Monday, June 29, 2020

7 Ways Your Day-To-Day Routine Drives Startup Success

frequency-drives-successMost of the young entrepreneurs I know are classic proof of the old adage that people tend to overestimate what they can do in a short period, and underestimate what they can do over a long period. They become frustrated when they are unable to build their startup over a weekend, and give up way too soon when the path to real success seems to be interminable.

Both problems can be mitigated by learning the power of frequency, as defined in the classic book by Jocelyn K. Glei, “Manage Your Day-to-Day,” which asserts that working consistently and frequently on something makes it possible to accomplish more, with greater originality, than spasmodic bursts of effort. A successful startup needs to be a daily task, with consistent focus.

I suggest that the following key reasons from Glei for how the habit of frequency fosters both productivity and innovation in general, apply especially well to an entrepreneur starting a new business:

  1. Frequency makes starting easier. Getting started is always a challenge. It’s hard to convert an idea into a business, and it’s also hard to get back into the groove with all the distractions of other activities and your “real job.” If you block out time every day to focus on your startup, you keep your momentum going, and start seeing long-term progress.
  1. Frequency keeps insights current. You’re much more likely to spot opportunities for innovation and to see new trends in the marketplace, if your mind is constantly humming with issues related to the startup. Frequent discussions with peers and customers on open questions will keep you from being led astray by your own biases.
  1. Frequency keeps the pressure off. If you’re producing just one page, one blog post, or one sketch a week, you expect it to be good and final, and you start to worry about quality. It’s better to write 100 lines of new code every day, recognizing that you will have to iterate to perfection, rather than expecting a week of work to happen all in one night.
  1. Frequency sparks creativity. You might be thinking, “Having to work frequently, whether or not I feel inspired, will force me to lower my standards.” In my experience, the effect is just the opposite. Creativity arises from a constant churn of ideas, and one of the easiest ways to get results is to keep your mind engaged with your project.
  1. Frequency nurtures frequency. If you develop the habit of working frequently, it becomes much easier to sit down and get something done even when you don’t have a big block of time; you don’t have to take time to acclimate yourself. The real enemy of progress is the procrastination habit, which should be replaced with the frequency habit.
  1. Frequency fosters productivity. It’s no surprise that you’re likely to get more accomplished if you work daily. The very fact of each day’s accomplishment helps the next day’s work come more smoothly and pleasantly. By writing just 500 words a day in a blog, I suddenly realized that I had enough for a book in just a few months.
  1. Frequency is a realistic approach. Frequency is helpful when you’re working on a startup idea on the side, with pressing obligations from a job or your family. It’s easier to carve out an hour a day, than to set all else aside for a week in the early stages of your startup.

Don’t be like many of the people that we all know who feel like they are working at a breakneck pace all day, every day, but have very few tangible results to show for their efforts. Every entrepreneur needs to build a proactive daily routine, while being able to field a barrage of messages, and still carve out the time to do the work that matters.

Another enemy of progress in startups is the curse of perfectionism. Some entrepreneurs never start, waiting for that ideal moment, when there are no distractions. Some are lost in the middle, obsessing over every step, and some never finish, always refining and adding, rather than learning from a minimum viable product. Thus the need to combine frequency with pragmatics.

If you can manage your day-to-day routine with frequency, rather than let reactive chaos manage you, you will find that your creative mind is sharpened, and your focus on the new venture will generate the “change the world” results that attracted you to this lifestyle in the first place.

Marty Zwilling



Sunday, June 28, 2020

4 Principles Guide Every Socially Conscious Business

conscious capitalismI’ve noticed that most young entrepreneurs are more socially conscious today than ever before, which is a great trend. Unfortunately, some are so focused on this principle that they forget that every business, even nonprofits, have to practice the basic principles of capitalism (build a business model to make money) to cover their costs to do good things another day.

Examples of profitable companies practicing this model include Trader Joe’s, led by Doug Rauch as retired president, and Conscious Capitalism® board member, and the Container Store, built by Kip Tindell. Both of these are purpose-driven businesses that boast high growth, high loyalty, and very low employee turnover. You can find dozens more on the Conscious Capitalism web site.

Of course a profitable model isn’t required if you intend to rely totally on donations, or have deep pockets to fund your socially conscious efforts yourself. Conscious capitalism is the rational alternative approach, dedicated to advancing humanity, while using tried and proven business principles. The idea has four principles guiding and underlying every business:

  1. Higher purpose. Business can and should be done with a higher purpose in mind, not just with a view to maximizing profits. A compelling sense of purpose creates an extraordinary degree of engagement for all stakeholders and catalyzes tremendous organizational energy.
  1. Stakeholder orientation. Recognizing the interdependent nature of life and the human foundations and business, a business needs to create value with and for its various stakeholders (customers, employees, vendors, investors, communities, etc.). Like the life forms in an ecosystem, healthy stakeholders lead to a healthy business system.
  1. Conscious leadership. Conscious leaders understand and embrace the higher purpose of business and focus on creating value for and harmonizing the human interests of the business stakeholders. They recognize the integral role of culture and purposefully cultivate a conscious culture.

  1. Conscious culture. This is the ethos – the values, principles, practices – underlying the social fabric of a business, which permeates the atmosphere of a business and connects the stakeholders to each other and to the purpose, people and processes that comprise the company.

I see conscious capitalism providing leadership at just the right time – for young entrepreneurs who are a bit disillusioned with the image of “business” today, but want to be profitable without sacrificing trust, reputation, and credibility with their peers and stakeholders important to them. They want their business potential to support the overall human potential as well.

None of these positives obviate the need for a viable business model, in order to survive. I would expect that to seem intuitive to all entrepreneurs, but every investor I know has many stories about startup funding requests with no clear business model. The most common failures are solutions looking for a problem, lack of a defined market, and giving away the product.

Soon, companies that also want legal recognition of their socially conscious focus will be able to incorporate as a Benefit Corporation (B-Corp). The B-Corp status, already available in thirty-five states, including New York and California, is meant to reduce investor suits, and gives consumers an easy way to spot genuine social commitment, without assuming it is a nonprofit.

Entrepreneurs and startups are all about innovation, in business principles as well as in products and services. I see conscious capitalism as a great innovation to the foundations of capitalism, bringing compassion and collaboration to the heart of value creation. Maybe it’s time to take a hard look at your own startup, and see if you have fully and consciously capitalized on capitalism.

Marty Zwilling



Saturday, June 27, 2020

9 Different Approaches For Motivating A Startup Team

chasing-money-motivationEntrepreneurs inherently understand that they have to be the initial leader of their startup, but often they don’t have the experience or the training to know where their leadership competencies lie, or how to build a leadership team. For new entrepreneurs, leadership development efforts may be more valuable for achieving startup success than business skills development.

Very few people know their own leadership style, or strengths and weaknesses, despite their many years of living and working in the real world. To assess where you are, and to unlock your full potential, there are many courses available, as well as seminars and gurus, but a good place to start is a book on the subject, like the classic one from John Mattone, “Intelligent Leadership.”

Mattone has a wealth of insights, based on years of helping Fortune 500 leaders overcome their self-imposed limiting leadership habits. He identifies and distinguishes between nine distinct leadership styles that I see in all entrepreneurs to some degree. The most effective entrepreneurs know their own predominant style, and how to build a team with all the rest required:

