8 Potential Entrepreneur Assists From Your Alma Mater

Most aspiring entrepreneurs look to their alma mater, or any university, as a source of classes that can help them, but neglect to think outside the box or take advantage of all the other resources to be found there. The lesson of finding help, connections, and even funding where other people may never look is one that makes all the difference in the entrepreneur lifestyle.

As a startup advisor and investor, living in an area with several local universities, I’m continually surprised by how little many entrepreneurs know about the resources available from these institutions. Even if you are no longer a student, or not enrolled now, it can pay big dividends to get to know people there and explore the possibilities, including the following:

1. Potential to get technical work done as a class project. Every university has grad students and professors who are anxious to find a project with high commercial potential to use as the basis for a thesis or an advanced class project. They have equipment and smart students that would otherwise cost you a fortune through an outside contract.

2. Online or evening entrepreneurship classes for anyone. If you need help building your first business plan or financial model, it’s getting easier and easier to find what you need, as well as connections to peers and investors, without an expensive business consultant. Visit the university library for access to otherwise costly business reports.

3. Access to intellectual property and current research. Most universities have a file of patents from project work that they are willing to license to any entrepreneur for business commercialization, with little or no cost up front. Other project and research reports in their library are a rich source of new ideas, if you are still looking for a place to start.

4. Get help with grant funding and incubator resources. Every startup needs to start their funding search looking for grants, with no equity dilution, as well as contests and foundations. These often lead to angel investors and venture capital investments later, or connections to local company venture funds for selected focus and technology areas.

5. Find technical and legal guidance and advisors. The best university professors are anxious to get involved in real-world business ventures as advisors to maintain their currency and improve their academic credibility. Their value to you is great industry connections, free legal advice, shared learning, and credibility for you with investors.

6. Attract a co-founder and key team members. Universities are a great source of hungry and passionate people looking to get involved with the next big thing, or an opportunity to change the world. They have connections to industry associations and entrepreneur organizations that can kick-start your networking efforts, both locally and globally.

7. Access to entrepreneurs-in-residence, business mentors. Most schools have a rich pipeline of real-world executive volunteers available for mentoring. These also get used for guest lectures in business classes, judges for business plan competition, and introductions to accredited investors. They can also connect you to area businesses.

8. Visibility to startup job opportunities and career guidance. Even if you are not a student, you can visit the job center to see what’s happening in your area that may be of interest, or check out what your competition is doing. If looking for help, you can find interns willing to work for the experience, and real insights into new customer segments.

For example, I live in Arizona, home of Arizona State University and Embry-Riddle Aeronautical University. Both provide entrepreneurial guidance for aspiring entrepreneurs, have technology resources, and access to expert staff members. I have done volunteer work at both these schools, and I’m not even an alumnus from either one. I’m betting you can find something similar at a university near you.

Marty Zwilling

9 Popular Startup Business Model Variations For Scale

Every new business quickly realizes that revenue coming in every period on a committed basis is the Holy Grail to survival and growth. Based on traditional research, getting new customers is five to ten times harder than getting additional revenue from existing customers. Thus the subscription model (low fixed monthly payments), has become the norm for new products and services.

In fact, subscription pricing has been around for a long time for magazines, cloud-based software, and gaming, but now I’m seeing it used for just about anything, including for more stylish clothes via Taelor Style, gourmet foods via TryTheWorld, and toys for your kids via KiwiCo. If you are an entrepreneur not using this model, it may be time to consider a pivot.

In fact, in a classic book “The Automatic Customer,” by John Warrillow, who runs the successful subscription based research business The Value Builder System™, I saw the nine most common variations on the subscription model today. If you are looking to start a new business in any domain, it’s definitely worth your time to check your fit for one of these models:

1. Membership website model. With this model, you provide website access to insider information for a regular subscription payment. It works best in a tightly defined niche market, like antique car owners, or rare-coin junkies, or woodworking enthusiasts, where experts hare hard to find, and members can gain from interacting with each other.

2. All-you-can-eat content model. By providing access to a large variety of titles, like NetFlix with streaming movies, or Hulu for TV shows, with new content added regularly, there is always a reason to keep up your subscription. If you already have many followers for some limited free offerings, this also becomes a natural freemium upgrade.

3. Private club model. On the other end of the spectrum, if your service or experience is in limited supply, make it a status offering for the strivers out there who want to act and feel like affluent consumers. Here the key is to convince customers that you have something really rare, and maybe even entice them into a long-term but affordable relationship.

4. Front-of-the-line model. If you can help with a relatively complex product or service, this one is especially appealing to customers who are not overly price sensitive, or ones for whom waiting in line can have catastrophic consequences. It works for the need to resolve IT issues in a small business, to avoiding long lines at popular clubs and hotels.

5. Consumables model. You should consider this subscription model if you sell things that naturally run out, like OAK + ACORN diapers or Ipsy for cosmetics. People are willing to pay for convenience, but don’t underestimate the logistical challenges in fulfilling orders and providing services to thousands of subscribers in out-of-the-way places.

6. Surprise box model. This model involves shipping a curated package of goodies to your subscribers each period. It may have started with wine club memberships, but has now been extended to include BarkBox for family dog treats, Standard Cocoa for those who love chocolates, and SpicySubscriptions for lovemaking paraphernalia.

7. Simplifier model. Everyone these days wants to simplify their life, so this subscription model works well for personal service businesses, like pet grooming, tutoring, window cleaning, and even bookkeeping. The key is making sure the customer doesn’t have to remember the scheduling, deal with immediate variable payments, or worry about quality.

8. Network model. This model works best where your product or service utility improves as increasing numbers of people join in. It was popularized with dating sites and LinkedIn, but now is popping up with many services, like Zipcar for car-sharing, Spotify for music sharing, and WhatsApp for international messaging for a low predictable fee.

9. Peace-of-mind model. This one is an extension of the insurance model into new domains. For example, Amber Alert GPS will make sure your kids don’t wander outside of safe zones, Site24x7 will let you know if your web site is down, and Social Studio monitors social networks so you know what people are saying about your brand.

If your startup is in the Business-to-Business (B2B) world, you need to realize that the subscription model has evolved considerably since SalesForce.com introduced Software as a Service (SaaS) way back in 1999. Popular variations of cloud subscription services now include offerings billed as Platform as a Service (PaaS), and Infrastructure as a Service (IaaS).

So now may be the time to start or transform your business into a recurring revenue engine with subscriptions, or just add an option to get some extra sales growth. But be aware, these models bring with them a whole new psychology of selling, supporting, and measuring your success with customers. Do your homework before jumping in with both feet.

Marty Zwilling

6 New Venture Ending Alternatives You May Contemplate

The last thing a new entrepreneur wants to think about for a new startup is how it will end. Yet one of the first things a potential equity investor asks about is your exit strategy. The answer you give can make or break your ability to get an investment, so you need to have the right answer ready before anyone asks. Here are three important reasons for the question:

• Good investment paybacks normally require an exit event. Equity investments are not loans, so there is no loan payback period or interest payments. Equity is stock, but private company stock has no market value until the company goes public or is sold or merged with another company. These events may take three to five years at a minimum.

• Startups with no exit planned will minimize investor returns. If the entrepreneur plans to grow the company into a family business, or keep it private, they will either never be interested in buying out investors, or will certainly not be motivated to provide the 10x return that investors are looking for. Investors hesitate to invest under these conditions.

• Most entrepreneurs like the startup role, but not the big-company role. Investors know that the fun of a startup turns into managing production processes, sales processes, and personnel in a few years. You probably will do that job poorly, unless you plan your exit early, to move on to your next startup role, to do that better the next time.

Of course, if you are able to bootstrap your startup, and don’t anticipate the need for outside investors, you can technically ignore the first two points. Even still, in the context of all three points, I recommend that you evaluate the most common exit alternatives and considerations, and integrate the right one into your startup strategy and plan:

1. M&A - merger or acquisition by another company. This should be perceived as a win-win event, where your startup is bought or merged into a larger peer or competitor, allowing both you and investors to cash out. The resulting entity will gain complementary skills, economies of scale, new customer sets, and hopefully a larger growth opportunity.

