Wednesday, May 18, 2022

6 Success Mistakes Often Made By Serial Entrepreneurs

Degree-Vs-Dropout-Dilemma-Of-A-Young-EntrepreneurAs you know, growing a business is hard, especially the first time. Unfortunately, every new initiative is different, so don’t get too smug if you have had some success, and can’t wait to repeat it again. In my years as a business advisor, I have seen many of you crash and burn the second time around, despite the confidence. I advise working the next one as thoroughly as the first one.

Here are some key insights that I and others have collected for mature company leaders, as well as serial entrepreneurs. They often justify strategies in their own minds that lead to problems or even catastrophic failures that they never saw coming:

  1. Concluding recent positives are the new norm. Unfortunately, in this new age of rapid market change and harder-to-satisfy customers, you can’t assume that what worked yesterday will work tomorrow. New technologies and the power of the Internet can change things almost overnight, so do your homework from scratch on every initiative.

    For example, the e-commerce trend, driven by the Internet, has boosted many companies to success, but Covid and more recent customer demands for customization, easy returns, and instant delivery have made to model very difficult for many businesses.

  2. Believing you have a magic approach to growth. In my experience, there is no long-term magic in business. Innovative product and process solutions are only temporary, as they quickly become a commodity in the minds of customers and competitors. Yet, if you did it once, you can do it again, but don’t assume it will be easy, or just copying the past.

    In my experience, the secret is mostly hard work and passion. The successful business people I know typically work longer hours, cultivate more relationships, and create new initiatives more often than the rest of us. Take a lesson from Elon Musk and Steve Jobs.

  3. If you like it, so will all your potential customers. Maybe this worked for you the first time, but it is certainly a high-risk approach. As an angel investor, I expected startups to have a passion for their solution, but also to have done the market research and customer validation to size the real opportunity. You and your friends are not the market.

    In addition, these days you have to help your customers find you, through traditional marketing, more social media, and influencers. With today’s information overload, you can’t assume that people will know that you and your new innovative solution even exist.

  4. Capitalize on a continuing market demand trend. You all remember the seemingly limitless growth of social media and dating sites, so for many adding another one seemed like a sure-fire success. Yet I find that investors and customers are no longer interested in just another one. There is no substitute for new business model work and marketing.

    People are seeing the value and have a growing interest in renewable energy, artificial intelligence, and the use of blockchain technology for business. I’m seeing new business models for remote services, the sharing economy, and creating your own ecosystem.

  5. Overlooking the impact of global market forces. The current geopolitical tensions and the pandemic have and will continue to upset markets that were thought to be golden by many entrepreneurs and business owners. As you look ahead to your next business or growth initiative, I recommend that you take a hard look at your current winning strategy.

    In this age, because of world-wide communication, e-commerce, and quick delivery, every local business is really a part of the global market. Don’t assume that you can isolate your business and marketing to the local area, and continue to survive and thrive.

  6. Let your ego do the thinking based on prior success. Don’t let past success take your foot off the pedal of working hard, building relationships, and truly listening to your customers and other experts. Steve Jobs found that his early success at Apple didn’t guarantee him a job, but he came to back with some new thinking in the end.

The message here is that even the most successful business leaders seeking growth, as well as serial entrepreneurs, should never rest on their laurels. There is no substitute for doing your homework on current opportunities in the market, customer trends, and new technologies driving competitors. Stay on your current winning streak and continue to enjoy the entrepreneur lifestyle.

Marty Zwilling

*** First published on Inc.com on 5/4/2022 ***

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Monday, May 16, 2022

5 Ways To Expand Your Thinking For Your Next Startup

expand-your-thinkingWith all the upheaval and uncertainty these days, I find many entrepreneurs and business owners are reluctant to pursue new dreams, waiting for the world to stabilize and risks to go away. As a long-time business advisor, I see things just the opposite. Now is a time of great opportunity, with people knowing they have to adapt, and proven successes such as Elon Musk and Jeff Bezos.

Sometimes the hesitation I see is not just the qualms of starting and growing a business, but an actual inability to think big, chase dreams, or build a support community around you. To counter this hesitancy, I was inspired by a new book, “Make No Small Plans,” by entrepreneurs Elliott Bisnow, Jeff Rosenthal, Brett Leve, and Jeremy Schwartz.

They make a strong case, by virtue of their own experiences, that anyone can think big, and with the proper humility, thirst for knowledge, and a talented team, we all can accomplish the impossible. I will highlight here just a few of the many lessons that they mention, and I also recommend, to get you started down the path to the satisfaction and success you dream about:

  1. Make sure some crazy ideas are added to your list. No idea should go unspoken. You need to give yourself permission to think outside the box, and seriously consider a dream idea or two that your rational mind would rule out quickly. In addition to something you want, just make sure it’s something you can build, and many others may pay for it too.

    A popular and effective way to generate a range of ideas is brainstorming. Good brainstorming requires you to assemble a half-dozen of the right people who are not afraid to speak up and participate. Your challenge is to listen and keep it positive.

  2. Expect to have and acknowledge some failures. Don’t let the fear of failure keep you from taking risk and learning from your mistakes. That doesn’t mean trying the same thing over and over again, and expecting different outcomes. It does mean owning up to mistakes, pivoting, and really listening to customers, advisors, and industry experts.

    Take inspiration from Thomas Edison, who called every failure an “experiment” (now it would be a pivot). He made no excuses for 10,000 light filament failures and soberly responded: “I have just found 10,000 ways that won’t work.” He then succeeded.

  3. Capitalize on authenticity versus perfection. Trust in the real you, including imperfections, and move forward. Perfection in business is undefined and unattainable. Keep your focus on customers, who are never perfect, and build productive relationships. In these days of full communication through the Internet and social media, you can’t hide.