  1. Helper. Mature Helpers are considerate and genuinely the most sensitive and caring of all the leadership types. They are excellent mentors and coaches, but have a strong need to be admired and respected in return. Strengthen this trait by being more conscious of your need to be liked, and don’t be possessive or controlling.
  1. Entertainer. Entertainers gain the respect of others with drive, determination, hard work, and the ability to win over people. But they can become fixated with appearing successful, showing more style than substance, or undermine themselves by exaggeration, inflating their importance, or trying to win or one-up all the time.
  1. Artist. Artists are perhaps the most creative and innovative leaders. They tend to move people deeply, and bring out the most in people. As they become more mature, they draw less inspiration from themselves, and more from others. Improve your artist side by avoiding negativity, procrastination, and focus on self-discipline.
  1. Thinker. Thinkers like to analyze the world around them, and may prefer thinking to doing. Mature Thinkers quickly understand problems, can explain them to others, and make sound and logical decisions. Strengthen this trait by not jumping to conclusions, seeking advice, and working cooperatively with others you trust.
  1. Disciple. Disciples are able to form strong and cohesive work groups, but sometimes appear incapable of action without permission of an authority figure or belief system, and don’t seek out leadership positions. This trait can be strengthened by accepting accountability, reducing reaction to stress, and cutting ties to authority.
  1. Activist. Activists are good at lifting the spirits of team members and managers, and are usually optimistic and confident. They tend to bury themselves in activities, but can be impulsive and select quantity over quality. Improvement efforts would include listening more to people, thinking about details, and learning to say no.
  1. Driver. Drivers are the most openly aggressive leaders, who enjoy taking charge, and can make things better with their immense self-confidence. Unfortunately, they may feel the need to dominate every situation, and make every decision. Mature ones act with more self-restraint, let others win, and work with others.
  1. Arbitrator. Arbitrators tend to be the most open of all types. What you see is what you get. They find ways to bring people together, and ways to involve everyone. To be a better Arbitrator, you need to be more assertive, more open, share your feelings, and work on developing your listening skills.
  1. Perfectionist. Mature perfectionists are capable of being highly noble leaders, with their deep sense of right and wrong and ethical principles. They are usually highly critical of themselves and others, and often frustrated by reality. To improve, they need to learn to relax, listen to others, and remember that no one is perfect.

In all cases, to reach your highest leadership potential, you have to stay true to yourself, rather than trying to conform to other people’s images of the best you. If you truly commit to learning more about yourself and becoming the best that you can be, while possessing a great attitude, you will discover that all challenges are really the seeds of opportunity.

Most recognized entrepreneur leaders admit that their biggest challenge was to break through their self-imposed limiting thoughts, emotions, and habits, to reach the next level. How many of these leadership traits have you mastered, how many are you working on, and how many of the other strengths have you built into your team to help you? That’s intelligent leadership.

Marty Zwilling



Friday, June 26, 2020

10 Key Business Plan Elements Not In A Product Spec

Business-plan-elementsAs an advisor to new hardware entrepreneurs, I often hear the myth that a business plan is no longer required to find an investor, if your idea is good enough. You may have heard that venture capitalists in Silicon Valley no longer read business plans. What you don’t realize is these famous investors only deal with entrepreneurs who sold their last company for a $100M dollars or more.

For the rest of us, we need a business plan, as well as a product plan. Some of you may be convinced that your product specification communicates the product message even better than a business plan, so why be redundant? Let me assure you that a business plan and product plan are two different things (I have personally written several of both). You need both to survive.

To be clear, I define a product specification as the technical definition of your product, to be used for development and testing purposes, with a quick business summary for context. A business plan is the outward facing definition of the business you hope to drive with your hardware solution, with a hardware overview in the intro to highlight customer value and competitiveness.

As a hardware engineer, you already know the value, importance, and layout of a spec to keep you focused, but you may not be so familiar with the key elements of a business plan, and the way to use it to support and add credibility to your hardware solution. Thus I offer the following outline for how to organize and present your business plan, with specific examples:

  1. Start with outlining the customer problem, and your solution. Use non-fuzzy terms to quantify customer value. For example, “We just patented a new battery technology that will cut your smartphone charge time and cost in half.” Be sure to include this in your “elevator pitch,” which you must always deliver as a prelude to your technology features.
  2. Description of the business entity you plan to form. The most common business entity used for startups is a Limited Liability Corporation (LLC), which is the cheapest and simplest to manage. If your goal is a large national corporation with more than 100 investors, and multiple classes of stock, you might prefer a C-Corp or S-Corp.

  3. Quantify the market opportunity in business terms. The answer is not “if we build it, they will come.” Investors and advisors want to see recent survey data and projections from industry professionals here, not just your opinion. For example, “Nielsen projects that the market for smart phones will double every year for the next five years.”

  4. Highlight your advantages over three top competitors. Call out your top competitors, highlighting your sustainable competitive advantage, including patents, trade secrets. and trademarks. Don’t denigrate your competitors, but use their limits to highlight your edge.

    For example, rather than saying, “Competitor X has poor reliability,” use the positive approach to list your reliability features, compared to X. If possible, quantify these in non-technical business terms, such as dollars saved or replacement costs over time.

  5. Provide specifics on the customer business model. All startups, including non-profits, need revenue to thrive, such as such as from subscriptions, retail, online, licensing, or services. Positioning your hardware solution as almost free may sound attractive to customers, but it won’t attract investors. They want to see revenue to share in the return.

  6. Document why your team is the best for this challenge. Be sure to highlight any special credentials or relevant experience that you or key members of the team, including advisors or existing investors, may have. Don’t assume titles will convey this information. Professional investors and even customers invest in people, rather than just a product.

  7. Include marketing, sales, and customer rollout plans. Don’t let your passion convince you that word-of-mouth and viral marketing will suffice against well-funded competitors and ever more demanding customers. Set specific targets on the sales channels and marketing initiatives you need, including the use of social media, brand building, franchising, trade shows, affiliates, and distributors. Budget time and dollars for each.

  8. Target income and expense by year, including funding. Here I recommend a 5-year projection of revenues, expenses, and funding requirements. Major milestones along the way should be outlined. Scale your funding requests to the value of your startup today, consisting of assets, contracts, and intellectual property you currently own.

    The best way to do this is to reference actual data from a recent similar startup success. Investors look for high-growth-potential companies who can double revenues yearly, hit break-even in two or three years, and penetrate at least 10 percent of the opportunity you quantified for the first five years, to give them a 10X return on their investment.

  9. Outline a viable exit strategy for you and investors. Investors want to know how and when they might see some return on their investment, since startups require some event to show value. The options here include going public (IPO), merger/acquisition, liquidate, or no exit, just paying off investors. Most investors don’t want long-term commitments.

  10. Summarize all of the above in an executive summary. Since everyone wants a quick overview of the whole plan, you need a tightly written and formatted two-page content summary, using the first paragraph of each of the above sections. This summary if often extracted as marketing collateral, with text and graphics for pitch handouts.

Based on my experience in the investment world, aspiring entrepreneurs seeking an investment with no written business plan are routinely requested to come back later, when “you have more traction.” Every good technologist should start with at least a single page business plan, or construct a “pitch deck” of maybe a dozen PowerPoint slides to cover all the important content.

Most of the business plans I see getting funded today are less than 30 pages in total, even including financial statement attachments. What investors expect, and what you should be looking to provide for your own use, are answers to all the relevant questions a good advisor might ask about your business goals, objectives, structure, and milestones over time.

I personally find that writing down my business plan is a good discipline to incent me to think through all the issues, and do the research on the alternatives available. As a hardware designer, I’m sure you do the same thing as you document your product specifications and pass them on to other members of your team for implementation. In addition, I know from experience that most investors look for written plans to separate what they call “hobbyists” from serious entrepreneurs.

If you have no idea what needs to be included in your business plan, fortunately there are many useful templates available online, books on how to write business plans in every bookstore, and several software applications being marketed to at least partially automate the process. Part of the fun of starting a business is the learning process, and this is an easy place to start.

If all else fails, working on your business plan is a good time to ask for help from a peer entrepreneur, or follow up on a friendly relationship with someone who has been there and done that. In fact, this context is your best opportunity to attract a co-founder who has the business skills and interests that are complementary to your technical strengths.

Keep in mind that multiple studies have found that hardware entrepreneurs who create a good business plan at least double their chances of securing funding and growing a business to change the world. Thus, building the plan is a small investment compared to the potential for being the next “unicorn” or billion dollar company, and leaving your dent in the universe.

Marty Zwilling

*** First published on Predictable Designs on 06/10/2020 ***



Wednesday, June 24, 2020

5 Stages Of The Market Lifecycle Gate Startup Success

tesla-cybertruckAs a frequent advisor to new entrepreneurs and startups, I often hear your frustration with being treated differently from other startups by investors, on expectations for valuation, traction, and market size. Of course, it could be your level of experience, or the quality of your team, but the difference is often more related to the lifecycle stage of the market you are trying to enter.

For example, if your idea is so new and different that it implies real social or technological change is necessary before widespread acceptance, investors will define your market as nascent or unproven, and be very reluctant to fund you, no matter how convincing your projections may be. On the other hand, if the market is super-hot, many will be willing to jump in to make your case.

