Wednesday, June 7, 2023

How To Build A Great Startup In The Age Of Disruption

Amane Dannouni speaks at TED@BCG at Grand Hyatt Mumbai, September 24, 2019, Mumbai, India Photo: Amit Madheshiya  / TEDThe cost of entry to the entrepreneur lifestyle is at an all-time low, but the challenge of winning and success is at an all-time high. Anyone can build a new web site, or publish a smartphone app for a few thousand dollars, but getting market penetration requires a lot more. Customers have come to expect disruptive change, so yet another social network is not the way to get traction.

As an angel investor, I quickly look behind the idea or solution, to gauge the mindset and the leadership capabilities of the entrepreneur. That’s why the classic book, “The Leader’s Mindset: How to Win In The Age Of Disruption,” resonated strongly with me. It was written by Terence Mauri, who has worked extensively with Sir Richard Branson and the London Business School.

Mauri offers some practical, actionable advice for entrepreneurs who want to develop a leader’s mindset, on how to spread the right message to potential customers, as well as investors. He outlines three shortcuts for simplifying how we think, how we act, and ultimately how we lead, which I have paraphrased and amplified here:

  1. Expand your mindset to think better by a factor of ten. Most entrepreneurs think about how they can improve cost or usability by ten or twenty percent. When was the last time you set a challenge for your team that pushed all of you to deliver more than you thought was humanly possible? People who shape the future, like Steve Jobs, did this.
  1. Push your mindset to tackle the seemingly insurmountable. A bold mindset excels at speed, creativity, and decisive action. Entrepreneurs in this category are real risk takers, such as Elon Musk. He recommends imagining creative solutions to a problem to “cut through the noise and focus on the signal.” Take a hard look at SpaceX or HyperLoop.
  1. Develop a learn-fast mindset to seek the latest and the future. Those who proactively seek knowledge and learn fast build knowledge pools and tap into the wisdom of mentors and industry leaders to raise their game. For them, adapting and stretching their limits is the norm. They learn from their mistakes, and collaborate with well-connected people.

Leadership on ideas is a start, but entrepreneurial leadership requires the ability to deliver on the new reality as well. The best entrepreneurs relish the opportunity to overcome the personal and team obstacles that challenge every team contemplating disruptive change, including the following:

  • Fear of failure, fear of the unknown, procrastination, and doubt. All these fears can cause flight or fight, freeze behaviors, or a hasty retreat from dreams, goals, and plans for disruptive change. Fear keeps your mindset locked in a state of helplessness and will stop you from reaching your goals.
  • Constrained by talent shortages and lack of commitment. A key requirement for every disruptive entrepreneur is to fuel the organization’s growth by attracting and nurturing the best and most committed talent. The best leaders find a team and every individual unique strength to do great work and make a difference beyond chasing profit.
  • Dragged down by excuses, inertia, and negative energy. A top priority of all entrepreneur leaders is to avoid falling victim to “somebody else’s problem (SEP).” Lack of accountability is a mindset that is diametrically opposed to the required leader’s mindset. Don’t let this contamination infect you, your team, or your disruptive venture.

Overall, the leader’s mindset begins with zero compromise on purpose. It demands that you believe in what you are doing from the heart, and that your contribution is essential to the future world you envision. This must be matched with the intellectual courage to change business models multiple times to remain viable, based on real-time feedback from the market.

Becoming an entrepreneur is easy, but winning is still tough. Do you have the leader’s mindset required to compete and win?

Marty Zwilling

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Monday, June 5, 2023

8 Keys To Ensuring Accountability In Your New Venture

Adventure Together | https://patina.photoMaybe it’s just me, but I sometimes feel that accountability is a rare talent in business today. In big businesses, people are quick to defer with “that’s not my department,” and even startup founders too often blame failures on the economy or the lack of investors. As an investor and advisor to entrepreneurs, I see accountability, or lack of it, as an override to even the best idea.

I believe accountability is a personal decision that we all can make, largely driven by personal confidence and determination, and is certainly one that we can learn. It’s not baked into our DNA, and there are many resources available to direct improvement.

For example, quite a while back I found some great guidance to the how, why, and who of accountability in the “QBQ Workbook,” by John G. Miller and Kristin E. Lindeen. Miller is well-known for his classic bestseller on this subject, “QBQ! The Question Behind The Question.” His advice starts with a request to stop blaming, and start asking, “What can I do to improve this situation?”

Very refreshing. If you are an entrepreneur building a new business, there are many things along these lines that you can and must do to be seen as accountable, including the following:

  1. It’s up to you to be the model of accountability. Don’t expect your team to be accountable, if they often hear you complaining about the workload, competitors, or partners. Accountability is a culture that starts from the top, and is reinforced by your hiring of skilled and positive people, delegating responsibility, and rewarding results.
  1. Clarify and constantly reinforce expectations. Team members can’t be accountable unless they know what is expected of them, and they understand how to deliver. Communication must be ongoing, both written and spoken, followed by some active listening on your part, to understand the gaps. Remove the “I didn’t know” excuse.
  1. Set measurable goals and objectives, with benchmarks. Accountability assessments must be based on objective facts, not opinions, politics, or a desire for power. Setting expectations beyond the realm of possibility, or frequently changing them, does not lead to accountability. Provide the tools for team members to measure their own results.
  1. Align individual responsibilities with relevant business goals. Team accountability must be correlated to responsibility and relevancy. You can’t hold your sales team accountable for manufacturing quality, but they should be responsible for profitability and volume. When expectations are aligned with motivation and interests, everyone wins.
  1. Truly delegate responsibility and decisions. Accountability can’t happen without control. If your management style is to make all the decisions yourself, don’t expect any accountability from your team. If you find yourself buried in work, with no time off, and feeling indispensable, it may be time to ask direct reports to call you out on delegation.
  1. Accountable teams need timely and actionable feedback. Getting to the source of problems should never involve blame. Accountable people need safe havens where challenges and performance can be discussed, individually and as a group. The goal must be continuous improvement and learning, not accusations and penalties.
  1. Provide resources and training to enable accountability. Tools and data are necessary for accountability, but must not be allowed to be the absolute determinant of a response. Provide the tools, but trust the people. Other necessary resources include training, reasonable financial leeway, mentoring, and access to relevant executives.
  1. Accountability requires consequences, both positive and negative. People who demonstrate accountability must be rewarded (awards, acknowledgement, promotion). In the same context, team members who consistently make excuses must be moved out of the organization to minimize the impact on others. No consequences mean no learning.

The best part about a focus on accountability is that it leads to real change, learning, and action, and these are the keys to entrepreneurial survival. When a business stops changing and learning in today’s fast-moving world, it stops growing and thriving. Every business is really a set of people. Are you growing and thriving?

Marty Zwilling

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Sunday, June 4, 2023

6 Keys To Retaining Your Top Performing Team Members

Wairere House Exit storySince the recent pandemic, I find that business leaders are fighting to retain and attract new talent to recover from necessary attrition losses and team members quitting due to personal priorities. In the wake of recent struggles, the people you need and want are looking for a new human focus from their leaders and managers in today’s chaotic and competitive labor market.

In my perspective, it’s more true than ever that team members work for people, rather than companies, and they quit bosses who treat them like inanimate pawns that can be moved around as required to plug the holes in the business. I’m sure you feel this change, and if you are, or want to be, in a leadership role, you need to focus on how to be more human and lead humans.

I found some practical guidance to supplement my own recommendations in a new book, “Be Human, Lead Human,” by Jennifer Nash, PhD. She speaks from running her own company and provides a wealth of real-life stories gleaned from her consulting in major businesses around the world. I will paraphrase her key points here, and integrate my own experience as well:

  1. Make time to listen and hear what people know. Ensuring that your people feel heard empowers both them and you. You really hearing employees also augments engagement levels and business results. Most importantly, it also attracts and retains talent by making people feel they are contributing. Every team member wants to be heard and contribute.

    Obviously you won’t hear much if you are not listening, or only thinking about your next response. Active listening is a communication skill that requires practice and intention. Your employees judge you by body language and cues, like repeating the message back.

