Friday, May 29, 2020

6 Keys To Startup Wins Without Disruptive Innovation

Non-disruptive-innovationAs an investor, innovation is a term I certainly like to hear these days, but many of you entrepreneurs try to take it to the next level, by claiming to have a “disruptive innovation.” What you probably don’t realize is that the term disruptive brings its own set of baggage, implying to investors extra high risk, high market building costs, and a long slow ramp before payback.

For example, you may think that disruptive smartphones were an overnight sensation, but in reality, it took huge investments by several different companies starting in 1992, including IBM, Apple, and Google, before the market really took off in 2007. The disruptive technologies in electric vehicles and artificial intelligence have taken even longer to see any dramatic payback.

Thus, if you are looking for initial funding for your new solution, I recommend that you focus your sights a bit lower initially, maybe even counter-intuitive to your thinking, and target markets and opportunities which have potential for a near term payback, with less up-front risk. Here are some example strategies to pitch and practice:

  1. Adapt an existing product to a new use. Innovation doesn’t even require technology. You may offer a different application for an existing product, a new pricing model, or a new level of support. Or find an entirely different application for an existing product. De Beers produced industrial diamonds, but found a market as well in engagement rings.

  2. Pick a specialized technology within an existing movement. Let the heavy lifting on major technology evolutions be done by big players, such as Apple or Google. Think smartphone cameras, as opposed to a new smartphone design. Within all large markets, there are many opportunities for smaller innovations that don’t require a huge investment.

  3. Focus on a large opportunity in a low-growth market. High-growth market segments always catch your attention, but also are likely to be attacked by bigger players with deeper pockets. Find an innovation that doesn’t require market growth to thrive – adding technology in a big market segment can be a big win even if the market doesn’t grow.

    For example, by most definitions, the retail market for a cup of coffee is mature, but that hasn’t stopped smart entrepreneurs like Roasting Plant from enjoying success by engineering a better cup of coffee. The opportunity is huge within the existing market.

  4. Find a niche market where you have unique insight. Experience is a great teacher. If you can tell me with conviction about what you have learned to be a viable innovation opportunity in a specialized area you know well, I might believe that you can produce a return in my lifetime. This step may also lead to a disruptive innovation in the future.

    Back in 2009, a new startup called Sqare used their POS (Point-of-Sale) and retail knowledge to create a popular ultra-mobile card reader and a free app, now in 30 million businesses, that turns their iPhone into a point of sale and control center for business.

  5. Target viable customer segments overlooked by competitors. Consider a non-mass-market segment less interesting to incumbents, such as needing a highly-customized solution, or customers who can’t afford the main-stream solution. Emulate the expansion of personal computers into industrial-strength versions, and cheap low-function boxes.

  6. Move an existing technology into a new business area. Usually it’s an advantage to have insider knowledge, but insiders don’t always see how a new technology fits into their domain. Just as the telephone and watch industries never realized how computer technology could revolutionize their device, other areas may quickly buy your innovation.

    In reality, neither Uber nor Lyft created any new technology, they just used existing GPS tracking and simple apps to improve the customer local transportation experience. Yet the customer and driver both appreciate the service innovations provided.

Another reason for implementing and pitching one of these alternatives is that market disruption is rarely predictable, so claiming your certainty can only hurt your credibility. Disruptive innovation is really only evident in hindsight. Thus I recommend that all you passionate entrepreneurs aim your innovation for the stars, but don’t highlight that focus to early investors or early customers.

I have found that building a new startup is best thought of as an incremental process, fueled by small successes, many pivots, and growing credibility and confidence. Counting on a “big bang” disruptive technology approach up front is a sure way to maximize your risk.

Marty Zwilling

*** First published on Inc.com on 05/15/2020 ***

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Wednesday, May 20, 2020

10 Traits Demonstrate Entrepreneur Character Strength

shark-tank-cellhelmet-pitchAs I was watching the investor show, Shark Tank, on TV the other night, I was struck by how quickly and how extensively the sharks focused on the background and character of the entrepreneurs, compared to time spent evaluating their products. I realized it was consistent with my own view as a former angel investor, that investors invest in you, more than your solution.

For example, if you as an entrepreneur come across as arrogant or too casual, many people you need to deal with in business, including investors, suppliers, and customers, will run the other way. The attributes you need to demonstrate in every meeting, and live on a daily basis, are ones illustrating your “strength of character.” These can be honed over time, and can’t be easily faked.