So rather than being stressed out by the seeming inequities, I recommend that you take a realistic look at where your startup fits in your market lifecycle, and adjust your expectations and arguments accordingly.

I found some good guidance that supports my own view in this regard in a new book, “Startup Myths and Models,” by Rizwan Virk, who has been there and done that. Both of us have found it very useful for you to first position your startup in one of the following market lifecycle stages, and then set your strategy and expectations accordingly:

  1. Emerging technology stage with signs of future potential. The market at this point is largely unknown and untested. This is normally the domain of technologists and idea people, often using the term “disruptive innovation.” Valuations here are always low, and funding generally depends on friends and family, or a few forward-thinking angels.

    For many years, startups featuring all-electric vehicles fell into this stage of the business lifecycle. Everyone knew these had potential, but had not demonstrated success to date due to infrastructure and support requirements, or cost constraints. Finally, Elon Musk and Tesla were able to break through, using their own funding and proven credibility.

    Now the emergence of autonomous and driverless vehicles fits into this nascent future potential category. I don’t recommend an expectation of funding on that one just yet.

  2. Market is recognized as real and growing by investors. Influencers are talking about this opportunity as one of the “next big things,” like the Internet of Things (Iot) or artificial intelligence (AI). Many investors and big companies are putting money into this space or adding it their product line today. Typical valuations range from 3x-5x revenues.

    In the last couple of years, Nest's smart thermostat has put IoT in the “real” category and Amazon's Echo product accelerated the industry forward toward AI as able to deliver real value to consumers. Now is the time to fund your startups touting these capabilities.

  3. Everyone feels behind the curve of a super-hot market. One or more startups here have already proven the market and achieved unicorn status, such as Uber and Airbnb. Investors are rushing to offer ridiculous valuations, even to pre-revenue startups, to keep from missing out. Your challenge is to get there quickly, before market saturation occurs.

    Once Uber made the ride-hailing market hot, a whole host of competitors have jumped in with immediate high valuations, with or without traction, including Ola, Careem, Taxify, and many others you never heard of. Of course, getting money doesn’t assure success.

  4. Market is maturing with consolidation as a key driver. There is still an opportunity to make money, but market leaders have already emerged. Very few new startups are getting funded at this stage, and existing ones are looking for strategic partners and being acquired to achieve continued growth. Valuations are back to 3x-5x revenues.

    Amazon is a great example of continued growth through consolidation in the maturing ecommerce market, having acquired or invested heavily in over 100 companies and startups. If you are an ecommerce startup, this may be your path to fame and fortune.

  5. Focus shifts from growth to profitability as a mature market. Established company process rules and metrics now characterize the leaders in this market stage. Outside investors may no longer are interested in this space, unless your startup brings a new technological innovation that can undermine the base, or attract a new market segment.

Because startup markets change quickly in today’s world, understanding the lifecycle stages will help you avoid frustration, and make more effective decisions on when to start, how much funding to expect, and the ideal way to exit your startup. I recommend it, since it is a lot more fun to enjoy the startup journey, as well as the destination.

Marty Zwilling

*** First published on on 06/10/2020 ***



Monday, June 22, 2020

6 Entrepreneurship Advantages For Seniors In Business

senior-entrepreneurA popular myth that most of you probably believe is that startups are only for the younger generations. In fact, I see more and more evidence that new entrepreneurs are coming from the older age groups (age 45-64), and success rates move up with age. Is it possible that age and experience are more of an advantage in this business than young passion and fearlessness?

Based on my own years of experience in big businesses, as well as startups, this is no surprise to me. I’ve long had my own views about why this is happening, and they were supported by what I found in a new book, “Ageless Startup,” written by a fellow successful entrepreneur and senior, Rick Terrien. We summarize the advantages of older entrepreneurs along the following lines:

  1. Think life-changing, not lifestyle entrepreneurship. Being an entrepreneur is indeed a lifestyle, implying for the young an ability to follow your own dream, and control your own destiny. More importantly, I believe that it should mean making a better life for others, through more jobs, technology innovation, or improving the environment.

    Over time, those of us who have grown up in business have a better idea of what really counts and what really is life-changing, both from a personal perspective as well as a business perspective. We are more prepared to focus on life-changing entrepreneurship.

  2. Find and see the opportunities hidden in plain sight. As an angel investor, I often hear from young entrepreneurs who have invented a shiny solution, without really focusing first on the need or the opportunity. Time and experience in business teaches you to listen for potential customers, and carefully evaluate the real business potential.

    For example, most professional services and consulting startups today are led by more experienced professionals who worked in business for many years before they decided to strike out on their own with their own brand of solution to a commonly seen requirement.

  3. Time to think about and develop your purpose and “why.” People are living longer today, and find they are only getting started after 30 years of experience. They are seriously looking for opportunities to grow personally and professionally, and leave their mark on the world. They can more clearly see what is important to them and to others.

    Paul Tasner, a celebrated Purpose Prize winner, started his new business at the age of 66. In a recent TED Talk, he summed up this perspective by saying, “I am doing the most rewarding and meaningful work of my life right now.” Making money is not his passion.

  4. You can look back so than you can lead going forward. Being able to look backward in your experience is an advantage in avoiding common mistakes, as well as recognizing a recurring but unsatisfied need in the marketplace. It takes time to build networks, know-how, and the leadership skills to chart a successful path and mobilize others around you.

    You don’t need permission from anyone, and you are less dependent on coaching and mentoring from the rare skilled and available people that most smart young founders depend upon. You also know when to say no, and don’t try to solve every problem.

  5. Use your ability to bootstrap and set a sustainable base. You as a second career entrepreneur are more likely to bootstrap, meaning able to pay strict attention to sustainable cash flow and utilizing your own capital at the outset, thus avoiding the pressures of finding and managing external funding.

    You recognize that new businesses are a journey with continuous challenges, so you need to focus on building a sustainable foundation early, with true-to-you values, and an achievable set of goals. Solutions will become obvious, and you can execute effectively.

  6. Play to the fastest growing customer segment you know. Globally, the population aged 65 and over is growing faster than all other age groups. According to projections, by 2050, one in six people in the world will be over age 65 (16%), up from one in 11 in 2019 (9%). Nothing gives you insight into customer needs like being in the segment with them.

Terrien and I both believe that now is the renaissance age for entrepreneurship, and it’s just beginning. Conventional models are falling by the wayside. It’s time now to start thinking about how you will make a smooth transition from working in a business to working on your business.

You are allowed to start small and go slowly, but it pays to start smart. Don’t hesitate to capitalize on your growing advantages.

Marty Zwilling

*** First published on on 06/08/2020 ***



Sunday, June 21, 2020

5 Strategies For Balancing Revenue Versus User Growth

scales_balanceSome analysts argue that revenue drives growth, while others say user growth drives revenue. Both have worked. Google reached $1B in revenue within five years of incorporation, and now has a market capitalization of over $1 trillion. Twitter showed no focus on revenue in the first five years, but was able to parlay 500M users into a $35B public company, and now growing revenue.

Every startup dreams of achieving that milestone, when they can focus more on scaling the business and enjoying their earnings, rather than fighting for another investment infusion. Most are still confused about the right priority. Should they focus on increasing revenues and profitability, or entice more and more users with “free” services, to increase their valuation.

Traditionally, it was simple. A business only achieved critical mass by becoming cash-flow positive. Revenue growth (top line) then had to be converted into profit growth (bottom line), before a business was deemed to be self-sustaining and worthy of public investment.

It’s only been in the last decade or two, that social media companies, like Facebook and Twitter, have achieved market valuations in billions of dollars (unicorn status), while clearly sacrificing revenue to gain users. In my view, the pendulum is swinging back, with investors looking more for the traditional indications of business integrity, stability, and growth:

  1. Some element of organic growth is a good thing. The purest form of capitalism has always meant charging a fair price and making a fair profit. Re-investing profits to grow the business is organic growth. The concept of free goods and services to get you hooked, financed by deep pockets, or advertising, seems marginally ethical to many.
  1. Long-term stability requires revenue growth and profit. Most modern investors still look for a business model that embodies a gross margin over 50%, and a net margin in the 20% range. A healthy business, ready to scale, has been doing this for a year or more, with an existing customer set generating a non-trivial and growing revenue stream.
  1. High customer loyalty and high team passion. Startup productivity is embodied in key ratios, including low cost of customer acquisition, high retention, and high revenue per employee. High customer churn and lackluster team members are still indicators of a high-risk investment opportunity, to be avoided by both public and private investors.
  1. Growing appreciation for the value of the solution provided. These days, you need customer evangelists who see the value and will pull in their friends through viral actions to keep the business growing. Too many of the high user growth startups have been fads, and numbers can go down as fast as they go up, as per Friendster and MySpace.
  1. Understanding competitive early mover requirements. First movers in a new space need users more than revenue to maintain market share, so investment pitches need to highlight this priority in requests for funding resources. More complex and defensible businesses should highlight their organic drive to profitability and brand leadership.

