Tag Archives: Entrepreneurship

Entrepreneurs Have Not Because They Ask Not

The world of entrepreneurship is becoming more divided almost daily between the “haves” and the “have nots.” In this context, we would be referring to technology. Whether a start-up is seen as a technology company or not is determining not only valuations, but access to resources. One of the more common resources available to tech companies that “have” what others presume it takes to cash out somewhere in their trajectory for a very favorable multiple is an incubator, increasingly referred to synonymously as an accelerator.

Until very recently, these accelerators extract an equity position in the start-up company’s cap table in order to justify the risk of helping them for very little compensation up front. Most tech entrepreneurs learn to play the game this way and progress through the angel–Series A–Series B–etc process if they hit their milestones. But…the “have nots” bristle at the model and try to create worthwhile businesses without giving up equity. Unfortunately, they also try to go without mentoring and systematic instruction–to their detriment.

There is an emerging trend toward fee-based offerings that is on the horizon. Organizations like EntreDot, with a fashion innovation center and an industry agnostic innovation center in downtown Cary, NC, prefer the fee-based “pay to play” model. The premise is that a Main Street entrepreneur (otherwise known as “have not”) needs access to resources just like a tech start-up. In order for the innovation centers to provide services like instruction, mentoring, and space, they charge the entrepreneur on a “pay-as-you-go” basis. While this may be an affront to the typical “have” start-up mentality, it meets with less resistance among “have nots.”

Leaders of accelerators around the country who are trying to convert to more of the fee-based services model point to the fact that competition is stiffer than ever to get into the top  accelerators and too many entrepreneurs are being left by the wayside, just as the “have nots” have been for a longer period of time. What the newly disenfranchised and ignored sectors of entrepreneurship have in common is that they are trying to figure out how to commercialize an idea.  They each need help to do so!

Alexander Taub, the director of business development at the Des Moines, Iowa-based mobile-payment network Dwolla, spoke recently with Lauren Cannon for an article on the topic for Young Entrepreneur. Really young companies that aren’t necessarily ready for the big time may not benefit from accelerators, he says. Still, Taub does use General Assembly’s offices, which serve as Dwolla’s NYC home base. The value from using the co-working space stems from connecting with other companies that are also being incubated there, he says. “That’s definitely worth it… We’re part of the community.”

Plus, the experience might be worth paying a little extra for. At the Cary Innovation Center, less than six months of involvement has lead to strong growth for its initial two residents, Shelten Media and the CaryCitizen. Shelten saw an increase in billings of over 60% in her first 60 days and is now looking for larger space at the Center. CaryCitizen has seen their staff grow from two to five people as advertising revenues have increased. Both companies appreciate the value of the mentoring, but are committed to the program due to the cross pollination occurring among the residents. While it is definitely a significant and personal choice to decide to become a part of an accelerator (or innovation center as EntreDot calls theirs), the proof is in the results. As long as those serving the participants help them achieve desirable results, they will enjoy helping both the “have nots” and some who would otherwise be in the “have” category.

 

From Think to Execute

“The ability to convert ideas to things is the secret of outward success.”
– Henry Ward Beecher

It is not enough to simply have a good–or even great–idea. Ideas are plentiful. I have them. You have them. The bum on the downtown street corner has them. People whose faces grace the covers of business magazines have them. Why are they on the cover and not us? Quite simply, they have become very proficient at executing their idea(s).

Brad Feld, of The Foundry Group and TechStars says that he gets emails all the time from would-be entrepreneurs with the latest software and internet ideas:

Often these entrepreneurs think their idea is brand new – that no one has ever thought of it before. Other times they ask me to sign a non-disclosure agreement to protect their idea. Occasionally the emails mysteriously allude to the idea without really saying what it is. These entrepreneurs think their idea is special and magic. And they are wrong.

The great entrepreneurs are already focused on the implementation of their idea. They send me links to their website or software. They describe the business they are in the process of creating (or have already created). They point me to what they’ve done to implement their idea and show real users who validate that the idea is important. And they quickly move past the idea to the execution of the idea.

Google? Not the first search engine. Facebook? Not the first social network. Groupon? Not the first deal site. Pandora? Not the first music site. The list goes on. Even when you go back in time to the origins of the software industry: MS-DOS – not the first operating system. Lotus 1-2-3 – not the first spreadsheet.

The products and their subsequent companies became great because of execution. First, they had to execute on building a great product. Next, they had to execute on building a great business. Finally, they had to execute on scaling, sustaining, and evolving a great business.

Notice what Feld says…

  1. Execute on building a great product. As you move from Ideation to Conceptualization, it is important to vet the commercial and market value of the idea. Determine whether the “back of the napkin” math shows that the idea has promise to anyone other than yourself.
  2. Execute on building a great business. Creation is the process of doing one’s initial research and development, followed by producing a prototype or beta version of the product or service. The work done here will reveal what not to do and what to do as you go about determining what you plan to take to market.
  3. Execute on scaling a great business. Evaluation of your strategic plan and markets, validating them and building a strong team around you will allow you to grow with less problems down the road.
  4. Execute on sustaining a great business. Preparation for the launch and Commercialization of your product or service require thinking through what you plan to do with a systems and process mentality so that procedures can be developed that help the business to run itself.
  5. Execute on evolving a great business. Commercialization looks differently at later stages of business growth. Sales organizations and operations must change and  as market data is analyzed and new opportunities for competitiveness emerge.