  2. Build your emotional intelligence to fully understand. Emotional intelligence is the ability to have and show empathy for individual team members and get them to trust you. Understanding them leads to more effective communication, authentic relationships, and better results. Often it’s body language and what is not said is the true real message.

    I have long been convinced that emotional intelligence (EQ or EI) in leadership wins over logical intelligence (IQ) every time. Like everyone, you have emotional strengths and weaknesses. You need to become aware of your own and learn from those you trust.

  3. Add value by helping team members feel valued. Human-oriented leaders prioritize helping their team feel they matter and add value. This fosters engagement, connection, and community, as well as creating healthy, resilient, and high-performing teams. Leverage individual strengths and spirit, and work to align their purpose with their work.

    But first you need to communicate clearly what has value to you and the team. A surefire way to make team members feel value is to hand them the keys to a project close to their expertise and interest. If possible, let the project be based on the employee's own ideas.

  4. Acknowledge each and every positive contribution. If you recognize others on your team, this creates virtuous performance cycles. Accepting that we all have strengths and weaknesses allows you to honor each person’s uniqueness and lead them to more satisfying and productive results, which benefits the business as well as team members.

    In my experience, public recognition of contributions in front of peers often has more impact than cash rewards and bonuses. Recognition starts with a simple ‘thank you’ or ‘well done’ from you or a peer. These cost very little and have large returns for all.

  5. Provide inspiration and authenticity for followship. Your inspiration creates positive direction, and shapes movement to results. Inspiration requires vision and the ability to tell stories that incent action. The more authentic these stories, the more your team will believe that anything is possible, and will follow your lead. Give trust first to get trust.

  6. See people as human rather than objects or resources. Being seen as human helps team members feel a sense of belonging and restores their humanity. Use inclusivity and acknowledgement to focus on the human elements of the team, and make sure they see you as human, by acknowledging your own sensitivities, imperfections, and motivations.

In my experience, all successful leaders have long been seeking continuous learning and growth. I urge you to start today to develop a human-focus mindset based on the recommendations outlined here, but stay abreast of the changes that will come tomorrow in our changing business and economic environment. Remember that what used to work no longer yields the same results.

Marty Zwilling

*** First published on Inc.com on 05/21/2023 ***

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Saturday, June 3, 2023

How To Identify New Venture Assistance Organizations

ycombinator=-sessionOne of the reasons that now is the time to be an entrepreneur is the explosion of startup assistance organizations, usually called incubators or accelerators. According to the International Business Innovation Association (InBIA ), there are over 2,000 of these locations worldwide, and new online versions springing up all over the place, like Founders Space in Silicon Valley.

Most of these are non-profits, set up by a university to commercialize new technologies, or a municipality to foster business development for the local economy. A few are still trying to make a profitable business out of nurturing startups, but it’s a challenge to make money when your customer startups don’t have many resources to give.

But there are notable examples of for-profit incubators that are thriving, including YCombinator, led by Paul Graham in Silicon Valley, and TechStars, led by David Cohen and located in several key cities around the country, that have an excellent reputation and track record. I believe their competitive advantage is their top on-site leadership, exclusivity, and connections to investors.

Variations on the incubator theme are sometimes called business accelerators, science parks, or the Small Business Administration's Small Business Development Centers (SBDCs) in almost every state in the U.S. Accelerators generally accept startups at a slightly later stage, and attempt to compress the timeline to commercialization into a few months, instead of a year or more.

Common resources provided by most of the incubators and accelerators today include the following:

  • Access to shared office facilities for multiple startup teams at a very low cost.
  • Shared business support services, including telephone answering, conference rooms, teleconferencing, administrative support, and a business mailing address.
  • Mentoring and technical assistance from volunteer or paid experts.
  • Direct seed funding, for a share of the equity, and introductions to investors.
  • Peer-to-peer networking with other startups and founders in the same stage.
  • Health, life, and other insurance at group rates.

If you don’t need these common resources, but need specialized technology services, you should look for technology parks and research facilities, often sponsored by leading companies in specific technologies, like Intel Capital and Google Ventures (GV). As well, these companies usually bring real new venture funding opportunities to the startups they sponsor.

To get started, go to the International Business Innovation Association web site, and use the search tool provided to see what’s available in your area. This association is definitely one of the world’s leading organization for advancing business incubation and entrepreneurship. Another good online approach is a simple Internet search for articles like the “The top 40 startup accelerators and incubators in North America in 2023

But don’t expect incubators to magically convert your pre-hatched idea into a successful company. The good incubators are highly selective, and expect you to demonstrate your commitment and a hard work ethic to meet expected milestones and show continuous progress. According to some recent feedback, YCombinator takes roughly 3 percent of applicants who apply to each batch cycle. Assuming 60 companies are accepted in a specific batch, that would mean around 2000 companies applied. That’s about the same ratio that angel investors claim.

I believe the real value of an incubator is in the relationships you can build there, with peers as well as domain experts, investors, and potential strategic partners. An incubator won’t help you if the market opportunity is small, the competitors are large, or your solution doesn’t address a real need.

As evidence that it does work, CrunchBase reported that more than 200 companies in YCombinator’s Winter 2023 cohort were funded, and many were scooped up by VCs even before the Demo Days. However, if you are looking to find an incubator like YCombinator for easy money and free services to hatch your startup, it probably won’t work.

Growing up and surviving in the entrepreneur world requires a fine balance between an independent determination to be self-sufficient, and a humble willingness and ability to listen to and learn from the best and the brightest startup mother-hens out there. Are you and your startup ready to make the cut?

Marty Zwilling

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Friday, June 2, 2023

7 Indications Your New Venture May Not Be Investable

investor-hesitationIf you aren’t willing to take some risk as an entrepreneur, then don’t expect any gain. Yet everyone has limits, and every investor implicitly has similar limits on what makes a startup investable, or one to avoid at all costs. If you need investors, it’s important that you understand their filters, and even if you are funding your own efforts, you need to recognize the red flags.

Of course, every risk level can be mitigated by a good plan that addresses the issue, offers a credible action plan, and will convince you, as well as investors and customers, that what looks like a risk to many is actually a sustainable competitive advantage for your startup.

Nevertheless, we can all benefit by understanding a collective view from investors on the high-risk elements that every new business has faced historically based on the team, as well as in the marketplace. Here is my perspective on the highest risk elements, from my years of working with investors and watching startups come and go:

  1. All the co-founders are first-time entrepreneurs. A strong team has one or more executives who have run a startup before in the current business domain. Even top big-company executives are considered high-risk in a startup environment. The challenges are as different for them as a jewelry store owner now building medical devices.

  1. Your startup is in a high-failure-rate business sector. These historically have included work-at-home, restaurants, telemarketing and social-service providers. On the Internet, I am wary of one more search engine provider, clones of existing social-media sites, and yet another new dating site. You need a big differentiator in these arenas.

  1. Products requiring changes to government regulations. Things such as driver-less cars and new medicines are far more than a technology challenge. They require exhaustive and money-consuming tests and trial periods, followed by bureaucratic approval cycles that can take forever. If you have deep pockets, these ultimately can be very lucrative.

  1. Huge ramp-up time and money required. For new car companies such as DeLorean and Fisker, designing and testing the product is only the beginning. Huge investments are also required to ramp up manufacturing, build a distribution network, and provide the support infrastructure. New drugs usually fall in this category, due to side-effect testing.

  1. Niche or low growth-rate businesses opportunities. Investors are looking for large opportunities (greater than a billion dollars) with double-digit growth rates. Others may indeed make good family businesses, but are usually deemed not worth investment. These are ones you need to bootstrap, crowdfund or pitch to friends and family.

  1. Marginal legality or poor public image. Don’t expect investors to line up for your new online gaming site, adult entertainment or quick sources of cash. Professional investors put great value in their integrity, so they won’t risk it by making investments that some would view as poor taste. These may traditionally have high returns, but are still high risk.

  1. Off-shore or foreign-country based. Every country has their own unique business requirements and customer culture. Thus investors in one country do not assume that they know what works in another country, even if it sounds good locally. If you want U.S. investors, for example, it may be worthwhile to set up an office in New York City or Silicon Valley.

No entrepreneur should consider any of these challenges as hard barriers, but they do need to be aware of higher risk perception, and include their mitigation strategy in their business plan for all to see. I encourage you to be proactive on these issues, rather than saying nothing unless questioned. Responding to a challenge will always make you look defensive, and many people will walk away without asking.