    Authentic leaders are forthcoming about both their strengths and weaknesses. Don’t be like the startup CEO I once worked for who always pretended to have all the answers, even when it was clear to everyone that his depth did not match his marketing passions.

  4. Find a partner to complement your weaknesses. We all have strengths and weaknesses, and too many of you spend your energy trying to fix a weakness, rather than leveraging a strength. Spend that energy instead finding and building relationships to balance that weakness with the strengths of others. One plus one can equal three.

    For example, I worked with Bill Gates and Steve Ballmer, who founded Microsoft and achieved success together. Bill was certainly the idea person and technologist, while Steve brought the business experience from Proctor & Gamble to close the equation.

  5. It’s not all about the idea – focus on the execution. The idea alone is not what’s valuable in business. The real value to you and the customer comes later, through hard work and execution. I learned long ago as an investor that the bridge from thinking and talking, to doing, is a long and difficult one for many to get over. Too many never make it.

    In my experience as an angel investor, I was never impressed when a startup founder claimed to be an “idea person.” Entrepreneurs often tout that “million dollar idea,” but I haven’t seen anyone pay that much for one yet. Focus on delivery results to show value.

I see many business owners who are linear thinkers, and they usually survive, but rarely boast of having achieved their dream, and often they don’t seem all that satisfied with their lifestyle choice. Maybe it’s time for you to take a hard look at your own progress and satisfaction in the business you are in. It’s never too late to starting thinking big, chasing your dreams, and having more fun.

Marty Zwilling

*** First published on Inc.com on 5/2/2022 ***

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Sunday, May 15, 2022

5 Phases Of Every Startup That Regulate Your Success

startup-stages-lead-to-successSuccessful startups seem to follow similar paths to greatness, and unfortunately all too often that path leads them back down the hill much faster than they went up. Big company powerhouses, like IBM and Xerox, took fifty years to make the cycle, but new companies today, in the age of the Internet, often make the cycle in five to ten years, or even less. Consider MySpace and Webvan.

Thus it behooves every entrepreneur to start watching these things more carefully from the very start. By definition, most startups begin as a result of some innovation in product, process, or service. The problem is that innovations in most business areas are coming so fast these days that yours can be overrun while still being scaled up across geographies and other products.

In other words, the challenge today is to build a culture of continuous innovation, as well as continuous scaling, and continuous consolidation, all concurrently. That’s a tall order, especially when your business culture has to fit into the myriad of international and local cultures that are part of every market these days.

In the classic book, “Fish Can’t See Water,” Kai Hammerich and Richard D. Lewis explore these cultural issues, both national and international, that can make or break your company strategy. Incidentally, I love that book title, which seems to me applicable to most aspects of business (and even people), as well as business culture.

To set the stage for all the cultural issues and timing, the authors start with a summary that I agree with of the five lifecycle phases every company is likely to experience over the long-term or short-term, regardless of culture:

  1. Innovation. This business phase is where every entrepreneur starts. It’s a volatile period for every company, where most struggle with getting commercial and technological traction, usually based on a single product or service. A particularly critical moment is when the founders hand over the leadership to a more managerial regime.
  1. Geographic expansion. This phase is characterized by rapid expansion either regionally or globally for growth (scaling up). This is where the culture of the startup has to adapt to the cultures of the markets served. A common practice is to hire local employees who know the geographic culture, even though this may well dilute the company culture.
  1. Product-line expansion. For additional growth, most companies expand the product portfolio to cater to more customers, and sell more to existing customers. The challenge during this phase is to stay innovative and agile. This usually marks the end of organic growth, as partnerships and alliances aid growth, but again dilute the focus on culture.
  1. Efficiency and scale. As the business matures, there is a natural drive towards more efficiency often through sheer scale and a desire for a stronger market share. Companies with an innovative and creative bias, which thrived during the innovation phase, usually struggle in this period. The emphasis is on global processes and tight execution.
  1. Consolidation. This is the end game for an industry, and many companies, characterized by mergers and acquisitions to a few dominant players. Value creation for major shareholders is frequently hampered by integration issues and culture clashes. The crises definitely hits here, if not earlier, and even the survivors can be dragged down.

In fact, crises can and do hit in any phase, due to poor execution, complacency from success, less competitive strategy, change of leadership, and many other reasons. It’s important to note that a company under crisis often will revert to its core national culture, which only further exacerbates the problem.

Thus it’s important to set your company culture early to be a global company, without a specific national bias, since the speed of change is so great. You need the global outlook, even though digitalization and Web 2.0 means you don’t have to have a physical presence in other countries to participate in the global market.

As companies grow in today’s high-speed Internet environment, with constant pivots and new products, they won’t even see the lifecycle phases flashing by, and in fact may be experiencing all of them concurrently. There is no time to be changing your culture to match the lifecycle. How hard are you working to avoid the “fish can’t see water” syndrome?

Marty Zwilling

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Saturday, May 14, 2022

8 Keys To Effective Delegation For All Perfectionists

women-business-laptop-officeFor a few, delegating comes easily, maybe too easy. For others who are perfectionists, letting go of even the most trivial task is almost impossible. If you are in this second category, you probably don’t like the references behind your back that you are a “control freak” or a “micro-manager.”

London business school professor John Hunt notes that only 30 percent of managers think they can delegate well, and of those, only one in three is considered a good delegator by his or her subordinates. This means only about one manager in ten really knows how to empower others.

