Entrepreneurial Twists and Misfortune

Anyone who has read my blog for more than one sitting knows that I began my career doing turnarounds, mixed in some strategy added to marketing and nonprofit, started some businesses, and now help startups and SMEs. Invariably, some of the companies I run across or that you may read about in an epitaph simply do not pan out. Megan Kauffman posted a blog entry today that features the thoughts of Wen-Szu Lin, a Wharton grad whose entrepreneurial venture in China was unsuccessful. Lin’s thoughts are below:

When our business in China did not work out as hoped, I could not believe that I failed at something I set out to achieve.  Four years of my life were gone.  The emotional scars and physical ailments resulting from the stress were real enough.  I couldn’t believe that I had lost money for my investors (who were friends and family).

Few people discuss the details about such periods in their lives.  Most entrepreneurs that we hear about succeed.  Or else they fade into oblivion.  Older entrepreneurs occasionally discuss the multiple failures that they experienced to reach success.  Yet, those painful memories are long past.  The younger a successful entrepreneur is, the more he or she is featured and sought after in stories.Venture failure

So, what happens with the majority of the entrepreneurs who, like myself, have experienced a major setback?  By far, this period was the most challenging in my life, and I was the most unprepared for the moment.  All of the business cases that I had studied in school, read in books, and heard first hand from entrepreneurs focused on how to handle business success.  How would I deal with failure emotionally and mentally?

Range of Initial Reactions

In China, I saw a lot of failed businesses, both from local Chinese and foreign entrepreneurs.  Through my years in Beijing, I have met many entrepreneurs and witnessed their responses when their businesses fail.

Based on my un-scientific observations, initial reactions fall into a few categories:

  • Reflect and move on
  • Disappearing Act
  • Denial (negative energy)
  • Oblivious (optimistic)

There are probably many other common responses to a failed business venture, but these were the ones that I encountered most often.

What happens now?

My foolish pride was quickly replaced by an immediate concern:  I needed to support my family, as my wife had just given birth to our first child.  Perhaps this urgency snapped me out of a potential downward spiral into depression. I had to quickly figure out how to generate an income for my family.

I experienced many mixed emotions as I evaluated my options and next steps.  Here were some of my main take-aways:

  • Personal reflection:  I started writing anecdotes, detailing each of the memorable stories from our four years.  I relived them in my mind and tried my best to put them on paper with the same intensity as I experienced them.  That was how I learned to move on from my experience.

Bottom line, I wrote a book (The China Twist) that reflected my experience.  The book contains the most vulnerable moments in my career, so I am facing my fears and my ‘shame’ head-on.  I am proud of what I wrote and what I have experienced. 

  • Job opportunities:  I did not realize that my degrees and background experience in consulting and technology were such a strong security blanket.  My options were actually quite varied and better than I had expected when the business ended.  
  • Another shot at entrepreneurship:  Growing up, I could think of nothing else I wanted to do except start something from the ground up.  My priorities definitely have changed but my dreams have not. One thing I know for sure is that I will be back in the entrepreneurship game sooner or later.

Some great advice from someone else who has lived the highs and lows. Take it to heart…stick a copy of it in a file and read his book –“just in case” you ever need the encouragement!

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Entrepreneur Faith – Future, Attitude, Improvisation, Timing and Help

Reading outside one’s usual list of publications, blogs, and websites can be very eye-opening. Perspective emerges as familiar subjects are addressed in differing ways. When worldview is, in fact, only hemispheric or nationalistic, it is incomplete to say the least. Asia is exciting in the business world today, as can be parts of Europe. One European publication draws my occasional attention: Entrepreneur Country.

Entrepreneur Country recently held a forum in, of all places, the Royal Institution of Great Britain. (Same location where the first Industrial Revolution began.)  Contrast this austere setting with the arrival of Madonna as a guest lecturer and you get the sense that this was not “business as usual!”