It’s also not smart to switch from a domain you know and love to a perceived lower-risk business that you know less about, or have no passion for, just because it may be more attractive to investors. Passion and commitment can overcome many risks, and these will also drive you to expand your scope of options for funding and implementation, leading to success.

If you are a true entrepreneur, you will find that a reasonable level of risk is necessary to incent you to go beyond the status quo of an existing problem. But in all cases, it pays to keep your eyes wide open, and do your homework on the pitfalls that others before you have faced. Only then can you enjoy the journey, as well as reach the destination.

Marty Zwilling

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Wednesday, May 31, 2023

8 Keys To Improving Your Image And Career Advancement

business-image-careerBased on my own career as a business owner and angel investor, in this age of change, I still see key successes and growth from the same team member work qualities. These haven’t changed much over the years, but still seem to be often overlooked by business professionals and leaders in their haste to keep up with peers, competitors, and customers in today’s volatile environment.

For example, it has long been widely accepted that one of the primary causes for entrepreneur failure in new startups is that many give up too soon. The reality is that starting a business, as well is working an existing business, has always required perseverance. Many people today are not prepared for the dedication and resilience required or have assumed unrealistic expectations.

Here are my key recommendations for surviving and thriving in business, as a business professional or an owner, from my own experience. These should come as no surprise to you, since they haven’t changed in many decades, and I expect will serve you well in the current turbulent times we all face:

  1. Spend time nurturing productive work relationships. It takes effort and homework to find productive relationship channels, such as industry conferences, connections to experts, and key customer relationships. In my experience, relationships are still the key to career opportunities, new clients, and collaborative results. Loners need not apply.

    Inside the organization, it also pays to offer some of your time for coaching and mentoring to less experienced team members, as an entrée to a supportive relationship. It’s amazing how quickly these activities lead to leadership or management opportunities.

  2. Hone your project management skills above all others. I have seen too many careers and businesses fail due to projects that went off the rails. Project management requires that you see the big picture, understand who and what resources are required, have the ability the communicate and motivate people, and have the skills to track progress.

    Project management is essential to getting things done on time, with a minimum number of problems and crises. The technology and tools in this discipline have improved dramatically over the years, so be sure you stay current and knowledgeable over time.

  3. Graduate from an idea person to one who delivers results. Some people are all talk and no action. Others are good at starting things but are not reliable at the finish line. In entrepreneurial circles, the idea person always needs to be paired with someone who can deliver, before investors are interested. Ideas without results kill many businesses.

  4. Nurture a reputation for coming to work prepared. We all know a few professional office mates who never show up on time or waste your first hour talking about non-work events or general complaints. Team members quickly note who is always ready to dive in to work challenges, and who always needs more time to get started or finish their tasks.

  5. Maintain a work-life balance for health and rejuvenation. Successful people are able to find enough personal time off to balance personal needs against the constant barrage of work demands. Constant attention to work devices, location, and travel is not humanly sustainable without loss of quality, satisfaction, and productivity. Find what works for you.

  6. Keep your results list always longer than your to-do list. Everyone is impressed with team members who are ready to take on new challenges and always produce results, rather than being too busy and flashing a large to-do list. Businesses win and grow by achieving more results. Check yourself by documenting your own results on a daily basis.

  7. Timely follow-up on customer and team member requests. Like me, I’m sure you notice if work-related phone calls and social media requests are not acknowledged or answered within one full workday. These same people would be annoyed if their best friends were not that responsive. Your career depends on the image you set here.

  8. Continually expand your role and assignment willingness. Don’t use your job description to put boundaries on your willingness to take on work or respond to requests from others. This allows you to grow through learning, and garner more appreciation and respect from peers, managers, and clients. Stretch here also increases job satisfaction.

Certainly, there are many more priorities and attributes that are also important, but hopefully the ones outlined here will help you step back and do a personal assessment of how you might redirect your efforts or reset your expectations. Don’t ever discount the value of keeping up with the new technologies and tools, but these won’t save you unless you start with the basics.

Marty Zwilling

*** First published on Inc.com on 05/16/2023 ***

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Monday, May 29, 2023

8 Top Capabilities Of Most Successful Business Owners

Successful-business-ownersIn my experience in large businesses as well as years of advising startups, I see far too much focus on product skills, and too little on people and process skills. In my view, this focus on the wrong skill set is the primary reason why over half of new businesses fail in the first five years, and only one out of a hundred startups get their requested funding from professional investors.

In fact, there is much evidence that the same principles separate success from mediocrity in most of the disciplines in business. I recognized this as I was reading the classic book, ”The Only Sales Guide You’ll Ever Need,” by Anthony Iannarino, who is an international sales leader and expert on optimizing results. His focus is on sales, but I see the same skills needed for entrepreneurs.

His top eight required skill set elements for sales don’t even mention product skills, and match my view of the right skill set for successful entrepreneurs, with only a few priority changes:

  1. Creating and sharing a vision. Storytelling and projecting a vision are foundational skills that are required from the first moment in starting a business. The old myth that “if we build it, they will come” has not worked for a long time. The best visions begin in the future, describe how to get there together, touch on emotions, and work in your values.
  1. Diagnosing and understanding the customer problem. This means all business people, especially entrepreneurs, need to get beyond the presentations and the experts, to actively listen to real customers. They need to ask customers the difficult questions, and really understand costs versus benefits, as well as competitive alternatives.
  1. Opening relationships and creating opportunities. Whereas providers used to control information, the Internet has given customers access to more information and more choices than ever. They demand interactive relationships with you, and depend on the relationships you have with their friends. Relationships are the new keys to opportunities.
  1. Producing results with and through others. You can’t build a business or sell alone. You have to lead and motivate many others with the right skill set to make it happen. To do this, you call upon your storytelling, negotiating, and change-management skills, all the while demonstrating your unswerving accountability. It’s up to you to clear the way.
  1. Asking for and obtaining commitments. Building a company and selling are all about gaining commitments. While it’s true that you can go too far too fast when asking for funding or asking for an order, all too often fear and timidity keeps entrepreneurs from going far enough fast enough. Offering more value is the key to a quicker close.
  1. Negotiating and creating win-win deals. When dealing with customers or partners, only win-win deals make sense. It’s all about value for both parties, and good negotiation is highlighting value. Great entrepreneurs are able to think on their feet, and are always prepared. Highlight the points of agreement, rather than hammer on the differences.

  1. Understanding business essentials and creating value. Product leadership alone might have been enough in the past, but today people are looking at a bigger picture. They want a business that is ethical, understands sustainability, and provides leadership that goes beyond profitability for shareholders. Value is far more than cost versus price.
  1. Building consensus and helping others change. Consensus and change are hard. These require building a team that can work together, identify the obstacles to change, deal with conflicting interests, and overcome the challenges to change. Great entrepreneurs create and sell a compelling case for change, and lead that change.

Put simply, your personal and people skills are the difference that makes the difference, more so than the product or service you bring to the table. It takes discipline, initiative, a positive attitude, and the ability to communicate and be accountable to set your business apart from the million others that have equal access to your customers. Make them remember you and appreciate the added value.

Marty Zwilling

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Sunday, May 28, 2023

7 Likely Criticisms Every Founder Needs To Anticipate

1272587-et-how-to-become-an-actor-adam-faison-aj-03a.jpgIn business, and in your personal life, the ability to anticipate and overcome criticism is one of the biggest differentiators between leaders, who make things happen, and followers, who may have great ideas but never seem to get things to go their way. In fact, leaders are not remembered for their dreams, aspirations, or intentions – they are remembered because they achieved results.

In my role as an advisor to entrepreneurs, I often find founders who have such conviction and passion for their new idea, that they can’t believe anyone could challenge it. They bristle quickly when investors or even potential customers raise issues with real value, competition, risk, and sustainability. The reality is that good ideas are always challenged, so you need to expect it.

The best entrepreneurs and business professionals learn to anticipate these push-backs before they happen, and respond calmly and effectively. I like the specifics on how to do this in the classic book, “The Agenda Mover: When Your Good Idea Is Not Enough,” by leadership expert Samuel B. Bacharach, Cornell Professor and cofounder of the Bacharach Leadership Group.