The challenge is delegating the right things, and not delegating the wrong things. If you don’t get it right, you are busy, but working on the wrong things. Almost every entrepreneur needs to improve their skills in this area, so I did some research on the basics. Jan Yager, in her classic book “Work Less, Do More,” has outlined eight key steps to effective delegation which I endorse:

  1. Choose what tasks you are willing to delegate. You should be using your time on the most critical tasks for the business, and the tasks that only you can do. Delegate what you can’t do, and what doesn’t interest you. For example, non-computer types should consider delegating their social media, website, and SEO activities.

  1. Pick the best person to delegate to. Listen and observe. Learn the traits, values, and characteristics of those who will perform well when you delegate to them. That means give the work to people who deliver, not the people who are the least busy. This requires hiring people with the right skills, not the least expensive or friends and family.
  1. Trust those to whom you delegate. It always starts with trust. Along with trust, you also have to give the people to whom you delegate the chance to do a job their way. Of course the work must be done well, but your way or the highway is not the right way.
  1. Give clear assignments and instructions. The key is striking the right balance between explaining so much detail that the listener is insulted, and not explaining enough for someone to grasp what is expected. Think back to when you were learning, when you were a neophyte.
  1. Set a definite task completion date and a follow-up system. Establish a specific deadline at the beginning, with milestones. In this way you can check up on progress before the final deadline, without fuzzy questions like “How are you doing?”
  1. Give public and written credit. This is the simplest step, but one of the hardest for many people to learn. It will inspire loyalty, provide real satisfaction for work done, and become the basis for mentoring and performance reviews.
  1. Delegate responsibility and authority, not just the task. Managers who fail to delegate responsibility in addition to specific tasks eventually find themselves reporting to their subordinates and doing some of the work, rather than vice versa.
  1. Avoid reverse delegation. Some team members try to give a task back to the manager, if they don’t feel comfortable, or are attempting to dodge responsibility. Don't accept it except in extreme cases. In the long run, every team member needs to learn or leave.

Almost everyone who has grown their startup from a one-person entity to a going concern with many employees has struggled with letting go of any task. On the other hand, executives who come from a large company to a startup tend to delegate too much, resulting in high costs and lack of control.

Finally, every entrepreneur needs to set aside their fear of delegating. If you do it right, as outlined above, every task will likely be done better than you could do it. The only thing you can't delegate is “the buck stops here” role. That can only be done by the person in charge, and it better always be you.

Marty Zwilling

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Friday, May 13, 2022

10 Ways To Be An Entrepreneur Who Endures And Thrives

Entrepreneur-thrivesAs the economy rebuilds after some tough economic times, more and more people seem to be turning to entrepreneurship and their dream lifestyle as an alternative to traditional employment. I applaud this trend, but caution all of you thinking this direction to approach entrepreneurship with your eyes wide open. It is not for everyone, as the entrepreneur’s path is fraught with challenges.

Many experts have tried to clearly lay out the criteria for survival in a way that allows you to judge your own situation and your own temperament, and make a rational decision before starting down this path. I recommend the ten points in a classic book by Bill Murphy, Jr., titled “The Intelligent Entrepreneur,” outlining the keys to successful entrepreneurship, as follows:

  1. Make the commitment. Entrepreneurship can be learned. But you have to be committed to the process of building your own thing and the act of creating something, rather than just coming up with an idea. It will likely take several ideas, with the learning process of failing on a couple, before you can call yourself a successful entrepreneur.
  1. Find a problem, then solve it. Rather than finding a new idea first, try finding a problem first. Problem solvers make successful entrepreneurs. Idea people are dreamers, who often don’t enjoy the hard work of a solution in a specific timeframe to make money.
  1. Think big. Thing new. Think again. In other words, make sure your solution will scale up. Professional investors will tell you they look for business plans that can credibly project revenues of at least $20M within five years, or they won’t justify an investment.
  1. You can't do it alone. Have a support team of people you know and trust. An idea person and a problem solver make a great team. Successful entrepreneurs have to work well with people, whether they be partners, investors, employees, suppliers, or customers.
  1. You must do it alone. But the dichotomy is that there are things that you have to do alone. “The buck stops here.” You have to be decisive, accept responsibility, and provide the vision. Vision is not a group-think activity. Sometimes decisions have to be made quickly, and with very little hard data, so you need the confidence in your gut.
  1. Manage risk. Without risk, there can be no innovation. Not every idea can, or will, be a winner. Fear of failure will kill innovation, but reckless disregard for risk will kill a business. The successful entrepreneur is able to find the balance between these two extremes.
  1. Learn to lead. In a startup, the entrepreneur leader has to do two things. First, drive the business creation process, and secondly, inspire all the others. The others include the rest of the team, investors, and customers. That means hands-on leadership and effective communication.
  1. Learn to sell. Don’t believe the old myth that “if we build it, they will come.” Selling is a learned skill, and takes effort, just like building a product. Everyone in your startup, especially the entrepreneur, needs to understand sales, and needs to be a salesman.
  1. Persist, persevere, prevail. Experts say the prime cause of failure in business is quitting too soon. The successful entrepreneur never gives up, and uses creativity to overcome all obstacles, including personal, financial, and technical ones.
  1. Time, not money, is the key resource. Entrepreneurship is a lifestyle, not a job. Be prepared to play the game for life. There are no quick fixes, or quick get-rich solutions. Learn to manage and balance your time; it’s the one thing that belongs to you alone. Great entrepreneurs have a life outside of work, and find time to give back.

Reporter Bill Murphy compiled his book based on three real-life success stories of Harvard graduates, all of whom proved the points by their failures as well as successes. There is no magic here, but I believe these rules can shorten the learning curve and increase the success rate for every budding entrepreneur. They can also help you be happy and have some fun.

Marty Zwilling

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Wednesday, May 11, 2022

7 Metaphors That Every Aspiring Leader Should Emulate

men-suite-man-businessIn building successful businesses, I find that creating a new and innovative product or service is usually the easy part. The hard part is providing the leadership required to align and motivate all the constituents and players – from engineers, to investors, vendors, and ultimately customers. Great entrepreneurs are not just idea people and then managers, they are extraordinary leaders.

