to validate your solution early, and get credibility with the people who count.

Marty Zwilling

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Friday, February 9, 2018

7 Myths That Kill Many Businesses Before They Start

Colonel-SandersYou don’t have to be a new venture advisor like me to hear all the excuses for not starting your own business. I’m sure all of you have friends who are not happy in their employee roles, and are not shy about complaining, but never seem to get around to doing anything about it. They can cite all the myths about being too old to change, not having the money, or no business degree.

They ignore the fact that Colonel Sanders was 62 when he franchised KFC, Steve Jobs started Apple in his garage, and Michael Dell and several others dropped out of school to build billion dollar businesses. Unfortunately, sorting out facts from excuses in the new venture arena has always been difficult, and today’s information overload has made it that much harder.

To organize my thoughts, I found a new book, “Burn the Business Plan,” by Carl Schramm, who speaks from experience founding five companies, working major corporate roles, and being an active venture investor. Among many other insights, he offers a perspective on several myths of entrepreneurship, which I can now paraphrase and prioritize based on my own experience:

  1. A real startup needs investors to get off the ground. In fact, research by Fundable shows that less than one percent of all startups are funded by venture capital and angel investors. Bootstrapping allows you to maintain full control of your startup strategy, retain maximum equity, and avoid the time delay and energy spent to attract outside investors.

  2. You need a business degree to start a venture today. The real value of a college education is in learning how to learn, since markets and business models are changing so fast. Business strategies are best learned from experience. In today’s world, more successful entrepreneurs have built on degrees in engineering rather than business.

  3. Working in a corporate world reduces your startup potential. On the contrary, early corporate training courses, potential future customer contacts, and getting real world marketing experience all are extremely useful for budding entrepreneurs. In addition, a regular paycheck and benefits help you build up resources before and between startups.

  4. Most successful entrepreneurs are young and crazy. According to the Kauffman Foundation and other studies, the average entrepreneur is actually thirty-nine years old, and the success rate of entrepreneurs over forty is five times higher than that of entrepreneurs under thirty. The percentage of startups created by entrepreneurs in the 55 to 64 age demographic is now growing faster than any other.

  5. You need quirky and more unheard-of ideas to succeed. The idea that novel products with minimal value to customers will somehow start a new trend is simply false. There is no substitute for market analysis, customer interaction, and attacking a real problem. Disruptive market changes take more time and money, and have the highest failure rate.

  6. Most successful startups spring from local incubators. An incubator may get you over initial hesitations, by connecting you with peers, advisors, and guiding you through the process of setting up a business. I find that most good founders proceed faster on their own, with less drain on their time from peers and programs, and no equity dilution.

  7. All successful businesses start with a business plan. In reality, Microsoft, Apple, Google, Facebook, and many others achieved success before they had business plans. The majority of startups, who don’t seek outside investors, most often choose to explore alternatives in real time, without a written plan to guide them or slow them down.

On this last point, I happen to believe that business plans, independent of investors, still have value in forcing new entrepreneurs to think through many key elements of their idea often initially overlooked – including the real size of the opportunity, cost of operations, and viable competitors. I have found that experienced entrepreneurs, who may least need plans, routinely create them.

Overall, there is no doubt in my mind that the image of an entrepreneur is at an all-time high, and the cost of entry is at an all-time low. So why would you continue to work in an employee role that you hate, and make excuses or believe the myths the keep you from starting your own business? It’s never too late to step into a new role where the definition of “work” is something you love.

Marty Zwilling

*** First published on Inc.com on 01/23/2018 ***

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Wednesday, February 7, 2018

7 Guidelines To Assure Two-Way Customer Communication

Girl-Headphones-ListenEntrepreneurs and business executives seem to be even more focused on their technology than the rest of us, and less inclined to listen to the voice of the customer, even if they remember to ask. Real two-way conversations with real customers, including the all-important body language, are unheard-of these days. Being connected to the Internet many hours a day is not enough.

In fact, being connected on the Internet has taken on a whole new meaning to me, since I noticed a study commissioned a while back by PC Tools, which found that more than a quarter of people using the Internet have no problem with staying online during sex. Others admit to surfing the web even during religious services. I doubt if any of these are really listening to their customers.

If you are looking for a way to get a competitive edge, now is the time to start building a relationship with your customers, which includes active listening. In a business context, here are some old-fashioned guidelines for effective listening, for you and the members of your staff who have been distracted by all the things you can now do online:

  1. Forget selling while asking for customer feedback. It’s easy to focus first on selling, and to treat all customer input as objections to be overcome. It’s harder, but necessary, to resist the response urge and actively listen to customers, while logging their input for later analysis. Customers will sense the relationship being built, and both of you win.