Bacharach details seven possible criticisms that every leader with a good idea should anticipate, and provides guidance on how to overcome each. I’ll paraphrase a few of his key points here, with comments from my own experience in business:

  1. Your new idea is too risky. A new idea is a step into the unknown, and always represents some risk. Rather than arguing the level of risk, a better strategy is to highlight the size of the reward. Then mobilize your support for these rewards through testimonials, input from experts, and traction. Increasing your credibility will reduce the perceived risk by all.
  1. The idea will only make things worse. Resistors often make the argument that while the idea seems fine on the surface, something later is certain to turn things upside down. This usually means that your message needs clarification to offset generalized qualms. Narrow your focus through specific case studies and quantify value and results.
  1. This idea won’t change a thing. When faced with this type of “paternal” criticism, the best path is to again ground your case in very specific examples to show that while the idea might not be a total paradigm shift, it will at least represent a significant change in cost or return. Negotiate the time and resources to do a trial, and measure results.
  1. You don’t know the issues well enough. The main goal of this type of criticism is to challenge your ability to lead and question your credibility. The antidote to such criticism is usually less passion and more facts to show that you have done your homework, assembled expert validation, and are interested in full disclosure and opposing views.
  1. You’re doing it all wrong. “The way it’s always been done” may work well for routine repetitive tasks, but it never applies to new ideas. This argument is actually attacking your ability to execute, rather than the idea. To offset this criticism, you need to highlight your prior experience, the expertise of your team, and the quality of your advisors.

  1. It’s been done before. This sort of resistance is predicated on the assumption that there is historical knowledge or past experience that makes your idea irrelevant or doomed to failure. This can be countered best by a proactive comparison of specific elements of your new idea to past practice and experience. Burst the balloon of generalities.
  1. Someone has ulterior motives. This challenge is one of trust, implying some hidden agenda or self-serving motivation for you and your allies, such as huge financial rewards or positions of power. The best strategy here is to not to over-react or be defensive, and highlight specific value to customers. This is where real leaders let others do the talking for them.

In all cases, the key words for countering criticism and moving things forward are anticipate, mobilize, negotiate, and sustain. Anticipate the agenda of others, mobilize your resources, negotiate buy-in and support, and get things done to sustain momentum in your campaign.

Don’t allow yourself to get involved in an escalating competition of egos, which can make others think that your ego is more important than seeing your idea come to fruition. True leaders in business with million-dollar ideas, like Bill Gates and Elon Musk, don’t stop until they have billion-dollar results. Where do you fit in this spectrum?

Marty Zwilling

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Saturday, May 27, 2023

5 Keys To Personalized Team And Customer Connections

fully-engaged-teamThe days of leadership without engagement are gone. With interactive social media and video everywhere, everyone needs to feel they have a relationship with their leaders, and every brand needs leader personification for customers to relate. Soon you won’t be able to name a business as one of your favorites if you can’t personally visualize and relate to company leadership.

In the same way, great entrepreneurs and company leaders should no longer rely on faceless and nameless processes to drive business strategy and innovation to stay competitive. The old way doesn’t work, and results more than ever in slow decision-making, lack of real connection with employees, and ignorance of what customers really want.

The new principles of engagement, as well as the dysfunctions of the old, are well illustrated in the insightful classic book, “Why Are There Snowblowers in Miami?” by Steven D. Goldstein. He speaks from a wealth of personal experience in private equity, as well as top executive positions at American Express, Sears, and Citigroup.

He found the dysfunctional engagement that sent snow blowers to his store in Miami every year. As a result of this incident and many others, he defined five key engagement principles which resonate with me as just as relevant for new business founders as mature business executives. Here is my adaptation of his engagement principles for all the aspiring entrepreneurs I advise:

  1. Learn to adopt an outsider’s perspective. Every entrepreneur, even though confident in his domain, needs to fight complacency in a world that changes almost daily. You need to look at everything through fresh eyes, continually ask questions not usually asked, and actively listen to contrary views. No change means you are falling behind as a leader.
  1. Interact with employees and customers on a regular basis. Authentic communication at all levels and encouraging feedback is how you find out what is really going on. More meetings in your conference room won’t get to the truth as well as simply talking to people who interact with customers directly. Never be too busy to talk to real customers.
  1. Focus on two or three pertinent metrics in any situation. Keeping it simple is the best course. No one can remember your top ten priorities and measurements. Unbundle projects into smaller elements, and personalize the top couple of metrics for each team. These simplified targets are crucial to motivating a team, and getting the focus you need.
  1. Help people know more, so they can do their job better. Knowledge is power, and good information flow and collection tools are of the utmost importance. Information that is relevant and timely needs to be shared widely and efficiently. It’s also important to share the evaluation insights, and to tie the next action steps directly to current results.
  1. Accept that whatever speed you are going is too slow. Time is the enemy in today’s global marketplace. Follow the guiding motto of Andy Grove at Intel, “Only the paranoid survive.” It’s vital to get quick wins, learn rapidly from failures, and get comfortable with constant change. Waiting is never an option, as competitors will always be moving.

In the same fashion, these engagement principles must be applied to customers. More and more, I see evidence that customers want to be pulled to your company by engagement, rather than feel that you are pushing yourself on them. There are a multitude of opportunities through social media to engage your customers, as well as getting out of your office into the marketplace.

Customer business leadership through brand icons, such as Ronald McDonald and Aunt Jemima, is fading fast. Customers as well as employees want to relate and engage with real people as leaders, and business leaders need to interact with real employees and customers to stay vital and current.

As an entrepreneur, you need to start this focus early, with the same passion you currently apply to your new idea and solution. Have you taken a hard look recently at where you are spending most of your time?

Marty Zwilling

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Friday, May 26, 2023

8 Priorities When Offering A New Product Or Service

business-startup-targetEvery one of you business owners I know periodically introduces new products and services to sustain growth, fight off competitors, or take advantage of new technologies. Often, despite your passion and expectation, customers don’t immediately see the value and need that you see, and you have no idea why the initiative is stuck, and what could be the real customer issue or fix.

In my experience in business, and as a consultant, I have found a common set of challenges that every new initiative has to overcome for widespread adoption and the business growth you need. Even though many of these can be mitigated by testing and early customer feedback, you will find that it pays big dividends to do your homework before building and rolling out every new initiative:

  1. In today’s customer data overload, marketing is essential. Customers won’t buy what they can’t find or don’t understand. No matter how great your innovation, don’t count on word-of-mouth to save you. The cost of any new product these days must include education and rollout marketing, perhaps equal or greater than the development costs.

    Even more important than solution marketing is building your brand. Make sure new solutions offered actually build your brand, rather than dilute it. New offerings which build your brand will increase acceptance and sales of all solutions, not just the new one.

  2. Solution may require new category development time. Major leading-edge (also called bleeding-edge) products or technologies, such as artificial intelligence (AI) or the Internet of Things (IoT), involve new concepts, time for acceptance, and focus on understanding value. Don’t count on these as short-term solutions to a growth problem.

    These disruptive technologies also have the potential for exposing your business to new competitors, including a wealth of startups that can jeopardize your core business, and redefine the marketplace. If you go this route, make sure your solution is strategic.

  3. Customers need supporting approvals to fully benefit. Often products that introduce disruptive new technologies, such as electric vehicles or healthcare solutions, are dependent on supportive infrastructures, operational regulations, or insurance approvals before benefits can be realized. Your rollout plan needs to factor in these requirements.

    The challenge here is that supporting infrastructure decisions are usually outside your control, and may be political or emotionally driven. To win in this environment, you may need to expand your leadership in industry conferences and community activities.

  4. Target audience may be limited or new due to price. Premium products may have high feature value, but may push you to a new level of customer, and prevent mass market appeal. This may require you selling exclusivity, doing channel development, or alliances with new partners. Another approach is to expand your scope geographically.

  5. Even in the face of real value, customer change is hard. Most new solutions I see are easier to use, more productive, more fun, or cheaper than existing alternatives. You will find that customers discount advertising, and look for user testimonials, online influencer reviews, and return-on-investment examples from industry experts. Incent these early.