Most investors admit that they invest primarily in people, not ideas, and they inherently believe that they can sense this leadership ability needed to get the rapid growth and 10x return we all strive for. Yet beyond a list of noble attributes, like vision, courage, and integrity, it’s hard for them to define what separates an ordinary entrepreneur or manager from an extraordinary leader.

I saw a new approach in the classic book “Leadership Transformed: How Ordinary Managers Become Extraordinary Leaders,” by Dr. Peter Fuda, which identifies seven leadership themes, presented as metaphors. I believe these will really help anyone recognize great leaders, and even more importantly, accelerate their own entrepreneur leadership transformation:

  1. Demonstrates a burning ambition and a burning platform (fire metaphor). These are the forces that initiate and sustain transformation efforts. The top two on the personal side are “urgency” and “desire,” but these have to be matched on the business side with the willingness to burn the platform (change any aspect of the business) without a crisis.
  1. Sense of accountability and momentum (snowball metaphor). This means no excuses and no rationalization, sweeping team members into mutual accountability. The leader then builds momentum from small successes into a snowball that will grow into a large, powerful, and eventually unstoppable business. Have you addressed all sources of drag or friction on your snowball?
  1. Artfully applies tools, and strategies for change (master chef metaphor). New entrepreneurs are really amateur chefs learning to cook a new business. Existing business frameworks are the recipes, and great entrepreneurs creatively use new tools and strategies to hone these frameworks, just like a master chef.
  1. Works with other team members on mutual aspirations (coach metaphor). It is not about leaders becoming coaches; it’s about leaders letting themselves be coached by others – advisors, team members, and even customers. A team’s captain is dependent on the support of their teammates, requiring trust and respect from both parties, and humility on the part of the leader.
  1. Does not mask authentic self, values, and aspirations (mask metaphor). Too many entrepreneurs put on a mask to conceal personal imperfections, or they adopt an identity not aligned with their authentic self, values, and aspirations. This façade is a burden soon recognized, so dropping the mask is more effective, as well as more comfortable and more fun.
  1. Enhance their self-awareness and edit their own performance (movie metaphor). Great entrepreneurs recognize that leadership is like a movie, and it can be honed and improved by disciplined reflection (see yourself as others see you), edited for impact, and directed by experts on your team. Reflect on how often you operate from judgment as opposed to perception. Think about who could help you reflect-on-action.
  1. Embed their personal journey within the business journey (Russian dolls metaphor). Business is really a set of journeys that interact with an entrepreneur’s personal journey. Up-line this may be your interaction with your Board, investors, and family. Down-line it’s the leadership model you use with your internal teams and external partners. Focus on improving your up-line and down-line dolls with your personal journey.

In addition, here are five strategies that Dr. Fuda and I both agree will lead to a more empowering approach to entrepreneur leadership, and help you optimize all the themes described above:

  • Shift your focus from your business content to market context.

  • Spend more time showing others what is required, rather than telling them.

  • Focus more on collaborating with others, rather than competing.

  • Evolve from guru to guide, and coaching others to find answers for themselves.

  • Move from critic to cheerleader, from what is going wrong to what is going right.

If you are an investor, you need to recognize and mentor entrepreneurs to extraordinary leadership. If you are a startup founder or executive, you need to strive continually to change yourself and your business to build and maintain the leadership you need to out-perform your competition, and generate the results to meet personal and financial objectives. How many of these themes and strategies are you practicing today?

Marty Zwilling

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Monday, May 9, 2022

8 Ways To Increase Worker Buy-In And Customer Service

engaged-business-team-customer-serviceMost businesses spend big money testing their brand logo, catchy marketing phrases, and demographics, but spend little time training and validating that their employees can and do deliver exceptional experiences to their customers. The result, according to an often-quoted Gallup survey, is 70 percent of workers not fully engaged, and poor customer experiences.

The customer experience is really your brand, since that is what customers remember and communicate to others, rather than your marketing. Thus the real challenge in building your brand is building the level of engagement and delivery of your team. Gregg Lederman, in his classic book, “ENGAGED!: Outbehave Your Competition to Create Customers for Life,” offers eight key principles for defining and managing the experience to keep it consistent and profitable:

  1. Keep every employee on stage, delivering an experience. At work, all team members (everyone who gets paid for doing a job at the company) are on stage responsible for delivering a branded experience to coworkers and customers. They have to out-behave and outperform your competition. Is your team performing like they are on Broadway?
  1. Keep your team happy to create engaged customers. An unhappy team member can’t create an engaged customer. Yet less than half of the people working today claim to be satisfied and happy at work. How many of your employees would say that what they think, what they say and what they do are in harmony? Money does not buy engagement.

  1. Don’t just announce your culture, make it visible. Your mission, values, brand positioning, and guiding principles are invisible, unless your employees know specifically how to act them out through their day-to-day behavior. You have to define these behaviors, measure them, and reward them. Walking the talk is the place to start.
  1. Focus on culture change rather than culture talk. Culture is changed by how we act (perform) and interact (employees and customers). Define and document a common mindset and make related behaviors non-negotiable. Everyone must know and do these things consistently. The secret to success is 1% training and 99% reminding.
  1. Turn common sense into common practice. The only true employee-driven measure of whether the workforce is “living the brand” is the perspective of others in each work area. Use a company-wide assessment at least twice a year to understand and remind the team to out-behave the competition. No more gamed employee satisfaction surveys.
  1. Build relationships and stop surveying customers. Every senior leader needs to have regular quality conversations with customers. These enable leaders to learn firsthand about how the company is living the brand and when it is not. Relationships will get referrals, drive more sales, and build loyalty. Use the feedback to improve and grow.
  1. Incent engagement with training and recognition, rather than rewards. Employees get much greater value from the power of recognition and much less from the actual rewards. Reward programs don’t drive sustainable culture change or business results. Provide recognition for the right behaviors consistently, and the results will accrue.
  1. Build trust in you as the leader by managing the experience. Without solid leadership people simply won’t follow. Earn trust by making the right experience a part of the day-to-day conversation, and reminding people by your actions what you expect. Demonstrate a culture of responsibility and accountability.

