Wednesday, January 26, 2022

6 Essential Leadership Practices Raise Accountability

Meeting-Office-Group-TeamAs an advisor to business executives and owners, I often hear discussions about employee accountability, almost always focusing on the negative. Phrases like “holding people accountable” imply negative consequences or punishment, rather than rewards or providing the freedom and coaching to team members to choose their own actions, and pursue what matters most to them.

I would challenge you to look at accountability from a more positive perspective, as I see in a new book, “Uncommon Accountability,” by Brian P. Moran and Michael Lennington. Based on their years of experience as successful executives and productivity consultants, they and I agree that focusing on these key positive elements will more likely get you the accountability you desire:

  1. Set clear and high standards of performance. When I talk with your team members, I’m often surprised at how little they know about your highest values and performance expectations. They need to hear your real organizational standards that define success, as well as the non-negotiable behaviors necessary to be a productive part of the team.

    Jeff Bezos believes strongly that setting high standards has been the key to Amazon's success. For example, instead of quick slide presentations, teams at Amazon write six-page memos to lay out ideas in narratives to be read in silence at the start of a meeting.

  2. Provide regular feedback on execution and results. Annual performance reviews are not enough to ensure accountability. We all need weekly, if not daily, informal and feedback on direction, and what is working and what is not. Positive feedback should be delivered publicly, but constructive feedback is best delivered in one-on-one sessions.

    We have all heard the excuse of “not enough time.” But when there is a will, there is a way. Richard Branson, who manages many companies, even provides feedback by walking around the cabin and talking directly to his key staff during his Virgin flights.

  3. Highlight every positive performer consequence. Most team members already know negative consequences, but rarely envision positive ones. It’s up to you to keep all potential consequences in perspective, and don’t apply them as a lever to improve performance. Make sure they are seen as based on metrics, and belong to the performer.

    Something most executives don’t talk about publicly, but should, is how people get selected for a “fast path” or quick promotion. I know from experience that this process most often focuses on employees who are always accountable, in success or failure.

  4. Foster a team member project ownership culture. In my experience, team members who take ownership always seem to identify ways to improve their processes and the business in general. They must feel free to make the decisions needed to perform well without getting permission first. Real accountability only comes with decision autonomy.

    Another key approach to encouraging ownership is to find ways to have team members work toward shared goals, and put more of their “skin in the game.” Of course, to make this a culture, you have to overtly reward successes, and avoid negative penalties.

  5. Build a trust relationship with each team member. Accepting accountability requires trust, and trust doesn’t come without a relationship. It’s up to you to build that relationship by listening to their needs and concerns, and offering help where you can. Avoid the temptation to provide the “right answers” to team members without seeking their insights.

    In today’s environment, with more and more remote and virtual teams, the job is tougher but it's possible. It’s your challenge to learn how to use social networks and video facilities effectively. Make sure that all your contacts and discussions are not one-way.

  6. Provide coaching and training on ownership discipline. As a leader, coaching is most effective way to help people manage ownership of their choices and results. The key ownership disciplines that you can help provide include vision, planning, process control, scorekeeping, and use of time. The key is to be available and stay positive.

With these key strategies, you will find that you no longer are tempted to manage accountability by negative consequence, but instead will migrate to the more positive and effective strategy of “holding team members capable.” At the same time, the people you depend on will shift from a mindset of “I have to” to “I chose to.” That’s a lot more satisfying and successful for all concerned.

Marty Zwilling

*** First published on Inc.com on 1/12/2022 ***

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Monday, January 24, 2022

5 Components Of A Startup That Will Bring Fulfillment

happy-startup-foundersBuilding a startup is hard work for low pay, it’s risky, and it requires total responsibility to make it work. Yet, many entrepreneurs are the happiest people I know. On the other hand, I know many unhappy individuals who are always partying, have minimal commitments, and little responsibility. I suspect the real parameters of happiness have eluded these people.

According to one of my favorite authors, Brian Tracy, in his classic book “The Power of Self-Discipline,” happiness is not even a goal that you can aim at and achieve in and of itself, but it is a by-product that comes to you when you are engaged in doing something you really enjoy while in the company of people you like and respect.

Tracy defines the five key ingredients of happiness that every potential and existing entrepreneur, including Mark Zuckerberg (and every non-entrepreneur), should evaluate relative to their own situation:

  1. Happy relationships. Fully 85 percent of your happiness – or unhappiness – will come from your relationships with other people. For entrepreneurs, that includes business colleagues, but it also still includes spouse, children and friends.
  1. Meaningful work. You must be doing things that you love and give you a sense of fulfillment, as well as making a contribution. Studies have shown that the three most motivating business factors include challenging work, opportunities for growth, and pleasant coworkers.
  1. Financial independence. The happiest of all people are those who have reached the point at which they no longer worry about money. That doesn’t mean unlimited funds, but enough that they don’t fear being destitute, without funds, or dependent on others.
  1. Health and energy. It is only when you enjoy high levels of pain-free health and a continuous flow of energy that you feel truly happy. For many, health is only a “deficiency need,” meaning you don’t think much about it until you are deprived of it.
  1. Self-actualization. This is the big one, the feeling that you are becoming everything you are capable of becoming. Before this can happen, you must first feel that all deficiency needs are satisfied, and you have achieved self-esteem:

  • Survival. Basic survival is the top deficiency need, meaning sufficient food, water, clothing, and shelter to preserve your life and well-being. You cannot be happy, and you will experience tremendous stress, until survival requirements are met.
  • Security. The second deficiency need encompasses financial, emotional, and physical security. You have to have enough money, security in your relationships, and physical security to assure that you are not in imminent jeopardy of any kind.
  • Belongingness. The final deficiency need reminds us that we are social people, and we need social relationships with others, both at home and at work. You need to be recognized and accepted by other people who count in your world.
  • Self-esteem. Your self-esteem is the core of your personality and largely determines how you feel about everything that happens to you. Are you liked and appreciated by peers, doing a good job and being recognized for it, and achieving your ideals?

According to Abraham Maslow, a noted psychologist, less than two percent of the population ever reaches this height of self-actualization and personal fulfillment. But the wonderful thing about self-actualization needs is that they never need to be completely satisfied. As you stretch yourself in this direction, you experience a steady flow of happiness and contentment.

In all of these areas, you need to exert self-discipline and willpower to overcome the tendency to take shortcuts. When you keep going in spite of all obstacles and hardships, you feel powerful. Your self-esteem and self-confidence increase, and then as you move, step by step, toward your ideals, you feel genuinely happy. Are you a satisfied entrepreneur?

Marty Zwilling

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Sunday, January 23, 2022

8 Reasons Why Great People Make Processes Repeatable

process-successEvery business needs repeatable processes to grow and thrive, but modern business processes need the right people to make them efficient and productive. In addition, today’s customers judge a company by perceived people relationships through social media, phone conversations, and sales experiences. The right people make productive processes, not the other way around.

Thus I believe that business leaders and entrepreneurs need to focus first on people leadership, rather than process leadership. As a business advisor and investor in new startups, I see how difficult it is to make any process work, no matter how well designed, if the team is dysfunctional. On the other hand, I see teams with almost no process that are tremendously productive.

Of course, some balance is required. That’s why I was pleased to see the balance on people versus process in a classic book on how to fix your organization, “The Diamond Process,” by Mike Diamond and Christopher Harding. These authors highlight the importance of both in their guidance on becoming a complete leader. Processes without people leaders will still be chaos.

