Category Archives: Entrepreneurship

I Want to be An Entrepreneur. What Steps do I Take?

Advice, Business Education, Entrepreneurship,

What Steps to be a Tech Entrepreneur?

I’m 18 years old and want to be a successful tech entrepreneur. What steps should I take?

That one, specifically, popped up in my email today from Quora, the excellent questions-and-answers site that I frequent often. But that’s just today. I saw a very similar question from a different person yesterday, and another on Monday. So that question, in various versions, has become one of those questions that pop up everywhere.

Here is My Answer:

Get Your Degree

Steps to EntrepreneurshipThere is only one obvious answer that will be generally true for anybody your age that asks this question: focus on completing your education. Get yourself a college or university degree, the classic BA or BS.

Choose your course of study as if you knew you were going to die when you graduate. Whether it’s computer science, engineering, math, pure science, liberal arts, fine arts, or business, if it is what interests you and what you want to study, then that’s the right step to take. You’re young and the world is full of options. If you study what you want, you discover who you are. You are quite likely to change your mind once or twice after you start – most students do – but that’s also fine, it’s part of the normal course of education, you’re in a discovery phase.

Education is About Clear Thinking and Communication, Not Specific Knowledge

Your education isn’t about specific business knowledge. It’s about clear thinking and communication. It’s about skills and understanding that apply to whatever else you do for the rest of your life. It is not easily measured by direct correlations to what entrepreneurs need to know or do. Yes, it is true that there are many parts of entrepreneurship that can’t be taught in a classroom. And it’s true that you can pick those up elsewhere. But it is also true that what you do learn as you get that degree is extremely important for your long-term career, and happiness; and will be directly applicable to what you have to do to be successful as an entrepreneur.

Entrepreneurship, business, and tech startups require a lot of common sense, a lot of clear thinking, a lot of hard work, and usually a significant dose of experience too. Studying some business topics can accelerate learning. Cash flow, for example, is a body of knowledge worth learning in a classroom. But all of these can be learned outside of the classroom too.

If you like data to go along with this, check out the Kauffmann Index of Entrepreneurial Activity. What you’ll find is that success seems to correlate mostly with having education and experience both. Successful entrepreneurs tend, on average, to be in their 40s and holders of one and often more than one advanced degrees. But dig deeper into degrees and you’ll find very little correlation between what they actually studied and their success. Look around you and you’ll find that the liberal arts people are as likely to be successful as the tech and science people. What matters most is the ability to bear down and do the work, and clear thinking, and sticking to goals.

Don’t Measure Education in Earnings

Don’t get distracted by those studies that relate degrees or areas of study to future earning power.  There’s no direct connection between what you study and what you earn for your lifetime. What happens in real life is that getting a higher education degree only happens for people who can stick to a goal for several years, get work done when they have to, follow through on assignments in time and as needed, and accomplish something. Of course what happens is that people who can do that end up being more successful because of what they learned how to do and the simple fact that they stuck to it long enough to finish with a degree; but it isn’t they they know something special that made them worth more money. It is that they worked more, smarter, and better.

You Aren’t Jobs, Gates, or Zuckerberg

Those amazing billionaires who dropped out of Harvard and Reed College, Bill Gates, Mark Zuckerberg, and Steve Jobs, are about one in ten million. You aren’t them. In each case they were seriously engaged in getting an education when the big idea changed their lives, made them obsessive, and became the business history we now all know. Two facts are very important: 1.) there are ten million or so of the rest of us for every one of them; and 2.) they weren’t skipping steps or avoiding anything, they dove towards something. First they fell in love with the idea and the possibility of a specific business, then they dropped out. (Steve Jobs doesn’t quite fit that description, but then he didn’t quite drop out either; he hung around Reed College, auditing courses, and got his education before he started Apple. He just didn’t pay tuition so he didn’t get the formal certification of his education.)

Give the Big Idea a Chance to Reach You

I think there’s an interesting similarity between successful entrepreneurship and successful marriages. The people I know who end up as successful couples, married for decades, generally fell in love with each other first, then got married, and then continued learning and evolving over decades as they grew together and changed together. Similarly, with the great tech startup successes that I’m aware of, there was a spark as the key people fell in love with the idea, the mission, the way they were going to change the world. They had that burst of passion first, and then followed it for years with learning, evolution, and course corrections.

If your question were about how to develop and pursue this amazing thing you want to do that is going to change the world, I might give you a different answer. But face it, you’re like me, like most of us, you’re trying to figure out not how to get to some specific destination, but rather what direction to travel in, generally. You aren’t blessed with the actual spark of the entrepreneurial idea. Don’t worry, though, very few of us are.