  6. Customers fear liability potential or see risks you don’t. These fears need to be offset by early success stories, educational case studies, or advice on ways to reduce risk. Also fears can be mitigated by warranties provided, complementary service options, or money back guarantees. Don’t forget to address the risks and cost of doing nothing.

  7. New solution highlights additional functional needs. Your new solution may seem straightforward and complete to you, but customers find complexity and new feature requirements that are difficult to solve. The result can be a host of new competitive and price challenges which can stall growth or require excessive resources and time.

  8. Customer may decide to wait for the next new thing. Your release of one cool new product may set unreasonable customer expectations for regular follow-ons. Instead of really expanding your market activity, you may find things slowing down as customers wait for the next wave of enhancements. Marketing costs will continue to increase.

Even though many of these challenges may seem obvious to you, I still see them often overlooked by aggressive business leaders, resulting in a large percentage of expensive new initiatives that fall well short of growth and revenue expectations. With the rapidly changing and competitive worldwide marketplace we live in today, do your homework early before you jump.

Marty Zwilling

*** First published on Inc.com on 05/11/2023 ***

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Wednesday, May 24, 2023

7 Keys To Making You A Team Leader And Future Manager

boss_executive_businesswomanOne of the things I’ve learned in working with aspiring entrepreneurs is that managing and leading a team is a scary venture into the unknown for many people, even if they have worked as a business professional for years. Having worked in my own career on both sides of the fence at various times, I recommend that everyone practice thinking like the boss in every role to prepare.

This will improve your effectiveness in your current role, and give you a head start towards a future role, such as startup founder, where you are the boss. You will find that the same key principles apply in both situations, and that every business professional has a boss, and should be a leader in their own domain to others with less experience and expertise.

I found some good insights and details on this approach in the classic book, “How To Be A Great Boss,” by Gino Wickman and René Boer, who speak from years of experience working with leadership teams of both small and large companies. Here is my summary of their key principles on being a great boss, which I will characterize here as applying to any business professional:

  1. Surround yourself with great people. As an entrepreneur, executive, or team member, you are most impacted by the people you gather around you. The smartest team members and the smartest bosses spend more time with people who are smarter in the relevant domain than they are. Then when you have to hire people, you will pick the best.
  1. Make more effective use of your own time. We all know bosses and peers who are always too busy, but never seem to get much done. Make sure that person is not you. Free up time for others by eliminating low priority tasks, and delegating items to the right people. Work on habits that improve your productivity, and find better tools every day.
  1. Understand both leadership and management. In business, leadership consists of creating the vision and direction, while management is primarily about gaining traction to achieve it. You don’t have to be a boss to be a leader or a manager. You should be practicing both in every role, and there will be no surprises as your career evolves.
  1. Train yourself to follow leadership best practices. If you practice all the key elements of leadership in every role, you will make a great team member or a great boss. These elements include giving clear direction, providing tools and training to the right people, getting out of the way, walking your own talk, and reflecting regularly on the big picture.
  1. Focus on demonstrating accountability for your actions. Accountability is everyone’s obligation, to accept responsibility for their activities, and to disclose your results in a transparent manner. Accountability cannot be imposed on you by a boss or entrepreneur – it’s a practice that you must learn to impose on yourself to be effective and appreciated.
  1. Develop productive relationships with people around you. Effective relationships, inside your business and outside, are critical in every professional, management, and leadership role. The most productive people get things done by working in concert with others, not demanding actions and results, but by orchestrating win-win relationships.
  1. Learn to deal effectively with people who disappoint you. While highly productive relationships lead to success, dysfunctional relationships make you a poor employee and a bad boss. People issues cannot be solved by avoidance or edict. If you surface and manage relationship issues early with respect and minimum emotion, you will be seen as a good team member and a good boss.

Thus, putting yourself in your boss’s shoes to see what they see, and act as you would expect them to act, is the best way to assure success in your role today, or prepare you for the startup founder role you dream about. In fact, the best team members and managers I work with always see themselves as their own boss. Try it – you may find and train that great boss you never had.

Marty Zwilling

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Monday, May 22, 2023

5 Keys To Capitalizing On Nondisruptive Business Growth

growth-nondisruptiveMost of the entrepreneurs and aggressive business owners I meet in my consulting practice are focused on finding new disruptive solutions and killing competitors as the key to success. If you are one of these, you may be missing win-win opportunities to incrementally expand existing markets, create new ones enabled by new technologies, or do good for society in this new age.

For example, witness the current creation of the space tourism industry, vaccines to control new viruses, or simply providing a free product to the needy for every product sold. Not all innovations have to be as disruptive as the Netflix digital download was to Blockbuster’s DVD business.

I found many non-disruption recommendations in the new book, “Beyond Disruption,” by W. Chan Kim and Renee Mauborgne. Both authors are recipients of numerous academic and management awards for leadership thinking, and I will summarize here their key strategy insights, combined with my own experiences:

  1. Lead with a focus on finding customer value. Begin with a perspective on improving the current market reality without needing to disrupt what is. This means flipping your mental script from rebuilding current platforms to envision what could be, by creating new realities, changing the environment, or creating an additional world with different actions.

    Don’t confuse the means with the ends. It’s easy to be seduced by innovative technology, but customers and the market need to see direct value to them, to offset the learning curve and infrastructure changes required. Seek innovation with non-disruptive value.

  2. Address an emerging or unexplored problem. A new opportunity may be one that has long existed, but has remained unexplored because it hasn’t been seen as solvable or a viable new market. Also look for emerging new needs beyond existing industry boundaries. I encourage you to dream big, but start small, and size these opportunities.

    In my experience, the biggest winners in business are those who excel at “seeing around corners,” or predicting customer needs and problems before they actually occur. To do this, you need a mindset of always looking ahead and reacting quickly to new trends.

  3. Find ways to unlock and capture the opportunity. This starts with debunking the existing assumptions that have concealed the opportunity and then reframing it with today’s technology to find a solution. Have the courage to develop an independent point of view and be prepared to ignore discouragement and assumptions from the pundits.

    I have found that the most innovative business leaders use reframing to change their perspective, think differently, and reduce anxiety. Reframing means re-conceptualizing a problem by look at it from a different perspective and identifying alternative solutions.

  4. Use your confidence and competence to succeed. Key enablers required along the way include capitalizing on the resourcefulness of you and your team, marshalling internal resources, and fostering a “can do” mindset. As with any innovation, you need to get market feedback by conducting rapid market tests with real people you intend to help.

    As a mentor to many business professionals, I find many who are risk-averse or not confident in their own abilities to make forward-looking decisions. You as a business leader must counter these fears by highlighting successes and rewarding risk takers.

  5. Aim high to build a better world for customers. There are many areas currently ripe for nondisruptive innovation, including aging of the world’s population, managing world energy demand, and probing deeper into our place in the universe. Any of these will provide business growth without socially disruptive or existing business consequences.

    That higher purpose motivates people in a way that financial wins alone never will. For a company to grow and thrive, it needs to find and broadcast its purpose in all that it does. Today’s generation of customers and workers also assigns real value to higher purpose.

With these steps, you can use innovation to create win-win outcomes in a world where economic growth and societal good are not trade-offs. The classic approach to change, involving disruptive innovation, is painful for all, and takes too long. I recommend this new strategy based on positive-sum thinking to build a world of business that is viewed most positively by today’s consumers.

Marty Zwilling

*** First published on Inc.com on 05/08/2023 ***

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Sunday, May 21, 2023

10 Ways To Get The Capital You Need For Your Startup

money-transfer-banking-iconOne of the most frequent questions I get as a mentor to entrepreneurs is “How do I find the money to start my business?” I always answer that there isn’t any magic, and contrary to the popular myth, nobody is waiting in the wings to throw money at you, just because you have a new and exciting business idea.

On the other hand, there are many additional creative options available for starting a business that you might not find for buying a car, home, or other major consumer item. If you have the urge to be an entrepreneur, I encourage you to think seriously about each of these, before you zero-in on one or two, and get totally discouraged if those don’t work for you.

Of course, every alternative has advantages and disadvantages, so any given one may not be available or attractive to you. For example, professional investors put great priority on your previous experience in building a business, and they expect to own a portion of the business equity and control for the funds they do provide. These are tough for a first-time entrepreneur.