Writing about the event, Peter Cook commented that “the day was characterized by entrepreneurs telling real life stories of their hopes, fears, successes and failures.” below he shares some of his observations and take-aways, with a few musical references (Cook is the leader of the Academy of Rock) for good measure:

iTrigga(Much) discussion was .. around what entrepreneurs do to avoid burnout. Ed Bussey of iTrigga was a prime example, having come to the conference after an all night vigil at hospital on the occasion of his wife giving birth! He did however point out the importance of pressing the OFF button from time to time to avoid the possibility of crash and burn entrepreneurship.  Others talked of rituals and routines such as working out in the gym, taking forced holidays, running the London Marathon, going to the North Pole (that’s hardly chilling out!) and so on. Seemingly obvious advice, yet not always taken by busy entrepreneurs.

Several speakers also gave witness to the importance of maintaining naivety if you are to succeed as an entrepreneur. Madonna’s contribution to this area is via her blockbuster hit “Like A Virgin”, which translates to the need to treat each new business situation like it’s the very first time. In particular, Sir William Sargent of Framestore painted a picture of the importance of intuition, creativity and the ability to remain adaptive and flexible as your company grows, saying, “If I stand still for 12 months, I will be out of business 12 months later.”

Entrepreneur Country Founder Julie Meyer and Dr Mike Lynch (offered opening remarks.) Julie presented her ideas about entrepreneurship clearly, concisely and without apology for wanting to create an enterprise economy, which produces both economic and social benefit. Business gets enough hard knocks and we need to start seeing it as an engine of improvement, rather than an evil empire as it is frequently portrayed by Governments and a self-righteous public sector. Mike Lynch extended Julie’s strident start to the day by giving us some home truths on entrepreneurship:

“Without good marketing you can have something amazing and no one will know.  Marketing is not cheating”

“Avoid the myth of doing things properly”

Another speaker, Stephen Linnecar, suggested that we gotta have FAITH – Not an allusion to George Michael, but the summary of his presentation which focused on five factors which he regarded as key to success as an entrepreneur: Future, Attitude, Improvisation, Timing and Help. Improvisation featured strongly throughout the day, a point that resonated personally with me, having taught creativity, improvisation and innovation for the Open University MBA for 18 years. However, what impressed me most of all about the speakers at the event was a real and unusual sense of authenticity.  Truths were told about successes. Much more importantly, we gained an insight into mistakes and outright failures. It’s much more important for an entrepreneur to learn from their mistakes than their successes and many speakers were candid about their regrets. 

 

 

 

 

Run Your Business Better With Games For the Mind

Owning a business is not a game. Seemingly, playing games is also irrelevant to running a business. Yet, there are skills requisite to entrepreneurship that may require development through practice. Whether one struggles with memory, focus, recall, or eliminating distractions, there may be a game to help you strengthen your mental capacity.

PositscienceThere is a growing number of “brain games” that help with decision making and memory improvement. Lumosity.com, which makes games for these needs, reached 35 million users earlier this year. Joe Hardy, PhD and Vice President of Research and Development for Lumosity, believes brain games are ideal for business owners. “Owning a business is one of the most cognitively challenging jobs,” Hardy says.

Lindsay LaVine, writing for Entrepreneur.com, says that, “Business owners have to process information accurately, balance projects, switch between tasks quickly and efficiently, divide their attention among tasks, and remember customers’ names. We took a look at three popular brain game providers to find out what the buzz is about:”

Lumosity.com

LumosityThe largest provider of brain games, the site works to train your brain in five categories: speed, memory, attention, flexibility and problem solving. “Each exercise is designed to train a different cognitive function of the brain,” Hardy explains. The games are based on neurological research performed by researchers from various institutions, including Columbia University and the University of California-Berkeley.

