Why Successful Startups Often Have A Pair Of Founders

In my work with new startups, I often find people who believe that the terms “entrepreneur” and “inventor” are interchangeable. Yet I find a big difference between “starting a new business” and “creating a new product.” In my experience, most successful entrepreneurs have indeed created a new product, but most people who claim to be inventors have a hard time starting a business.

The simple solution I recommend to inventors is to find a partner who can focus on business and marketing, while you focus on technology. Bill Gates did this with Microsoft, by teaming with Steve Ballmer from Proctor & Gamble, and Steve Jobs, who started Apple, did it in reverse by teaming with Steve Wozniak. Two people with complementary skills are often equal to three.

Unfortunately, most inventors I know tend to look for partners who are also technologists, perhaps because they feel more kinship with them, or they assume great products will lead to great businesses, without any real effort on the business side. Here are some of the key entrepreneur characteristics most often overlooked by inventors:

1. Driven by customer-centric view of needs, rather than technology. Understanding what drives customers to buy, in different market segments and cultures, is usually just as challenging as creating and combining technology to deliver function. In fact, many customers have an inherent fear of new technology and the complexity it often brings.

2. Ability to raise money, manage it, and think in financial terms. A good entrepreneur starts with quantifying the problem, rather than a solution looking for a problem. They worry about the infrastructure needed to attract and support customers, including investors, employees, organization, marketplace coverage, manufacturing, and delivery.

3. Skilled and motivated by building a multi-disciplined team. A great inventor is most often a lone technologist who doesn’t have the interest or skills for building and managing a team. In fact, they may fear team leadership as a burden, or a potential dilution of their ownership. Certainly interfacing to the outside world may not be an inventor forte.

4. Master of multi-platform communication and marketing. Even the best solutions these days need to be marketed on multiple platforms, including online, social media, and the proper industry and customer channels for customer geographies. The old philosophy of “if we build it, they will come” doesn’t work in today’s information society.

5. Proven ability to spot new trends and willing to take risks. Believe it or not, the business world changes even faster than technology, so you need to see changes coming in your industry, and even drive them. That means taking calculated risks with new business models, new customer segments, as well as new products and services.

On the other hand, inventors and technologists have some key attributes that every entrepreneur can benefit from in a partnership, including the following:

1. Turns customer needs and desires into solutions. Dreaming and talking about potential solutions is not enough. Someone has to have the skill and discipline to turn these dreams into reality. Inventors follow a structured process to assemble and test solutions, file patents for intellectual property protection, and define production details.

2. Provides the focus to balance entrepreneur distractions. Good entrepreneurs are often diluted in their potential by trying to attack too many new market opportunities or customer requests concurrently. They need the reality check of good technologists to keep their interests bounded, and provide realistic risk assessments on new demands.

3. Ability to keep track of new technology advancements. New business and product opportunities come from the world of science, as well as the world of customers. Inventors have the required connections and interest to track these evolutions, and assess their potential for the business at hand, including non-technology challenges.

Mark Zuckerberg and Elon Musk are often cited as two of very few modern entrepreneurs who also have a strong technology background. Mark personally invented the early Facebook social network, while he was at Harvard, and went on to build a huge business. Elon Musk has a deep technical background that has helped him lead multiple businesses, including SpaceX and Tesla.

Thus I recommend to every inventor and every entrepreneur that they take a hard look at their personal strengths and interests, and not be hesitant to solicit a complementary partner who can make one-plus-one equal three, and get all of us where you want to go in business a lot faster.

Marty Zwilling

*** First published on Inc.com on 01/17/2020 ***

8 Errors To Avoid In Your First Minute With Investors

As an aspiring entrepreneur, one of the most important things you need is a memorable “elevator pitch,” to communicate your startup value proposition and leave a great first impression on friends, investors, employees, and future customers. As a startup advisor and potential investor, I’ve heard too many that are heavy on emotion, but light on quantifiable value and impact.