So you get your education now because that gives you future options, skills, and experience sticking to something. You advance your possibilities and give your career a chance to develop.

For the record, my own career shows that I practiced exactly what I’m suggesting here. My advice is based on what I’ve seen work, in the real world, and is what I did myself.

Q&A: What Do I Include in a 1-Page Business Plan

Business Plan Contest, Venture Contests,

I received this question overnight from my ask-me-a-question page:

I am entering a competition that is asking for a one page business plan and I am having a hard time trying to determine what to put on it and what not to include. What information is absolutely required?

To answer this well I’d need to know the criteria set up for the competition. Some are more concrete than others. Some are more about the idea, but most emphasize investment potential. I think of what I want to see as I review submissions to an angel investment group. These are essential to me:bar-charts-37107002_600W

  1. The problem you solve. This is also called “why-to-buy.” It’s a way to set a target market and potential growth in a single thought. Show the underlying need. And it doesn’t have to be all problems and needs as if your business is going to save the world. Lots of things nobody really needs make good businesses: expensive coffee, gourmet foods, perfume, and so forth.
  2. Your solution. This is your business offering, what you sell. The more new and different, the better – as long as it’s credible. Validation – users, buyers, pre-sales on Kickstarter, for example – is great if you have it
  3. Why you. What’s so special about you that makes your solution interesting. That might be technology, positioning, secret sauce, management experience, traction.
  4. Management team experience. Experience with startups is especially important, but whatever lends credibility to your ability to deliver the solution.
  5. Growth goals. Show projected annual revenue for 3-5 years, if that’s an interesting number; or projected growth in users, downloads, subscribers, unique visits or something like that, if that’s an interesting number. If you can, show it as a small bar chart.

The one page business plan is metaphor for short and simple, a business summary. It’s named incorrectly but it can still be useful. Even a 60-second elevator speech can be useful. Summarizing is a good thing. But I’d rather see a 2-5 page summary than a single page; and I’d rather take it as a summary, not a plan.

I’m biased of course but LivePlan does a great one-page summary that it calls a pitch, which shows problem, solution, market, secret sauce, milestones, revenue, and team leaders.

This 2015 Trends Piece Could Set a Trend Itself

Books, Creativity

Delightful serendipity: this gorgeous work, The Future 100: Trends and Change to Watch in 2015, 110 beautiful pages on trends for the future, is also in itself a new way to do things. Global ad agency J Walter Thompson delivers it, for free, via Slideshare.com (the illustration here is just one of the 110 pages):

JWT trends slideshare

The content here is the best kind of food for thought. You’ll recognize most of the trends, but some will surprise you and some will make you disagree.

It’s a great use of the medium. It’s designed as a slide deck (PowerPoint or Keynote, presumably) but reads like a beautifully-laid-out horizontal book. I opted to give it my full screen 27” monitor, full screen, and the visual effect is stunning. However, it is designed to be read, not delivered as a presentation. And it works great in full screen, with enough text to make it stand alone, but full use of the images.

Now it’s making me think I want to do something like this on lean planning…

Q&A: Winning Business Plan for a Competition

Business Plan Contest, Venture Contests, , , ,

How do you do a winning business plan for a business plan competition? I’m glad you asked. I’m a frequent judge of these competitions so it’s in my interest to help you improve your chances by developing a better business plan, pitch presentation, summary, and elevator speech.win the competition

So that you know, I’m answering this question with reference to the mainstream high-profile business plan competitions I’ve judged many times, including the University of Texas’ Global Venture Labs Investment Competition, the Rice Business Plan Competition, and the University of Oregon’s New Venture Competition. I’ve done these three at least 10 times each. I’m assuming they are typical – but I could be wrong.