Unfortunately, the Internet and heavily funded startups have nurtured a customer expectation of free web services and free smartphone apps. In these domains, it is now difficult to monetize at all until you have a large critical mass of users. In these cases, growth scaling is important, both before and after revenue flow begins. The business plan must reflect both growth phases.

Thus even after a startup has achieved a critical mass of users, the expectation of long-term revenue growth and profitability does not go away. Twitter is facing this challenge right now, as the large majority of public investors expect a near-term financial return on their investment, every quarter of every year.

So a higher focus on user growth may be necessary early, but is never sufficient. If you are in it for the long run, don’t forget the basic business principle that if you lose money on every customer, you can’t make it up in volume.

Martin Zwilling



Saturday, June 20, 2020

7 Startup Leadership Keys To Ramp Up Team Commitment

highly-engaged-teamEntrepreneurs need to be effective team leaders, since no one can transform an idea into a product and a business without some help. Unfortunately many founders I work with as a mentor are experts on the technical side, but have no insight into leading a team. But fortunately, team building is a skill that can be learned and practiced, for those willing to put in some effort.

The only real alternative is to find a co-founder who can build and lead the team, while you focus on the product. Otherwise, in my experience, the startup will fail. The importance and the specifics of practical team leadership were re-confirmed to me a while back in the classic book, “Unlocked,” by Robert S. Murray, who is a recognized expert in the field of business leadership.

I recommend his checklist as a starting point for developing team connections and building engaged team members as a key step in becoming an effective team leader, even if your team is spread all over the country:

  1. Consciously reduce time spent on outside activities. You won’t be viewed as the team leader if you spend most of your time on activities that are not relevant to your team. Being visible and engaged on a random part-time basis, due to other jobs, won’t do it. If your team has trouble finding you, you won’t make productive connections.
  1. Be compulsive about scheduling time for your team. Even busy entrepreneurs need to schedule regular and predictable times which will be devoted only to working and interacting with the team. Possibly an hour in the morning and an hour in the afternoon may be enough, if you make it happen consistently.
  1. Maintain a weekly “huddle meeting” with the entire team. This can even be done remotely via Zoom, but it’s important that every team member attends. You need to listen as each summarizes their accomplishments for the last week, and their plan for the week ahead. Leadership is making sure they have resources and understand the strategy.
  1. Have monthly reviews with each team member. Team members need and crave feedback, much more frequently and informally than the annual performance review. I recommend scheduled monthly 30-minute informal checkpoints, as well as quarterly updates on objectives and performance. Ask what you can do for them in every review.
  1. Practice leadership by walking around (LBWA). I personally have found this to be one of the most effective ways to find out what is going on, as well as an opportunity to provide feedback on strategy and direction. Go for walks every day and stop at people’s desks. Ask them what is going on, both in the team and outside of work. Listen.
  1. Recognize team members for individual efforts. Communicate individual results as well as team results to everyone. Most leaders don’t say “thank you” enough. Recognition in front of peers is often more motivating that monetary awards. This is the time to talk about wins with customers and what is coming on the horizon, and the team role in each.
  1. Be real and authentic in every interaction. If you are not, your team will see right through it and you will be worse off than if you stayed locked up in your office. Make sure you’re treating all team members as you would want to be treated. Be genuinely interested in learning something new every day from your team, and they will follow you.

The value of startup teams with the founder as an effective leader is many times the value of many strong individuals working independently. It’s not only your connection with the team, but their connection with each other that is critical. Only a dedicated leader can spot those special powers in each member and then build a well-oiled team which can win the startup war for you.

The result is not only more productivity, but also a startup where everyone loves to contribute, and the whole team feels the energy and satisfaction of accomplishing your dream. Now your product leadership becomes business leadership, which can actually change the world.

Marty Zwilling



Friday, June 19, 2020

5 Ways To Validate Your Technology As Market Driven

electric-driverless-shuttleTechnical entrepreneurs love their technology, and often are driven to launch a startup on the assumption that everyone will buy any solution which highlights this technology. Instead, they need to validate a customer problem and real market need first. Don’t create solutions looking for a problem, since investors ignore these, and customers other than early adopters will be hard to find.

Exciting new technologies these days range from the niche social media software platforms I see almost every month, to new transportation models, like consumer space travel and driverless autos. These founders all seem to be pushing their technology, rather than highlighting their solution to a painful need. Customers buy solutions, not technology.

In fact, outside of those few early adopters, technology by itself has negative value to the majority of potential customers. Most people are wary of change, and know that new technologies take time to learn and stabilize, so customers prefer solutions based on tried and tested proven technologies. Smart entrepreneurs build market-driven solutions, per the following principles:

  1. Size the opportunity and customer interest first. Your passion isn’t enough to create a market. If there is a growing opportunity, an accredited market research group like Forrester or Gartner will already have data to quantify your excitement, and help make your case. Prototype your solution for customers, and discount friends and family.
  1. Look for customer willingness and ability to pay. Just because users support your free trial doesn’t mean they will pay for the solution. Nice to have does not motivate a revenue stream. Technologies that cure world hunger may find that that hungry people don’t have money, and government agencies as customers are a very long sales cycle.
  1. Limit the features and complexity. Technologists tend to add more features, just because they can. More features usually means more complexity in operation and support. The best solutions, from a customer perspective, are able to mask the technology with a very simple and usable interface that focuses on their problem only.
  1. Take a hard look at alternatives and competitors. New technology does not necessarily make better solutions. If you claim no competition, investors may perceive that you have no market, or you haven’t looked. Neither is positive. Customers may be perfectly happy with existing alternatives and competitors.

  1. Work in a familiar domain, on a problem you have experienced. The most successful entrepreneurs tackle problems that have caused them personal pain, in an area they know well. Every business domain looks simpler to outsiders who have no insights into the complexities that increase your risk.

None of these principles is meant to imply that technology is not important in building new solutions. In fact, some technology leaps are so great that they enable a whole new class of products, or a whole new market. These are called disruptive technologies or the next big thing, in the sense that existing markets or economies of scale are disrupted by the scope of change.

Examples of solutions from disruptive technologies include the appearance of personal computers, smartphones, the Internet, and the first social media platforms. Even for these, which did indeed change the world, the aforementioned principles still apply, in conjunction with a couple of additional considerations:

  • Time frames for acceptance are longer and the risk is higher. Based on history, the acceptance period for major technology changes is much longer than innovative evolutionary changes – sometimes taking 20 year or more for pervasive acceptance. Investors thus tend to shy away from these startups, meaning you need deeper pockets.
  • Disruptive technologies require customer education to create a new market. Customers tend to think linearly, so existing customer feedback is unlikely to lead to, appreciate, or pay quickly for the new solutions from world-changing technology. This means more time and money for viral marketing, product iterations, and promotions.

So the more you emphasize the technology of your offering, the more you need to be prepared for increased costs, reduced investor interest, slow customer acceptance, and a longer wait for any return. On the other hand, the longer-term impact and return of disruptive technologies is likely to be huge, if they survive the early challenges.

My recommendation for first-time entrepreneurs, and the rest of us who don’t have deep pockets, is to focus on customer problems that are causing pain today, and customers who are willing and able to spend real money on a solution.

You will more likely get the investor resources you need, the guidance from existing experts, the opportunity to hone your business skills, and the confidence from success. Then when you sell your first company for several hundred million, you will be ready to tackle that favorite disruptive technology leading to the next big solution to change the world.

Martin Zwilling



Wednesday, June 17, 2020

5 Reasons Two Founders As A Team Are Better Than One

Bill-Gates-Steve-BallmerIt seems like every entrepreneur I meet these days is quick to proclaim themselves a visionary, expecting that will give more credibility to their startup idea, and improve their odds with investors. In reality, I’m one of the majority of investors who believe that startup success is more about the execution than the idea. Thus, unless the visionary highlights a cofounder who can take the vision and execute, I assume the worst.