In that critical first minute, no one needs to hear that you have a passionate dream of changing the world, introducing new disruptive technology, or a product with more features than competitors. What they want to hear is quantified value to them. If you find people’s eyes glazing over in the first minute of your pitch, take a hard look for any of the following errors, and fix it:

1. Trying to paint an interesting background first. No matter how amazing your efforts and insights have been to get you to this point, the journey is irrelevant until the investor or customer understands the problem, the solution, and the potential impact on them. Save the story for a later meeting, after the context and value have been driven home.

2. Lead with your best marketing pitch and conviction. Of course, it’s always good to speak with conviction, but marketing terms such as “improved productivity” or “lower cost” won’t make your offering memorable. Focus on quantifiable and relevant specifics, such as “reduces your cost by 40 percent,” or “increases productivity by 50 percent.”

3. Save your best “grabber” for the ending big close. It’s better to start with a hook than to assume that people will stay with you to hear it at the end. The best hook for snagging an investor is a succinct definition of a real problem, followed by your unique solution. For example, “I have patented a new tire that will double the wear mileage at half the cost.”

4. Describe technology and features, not competitiveness. Customers think about alternatives, and investors worry about competitors. Too much technology and too many features can scare off both. You should be highlighting your unique advantages, added value, market sensitivities, competitor limitations, and intellectual property.

5. Highlight the solution more than the team. Customers still buy from people, and investors invest in you and your team, more than the solution. They need to know why you are the best “horse to ride” in this race, based on all unique qualifications and any previous track record. If you don’t yet have a team, it may be necessary to build one first.

6. Tend to overstay your welcome and talk too fast. The attention span for elevator pitches is usually limited to 30 to 60 seconds, and only 150 to 250 words. Doubling or tripling the message length will only ensure a bad first impression, or at best, key elements of the message will be lost. Stay highly-focused and look for time limit cues.

7. Forget to identify and ask for the next step. You shouldn’t expect to get an investment commitment in the elevator, or close a customer deal in the first minute. Thus your last key element of every elevator pitch must outline and request the follow-up session needed to fill in details and answer questions. Always solicit specifics for this session.

8. Assume your words are the only necessary take-away. For reinforcement and later questions, you should always be prepared to provide physical takeaways. For investors, an executive summary of your plan is appropriate. For customers, a sample, demo device, or at least a brochure will solidify the message and your readiness to deliver.

I recommend that a good elevator pitch is not just for riding with someone in an elevator. It should be imbedded in the home page of your web site, the introduction section of your business plan, the heart of your executive summary, and the first slide of your investor pitch. You should also deliver it at the beginning of every networking opportunity, and train your team to do the same.

Don’t forget to update it based on feedback from customers and investors, and as your solution gathers momentum in the marketplace. Remember the key here is not to hide behind too many words, or assume you can stretch the ever-decreasing attention span of key people today. Check yourself by taking a few sample rides in the nearest high building to see if you can beat the elevator to the top.

Marty Zwilling

*** First published on Inc.com on 01/13/2020 ***

9 Keys To Finding The Perfect Angel Investor For You

As a long-time advisor to entrepreneurs, and a former angel myself, I still find startups confused about the definition of an angel investor, and how and when to attract one. Angels are actually serious investors who invest their own money, versus venture capitalists who invest institutional money, or regular people who invest in crowdfunding. Thus they don’t live or fly above the clouds.

Despite the recent growth of crowdfunding, angels continue to be one of the major sources of financing for new ventures, so it behooves every aspiring entrepreneur to understand who these people are. You need to know why and how they invest, and then focus on the ones who are the best match for your startup. Here are some key points to consider in finding one for you:

1. Look for accredited angels and groups rather than individuals. There are organizations of angel investors in most major cities, as well as national groups, starting with the Angel Capital Association. Make sure your angel investors in the USA are accredited as having an income of at least $200K in annual income and $1M in assets.

2. Angels spread their risk by making multiple smaller investments. Typically, individual investments will be less than $100K, but a group of angels may syndicate multiples. Venture capitalists, on the other hand, rarely consider requests below $2M. For amounts needed of less than $10K, consider crowdfunding or friends and family.