Based on my own years of experience in big business, startups, and the investor community, here are the key habits and traits that each of us needs to continually improve to be perceived by peers and others as leaders and innovators in business here and consistently around the world:

  1. Be aggressive in aspirations but prudent in execution. I want to see entrepreneurs who have a focus on the future, but the strength and perseverance to build realistic and well-laid plans, for follow through daily. This means you set goals, milestones, and metrics, and are able to provide financial projections to support funding requirements.
  1. Demonstrate social intelligence and concern. Today’s world of business is highly driven by social issues and environmental concerns. Entrepreneurs with a strength in social intelligence are better able to use these to their advantage, in selecting the right solutions, the right market segments, and implementing effective marketing strategies.
  1. Listens well, and seeks out critical feedback from others. If you are an entrepreneur with this trait, I believe you will seek and positively respond to feedback from three critical groups: peers, customers, and experts. I find that self-focused entrepreneurs, on the other hand, are more likely to resort to denial when faced with negative feedback.
  1. Always proclaim and deliver a positive attitude. The reality of my business experience is that people who are consistently more negative and pessimistic tend to make their views limit their results. If you demonstrate a positive attitude, I’m more easily convinced that you can make your business commitments, and your solution a success.
  1. Conversant with a variety of perspectives and concepts. This trait, sometimes called mental complexity, will convince others that you likely understand the relevant issues, are willing to challenge your own ideas, and will be quicker to adapt them to encompass new information, experiences, and meaning. Change is the only constant in business today.
  1. Takes ownership of personal strengths and weaknesses. Investors look for entrepreneurs with a high level of self-determination, who continually seek more competence in their chosen domain. We all have weaknesses, but we can all learn and improve our effectiveness. Denial and over-confidence are not good traits to exhibit.
  1. Not afraid to share personal life experiences. Everyone has a story. You can make it inspirational and supportive, or you can hide behind a veil of anonymity. Other people in business judge your character by how major events and influences have shaped your personal development, and will likely impact your response to new situations.
  1. Recognize natural leaders and seeks help from them. Great entrepreneurs have sought help from natural helpers since childhood, including parents, teachers, and business influencers. I believe this will make you feel more accepted, respected, and affirmed, and allow you to pass that feeling on to key players in your business career.
  1. Shares views and learns from a personal mentor. Entrepreneur leaders recognize and seek three types of mentoring – career mentoring for the longer term, peer mentoring for tactical guidance, and life mentoring for quality of life balancing. Even successful entrepreneurs, included Bill Gates and Warren Buffett, learn from each other as mentors.
  1. Visibly demonstrate the highest integrity. Integrity is generally defined as the act of behaving honorably, even when no one is watching. People with high integrity follow moral and ethical principles in all aspects of their business life, including decision making, and working with others. Investors ask about you, not your product, to test your integrity.

Whether you are an entrepreneur, or any other business professional, the strength of your character, as perceived by others, is of major importance to your growth and success. Don’t let the desire to find shortcuts, or egotistical tendencies, keep you from continuously improving and developing your character. Your return for showing good character in business is well worth it.

Marty Zwilling

*** First published on Inc.com on 05/06/2020 ***

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Friday, May 15, 2020

10 Marketing Strategies To Drive Exponential Growth

drive-exponential-growthAs an angel investor, I see plenty of startups focusing on building an innovative product, but I’m looking for the few who are also leading with an exponential growth strategy, to put them in the category of the next Amazon or Google. Traditional marketing may be adequate for linear growth, but it likely won’t catapult you to Amazon’s unicorn status, or make waves in the business world.

For example, I usually hear about an aggressive marketing budget, with a plan to penetrate a few big retail chains, and some videos to catch your attention on YouTube. What I want to hear is an innovative marketing and growth strategy that will set you apart in the minds of investors, as well as customers. This strategy would likely include one or more of the following elements:

  1. A plan to rollout innovative support for a worthy cause. Today’s customer is especially attracted to companies like TOMS, who donates a pair of shoes for every pair they sell, or Patagonia, with its support for grassroots environmental groups. Let your highly motivated customers be your best marketing advocates for new customers.