Lack of engagement is very expensive. According to Lederman, engaged organizations grew profits as much as three times faster than their competitors. Highly engaged organizations have been shown to reduce staff turnover by 87 percent, improve performance by 20 percent, and increase customer satisfaction by at least 12 percent.

Overall, successful startups and world-class companies are known to have fiercely loyal customers driven by fully-engaged team members, resulting in proactive referrals and more purchases. That’s the brand you want, and it needs minimal focus on the logo and advertising to survive and out-perform your competition. How would you rate your customer experience today?

Marty Zwilling

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Sunday, May 8, 2022

10 Startup Founder Decisions That Have No Good Answer

adult-businesman-thinkingMost entrepreneurs struggle with many startup founders quandaries in building their business, and these key dilemmas are probably the biggest source of pain and failure for the entrepreneur lifestyle. People may jump into the lifestyle to be their own boss, achieve great wealth, start a new trend, or all the above. The dilemma is that these goals are usually mutually exclusive.

For example, is the person who starts a new trend likely to be the one who controls it through the growth phase? In a famous Harvard study of 212 new ventures a few years ago, USC professor Noam Wasserman found that half the founders were no longer at the helm after three years, and over time 80% were forced out. That’s not an attractive statistic if you crave control and power.

Don’t wait for the harsh reality of the demanding business world to start thinking about these tradeoffs. The research from Wasserman and others outlines the following top ten dilemmas that every founder needs to deal with sooner or later in their career as an entrepreneur:

  1. The make money or serve humanity dilemma. Your great idea for the next Facebook may make you wealthy, but it probably won’t help the hungry. The answer is to look hard inside yourself, to see what makes you happy and satisfied. If living on Raman noodles while you make the world a better place is fine, skip the investors and growth race.
  1. The right time to start dilemma. The right time to jump is a function of favorable career, personal, and market circumstances. While it’s unlikely that all three of these will ever be true at the same time, most experts don’t recommend jumping at the first opportunity, but first gaining some skill, financial, and business experience first.
  1. The founding team size dilemma. Should you start a company solo or find co-founders to help you? With one or more co-founders, you gain complementary skills, spread the workload and responsibilities, and reduce the risk. The downside is loss of control and financial dilution. In my view, two heads are always better than one.
  1. The co-founder relationship dilemma. While long-time social friends and family may seem like the natural choice for co-founders and team members, these relationships often get in the way of hard business decisions or necessary business adjustments. Old co-workers or new friends with complementary skills usually make the best partners.
  1. The founder’s title and role dilemma. Usually co-founders expect to get a C-level title associated with their area of interest, like CFO for the financial expert. Make sure these titles are handed out only to people who are willing and able to accept the responsibility and workload of the associated role. It’s tough to downgrade titles and roles later.
  1. The compensation model dilemma. Every founding member wants to be compensated richly for the risk and the unknown. You have very little money, and you don’t want to give away your equity. Recognize that the best people don’t work for free. Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones.
  1. The right investors and right time dilemma. You don’t want to take money from friends and family, but it’s too early for angel investors and VCs. No one wants to put in money until you have a product, and you need money to build the product. Bootstrap if you can, otherwise climb the pyramid of family, friends, angels, and VCs.

  1. The right motivated employees dilemma. Very early, you need generalists who can cover multiple areas, but you can’t pay for experience. Later you need specialists and managers. Offer low cash early, with bonuses or stock options for milestones, to people in your personal network. Later use LinkedIn and other job sources for professionals.

  1. The founder succession dilemma. Startups are usually founded by product or service experts who don’t enjoy the various growth phases. Should the founder keep the company small, try to adapt, or step aside in favor of a seasoned business executive? Transition to a specialist role, plan to exit, be prepared to be pushed out, or plan to fail.

  1. The control and growth dilemma. If you take investor money, expect a push for hockey-stick growth and a liquidity event, like going public (IPO) or sale (M&A), to get the payback. If you prefer a private company with organic growth, keep control within friends and family, and prepare for the long haul. Otherwise exit and startup with another idea.

Not facing these dilemmas squarely and honestly is one of the biggest pitfalls facing every entrepreneur. You can’t have it all, just like your startup can’t be all things to all customers. You have to focus on the things you can do and love to do, and do them better than anyone else. Turn these top ten dilemmas into your strengths, and you will have a competitive advantage, as well as the fun and satisfaction you sought to find in the entrepreneur lifestyle.

Marty Zwilling

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Saturday, May 7, 2022

Insights For Business Leaders Who Manage By Autocracy

 Alexander Lukashenko is the President of Belarus.Trying to be a business leader by instilling fear in your employees and partners is never a good approach, but it is particularly devastating in a startup. Yet I see this autocratic approach used all too often by new entrepreneurs, most of whom are not natural tyrants, but who are fighting to mask their own internal fears and insecurities about starting a business.

The classic book on this subject, “Leading Without Fear,” by Laurie K. Cure, PhD, convinced me that fear is a natural reaction to the risks associated with a new venture, and people handle this fear in different ways. Some are able to read the danger signals, and catapult themselves and everyone around them into action without fear, resulting in progress and success.