Thus I find that the best entrepreneurs and business leaders today are people-centric, but they never forget that efficient repeatable processes are required as the business scales up. There are many advantages to this focus today, including the following:

  1. It takes people to see the need and adapt to change. Today’s pace of change in the market and in technology is unprecedented. Business leaders who are people-centered understand that a learning culture, tolerance for mistakes, and innovative approaches are required to thrive. Process leadership focuses on repeatability and efficiency only.
  1. Customers demand more engagement and flexibility. People-centric leaders drive ownership and engagement down to their customer-facing team members. For this to work, team members must commit themselves and freely accept accountability for their actions. In the end, engagement drives customer retention, sales, growth and profit.
  1. Leaders need direct and open team communication. Effective communication in a rapidly changing environment must be two-way and continuous, from all levels of the organization. Leaders need to share their values and goals, as well as challenges, to get effective assistance and buy-in from team members delivering the company image.
  1. You need a team focused on the future as well as the present. Long-term business survival and success requires everyone taking calculated risks for future gains, rather than blindly following a hard-coded process that seems to work today, handed down from leaders on high. People-centric leaders encourage and reward thinking outside the box.
  1. Self-motivated people require less supervision and management. This means more time for leaders to concentrate on looking ahead and rewarding team progress, rather than managing corrective individual performance actions and motivational incentives. Self-motivated team members are known to be many times more productive than others.
  1. Priority is placed on employee mentoring and coaching. A primary focus on process leads to highly structured training classes, leaving little room for personal career development. Mentoring and coaching tend to improve commitment, motivation, decision making, and creative talents, which are required for a competitive business and career.
  1. Taking care of people generates a quid pro quo. What goes around, comes around. If you treat people as automatons who execute a process, your team will respond in kind. If you treat your team as peer business owners, they'll be there to support you as the business changes. Leaders who demonstrate trust and respect will gain that in return.

  1. People leave you a favorable legacy long after you are gone. The mark of a complete leader is the ability to leave on vacation, and be assured that all will proceed without change. The greatest legacy that any leader can leave is a team who remembers and continues to honor the right values and objectives, even after you are gone.

Whether you are building a new organization or fixing an old one, the leadership analysis and focus needs to start with the people, and extend from there through the level of process and productivity required by the size and scope of the organization. Process leadership is important, but it’s just not effective without people leadership first.

How much of your time as a manager or business leader today is spent on people versus process? Would everyone on your team agree and return the focus?

Marty Zwilling

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Saturday, January 22, 2022

5 Tips For Startups Looking For A Great Solution Idea

startup-great-idea-domainPotential startup founders are always looking for ideas to implement, when they should be looking for problems to solve. Customers pay for solutions, but there is no market for ideas. I’m often approached by people with a “million dollar idea,” but I haven’t seen anyone pay that for one yet.

Equally often, I see startups who are on the road to implementing an idea, but haven’t figured out what problem it solves – the business plan waxes on eloquently for 20 pages about how great this product and technology is, but never gets around to defining the problem (investors call this the “solution looking for a problem” syndrome).

A related “red flag” in a business plan is a missing competitive analysis section, or a short paragraph that essentially says, “this product has no competition.” My reaction is, if there is no competition, then there is no market demand for your product, so why are you building it?

Luckily, many startups are smart enough to keep morphing their idea, until it finally fits a real-world problem, and they can move forward in the marketplace. Unfortunately they could have saved themselves much lost time, money, and heartache if they had just focused on identifying the problem before they built a solution.

Smart startups also don’t forget that startup ideas are solutions for someone, and companies have to make money. The way to make money is to make something people or companies need (not necessarily what they want). Here are five solutions from a classic essay by Paul Graham on “Ideas for Startups” that I believe have even more potential in today’s fast changing environment:

  1. Automate a labor intensive process. This is the traditional realm of computers. Microsoft Excel applied it to accounting spreadsheets, and Google applied it to information mining on the Internet, but Henry Ford even applied this principle to auto manufacturing. There are still millions of these opportunities for startups out there.
  1. Fix something that’s broken. In business, it seems to me that the traditional banking business models are broken or at least no longer fit the purpose. On the other end of the spectrum, Internet dating sites don’t seem to work. There are new ones sprouting up every day, so they must be offering something people want. Yet they work horribly, according to most people who have tried one.
  1. Take a luxury and make it a commodity. People must want something if they pay a lot for it. Yet most products can be made dramatically cheaper as technologies improve. This opens the market opportunity, you sell more, and people start to use it in different ways. For example, once cell phones were so cheap that most people had one, people started adding functions and using them as cameras and Internet devices.
  1. Make something cheaper and easier to use. Making things cheaper means more volume and more profit. For a long time making things cheaper made them easier, but now even cheap things are too complicated. Computer applications today are cheap, but often still impossible to use.
  1. Take a current solution to the next level. Solve the currently intractable problems that impact all of us. Tackle the global warming problem, predict where earthquakes will occur, find alternative energy sources, cure cancer, and unlock the keys to aging. There is no shortage of opportunity here.

Combine these with the value of a good understanding of promising new technologies, and the value of having associates with complementary skills to extend your thinking. Problem solutions are the ingredients that startups are made of. Start solving a problem today that you can use as the basis for the “idea” for your next startup.

Marty Zwilling

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Friday, January 21, 2022

5 Key Attributes Of A High-Performing Business Leader

Howard-Schultz-Starbucks-FounderEvery business leader I know struggles with the challenges of leadership, and is constantly honing their formula for success. We all wish it could be boiled down to a short list of actions, but we continue to be surprised and frustrated by new situations that seem to be beyond our thinking. Thus, ever after years as an executive in IBM and other companies, I’m still looking for the magic.

I was impressed by a recent book, “The Leadership Star,” by Brian Hartzer, an experienced business executive, offering a concise leadership framework that I believe embodies the key attributes that I recommend. I challenge each of you to review his list for completeness, as paraphrased here, and take a lesson or two from it to improve your own leadership impact:

  1. Show genuine care as the foundation of engagement. Great leaders strive to treat each person in their organization as a valued individual, rather than as a “human resource.” That means showing that they value each person for who they are, take interest in their development and growth, and care about excellence and results.

    This focus on individuals, often called servant leadership, is building a larger and larger following. Howard Schultz, former chief executive of Starbucks, credits servant leadership with driving his company to scale so quickly to now almost 34,000 stores in 80 countries.

  2. Help constituents find meaning in what they do. Strong leaders define and explain the organization’s purpose (why), priorities in delivering on that purpose, and demonstrate their own personal commitment to each. They help people see how their individual roles link to and support that purpose, and how the work aligns with their own personal values.

    Of course, finding personal meaning also requires effort on the part of your employees. They must recognize and appreciate what they are good at, realize what makes them happy, follow their passion for adding value to the world, and contemplate their legacy.

  3. Ensure team members know what is expected of them. Leaders need to give clarity to individual roles, expected behaviors, goals, and consequences, through regular formal and informal feedback. Ideally that feedback allows you to understand both absolute performance against goals, and your relative performance in the broader organization.

    In my consulting as well as leadership roles, the gap I found between what a leader expected versus what team members heard amazed me. I found that I needed to deliver the same message, in different forms, several times before it was really aligned.

  4. Be proactive in helping knock down progress barriers. This means really listening to team members and asking what’s getting in the way, personally looking for barriers they may not see or recognize, and taking action to remove those barriers. You must take the initiative to talk to customers, suppliers, other employees, and understand the process.

    The key here is to adopt a “proactive personality.” Many business leaders tend to become more and more reactive, as the volume of issues and challenges grows as your business scales or struggles. Keep your focus on the future, and what you can control.

  5. Publicly recognize individual contributions and success. The most effective leaders create a culture that regularly recognizes the value of individual day-to-day efforts, and celebrates major milestones, such as the achievement of quarterly or annual results. They utilize a variety of peer and team-leader programs, both formal and informal.

    Studies show that public peer recognition programs are often more effective than big bonuses or cash rewards. If you provide recognition for the right behaviors consistently, the desired results will accrue, and team members will be advocates for your leadership.

In all of these elements, the character and behavior of you as a leader is critical. You must demonstrate strong personal values and purpose, empathy for others, sustainable energy, and self-awareness. As well, you must continuously communicate through multiple channels, such as walking-the-talk, email, and town hall meetings. Keep listening and adjusting based on feedback.