Thus it is always a question of what you qualify for, and what you are willing to give up, to turn your dream idea into a viable business. Here is my list of the ten most common sources of funding today, in reverse priority sequence, with some rules of thumb to channel your focus:

  1. Seek a bank loan or credit-card line-of-credit. In general, this won’t happen for a new startup unless you have a good credit history, or existing assets that you are willing to put at-risk for collateral. In the US, you may find that the Small Business Administration (SBA) can get you infusions of cash without normal backup requirements.
  1. Trade equity or services for startup help. This is most often called bartering your skills or something you have for something you need. An example would be negotiating free office space by agreeing to support the computer systems for all the other office tenants. Another common example is exchanging equity for legal and accounting support.
  1. Negotiate an advance from a strategic partner or customer. Find a major customer, or a complimentary business, who sees such value in your idea that they are willing to give you an advance on royalty payments to complete your development. Variations on this theme include early licensing or white-labeling agreements.
  1. Join a startup incubator or accelerator. These organizations, like Y Combinator, are very popular these days, and are often associated with major universities, community development organizations, or even large companies. Most provide free resources to startups, including office facilities and consulting, but many provide seed funding as well.
  1. Solicit venture capital investors. These are professional investors, like Accel Partners, who invest institutional money in qualified startups, usually with a proven business model, ready to scale. They typically look for big opportunities, needing a couple of million dollars or more, with a proven team. Look for a warm introduction to make this work.
  1. Apply to local angel investor groups. Most metropolitan areas have groups of local high-net-worth individuals interested in supporting startups, and willing to syndicate amounts up to a million dollars for qualified startups. Use online platforms like Gust to find them, and local networking to find ones that relate to your industry and passion.
  1. Start a crowdfunding campaign online. This popular funding source, where anyone can participate, per the JOBS Act in the US, is exemplified by online sites like Kickstarter. Here people make online pledges to your startup during a campaign, to pre-buy the product for later delivery, give donations, or qualify for a reward, such as a tee-shirt.
  1. Request a small business grant. These are government funds allocated to support new technologies and important causes, like education, medicine, and social needs. A good place to start looking is Grants.gov, which is a searchable directory of more than 1,000 Federal grant programs. The process is long, but it doesn’t cost you any equity.
  1. Pitch your needs to friends and family. As a general rule, professional investors will expect that you have already have commitments from this source, to show your credibility. If your friends and family don’t believe in you, don’t expect outsiders to jump in. This is the primary source of non-personal funds for very early-stage startups.
  1. Fund your startup yourself. These days, the costs to start a business are at an all-time low, and over 80% of startups are self-funded (also called bootstrapping). It may take a bit longer, to save some money before you start, and grow organically, but the advantage is that you don’t have to give up any equity or control. Your business is yours alone.

You can see that all of these options require work and commitment on your part, so there is no magic or free money. Every funding decision is a complex tradeoff between near-term and longer-term costs and paybacks, as well as overall ownership and control. Yet with the many options available, there is no excuse for not living your dream, rather than dreaming about living.

Marty Zwilling

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Saturday, May 20, 2023

7 Ways To Prepare For A New Venture As A Side Hustle

sun-and-hazel-side-hustleMany experts will tell you that you can’t succeed as a part-time entrepreneur, as any good startup will require a 100 percent commitment of your time and energy. But not many of us have enough savings to live for a year or more without a salary, fund the startup, and still feed the family. Thus I often recommend that entrepreneurs keep their day job until the startup is producing revenue.

Of course, if you have investors anxious to give you money, or a rich uncle to keep you afloat, there is nothing wrong with a dedicated and full commitment to the startup, with commensurate more aggressive milestones and growth expectations. We all understand the risk of competitors quickly closing in, and market factors changing before we can roll out our solution.

For those of you who do decide to keep your day job, here are some pragmatic recommendations I espouse on how to make the most progress in your startup, while simultaneously juggling your other critical family and employer roles. In fact, these suggestions have tremendous value, even if you are dedicated and committed full-time to your new startup:

  1. Find a cofounder who can keep you balanced. Two cofounders, both working part-time are actually better than one founder full-time. You both need the complementary skills, ability to debate alternatives, and the tendency to keep each other motivated, that neither could match working alone. One still needs to be the agreed final decision maker.
  1. Schedule fixed times and days for the startup, working with the team. Building a startup is hard work, and requires discipline to get it done. Working part-time doesn’t mean all working randomly alone. Commit to a regular weekend time and a couple of specific nights per week where you meet with the team and focus only on the startup.
  1. Get better at saying ‘no’ to your friends. Learning to manage your own time is critical. Everyone around you enjoys adding things to your schedule, and reducing their to-do list. The key is learning to say no without offering a long list of excuses, or whining about how busy you are. It’s never possible to satisfy everyone, so be true first to your own priorities.
  1. Set realistic milestones and take them seriously. It’s easy for part-timers to make excuses that other priorities caused you to miss milestones, but predictable results and metrics in this mode are even more critical than for full-time members. Use the 80/20 rule to maximize productivity – get 80 percent outcome from 20 percent of focused efforts.
  1. Select a business idea that has a longer runway. Some startup ideas are dependent on a rapidly emerging fad, or have many competitors fighting for a limited market. You can’t move fast enough on a part-time basis to win in these areas. On the other hand, if you have a new technology, with patent applied for, maybe you more time to get it right.
  1. Prepare yourself for a longer journey to success. Seth Godin is famous for saying that the average time for overnight success in a startup is six years, even working full-time. Like any startup solution, the first version will likely be wrong, and require one or more pivots. Learn to look for small indications of success to keep you motivated.
  1. Make learning your full-time vocation. No matter how many full-time, part-time, and family commitments you have, you always need to carve out time for learning new things. Learning is not stealing from any employer, and it prepares you for all your futures. Don’t wait for anyone to pay your way to class, or give you time off for training. It won’t happen.

The advantage of quitting your day job early is that it removes all excuses, and all qualms from you and others, that the new startup is only a hobby. There is nothing that drives an entrepreneur like being hungry, dependent on the outcome, and seeing mounting debt. Without self-discipline, many aspiring entrepreneurs find that a single focus is the only way anything ever gets done.

There is certainly additional risk associated with working a paying job during the day, and working on your startup nights and weekends. First is the risk to your health and family life, which if you lose these, all the business opportunity in the world doesn’t matter.

Then there is the risk of antagonizing your current employer by missing deadlines, reduced productivity, or even getting embroiled in a legal conflict of interest or intellectual property ownership rights. I suggest it’s best to be up-front with your employer, with an honest commitment that your startup work will not impact company commitments or results.

Potential conflict of interest issues with a current employer should be explored openly, and resulting agreement documented, to preclude the possibility that you might lose everything later as your startup succeeds. On the positive side, your employer may like what you have in mind, and become your first investor and biggest supporter.

If your conclusion after all these pros and cons is that the risk is too high for you, you probably need to keep your day-job long-term, and give your startup idea to someone else. There certainly isn’t anything wrong with a regular well-paid job and career, with health-care benefits, and a competitive retirement plan. But the entrepreneur lifestyle is still more fun, even part-time.

Marty Zwilling

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Friday, May 19, 2023

10 Practices That Have Led To Multiple New Businesses

Elon_Musk_Royal_SocietyEntrepreneurs who experience success with their first startup are often amazed to realize that the risks and fears of doing it right the second time go up, rather than down. Encores are tough, especially in the high-risk world of startups, yet every entrepreneur I know can’t wait to start over and do it again. Sometimes their haste or ego causes them to ignore basics, and they fall hard.

Every startup success is a function of great people, products, and profits. But there is no magic formula on how to bring these together a second time, but I did see some good insights on the parameters in a classic startup business parable, “Endless Encores,” by Ken Goldstein, who advises startups and has built companies in technology, entertainment, media, and e-commerce.

I have pulled together here a few of our joint recommendations to every entrepreneur and startup that I advise. These work the first time, and are required every time for success:

  1. Seek extraordinary people and revere talent. In the heat of the battle, when you have the least time and money to attract the best, it’s easy for an entrepreneur to settle for who is available, rather than who can bring real value and innovation to the business. Repeat leaders think more about talent, while short-term leaders worry first about output today.