  2. Sponsor some friendly competitive events with prizes. Everyone loves to compete, and maybe even win something. Give customers incentives, rewards, and challenges as a way to have some fun, and they will talk about you and promote you. Examples include the Nike Run Club app where people participate in challenges and win trophies.

  3. Offer an alliance with competitors to expand the market. Elon Musk and Tesla made their battery patents available to anyone, to clear the path for market infrastructure growth and compatibility, which of course benefits Tesla. A mindset of killing your competitors is not always the key to expediting your own growth and success.

  4. Initiate a visible campaign against a common competitor. On the other hand, one of the best ways to strengthen your own community is to provide leadership against a common enemy. This could be fighting some government bureaucracy with your technology, or “supporting” unhappy customer efforts against an unpopular competitor.

  5. Produce memorable product demonstrations or videos. New products being used in unusual ways attract attention, buzz, and followers. Be sure to involve real people and real customers, such as GoPro cameras, with user generated demos and amazing aspirational videos. These can easily start new trends, or capitalize on existing ones.

  6. Build relationships and partnerships to expand your influence. This one has been around for a long time, but I still see too many entrepreneurs trying to climb the mountain alone. Apple expanded their business exponentially with app developers, and Amazon found new ways to make their suppliers look and act like they are part of the business.

  7. Provide and promote an exclusive community for influencers. Like-minded people like to have a place to meet and talk to each other, both in cyberspace as well as the real world. Think of these as the future version of the old “computer clubs,” or today’s multi-player game platforms. These communities will dramatically amplify your own marketing.

  8. Include marketing initiatives to educate and help customers. Whole Foods, for example, has worked hard to establish itself not just as another grocery store, but as a lifestyle choice. Innovative marketing content is focused wholly on healthy living and earth-conscious eating, rather than the conventional food product offerings and price.

  9. Create experiential opportunities for desired customers. Experiential marketing, also called "engagement marketing," invites an audience to interact with a business in a real-world situation. Herm├Ęs, for example, used pop-up shops in New York and China to allow potential customers to try luxury things without having to go out of their comfort zone.

  10. Market an image of exclusivity or premium only. Believe it or not, Facebook started at Harvard and promoted its exclusivity to this school, then slowly spread to others, when rival social media platform MySpace was inviting everyone to join. Using this strategy requires a keen understanding of your market, and timing to yield to customer desires.

As you may guess, many of these strategies can’t be implemented as an “afterthought” once you have your innovative solution implemented. Thus investors like me are looking for a parallel and early plan that integrates your marketing strategy with your product. If you really expect to be the next unicorn, based on exponential worldwide growth, now is the time to start building that plan.

Marty Zwilling

*** First published on Inc.com on 04/29/2020 ***

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Wednesday, May 13, 2020

5 Keys To An Effective Startup Communications Mindset

leadership-communications-mindsetOne of the biggest challenges we all face when put into business leadership roles is how to communicate most effectively. As a mentor to entrepreneurs over the years, I see many of you who don’t communicate enough, others who seem to do all the talking, and some that are hesitant to be direct and open. I find that having the right mindset is key to getting all these right.

You first have to accept the fact that communication is far more than relaying information. The mindset you need for real communication must be focused on building relationships, surfacing ideas, generating trust, and building commitment, whether it be with your team, customers, or suppliers.

I found that guidance along these lines was spelled out well in a new book, “Entrepreneurial Leadership,” by Joel Peterson, based on his experience at JetBlue Chairman and a Stanford Professor. He nets out five specific mindsets that I assure you will help any of you as a leader communicate more openly and more successfully:

  1. Be convinced you have a valuable contribution to make. The first necessary mindset in communicating effectively is being convinced you have something important to say. So do your homework before you talk, to get up to speed on the current topic, identify new information that others don’t have, and quantify value to you and other relevant people.

    For example, every business team needs focus and direction to be productive. You as the leader have a responsibility to define goals, strategy, and operational metrics. One of the biggest problems I see in startups is everyone trying to do too many different things, straining resources and confusing customers.

  2. Always open to be influenced by new information. The best communicators remain open and anticipate productive feedback in the form of additional information. They realize that it’s an interactive process, and everyone wins when the process clarifies and improves the message. You have to remain open to change throughout the process.

    Most analysts agree that many major business failures, including Blockbuster, Kodak and Xerox, were not a result of leaders not knowing about new technology, but failing to communicate effectively and listen to other internal organizations for impact and timing.