3. These investors are not looking for startups in the idea stage. Their interest is in a business which has proved the viability of a new and innovative product, and even sold a few already, and are ready to scale the business. Speculative ideas, research, and early development won’t appeal to them. For these you should look to friends or crowdfunding.

4. They are attracted to “squeaky-clean” business images. Don’t expect angels to invest in business ideas that may have legality implications, or appeal to people’s weaker instincts, such as gambling or drugs. They prefer to fund innovation in known and existing business domains, rather than innovations requiring infrastructure or education changes.

5. Most focus primarily on their own areas of experience. Angels are typically business professionals who have accumulated some cash from their own success and expertise, and they look to leverage that by helping you do the same. Thus they prefer local opportunities, similar to their own, where they meet regularly and contribute face-to-face.

6. They expect a high return on a long-term investment. That means they are looking to buy a share of a company that can generate real profits over time – not a charity, social cause, or a get-rich-quick scheme. Since they know that most startups fail, their target return is ten times investment, so be prepared to talk cost vs revenue and product life.

7. Decisions are based on the startup team vs the product. This bias is based on the belief that the right people make all the difference, rather than the right idea. Thus, with angels, early networking with potential investors and successful peers is highly recommended. Lead with your credentials, rather than with your technology.

8. Document your plan and your financial projections. Angels look for entrepreneurs with the discipline to create a plan, including financial projections, rather than just talk and arm waving. Perhaps your friends and family believe in you, and will provide funding based only on your excitement. For later rounds with VCs, you need the detail anyway.

9. Set a realistic valuation for your startup to attract angels. Remember than angels are buying a share of your company based on its value today, not some time in the future. A typical valuation for an angel investment is $2.5M, meaning a $500K investment will cost you 20 percent of your company. Successful valuations above $5M are rare for startups.

Above all, remember that angels are experienced business professionals, who have driven some success. They expect you to act with integrity, and always show respect for their position, just as they respect yours, since they were likely once in your position. They probably won’t respond well to hard selling, intimidation, large displays of emotion, or failure to do your homework.

Persistence and learning are seen as virtues by angels, so prior failures and rejection should be viewed as only a temporary setback. The most common rejection response of “come back when you have more traction” means exactly that, so don’t be too discouraged. Most entrepreneurs have found that attracting an angel who can help you is far more valuable than just the money.

Marty Zwilling

*** First published on Inc.com on 01/08/2020 ***

5 Steps To A Winning Personal Brand For Entrepreneurs

Although most people believe that being a successful entrepreneur is all about having the right idea, I’m convinced from my years of experience as a startup advisor and investor that’s it’s more about you as a person. If you can brand yourself as someone to remember, and someone who can deliver, I assure you that you will have no trouble finding investors, as well as customers.

So how do you develop that reputation such that everyone believes in you, and customers jump to try your solution first? The key points are comparable to those involved in branding a business, as outlined in the new book, “Be Different!: The Key To Business And Career Success,” by noted business leader Stan Silverman. You have to stand out from your peers and competitors:

1. Build a reputation for getting any job done, and doing it well. The best entrepreneurs are not just dreamers of the next big thing – they have to be great facilitators and problem solvers. By definition, every successful startup has to be different from the competition, with many unknowns, new challenges to overcome, and new customers to be attracted.

   If you don’t have a successful prior startup to demonstrate your ability, it’s time to be creative. Pull some examples from your private life, prior jobs, or academia, where you demonstrated personal initiative, determination, and results in overcoming challenges.

   It it’s too early to show a track record, it may be time to find a partner who believes in you, and can complement your strength as a thinker. Most successful startups I know were built by a team, rather than a lone entrepreneur, so don’t be afraid to ask for help.

2. Highlight your expertise and results as a thought leader. These days, with the pervasive presence of social media, blogs, and online access to information, it’s easy to get your message out there, and engage a following. People need to see you as an “influencer,” who is able to sell your new ideas, as well as communicate the future.