2. IPO – public company initial public stock offering. According to National Venture Capital Association statistics, only 16% of venture-backed startups recently used this alternative, due to high liability concerns, demanding shareholders, and high costs. Most experts don’t recommend this approach as your default strategy anymore.

3. Find a private equity firm or friendly individual. This alternative differs from an M&A, since the result is still your original single company. Yet it is an opportunity for you and your investors to cash out. The buyer has the challenge of scaling the business, and managing all the operational growth requirements. You can kick-off your next startup.

4. Position the company as a cash cow to fund spinoffs. If you can convince investors that your startup will generate a solid revenue stream, and the market won’t go away any time soon, they may see an opportunity for an ever larger return. You can maintain ownership, and even find someone you trust to run it for you, as you focus on spinoffs.

5. Liquidate the assets, cash out investors, and keep the rest. This is not a recommended strategy, since business shutdowns are usually seen as distressed situations, meaning the value of hard assets will be highly discounted. Less tangible assets like the brand name, business relationships, and even your reputation may be lost or damaged.

6. No exit. If your startup strategy is to be a lifestyle company, or a family business that will grow organically and never go public, then no-exit is a valid exit strategy. This alternative is often paired with a personal no-exit strategy. If you expect investors to help your startup scale, it probably won’t happen, as discussed in the first points of this article.

While exit discussions may somehow seem negative, an exit strategy should always be seen as positive. It’s a plan to develop the best opportunity for you, your startup, and your investors, and capitalize on it, rather than a plan to get out of a bad situation. Think of it as a succession plan, to keep growing what you have started. It may be the end of your startup phase, but it should be the beginning of a more mature and stable business.

Marty Zwilling

7 Tactics To Minimize Stress From Annoying Coworkers

Throughout my career in business, I have rarely been on a team where every member was equally productive and never annoying. While I considered this situation a “normal” challenge of team collaboration, and part of my responsibility to overcome, I was often amazed at how lack effort, sensitivity, or communication skills would cause the whole team to become dysfunctional.

I’ll admit that I did learn some key strategies over the years to mitigate the problem, which I will offer for those of you who may be new to the workplace, or may be convinced that only the guilty should have to change. I assure you that these are important lessons that will enhance your career, as well as improve your odds of success with customers, partners, and even your family.

Here are my key recommendations for actions on your part to interact more effectively with others in the workplace whose style may be annoying to you, frustrating to both, or even intentionally obnoxious to peers:

1. Clearly define boundary lines and expectations early. Obnoxious team members may by force of habit ignore your earned expertise or team leadership position. Make it clear that negative or inappropriate language is not tolerated in business discussions. Clarify communication conventions in a normal tone of voice and honor your own boundaries.

   I have found that every work relationship needs commonly understood boundaries, just like family and personal relationships. The boundaries in business may start with work scope limitations, but certainly must include emotional and physical constraints as well.

2. Share your time constraints early in every discussion. Don’t let frustrating team members monopolize your time or jeopardize other commitments. Move on to other activities in a timely fashion, with a calm and courteous exit. If you are in charge of a meeting, make sure all members are aware of and live up to the same participation rules.

   In addition, I recommend speed mentoring for those of you that love to help others resolve their challenges, rather than jumping in to do the job for them, jeopardizing your own ability to meet personal commitments, or raise your stress level to unhealthy highs.

3. Adjust your interaction style to be accommodating. Over time, you can adjust your interaction style to make the relationship work better for both of you. For example, some people insist on giving you all the details before a conclusion or request for help, while you expect the end result first, to give the details a better context. Don’t interrupt.

   Above all, don’t be confrontational or combative. Think about how to engage your colleague in problem-solving, which is inherently collaborative instead of combative. Never make the interaction about who’s right and who’s wrong, and keep it positive.

4. Keep interactions short with obnoxious coworkers. Plan your discussions to occur immediately before a scheduled meeting, or other planned exit. Keep yourself calm and positive, while avoiding contentious topics. Join in discussions with other team members or managers present. Check your body language to avoid giving negative messages.

5. Focus team members on results, rather than activities. Incent peers and every team member to produce results, and provide feedback and rewards based on results rather than work hours or activities. Do not tolerate complaints, excuses tied to others, or listen to unrequested negative assessments on the work habits or business role of others.

6. Don’t broadcast your stress and frustration to peers. Be aware that an obvious poor relationship with one team member may bias others against you. Always make sure your own behavior is never seen as annoying, both in terms of what you say, and the body language you exhibit. The best leaders are praised for their handling of difficult situations.

7. Strive to always treat every team member consistently. Ask a trusted coach or mentor for feedback to make sure that you are not part of the problem with difficult team members. Having productive and trusted relationships requires that you are able to adapt your approach as required, rather than expect everyone to adapt to your style.

With these tactics, I predict you will be pleasantly surprised by the level of cooperation and productivity you can get from other team members and managers, even ones that previously were secretly not fully supportive of your efforts. In addition, you will have more time, energy, and support for your own work initiatives, resulting in a win-win for all parties involved.

Marty Zwilling

*** First published on Inc.com on 2/10/2023 ***

10 Strategies Of Professionals Who Love What They Do

As an experienced business professional and mentor, I find that most successful peers will admit that they love what they do. From all the rest, I often hear the complaints about lack of motivation, boring job assignments, and bad management. My challenge has always been how to get people from the second category into the first. I’m finally convinced that only you can change yourself.

I always thought that I must be lucky to have found so much excitement and satisfaction from my work, so I never had any really good answers to those of you who second category who wanted to move to the first. Therefore, I was pleased to see some good insights and recommendations in a new book, “Intrinsic Motivation,” by Stefan Falk, a McKinsey & Company performance coach.

He shares some key habits and attitudes that have inspired me and should motivate anyone to look forward to their work, rather than complain about it:

1. Identify something exciting in every task you face. Self-motivated or intrinsically motivated people know there are no boring tasks, only boring ways to think about tasks. We use deliberate thinking to consciously and intentionally cultivate our curiosity and our ability to improve the way we do things. We don’t waste time and energy on old habits.

2. Focus on meeting every commitment you make. Meeting commitments creates a natural tension and challenge in your work life. Every day becomes an opportunity to feel good about your capabilities and contributions. Don’t make commitments that have no potential for positive return on your effort, or no potential for learning or satisfaction.

3. Learn from mistakes and awkward situations. Be grateful for your failures and difficulties, because they focus you on what you need to work on. Accept the fact that making mistakes is part of being human and it is something you can learn to embrace and use as a way to improve your understanding of yourself and the world around you.

4. Set daily goals focused on personal development. Make these goals pragmatic and concrete, rather than nebulous dreams. Be sure to analyze goal results regularly and celebrate every success. When you fall short, find ways to improve your performance and develop new goals. The feeling of daily growth is the biggest energy booster there is.

5. Re-prioritize daily what is strategically important. Sort your work and development opportunities into three buckets: always important, game changers, and not important now. That last one is especially valuable because it allows you to take things off the table, reducing your stress and enhancing your ability to focus on what matters most.

6. Use self-doubt as incentive for self-improvement. Self-confidence is important but taken to excess it can lead to complacency. Nothing is ever completely under your control, and a healthy amount of worry enables good performance. The key to harnessing self-doubt starts with your confidence in your ability to set yourself up for success.

7. Never focus on things you can’t control. Being distracted by issues you can’t influence is a de-motivator, whereas focusing on what you can control (your own behavior) is a great source of inner strength. That’s how you build resilience and start making positive changes, no matter what kind of chaos is happening around you.

8. Always develop a plan before proceeding. Too little planning leads to stress and less than optimum results. In fact, there are no truly complicated tasks, if you think them through carefully before you dive in. If the plan requires many steps and many details, it helps to write down the plan to make sure it is clear and complete before starting.

