Category Archives: Advice

Go Ahead, Search Me … and Give Me Better Info

Business Ethics, Marketing, , ,

What bothers me isn’t that Orbitz steers Mac users to pricier hotels, as WSJ.com reports; it’s that some people act like that’s somehow illegitimate, unfair, or deceptive.

I say, on the contrary, give people what they like.  Not everybody wants the cheapest hotel available. Many people prefer paying a bit more for something better. And what’s wrong with that?

The report:

Orbitz Worldwide has found that people who use Apple Inc.’s AAPL +0.22% Mac computers spend as much as 30% more a night on hotels, so the online travel agency is starting to show them different, and sometimes costlier, travel options than Windows visitors see.

So, just for the sake of argument, I like interesting restaurants with local and organic food, and I don’t mind paying the bit more that those restaurants cost. Am I mad at Yelp if it shows me those on the top of a search, instead of the fast foods and pizza? The Journal adds:

Orbitz found Mac users on average spend $20 to $30 more a night on hotels than their PC counterparts, a significant margin given the site’s average nightly hotel booking is around $100, chief scientist Wai Gen Yee said. Mac users are 40% more likely to book a four- or five-star hotel than PC users, Mr. Yee said, and when Mac and PC users book the same hotel, Mac users tend to stay in more expensive rooms.

Guessing what people want, based on what we know about them, is not a bad thing to do.  And it’s not like Mac users have to pay more for the same room, on the same night, booked at the same time; it’s a matter of guessing what they want to see. How is this bad?

We all routinely pay different prices for the same thing. We all know that airplane seats — to cite one obvious example — are priced in all different ways. It bugs me that I pay more for the trip I book at the last minute than the one I book in advance, but I don’t blame the airlines for that. And we can get last-minute hotel rooms cheaper, sometimes, than by booking in advance. This is pricing by context and value. I don’t like it when it’s me paying more, but then I always have the option of planning better. Or not going. Right?

I’ve been a Mac user since the beginning, and was a long-time consultant to Apple, although I like Windows too and use both. But I’ve always seen the Mac had some extra connotation. That’s interesting to me, and intriguing for marketing purposes. Like car brands, dining preferences, and fashion. We are what we buy.

How do you feel about this? Are you offended?

Q&A: When to Quit the Day Job and Start On My Own

Entrepreneurship, Q&A, Starting a Business,

This Q&A post is different. Usually I highlight questions here for my answer, meaning I’m answering a question I think others are asking, for which I’m hoping my answer might be useful. In this case, however, I’m posting because of the question itself: It’s extremely common, very important, and doesn’t have any obvious single answer I can think of. 

This question came through my ask me form on timberry.com: 

I am at a crossroads in my working life. The company I am working for is going through retrenchments and no-ones job is secure. I have good experience in the industry and was aproached by a former employer who suggested that start my own business and sub contract to them. I do not have capital and because of the problems that the company I am working for have had my finicial situation is not looking good. I have always wanted my own small business and this seems a great opportunity except I am worried about the finances. My question is simply this: Do i take the risk and go on my own or find a another better paying job and sort out my finances at the risk of loosing this opportunity?

Your advice would be greatly appreciated.

My first reaction to this is not to answer out of respect for the importance of the question, and how little information I have.  Yes, this is one of the most important questions I get, and I get it a lot, although not often as well worded as this one. And in my case respecting the question means I’m afraid to answer it simply. It’s a life-changing decision and no thoughtful person should answer it from afar, with an email answer. 

My follow-on reaction is easy answers that are cliches: things like follow your gut that sound good but don’t really help. 

My best answer is you should do a business plan. Not a formal written business plan, a plan-as-you-go business plan, a simple practical plan that’s just big enough to reduce the uncertainty; that may never get printed; that may be as simple as a target market and business offering, key milestones, and projected sales, costs, expenses, and cash flow. 

The right kind of business planning is the best way to break the huge fear and doubt down into more manageable pieces. 

(Image: shutterstock.com)

7 Steps to Practical Business Stories

Business Pitch, Business Stories, Personal Productivity,

Remember, stories aren’t just stories. They’re truth and promise and relationships established. They’re vital to business. There’s more truth in stories than in all the statistics ever published. 

Geoffrey James posted How to Tell a Great Story on Inc.com last month, quoting Mike Bosworth of Solution Selling, and Ben Zoldan, one of his top trainers. So this is how to tell a memorable business anecdote:

1. “Decide on the takeaway first.” There’s a business goal. Yes you want to make conversation, but also make a business point. If you’re selling shoes, tell a story about a shoe disaster, or a shoe rescue. 