  3. Never be deterred from showing a constant curiosity. True communication always invites feedback and input, rather than closing the door. Make your intentions and your perspective evident, but show a willingness to understand another’s experience or additional facts. This mindset will set the best tone and tenor for further interactions.

    Research shows that the best leaders spend more than 75 percent of their time satisfying their curiosity, which means communicating effectively with peers, outside experts, and their internal teams. To stay effective in this world of change requires constant learning.

  4. Set your goal to be the best idea will always win. You communicate best when you look beyond any self-interests you may have, to address the collective good. With this mindset, you will find that other people listen, engage, and give more of themselves. Skip the vague generalities and jargon that may confuse people or blur your intentions.

    What we are talking about here is not just communication, but creating a culture that fosters, rewards, and empowers itself through great ideas from everyone. That has to be driven by you, the leader, through consistent and empathetic messaging.

  5. Be determined to balance inquiry with advocacy. The idea behind this mindset is to lay out your thinking and reasoning, inviting others to do the same. Make the process iterative and cumulative, but don’t forget to call the question after a reasonable time. We’ve all been frustrated with people who talk forever and never make a decision.

    Examples of inquiry include asking questions to seeking the wisdom of the room, while advocacy means stating your view or urging a course of action. There is a place for both, and your challenge is to find that balance that makes people trust you and follow you.

Overall, I have learned that effective leadership starts with adopting the right mindset for every communication. After that, choose your words well, both oral and written, and recognize that your body language transmits a key part of every message. Don’t hesitate to spend the time you need optimizing your communication to get it right. Your business and your success depend on it.

Marty Zwilling

*** First published on Inc.com on 04/28/2020 ***

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Wednesday, May 6, 2020

5 Keys To Starting New Trends Rather Than Following

Ride-sharing-trendI’m sure all of you are convinced that your new business will create the next trend and ride the wave to success, but the reality is that most startups fail, so anticipating future trends is clearly harder than it seems. In my experience, it takes more than a gut feel, so predicting breakthrough changes and new trends is a skill that must be learned, and made part of your business process.

For example, Lyft and Uber were able to capitalize on the current ride-sharing trend worldwide by tracking statistics that indicated reduced interest in car ownership by millennials, lack of parking spaces, and auto ownership costs moving up rapidly. Others pivoted quickly based on customer need changes, rather than just spending more money on advertising and charging ahead.

If you want to join the ranks of entrepreneurs and businesses who have a reputation for being ahead of the pack, for being an initiator rather than a follower, such as Apple and Nike, here are five key strategies and skills to develop that I recommend and practice:

  1. Develop a mindset of constant change required to thrive. As a mentor to business owners, I still see many praying for the day when things stabilize, their processes are working, and they can relax and enjoy business growth. As Andy Grove famously wrote, “Only the paranoid survive.” Accept and act as if the only world constant is change.

    One way to adapt your mindset to appreciate change is to reflect more on those cases where change has made your personal life better. Your new car is a pleasure to drive, online shopping takes out the pain, and social media makes connection to old friends fun.

  2. Spend more time outside the business, looking for trends. Smart entrepreneurs continually test their perceptions against those of customers, outside leaders, and experts. They actually search for indications of change and opportunities across diverse environments, rather than just more customers who might use their current offerings.

    Get out of the office to visit real customers, attend industry conferences, and network with peers and influencers. You will find it amazing how much your perspective will improve as you establish relationships and really listen to others. Learning can be fun and profitable.

  3. Continually initiate experiments to test before committing. Many established businesses are so confident of their brand power that they commit huge amounts to change initiatives that are untested and possibly wrong. No one has perfect insight, and things change so quickly that business rollout trials should be your norm to test change.

    Even the smartest entrepreneurs have found that a well-designed market experiment will test a number of different hypothesis and variables at once, without a major investment, proving bad assumptions as well as validated ones as the experiment goes on.

  4. Focus on agility as the key skill your organization needs. This starts with strong leadership and communication on your part, but it has to extend into the training, decision making, and reward systems that you foster. The ability of you and your team to move quickly when change happens will set your outcome with customers and competitors.

    As a first step toward faster decisions and agility, practice applying the 80/20 Principle to your thinking. In most situations, you can gather 80 percent of the relevant information in the first 20 percent of the time available. The rest does not often improve decision quality.