9. View other people as assets to learn from. The best way to learn how to do a new task is to emulate someone who knows it and does it well. You can also learn what to avoid by watching someone perform a task poorly. Avoid the pain of making every mistake alone.

10. Use a trusted coach to tell you what you need to hear. A good coach provides you with honest feedback on your performance that you can’t see. You don’t have to like your coach, as long as you can trust the person to tell you what you need to hear. Just remember that they have no requirement to motivate you – that is your responsibility.

Stefan and I both believe that the key to appreciating any activity is to engage in outcome-focused behavior, as opposed to activity-focused behavior. He and I both believe that too much focus on activities versus results is a primary cause of burnout among the professionals we know. Thus, I’m convinced that the secret of managing satisfaction at work is managing your own mind.

Marty Zwilling

*** First published on Inc.com on 2/7/2023 ***

5 Popular Freelance Opportunities In This Gig Economy

The era of stable lifetime jobs for business professionals within a single company are gone. Companies are rightsized quickly now as markets change rapidly, and business professionals are quick to jump to new opportunities for growth and survival, with no ties to special benefits or pension plans. Thus smart business professionals are rapidly becoming the new entrepreneurs.

As a mentor to startups, I see more startups that are really an individual professional, marketing themselves as a consultant or freelancer in this new gig economy. This is a positive in uncoupling them from a dependency on a single company or boss, but the downside is that they have to suddenly manage all facets of a business, including finances, strategy, and savings for the future.

Of course, entrepreneurs delivering services have existed for some time, including business consultant, independent contractor, and freelancer titles. But these titles are not descriptive of specific roles or skills, and have always had marginal credibility in the business community. I suggest that new entrepreneurs lead with their “professional” title, which suggests their focus and specialized skill, and can be applied to almost any role. Here are some examples:

1. Marketing Professional. Every company and startups needs marketing experts, who are skilled and knowledgeable in the development of marketing programs, content creation, lead generation, and the utilization of social media. This world changes rapidly, and needs a professional with experience in digital and conventional media to keep up.

2. Software Development Professional. Even big companies I know find it hard to keep their in-house programmers up to speed on the latest technologies, including mobile devices, the latest Web technologies, and multi-tenant applications in the Cloud. More and more are scouring LinkedIn for specialists willing to do short-term relationships.

3. Staffing Professional. Staffing requirements come and go in every company, big or small. One of the harsh realities for most product entrepreneurs is that they have deal with hiring and firing as their company grows, and they have no experience or idea where to start. For existing trained professionals, it’s an opportunity to become an entrepreneur.

4. Administrative Professional. Long ago, these were called secretaries, often starting in the typing pool, with the best aligning themselves with an advancing executive, leading to a long career. Now the new breed of these is a self-managed entrepreneur, working remotely, with real expertise on the administrative tools and ways of business today.

5. Sales Professional. The best sales people in any company are highly focused, and self-motivated by the commissions they can earn by closing a few big deals. They know how to capitalize on social media, viral marketing, events, and the new tools of the trade. They are always ready to move on to the next big opportunity as markets change.

I’m sure you can think of a dozen more examples today. Tomorrow you may be looking for a Personal Finance Professional, Health-Care Professional, or even a Startup Professional. We are becoming a society of entrepreneurs. Even the education system is starting to recognize this, with entrepreneurial courses and majors springing up in every university across the world.

Thus you don’t need to invent an innovative product or technology to be a real entrepreneur. The cost of entry as a services professional is at an all-time low, with powerful free tools to create your own website, cheap incorporation of yourself as a Limited Liability Corporation (LLC) via the Internet, and community colleges offering courses for anyone in the new technologies.

The challenge is that not everyone is ready and willing to take on the responsibility for their own skills, lifestyle management, and financial stability. Many of these new entrepreneurs come to me looking for an angel investor or crowdfunding, which will never happen. Investors don’t fund entrepreneurs offering services, since these don’t scale, don’t have large margins, and need just a customer contract to start.

So if you have some resources, some skills, and some confidence in yourself, maybe it’s time for you to jump on the entrepreneurial bandwagon. There is no longer any excuse for a professional businessperson to be stuck in a position they don’t enjoy and can’t control. The entrepreneur lifestyle is much more satisfying, and has unlimited potential.

Marty Zwilling

7 Incentives For Testing Your Startup Marketing Early

It’s still popular these days for startup founders to operate in stealth mode, meaning no details about the idea or progress are shared with anyone until the big reveal and rollout. The common reason given is that this prevents any competitor from stealing their idea and beating them to market. In my view, this paranoid approach costs them much more than the risk of being open.

I’m not suggesting that a startup should ever disclose patent details to others before filing, but I can’t imagine why a startup would not seek visibility and feedback for their idea and solution while they could still make changes with minimal cost. Pivots and corrections are inevitable for startups in this age of rapid change, and the earlier you make them, the quicker you get to success.

Being open is the new business culture around the world. Entrepreneurs talk to customers and competitors talk to each other about the new trends and technologies they see. Coopetition is the new mantra for growing your business faster. Here are seven key reasons that being open is better for your startup than trying to fly under the radar:

1. Visibility generates interest. You can’t get any word-of-mouth or media activity by hiding. Before you finalize the product is the best time to talk about it and see if you can get some buzz started. This will do more for your first mover advantage than more time in the lab. Most people agree that even negative media attention is better than none.

2. Evaluate customer response prior to development. It’s never too early to get real feedback from the people who count. No matter how passionate and certain you are that your idea is perfect, the reality is that you will likely need to pivot at least once. Why not make the change before you have wasted significant time and money?

3. Get competitors to surface early. You may be convinced that no competitors exist, which is very unlikely. If there really are no competitors, then there is likely no market opportunity, or you haven’t looked yet. If your position is so tentative that knowledge of your idea puts you in jeopardy, you need to know it sooner, rather than later.

4. Demonstrate a minimum viable product (MVP). Surface your prototype, get customer feedback, make corrections, and iterate until you get it right. Startups in stealth mode often have a false sense of security that they can take extra time to do the job right the first time. Customer feedback is required to get it right, and hidden time is wasted time.

5. Meet investors before asking for money. The time to build investor relationships is before you need the investment. It gives you credibility to mention your idea in general terms, without immediately asking for money. This can help you get in the door when you are ready, and asking questions early will give you insights on investor priorities.

6. Pivots can be done gracefully at this point. Customer credibility actually improves when they see you making changes based on their input, and the cost of correcting mistakes early is lower. Operating in stealth mode for an extended period tends to convince entrepreneurs to believe their own biases, and visibly fight the need to change.

7. Optimize your web history and presence. Stealth mode normally means no time for search engine optimization prior to product launch, not to mention relevant blogging activity, and link building. This means your whole startup effort will appear as very early stage for investors, and will likely not be adequately tuned for customers.

On the other hand, stealth mode does make sense for large companies, like Apple and IBM, who will likely be sued for pre-announcing a future product, since other companies have used this ploy in the past to freeze the market and lock out new competitors. Of course, even startups can get into serious trouble by talking about products and direction with no intent or ability to deliver.

I also realize that there are a limited set of startups, facing particularly entrenched and unscrupulous competitors, where early stealth mode is necessary. With most other classes of startups today, including smartphone apps, web services, and social media applications, early customer feedback is critical, and time to market is of the essence, so secrecy is more of an excuse than an advantage. Who are you fooling by not allowing your startup to be found?

Marty Zwilling

8 Red Flags To Evaluate Before Pledging To A Startup

Every startup founder loves to prompt for questions from investors and potential key team members about their vision, and the huge opportunity that can be had with their disruptive technology. Yet if you are on the other side of the table, there are some other key questions that you need to ask, which will tell you more about the real success prospects for this business.