   For example, Elon Musk has long been a bold and provocative thought leader on space travel. He used his expertise on rocket ships to sell the future potential in interviews, blogs, and public speaking opportunities, long before he started SpaceX as a company.

3. Demonstrate honesty and integrity in everything you do. Investors and customers do not want to deal with entrepreneurs or startups whose reputations are tarnished or questionable. For brand image, it simply means truthfully communicating the challenges faced, and then putting in the honest legwork to address those challenges.

   Without excuses or disavowing responsibility, you must deliver on all promises, past and present, pay attention to the common good, and surround yourself with people offering solid character and a positive attitude. Show total respect for all customers and investors.

4. Show that you are a leader that others want to work for. A little known fact is that potential investors, including myself, often visit a startup to gauge the level of respect and commitment of employees to their leaders. Leadership dissent in the team is the quickest way to kill an investment, and customers will tell you it is the quickest way to kill a brand.

   We have all experienced or heard stories of entrepreneurs that refuse to listen to their team, such as Theranos founder Elizabeth Holmes, when their pin-prick blood test could not be validated, causing a billion-dollar startup to fail and promising careers ended.

5. Always project a positive attitude of a world of possibilities. Entrepreneurs with positive, but rational, attitudes are supported and move forward with their plans. Those with a negative attitude, including competitor bashing, do not. When starting a business, as we all know, there will be difficult periods, and we want to know you will keep going.

   Investors, for example, listen for the words you use when you are faced with a specific difficulty. Instead of saying, “I have a problem,” you might say, “I am faced with an unexpected opportunity.” Customers want to hear about creative solutions, not problems.

In addition, unlike a business brand, a personal brand is broader than just one business segment. An entrepreneur with a great personal brand, such as Elon Musk, can work in any number of segments influencing people and the market. Your name is your brand to make your business.

The next time you approach someone with a great new idea, make sure you include your brand story as well. At the very least, both together will make a great first impression, and that first impression image will last longer and have more impact than any solution image you can offer.

Marty Zwilling

*** First published on Inc.com on 01/03/2020 ***

7 Key Strategies To Ensure Long-Term Customer Growth

In my experience working with entrepreneurs, once they feel they have a winning formula for their business, they are often hesitant to change or update it. They forget that adapting their company and themselves as their customers evolve is the key to long-term survival. Think of Blockbuster and Toys ‘R’ Us, both of whom missed customer changes and the move to online.

Every business owner needs to plan to reinvent their business regularly, or their competitors and their customers will make them obsolete. I’m not talking about just making incremental improvements in their products and processes, but more fundamental changes to the business model, such as the following:

1. Announce a new market launch that fits your core competency. Every recognized brand, including Sears and Nintendo, need to show new life and vibrancy on a regular basis to keep the attention of new generations and existing customers. Of course, it’s smart not to stray too far from your core competency for credibility and risk reduction.

   For example, Uber recently made the move into food delivery with UberEATS. By drawing on the current network of drivers and the app technology it already has in place, UberEATS could be a major competitor for food delivery services such as DoorDash.

2. Create an overt strategy to react to emerging customer trends. Remember when you were a startup? You didn’t wait until a new market was totally proven before entering. You always need an element of your organization whose mission is to actively look for early markets, and a process to test solution viability with real customers in the market.

   Don’t be the next Xerox who totally missed the personal computer market, even though they had the technology and the processes well before Apple, IBM, and others. They were successful with business computers and technology, but didn’t see the change.

3. Expand into key new sales and delivery channels. Today the Internet is the best example of a new sales and delivery channel that has transformed many businesses, and killed others. For you, the future could be in using distributors, licensing to other brands, or international subsidiaries. When was the last time you tested on of these channels?

   Apple is an early example of adding a channel to expand, to become a “click-and-mortar” retailer, meaning they operate both physical and online stores. This were done in a complementary fashion to provide support and education, and not undermine sales.