Lumosity’s in-house team of developers creates games based on what research shows exercises various parts of the brain. For example, Memory Matrix requires players to remember which tiles appear in a matrix and recall the pattern from memory, which helps improve spatial recall and working memory. “Think of it as a personal trainer for your brain,” Hardy says. He recommends that users spend 10-20 minutes every day playing brain games, as opposed to spending two hours one day and skipping out on the rest. “It’s like going to the gym,” Hardy says. “The more training you do, the better. The goal is to create a habit that’s sustainable and keeps you engaged.”

Lumosity offers a free limited membership that allows users to participate in some games, while the paid membership provides full access to the site and tracks your BPI (Brain Performance Index, a measure of cognitive performance) progress over time. Paid memberships range from monthly to lifetime options ranging from $15 a month to $80 a year.

Positscience.com

Positscience logoPositscience offers brain training in five categories: attention, brain speed, memory, people skills and intelligence. (A new category, navigation, will be available on the site soon.) Posit Science games include enhancing a user’s ability to read facial expressions, from easy (happy or sad) to the more difficult (puzzled or embarrassed). Its games also help users improve facial recognition as well as matching names with faces and remembering facts about people you meet, an important skill in networking and business.

Posit Science has developed games in collaboration with researchers from nearly a dozen universities, including Yale and Stanford. You can try some of the games out for free without having to sign up. Posit Science offers memberships at $14 a month or $96 a year.

Cogmed.com

CogmedCogmed is designed to improve working memory to allow users to learn new skills in academic or professional endeavors. Users are encouraged to spend up to 30 minutes a day, five days a week on training exercises over a five week period. Training is only available through programs offered by accredited coaches who monitor user results and provide motivation. Many programs are supervised by doctors or psychologists who specialize in attention problems.

Prices vary according to the program selected and the professional coach’s fees. The program is best for people who have working memory issues caused by ADHD, anxiety in social settings, or adjusting quickly to new tasks. 

 

Free is Costly and Cost is Freeing

As a consultant to small businesses, I have had to fight the trend of owners wanting something for nothing. In the start-up world, it is almost unheard of for something to not be free. Yet, I see organizations like EntreDot introduce business models that ask entrepreneurs to invest in themselves and wonder why that is not the norm. Mike McDerment, co-founder of FreshBooks, concurs in an article he recently wrote entitled, “Why Free is Bad: Businesses Should Be Happy to Pay For Key Services.”

McDerment noted that, late last year Google Apps for Business eliminated its free version (see Google Dares Businesses To Switch To Microsoft Office). He acknowledged that, while some may have thought the decision to be a bad thing for small business owners, he did not. In fact, McDerment lists several downsides to free:

1. Free things are never really free. When we don’t fork over dollars for products or services, we think of them as free. But we always give up something. When it comes to online services, that something is usually personal data or content you’ve created — think Facebook and Instagram, whose privacy policies obscure the line between what you own vs. what they own. For consumers, that might be an acceptable bargain. But for small businesses that trade may be unacceptable.

2. Free services don’t serve you. Free services can’t provide great customer service. You know this to be true if you’ve ever sent an email to a free service to get help. Imagine relying on one of those free services to run your business!. What happens when you need help, and you need it now?

3. Free services for small businesses don’t last. Free services for small businesses come and go. Google Apps used to be free, now it isn’t. Free services don’t last for the small businesses because the market is so challenging to reach and serve. My guess is that understanding the market challenges is the key to why Google Apps for Business going paid is a good thing for small businesses.

Google Apps For BusinessMcDerment also goes on to argue how “Free” stifles competition:

In the dot com era, companies were terrified to do anything that Microsoft might be interested in, and venture capitalists would stop a hundred businesses before they could start with one simple question: “Why won’t Microsoft do this?”

Similarly Google has scared people out of doing things, because thanks to the significant advantage created by its search business, the company can afford to lose money on other activities, starving the competition and limiting innovation.

Fact is, Google can always return to the free model, but it’s a good signal that it has started to charge for things. Wall Street will be happy, and small business owners should be too. That’s because I expect Google’s paid model to give entrepreneurs the confidence to step in and start innovating more for the small-business market.