Enthusiastic startup founders may try to deflect or minimize these questions in true media-training style, so you need to be patient, calm, and persistent to get the whole story. From my perspective as an investor, I recommend that every founder needs to know the answers to these questions, be open and honest in answering them thoughtfully, and without making excuses:

1. What is the current runway and burn rate? These terms quantify how fast money is being spent, and how long the business can survive before another round of investments is required. Early stage burn rates over $50K per month, or a runway of less than six months may indicate an inefficient or desperate startup. Think twice before you jump in.

2. How complex is the capitalization table? The allocation of shares among the founders, and the number and size of outside investments, will tells volumes about the health, stability, and management of the business. Most founders like to talk about their many months or years of sweat-equity, but cash invested is a stronger commitment.

3. When did this effort really start, including pivots? If the company has been around for more than a couple of years, and still has no product or revenue flow, there better be a good explanation. One more key employee or one more investor will probably not turn the situation around. History gaps and founder turnover may indicate a long road ahead.

4. Does everyone on the team have a clear role and mutual respect? You won’t get this answer directly from the founder, so ask to talk to other key team members to make sure everyone is carrying their weight, and communicates effectively. Some conflict and differing perspective is healthy, but too many titles or close relatives should be suspect.

5. Any outside advisors or board members available for discussion? Every startup should have at least a couple of outside advisors who are not major investors or family members, anxious to talk to new investors and key new hires. These should be people with complementary skills to the founders as well as industry expertise or connections.

6. Is there a real customer willing to give a testimonial? Don’t be sidetracked by potential customers in the middle of a free trial, or friends of the founder. If it’s too early for customers, make sure you understand exactly when the product ships, how detailed is the rollout and promotion plan, and how many times these plans have changed.

7. Are any lawsuits and challenges to intellectual property pending? Before you invest your life savings, or bet your career on this startup, you need to know how much of a barrier to entry the brand and patents are projected to be. If you have questions or concerns, now is the time to seek legal advice, not after the fact.

8. How much and when can I reasonably expect a payback? Since nine out of ten startups fail completely, serious investors look for a 10X return on their investment within five years. Look for examples of similar companies and revenue multiples achieved from acquirers. Calculate employee stock option values and vesting times, as well as salary.

These questions are the key ones in every due diligence effort, always done by accredited investors, but almost never done by key employees and new partners. Ironically, startup investors are normally in less personal jeopardy than early startup employees. Smart investors know that many startup investments will fail, while employees always plan on million dollar payouts.

In any case, in addition to the grand vision and the chance to change the world, I recommend that it’s worth your while to calmly and assertively get some good answers to some hard questions from a passionate startup founder before you sign your life away.

Marty Zwilling

5 Roadblocks To An Excellent Culture In Your Business

As a business consultant, I see many different employee cultures, from exciting and motivational, to dysfunctional and non-productive. Company leaders, as well as front-line team members usually realize when they have a problem, but most have no idea what is possible or how to change the culture. They keep waiting for top management to somehow fix the situation.

In reality, I believe that building and sustaining a winning culture is everyone’s business, not just that of top management. It does require leadership at all levels of the organization to find shared values, set clear expectations, attract and develop talent, accelerate execution of a winning strategy, and generate a feeling of alignment, togetherness, and engagement every day.

I found all these elements outlined clearly, as well as a great discussion of the roadblocks to getting there, in a new book, “Culture is the Way,” by Matt Mayberry. As a result of his work with clients around the world, Matt is recognized as an expert in culture change and development. I was particularly impressed with his key recommendations for overcoming change roadblocks:

1. Lukewarm leadership buy-in to a culture revamp. The first challenge in changing your organizational culture is usually convincing senior leaders that this change will have a major positive impact. Culture change is especially sensitive to a consistent message from leaders, who may be focused on day-to-day challenges, and a fixed operating style.

   Getting and maintaining leadership buy-in must be your relentless and continuous focus. I recommend you start with team building activities to strengthen trust and communicate the objectives to everyone on a regular basis. Use personal relationships to test buy-in.

2. Culture is viewed as all slogans and no action. Words don’t build or change culture by themselves. True cultural change starts when behavioral change begins to take root. It must be a long-term process with repeated iterations that create a new cultural paradigm and become the new norm. It’s about turning personal values into repeatable behaviors.

   When your changed culture becomes a part of you, your hiring processes, company-wide messaging, and leadership development programs, you start to remove the “all slogans” and “no action” perception, and it becomes ingrained into the DNA of your business.

3. Yielding to the temptation of instant gratification. Building a great culture takes time and a tremendous amount of energy, often far more than you can imagine. The results may not be immediate – increasing profit, enhancing performance, and building a top-notch workplace where everyone wants to work. Don’t let the adrenaline fade to the past.

   I recommend that you over-communicate from the moment you begin building the culture change and throughout the duration of the process, that nothing great is ever created overnight. Use anecdotes to illustrate the consistency and amount of patience required.

4. Leaders derailed by overload and distraction. Trying to act on too many things at once does the opposite of what you want to accomplish. You will shut down, lose focus, or your team will procrastinate. Take the necessary time to identify the most promising activities that will have the greatest impact on where your organization is right now.

   Forestall loss of momentum by creating a long-term roadmap of activities and objectives, with metrics, to track implementation and measure results. Be sure to involve highly influential executives, as well as front-line team members, to keep everyone moving.

5. Failure to cascade change success across all teams. You may find pockets of cultural excellence within an organization, but true cultural excellence requires more than one or two teams living and breathing your culture. You need regular cross-organization leadership meetings to discuss what is working, and which teams need higher priority.

   Never just tell people once what your goals or expectations are, but be proactive by sending reminders and creating training programs that are tied to specific functional and organizational elements. Celebrate and publicize even small successes across all teams.

As Peter Drucker once quipped, “culture eats strategy for breakfast.” In addition, in a recent Glassdoor survey, over fifty percent of employees said work culture is more important than pay. These insights, as well as my own experience, is why every business leader needs to focus on achieving their best employee culture as the key to agility, impact, and competitive advantage.

Marty Zwilling

*** First published on Inc.com on 2/3/2023 ***

8 Keys To Starting A Venture With Minimal Equity Loss

If you really want to start a business your way without a boss or professional investor hovering over you, then just fund it yourself or through friends and family, and grow it organically. It’s more possible to bootstrap today than a few years ago, as the cost of entry continues to go down. According to Investopedia, over 90 percent of successful businesses currently start this way.

With one of the many new tools, and a dose of sweat equity, you can create a website for almost nothing -- and you are on your way to success with ecommerce, your latest invention or personal services. It’s equally easy to go online and incorporate your new entity, register some intellectual property and have some fun with social media for marketing and interacting with customers.

The key to successful bootstrapping is to master the do-it-yourself approach, defer compensation or barter services whenever possible and become a frugal minimalist in all things requiring a cash outlay. Here are the key principles I recommend as an advisor to many entrepreneurs:

1. Start your business in your own home. With the advent of the Internet, the size and address of your office is irrelevant. Most new teams are geographically dispersed these days anyway, so paying rent for an office should be differed to later stages when revenue is plentiful. You will be in good company with the many legends who used this approach.

2. Barter services for access to required resources. Don’t rationalize a big investment in basic equipment with long-term requirements thinking. Look for a part-time job in a local or family business to provide access to things you will need only occasionally, such as a high-speed printer, video equipment or product assembly tools and storage.

3. Learn to be a generalist rather than a specialist. With the unlimited access to “how-to” videos and detailed instructions on the Internet, you shouldn’t need to hire experts for most things. Likewise, too many volunteers and interns will only increase your workload and rework costs. Use your networking to get advice, but all jobs can be do-it-yourself.

4. Operate small, but show a big-company image. You don’t need a large building and staff to be visible and heard worldwide. Use multiple social-media channels, blogging, email and voicemail to build the same image and responsiveness as larger competitors. Keep expenses down, but keep customer visibility and sensitivity as a top priority.