4. Continually update your team with new people and technology. While fully utilizing the skills of a proven team, it’s also critical that new blood and new technology be brought in regularly to challenge your norms and expectations. Changing times calls for new skill sets, insights, and new cultures. You don’t need people fighting for status quo.

5. Look and act on ideas from your best and brightest within. These are the people who really know your strengths, and the interests of your customers. In addition, if you don’t listen to and provide new challenges for them, they will leave and become your toughest competitors. Not every initiative will succeed, but a culture of change is critical.

6. Enlist outside advisors who tell you what you need to hear. We are all guilty of being too close to an issue, or harboring bias against change. Thus smart business leaders proactively seek outside board members and advisors from other customer domains who can stretch their thinking, and give critical feedback on the existing strategy and actions.

7. Use outside investment and acquisition to expand your scope. Even if your business success so far has been based on bootstrapping, it may be time to look to institutional investors to help you with acquisitions and new initiative funding. Their insights will broaden your view, and enhance your ability to keep up with a rapidly changing market.

Building a successful business is not a one-time effort. Long-term success and vitality requires a constant focus on finding the new magic in a new marketplace with new customers. What worked for you yesterday probably won’t keep you alive and competitive tomorrow.

Standing still is actually falling behind. What have you done lately to reinvent your business in the eyes of your customers?

Marty Zwilling

*** First published on Inc.com on 12/20/2019 ***

5 Strategies Recommended For Successful Bootstrapping

As an advisor to entrepreneurs, I often hear the desire to run their own company, to avoid having someone else telling them how to run the business. They then ask me to help them find investors who can provide the funding they need. They don’t seem to realize that investors can be the most demanding bosses your ever had, since it’s their money you are using and potentially losing.

I have to explain that if you really want to exercise total control of a new venture, they you need to do it without external investors, bootstrapping your way with your own resources. Sure, this may limit the type and scope of your startup, but it’s the only way to get the control and freedom you want.

Although I’m a big fan of bootstrapping, I still recommend you use the same business discipline in starting and running a new company, as you might be forced to use with investors:

1. Create and use a formal Board of Directors early. Although technically a board of directors or advisors is never required with bootstrapping, a well-experienced group of two or three outside advisors can be worth its weight in gold, to keep your focus on the right targets, and prevent you from making strategic and operational mistakes.

   I recommend that you keep your board diverse in age as well as scope of experience. Avoid family members and close personal friends. Although board members should be compensated to assure commitment, I suggest company shares rather than cash.

2. Define a set of management objectives and milestones. Even if you don’t have a board of directors, you need to set some targets for yourself, so you can measure progress and declare success for both you and your team. For focus, the list should be short, maybe five or less, and updated on at least an annual basis, based on progress.

   In the first five years, these objectives should normally include when you intend to first become profitable, a scaling strategy and target, some short- and long-term milestones, and the key performance metrics you will use to steer and manage the business.

3. Personally manage cash flow processing and procedures. With bootstrapping, you don’t have other people’s money to spend, and probably not as much of it. That means not delegating spending decisions, personally handling inventory decisions, and following-up on overdue receivables. You will also need a line of credit for financing.

   I strongly advise you create a separate bank account and credit card for your business, even though it is all your money. Use of a business credit card is actually encouraged, since this automatically provides the detailed reports and line of credit you need.

4. Update board members and key employees regularly. If you want employees to stay committed, don’t keep them in the dark on status, progress against milestones, and the health of the business. For directors, your credibility and their ability to help is at stake. Running a business is not a job for an introvert who chooses to hide in an office all day.

   By law, board meetings may only be required once a year, but for small companies I recommend a frequency of at least quarterly, if not monthly. Email status reports to board members and key employees should be delivered more frequently, as key events unfold.

5. Never keep bad business news a secret from your team. Too many small business owners try to spare their board members and employees any pain by not acknowledging key negative company, customer, or even outside events that have a potential substantial impact on the business. They find out the news anyway, and it only hurts your credibility.