It’s true that gifted visionaries bring many good things to an organization, including big picture ideas, seeing around corners, and a hunter mentality. Yet they also come with a set of shortcomings. These were outlined well, with some good recommendations for overcoming them, in the classic book, “Rocket Fuel,” by Gino Wickman and Mark C. Winters, both with a wealth of experience in this domain.

My bottom-line recommendation and theirs is that every visionary entrepreneur needs to be matched with a cofounder or key team member who has the required execution attributes. Let’s take a hard look at the key potential weaknesses of a visionary, and the value of an execution-oriented partner, which the authors call an integrator:

  1. Staying focused and following through. Visionaries tend to get bored easily. To spice things up, they start creating new ideas and direction, which gets everyone excited. This may cause a wonderful 90-day spike in performance, but in the end often sabotages their original vision. Many projects get started but few are completed, and momentum is lost.

    To compensate, every visionary entrepreneur needs to find a partner who gets great satisfaction from results, and loves the discipline of making things happen on a day-to-day basis. This person is the glue that can hold the people, processes, systems, priorities, and strategy of a developing startup together.

  2. Too many ideas and an unrealistic optimism. Most true visionary entrepreneurs have unusual energy, creativity, enthusiasm, and a propensity for taking risks. This can be disruptive, as they love to break the mold. They often show little empathy for the negative impact this can have on capacity, resources, people, and profitability.

    Again, the solution is a partner who is the voice of reason, who filters all of the visionary’s ideas, and helps eliminate hurdles, stumbling blocks, and barriers for the whole leadership team. Titles for this role in a startup are not fixed, but usually show up as president, COO, or chief architect.

  3. Cause organizational whiplash. Due to founder visibility, the team is so tuned in to the visionary and current direction that every turn to the right to pursue a new idea turns the whole team to the right. The organization can’t keep up the pace of change, and soon loses motivation, productivity, and all sense of where they are headed.

    Every organization needs a steady counter-force that is focused on directional clarity, and great at making sure people are communicating within the organization. Good integrators are fanatical about problem resolution and making decisions. When the team is at odds or confused, they need this steady force to keep them on track with the business plan.

  4. Don’t manage details and hold people accountable. Visionaries typically don’t like running the day-to-day of the business on a long-term basis, and aren’t good at following through. Even communicating the vision itself can be quite a challenge, since it’s so crystal clear in their head that they can’t imagine having to repeat or clarify for others.

    Balance here comes again from the operational expert, who is very good at leading, managing, and holding people accountable. They enjoy being accountable for profit and loss, and for the execution of the business plan. When a major initiative is undertaken, they will anticipate the ripple of implications across the organization.

  5. Tends to hire helpers and not develop talent. Idea people are so bright that they don’t see the need to leverage the capabilities of others, or hire people smarter than they are in any given domain. They are usually too self-centered to see the need for developing skills and leadership in the other members of the team, or building a succession plan.

Here also the solution usually is a partner with prior experience, who has learned how and when to hire real help, and implement metrics and processes to measure results. They enjoy the coaching and development role, and are able to match work assignments to people’s strengths, promoting both people and company growth.

Of course, many will argue that the visionary entrepreneurs can simply fix their shortcomings, and thus save resources by satisfying both roles. But in my experience, very few entrepreneurs have the bandwidth to make this work, and the adapted entrepreneur ends up doing both jobs poorly.

I’m a proponent of capitalizing on your strengths, rather than focusing on fixing your weaknesses. If your strength is being a visionary, use that vision to attract a complementary partner, and make it a win-win opportunity for both of you.

Marty Zwilling



Monday, June 15, 2020

7 Positive Ways To Highlight Your Competitive Clout

businessman-competitive-cloutMost entrepreneurs spend far too much time thinking negatively about competitors, and can’t resist making derogatory statements to their own team, to investors, and even to customers. This approach only makes these important constituents question your integrity, intelligence, and your understanding of business basics. Pointing out flaws in others does not give you strength.

As an investor, I always listen carefully to what an entrepreneur says, and does not say, about competition. Every business area has competition and every customer has alternatives, so a smart entrepreneur needs to acknowledge these as a positive in defining a big market, and position the features of a new solution in this context. Here are seven key ways to do this:

  1. Frame the competition as manageable. Investors want to see evidence of specific competitors who make the market, and your sustainable competitive advantage to hold your own. They don’t want to hear of no competitors, or a long list implying a crowded space. Use three generic categories, and relate your position to a key player in each.
  1. Highlight your positives to frame competitor shortcomings. Talk about competitors with positive statements about the advantages of your own product. For example, “While Product X has worked well in the server market, my product also provides Cloud support, to drastically reduce IT costs and maintenance.”
  1. Emphasize intellectual property and dynamic product line. Patents and trade secrets are more powerful advantages than missing competitive features, which might be quickly filled in as you gain traction. Be careful with the first-mover claim, since big competitors have deeper pockets and can accelerate to quickly eliminate this one.
  1. Demonstrate expertise on the range of competitors. You don’t need to talk about every competitor, but you better know every one, just in case someone challenges you. Do your research thoroughly on the Internet, with industry experts, and advisors. Build your credibility by presenting balanced competitor leadership and team histories.
  1. Become a thought leader on industry evolution. Make it evident that you have learned and evaluated competition from a higher perspective – meaning the evolution of industry technology and trends. Show that you have thought about indirect competitors and alternative solutions, like airplane technology versus a better train.
  1. Develop a timeline showing continuous innovation. Make your competitive position a long-term advantage by presenting a timeline of technology evolution, rather than a comparison at time of first rollout. Investors don’t like an apparent “one-trick pony,” or a momentary advantage that can be quickly overcome by smart competitors.
  1. Position your solution in the world market. Every market and every opportunity these days is global, so successful strategies and positioning are done with that in mind. Your rollout needs to be focused and targeted locally in the near-term, but competition needs to be addressed in a much broader long-term way.

Don’t forget that the primary objectives of every competitive positioning are to demonstrate your business acumen and integrity, as well as the strengths of your solution. Any overly negative comments you make about competitors doesn’t help you on either of these objectives, and will kill your momentum with investors and potential customers.

Spot comparisons are also less and less valuable these days, as the market tends to change quickly, and competitors can pivot and recover just as quickly. Remember that smart competitors are likely working on new features with resources greater than yours, and timeframes to delivery that may be shorter than yours.

In addition, thinking positively about competitors is what your customers will do, and what every smart investor or potential business partner does. You have to get on the same wavelength to optimize your solution, maximize your credibility, and minimize the competitive risk. The alternative of being an entrepreneur full of negativity is no fun for either side.

Martin Zwilling



Sunday, June 14, 2020

8 Keys To Hooking Investors, Even If They Are Sharks

shark-tank-daymond-johnAs an advisor to entrepreneurs and active angel investor, I often get questions about the realism of the Shark Tank TV series, compared to professional investor negotiations. The simple answer is that with all the staging of TV lights and billionaire investors, it’s nothing like Silicon Valley. Yet the process is eerily realistic, and every entrepreneur can glean some important lessons.