5. Practice living on a shoestring budget. Most successful entrepreneurs take only a very minimum salary during the formative business years and reinvest all profits back into the business for organic growth. Defer your desire for expensive perks and vacations until later when you have time for them. You can have fun without spending big money.

6. Favor profitability over revenue and user growth. Adding free users or customers to increase valuation makes sense for a venture-backed startup looking to go public, but will kill bootstrapping. Self-sustainability, independence, and real fun requires paying customers, profitability and an early cash-flow-positive business plan.

7. Use your equity for key executives and business partners. Bootstrapping doesn’t mean that you don’t share equity. You can use it best to entice new team members and partners, giving you more horsepower and commitment for the long run. Investors seeking equity for cash typically want more control and cash-return quickly.

8. Don’t assume you must plan for exponential growth. Investors have spread the word that you can’t get “hockey-stick” growth without a large cash infusion. In fact, you don’t need exponential growth to give you a good return and be declared successful. You may not be acquired for 10-times revenue, but quick exits and public offerings are no fun.

In summary, bootstrapping means living within your means, watching costs carefully, finding alternatives to cash for building the team and expanding the business infrastructure. Bootstrapping does require a full confidence in your own passion to make decisions and change the world with no investors to lean on or blame. But isn’t that why you signed up to be an entrepreneur in the first place?

Marty Zwilling

9 Strategies to Increase Team Collaboration Quality

Every business I know has teams, some working collaboratively to great advantage, while others sadly operating as collections of individuals who work alone, often in competition with each other. As a consultant, I often get asked what can be done to improve team relationships and maximize the impact of the whole organization. Most business successes I see required great collaboration.

I’m sure you are all familiar with the challenges of team collaboration, including stealing credit, placing blame, herding cats, egos, and responsibility without authority. On the other hand, most business leaders agree than great team collaboration leads to more innovation, better decisions, and a more productive and satisfied workforce. They just don’t have a strategy to get there.

I’ve always had a few recommendations, but I was pleased to see the most detailed study of this important challenge in a new book, “Collabor(h)ate,” by an experienced business consultant, business executive, and relationships researcher, Dr. Deb Mashek. I like her set of practical recommendations for making workplace collaborations less painful and more productive:

1. Set clear expectations for the collaboration. Set aside time at the beginning of a collaboration relationship to make expectations explicit and to co-create an understanding of the norms that will govern the shared work. Then revisit these agreements as part of a regularly scheduled relationship maintenance check-up.

2. Behave consistent with shared expectations. Be honest with yourself here. Perhaps you object to the expectations and have no intentions of upholding them, or you don’t understand why a particular behavior is valued, don’t have the skills or resources, or just lack motivation. Your good behaviors will increase the likelihood of others’ good behavior.

3. Avoid jumping to conclusions about others. When someone doesn’t behave as expected, or when something goes wrong, our brains are quite adept at coming up with rich stories based on thin evidence and emotions. Don’t let this start a vicious cycle that can make it difficult to engage constructively when a collaborator violates expectations.

4. Be receptive to accountability feedback. If you react defensively or if you off-load the blame for poor performance or dropped balls on others, you miss out on the opportunity to become better at your work, undermine the quality of the shared work, and erode the fabric of trust in the relationship. Accept your mistakes, forgive others, and move on.

5. Be responsive to other collaborators’ needs. Over time, the other person will come to see that you have their back, and assuming they are likewise making the effort to be responsive to your needs, you will come to see that they have yours. This mutual responsiveness builds trust and connection, which will be needed in challenges.

6. Strive to be communal rather than transactional. In communal relationships, like a marriage, we look for opportunities to contribute positively, without waiting to be asked, or measured on a tit-for-tat accounting. You can gracefully point out imbalances, pull back on efforts, and always highlight the small actions you see and appreciate from others.

7. Use self-disclosure to create trust and closeness. If you would like to improve collaborative relationship quality, share an appropriate bit of yourself with colleagues, and make space for others to do the same in their own way and in their own time. Always, when a colleague shares something with you, acknowledge it with care and sincerity.

8. Cultivate a collaboration identity, “we” versus “I.” This is called mutuality, or the psychological sense of sharing a social identity with other people. Mutuality results in a higher willingness to work together and share resources and rewards. You can encourage this through novel ideas, humor, and trying a new place for lunch together.

9. Seek out novelty and challenge items as a team. We are all drawn to relationships and experiences that we believe will provide self-expansion and new strengths. In business teams, this might include attending a conference together, or saying yes to a challenging new project, or tackling new roles. Avoid boring and repetitive activities.

Even if you would rather work alone, I recommend that you pursue these strategies for the health of your career, and the health of your business. In this era of a worldwide economy, you need to learn how to interact and collaborate effectively with other cultures and diversity, both inside and outside the workplace environment. Life is more fun where you are not isolated and ignored.

Marty Zwilling

*** First published on Inc.com on 1/30/2023 ***

10 Common Startup Mistakes That Are Rarely Admitted

Every entrepreneur I know has their favorite excuse for a previous failure – an investor backed out, the economy took a downturn, or a supplier delivered bad quality. These things outside your control do happen, but based on my years of experience as a startup advisor and angel investor, I still see too many strategies leading to failure that are inside the entrepreneur decision realm.

I certainly agree that starting a business is fraught with risk, and none of us get it all right the first time. It’s important to learn from your own mistakes, but it’s even smarter to learn from someone else’s mistakes, without paying their high price in time lost, cost, and pain. In that spirit, I offer my perspective on ten common startup failure sources that rarely get admitted by entrepreneurs:

1. Choose to skip the written business plan. I believe the old adage that you don’t know what you don’t know until you try to write it down. A business plan is for you first, not investors. The discipline of writing down your plan is the best way to make sure you understand how to transform your idea into a business, and how to communicate it.

2. Offer free solutions to bring in more customers. Don’t get caught in the myth that you shouldn’t worry about monetization until after you have a large customer base. Viral marketing costs real money, and your support staff and hosting systems cost even more. Even non-profits need a profitable business model to offset staff and operating costs.

3. Assume passion level defines business opportunity. There is no substitute for market research to confirm that your passion matches a real need in the market. Not every great idea is a viable business. Social causes are great, but your ability to sustain your value contribution is directly linked to your ability to find paying customers.

4. Practice dreaming more than doing. Dreamers come up with ideas, and do-ers come up with businesses. Building a successful business is all about execution. Don’t try to build a business unless you are comfortable with risk, uncertainty, responsibility, and hard decisions. Dreams may motivate your team, but customers expect real solutions.

5. Convinced that many existing players means room for ‘me-too.’ Jumping into a crowded space is a great way to get lost quickly. Your chances of success are much greater if you target an under-served niche, or bring a new quantum leap in value over existing competitors. ‘Easier-to-use’ and other fuzzy terms won’t get any attention.

6. Bypasses intellectual property as not worth the cost. ‘First-to-market’ is not a sustainable competitive advantage for startups, since sleeping giants do wake up when they see traction, and they can smash newcomers quickly. Patents and trademarks are very valuable in attracting investors for scaling, as well as future premium buyouts.

7. Thinks boundless energy is equal to experience. The real secrets of any business domain are not intuitively obvious, nor available in books. Many entrepreneurs tackle a completely unknown business domain, because the solution looks obvious, and they plan to work very hard. Usually it pays to work in an industry for a while, before you try to fix it.

8. Willing to start today and find resources later. Cash is always hard to find, but in many cases it’s even harder to find access to needed distribution channels, government contract expertise, or the special skills required to deliver your solution. Entrepreneurs need to spend time working on the business, as well as in the business.

9. Finish the product before marketing begins. It’s never too early to start marketing, since it usually takes as long to build marketing momentum as it does to build a product. No startup can afford to do these serially. In today’s information age, it takes time and money to make your solution visible. Marketing should start before product development.