Even with all this, I have learned that good business leadership is a journey, not a destination. You have to be willing to learn from your mistakes, humble enough seek help and advice regularly from peers, mentors, and coaches, and smart enough to recognize good people are the key asset of every organization, even more important than good processes.

Most important of all, you must seek to enjoy the journey, if you hope to enjoy the success.

Marty Zwilling

*** First published on Inc.com on 1/07/2022 ***

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Wednesday, January 19, 2022

5 Keys To Being Seen As A Valued Contributor At Work

Business-Teamwork-CooperationAs I talk to business owners and entrepreneurs, I’m surprised at how many complain about team members who feel taken for granted, or have contributions not appreciated. As an advisor and mentor, I’m always looking for more ways to improve communication, get people more engaged, and get more done. Great communication inside the organization and outside is the key to value.

I was pleased to see some specific guidance on how team members can better communicate their value at work, without self-aggrandizing, in a new book, “Influence and Impact,” by Bill Berman and George Bradt, who speak from experience as a psychologist, and years of coaching in companies across multiple industries.

The authors agree with my own assessment that there are many ways, both subtle and not so subtle, that you can coach team members on how to communicate their value, what they are capable of, and what you are looking for from them. Here are some of the key practices that the authors and I both recommend you emphasize:

  1. Focus on delivering and over-delivering, consistently. Coach them that working hard, over long hours, is not enough. You are expecting relevant results, and have little sympathy for hard work that misses your expected target. They need to openly accept misses, make no excuses, and explain clearly what they have learned to get results.

    Some good team members I know can’t resist the urge to say “yes” to all new requests, even when it jeopardizes their ability to deliver existing high priority work. Ask them to not let ego or optimism get them tagged as someone who promises but rarely delivers.

  2. Find opportunities to innovate, change, and accelerate. Helping your organization adapt and get ahead, with results, will have a positive impact on everyone, and you will remember. Ask them to raise their hand when opportunities come along to address a problem or streamline a process. You need people willing to accept a challenge.

    Every year, new things happen, like the current COVID pandemic, which raise the challenge of how to deal with new situations, new technology, and changing business trends. It pays to keep up with the world outside the office, and communicate inside.

  3. Solve problems for the business and peers. Everyone can start by building business relationships with other team members and owners, so they know the common goals, priorities, and challenges. If they can solve problems for you, you will see them as making an impact, and capable of taking on more responsibility.

    When was the last time you sat down with individual team members and asked for an update on their view of priorities and key challenges? I’ve been on both sides in my career, and often been surprised by how views can differ. Understand their values.

  4. Prioritize stakeholders essential objectives first. Be able to provide a current understanding of these objectives by regularly asking for feedback from stakeholders, including vendors, customers, and peers, and really listening to what they need. At the same time, make sure everyone understands your goals, and the results you expect.

    I’m not suggesting that you forgo your own objectives in favor of others, but most often I find there is common ground that you can capitalize on. Then your work becomes a win-win result, rather than win-lose. That means double the value and credit for all efforts.

  5. Show perseverance and adaptability to the mission. Building agility and timeliness are critical components of modern leadership, due to the pace and complexity of change today. Ask everyone to demonstrate a relentless focus on the company goals, with the mindset to initiate a variety of tactics to get to the desired objective.

    Some people believe that perseverance means not asking for help or guidance when the going gets rough. Assure everyone that the most valued performers are actually ones who are not afraid to seek guidance from peers and experts, and communicate well.

Notice that while each of these practices requires good communication, all of them stop short of asking for blatant self-promotion, which can be grating to others, and actually work against value. You do have to make it clear that you want team members who will take on new and bigger responsibilities, but don’t let them assume that more influence and impact will come with time.

Build good relationships with the people who count in your organization, and focus on what your organization really needs from them. The result will be a greater sense of satisfaction from your efforts, and new opportunities to benefit from all the team can really do to grow the business.

Marty Zwilling

*** First published on Inc.com on 1/05/2022 ***

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Monday, January 17, 2022

8 Growth Practices That Every Startup Needs To Follow

Facebook-growth-lessonsMany new business owners I know have learned the hard way that you can never be everything for everyone. As a startup, you need to use your limited resources to excel at a few core things for your best customers, in order to stand out and get the momentum going. Focus on a few key principles is the key to success, and it takes discipline and determination to make this happen.

I found some good lessons in this regard in a classic book, “Becoming Facebook,” by Mike Hoefflinger, the former Head of Global Business Marketing at Facebook. He talks in detail about ten of the key challenges that Facebook faced in their growth, to move from a tiny social media upstart to one of the most successful companies in the world.

Based on my experience advising new businesses, all of the principles that he outlines, including the following subset which I generalize here, should be taken to heart by every entrepreneur:

  1. Give customers fewer things that matter more. Your customers’ biggest need is not for more things. Your best strategy is to find more customers that fit the things you do best, rather than building more things. Too many choices confuse all customers, and make your job in marketing, distribution, and support much more difficult. Less is more.
  1. Pick a single metric that is the focus for all growth. Today’s world is full of metrics leading to business growth, including customer logins, revenue per customer, retention, and average solution price. Facebook’s winning strategy was a laser focus on increasing active user counts and time spent online. Revenue and competitive position followed.
  1. Speed is a key feature in every customer experience. Customers today have adapted to a fast-moving world, and they expect every business to keep up. They have no understanding or patience for extra steps and delays caused by bureaucratic processes, disengaged employees, complex networks, or software usability problems.
  1. Strive to cross the chasm from early adopters to mainstream. Many new companies become bogged down with the more vocal early adopters, who have an appetite for more function and new players. The mainstream majority want simplicity and base function, and we they get it they will come in droves, and be very reluctant to jump ship. Get there.
  1. Disrupt your own success before someone else does. In this age of technology, the advent of a better alternative is inevitable. To retain the initiative – especially when you’re winning – shape the disruption through your own moves instead of falling victim to those of others. Waiting for the crises of customers often means an impossible recovery effort.
  1. Maximize employee engagement by fitting roles to strengths. Employee engagement starts with looking beyond experience, to talent, determination, results, and a fit to your company values and culture. On an ongoing basis, engagement requires a focus on motivation, match to strengths and interests, and active career planning.
  1. Take care of business, but always play the long game. For many companies, the long game is choosing the right strategic partners and acquisitions. For others, including Facebook, it is penetrating China despite political constraints, and India, where only thirty percent of the population is on the Internet. But never take your eye off today’s customer.

  1. Getting acquired or going public should be a result, not an intent. A focus on looking good as an acquisition or IPO candidate has undermined many startups. Zuckerberg had so much confidence and determination to stay independent that he turned down an early $1 billion offer from Yahoo. Now Facebook’s market cap is nearly 900 times that number.

Facebook may seem like an overnight success, but in reality it faced the same challenges as any new business, including existing well-known social media competitors like MySpace and Friendster. Facebook competed against the model of free customer use paid by advertisers of Google, and the sophisticated data delivery infrastructures of YouTube and Netflix.

I’m convinced that the lessons outlined here can help you become the next Facebook or YouTube in your business domain. How many do you already practice today?

Marty Zwilling

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Sunday, January 16, 2022

Every Online User Platform Needs Revenue To Survive

success-profit-user-countA question that I still hear debated often is whether a new online platform startup growth strategy should focus on user count or profits. First of all, the glory days of “dot.coms” are gone, when investors “didn’t care” about profitability, and all the big money was focused on user count growth.

In the long run, everyone wants both profitability and user growth, but the question is which comes first. Most startups and investors I know don’t have unlimited funds, so the first question they should ask and do ask today, is “When is your company going to be profitable (self-sustaining)?”

Of course, growth is implied in that equation, and is also required for maintaining a sustainable competitive advantage. The challenge is not to undermine growth by a blind focus on profits. You might sell one of two of your widgets for $1 million each, entering profitability immediately, but then die because you can’t grow sales at that price.