Others intentionally or unintentionally project their own fear into a weapon that gets used on their team and constituents to get things done and assure accountability, at least in the short term. According to Cure, there are three main reasons that entrepreneurs resort to propagating fear:

  1. Need to establish a sense of urgency. Sometimes it seems like instilling fear is the quickest and most effective way to instill a sense of urgency in other team members. In fact, it does work in the short term, but in the longer term it breeds mistrust and cynicism, which quickly erodes morale and leads to reprisals worse than the challenge.
  1. Don’t know any other way. Often new entrepreneur leaders reach a point of desperation in dealing with people, and hope that they can somehow shame, anger, or scare people into behavior change and desired results. This approach usually stems from primal reactions during early childhood, or a specific cultural background.
  1. Engulfed in the flames of their own fear. Others use fear because they are simply afraid, and unable to hide it. It requires extreme discipline not to project your fear onto others. When leaders are in fear, be it for their own security, sense of affiliation, or self-esteem fears, they become blind to how they might be using fear in their own leadership.

Smart entrepreneurial leaders avoid these reasons, and don't use fear because of its devastating consequences on their long-term business success. Here are a few of the consequences:

  • Fear drives the team into fixed and safe positions, allowing competitors an easy advantage.

  • Fear short-circuits change, creativity, and innovation, which are the life-blood of startups.

  • Fear limits rational discussion of alternatives, leading to poor decisions and inaction.

  • Fear fosters suspicion, mistrust, and cynicism of the leader and the startup.

  • Fear tends to turn the focus inward to survival, rather than outward to customers.

Based on the insights I see from Cure’s book and others, I recommend the following strategies for reducing fear in your own mind and in the minds of your constituents:

  1. Increase your own self-awareness. This is essentially your ability to know yourself, your motives, desires, and personality. Who are you, and why do you do what you do? It is only with self-awareness that you can grow and learn. Self-awareness simply requires an ongoing practice that you can engage in and make a part of your lifestyle.
  1. Be clear on all your goals, and communicate these regularly to your team. If either you or they don’t know the goals, neither of you will know when a threat is imminent, or if everyone is in alignment. When you are out of alignment with the team in terms of goals, everyone feels torn, dissatisfied, and fearful.
  1. Focus more on the positive side of risk. Everyone’s brain has a reward pathway that creates a sense of euphoria and pleasure when you overcome high odds, or do something innovative. Stop focusing so much on the things that can go wrong, and anticipate the joys of progress and success.

All entrepreneurs have to take risks and provide leadership to succeed, but driving yourself and your team with fear is not the answer. The best leadership is providing real motivation from the work itself, and the drive to build something lasting. Fear has no role in either of these.

Marty Zwilling

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Friday, May 6, 2022

10 Key Business Domains Where ‘Big Data’ Looms Large

Contextual Robotics Institute 2018 Forum: Healthcare RoboticsEven though ‘big data’ has now been around for several years, the opportunities for startups seem to keep growing, just as the amount of data keeps growing. According to Forbes, over the last two years alone 90 percent of the data in the world was generated.. This data comes from sensors, social media posts, digital pictures and videos, purchase transactions, everywhere.

Every day, we create 2.5 quintillion bytes of data — much of it unstructured and far beyond the capability of conventional databases. Hence one segment of the opportunity is the need for new database technologies, like Hadoop, a distributed file system originally designed for indexing the Web. Data capacity is measured in petabytes (1000 terabytes), or soon even yottobytes (1024).

A while back, Gartner formalized their ‘big data’ definition as a “3V” framework - high Volume, high Velocity, and high Variety information asset, requiring new forms of processing to enable enhanced decision making, insight discovery and process optimization. IBM adds a fourth “V” of Veracity to add trust and noise filtering to the challenge of Big Data analysis.

By any definition, the opportunities from ‘big data’ have the potential to create a next wave of successful technology companies that could change the way we all live and work. I will summarize here some of the key business domains with large opportunities, based on reports by Data-Flair, Gartner, and other sources:

  1. Targeted marketing. ‘Big data’ can mean big profits. By understanding what you want to buy today, companies large and small can figure out what you'll want to buy tomorrow -- maybe even before you do. By transforming a single shopper's path into data points, companies can see how you move through a store, and how that tracks with sales.
  1. Protecting the environment. Analyzing the massive sets of data available on toxic emissions and weather patterns can help us understand environmental threats on a systemic level. We now have the sensors to track and model future environmental shifts -- and how to stop them. We just need ‘big data’ tools to do the analysis.
  1. Health care in the U.S. Health care is a large and important segment with huge data challenges, mostly not structured or linked. It has multiple and varied stakeholders, including the pharmaceutical and medical products industries, providers, payers, and patients. Each of these has different interests and incentives, with real money to spend.
  1. Social media and web data. Social media postings and e-Commerce transactions are just a couple of the sources of external data that are of great interest to many companies. Facebook has nearly 3 billion users, the Internet has 1.6 billion websites, and e-retail sales surpassed 4.2 trillion U.S. dollars worldwide. That’s a lot of data to analyze.
  1. Automated device generated data. Another ‘big data’ opportunity is the vast amount of sensor data—machine generated data—that exists and is growing at an exponential pace as more machines become internet-enabled. Examples include data generated from traffic cameras, parking meters, toll collection, and black boxes in airplanes.
  1. Scientific research in overdrive. Data has long been the cornerstone of scientific discovery, and with ‘big data’ -- and the big computing power necessary to process it -- research can move at an exponentially faster clip. The Human Genome Project, which took 13 years, could now be completed in hours. There are many more waiting.
  1. Global personal location tracking. Processing personal location data is a domain that includes child safety, law enforcement, tracking terrorists, and travel planning. The data generated are growing quickly, reflecting the burgeoning adoption of smart phones and other applications. This domain is a hotbed of innovation for startup opportunities.
  1. Global manufacturing. Manufacturing is a global industry with complex and widely distributed value chains and a large amount of data available. This domain therefore offers opportunities at multiple points in the value chain, from bringing products to market and research and development (R&D), RFID tracking, to after-sales services.
  1. Data is the new weapon of defense. The traditional battlefield has dissolved into thin air. In the ‘big data’ era, information is the deadliest weapon and leveraging massive amounts of it is this era's arms race. But current military tech is buckling under the sheer weight of data collected from satellites, unmanned aircraft, and intercepted messages.
  1. Public sector administration. The public sector is another large part of the global economy facing tremendous pressure to improve its productivity. Governments have access to large pools of digital data but have hardly begun to take advantage of the powerful ways in which they could use this information. Much change is needed here.