Be someone known for execution rather than ideas–even if you are not trying to impress a venture capitalist, you will meet with greater success in all that you undertake!

 

Shark Tips For Second Career Entrepreneurs

“The best advice I would give to somebody is, don’t ever start a business that you are not incredibly and deeply passionate about,” said Robert Herjavec, one of the “sharks” on ABC’s hit TV show, Shark Tank. “It is hell, and you will spend more hours with your business than you will with your family and friends. You will have horrible days that will make you want to quit and question everything you have ever learned. Along that journey, if you don’t absolutely love what you do there is no way you will survive.”

Many people who are looking at starting a business as a second career are intrigued that, if it works out, they can create a new source of income in addition to the retirement income sources they’ve worked on for years. True entrepreneurs, however, don’t start businesses to produce money. What?

“The biggest mistake I see people do is they start a business to make money,” said Herjavec. “The problem with that is on those cold days, money doesn’t keep you warm at night. For me, it is impossible to expend the effort required to start a great business because you want to make more money.”

Passion is what is critical to successful entrepreneurship. Some would even label it fanaticism. When one is in the midst of a dogged pursuit of what is primal, success looms in the not too distant future. It is as though a deep seated conviction drives one to pursue what is the convergence of talent, inspiration, and motivation. Not everyone, though, even considers that starting a business is a possibility. Some were just not raised to think entrepreneurially.

“When I was younger, I didn’t know that people could start a business, and I always say now that if I knew what I know now, I would have dreamed bigger,” said , CEO of Canadian-based information technology company The Herjavec Group. “I don’t have an MBA, or a business degree, and I wasn’t very good at accounting. I remember when I wanted to start a business; everybody said to me, ‘you can’t do it.’ Fundamentally, I owe my success in business to the fact that I really love what I do.”

“It was really interesting because, where I came from, we lived on a farm and my grandmother raised me and everybody lived like us,” said Herjavec. “Then, we came to North America and it was my first impression of not being well off. I realized that compared to everybody else, we were really poor.”

To make a living, Herjavec began working as a newspaper deliveryman and waiter in the early 1990s.  He was able to make ends meet and learn important business lessons at the same time.  The biggest, perhaps of all, was noticing what was on the mind of his customers.

“The most important relationship in business is the one between you and your customers. All my experience is customer-related. When I was delivering newspapers, you used to have to collect the money,” Herjavec said. “When I was a waiter, it was all about maximizing a tip and ensuring enough turnover. All these odd jobs always related in different ways to customers.” 

Knowing what customers want and creating a strategy to meet their needs is critical path stuff. What else is desirable in terms of an entrepreneur’s worldview? Flexibility and good analytical skills rate highly for Herjavec.

“People ask me if there is a quality or characteristic for entrepreneurs, are they born or made?” he says. “The one characteristic that I find in most people who start a business is, they are very comfortable and adaptable to change. I always say my greatest skill is if you throw me in the middle of the forest, I’ll figure out the game.”

Finally, it is crucial that a business founder have a distinct competitive advantage. Whether taking on the 100 ton gorilla (market leader) or a local competitor, it is key to know how you are differentiated from the others. One of the best ways to stake your claim is through unique knowledge or processes.

“The other thing I notice is that lots of other entrepreneurs make the mistake of changing fields all the time and start businesses where their knowledge level isn’t very high,” said Herjavec. “I always say to my kids, become an expert at something and become such an expert at it that you can walk into a room and people will pay you for your knowledge.”

In summary, here are lessons we can learn from Robert Herjavec, aka the Shark:

  • Be extaordinarily passionate
  • Start a business because you believe you were meant to, not for income only
  • Know what the customer wants and deliver
  • Be flexible 
  • Hone your analytical skills
  • Be a lifelong learner and master of a unique subject matter

You’re No Omni; Nor Am I

 

Rugged individualism is highly overrated. There’s a reason why many successful business owners have either an equally strong co-founder or a significant other who is a top cheerleader. It’s because most people are simply not omniscient, omnipotent, or omnipresent. We need others. When we are willing to become transparent and admit that need, we then are taking a requisite step towards success and away from failure. 

Transparency is akin to vulnerability and is one way trust is built. Determining that you would benefit from the input of another requires humility and is hard to do. Those who dare to become interdependent, however, are amazed at the benefits. Interdependency equals collaboration. Collaboration, by definition, means that we no longer have to carry a burden–positive or negative–alone.

“The fact that I don’t have any technical background means I’m not impeded by my knowledge of what it’s going to take to build something, so I’m free to just dream up features and ideas,” says Cyrus Farudi, founder along with Omri Cohen of Capsule, a web and mobile app built for event planning, group interaction and photo sharing. “Luckily, my partner, who has a technical background, has a very ‘yes, it can be done’ attitude. There have been screaming matches when I’ve tried to get too involved in something on the tech side.”