  1. Hire for character, competency, and compatibility. Hiring is the single most important thing you do as a leader, and firing is second. It’s more than filling an open slot on your team. You start with skills, but then you have to delve deeply into motivation, trust, ambition, chemistry, and experience.

  1. Diversity on your team expands thinking. Hiring people who are just like you may eliminate revolts, but it won’t get you outside your own box. Creativity requires constructive conflict, a willingness to collaborate, dealing with failure, and boundless iteration. Solution and business model innovation require pushing the limits.

  1. Self-demanding beats boss-demanding every time. Startup successes are never perfect. Too many entrepreneurs are their own worst enemy, trying to do everything right the next time. Remember to embrace pragmatic goals and solutions, and accept a little bit of luck and assistance along the way. Perfectionists never win in the startup business.

  1. Leapfrog products invent and reinvent markets. Incremental product ideas do not change markets. It takes a paradigm shift, like autos to airplanes. On the other hand, making the user experience easier, richer, and more pleasant, as Apple has done repeatedly, can reinvent existing markets. Focus on the customer for repeated success.

  1. Eat your own dog food. If you don’t, why should they? The basic premise is that if a startup expects paying customers to use its products or services, it should expect no less from its own team. There is no better way to get quick and honest feedback on strengths, weaknesses, and usability. Even encore startups should expect to pivot to get it right.

  1. A business model is not an after-thought. Passion and ego are no substitute for a business model that makes sense. Some entrepreneurs are so enamored by their first success that they inherently believe that their next idea will make even more money. If your solution is free, or you lose money on every sale, it’s hard to make it up in volume.

  1. Strategy is charting a course, not making a move. Implementing a strategy doesn’t force the answer you want, so it pays to map out the alternatives and envision the possible as well as the problematic. Markets change rapidly these days, so the strategy that brought you success the first time, may lead to your demise the second time.

  1. Recurring revenue is the foundation for growth. Everyone loves the subscription model, since transaction costs exclude the cost of acquiring a new customer. Investors love this and other recurring revenue models because they facilitate growth through scaling. Sometimes repeat entrepreneurs forget that they must acquire new customers.

  1. Use cash wisely, as if it were out of your own pocket. Every new startup has extensive cash flow out, before any flows in. Serial entrepreneurs, with new bigger ideas, often forget that part of the equation, and are caught short. Repeating successfully means the same focus and due diligence on cash you had the first time around.

Thus the path to repeat success in business is to utilize what you learned from your first experience, and subvert any illogical fear of being exposed as a fraud or a lucky accident. If you have been able to “bring the crowd to its feet” with the success of your first venture, the principles outlined here could bring you endless encores.

Marty Zwilling

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Wednesday, May 17, 2023

6 Approaches To Problem-Solving From Today’s Leaders

https://patina.photoAll the business leaders I know have noticed that the problems we all face today are becoming more complex, multifaceted, and our customers are more demanding. Everyone wants to know how to become a better and more timely problem solver, as well as a more creative solution provider. The challenges for every business are now more global and multi-cultural than ever.

We are all jealous of the few leaders who seem to get it right more often than not, amassing multiple business successes, such as Jeff Bezos and Sir Richard Branson, while the rest of us struggle to keep up with our smaller domains.

In my consulting practice, I seem to struggle the most with those of you who are perfectionists, so I was pleased with the guidance I found in a new book, “The Imperfectionists: Strategic Mindsets for Uncertain Times,” by Robert McLean and Charles Conn. These authors speak from a wealth of experience as investors, entrepreneurs, and environmentalists.

I particularly like and agree with their characterization of six mindsets that facilitate effective problems solving under today’s uncertainty and time constraints. I will summarize these here, adding insights from my own experience in business:

  1. Great questions generate the best insights. The best business leaders are ever curious about every element of every problem. You as a leader must be able to suspend your natural pattern recognition impulses long enough to see evolving challenges in a fresh light. Asking the right questions reduces uncertainty and provides new answers.

    Of course, you have to stop talking and start really listening if you want to learn anything from questions. That means also that you have to suspend your biases, forget your leading questions, and do the follow-up required to confirm what you think you heard.

  2. Look at the problem through multiple lenses. By changing your lens or widening the aperture, you can identify threats and opportunities beyond the periphery of conventional vision. Also, you can zoom in and zoom out to be sure you are seeing the real structure of the problem, rather than imposing an old solution or addressing only one surface.

    In the trade, this approach is sometimes called “dragonfly eye,” referring to the fact that dragonflies have huge compound eyes, with hundreds of lenses that gather much more data than our human eyes, giving them a survival advantage in a complex world.

  3. Constantly experimenting through trial and error. To be a great problem solver, you must go beyond conventional data to explore tomorrow’s evidence from experiments to test hypotheses. The internet and instant global communication have made this kind of direct experimentation possible and cost effective, leading to early pivots and retries.

    Jeff Bezos at Amazon credits much of their growth and success to conducting regular change experiments. Bezos believes that if you double the number of experiments you do per year, you’re going to double your innovation, and thus outpace your competitors.

  4. Enlist the collective intelligence of the crowd. With the pace of change today, it is unlikely that all the best people to solve any given challenge are inside your four walls. Clever leaders now cast their nets more broadly, reaching out to the crowd on the internet, as well as industry organizations, governments, and even competitors.

    Of course, this requires that you bring together highly functioning groups of diverse people, which means you have to be willing to share your challenges. That may be a new mindset for you, but in my experience, the payback is well worth the time and effort.

  5. Don’t demand risk elimination by perfectionism. Great problem solving under uncertainty requires assessing and betting on the odds through trial and error, leading with low cost minimum viable prototypes, and accepting that some initiatives will fail. You must embrace humility about what you can learn, and what is knowable at any time.

  6. Use the show and tell mindset to compel action. This enables you to connect an audience, constituents and customers with the solution, and then use combinations of logic and persuasion to get buy-in. Storytelling will present the case emotionally as well as logically, connect with the values of the audience and the balance of risk vs reward.

In all cases, problem solving is a wager on the future, so you need to understand the stakes, or costs, of playing the game. This means assessing the price of each strategic move, including the costs of doing nothing, or finding a perfect solution, and weighing the payoffs of each potential outcome. Now is the time to hone your problem-solving skills if you expect to survive and thrive.

Marty Zwilling

*** First published on Inc.com on 05/02/2023 ***

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Monday, May 15, 2023

6 Keys To Adding Customer Value In Marketing Content

Hero-Content-MarketingEntrepreneurs have always believed that their product or service must show real value to customers, but today the smart ones are even able to make their marketing valuable. The days are gone when marketing was all “pushing product.” Now customers seek out people who are willing and able to add value, with expertise and insight, even before they have a product.

This new approach is often called “pull marketing,” where the idea is to establish a loyal following and draw customers to your content, and eventually your solutions. Customers don’t even see this as advertising. For example, top bloggers today, including Rand Fishkin and Gary Vaynerchuk, find no need to advertise, as customers come to them for value from content alone.

The impact of the right marketing content, and the principles of providing it today are outlined well in a classic book, “Content, Inc.,” by the so-called godfather of content marketing, Joe Pulizzi. He provides details on six key principles that every entrepreneur needs to practice in building and executing any modern successful startup:

  1. Fill a need independent of your product or service. For example, Seth Godin’s daily articles online on marketing are so valuable that he pulls loyal customers without ever mentioning his publishing services, consulting services, or speaking engagements. Make your content answer some unmet customer need or question without pushing a product.