Here are eight key points that I believe should be taken from the show by every startup founder looking for investors in real life, across the range of venture capitalists, angel investors, or even friends and family:

  1. You will be judged first as a person, then by your idea. If you’ve watched the show, I’m sure you remember entrepreneurs who appeared doomed by their presence, almost before they started. Others with the right confidence and personality were able to garner funding, despite a weak business plan. Investors invest in people, more than ideas.
  1. Grab investor attention in the first couple of minutes. Skip the background story and customer pitch, which every investor has heard all too often. Investors want to hear a quantified problem, a simple solution description, opportunity size, competition, traction, team qualifications, how much money you need, and what equity you are willing to give.
  1. Personalize your presentation, if possible, for every investor. Smart Shark Tank presenters have done their homework on each investor, and customize their sample product or anecdote for each. In a more general sense, find out as much as you can about every group and person you address, and tune your pitch ahead of time to match.
  1. There is no substitute for knowing your business. We have all seen the entrepreneur who believes that passion and emotion will overcome all investor objections and requests for answers. The most common failures on the show, and in real life, are people who don’t know their margins, cost of customer acquisition, channels, or other key data.
  1. Dress to impress and be credible to investors. A colorful costume may catch TV viewer attention, but may hurt your image and turn off investors. Remember that most business investors are from an era where sandals and frayed jeans were not associated with hard work and business success. Exceed the expectations of the investor.
  1. Keep calm, and never get defensive when questioned. Entrepreneurs who interrupt investor questions, or show a temper, will quickly lose investor respect, and likely lose the deal. Be sure to pose your counterpoints as clarifications rather than disagreements. Agree to evaluate investor views on subjective issues, rather than just dismissing them.
  1. The value of an investor goes far beyond cash. Many entrepreneurs feel that investor money is all green, and thus the same. On Shark Tank, you can easily see that some people need Lori and QVC, while others need Damon and his apparel connections. Investor knowledge and experience routinely have more value than the money.
  1. The initial outcome is the beginning, not the end. All handshakes in investor forums, or on the show, are subject to follow-on due diligence reviews. According to reports, only about a quarter of the deals close as you see them on the show. On the other hand, many who don’t get an initial deal win later through good visibility and connections. Based on my experience, both of these are also true in real life.

Thus, while the forums and investors are different in the real world, there are many relevant lessons than an astute entrepreneur should take away from Shark Tank. So if you plan to face any forum of potential investors in the near term, position and practice your own pitch with advisors until you are ready to calmly face the bright lights. The last thing you want to hear from any of them is “I’m out!”.

Marty Zwilling



Saturday, June 13, 2020

7 Entrepreneur Questions To Select The Ideal Investor

analyzing-profit-business-calculationToo many entrepreneurs tell me they are looking for an investor, and can’t differentiate between venture capital (VC) investors versus accredited angel investors. They argue that the color of the money is the same from either source. They fail to realize that the considerations are quite different for each, which can make or break their investment efforts, and ultimately their startup.

Let’s consider some basic definitions. Accredited angel investors are non-professionals investing their own money, while venture capitalists are professionals who invest someone else’s money (usually from large institutions). The amounts from angels start as low as $25K, while minimum venture capital amounts usually start in the $2M range.

That doesn’t mean you should always go for the big bucks first. In fact, the reality is quite the opposite. Angels are more likely to fund new entrepreneurs, and early-stage or seed rounds, while VCs tend to focus on entrepreneurs with a successful track record, and later stage rounds. Of course, between these extremes is a large overlap of interest and potential.

More importantly, the focus on numbers tends to hide other more subjective issues that could be more important for any given startup. These considerations include the following:

  1. How much ownership and control are you willing to give up? VCs tend to demand more control of your spending and strategic decisions, with required board seats and lower valuations. Angels will likely agree to simpler term sheets, better valuations, and less restrictive terms on potential dilution, voting rights, exit options, and executive roles.
  1. How big is your startup opportunity? If your targeted business plan opportunity is not at least a billion dollars, most VCs won’t even be interested. Both angel and VC investors are looking for solutions that scale easily (product versus service businesses), and both expect revenue growth that can reach the $20M mark by year five.
  1. How large is the financial return you project? VCs will be looking for a 10X return on their investment in 3 to 5 years, or 30% annual IRR (Internal Rate of Return). That may sound high, but they know that up to 9 out of 10 startups fare poorly, so they are looking for one big win. Angel investors wish for the same return, but may accept a 5X deal.
  1. How many investment rounds will be needed? Angel investors are usually constrained to making a single investment per startup, but very few entrepreneurs make it to cash-flow positive on a single round. VCs tend to protect their initial investment, and they have the resources to make several multi-million-dollar rounds as required.
  1. How experienced is your team? First-time entrepreneurs rarely catch VC interest, unless they have one or more people on their team who have a track record of startup success, in the same business domain. Angel investors often have emotional motivation to give-back, and assume their own expertise and involvement will assure success.
  1. How good are your connections in the investor community? Sending unsolicited business pitches to every angel and VC investor you can find on the Internet is a waste of your time as well as theirs. You need a warm introduction for most VCs, to get their attention. For angel investors, you only need to do some local networking to get interest.
  1. How much help do you expect and need? Both VCs and angels can and will help you, but VCs are likely to be more “hands-on.” They tend to have partners focused on a given business area, with current insights, executive connections, and the ability to bring in new team members. If you are looking for money alone, angels are the better alternative.

If your startup can’t yet relate for any of these considerations, then your alternative is that popular first tier of investors, called friends, family, and fools (FFF). With these, you are on your own in negotiating amounts, valuations, and roles. These are people who believe in you personally, without evidence of previous startup experience, no current traction, and lack of valuation.

In all cases, investors tend to invest in people, more than the idea, or even the stage of execution. They are looking for a win-win deal, with entrepreneurs that demonstrate a positive chemistry and open communication. The color of any investor’s money may look the same, but it won’t help you if the price you pay is higher than the value it brings.

Marty Zwilling



Friday, June 12, 2020

7 Ways To Optimize Passion And Energy In Your Startup

high-passion-and-energyMost of you will start your business with plenty of passion and purpose, but all too often I see both disappearing after months of facing unanticipated setbacks and challenges. Indeed, it is even more critical that you keep your key team members energized with a high level of passion and purpose, or burnout rears its ugly head, putting the future of your whole business in jeopardy.

The challenge is to create positive recharge events for you and your team on a regular basis, rather than waiting for that one big success indicator, like record profits or going public, to override all the negative crises along the way. Here are some key initiatives from my own experience, which can make even the toughest business journey seem worthwhile and fun:

  1. Prioritize and highlight many small wins along the way. A good way to start is to create and communicate bite-sized milestones toward your end objective, including product development stages, customer threshold targets, and funding achievements. Schedule all-hands events to celebrate each and get everyone’s batteries recharged.

    These events can be as simple as a team pizza party for meeting development milestones, to an off-site adventure or concert to recognize progress and generate new team enthusiasm. Frequent small events are always better one large formal bash.

  2. Give your business a higher purpose than just profit. These days, even customers look for businesses who create a social or environmental impact, and flock to support them. They feel the same passion that you and your team need to be reminded of on a regular basis to keep up the necessary level of energy, positivity, and commitment.

    For example, Blake Mycoskie, founder of shoe company Toms, donates a pair one-for-one, keeps himself and his team recharged by sending employees to travel internationally and work directly in the field where the shoes are donated.

  3. Focus everyone on the bigger paybacks than a paycheck. There is increasing evidence that employee happiness and job satisfaction, including yours, does not scale up with your success. Make sure that all of your business efforts create and capitalize on positive people relationships, personal growth, and matching people needs to results.

    In addition, according to recent reports, the size of employee paychecks ranks behind advancement opportunities and work-life balance as the key reasons people are burned out with their job. Just think about what is important to you, and talk to them about it.

  4. Maintain a balance between work and other life activities. Provide yourself and everyone some time to recharge, whether it be scheduled reward events, or just some time off for vacations and time with family. Remember that your well-being, and that of your team, should always come first, on the road to making your business a success.

  5. Incent change, learning, and innovation as business norms. Nothing kills passion and purpose like a static environment. The business world is constantly changing around you, so you and your people need to do the same. Make sure your objectives and rewards motivate employees through innovation, and desired training and coaching.

  6. Regularly reconnect and communicate your “why.” Every business was started to satisfy a need in the marketplace, and it pays to remind yourself and communicate to your team that purpose on a regular basis. Everyone is energized when they feel really needed, and that need can be easily lost in the day-to-day challenges of a business.

    Your “why” is the emotional appeal of your business, and it can be as simple as Toms improving the lives of the less fortunate, to Airbnb’s effort to make every stay a unique and enjoyable experience. Don’t let you or your team forget it for a moment.

  7. Give up expecting perfectionism in you and others. Stop penalizing yourself and others on the team for every less than perfect move, and relish the learning that normally comes from mistakes. Make it a habit to take pleasure from doing your best and helping others learn, rather than agonizing over business outcomes that are never good enough.

I’m convinced that most entrepreneurs and most teams are operating well below their fully-charged capacity most of the time. Feedback from employees indicates that only about one in five feels fully engaged and productive. Just think what your company could do if you and everyone worked at the level of passion and purpose you felt when you started the business.