I think you will find that most investors will relate to the following strategy for keeping the right perspective and getting the profit versus growth balance right:

  1. Pick an idea that has the potential to make money. That means it solves a real problem for real customers who are ready and able to spend real money. The number of current potential customers is large and growing. Solutions that may be viewed as “nice to have” or “satisfies a higher-level need” won’t get funded.

  1. Design a product or service that you can sell. Sure, you may need to give the product away for free to get traction, but assume you will have to sell something someday to get profitable and stay alive. MySpace, for example, boomed after launch for five years without a revenue model. When their deep pockets went empty, Facebook stepped in, but demanded revenue from ads. MySpace wasn’t ready for this, and it soon faded. Don’t count on finding investors willing to support growth alone on your new startup.
  1. Build a business plan for profitability in your lifetime. This simply means you need to be sensitive to costs, revenue projections, and a timeline, such that there is light at the end of the tunnel. Most Internet businesses should show profitability in two years, while new medicines may take ten years to pass FDA and other safety tests. Investors will look at competitors in your industry for the norms.
  1. Identify the total investment required for profitability. A very common mistake of early-stage startups is to request a small investment to get started. They are usually thinking only of costs required to get “in business,” rather than the total costs of marketing, scaling up, and going international. Be ready to answer the investor question “Is that all you need to get profitable?”

So unless you are building a non-profit, I say focus on profit all the time, every time. Of course, growth is implied in every focus, and profit enables growth. But some of you will surely say “What about Facebook and Snapchat, who focused on growth first and are clearly successful?” So let’s take a look.

Facebook is indeed the largest growth site on the web, with almost three billion user accounts, all free. Yet it took almost six years to become profitable, with revenue only from advertising. What most people don’t realize is that the total outside funding to get it there has been estimated at over $800 million, which is a bit more than you will get from any angel investor.

Yet I can’t argue their success in the value proposition, since they turned down a billion dollar offer from Yahoo way back in 2006, and their market cap today is over $900 billion. It has taken some very deep pockets to get to this point, so now you know why I smile when you tell me your plan emulates the Facebook model. Even the popular Snapchat is still struggling to generate revenue and profit.

I’ve heard all the arguments that a push for early profits on new business models will lead a company to fall back to a lesser model that provides short-term results, but short-circuits risk-taking that could lead to more long-term value creation. That’s a great argument if you have unlimited funding, but if you are just one of the “rest of us,” I suggest you focus on getting to cash-flow positive early.

Marty Zwilling

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Saturday, January 15, 2022

7 Lessons On How Startups Use Social Media To Succeed

social-media-to-succeedIf you are a business owner today, and not using social media to promote your business, you are missing out on a huge opportunity. But, contrary to what most people preach, it isn’t entirely free. Most social media outlets don’t require a subscription charge, but they certainly always require an investment, sometimes large, in people, in technology, your reputation, and your time.

There are hundreds of consultants out there who will take your money for guidance in this area, but I recommend that you start with some free resources on the Internet, or one of the many recent books on this topic. One of the original classics, “How to Make Money with Social Media” by Jamie Turner and Reshma Shah, Ph.D., hits all the right points from my perspective:

  1. There are risks as well as benefits. As with many startup activities, you only have one chance for a great first impression. You can jump into social media with a poor brand definition, poorly focused content, unrealistic expectations of customer service, or be killed by malware or viruses.
  1. Assess social media relevance to your product or service. If your business is industrial B2B products, social media should be low on your list. Spend your time and money on other platforms. If you are selling to consumers, especially younger ones, your business won’t survive without an effective social media presence.

  1. Attracting key stakeholders requires sensitivity. For some customers and many investors, a heavy focus on social networks and viral marketing may be a negative, rather than a positive. A balance of conventional and social communication and marketing is always advised.

  1. Pick the right platform for your business. Within each of the platform categories defined above, there is a right one and a wrong one for your audience. For example, LinkedIn is attuned to business professionals, Facebook is dominated by the social and upwardly mobile crowd, and Instagram leads as the top social media app for teens.
  1. Communication and writing skills are required. Heavy texting experience is not a qualification for communicating via social media. In additional to strong journalistic writing and storytelling, you need business acumen, strategic thinking and planning, and the ability to do the right research. These days, video production is also a useful skill.
  1. Make social media an integrated part of an overall strategy. An integrated marketing strategy starts with an overall brand management strategy, delivered through online and offline communications, promotions, and customer engagement vehicles. Your Twitter and YouTube messages better match your print advertising message.
  1. Find the right tools to analyze the ROI. Return-On-Investment metrics are not new, but the tools are different. Get familiar with current social media tools, such as Google Analytics, Kissmetrics, and HootSuite analytics. Over time, put together the data you need to measure your progress on a weekly/monthly/yearly basis.

The key social media platforms today include communications (Wordpress blogs, Twitter), collaboration (Evernote, StumbleUpon), and multimedia (YouTube, Flickr). In looking ahead, don’t forget the mobile platforms (iPhone, Android), and location-based services (Foursquare, Curbside).

As with any resource or tool, you need to optimize your social media costs against a targeted return. That means first setting a strategy and plan for what you want to achieve, then executing the plan efficiently, and measuring results. It’s not free, but it’s an investment that you can’t afford not to make.

Marty Zwilling

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Friday, January 14, 2022

7 Startup Partner Pairings That You Are Apt To Regret

startup-unhappy-partnersMost entrepreneurs who start a company alone soon come to the conclusion that two heads are better than one – someone to share the workload, the hard decisions, costs, and tasks you don’t like. In a moment of crisis, you may be tempted to take on the first person expressing interest as a co-founder. This would be a mistake, and could easily cost you your startup.

If you think about it, you should realize that not everyone is ‘ideal partner material.’ Most of us learn that fact from other partner relationships, like dating and marriage. First you have to be clear on who you are, and who you can co-exist with, what complementary skills and resources you need, and what decisions in the business you are willing to relegate.

Second, in your search for partners, you need to be aware of the many considerations that can make the difference between success and failure in the business, as well as your satisfaction with the relationship. Bringing money and connections is great, but other less tangible things can rip the business apart. If you catch yourself thinking any of these thoughts, it’s time to re-think:

  1. “We both have the same vision.” There is usually only room for one in a vision. Even if the endpoint is the same, there are many different roads to get there, and it’s hard for a startup to be on two roads at once. It works much better when one partner is the visionary, and the other is the pragmatic “get it done today” kind of person.
  1. “All decisions will be made jointly.” Two people making a decision need a tiebreaker, and three or more take too long. There is certainly no problem with each partner making decisions in his area of expertise and responsibility, but one has to be in charge. VCs routinely ask “Who is the final arbiter?” and the answer better not be ambiguous.
  1. “We are so alike, we finish each other’s sentences.” You really need a partner who is complementary, and can tackle the operational roles, like marketing, finance, and sales. A partner who is a carbon copy of you will likely mean two people working on every problem, rather than a natural separation of duties. Most startups can’t afford that.
  1. “Our work styles are different, but our goals are the same.” Some people are early risers and expect to tackle the tough problems early in the day. Others don’t get rolling until noon, and save the hard discussions for after dinner. No problem when things are going well, but in the hard times, emotions go up and communication goes down.
  1. “We have different values and ethics, but share a passion for this business.” Partners who don’t share a common regard for regulations and boundaries are doomed to high levels of stress and frustration. Some people like to live just over the limit, while others have a high sense of integrity and morality. It usually doesn’t work.
  1. “I’ll put in the money, if you put in the sweat equity.” I’m not suggesting that co-founders should be equal contributors on both sides, but the parameters for “equality” better be well understood and well documented. Things happen, memories change, and soon both sides feel under-appreciated and over-utilized.
  1. “Let’s keep it in the family.” On the surface, this seems like a great strategy, with a “share the pain, share the gain” outlook, or just cheap labor. In reality, the pressures of a relationship break up more startups, or vice versa, than running out of money. Investors routinely decline to fund co-founders who are siblings, or in a romantic relationship.