10. Just give up and start over when tired and frustrated. In my experience, most startup success back-stories include an entrepreneur that simply would not give up, despite seemingly impossible odds. Most great entrepreneurs, including Steve Jobs and Thomas Edison, overcame multiple setbacks before they built their legacy of success.

None of these issues involve rocket science or MBAs. The best entrepreneurs just temper their passion with reality checks and street smarts, derived from their advisors and learning from their peers. It’s good to avoid making the same mistake twice, but it’s even more important to avoid making the same mistake as others before you, and expecting a better outcome. Even the best excuses don’t lead to success.

Marty Zwilling

Maintain Your Startup Motivation While Working Harder

Many experts are certain that successful entrepreneurs are the ones with the most inspiration (passion and dream), while others will assert that it’s about more perspiration (working harder). In my experience, both are always required in heavy doses. There are no “can’t fail” shortcuts or “get rich quick” scenarios.

That’s why all those so-called million dollar ideas I hear about as an investor don’t get me excited, and entrepreneurs find that working twenty hours a day often generates nothing more than sweat, instead of the desired sweat equity. Moving a dream into reality requires balancing on a tight-rope of passion supported by unending efforts to move heaven and earth to make it happen.

For success under in this challenging and stressful environment, it’s important to recognize every small element of success to keep your inspiration alive. Here are five key ones to celebrate:

1. Enjoy the feedback from every satisfied customer. This is the confirmation that your product or service fills a real need in the marketplace. Talking to real customers is the best way to keep your inspiration alive, as well as the best way keep on track with changing trends and future innovation ideas.

2. Note the growth of your team and your own leadership. Overcoming obstacles and learning is one of the biggest inspiration for most entrepreneurs. Similarly, it will be very satisfying to see the productivity increases from your leadership and mentoring. Enjoy watching key members of your team grow from followers to leaders.

3. Celebrate the ability to pay yourself a salary. Having enough revenue to finally give yourself a salary is an inspiring event, and one that you should savor. New business models that provide an ongoing revenue stream, or a secondary stream from advertising, raise your margins and can give you some additional satisfaction.

4. Watch that patent provide a real barrier to competitive entry. Re-live that moment of inspiration that resulted in an innovative design and implementation for your product, and is now providing you with a sustainable competitive advantage. This may also be the moment when you get your first big acquisition offer, rather than a clone appearing.

5. Appreciate the media accolades and peer success feedback. Enjoy that first video interview at an industry conference, or the newspaper story which enhances your startup visibility and credibility. Feel the inspiration from peers asking for your secret, or peers trying to model their efforts after yours.

At the same time, you can never let up on the work and the sweat required for continuous innovation, exemplary customer satisfaction, and staying ahead of competitors:

• Marketing is a never-ending challenge. Even with the perfect product, your customers won’t even know you exist without marketing. Surprisingly, word-of-mouth and viral efforts require more work and a larger budget than you would expect. You have to react quickly to changes in the marketplace, and adapt to new customer requirements.

• Managing cash-flow personally and continually. Cash-flow challenges must be part of your daily workload, especially if the business is growing fast. This is a task that you should never delegate. Keeping expenses down must always be top priority. One approach, which is even more work, is to keep tasks in-house rather than outsourcing.

• Increasing customer focus and loyalty. Using the new social media channels for customer interactions and feedback is a great boon, but it requires daily attention and work to respond to customer requirements, fix satisfaction issues before they escalate, and build the level of loyalty required to make every customer an advocate to friends.

In my experience, I have found that if entrepreneurs can sustain the inspiration, even the hard work becomes part of the fun and satisfaction, leading to success. All of one, without the other, is not sustainable. How well are you doing in that balance between inspiration and perspiration?

Marty Zwilling

5 Steps To Finding The Best Investor For Your Startup

Even though the color of their money is always green, all startup investors are not the same. Struggling entrepreneurs are often so happy to get a funding offer that they neglect the recommended reverse due diligence on the investors. Taking on equity investors to fund your company is much like getting married – it is a long-term relationship that has to work at all levels.

Investor due diligence on a startup is not a mysterious black art, but is nothing more than a final integrity check on all aspects of your business model, team, product, customers, and plan. Reverse due diligence on the investor is a comparable process whereby the entrepreneur seeks to validate the track record, operating style, and motivation of every potential partner.

If all this checking sounds a bit paranoid and unnecessary, it may be time to take another look at some questionable investor practices and onerous term sheet requests. Beyond the technical issues, if the chemistry isn’t right, the impact on your startup and future business is likely to be similar to that of a bad marriage. It’s no fun for either side.

Thus, here are the minimum steps that I recommend to every entrepreneur in completing an effective reverse due diligence effort:

1. Get a perspective from peer investors. Of course you need to discount any investor competitive positioning, but local investment group leaders will quickly tell you the strengths and terms of active investors in your area. If your investor is unknown, or peers offer no positive attributes, take it as a red flag. A sample of three views is adequate.

2. Personally visit another startup funded by this investor. Through networking with other entrepreneurs, you should find one or more to visit that have relationships with this investor. Another approach is to ask the investor for references, where their involvement has made a real difference, leading to success.

3. Do research on investor visibility via Google and social media. Start by checking the profile and credentials of investor principals on LinkedIn and industry associations. Check for positive or negative news articles, press releases, relationships, and support of community organizations.

4. Invite the investor to dinner or fun-related activity. Outside of work is where you can best evaluate the chemistry match, and decide whether you can enjoy and learn from the relationship. Enjoy a sports event together, or find common non-profit causes to participate in. As with any relationship, it doesn’t pay to close in a heated rush.

5. Conduct a routine credit and background check. Look for investor experience in your business domain, as well as evidence of integrity and trustworthiness. Check the content of the investor’s website, and pay particular attention to the source of funds. Personal funds imply the most commitment, and offshore funding is most suspect.

Investor agreements should always be reviewed by an attorney who is familiar with startup equity investment deals. To get the terms you want, it’s better to start with your own term sheet. It’s even better to let the attorney do the negotiating, since many innocent-sounding protective and governance provisions can have long-term negative consequences to you.

While I recognize that there continues to be a shortage of venture capital for new entrepreneurs, compared to the demand, don’t succumb to the temptation to take funds from investors that you are not totally comfortable with. The result will likely be business demands that you can’t meet, loss of key personnel, potential lawsuits, and certainly not the fun lifestyle you expected.

The only successful entrepreneur-investor relationships are win-win ones. That means you and your business must benefit from both the money and mentoring from the investor, and the investor will win from getting a larger return sooner. Win-win relationships get better over time, whereas win-lose go downhill fast and rarely survive the honeymoon period. Know your partner well before you get married.

Marty Zwilling

5 Key Growth Initiatives In This Inflationary Economy

Most business professionals I know have been conditioned to think of inflation as highly negative, driving up their costs, and reducing customer buying. I see it as an opportunity to find new ways to attract customers, make long-needed changes to improve productivity, and lower your own costs of doing business. We all need a shock from time to time, to get us thinking ahead again.

For example, in my discussions with business owners, some have already used inflation positives to update their inventory values, take advantage of reduced mortgage rates, or simply making the price increases that they have long needed. Others have seized on the opportunity to restructure their business for the future, eliminate marginal processes, and find new growth partners.

For the rest of us, here is my prioritized list of key strategies that I believe every business leader can benefit from as a starting point in making the current inflation economy less of a negative impact on their business, or maybe even a pleasantly surprising positive:

1. Solicit follow-on revenue from existing customers. Now is the time to reach out to satisfied existing customers for repeat business, as it is less expensive to generate more revenue from your past customers than it is to land new ones. I recommend using digital channels, including email and social media, personalized, if possible, with promotions.

   Keeping customers coming back is not a one-time thing, but an on-going effort to not let them forget you. You must show your appreciation with a “thank you” for the business every time, offering a reward for referrals, and doing things together in the community.

2. Respond to new market shifts and opportunities. The recent inflation has made every customer rethink their spending habits and needs. While they are looking, you can benefit with new services or an expanded product line. Maybe it’s time for you to expand online, through Amazon or similar platform, or open a new store in a new growth community.