Marty Zwilling

*** First published on on 05/29/2020 ***



Wednesday, June 10, 2020

8 Business Accountability Lapses And How To Recover

others-blame-fingerAs a business investor, I look for investments where I see founders really holding their people accountable for their actions. More importantly, I look for entrepreneurs and owners like you who are not afraid to hold themselves accountable for the success of the business. If I see or hear evidence of a victim mentality, or someone playing the blame game, it may be time to walk away.

I do believe that lack of accountability is an easy trap to fall into, but one that you can avoid, and even consciously crawl out of. Based on my experience in several businesses, accountability has several levels from none to poor commitment as outlined below. You may recognize these in your own company, and can overcome all of them with a proactive management focus and conviction:

  1. Everyone is proceeding with unreasonable expectations. This almost always starts at the top, based on a founder’s dream and passion, without the proper homework on sizing the market, or assessing product realities. The team accepts no accountability, because they have not been made believers. You have to give them a credible plan and evidence.

    Every investor can recite examples of passionate entrepreneurs who seek funding for a worthy cause, like feeding the hungry, without a real business case for who will pay. If you can’t convince investors, you probably won’t get accountability from your team.

  2. Team members oblivious to business success or failure. Too many employees these days, and even executives, are focused only on doing what they have been told, without regard to impact on the business. You can and must fix this by communicating business goals and objectives, and establishing personal metrics which only reward success.

  3. Unclear, misaligned, or overlapping job responsibilities. When I find two or more people who believe they have responsibility for an objective, it is hard for anyone to feel accountable. Your job as the entrepreneur is to make sure that goals and objectives are uniquely assigned, with proper follow-up and measurements, to clarify accountability.

  4. Key people resort a victim mentality when things go wrong. It’s easy for you to blame someone else in the organization, economic conditions outside, or even overly demanding customers, when things are not going well. It’s your job as a leader to be the model for accountability, and build it into your team culture through trust and rewards.

  5. People are focused on workload rather than business results. I often hear about how hard people are working, rather than milestones achieved or business growth. This argument is used to justify the need for more funding, more people, and more time for delivery. Raise accountability by narrowing your focus and tools to improve productivity.

  6. High employee turnover and poor employee morale. When I do due diligence on a potential funding candidate, I always inpect high levels of employee change, and low morale indicators. Accountability is impossible to maintain in an environment of high people change, tension, and uncertainty about the organization or company mission.

  7. The business remains static despite changing realities. Every business today must recognize that change is the only constant for survival. Accountable leaders and teams realize that pivots are often required, and the agility to make changes to the product, business model, and even the customer set, must be part of every accountable culture.

    Kodak, as an example, had made so much money on film that they were reluctant to believe in the digital trend, even though they had one of the first digital camera patents. No company leader wanted to be accountable for a change of the magnitude required.

  8. A lack of openness to outside guidance and coaching. I believe that every business, whether public or private, needs to engage an advisory board or outside directors for a regular review. Executives with no external input, even if they think they are accountable, easily mislead themselves into missing alternatives and trends that will hurt them.

Based on my own experience and feedback from other executives, accountability is not only the key to business success, but it is the key to employee happiness, engagement, and retention as well. In all cases, accountability has to start with you. So before you start to challenge the commitment of your team, it may be time to take a hard look at yourself as the role model.

Marty Zwilling

*** First published on on 05/27/2020 ***



Monday, June 8, 2020

6 Tips To Market Your Idea Before Building A Solution

market-your-ideaSavvy entrepreneurs start testing their ideas on potential customers even before the concept is fully cooked. They have enough confidence in their ability to deliver that they don’t worry about someone stealing the idea to get there first, and they don’t forget to listen carefully to critical feedback. They become walking public relations machines for themselves, as well as their idea.

The alternative is to spend big money later on pivots, lost credibility with investors, and delays at rollout trying to build visibility and credibility. I’m not proposing that anyone promise things that they don’t intend to deliver, but it’s time that founders switch to start selling their product before they build it, rather than believing the old adage of “if we build it, they will come.”

I still hear too many excuses for not working early on the elevator pitch, like wanting to fly under the radar, don’t have the team together yet, or can’t afford an agency. In fact, you don’t need a third-party public relations agency at this stage. There is real value in doing the key things yourself, before your startup is even started:

  1. Demonstrate thought leadership before selling a product. Highlight the problem and your concerns in industry blogs, speaking in public forums, and making yourself visible on social media and networking opportunities. You want people to see you as an evangelist for hydrogen fuel, for example, so your later auto engine will have credibility by default.
  1. Craft and hone your elevator pitch early. Before the product is set in stone, you can test your message and continue to refine it until it connects well with investors, as well as customers. Later you may have the problem of being told by public relations firms to stay on message, even after you suspect it is not working.
  1. Visibly be a bit controversial to test the limits. This early in the game, any coverage and peer review is better than just being another unknown entrepreneur. It’s human nature that challenging the status quo gets more attention than quiet concurrence. People tend to forgive controversial views if you aren’t perceived as pushing a product.
  1. Proactively seek out thought leaders and journalists. Entrepreneurs who wait to be found are destined to spend a lot of time alone. Social media sites today, including Facebook, LinkedIn, and Twitter, provide ideal forums for presenting your cause and your concept. Start actively blogging on your own site, as well as on industry forums.
  1. Make your business cards stand out in the crowd. Everyone exchanges business cards, and most are forgotten immediately or never really seen. These days, images are especially important, as well as a tag line, and your social media links. Unique and professional business cards are still well worth the investment.
  1. Follow up personally on every new connection. Key introductions in a networking meeting will be quickly lost, unless you take the next step of calling or emailing later to request a personal meeting. Use these meetings to build the relationship, more by asking questions than by pitching your concept. Requests for investment come later.

Every entrepreneur has a story, perhaps the inspiration for your idea, or the path taken to get to this point, or a key lesson learned from past mistakes. Stories are the grist reporters look for, and they make you unique and memorable. Find your personal hook – it can be more key to your entrepreneurial success than any given product or service that you are about to offer.

If you are a social entrepreneur, a natural hook is the environmental or humanity cause that you espouse. Perhaps you can amplify your position by sponsoring an event, travelling to a visible location, or donating your time and other resources.

These days, winning in the crowded startup world is all about marketing. The sooner and more effectively you utilize all the available marketing channels, the more visibility and impact you will have later when your product or service arrives. As an entrepreneur, you are the most important part of your brand, not the other way around. Capitalize on yourself early.

Marty Zwilling



Sunday, June 7, 2020

8 Indications Of A Real Entrepreneur Versus A Hacker

Hacker_versus_entrepreneurAs a startup investor, I often see business proposals looking for funding that really look like expensive hobbies looking for donations. I recognize that entrepreneurs tend to substitute vision and passion for formal processes, but using no discipline or process in building something new is a sure way to spend money, rather than see any return and build a self-sustaining business.

I’m not suggesting that you model your startup after the complex corporate organizations you hated in your last job, but there are at least eight key functions and activities that every investor expects to find in a startup proposal with any real potential to change the world. Each of these requires some ongoing effort, so I expect at least a rudimentary process associated with each:

  1. Record of spending and business assets. I still see entrepreneurs who spend money and time for months on a new business idea without any separation of personal and business funds, and any formal accounting system for their new business. This is the first business process that every startup needs, that I wouldn’t expect to find for a hobby.
  1. Managing to specific goals, priorities, and a plan. Technologists building cool new platforms, just because they can, won’t find investor interest. Entrepreneurs need to document a process of responding to a market need, sizing opportunity, assigning a specific business model, and planning for marketing, sales, and customer satisfaction.
  1. Solution development and delivery. Products and services for a business need to be attuned to customer requirements, cost and quality tradeoffs, with milestones for pricing and completion. Typically some production and delivery is outsourced, requiring formal contracts and documentation. Hobbies are developed ad-hoc, driven by personal needs.
  1. Preparation and management of funding. Even if you are not requesting outside funding, I would expect a clear process for sourcing and managing the investment you plan to apply. External investors expect a documented business plan, with clear targets on funding needed, use of funds, revenue projections, return potential, and exit strategy.
  1. Team building status and plan. Solo entrepreneurs, with a team of helpers, will be assumed to be a hobby rather than a business. I recommend every startup plan for at least two or three decision level team members, and at least a couple of highly-qualified external advisors. Show that you have a process to hire, fire, and train others as required.
  1. Formalize the use of tools and information technology. Productivity and repeatability is the hallmark of a good business, whereas a hobby usually assumes everything is custom built and personal. I look for business startups to already have their website up and running, administrative tools purchased, and basic procedures automated.
  1. Customer receivables collection and vendor payments. These are critical processes for any business, so they need to be implemented even before investor requests are sized or solicited. For progress and success assessment, each of these needs some metrics defined, a training plan, and responsibility assignments within your team.
  1. Marketing, sales, support, and service operations. I’m assuming that most of you will see these as intuitively obvious elements of a business, but not needed for a hobby. Yet I continue to get funding requests that never mention any specific plans or costs to be associated with these elements. No mention usually means no plan and not competitive.