We all know of some relationships that seemed mismatched, but worked out well, so the real test is the test of time. Just as you should take some time to explore if your love interest would make good marriage material, I encourage you to take some time to explore if your fellow entrepreneur would make good 'partner' material. Avoid ‘whirlwind’ business partnerships.

In all cases, once you have decided that it’s time to seal the deal, be sure to establish in writing your working agreement, as well as ownership shares. Only then is it time to celebrate and look for angels on your way to heaven.

Marty Zwilling

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Wednesday, January 12, 2022

8 Key Principles To Prepare For Invading A New Market

startups-like-military-invasionMany of you don’t like to think of it this way, but penetrating a target market with your startup is a lot like a military invasion. I’ve learned over the years that you need to start with specific goals, a focused strategy, and a motivated and prepared team in order to penetrate competitive defenses. Too many entrepreneurs I know charge into battle with only their passion, and hope for the best.

I recommend you review the business startup experiences of some successful entrepreneurs with a heavy military influence, such as R.Riveter, which landed $100,000 from Mark Cuban on Shark Tank a while back, to enlist military spouses from across the country to make fashion handbag components. Here are some key strategy elements I see highlighted by the military:

  1. Gather your intelligence on where and when to hit first. Too many entrepreneurs push their product out without the proper scouting on high return or weak points in the existing market. They assume their innovation will overwhelm any competition, anywhere. The old adage of “location, location, location” could mean your city, or another country.

    It has long been assumed that starting locally is a requirement if you need investors. Yet VC feedback indicates that even this bias has been declining over time, perhaps due to significant improvements in videoconferencing and other communications technologies.

  2. Focus on one key objective rather than a broad global win. We all start with limited resources, so don’t try to win over everyone with the initial charge. A broad attack will likely confuse potential customers, and will spread your resources too thin to satisfy any. There is always time for broadening, or scaling your focus to pick up additional segments.

    For example, a few years ago the experts were telling SkyBell that they needed to own the whole smart home platform. They resisted this urge, and won by focusing first on providing an effective single point solution showing users who was at their front door.

  3. Capitalize on territory the competition has not penetrated. Use your new features or innovation to quickly get a foothold in the market. Be realistic with your intelligence gathering to find pockets of real interest, rather than assuming that “everyone wants one” of what you have to offer. This always means targeted marketing and special programs.

  4. Line up your resources and training before you roll out. Some entrepreneurs think they can do it alone, or can learn on the fly. It takes a team to run a business, with the tools and training to handle any skirmishes. I’m sure you have all heard of a highly promising startup that failed due to lack of inventory or non-existent customer support.

  5. Marshall friendly forces within the territory for support. Smart entrepreneurs use social media and influencer advocates within the target market to build momentum and provide direction and support, even before they are ready to attack. In today’s age of communication, customers look to friendly forces to find a new invader they trust.

  6. Aim for competitor vulnerabilities and premier opportunities. Initial penetration and success is what you need to convince mainstream customers to switch or try your new solution. Don’t be afraid to pivot or adjust your attack as you see weaknesses in competitive offerings, or major customer opportunities that you didn’t anticipate.

  7. Build collaborative partnerships with potential competitors. Many entrepreneurs forget about white-labeling and strategic supplier relationships as routes to customers and long-term leadership. Don’t be afraid to communicate and negotiate with the enemy to find win-win opportunities and confirm your position as a major market player.

  8. Keep your eyes open and be ready to counter flank attacks. Charging into battle with blinders on, expecting no surprises or resistance, is foolhardy. Every smart entrepreneur reviews his strategy and progress with the team at least weekly, and reserves some resources for changes and counter-attacks. Be willing to take risks, but don’t be reckless.

In my experience, almost every startup has the challenge of tackling larger and more established adversaries or existing alternatives in the market they choose to serve. Thus it makes sense to treat it like the life or death operation it really is. Don’t let your passion and ego limit your ability to enjoy the legacy and long-term success you always dreamed about.

Marty Zwilling

*** First published on Inc.com on 12/26/2021 ***

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Monday, January 10, 2022

7 Reasons Entrepreneur Mentoring Is A Win-Win For All

business-mentoringAs a long-time mentor and advisor to new business owners, I can attest to both the need for mentoring, and the satisfaction that comes from watching an aspiring but tentative entrepreneur grow into someone capable of changing the world. Business is not rocket science, and one-on-one guidance face-to-face, with a real project, trumps the classroom and mistakes every time.

In addition, mentoring is one of the most productive roles I have found as a member of the 78 million Baby Boomers otherwise entering retirement age. I can’t think of a better way to empower experienced business professionals, whether they are executives, engineers, accountants, lawyers, or bankers. It’s a win-win situation for everyone in this new age of the entrepreneur.

I found additional guidance in the classic book, “Teach to Work: How a Mentor, a Mentee, and a Project Can Close the Skills Gap in America,” by Patty Alper, who has been mentoring for fifteen years. She provides a detailed guide on how to get started as a mentor, how to have the greatest impact, and enjoy the role at the same time. Here is a quick summary of the lessons she offers for all of us:

  1. It’s an opportunity for give-back and pay-forward. I have enjoyed some success in business, but I would hate to think that everyone has to make all the mistakes I did to get there. Every professional I know has plenty to contribute, and enjoys the give-back as much as the learning. Those who learned from others first really enjoy paying it forward.
  1. Everyone finds meaning in new win-win relationships. The new generations in business, and even the old ones, believe that relationships get things done, more than skills learned in school. Building relationships, and finding ways for a win-win, is what mentoring is about. Good business relationships make better teams and customers.
  1. Face-to-face mentoring generates more inspiration. Entrepreneurship and business leadership requires passion, confidence, and creativity. Working directly with a mentor provides a depth of communication, through body language as well as personal focus, that is much more likely to provide the required inspiration compared to classrooms.
  1. Real-life projects incent high learning and retention. Business is not predictable, and there are no answers in the back of the book for most situations. Real projects and actual ventures are the best way to incent thinking outside the box, teach that mistakes are just learning vehicles, and focus on problem solving and innovation as the keys to success.
  1. Mentoring pitches turns students into communicators. Mentoring is really a lesson in two-way communication, required for every business transaction. Aspiring entrepreneurs learn to talk in front of others, sell their ideas, and be judged. They learn resilience and confidence, as well as how to show respect for investors and customers.
  1. Smart companies use mentoring to find future talent. Today, leading companies including Starbucks, Zappos, and Ernst & Young, are finding that mentoring is a great corporate social responsibility focus, as well as a way to find and train future talent. It’s another example of win-win, for the business as well as the mentees.
  1. Mentors learn about culture changes and new generations. When I am mentoring, I’m always surprised at how much I learn about how people think today, and what I can do to work effectively with them as team members and customers. One of the challenges we all have is cross-generational understanding. It’s hard to learn that in school.

In my view, this type of mentoring is a missing link in our education system today between schools and businesses. It’s bringing back a bit of the paradigm of the master tradesman in the European guild system mentoring journeymen before they stepped out on their own. Today we need it to improve engagement, confidence, and work satisfaction for all business professionals.

We need to close the Gallup poll gap between the 98 percent of academic officials who are confident they are preparing students for success, versus the 11 percent of C-level business executives who strongly believe that college graduates have the skills they are looking for. Entrepreneurs are our next generation of C-level executives. Let’s make sure they are ready.

Marty Zwilling

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Sunday, January 9, 2022

7 Keys To An Engaging Framework For Social Media Mktg

framework-social-media-marketingMost startups, and many big businesses, still don’t have a clue on how to use social media productively for marketing their business. They randomly churn for hours a day on a couple of their favorite social media platforms, with little thought given to goals, objectives, or metrics; and ultimately give up and fall back to traditional marketing approaches.

Start by reviewing current statistics, like the recent Social Media Marketing Benchmark Report 2022, to learn which social media sites are most popular, which features drive the most impact today, and how other social media marketers have maximized their efforts and seen the greatest ROI.