These large opportunities are why IDC says that worldwide revenues for ‘big data’ and business analytics will grow from to more than $260 billion in 2022, at a compound annual growth rate (CAGR) of 12.8%.

Compared to the plethora of new Internet dating site proposals that I see, big data is an exciting opportunity for entrepreneurs and investors alike. Be there.

Marty Zwilling

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Wednesday, May 4, 2022

7 Barriers To Communication In Business Relationships

business-businessman-difficultMost business mentors tell me that the single biggest problem they have to deal with in small companies is the lack of open, honest, and effective communication, both from the top down and from the bottom up. Some entrepreneurs forget that talking is not communicating. Fortunately these skills can be learned, and the barriers to communication can be overcome one by one.

Founders have to communicate their ideas and products to investors, business partners, and the rest of the team. Then, hopefully, come customers, distribution channels, and going public or merging with an attractive buy-out candidate. Communication is not just talking, but also listening, writing, body language, and “actions speak louder than words.”

According to a classic book on people management by Professor Derek Torrington, “Managing to Manage: The Essential Guide to People Management,” it is the listener who determines the extent to which a message is understood, and that is shaped largely by their own experience and background. From an entrepreneur perspective, here are the key barrier-to-understanding elements:

  1. Unclear frame of reference. Whenever you discuss any startup matter, the receivers will view it from their particular frame of reference, including their values, their priorities, and their background. The responsibility is on you the entrepreneur to decipher the receiver reference, and do the “translation” of your message to them.

  1. Stereotyping and biases. This is the other end of the spectrum, where the entrepreneur defaults to an extreme extrapolation of the listener reference base. Common problem stereotypes relate to age constraints, gender roles, and cultural performance implications. Effective communication requires compensating for language barriers, no stereotyping, and first focus on performance here and now.

  1. Cognitive dissonance. Psychologists use this term to describe the genuine difficulty the people have in understanding, remembering, and taking action on inputs that they find irreconcilable with the current reality, or with strong existing beliefs. The message heard may be unintentionally distorted, and you must repeat and rephrase often to be effective.
  1. Failure to build relationships. When people are listening to someone with confidence and trust, there is a predisposition to hear the message and agree. On the other hand, if the source is unknown or un-trusted, the message may be ignored or minimized. The solution is to work on relationships first, before attempting persuasive communication.
  1. Technical semantics and jargon. Jargon only has meaning if the symbols are already understood. If an abbreviation or phrase is not commonly used outside a specific group, or experts, it becomes negative communication, with people reading it as presumptive, insulting, or an attempt to deceive. The remedy is to use clear and concise language.
  1. Not paying attention and forgetting. We all have the human predilection to be selective in attention. Attention spans seem to be getting steadily shorter. Add the problem of noise, external and internal, which can blank out whole messages. Pick the right time and place for each message type, to maximize attention and retention.

  1. Information withheld. Sometimes an entrepreneur or executive tries to communicate without full disclosure, perhaps to minimize impact, or due to company policy. This is readily recognized by most constituents, negates the message, and erodes trust. In startups, the best policy is transparent honest disclosure across all levels of the team.

It’s important to remember that communication only happens when the other person really hears what you mean to say. It’s not a one-way street, and there are often barriers on both sides. To be successful, the entrepreneur has the responsibility of overcoming all of these barriers to make the interaction effective. The alternative is a lose-lose situation for both sides.

A climate of open, two-way communication is also the only way to ensure that those who do not understand feel free to ask for clarification. No questions does not always mean that everyone heard the message. How often do you ask for feedback to make sure your communication has been effective?

Marty Zwilling

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Monday, May 2, 2022

7 Key Practices for Entrepreneurs Tackling Leadership

women-business-leadershipMost of the entrepreneurs and business owners I work with recognize that they must occupy and practice a primary leadership position, but many will admit that they are not thriving in this role. They are not having the impact they expected, and they are not feeling the personal satisfaction they need for next level motivation. This is a tough challenge for every coach and mentor.

I’ve never had a definitive list of recommendations to overcome these qualms, so I was pleased to see the insights in a new book, “Arrive and Thrive,” by Susan MacKenty Brady, Janet Foutty, and Lynn Perry Wooten. Although their focus is primarily on women leaders in business, I’m convinced that the same insights and recommendations apply to all aspiring business leaders.

These authors bring a broad range of experience and practice in business leadership, as executives, consultants in the real world, and academic researchers. They assure us that your fears and qualms are normal, but the next step in your journey is more than possible if you focus on this key set of practices with full intention, awareness, and agility-in-action:

  1. Capitalize on your best talents and strengths. We all know our own strengths and weaknesses, and too many of you spend too much energy bemoaning weaknesses, rather than leveraging strengths. The power of strengths is the positive impact on everything you say and do, the increase in your well-being, and lasting resilience.