   Also, you must focus on business model innovations that cut costs for your customers, such as self-service, un-bundling your pricing, and selling directly to the customer. Innovation is not all about break-through technologies and big financial investments.

3. Outsource functions outside your core competency. I see a new resurgence of outsourcing alternatives from outside the country as well as inside, driven by freelancers caught in the squeeze. Look for functions that may be performing poorly in your business due to lack of skills or necessary tools. Selective outsourcing can save you real money.

   With free world-wide Internet access, outsourcing no longer requires the extensive travel, translation, and communication costs once associated with remote work. Through the use of Zoom and similar video tools, they could be your employees working from home.

4. Run experiments on new sources of revenue. In times of inflation, customers will react positively to a new repair or support service, may be more amenable to a rental capability for major items, or ready to sign up for a subscription service. I recommend sampling one or more of these opportunities, without a major investment on your part.

   For example, Amazon and Jeff Bezos credit much of their continued growth, even in tough times, to scheduling change “experiments.” Bezos believes that if you double the number of experiments you do per year, you’re going to double your growth ability.

5. Replace marginal performers with new top talent. Now is the time for those changes you have been putting off to balance resources. Recent downsizing at nearby companies means more highly skilled employees on the market now, so you may be able to trade up and gain in productivity, thus reducing overall costs, while preparing for new growth.

   Attracting the right talent and using the right incentives has been shown to dramatically increase productivity. Don’t forget that new generations of workers are motivated by a different set of incentives, including culture, flexible schedules, and constant feedback.

I understand that inflation is putting pressure on all of us, businesses and customers, but as with all challenges, there are potential benefits as well as pain. I’m just suggesting that looking for positives is more productive than focusing on the negatives. After all, running a business is all about maximizing your satisfaction, as well as your financial returns. Make it a win on all fronts.

Marty Zwilling

*** First published on Inc.com on 1/25/2023 ***

7 Mindsets for Succeeding as an Aspiring Entrepreneur

Every business professional I know, or have met in my consulting role, has given serious thought to the alternative of switching to the entrepreneur lifestyle, pursuing a long-standing dream, and controlling their own destiny. They ask me for a perspective on the pros and cons of that dream, the potential for increased satisfaction, and the probability of their long-term growth and success.

I’m convinced that the answer to that question is a personal one, and you need to look more inward than outward for the answer. All I regularly do is offer some personal anecdotes and lessons from my own experiences, and recommend that you do your own research on the experiences of others who have been on the many sides of the business equation.

In that context, I was pleased with the guidance and real data presented in a new book, “Fall in Love with the Problem, Not the Solution,” by Uri Levine. He has built more than a dozen businesses and seen everything ranging from failure to immense success. He offers a handbook of lessons for what to expect in business, from initial ideas to funding, growth, and possible exits.

In my view, here are several key takeaways that you can compare to your own perspective, to see if you have the mindset, determination, and patience to migrate to this business lifestyle:

1. Building a startup is a journey of failures to success. The most important rule to increase the likelihood of success is to try more ideas, and the way to try more is by failing fast. This approach will give you more time and run rate to find what works best for you. Sometimes you need to focus on the next idea rather than saving the current one.

2. There is no such thing as a surefire or bad idea. Every idea has merit and risk. I have seen great ideas fail, due to timing or poor execution, and poor ideas laid out perfectly, and morphed into absolute brilliance. The winners are the ideas that cause enough customers today to pull out their wallet and lay down their money to pay for solutions.

3. You have to cater to many different user categories. There are at least three relevant groups of users to start: innovators, early adopters, and early majority. But don’t forget the even larger group which follows, called the late majority. The biggest challenge is that a user from one category can’t even realize that there are other users not like them.

4. To survive, you need to find a product-market fit. Product-market fit (PMF) is all about value creation. You need to create great value for many people to succeed, else you will die. For consumers, this is how many users try the solution, and are still using it three months later. For business solutions, it’s about expanding usage and renewing contracts.

5. Find an idea that matches your set of values. The key to work satisfaction in the long-term is living your core values. For example, if saving the environment is your passion, look for a business and customers that thrive on the same values. This will put the right team in your life, keep you motivated, and prevent decisions that will get you into trouble.

6. Firing sooner is more important than hiring quickly. If everyone knows that someone at the company is not right, and management does nothing, top-performing staff will leave. For every person you hire, after the first and third month, you must ask yourself, do I still agree with this hire? Remember that people join companies, but they leave people.

7. Decide early on your exit, right time and conditions. Exiting your company will be the most extreme transition of your life. Think about it positively, what the day after is going to look like for you and your team. Resist the urge to commit to stay forever, be prepared to let go of your baby, and consider the associated alternatives, such as starting a new idea.

The processes and requirements for building new ventures are far different from those of most existing professionals, so think seriously about these takeaways before you step into a new set of responsibilities and expectations. Yet, in my experience, the people who pursue the new venture alternative are generally more satisfied than all the rest. Life is too short to not have fun. Go for it!

Marty Zwilling

*** First published on Inc.com on 1/23/2023 ***

Does Your Entrepreneur View Match Your Startup Stage?

According to most definitions, an entrepreneur is one who envisions a new and different business, meaning one that is not a copy of an existing business model. Many entrepreneurs have a passion and an idea, or even invent a new product, but are never able to execute to the point of creating a startup. Even fewer are able to grow the startup into a viable business.

As a mentor and advisor to entrepreneurs and startups, and an angel investor, my passion is to find and nurture those entrepreneurs with innovative business ideas and acumen, to make them into successful business owners. I fully realize that for some of the best entrepreneurs, success is surviving the journey, and they can’t wait to hand off the new business and start another one.

Thus, in my view, entrepreneurship is an evolution of an idea through a series of developmental stages, culminating in a self-sustaining business. A business is an entity which exchanges goods and services with people outside the business (customers) for money, social good, or something of equal value. Here is a summary of the key stages along the way:

1. Idea and seed stage. In this first stage, a specific idea or passion is solidified into an executable plan. Typically this is done by one or more entrepreneurs with personal or family resources, with no business entity yet formed, so they would not yet be considered business owners. Market research and a business plan should be the focus at this stage.

2. Startup and development stage. The development stage normally begins with designing and prototyping a product or service, and creating the company legal entity. While legally the entrepreneur has created a business entity, there is nothing of value yet to own since the company has no solution to offer, no customers, and no revenue.

3. Funding and rollout stage. At this point investors should be interested in buying a chunk of the business. It is arguably sustainable with a proven value proposition and business model for customers, and operations processes that work. The entrepreneur now becomes a business owner, and must start thinking like one to get to the next stage.

4. Growth and scaling stage. This is the stage where most entrepreneurs exit, get pushed out, or learn to operate as full-time business owners. Business owners know that growth as a business versus a startup requires replicable and documented processes, a focus on marketing and sales, personnel management skills, and detailed planning.

Another way of determining when an entrepreneur becomes a business owner is to look for the mindset change required to build and maintain a successful business. Every entrepreneur needs to compare his strengths and aspirations to this business mindset:

• Satisfaction from business success versus the big idea. Business owners get their satisfaction from happy customers and happy stakeholders. Entrepreneurs are more focused on thinking big, stepping into the unknown, and changing the world. They embrace risk, while a business owner seeks to reduce and manage risk.

• Seeking a stable environment now versus a better future one. Good business owners like a predictable market where they can make calculated decisions to improve and grow. Entrepreneurs love to envision breakthroughs and disruptive technologies, with tough problems to overcome, which will allow them to create lasting change.

• Relish repeatable activities and processes versus new challenges. Most small business owners enjoy the completion of daily and weekly tasks, and cyclical processes, like inventory and receivables. True entrepreneurs are always thinking many months out, anticipating the next opportunity and the next recognition for innovation.

