How To Build A Great Startup In The Age Of Disruption

The 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.

2. 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.

3. 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

8 Keys To Ensuring Accountability In Your New Venture

Maybe 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

7. 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.

8. 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

6 Keys To Retaining Your Top Performing Team Members

Since 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 ***

How To Identify New Venture Assistance Organizations

One 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

7 Indications Your New Venture May Not Be Investable

If 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

7. 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

8 Keys To Improving Your Image And Career Advancement

Based 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 ***

8 Top Capabilities Of Most Successful Business Owners

In 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

7. 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.

8. 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