The next thing that entrepreneurs need to realize is that the process and framework for making social media marketing work are different from traditional marketing, and trial and error certainly doesn’t work. Ric Dragon, an expert in online marketing, in his classic book. “Social Marketology,” outlined the best set of steps I have seen so far for this current world:

  1. Focus on desired outcomes first. Valid social media objectives for a business should include one or more of the following: increased brand awareness, lead generation, service and support, or reputation management. Obviously, the platforms and how you use social media would be different for lead generation versus service and support.
  1. Incorporate brand personality and voice. Popular culture these days expects a more humanized brand voice, and constituents are listening carefully to the tone, vision, and expertise of that voice. Think about how you can project the voice you want, and make sure it is consistently used by all team members across all platforms used.
  1. Identify the smallest segments possible of your constituents. Due to the information overload felt by consumers today, marketing at the generic segment level no longer works. Social media is the only one which allows you to be hyper-granular and drill down to micro-segments, to dramatically improve engagement levels and conversion ratios.
  1. Identify the communities for these micro-segments. Traditionally, community implied a physical grouping, but today a community is characterized by what they value, more than proximity. More important than finding a community, is creating one, with your blog and other social media engagement. The best communities then become your advocate.

  1. Identify the influencers of these communities. Social media brings all the aspects of important influencers these days, including peer pressure, authority, credibility, and in some cases, celebrities. Because feedback from social media operates in real time, you don’t have to wait months for results. You spend the months influencing the influencers.
  1. Create an action plan with metrics. Good action plans include a listening plan, channel plan, SEO plan, and a content creation plan, with activities and metrics. Social media activities span the gamut from curation to gifting, building relationships and groups, blogging, service actions, to lead conversion. Pick the ones that fit your desired outcome.
  1. Iteratively execute and measure results. Measuring is all about return-on-investment (ROI). This can be customer acquisition cost, revenue growth, profit, or whatever other parameters are key to your success. Iterate and expect to pivot, based on results, because you can’t get it all right the first time. This is not trial and error.

In fact, marketing in the social media is fundamentally different from conventional marketing. The depth in which connections can be made with the “audience” or “customers” is far greater than it possibly can be with any other medium. The very nature of influence at this level means that values and vision must be in tune.

Of course, with social media marketing, trial and error is not the only way to fail. You can fail by not being there at all (see the United Breaks Guitars story), or making a big mistake (see 10 Social Media Fails to Avoid in 2021).

More positively, social media also brings many more ways to succeed. See some recent examples in the 10 of the Top Social Media Campaigns of 2021. It’s time for you to learn the best practices of using social media in your company, and putting them to work before your competition puts you out of work.

Marty Zwilling

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Saturday, January 8, 2022

10 Benefits Of True Multi-Tasking As An Entrepreneur

multitasking-businessmanWith the cost of entry at an all-time low, and the odds of success equally low, more and more entrepreneurs are starting multiple companies concurrently. This “parallel entrepreneur” idea has been around since at least the days of Thomas Edison, and for the new generation of entrepreneurs, who have been multi-tasking since birth, it’s probably not even a stretch.

Some entrepreneurs, like Paul Graham, co-founder of Y-Combinator, and Dave McClure, founder of 500 Startups, mask their focus on multiple startups by running an incubator or accelerator, and providing seed funding for a number of individual efforts. Other prolific entrepreneurs, like Richard Branson and Elon Musk, simply have several startups on the table at any given moment.

For entrepreneurs who really try to be the CEO of multiple early-stage startups concurrently, the hot term for this practice is “multi-table” entrepreneurs. I suspect this term is derived from the common online gambling practice of playing multiple poker games at the same time. In fact, I think that’s a great analogy, since the odds in a poker game may be similar to those of a startup.

Yet there are clear advantages to the parallel approach, if you have the moxy, resources, energy bandwidth, and the ability to multi-task effectively:

  1. A portfolio approach versus all eggs in one basket. Investors have long argued the value of a portfolio to hedge and leverage the risk, so why shouldn’t entrepreneurs do the same? With the current low capital requirements for smartphone and Internet apps, and high market volatility, it makes sense to spread the risk around as much as possible.
  1. Optimize your advisers and investors. Advisors and mentors are busy people. In your weekly meetings, it’s as easy to cover multiple company issues as one. Investors building their portfolio love to hear about multiple startups in one sitting, to select the best fit. Investors look at the people first anyway, so a strong team is good common ground.
  1. Many entrepreneurs love investing in other startups. Most Angel investors I know have previously founded and run at least one startup. Both these roles require unique skills, but both can benefit from operating in the other mode. Multi-table investors are the norm, and the investment process is good training for multi-table entrepreneurs.
  1. Learn to manage resources like multi-divisional corporations. Allocating resources, financial and operational, between divisions has long been a strategy for conglomerates, and can work just as well for savvy entrepreneurs. Revenue from one startup can be “invested” in another, and assets like buildings and computers can be shared.
  1. Attract and share specialized talent and skills. It’s very hard to attract talented people to a single product startup, but much easier if the entrepreneur has a bigger vision, with several entities producing complementary products. Expensive “lean startup” specialists can see a career potential, work full-time, and drive multiple successes.
  1. Cross-fertilization from current market feedback. One thing that you learn in one company, at a given moment in time, is equally valuable or leverageable in a different way at your other companies. As your customer list grows in one, you own it for the second. The cost of finding new markets can now be split among multiple entities.
  1. Foster and enforce the art of delegation. For long-term success, every entrepreneur needs to know when to step in, and when to delegate. That’s a skill that may not get enough attention until too late by a single startup entrepreneur. With parallel startups, delegation is a requirement for entry, and a valuable skill for all environments.
  1. Multiply the pay-back. Many parallel entrepreneurs have already achieved financial security through earlier efforts. Now they may see a way to multiply pay-back and spread the risk by active involvement with multiple startups. Of course, it’s like a double-down in gambling as well, which can quickly turn into a double loss.
  1. Products need not be tied to a given company. With open-source tools and public APIs, every product is no longer owned by a given company. The company entity is now primarily used to allocate ownership, accountability, and tax consideration, and need not be bound to a given product or operational structure.
  1. Burns off high energy and bandwidth. Now we are back to the fact that there are people who love to multi-task, and anything less is simply boring. This is especially true of Gen-Y entrepreneurs, with fire in the belly to change the world. Some see startups as a lottery where more tickets mean a higher probability of winning.

Of course, there are huge risks when you try to ride multiple horses at one time. At the very least, you may not do either well, or won’t be fully there when the going gets tough. Even single entrepreneurs who maintain a day job, for a steady paycheck, feel the pain of juggling multiple initiatives.

The hard part is getting the management part right. Every startup has to have someone minding the store, and a clear path to “the buck stops here.” No one can be a full-time CEO and work “in” the business of multiple companies. Plus there is the challenge of making sure the multiple roles do not conflict, legally or otherwise. Tread carefully there.

The most common way people move into the parallel entrepreneur environment, if they are so inclined, is to start another one, while still exiting the current one. The risk here is that winding down one takes much longer than you would expect, and starting something new consumes more energy than anyone predicts.

Overall, for the first-time entrepreneur, my sense is that trying to focus on more than one equally exciting idea is a recipe for failure. But with the cost of entry going down, and the multi-tasking bandwidth of each new generation going up, I suspect parallel entrepreneurs may soon be the norm rather than the exception. Are you ready to step up to this table?

Marty Zwilling

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Friday, January 7, 2022

5 Keys To Establishing A Caring Culture In Your Team

Management-SoftwareIt’s easy to say to people on your team that they must be accountable for their actions, but it’s not so easy to tell them how to do it. It’s even harder to give them the mindset of wanting to be accountable. In fact, many business leaders forget that they are the role model for accountability, and don’t audit their own actions to make sure that they always practice what they preach.