This innovation will encourage services tailored for the long-underserved small businesses of the world. Sure, those services won’t be free, but they will be affordable, just as Google Apps remains affordable at $50/year.

Just as important, these new services won’t come with all the downsides of “free.” In exchange for services they need, businesses will trade dollars, not their data or their content.

I’m hoping this signals the start of a new era, one where for the first time ever, competition, innovation and choice are healthy in the small business market.

After discussing the competitive effects, McDerment then offers his insights into the upside of payments for services by small businesses:

…Why should small businesses care about their vendors’ problems? Why is it a good thing for them that Google Apps For Business went paid? How are small businesses going to benefit by paying for something they used to get for free?

The answer: innovation and the arrival of services tailored to meet their needs. Just think of how many things small business owners run on Word and Excel and you get a sense of how under-served this market really is. Google Apps for Business going paid makes serving the small business market more attractive – for everyone. As long as all Google Apps were free, smart entrepreneurs and competitors were inclined to avoid investing in innovation for small businesses for fear Google could step in and wipe them out with a free service.

Entrepreneurs With Too Much Passion Are Challenged

Diana Ransom is a contributing editor to Entrepreneur.com and queried in an article today whether lack of focus is an issue in startup failure. She cites the usual suspects (inadequate capitalization, poor market timing, and “founder fatigue”), but then notes that there’s no plausible explanation in other situations. Ransom’s case in point is the decision by founder Campbell McKellar to close the doors of New York City based Loosecubes in November after what seemed to be an incredible run. While McKellar was praised as articulate and poised, Ransom went on to postulate that maybe she had too many passions and it became her undoing.

LoosecubesThe 2.5 year journey attracted 25,000 subscribers in 60+ countries in an office-sharing play that has been copied by Desktime in Chicago. Ransom said she felt the idea was taking off, as evidenced by $9 million in venture capital funding and a staff of 16, all run by a phenomenal young entrepreneur. The sudden decision to close up shop with no media interviews by the founder gives rise to Ransom’s observation that there must be an underlying cause such as too many competing interests:

Like novelists who write several books, entrepreneurs often harbor multiple business ideas, and they love all of them. This is where problems arise; rather than building and running one business for decades, they’re itching to give the next idea a try. In fact, selling or shutting down a business can serve as a form of catharsis.

Naturally, there’s a financial loss associated with failure, but there’s also a sense of closure that people in the career world don’t really ever get to feel. That business (aka your baby) is gone. And while employees who get laid off often look for a new job in the same field, entrepreneurs can consider something entirely different. They can break new ground, explore undiscovered territories. While fraught with uncertainty, it’s also exciting. It’s the thrill of the launch. I suspect this is what happened to McKellar.

Ransom has interviewed many entrepreneurs and has experience identifying with their motivations. She writes that, “If you can identify with these flights of fancy–and you’re aware that they’ve become an impediment to your business trajectory–let me offer a suggestion: Instead of seeking your bliss by creating specific products or services, fall for something that can work across any business. Tony Hsieh (the serial entrepreneur and CEO of Zappos) has a (well-known) major crush on customer service. That’s his thing no matter what business he’s in. His long-held belief that quality customer service will make or break consumer companies helped him create a beloved online retailer, which Amazon.com acquired in 2009 for an estimated $1.2 billion. Now, customer service may be Hsieh’s cup of tea, but yours may differ. And that’s OK. Just make sure there’s something in your entrepreneurial passion that will hold your focus well after your initial idea has matured. Your eventual success depends on it.”

While identifying a strong suit and core value like customer service that can transcend products and services ideas is a good idea. I would argue that there is nothing wrong with being the other kind of entrepreneur. One key proviso: find a way to build a superstar team around yourself sooner than later so that you can effectively delegate responsibilities that draw you into the doldrums of running a business instead of the excitement of launching an idea. 

Those who are able to build teams that function without their requisite involvement are freed to do more of what they wish–even becoming a serial entrepreneur like Tony Hsieh!