  1. Consistently deliver new and valuable content. The key is consistency. Startups that haven’t updated their website since rollout, or publish a new blog once a month or less, won’t be followed for valuable content. In this context, content is like advertising, unless customers see you every day, they won’t remember anything about you, good or bad.
  1. Customers relate to other humans and relationships. As a startup, you the entrepreneur are the brand. Customers like to think they know you, so you need to find a voice, and share it. If you have a story, share that too, and invite interaction and comments. It’s more true than ever that people buy from people, not companies.
  1. Value is in your point of view. Everyone knows how to use Wikipedia, universities, and textbooks for facts and history. Experts and advisors offer new value from their insights, opinions, and experience. Don’t be afraid to take sides on matters that can position you and your company as an expert. People appreciate that and come back for more.
  1. Avoid “sales speak” and pushing your product. The more you talk about your solution, the less people will value your content. Pulizzi has measured that page views drop quickly by as much as 75 percent on self-serving content. Skip the flowery phrases and frequent adjectives that make up so much of the advertising copy we all recognize.
  1. Demonstrate best of breed through actions. Although you might not be able to reach it at the very beginning, the goal for your content is to be best of breed in your chosen domain. This means that, for your content niche, what you are distributing and your recommendations are the very best of what you and other experts have found.

Pulizzi argues, and I agree, that great content can be used by entrepreneurs to build an audience of potential customers first, before you have a product to sell. It’s the smartest and least expensive way to test the value of your concept, as well as the potential makeup and size of your target customer set. You then have the opportunity to monetize an already loyal following.

By experimenting with content, every entrepreneur can explore their own sweet spot, where they can comfortably offer value to an interested customer set. They can find their personal tilt that sets them apart, build a base of followers as a foundation to a business, and then harvest the audience for diversification and monetization.

What we call “marketing” has changed from a focus on “selling” customers with push marketing, to a focus on providing value early and in every way possible, such that customers are drawn to you as a trusted provider of value. That’s the loyalty you need, to have them recommend you to their friends, and keep you ahead of the many competitors easily visible on their radar.

Marty Zwilling

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Sunday, May 14, 2023

5 Keys To A Viable Spending Rate And Cash Management

Projecting-burn-rate-cash-flowCash flow is a basic survival metric for every startup. Investors check your burn rate to assess your efficiency, and project your remaining runway before you run out of money and into a brick wall. Don’t wait until you are almost out of cash before managing every dollar spent or looking for the next refueling from investors. Desperate entrepreneurs lose their leverage and die young.

It doesn’t take a financial genius to recognize that you need to keep your burn rate low. Yet it always amazes me that I can find two different startups, seemingly working on the same problem, with one having a burn rate several times higher than the other. Of course, their answer is that the second intends to get to market faster, but every engine has limits regardless the fuel applied.

If your runway is less than a year, it’s time to either begin looking for a new cash infusion or defining and implementing a Plan B to assure survival. Your goal is that magical breakeven point and hockey-stick profit-growth curve. Raising money from professional investors, even friends and family, takes time. Count on six months from beginning the funding process until a new check is cashed.

As a mentor to many entrepreneurs and startups, here are my best recommendations for keeping the burn rate low, planning ahead and maintaining credibility with investors:

  1. Manage cash flow personally every day.  A big influx of orders may feel like success, but can kill your business if you don’t have the cash to produce, deliver and wait for payment. The best entrepreneurs manage cash flow ruthlessly and never delegate decisions about spending money. Cash flow out equates to burn rate, and the runway depends on your reserves.

  1. Buffer your projected resource requirements. You will make mistakes. Things will cost more than you expect. Always add 20 percent to your best estimate of funding requirements when approaching investors. They understand startup realities. Better to ask for more early. Going back to investors for more money ahead of the plan is high in terms of credibility and leverage.

  1. Use future cash for payments where possible. Deferred payments start with stretching the payables period but, more importantly, include giving employee equity in lieu of a higher salaries and negotiating vendor deferred payments out of future revenues. Think of these alternatives as paying interest on a loan, and manage them wisely.

  1. Be a miser with contract services and facilities. One of the main reasons that former corporate executives often fail as startup CEOs is that they expect a big office and an entourage of expensive professionals to do the real work. Cash flow can be drastically reduced by working out of your garage. Tackling most of the support tasks yourself.

  1. Use social media for early marketing.  Hire a professional marketing and public relations agency once you have a good revenue stream but you don’t need them to start a free blog, establish Facebook and Twitter accounts with initial content and complete the basics of search engine optimization. Social media is not rocket science.

The timing of cash flow is everything. Waiting until you have something to sell before bringing on a sales and operations staff. Getting a sales contract before manufacturing inventory. Match your office, facilities and computer equipment to the size of the staff you have today, and intend to have in the next six months.

As a rule of thumb, your monthly burn rate should be less than 10 percent of your last funding raise or starting cash in the bank. For example, a software development startup raising $250,000 from angel investors better be able to operate on $25,000 per month. This could equate to two technical founders (with a minimal salary), funding two developers for a year.

In this case, the primary cash outflow would be for product development and operating expenses, with potentially enough runway to build the initial product, get a patent, attract some early adopters, and build the initial revenue stream. That should equate to an adequate valuation for a $2 million follow-on Series-A round, without giving away all the equity.

Overall, managing cash flow and burn rate is more critical to your business success than having the right idea and the right product.  It’s why most investors proclaim that they invest in people, more than the idea. If you adequately manage your burn rate, your startup is much less vulnerable to flaming out before you get to that elusive break-even point.

Martin Zwilling

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Saturday, May 13, 2023

7 Ways To Validate Your Business Idea Before Starting

validate-your-ideaIn my experience, consummate entrepreneurs tend come up with more startup ideas than they can ever implement, and some of the ideas may not even make business sense. But how does any entrepreneur know which ideas to implement, and which ones are best left behind?

After all, most great breakthroughs, like a computer in every home, seemed like a crazy idea before Steve Jobs and Bill Gates made it happen. Now we are seeing a computer on every wrist, and in most household appliances.

That doesn’t mean that entrepreneurs should ignore business and market realities, under the assumption that success is a random phenomenon. Passion, optimism, and determination are necessary but not sufficient to assure a successful startup.

Some analysis and due diligence along the following lines should be performed on every idea, as a reality check, before committing your efforts and other people’s money to building a business:

  1. Look for places where competitors are few. Even if the idea sounds unique to you, it’s worth your time to do a few Internet searches using relevant keywords. If you find more than a dozen solutions that loosely match your idea, it may be time to skip that one and try another. Don’t forget to consider customer alternatives, like trains versus airplanes.
  1. Check for intellectual property barriers in your way. These days, you can find existing patents and trademarks through Google and the US Patent Office online site without spending thousands of dollars with your favorite patent attorney. Of course, existing patents don’t stop you from innovating, but charging ahead into a wall is no fun.
  1. Find a recognized billion dollar and growing market. If you will be looking for professional investors to help you along the way, recognize that they expect to see data from credible market analysts on the size and location of your solution opportunity. Look for double-digit growth data from Nielsen, J.D. Power, Frost & Sullivan, or others.
  1. Separate nice-to-have ideas from ones solving painful problems. All your friends may love your idea on how to find the nearest bar or gym, but how many people are willing and able to pay money for your solution? Even good social causes need to bring in revenue to continue their worthy efforts. Ask domain experts to quantify value for you.
  1. Choose projects with financial resources within your reach. These days, you can build a new e-commerce website to sell home-made wares for a few hundred dollars. New smartphone apps cost only a few thousand, if you have the programming skills. Unless you have a rich uncle, it’s probably not smart to challenge Intel for the next computer chip, which would require hundreds of millions of dollars in investment.
  1. Minimize infrastructure dependencies. Sometimes your solution is impressive, but mass acceptance requires a big culture change, a large support system, or government legislation. For example, the Segway personal vehicle was proven technology 20 years ago, but is still constrained by right-of-way laws, liability issues, and charging stations.
  1. Availability of necessary skills and team members. Most startup projects require special skills and a motivated team. Entrepreneurs with ideas may not have access to the support skills required, or the ability to put together a motivated team. A successful startup is more about the right people and the right execution than the right idea.

Despite what you hear from some Internet spammers, there are no slam-dunk entrepreneur ideas that can make you rich with no risk and minimal effort. In fact, from painful experience, every real entrepreneur I know could probably add at least one item to this list of reality-check items. Thus I’m suggesting that you do your due diligence carefully, and pick the right idea before you start.

Sometimes I have to tell wannabe entrepreneurs that their million-dollar-idea is actually worth very little, in their own hands. It may indeed be better to freely donate your idea to a more qualified entrepreneur or team, rather than foolishly running it into the ground or sitting on it. One hundred percent of zero is still a small number.

Martin Zwilling

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