   In reality, people assume the worst when they don’t hear from the leader, and may assume you are part of the problem. What they need and want to understand is the why, and what they can do to help. This transparency also keeps good people from leaving.

For many, bootstrapping may appear to be the hard way to start a business, but most entrepreneurs I know who started this way are happier and more relaxed than those who have to deal regularly with investors. In addition, by bootstrapping, you own all the gains from your efforts, instead of only a share.

Contrary to popular perception, a large majority of the fastest-growing private companies in the U.S. are still bootstrapped today, often starting with less than $10,000 of personal funds. So before you get frustrated by the “advantages” of outside investors, I recommend that you take a hard look at what you can really do with your own resources.

Marty Zwilling

*** First published on Inc.com on 12/18/2019 ***

8 New Ways To Focus On Customers For Trust And Profit

As an advisor to entrepreneurs, I find that I often have to remind them that the world of customers has changed since they started their last business. Customer expectations of a relationship and personalization are stretching every business today, and pervasive use and confidence in social media by customers can override all your image building and marketing messages.

Of course, part of the change is that Gen Z (born after 1996) now outnumbers the Millennials (born after 1981). But even the older Boomers have learned to use technology and social media as the source of expectations from your business, more so than your own traditional marketing.

I’m not suggesting that you abandon traditional advertising and image building efforts, but definitely it’s time to supplement them to address the following changes that I recommend:

1. Meeting next generation expectations is key to survival. Pushing yourself on customers by touting features and price doesn’t work anymore. Today’s customers want to be pulled to you by the positive feedback from others, and the positive image you present through good deeds, like Patagonia’s work with environmental groups.

2. Use analytics to see why customers are buying, as well as what. Most businesses use big data to analyze past transactions for volume and location, but they now need to look deeper. I believe it’s time for analysis of social media, and more detailed attention to customer feedback, complaints, and testimonials to better focus your offerings sooner.

3. Pursue a customer-centric strategy in everything you do. Customers will remember you, and come back, if all their interactions feel painless and personalized. We’ve all been frustrated with businesses that have multiple waiting lines, treated us impersonally, and made simple things complex. Rethink every process from a customer perspective.

4. Make customer trust the heart of your business model. Although customers today are comfortable providing personal information in return for a better experience, they are also quick to write you off if you misuse the data, disclose it, or use it to push irrelevant products. Trust requires that you have a strong privacy policy in place, and use it.

5. Regularly ask your customers what they think and why. Start with employees and executives who are willing to really listen to customers, and make them do it regularly. Supplement this feedback with more formal modern satisfaction surveys, like the Net Promoter Score. Yet all of these do very little unless you follow-up and act on the input.

6. Use new technology to personalize and expedite. Too many businesses tolerate old systems, which may be slow or require extensive typing, rather than upgrade to devices that can move around the store, or identify a customer by name and interest, rather than a customer number. Make shopping a satisfying experience, whether online or in-store.

7. Hire, train, and reward employees who are customer-centric. This process has to start at the top, and extend through all levels of your organization. Most importantly, total integration of all groups is the key to memorable customer experiences, with measurements and rewards aligned accordingly.

8. Walk in your customer’s shoes to check all interactions. Periodically, you personally, as well as all key people in your organization need to accompany real customers as they interact with your business. You need to experience first-hand what their needs are at each interaction, how well you meet them, and where opportunities for improvement lie.

Most importantly, don’t get complacent. If you think your business has already turned the corner, just remember that customer expectations, competitors, and economic conditions will continue to turn corners, probably at an ever-increasing rate. Your challenge is to keep up, without jeopardizing your ability to remain financially healthy and keep their trust.

Both Amazon and Zappos are prime examples of brands that are customer centric and have spent years creating a culture around the customer and their needs. Not only does focusing on the customer make sound business sense, but research indicates that customer-centric companies can be up to 60% more profitable. How far have you come along this spectrum?

Marty Zwilling

*** First published on Inc.com on 12/16/2019 ***