2. “Pick the ending ahead of time.” Get the ending that supports the takeaway. 

3. “Begin with who, where, when, and a hint of direction.” He adds:

Every great story–and indeed, every great movie, novel, or TV show–starts with a person (who is going to do something), a place (where things are going to happen), a time (so people can relate “then” to “now”), and just a hint of direction, indicating where the anecdote is headed.

4. “Intensify human interest by adding context.” Details, done right, make it a story. Try to put your people there, caring about the people and the situation. 

5. “Describe the goals and the obstacles.” They call that plot. What was the problem, and how was it solved. 

6. “Describe the decision that made achievement possible.” 

It’s important not to confuse the decision (or turning point) with the ending of the story.  The turning point is not “what happened”–it’s the decision that caused what happened to happen.

7. “Provide the ending and highlight the takeaway.” Don’t assume your listener figured it out. Make sure to say it, out loud. Tell everybody what happened and why it’s important. 

Nice post, good recommendations; thanks Geoff, Mike, and Ben. 

Did They Copy Your Idea? Deal With It.

Business Ethics, , , , , , , , , ,

This troubles me. App Developer Says Facebook Stole Idea for “Find Friends Nearby”.

I don’t know the app, haven’t used it, and I’m not a lawyer, but I hate it when people complain about some big company stealing their ideas. Ideas get copied all the time. Have you seen the web? Have you seen books, movies, or TV?

Good ideas get copied. I don’t mean software piracy or plagiarism, which I hate, isn’t legal, but is also inevitable. I do mean reverse engineering and just plain copying good idea. Like movie and fiction formulas that work.  Selling points, tag lines, icons, apps, functionality, features, packaging, design … copycats get around them easily without strictly violating the law.  It’s a fact of life.

Think of the history of high tech in the last generation or so. DOS copied and improved CP/M which copied something else. The original Mac copied and improved Xerox and Windows copied Mac. Lotus 1-2-3 copied and improved Visicalc and Microsoft Excel copied and improved Lotus 1-2-3.

As a writer, I hate it when people just copy my work and pretend they wrote it. But it does happen constantly.

As a software developer and publisher, I hate it when people copy my product’s tag lines and positioning but it happens all the time.

Ethical? You be the judge. Legal? I’m not an attorney, I can’t say. But I will say this: It happens all the time.

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Key to the Pitch: Make Me Care

Advice, Business Stories,

Never underestimate the business value of the good story. Business planning is telling stories and making them happen. Startups make stories come true.

In this delightful TED talk storyteller (filmmaker) Andrew Stanton boils it down to this: Make me care.

http://video.ted.com/assets/player/swf/EmbedPlayer.swf

If you want to sell a business idea, tell it as a story. The best elevator speech tells the story of a need and filling that need. The best market analysis in business planning is stories of people and what they want and need, and people getting together to execute an idea.

Note: click here the source site for this TED talk.

Don’t Give Away Ownership As If it Were Just Credit. Please.

Family Business, Starting a Business, , , ,

Please, entrepreneurs, this is important. Please don’t give away ownership in your startup, ever, except to partners who offer permanent help and value to the business, and will be there forever. That’s team members working the business, investors, or strategic partners with long-term commitments you can’t live without. Separate ownership, which is critical, and should never be given away easily; from credit and kind words, which are easy to give away.  

I’ve seen this so many times. People give percentages away to their lawyers, their graphic artists, their friends, and their relatives, but for no good reason. Then what happens is if the business makes it a year or two into actual business, suddenly those once-naive founders realize they are doing business with partners, who own part of their company, who don’t work, don’t care, criticize, and drag the decision-making processes. Pay the fees. Don’t save starting costs by giving the business away. 

Giving a piece of your new business isn’t liking buying a round of drinks at a table, but sometimes people treat that as if it were. But the truth is that you only have 100 percentage points to give away. The best ownership structure is 100 percent you. If however you need resources, key people and investment, then you need those percentage points to trade them for absolutely critical long-term relationships, or money. Not to make your cousin happy. Not to save on attorney fees. 

I recently dealt with an entrepreneur who was grateful for a ton of help, including written content, received from a good friend. He was trying to figure out how much of the company to give that friend as a reward. But the friend wasn’t going to be involved in the future, had taken another job, and wasn’t even asking. 