  5. Spend more time on long-term strategy than daily crises. I still see many businesses who let current challenges lead them on a random walk into or out of the future. You need to build a vision of the future that can become a self-fulfilling prophecy. Of course, this vision must be continually tuned by new customer trends and technology arrivals.

    Your team and your customers will be more responsive when they feel a sense of purpose and direction, and they can provide better feedback. Patagonia are Airbnb are examples of businesses that put their purpose first, and are leaders in change as a result.

Even though none of us can really see around corners, it helps to overtly hone your business acumen to see bends in the road before others. With that, and the courage to accelerate towards these curves as opportunities, rather than slowing down to put up a defense, you too can be perceived as a leader, rather than a follower, in today’s ever-changing but ever-growing market.

Marty Zwilling

*** First published on Inc.com on 04/22/2020 ***

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Monday, May 4, 2020

8 Business Execution Strategies That Lead To Success

Richard-Branson-strategyI’m sure you have all seen entrepreneurs and startups with great ideas that never seem to live up to their potential, while others with more mundane solutions seem to take off quickly and never slow down. In my experience as an advisor to startups, the difference is almost always related to the founder and their execution strategy, more so than to the solution quality or the market.

For example, I used to regularly hear pitches for the next great social media site, usually focused on a special interest or niche, such as photography, cooking, healthy living, or a thousand others. Unfortunately none of the struggling entrepreneurs I worked with turned out to be the founders of successful ones like Pinterest (photo sharing), NextDoor (neighborhood), or Classmates (school).

After investigating these successes, I have isolated certain strategy elements which I now offer to you as expeditors of success in starting a new business, independent of the product or service you are offering, as well as the market segment you are targeting. Of course, none of these are a substitute for doing your homework on the opportunity, and maintaining the energy to drive it:

  1. Break the journey into small sprints with milestones. We all need to see progress toward a goal to keep us motived and focused. If you tell me that you have been working on your startup for two years, but can’t quite quantify the progress, I’m not impressed. If you have completed four out of five milestones, we can both see success in your future.

  2. Define success metrics, and measure progress regularly. Smart entrepreneurs set reasonable progress targets, and use these as lead indicators to provide feedback and allow pivots based on things learned along the way. Startup success is rarely a straight-line process, so knowing where you stand at any given point is critical to success.

  3. Look for tools to automate and simplify strategy execution. Initially, you may be able to do everything in your startup, including product development, marketing, and shipping orders. Too many entrepreneurs I know burn themselves out as this burden grows, and they are hesitant to use available tools or outsourcing non-critical tasks to allow scaling.

  4. Focus on communication and responsibility assignment. As you move from development to rollout, a team effort is required, including marketing, sales, funding, and customers. Your success and growth as a business is now highly dependent on your ability to clearly communicate what you expect from others, and keep them motivated.

  5. Define and implement a rhythm to minimize business chaos. Everyone on the team, including yourself, will be more confident and productive if they see things happening on a predictable schedule. Most people like a weekly schedule, where they can see reports, predict management appearances and decisions, and feel in control of the business.

  6. Regularly schedule time with outside advisors for perspective. I can tell you from personal experience that it’s easy to get blinded by daily crises, and miss key issues that gate success. Every startup should have at least quarterly meetings with an Advisory Board or key investors to bring a new perspective to what is working and what is not.

  7. Make strategy updates part of your normal business cycle. Nothing kills startups like an entrepreneur who is too fixed on a given strategy, and refuses to change in light of real data that changes are needed. Part of the culture that you must create is one of learning and regular updates, not requiring a crisis and loss of momentum on the team.

  8. Most importantly, create a strategy before you start. Too many entrepreneurs I have known started their business without any strategy or plan to make it grow. They try to do everything at once – sell online, go retail, expand their product line, and be the premium brand as well as the low-cost producer. Choose your focus and do it well to succeed.

Thus I’m convinced that any strategy is better than no strategy. However, the best entrepreneurs provide the agility and foresight to incorporate the elements outlined here, allowing them to seemingly take any solution and build a successful business. Richard Branson, founder of the Virgin Group, now drives the strategy of over 400 companies. But even he started with just one.

Marty Zwilling

*** First published on Inc.com on 04/17/2020 ***

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