For all of these, your objective should always be a minimum viable process to start, with the expectation that each will be enhanced and pivoted as you learn from customers and competition that works and what doesn’t. The key is to be proactive, rather than assuming that you can react to each crisis as it happens. Customers today are easy to lose, and expensive to replace.

It’s a myth in the startup world that not having processes makes you more competitive. In my experience, no defined process means unable to respond in a timely fashion, unpredictable quality, and high operating costs. None of these are attractive to investors, and jeopardize the success of even the best initial idea. A hobby may take your idea to a product, but a startup has to take the idea to a business.

Marty Zwilling



Saturday, June 6, 2020

8 Learning Principles To Keep You Ahead Of The Game

future-game-consoleAspiring entrepreneurs who rely only on traditional learning vehicles (teachers, classrooms, and risk-free practice) are doomed to failure in anticipating change today. Either they are never really ready to commit, study an opportunity until it has passed, or fail with tools and techniques from a bygone business era. The Internet and the current information wave have changed everything.

Being a successful entrepreneur these days requires a current insight to a myriad of changes, including many that haven’t yet been integrated into the traditional academic learning vehicles of textbooks and professors. The Internet is the problem, by facilitating constant change, and it’s the solution, by providing an absolutely current view of customers, trends, and best practices.

The challenge is to find the time and initiative to keep up with the information wave, and be able to curate the data into knowledge that must be learned, unlearned, or relearned. It requires an attitude of self-education, versus an assumption that someone else will provide the education. For entrepreneurs, change is the norm, so you have to relish it before you can make it happen.

This required ability is aided by some supportive personal attributes, such as confidence, initiative, problem solving, and determination, but the basic learning principles must include the following:

  1. Satisfaction will come from learning something new every day. This goes hand-in-hand with every entrepreneur’s desire to do things better, and make a real impact on the world. This is a key part of enjoying the journey, as well as the destination. It doesn’t imply any sense of superiority or weakness, but often provides motivation beyond money.
  1. Success requires challenging assumptions and status quo. With this principle, real entrepreneurs start with a conviction that new learning will reveal flaws in existing models, leading to new opportunities. The Internet is the source of data for alternative views, and social media allows direct customer interactions to test these views.
  1. Learning means understanding, far beyond memorization. Great entrepreneurs strive to understand the depth of a customer need, rather than just the ability to recite a longer list of features. Technologies are not solutions, but understanding a technology, in the context of a customer need, will result in more competitive and long-lasting solutions.
  1. The act of communicating and writing enhances learning. The process of documenting what you think you know in a business plan, for the team and for investors, solidifies your own understanding of your new business. With that learning, you are able to more effectively share and market your solution to customers and business partners.
  1. Building a new business is not rocket science. Growing a business is understanding the needs and thoughts of regular people and simple financial transactions, not some complex technology that you might assume you can never learn. With the Internet, you can see all you need explained in a dozen ways in text, videos, pictures, and podcasts.
  1. Learning is nothing more than looking outside your box. Extending your knowledge is like dealing with competitors – if you aren’t extending your comfort zone, you are losing ground. With the Internet, you can quickly test your new business concepts, with crowd funding and social media, and get quick feedback from around the world at low cost.
  1. Relationships are a test of your learning readiness. Building a new business today is all about building relationships with your customers and your team. As an entrepreneur with a new startup, you are the brand, and customers today expect a relationship. In addition, you always need relationships with advisors, investors, influencers, and peers.
  1. Proactively ask for help and anticipate the need to pivot. With the Internet, you can ask for help from normally inaccessible experts, with minimum personal exposure and cost. It’s easy to see how often others have made changes, so your own learning and associated pivots should never be an embarrassment. Avoid the arrogance trap.

No one is too old to learn new things as an entrepreneur, whether you are just out of school at twenty, or just finished your first career at sixty. If you follow the principles outlined here, and take advantage of the pervasiveness of the Internet, you too can be a part of the solution rather than a part of the problem. A failed startup is the harshest learning lesson of all, and we need to change that approach.

Marty Zwilling



Friday, June 5, 2020

7 Ways Entrepreneurs With Great Ideas Must Follow Up

entrepreneur-businesswoman-visionIn my experience with entrepreneurs, there seems to a wealth of self-proclaimed “idea people” who aspire to start businesses, but only a few who are willing and able to dig in and get the job done. All the great ideas in the world won’t make a business, if the ideas never get implemented. Only rare great entrepreneurs, like Bill Gates and Elon Musk, have proven to be both.

I worked with Bill Gates in the early days of Microsoft and the IBM PC, while I was with IBM. Bill was relentless in his focus on getting the software PC DOS project delivered, while continually challenging us with new business models. Elon Musk is known for his focus on implementation, often working 80-100 hours a week, while still able to offer an endless supply of innovative ideas.

If you or your team sees you as an idea person, your first task as an entrepreneur should be to find a co-founder who can deliver. Finding a co-founder is rarely a bad thing, since two heads are always better than one in meeting all the startup challenges. Let me be a bit more specific on how follow-up trumps ideas for success in the key challenges of a startup, or any small business:

  1. Networking with investors, partners, and customers. Meeting people and talking about your ideas won’t get you very far. First you have to listen carefully to what the other party is looking for, and then you have to follow-up to meet their connections, do personal dinner invitations for relationship building, and demonstrate traction.
  1. Tailor investor proposals and term-sheets. Professional investors expect far more than an idea pitch – they are looking for a documented opportunity analysis and realistic financial projections. They watch for formal follow-up to questions, demonstration of real product, and revenue results. Passionate reiteration of the idea won’t close funding.
  1. Detailed product specifications and prototypes. With great idea people, an initial product is rarely fully defined, as features are added and subtracted to meet the audience of the day. Milestones are not met because there is no implementation discipline. Products from idea entrepreneurs often try to be everything to everyone.
  1. Productivity and time management challenges. Idea entrepreneurs are largely driven by the “crisis of the moment” or the next event on their schedule. They are too busy to follow-up on a major partner opportunity, customer inquiry, or a critical internal process that simply isn’t working. Communication to the team suffers, and productivity is low.
  1. Managing marketing metrics and the sales pipeline. Effective marketing requires converting ideas to real content, creating programs to educate channels, and managing metrics to see what works and what needs to change. Follow-up is required for every sales lead, a pipeline built, and a sales process documented, with training for new reps.
  1. Customer acquisition, retention, and support. Ideas don’t generate customer loyalty – they want to see specifics for their case. Most experts agree that acquisition of a new customer costs six times retaining existing customers. Lack of follow-up after a sale can cost you more customers than poor service or poor quality.
  1. Maintaining professional relationships. No business associate will be impressed with ideas for long, if they experience unpredictable follow-up delays in email, phone calls, or delivery commitments. Disciplined execution is as critical to communication and relationships as it is to the bottom line of your business.

For business professionals, I would suggest that if you don’t do follow-up well, you should never aspire to be a manager or an executive. That’s what they have to do most of the time, so you won’t enjoy the job, and probably won’t be seen as doing it well. Most executives will tell you that their idea time is while sleeping, or while working out in the gym.

Of course, every small business needs to be built around a great idea, and every entrepreneur needs to find innovative new ideas regularly to stay ahead of the crowd. But the bulk of the real work and time to make a startup or small business successful is in the execution and follow-up.

In my view, idea people will be more at home and more appreciated in the design, marketing, or planning department of a larger and more mature organization, with an implementation team behind them. Successful entrepreneurs need to enjoy the journey, perhaps more than the destination.

Marty Zwilling