• Long-term attachment to the business versus the idea. If you see the business as the core of your worth, you will make a great business owner. Entrepreneurs see their value in the change they accomplish, and their impact on the future. True business owners dream of keeping the business in the family, and making it a long-term success.

Yes, there are notable entrepreneurs who make the transition from the big idea to a big business owner, including Bill Gates and Mark Zuckerberg. But there are thousands more whose interests revolve around being a better entrepreneur. Others start and end their careers as business owners, by buying an existing business, inheriting a family business, or buying a franchise.

So I believe the bottom line is that most entrepreneurs never really become business owners. They may step into that space for a few years to maximize the impact of their idea and personal return, but their heart is in their next venture, and that’s the way it should be. Neither money nor business success will buy you happiness if you aren’t doing what you love. You decide.

Marty Zwilling

5 Challenges When Predicting Future Customer Behavior

We are now solidly in the era of big data, where computers are capturing and processing the details of everything we do with all our interconnected devices in real time. Businesses see this as the Holy Grail for finally being able to predict who, where, and when customers will buy their existing solutions, and what their future solutions must look like to be attractive.

According to published estimates, ninety percent of the data in the world today was captured in the last two years, at roughly 2.5 quintillion bytes a day. That’s a lot of data, but the jury is still out on whether technology can make any sense of the data or derive new meaning from it in our changing world. So far, we haven’t been very good at predicting the future in life or in business.

For me, the first step in understanding the potential is to better understand what human data really looks like as it comes in from all these sources. I found some help in this regard from a classic book, “Humanizing Big Data,” by leading consumer researcher Colin Strong. I will paraphrase here the keys ways he outlines that our lives are becoming increasingly datafied:

1. Datafication of emotions and sentiment. The explosion of self-reporting on social media has led us to provide very intimate details of ourselves. Many market research companies now use this data by ‘scraping’ the web to obtain detailed examples of the sentiment relating to particular issues, brands, products, and services.

2. Datafication of relationships and interactions. We are now not only able to see and track the ways in which people relate, but with whom they relate, how they do it, and when. Social media has the potential to transform our understanding of relationships by datafying professional and personal connections on a global scale.

3. Datafication of speech. Speech analytics is becoming more common, particularly as conversations are increasingly recorded and stored as part of interactions with call centers, as well as with each other. As speech recognition improves, the range of voice-based data and meaning that can be captured in an intelligible format grows.

4. Datafication of offline and back-office activities. Within many data-intensive domains such as finance, healthcare, and e-commerce, there is a huge amount of data stored on individual behaviors and outcomes. Add to that the emergence of image analysis and facial recognition systems processing in-store footage, traffic systems, and surveillance.

5. Datafication of culture. There is a whole new discipline of ‘cultural analytics,’ which uses digital image processing and visualization for the analysis of image and video collections to explore cultural trends. For example, Google’s Ngram service has already datafied over 5.2 million books from 1800 to 2000 to let anyone analyze cultural trends.

Of course, there is a big jump needed from data to real insights, intelligent decisions, and future predictions. This book author also explores some of the major challenges associated with humans making sense of big data, and using it effectively, including the following:

• The human psychology of cognitive inertia. Humans seem to be wired to resist change, with a set of cognitive ‘rules of thumb’ which focus us on short-term loss-averse behaviors. Human are inclined to rely on familiar assumptions and exhibit a reluctance to revise those assumptions, even when new evidence challenges their accuracy.

• Cognitive ability to make sense of data. Even though computers can process and store large volumes of data, assessing the implications still falls primarily in the realm of humans. Sense-making is the process of deriving meaning from experience and situational awareness, which seems to be a struggle for both people and computers.

• Information overload and data quality. In reality, more data does not necessarily lead to better decisions. More information usually means more time is required to make a decision, perhaps leading to inertia, or volumes of one type of data bias the decision in the wrong direction, since more data is not always better data.

As we continue to become more data connected online and offline, there is no question that our digital exhaust will tell more and more about us, allowing better short-term projections of our buying habits and interests. Yet, the challenge of really predicting future needs and behavior is much tougher. Thus, I predict that humans will be driving big data in business, rather than the other way around, for a long time to come.

Marty Zwilling

10 Lessons To Be Learned By Winning Teams Everywhere

Did you ever wonder why some entrepreneurs always seem to have all the luck and success, while others never seem to catch a break? As an angel investor, I quickly learned that luck has very little to do with it, and I now look for some personal characteristics and leadership styles that separate the potential winners from the losers.

These differences are the reason that investors say that they invest in people, rather than ideas. As I was reminded again by the classic book from Dennis Perkins, “Leading at the Edge,” this isn’t a new concept. He illustrates this by comparing the acts of numerous teams which faced the edge of life and death as early Antarctic explorers in the 1800s.

He was able to identify ten lessons from the common threads to survival in the winning explorer teams, which I believe apply equally well to the survival and success of business startup teams today:

1. Never lose sight of long-term goals, but focus real energy on short-term objectives. Don’t be afraid to pivot, and commit to new objectives with as much passion and energy as the original. Andy Grove of Intel fame started making memory chips, but switched to microprocessors with a vengeance when Japan totally undercut his pricing.

2. Set a personal example with visible, memorable symbols and behavior. Under the stresses of a startup, visible leadership cues can make the difference between success and failure. When McDonald’s was still a small company, Ray Kroc, the CEO, had a penchant for asking a store manager to help him clean up trash in their parking lot.

3. Instill optimism and self-confidence, but stay grounded in reality. That means you must first find optimism in yourself. Then it extends to the hiring process. Herb Kelleher, while CEO of fledgling Southwest Airlines, said he only wanted people with positive attitudes. He also famously said," We don't do strategic planning. It's a waste of time."

4. Take care of yourself: Maintain your stamina and let go of guilt. Evidence shows that effective entrepreneurs have high levels of energy, and handle stress well. But no one is superhuman. I once worked for a CEO of a startup company who insisted on working 20 hours a day, until a health crisis almost killed her, and did kill her company.

5. Reinforce the team message constantly: “We are one – we live or die together.” Teamwork is the hallmark of high-performing startups. Establishing a shared identity is the first step to creating unity. The Google team stayed tight as they developed the technology, first working out of Larry Page’s dorm room at Stanford, then a garage.

6. Minimize status differences and insist on courtesy and mutual respect. CEOs who talk, and really listen, to everyone in the organization gain the highest reputation. Not surprisingly, based on the success of their companies, both Mark Zuckerberg and Elon Musk scored in the top ten most respected CEOs per a recent Glassdoor Survey.

7. Master conflict – engage dissidents, and avoid needless power struggles. Some entrepreneurs go to great lengths to avoid interpersonal friction, or engage the wrong way. Those of you who viewed the movie The Social Network, saw an example of new entrepreneurs dealing with conflict poorly, almost leading to the demise of Facebook.

8. Find something to celebrate and something to laugh about. Especially under the constant pressures of a startup, the ability to lighten up, celebrate, and laugh can make all the difference. Herb Kelleher, mentioned earlier, is one leader who also understood the power of humor in business, with his own antics, and focus on “fun ware.”

9. Be willing to take the Big Risk. Risk aversion does not always result in disaster, but neither does it create change. Risk takers make things happen. Think of the risk taken by CEO Todd Davis of LifeLock when he posted his Social Security number online, to assure customers the he could protect them from identity theft. It worked.

10. Never give up – there’s always another move. Rather than expecting things to go right, entrepreneurs have to assume things will go wrong, and solutions are elusive. Colonel Sanders started at a late age to build his chicken recipe into KFC (Kentucky Fried Chicken). It took two years of persistence to get the money. The rest is history.

Investors (and team members and partners) find that it’s more effective to assess an entrepreneur’s fit to these personal characteristics than it is to assess the real potential of an idea, or the probability of good luck. We listen to you and judge how many of these are practiced by you. When it’s time for due diligence, we will talk to your team. Their perception is the only reality. What do you think they will say?

Marty Zwilling