    At the same time, but as a second priority, I find that it pays to mitigate key weaknesses. Even though you will never be great at all tasks, some are important enough that it's worth the extra effort to learn more, practice, and achieve minimal competence.

  2. Embrace the real you as your competitive advantage. Accept the fact that authenticity is necessary for leadership effectiveness. The willingness to share yourself in appropriate and honest ways builds trust, respect, and followership. If you make a mistake, own it, and work to make things better. Enlist trusted relationships for feedback and guidance.

    In my experience, the values that represent the real you can and should change as you learn, then react and adapt to real world situations. Your team will quickly sense your insights and sincerity, leading to greater impact and satisfaction by everyone.

  3. Cultivate the courage to do honest introspection. The support currently provided by product service can become inadequate to satisfy new customers, as your growth and image becomes better known. Be prepared to create and train a dedicated support group that can keep up with your now larger and growing install base of demanding customers.

    Also be aware that customers today are looking for a total memorable experience in dealing with your company, rather than just product support. You need the courage and introspection to lead your team to this new level of expectation, despite the challenges.

  4. Proactively prepare for the unexpected in business. To thrive as a business leader, you need to assume there will be change and crises, and develop resilience to bounce back and adapt. Let business change give you practice in self-empowerment, self-assurance, and alignment. Form collaborative relationships to help and support you.

  5. Engage others in inspiring a bold vision of change. Inspiring vision means taking note of what needs to change, and what you yourself believe in. Establish trust and enroll others in that vision. During times of crisis, that vision will be seen as leadership, and people will follow you and think about what’s next, resulting in the progress you desire.

  6. Create a healthy, safe, and low risk team environment. Sincerity and empathy are essential to establishing the trust and respect of team members, leading to engagement, real communication, and commitment to the leader. Practice collaborating and supporting your team, to make them feel safe and appreciated, and bond to you and the business.

  7. Commit to being an inclusive leader, an ally for all. Be aware and fight the biases that may show up in any environment, or may come from your personal background. Counter groupthink by overtly hearing from a variety of diverse voices. Partner with colleagues from underrepresented groups, support their success and allow them to arrive and thrive.

As you find yourself in positions of greater responsibility, risk, and reward, the practices outlined here offer you the groundwork for making more effective, as well as more fulfilling, choices for yourself, your team, and even your community. It’s up to you to keep up with the pace of change all around you and in business today, and thrive while bringing your team along as well.

Marty Zwilling

*** First published on Inc.com on 4/18/2022 ***

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Sunday, May 1, 2022

6 Marketing Specifics That Apply To Every New Venture

entrepreneur-marketingMarketing is everything these days. You can have the best technology, but if customers don’t know you exist, or they don’t know how your technology solves a real problem for them, your startup will fail. Yet I see many technology entrepreneurs that focus on the basics of marketing too little and too late.

They skimp on the design of their website, procrastinate on the rollout to make sure the product is perfect, and get so excited about technology features that they forget about creating value for customers. In fact, this article was driven by a startup press release I saw a while back, highlighting a startup’s “geo-fencing technology” as a new basis for discount coupons. How many customers will have any idea what this means to them?

On the marketing side of the equation, there are so many “marketing gurus” and “marketing resources” out there, the real challenge for most of us is to sort out the basic do’s and the don’ts that apply to startups. I like the guidance from marketing coach David Newman’s classic book “Do It! Marketing,” which provides some pragmatic marketing tips for small businesses as follows:

  1. Don’t tell customers how great you are. Parroting a generic message that you have great service, great value, and a great selection says you have nothing unique. You need to clearly convey what makes your startup the only choice for your customers. Give yourself the “So-what?” test and check for a compelling value-based answer.
  1. Don’t fall into the marketing-speak trap. Don’t fall for the temptation to make big claims, empty promises, and mind-boggling jargon. Learn to speak a new customer-specific dialect based on current research and homework. Go directly to the source – your real live customers, and get their priorities, issues, pressures, and challenges.
  1. Don’t waste your time networking with strangers. Start networking smarter and smaller. Invite key people for coffee or lunch one-on-one, and get to know them and their business. Aim first and foremost to make them a friend, and the connections to others will come naturally. Working the circuit of big groups of strangers is minimally productive.
  1. Don’t waste your time following up. If you are focused exclusively on prospects who are actively seeking to solve the problem you are positioned to solve, you won’t need five or seven attempts to get their attention. Craft a no-follow-up sales letter, after you have positioned yourself as the right expert, with powerful testimonials. They will call you back.
  1. Don’t dumb it down for social media. Many entrepreneurs fear giving away their very best insights, strategies, or tools via social media – it might diminish the demand and the profit. In fact, when customers perceive real value in what you give away, they begin to imagine how much more they might get as a real customer.
  1. Don’t put all your faith in passion. Passion is necessary, but not sufficient to grow your startup. Be passionate about what you do, but develop a really strong plan, and a strong plan B too. The more you think ahead of failure, and think beyond failure, the better your chances for success are.

Instead of asking themselves “How and when will this generate sales?” entrepreneurs need to focus more on who they are marketing to and why. Then give them a compelling, specific, and relevant reason to buy from you.

One of the best approaches is to sell the same way that you buy. You look for value in a specific solution, or at least a conversation about your own problem, headache, heartache, or challenge. You don’t buy based on cold calls, spam e-mail, or phone calls that interrupt your dinner. Give your own customers the same consideration. Good marketing is not rocket science.

Thus marketing is the first thing you need to think about and act on in growing your business, as well as the last thing. The only actions that create results are those that make you stand out above the crowd, attract, engage, and win more customers than your competition. Have you reviewed your startup marketing actions recently for the right do’s and don’ts?

Marty Zwilling

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