In the classic book, “The Difference: When Good Enough Isn't Enough,” Subir Chowdhury shines a bright light on both these issues. Chowdhury is one of the world’s leading management consultants, and he argues that accountability is only one part of a real caring culture that must be built and maintained to achieve a sustainable competitive difference.

The other key parts of a caring culture include nurturing employees and leaders who are straightforward, thoughtful, and resolute in their approach to the business. All my years of experience in business resonate with that assessment, and allow entrepreneurs to explain to team members what accountability means, and what steps are required to get there:

  1. Willing to proclaim that something needs to be done. We all know of examples where employees and managers see the same problem occur over and over again, but never raise a flag indicating that something can and should be done. A mindset of caring about the business and other workers is required to motivate this first step in accountability.

  1. Accept personal responsibility for tackling an issue. People without a caring mindset are quick to point the finger at someone else, or defer totally by saying “It’s not my job.” Leaders must send the message, and show by example, that delivering quality solutions to customers is everyone’s business. People working on problems must be rewarded.

  1. Make positive choices or decisions to act. Making positive choices is difficult with leaders or organizations that tolerate inertia or too much negativity. The right to make choices is one of the most important freedoms we have, so you won’t get accountability from employees that don’t feel they have the mission and training to make decisions.

  1. Think deeply about the consequences of each choice. It is easy to make a poor choice if you are not thinking about the consequences of that choice. Are you working to get a problem off your back or only serving your ego? Is what you are about to do the best long-term solution for the customer, or merely an expedient? Think before you act.

  1. Set high expectations for yourself and your team. When you set your own sights high, you cannot help but inspire others. When you inspire others, you make it easy to become more accountable yourself. Inspired team members will then set their own target higher, and that momentum will lead to better customer experiences and business success.

To make a real difference in your business, you need to be the role model for accountability, as well as nurturing these additional facets of a caring mindset across your whole business:

  • Culture of direct and open communication and respect. Your team’s ability to be straightforward and honest suffers when they are afraid, egos dominate, or people don’t trust that they will be treated fairly. Too often, leaders hide business realities and personal mistakes, but expect everyone else to understand and do the right thing.
  • Culture of individual empathy and thoughtful listening. Real listening involves not just hearing what others say, but trying to put yourself in their shoes, to fully understand the message. For managers, this requires getting out from behind your desk, going to the factory floor, meeting with customers, and being accessible at any time to your team.
  • Culture of passion, determination, and perseverance. This is a mindset that every problem can be resolved, and every situation can be improved. It requires humility and a willingness to change and adapt, even an acceptance that continuous improvement is the norm. People in this culture don’t ever settle for less than their personal best.

Thus you can see that accountability isn’t easy. It can’t be accomplished by edict, but it can be taught by example, by leaders who practice the principles they want their team to follow, and leaders who build a mindset of caring throughout the organization. How long has it been since you have taken a look in the mirror at yourself and your organization in this respect?

Marty Zwilling

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Wednesday, January 5, 2022

8 Reasons To Forge Ahead Now With Your Next Startup

startup-weekendAccording to most authoritative sources, the global economy has been severely impacted by the current pandemic. Yet if you wait for an economy bubble before starting your new business, you will be making a comparable mistake to the people who thought during the dot-com bubble "all I have to do is a startup, and I'll be rich." In reality, what matters more is who you are, not when you do it.

Like Paul Graham, founder of Y-Combinator, said a long time ago, I see startups succeed or fail every day based primarily on the qualities of the founders. The economy has some effect, but as a predictor of success it’s a rounding error compared to the founders. If you're worried about threats to the survival of your company, don't look for them in the news. Look in the mirror.

Here are some pragmatic reasons from Paul and others to highlight why you might not want to wait for the next business bubble before taking the leap:

  1. Alternatives are not as tempting. If your alternative is no job security, and low pay, why not work for yourself and build your startup? You'll be investing your time and energy into something with more potential upside in future. If you're talented and have always toyed with the idea of a startup, financially it makes sense to do it now.
  1. More available talent. It's hard to hire good people because they already have a job. But in a lesser economy that's not true -- companies have exploded and laid-off everyone, even the stars. Check your business network for a great co-founder or a great designer.
  1. Low cost infrastructure. Notice the empty offices that are wasting away as you drive down the street? Make them an offer. Need less expensive advertising? Ad revenue is still down as companies right-size marketing budgets. Negotiate, or use social networks, which are virtually free.
  1. Competitors are vulnerable. They have higher overhead, long-standing bills, yearly advertising contracts and high office leases signed years ago. Their prices are high and hard to lower. They're eating cash. You have none of these pains; you're sipping cash with no overhead and lots of time to devote to coddling new customers.
  1. Technology progresses. So for any given idea, the payoff for acting fast in a struggling economy will be higher than for waiting. Technology trains leave the station at regular intervals. If everyone else is cowering in a corner, you may have a whole car to yourself.
  1. Markets don't "reduce headcount." As a startup, you have more control over your customer base. You’re probably not going to lose your customers all at once, even though they may drop off individually if they can no longer afford you.
  1. Some business opportunities go up when the economy is down. While inventory liquidation is not an especially pleasant business, it's an example of one that generally does well during economic downturns. An aging population whose health is in jeopardy is going to purchase healthcare products and services—struggling economy or not.
  1. Investors are still looking for good startups. Everyone knows you're supposed to buy when times are bad and sell when times are good. A few investors actually think that way, so be there. You're an investor too. As a founder, you're buying stock with work.

The way to start in a sluggish economy is to do exactly what you should do anyway: manage cash as tightly as possible. If you don’t quit, the most likely cause of death in a startup is running out of money. So the cheaper your company is to operate, the harder it is to kill. And fortunately it has gotten very cheap to run a startup.

The most popular day for starting a new company is the same as starting a new diet: Tomorrow. So take the leap today, not tomorrow. If you don’t get started now, the odds are you'll never start. If you are an entrepreneur at heart, don’t be doomed to a life of trudging through jobs, depending on someone else for salary and bonuses and health care and retirement, a life's work without ownership or upside.

Besides, bubbles are hard to recognize until they burst. We are likely in one right now, but we won’t know until it’s too late. So either way, now is the right time to pursue your entrepreneurial passion.

Marty Zwilling

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Monday, January 3, 2022

6 Hiring Principles To Grow The Best New Venture Team

small-office-teamStartup investors tell me they invest in a new venture with a higher caliber of people, rather than the product or service, and I agree. In my role as a business advisor, I see successful businesses most often emerging from great teams rather than great products. Yet I find the people building teams are usually product experts, often with no experience in team building.

Of course, it’s no surprise that most entrepreneurs don’t have a background in hiring teams, and don’t have a budget for training or human resource consultants. But these days with all the resources on the Internet and elsewhere, there is no excuse for not keeping up on the latest insights, best practices, and technology in the area of hiring, motivating, and training.

For example, I remember a classic book, “The Best Team Wins: Build Your Business Through Predictive Hiring,” by Adam Robinson, CEO and cofounder of Hireology, which details the how and why of hiring your most valuable assets today. He comments that in spite of the digital revolution, the hiring process hasn’t changed from its low priority, last minute, subjective roots.

In fact, his analysis of current statistics and many case studies leads both of us to recommend a focus on a set of key hiring principles that shouldn’t come as a surprise, but don’t seem to get followed very often these days by new companies, or even the more mature ones:

  1. Look for a cultural fit before a skill match. In the past, very little consideration has been given to finding people who share your purpose and values for the business. But today, in this era of relationships, people who fit your culture have proven to be much more engaged and productive than others who are more skilled, but feel like outsiders.
  2. Some of the companies with the best team cultures, including Zappos, even go so far as to offer new employees $2,000 to quit after the first week on the job if they don’t feel a fit with the team assigned. It’s a small cost to prevent a long-term loss.