  2. Observe customer body language, as well as words. Whether it’s while listening or talking, some studies show that as much as 60 to 90 percent of the communication is nonverbal. This means meeting personally with real customers, in an environment friendly to them. Email surveys and voice response units are not effective listening.

  3. Eliminate pride and ego from the equation. If your customer senses your ego is talking, they know you won’t be able to listen. Pride is good, but can easily be heard as selling. You can’t listen if the customer isn’t talking, so make sure more than half of the conversation is input rather than output.

  4. Always ask open-ended questions. Questions that start with “why” invite a defensive response, and usually don’t lead to a productive dialog. You are not looking for one-word responses. More effective questions usually start with “what,” and focus on that person as a customer, rather than you, your product, or your service.

  5. Pause thoughtfully rather than reply immediately. People sense that you are not listening, when you respond too quickly. Even with the best of intentions, responding on the spur of the moment often results is something we wish we had not said, or said differently. Always listen carefully for nuances, and think before you speak.

  6. Respond to general comments with focused questions. Forget the script, and think on your feet to go where the discussion leads. This requirement for effective listening is why customer satisfaction online and phone surveys may identify big problems, but don’t really address customer needs for future of your business.

  7. Make social network contacts into two-way conversations. Social network streams that are all output, or all input, are not effective. You need to post non-defensive responses to all inputs on a timely basis, to show you are accessible and listening. Requests for input that are thinly disguised sales pitches won’t work.

Customers want and expect two-way personal relationships with their providers, and they know that the technology now allows for this. “Push” marketing messages are perceived as clutter, and are often simply ignored. Business relationships build loyalty, in the same way that personal and peer-to-peer ones do.

My final message is that you need to be listening online and offline to what customers are saying about your competitors. Listening more effectively to current customers will maintain their loyalty, and listening more effectively to the customers of your competitors will bring you the new ones you need to grow. Talking too much can cost you both.

Marty Zwilling

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Monday, February 5, 2018

5 Ways Today’s Market Allows Startups To Scale Faster

airbnb-brand-scalingAs an active angel investor, I’m accustomed to hearing entrepreneurs pitch their expectation to quickly create a new dominant brand, based on their disruptive technology. In the past, such statements have been credibility red flags, since “everyone” knows that a dominant brand takes decades to establish and scale. Only recently, I realized that times are rapidly changing.

Most of you probably recognize the brand names AirBnB, Instagram, and Slack, all of which are less than ten years old. These are companies that not only have a familiar brand, but carry from five to 35 billion dollar valuations. Of course, in a world which spawns over a half million startups every month, these accomplishments are very rare, but they are happening like never before.

The question that I and every investor have been asking is “What are the critical factors that are fueling the recent rapid scaling of consumer brands in today’s marketplace?” I just finished a new book, “Shortcut Your Startup,” by the entrepreneur brothers Courtney and Carter Reum, and I like their summary of five critical changes in the market that every entrepreneur should capitalize on:

  1. Pervasive computer usage is now the great equalizer. We are all more reachable through powerful and mobile personal computer devices, and the world is more and more connected with the Internet of Things (IoT). Whether our business is a startup or a multi-national brand, through platforms like Amazon, giant players have no special advantage.

  2. Brands are speaking through rather than to consumers. As a result of social media and mobile platforms, consumers have created a sharing economy – sharing their opinions, and speaking out to companies as well as their peers, rather than listening to brand advertising. Brand scaling is driven by customers, not by business, large or small.

  3. Tools allow marketing in a much more targeted way. In the past, marketing budgets were focused on high-traffic channels, with minimum focus on demographics. Today as companies use tools to collect massive amounts of data on desired consumers, brands are able to increasingly market to very specific groups of people, at less cost.

  4. Getting online traffic is less expensive and more real time. While brand building used to be dominated by larger well-capitalized companies, today startups can afford to get their products in front of qualified leads around the globe at a fraction of the cost and in much less time. Building a big retail presence, or buying Super Bowl ads, is not required.

  5. More capital is available for scaling and brand building. With the growth of angel investing in the last decade to venture capital levels, and the more recent crowdfunding to match both combined, there is more capital available for growth than ever before. Brands can fund operating losses in order to scale faster and acquire market share.

Today, time is your scarcest resource in a new venture. I can almost guarantee that if you’ve observed a market need, others have noticed it as well. Thus it is imperative that you get to market quickly, adapt to your customer demands, and scale before the market changes, or new competitors appear. The cost of time is increasing, and less time increases your odds of success.