Don’t give her a piece of your business, I said. Pay her fairly. And if you can’t afford to pay her now, write up a bonus or a percent of sales that you’ll give later if you make the sales. Everybody wins. And you own your whole company. You don’t give away a piece of it in gratitude for somebody who won’t be a permanent part of it. He took my advice and gave her money now and a promise of money later, but not ownership. Both sides of that were delighted with that arrangement. 

What brings this to mind is this question I received over the weekend in my ask-me form on my timberry.com website: 

I’m 19. I have been avidly working through ideas for an amazing product. I’ve gone through lots and I eventually stumbled upon one that my mom loves so much that she wants to be a part of my business. Great news, but my issue now is that I’m willing to list my mom as a founder and now she wants me to add my stepfather as a founder as well. I feel like people are fishing for credit and titles that they have not yet earned. I’m not willing to appease anyone for the sake of it. How can I build a successful business alongside my family? 

Kid, you’ve got this one right and your mom and stepdad have it wrong. Read the post here. Family or not, ownership in your business is about actual contributions to your business. You say you’re “willing to list” your mom as a founder. But this isn’t like the acknowledgements at the beginning of a book; this is ownership in the business. List, sure; stocks and shares, no. 

Titles and credits are nice but ownership should be reserved for people who are going to actively contribute either money or long-term help. List them as advisors and give them credit on your website but give them ownership in proportion to the work, contribution, or money. This is business.  

(Image: bigstockphoto.com)

7 Questions to Ask Before Doing Business With Your Spouse

Family Business, Starting a Business, ,

I often say “choose an investor like you would choose a spouse.” Sometimes I say “choose a partner like you would choose a spouse.” But what if you already have the spouse, and you’re looking to start a business together? What do you choose? 

Before you start, it’s a yes or no question, I think. Do we start a business together or not? 

I recently received an email from Dennis Seaman and Quincy Yu who are married to each other and, presumably, to their business, which they is SeaYu Enterprises, whose main product is Clean+Green Pet Stain and Odor Remover. They call that “copreneurs” and “marriedpreneurs.” They’ve been doing it for 10 years now, they said in their email. And they’re obviously happy with the results. 

They offered me this list of seven questions to ask before starting a business as a couple: 

#1 Do your skill sets compliment each other – or compete with each other?
#2 Do you have similar professional AND personal goals?
#3 Is your relationship equipped to handle the stress of running a business together?
#4 Do you know the “work” version of your spouse?
#5 Are you both equally passionate about the business?
#6 If planning to work from home, can you set aside a separate office space?
#7 Do you trust and respect each others’ skills?

Those are powerful questions. But from my point of view, having had 30+ years in business with my wife, and 10+ years watching two of my grown-up children doing business with their spouses, that the right (or wrong) answers may not be as obvious as you think. Take question #5 there, for example, or question #2: Do you think a yes answer is required? I don’t.  And with question #3, I’m afraid that until you’re right up to your neck in the business you have no idea what the stress level will be, or whether or not you can handle it. 

But I will say this: This is definitely a good list of questions to answer. And do it out loud, please, and then discuss it. It’s never going to be this simple after you start. 

Help Me Answer This Deep Question From a Young Entrepreneur

Q&A, Starting a Business

What would you say to this question? I think it’s too deep for me to answer by myself. Please join me in the comments, with your answer. 

Here’s the question: 

I have an idea that I am hopelessly passionate about, but I question the wisdom of trying to execute at this point in my life. I’m young and inexperienced. I’ve started companies in the past, but they were barely minnows. And my passion is to build something truly special, with longevity, that adds real value to life. In other words, it’s a whale of a project.

I’ve asked myself a thousand times, and I sincerely do believe I can do it. I’ll surround myself with people smarter, better, and greater than me who share my vision. Collectively, I truly believe we could do it; but I also know I will make innumerable mistakes a long the way; many of which I could potentially avoid with more experience. My rational brain tells me to continue to learn and make mistakes under the shelter and guidance of others. Learn to be a better leader by following first. But I’m consumed by my idea. I’ve tried boxing it up, putting it in a safe spot to be dusted off later – but I fail hopelessly, each and every day. I’m just not sure what to do.

So I guess where I could really use guidance is: is my uncertainty a sign that I’m not ready? Were you ever uncertain about your timing or level of experience?

And my answer is:

First: No uncertainty is not a sign that you’re not ready. Uncertainty is an indication of intelligence and understanding. I mistrust certainty in almost all areas of life. People who are sure of something probably don’t fully understand the something. 

Second: Yes, I’ve been almost always uncertain about timing and I still am. As for level of experience I am very confident in my areas of expertise but I also remain very respectful of what I don’t know. 