“Collaborating is about co-laboring,” says Nilofer Merchant, innovation expert, Harvard Business Review columnist and author of The New How: Creating Business Solutions Through Collaborative Strategy. “It’s not about hugs. I think people think about it as this positive thing, but it’s really about how you solve tough problems that neither party could solve on their own.”

If you’ve chosen someone based only on skills and intelligence, there might be a personality conflict that, under normal circumstances, could lead to a standoff. But you’re a team, so conflict over personalities would be distracting and frivolous. Sure, the tension of your differences might push both of you right up to the point of failure (the brink of doom, we’ll call it). But there are two reasons you’re not likely to go over the brink of doom: One, your fate is connected (by the handcuffs of mutual interest, for lack of a better metaphor); and two, because a lot of great ideas happen right before people fail–a kind of adrenaline kicks in, which keeps you from creative inaction (the abyss of “Man, we got nothin'”). The point is: Collaboration is harnessed conflict.

-Ross McCammon on entrepreneur.com

McCammon describes collaboration as “harnessed conflict.” It is important to realize that the best partnerships (not necessarily legal co-owners of a business, but in the general sense) pit people together whose worldviews can be decidedly different. Finding a way to respect one another and build consensus on how to move the organization forward is not just an internal exercise–it yields fruit outside the company in other key relationships as well!

When you set out to have a meeting with someone for collaborative purposes, here’s some advice from those who have gone before you:

  • “You have to have the difficult conversations first,” says Jim Moran, co-founder, president and COO of Yipit, a New York-based deals aggregator and recommendation service. “You have to determine who is better at what. That transparency will make everything flow.”
  • The habit of reflecting back to the other person what you have observed being communicated is a good way to build cohesion. “It’s nonverbal behavior beneath people’s awareness, but you can get skilled at doing it deliberately,” says Steve Kozlowski, professor of organizational psychology at Michigan State University and editor of the Journal of Applied Psychology. “You mirror the subtle behaviors of others during an interaction. It’s part of the attraction process. It tends to build rapport.”

Go find a new collaborator for your project/business!

 


Use a Telescope, Binoculars, and a Magnifying Glass

A telescope, binoculars, and a magnifying glass…all are a form of optics that each help the eyes of the viewer to zoom in on something hard to see. What is the key differentiation between each? How large is the object you want to see, and how far off? If, for instance, one wanted to look at a molecule, a microscope would be preferred to any of the three, even over the magnifying glass. However, if the intricacies of a solar system were of interest, a magnifying glass would be of no real use. 

Whether your company is in start-up mode, or you are trying to re-energize it for growth, one must know what is sought after, how to view it through the right lens, study it, and develop a plan as to how to do it. Boldly, I would say that any company in existence needs to approach its goal setting and performance measurement using tools that are scaled to the need appropriately. Peter Cohan, in an article published for Inc. online yesterday, advances this argument persuasively. He argues that the mission, long-term goal (BHAG in the vernacular of Jim Collins in Good to Great), and short-term goals that feed the other two are matters of scope and perspective, but that all are necessary and important:

1. Mission:What is the enduring purpose of the venture?

To answer this, ask yourself what problem matters most to your venture and why you are willing to go years with little pay or sleep to solve it.

Charlie Javice is co-founder and CEO of PoverUp, a social network for university students to get involved in social enterprises. As Javice told me, “One of the reasons I started PoverUp was that in the summer of 2008, I volunteered in a border refugee village in Thailand. That’s where I realized that a little money (I bought 50 donuts for $1) could go a long way to helping poor people start businesses that would lift them out of poverty.”

2. Long-term goal:What will this company look like in five years?

The answer to this question is of primary importance to a start-up’s investors who want a return on their capital– by getting acquired or going public.

Evernote CEO, Phil Libin, told me in earlier this year after raising $70 million to add to storage service provider that his goal was to build a 100-year-old public company.  As Libin said, “I think that Evernote as a publicly traded company could be worth $10 billion, $100 billion or more.” He guessed that the IPO would happen in 2013, when Evernote got big enough, but he wanted the IPO not to disrupt Evernote’s strategy or how the company works.

3. Short-term goal: What frugal experiments must we make to reach our long-term goal?

If the mission and the long-term goal are the 1% of the inspiration needed to build a successful venture, the short-term goals are the 99% perspiration. Create a series of real options. I mean that you should make small, inexpensive bets–a win means that the venture can go on to the next short-term goal; a loss means a chance to learn what went wrong and do it better the next time.

BrewDog’s co-founder James Watt set five short-term goals at his craft beer maker’s outset:

  1. Find something to do after the co-founders quit their corporate jobs.
  2. Decide whether that should be crafting beer.
  3. Create buzz among influential beer bloggers.
  4. Get a distributor in the country where they had created buzz.
  5. Convince a bank to loan money to build a facility to satisfy customer demand.

Learn from these innovative business owners and go create your own “optics” for success. Develop the ability to simultaneously think about what execution matters today, what you want the organization to become in the next few years, and how the world could be improved by your contribution over a lifetime. Manage based on these guiding objectives and you will increase your likelihood of success manifold!