As an investor, I also know that the longer you take to scale and reach a dominant brand position, the more capital your business will need, and the bigger your exit will have to be for anyone to make real money. Investors measure their success by looking at the internal rate of return (IRR). VCs know that a one-year difference in timeframes can be the determinant of success or failure.

The realities outlined here are as relevant to veteran entrepreneurs looking for new ways to boost performance as they are to aspiring entrepreneurs ready to take their first leap of faith. It’s obvious to me that the pace of business change is accelerating, with no respite in sight.

Although the cost of entry is low and anyone can play, not everyone should do it. First you need to take a hard look at yourself, to see if you find the challenge exhilarating or crushing. Time is of the essence.

Marty Zwilling

*** First published on Inc.com on 01/18/2018 ***

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Sunday, February 4, 2018

Business Today Needs More Focus On The People Aspect

Starbucks-leadershipMost entrepreneurs assume that success is dependent on their product expertise, coupled with some knowledge of how to run a business. In fact, I have found from personal experience and mentoring that both of these are necessary, but not sufficient, for building a business. Successful entrepreneurs today must practice human-centered leadership to compete and win.

There are many leadership styles out there that may have worked well in the past, including authoritarian and paternalistic. But in this new age of relationships, these often work against your business. There is more and more evidence that a more human-centered or heart-centered leadership yields the best results with your team and with customers in the long run.

As top business consultants and leading proponents of this leadership style, Susan Steinbrecher and Joel Bennett, in their classic book “Heart-Centered Leadership: Lead Well, Live Well,” do a good job on the details of why and how this approach leads to greater satisfaction and well-being for the team, and by extension, to the bottom line profit and impact of the business.

Here are some examples from their book and my experience of the many indicators, challenges that entrepreneurs will probably recognize, which highlight the value and need for increased focus on the human element:

  1. Collaborative team sessions seem to drag on. Entrepreneurs often complain about the amount of time wasted in meetings, because one of the team members just wants to be heard, or feels that what he or she has said is not valued. Great leaders learn to listen actively to conversations, so people don’t hold up progress just to be understood.

  2. Disruptive office politics start to show. Startups with weak directives, poor communication, and ineffective cultures are breeding grounds for negative interpersonal dynamics. Office politics are really about self-interest and self-esteem. Heart-centered leaders create engaged teams that are too highly motivated to waste time on politics.

  3. Investments and acquisitions fail. Failure is often not due to fiscal irresponsibility or lack of due diligence. Business-to-business relationships usually fail because the leadership team underestimates the impact and the importance of recognizing the human element. Effective entrepreneur leaders focus on getting people needs satisfied early.

  4. Team conflicts become personal fights. A conflict and a fight are not the same thing. The best entrepreneurs understand their people and embrace constructive conflict for steering through the maze of innovation and change common to every startup. Toxic relationships are emotional, often personal, disagreements which are counter-productive.

  5. Demand for coaching, counseling, and discipline training is high. The most-used workplace training programs are really about matters of the heart. Managers need training in coaching, counseling, and discipline because they resist or have difficulty communicating with team members. Punishment at work is not a motivator to change.

  6. Difficulties retaining key employees. Top team members rarely quit the company. More often than not they quit their boss. All too often, quitting is a response to a perceived lack of leadership or appreciation by key executives. Human-centered leaders connect with each team member at a personal level to assure ongoing commitment.

  7. Evidence of crossing the line ethically. If entrepreneurs show only an exclusive focus on the bottom line, team members may convince themselves that they have to bend the rules to be successful, which can easily lead to lying, cheating, and stealing. Leaders need to focus on a human-centered culture in their actions, as well as every message.

  8. Customer relationships culture is slipping. Your startup can’t sell and compete on the strength of your customer relationships, if the business culture in your startup is not human-centered. That startup culture has to come from the beginning and from the top, meaning heart-centered leadership from the entrepreneur.

There is an increasing body of evidence that teams and leaders focused on the human element not only live well, but are winning in their profit-making objectives as well. Examples of exemplary companies practicing this model include Starbucks Coffee and the Whole Foods. Both of these are human-centered businesses that boast high growth, high loyalty, and low employee turnover.

How evident in your leadership style is your commitment to personal understanding, open-mindedness, authenticity, trust and integrity? If you haven’t tried it, or you aren’t getting the feedback from your team than you want, maybe it’s time to take a hard look in the mirror. It’s never too late to learn.

Marty Zwilling

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