But please help. Add your answer here as a comment. You know as much about this as I do. 

 

Some Suggestions for Family Business

Family Business, Weblogs

I’ve done business with my wife, daughter, son-in-law, and various mixtures of those. Of course the classic advice on this is not to mix business with family.

But people do. I read somewhere that 62 percent of the gross national product of the Western world is produced by family businesses.

Furthermore, I don’t believe (much) in general rules or best practices.

But here are some suggestions that might help you manage the mix between family and business relationships.

  1. Beware of the crossover. The cause of most family business problems is the crossover between different relationships. You don’t mix boss and subordinate relationships with parent-child or siblings or husband-wife. People who are successful working with family separate the roles so you don’t get into family behavior when you’re talking about business. You have business discussions and personal life, and never the twain shall meet. That’s really hard to do, but it’s also vital.
  2. Use physical location to help. Make a rule not to talk about business at home and not to talk about home and kids and relationship problems at the place of business.
  3. Use physical presence to help. Don’t talk about business in front of the kids. Or the parents.
  4. Recognize communication triggers. Often what started as business discussion is suddenly husband-wife or sibling-sibling or parent-child, stop. Call time out. Have a signal. Adopt a safe word. We spend years in patterned habitual behavior based on the family relationship so stopping it for business is hard. We have to work on it.
  5. Don’t forget to acknowledge the advantages of family business. You are working with people you know and trust who care about the same things you do. You share the problems. You share the rewards.
  6. Don’t pretend it’s all arms length and objective. Family factors influence decisions. It’s naive and distracting to pretend they don’t. Try to be aware of how and when they do and manage the long-term objectives accordingly.
  7. Never stop learning.

My wife and I didn’t intend to build a family business. I was on my own consulting and building products and she was (still is) my advisor and confidante. We grew older and our children grew up. People who were once preteens spending Saturday mornings putting sticky labels on plastic software disks grew up and became interested in the business. We never pushed them to, but never tried to avoid it either.

We did employ a family business counselor for several years. Her name was Bonnie Brown Hartley and she was good for us. We met once a month for a session she ran. At one point that was me and my wife and a son, and later our son left but we had two daughters and their husbands involved. The family meetings were a useful format.

The best thing Bonnie did for us was insist on a written family business code of conduct. I won’t pretend we never broke it, but it was a good idea.

(image: bigstockphoto.com)

3 Essential Truths About Startups and Investment

Advice, Angel investment, Back to Fundamentals, Starting a Business, , , , ,

Today I’m answering, with this post, a lot of similar questions I get often in email, where somebody is asking me how to get connected to or hooked up with or recommended properly for angel investment. Here are some unpleasant and unpopular facts about startups and investment.

  1. Only friends and family believe in you and invest in you because you’re you. And that’s if your friends and family do believe in you; that’s not true for everybody. Outside investors, in sharp contrast to friends and family, either believe in your business prospects, your market, and your team, or they don’t invest. They’re doing it to make themselves money. (back story: I get a lot of emails from people asking how they can get investment for their business when they have pretty much nothing to offer investors. The answer is: You can’t.)  Or not at all.
  2. About that great idea you have that’s worth $5 billion for which you need $500 million to get started: unless you’re already a startup star, or an oil prince, or family wealth princess, just forget it. Mark Andreesen or Mark Cuban or Paul Allen could maybe get $500 million for a new idea. You can’t. (If it makes you feel better, neither can I). Give it up or scale it down to a $5 million idea that takes $5,000 to get started; or just forget it.
  3. All of you newbies – new to entrepreneurship, no successful startups, no traction — asking how you start your business with no money: Please, get real. Once in a blue moon a foundation or government agency will grant some money, and usually that’s just a low-interest loan, to some proposal that has social and economic value that fits government priorities. We see this in special development zones, some scientific or defense-related research areas, and occasionally with private money committed to social good. But it’s rare. If you aren’t one of those special cases, forget it. And if you are, do your homework, find out what really happens with grants and such.

If you’re still interested in a startup, stop looking for some pie-in-the-sky solution. Get a job in the business area that interests you, and learn the business. Partner up with people who’ve been there already. And do your homework, look up all those web pages full of good advice about startups, including this one, bplans.com, which is full of information about what you can and can’t do. If you’re in the U.S., connect with your local Small Business Development Center, or Women’s Business Center, or Small Business Administration (SBA) office. If not, find the equivalent in your country. Get some real info, and then do the work: do some research, develop a realistic plan, take real steps.

Starting a business isn’t a right. The government doesn’t owe you your startup. You have to make it happen.