  3. Give priority to attitude over experience. New businesses need people who have a passion for getting things done with limited resources, enjoy problem solving, and relish constant change. Often times, candidates with more years of experience are frustrated and unproductive in these environments, and are looking for structure and consistency.
  4. At Twitter, for example, even though everyone gets great perks, including meals, yoga classes, and unlimited vacations for some, employees can’t stop talking about how they love working with other motivated people, where no one leaves until the work gets done.

  5. Be patient when filling open positions. Not planning ahead, and only hiring people in the crisis of an open position is a recipe for creating dysfunctional teams. Having no one is better than someone who needs constant attention, or is working against you. Define a disciplined process, take the time to find multiple candidates, and do proper reviews.
  6. Get interactive in candidate interviews. Some entrepreneurs approach hiring as a test of their selling ability, while others wait for the candidate to sell them. The best approach is to ask open-ended questions, really listen to the answers, and then follow-up for depth. Have multiple team members do their own two-way interviews, and compare notes.

  7. Avoid surprises through proactive homework. Team managers in a hurry to hire often skip references, assuming they won’t get the real story anyway. In truth, much can be inferred from what is not said, and the tone of former managers. Doing multiple calls will reinforce your qualms or eliminate them. Recovery from a surprise bad hire is expensive.

  8. Another type of surprise is the perfect candidate who walks away at the last minute. This can be avoided by asking about extenuating circumstances before you extend them an offer, such as spousal objections or other pending job offers. Asking will give you the chance to address these considerations, and avoid disappointment and drama.

  9. Do your onboarding with conviction. Integration of a new employee into their team is the right time to communicate the culture and direction of the business, and let them know what is expected of them. The proper training and support right up front is key to retention, the right attitude, and their ability to be influential in driving your business.

Building and managing a great team doesn’t stop when your last position is filled. Keeping the team motivated and happy over time is just as hard. Even happy people expect to be promoted, and do move on to other opportunities, so you have to plan for replacements as well as new business. Is your business able to grow and adapt as fast as the market changes these days?

Marty Zwilling

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Sunday, January 2, 2022

6 Strategies For Luring Investors To Your New Venture

Premier-angel-investorsFundraising is brutal. Actually, according to Paul Graham of Y-Combinator fame, “Raising money is the second hardest part of starting a startup. The hardest part is making something people want.” More startups may fail for that reason, but a close second is the difficulty of raising money.

Quite a while back, I outlined “The 10 Best Sources of Cash to Start Your Business” for startups, listing angel investors as alternative six. I still get a lot of questions on these mysterious and often invisible investors, so here is another attempt to bring them out of the ether.

By definition, an angel investor is not an “institutional investor.” Venture capitalists (VCs) are paid to invest other people’s money, and measured on the rate of return they get. Angels are typically high net worth individuals who are investing their own money, for a wide range of motives.

So “good” angels are ones with motives that are consistent with what you bring to the table. This means they usually invest in people who have the right “chemistry”, and areas of business they already know. They tend to work locally, so they can “touch and feel” their investments.

Angel investors also tend to limit the size of individual investments to $250K or less. If you need more, you need VCs or a flock of angels. So how do you find those good angels?

  1. Use personal networking. The best angels you will find are the ones who know you personally, or know a member of your team or advisory board. If a potential investor gets to know you BEFORE you are asking for money, your credibility and investment probability will be improved by an order of magnitude.
  1. Entice angels to play along. Of course, angels are really mortals. They want to make a difference. Asking an angel to work with your company in an advisory role is a great way to establish a relationship that may lead to a cash investment. If you impress the angel, it will likely make her at least an archangel (advocate) when it comes to funding.
  1. Court local angel groups. Since angel investors most often focus only in their own geographic area, it’s most effective to court the local group, or even make a guest appearance with an archangel. If you can earn an archangel's confidence, he or she will invite you to pitch the group, and you'll have an edge in the voting.
  1. Mine national databases. If you are still alone, submit your application to the leading online website national databases of angel investors, Gust (USA) and National Angel Capital Association (Canada). These sites have arrangements with hundreds of local groups and individual investors that you might otherwise have missed.
  1. Remember angels beget angels. That means that once you get the first one, he or she becomes your best advocate for finding more. Investment angels don’t like to travel alone, so they will bring in others if they can (it’s called share the risk).
  1. Don’t forget passive angels. These are angel investors who are private, meaning they don’t go to meetings, but will invest if someone they trust brings them an attractive opportunity. Find the right investment advisor, or member of your advisory board, and the “match-making” will happen.

Remember that angels have a culture all their own, and it pays to understand how to deal positively with them after you find one. There are some books out there to help, like the one I published a while back with Joe Bockerstette “Attracting an Angel - How to get Money from Business Angels and Why Most Entrepreneurs Don't”, and an old standby “The Art of The Start”, by Guy Kawasaki.

Even if you follow this recipe, you are likely to find that fundraising is a brutal challenge. But if it results in a good angel or two watching over your startup, you will definitely be one step closer to heaven.

Marty Zwilling

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Saturday, January 1, 2022

6 Signs That Your Startup Could Be The Next Exception

google-logoI tell entrepreneurs that Google was an “exception” to all the investment and startup rules, but I’ve always wondered what it takes to be an exception. Since every business is built by unique individuals, I’m totally convinced that exceptional people are the key to an exceptional company.

To check out the Google founders, and because I still see so many business plans that are modeled after Google (more search engines, and more billion dollar growth models), I had to take a look at the classic book about them a while back, called “Inside Larry & Sergey’s Brain,” by Richard L. Brandt. It didn’t disappoint me.

This book was not sanctioned by Larry Page and Sergey Brin, so it’s not a love story. All the controversy is highlighted, but the message still seems to be that these guys were and are exceptional in their efforts to build a company. Here are some lessons from the book that all entrepreneurs should wish they could emulate:

  1. Independently outstanding, but complementary founders. Larry is the primary thinker about the company’s future direction, and still weighs in heavily on key hiring decisions. Sergey, a mathematical wizard, is the arbiter of Google’s technological approach. Both have a deep sense of moral values and ethics, and work well together.
  1. Unique business tactics. Technology alone does not make a great company. Business tactics do. Google developed the most profitable form of advertising anyone had ever seen, ads selected real-time based on search terms. They focused on small advertisers looking for bargains. The model was a perfect fit for the Internet Age.
  1. Survived phenomenal early growth. In 2003, just four years old, sales hit $1.5 billion, profit was $100 million, and it had taken over some 80 percent of the world’s search queries. Google now employs about 140,000 people. Most founders don’t survive this kind of growth and change, but Larry and Sergey are still a well-balanced machine, with a net worth of over $125 billion each.
  1. Leaders loved and hated at the same time. Larry and Sergey have been wickedly clever. They break the mold. They challenge old industries and make a lot of enemies. They’re ruthless businessmen. Yet through it all, they’re idealists, believers in the power of the Internet to make the world a better place.
  1. Founders surround themselves with the best people. Early on, they were able to get money from the likes of Andy Bechtolsheim and John Doerr. They convinced Eric Schmidt to take the reins with them for growth as interim CEO and Executive Chairman for years, and had Dr. Larry Brilliant to set up the philanthropic arm. Amazing.
  1. Continue to think big. According to the book, both founders continue to think big. Some of their ideas are as flighty as space travel; others are as grounded as the DNA that makes them who they are. No one proclaims to know where its leaders will take Google and Alphabet next, but everyone expects more great things.

Even the pros should probably pay attention here, to sharpen their game and to improve the accuracy of their assessments about people in general, as well as Google’s motivations and intentions. I think Larry and Sergey have shown a relentless focus on innovation that puts them miles ahead of competitors on all fronts.

I challenge each of you, as you reflect on your own vision and entrepreneurial plans, to take a lesson from Larry and Sergey. Do you have the intestinal fortitude to walk away rather than be “corrupted by financial interests,” or to ignore conventional wisdom and follow your own instincts?

If so, then you too may be the exception that even the best and the brightest will line up to support. This world needs more exceptional people. Act like one and you too may be one.

Marty Zwilling

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