Here’s how the process works, with regard to what you deliver and how decisions are made:

  1. You submit either a business plan or executive summary to a steering committee that selects a few dozen entrants from hundreds of submissions. These committees vary. Many still use the full plan, but trends favor just the summary. This step takes place behind the scenes, before the visible portion of the competition begins. The entries selected are called semi-finalists. They are invited to go to the competition, at the site, which usually involves a Thursday, Friday, and Saturday, most often in April or May.
  2. Semi-finalists are divided into groups of four to six. Semi-final judges, mostly angel investors, venture capitalists, and executives from sponsor companies, read and evaluate the full business plans before the competition starts.
  3. An elevator speech round happens on the Thursday, in the evening. The teams do a 60-second elevator speech for prizes and awards. Winning that competition doesn’t formally help win the main prize, but informally, it affects the judges who see it. About half the judges will attend that first evening.
  4. The semi-final round takes place on Friday. Teams do pitch presentations and answer questions from the judges assigned to their group, who have read their business plans. Judges choose a finalist based not on the quality of business as a potential investment. The plan matters of course, and the pitch matters as well, but the choice is ultimately about the business. Judges try to make decisions based on investment criteria, including growth potential, defensibility, scalability, and experience of the management team.
  5. Finalists go through the same gauntlet on Saturday. Finals judges read the plans, listen to pitches, and ask questions. They choose the winner based on the same criteria they use to choose investments.

In all of these competitions, the judges are told to choose the best plan for outside investors, not the best-written or most attractively formatted business plan. So, a mediocre business plan for a great business will always beat a great business plan for a mediocre business. What you want from your business plan is to present your business well in a way that makes it easy for judges to see what you have. Your business plan alone isn’t enough to determine your fate in these competitions, but it does provide the first impression and the detailed background. In fact, all three of the competitions I mentioned above have special prizes for the best business plan, but those awards pale in comparison to the main prizes.

Therefore, the best way to help your chances with your business plan is to make sure the judges see the critical elements that make a business attractive to investors: potential growth and scalability, proprietary technology or some other kind of barriers to entry, and an experienced management team.

Here are some related tips that might also help:

  1. Make sure you cover the information investors want. Tell a convincing story about the problem you solve and the solution you offer, in a way that will interest the investors and let them believe your market story. Show whatever traction you have, and as much startup experience in the management team as you can. Show how your business will defend itself (proprietary technology, trade secrets, whatever secret sauce you have) from competitors entering the market. Show how you can scale up for high growth. Show that you understand how exits might work in 3-5 years.
  2. Keep it brief. Be concise. Don’t show off your knowledge, push your main points forward. Bullet points are appreciated.
  3. Show your numbers and your key assumptions. Numbers without assumptions and underlying story are useless. Forget present value and IRR games that depend on future assumptions. Show unit economics and build forecasts bottom up, from assumptions, not ever as some small percentage of a big market.
  4. Use illustrations that simplify and explain. Have the detailed numbers to back them up, of course, but use bar charts and line charts and pie charts to help readers get the idea quickly.
  5. Check your numbers against real world benchmarks. Investors will react negatively, not positively, to unrealistic profitability projections.
  6. Maintain alignment between the key points you emphasize in the business plan, the pitch presentation, and the elevator speech. Ideally your business plan is like the screenplay for the pitch presentation and the elevator speech.
  7. Don’t be afraid to revise numbers constantly, and don’t apologize if the numbers you show today are different from what you showed yesterday. Plans are supposed to evolve constantly.

(Image: shutterstock.com)

Nobody is Going to Pay You For Your Ideas

Business Ideas,

Yesterday somebody posted an interesting comment on the bottom of my post ‘How to Sell an Idea to a Big Company.’ Sadly, that post explains to people why they can’t sell their ideas to big companies. Most of the 70-some comments there are from people who ignore what the post says and share how great their ideas are. This one is slightly different.

entepreneur-in-residence.jpg

This person acknowledges the problem, as follows:

How do I sell not an idea but my involvement in creating ideas to a reputable company? Is there a way for me to work (preferably from home) and continually provide my endless supply of ideas to a company? How do I go about getting a job where I am the idea man; where I am a part of the think tank for a company; where I can show them what is wrong and why and how they can do it better and blow away the competition in the process? Is it even possible to have such a dream job or am I just fooling myself?

If you have to ask, then yes, you’re fooling yourself.

Because although it is true that some very special people get jobs like that — Alan Kay, for example, computer pioneer, extremely accomplished; or click the image here to see a piece from the New York Times about Entrepreneurs in Residence — it takes accomplishments to validate ideas. Those entrepreneurs in residence are there for ideas, but they didn’t get there by having ideas. They got there by executing on ideas.

I think the people who walk around thinking they have multiple great ideas, but have no accomplishment to prove it, don’t understand how ideas work. Untested ideas are like unwritten novels. All unwritten novels are brilliant — on the minds of would-be authors who didn’t write them. You and I can’t evaluate our own ideas. We’re too close  to them.  Real ideas are out there in the world, bouncing around, until somebody locks onto them, does something with them, executes, and makes them happen.  That gives them value.

The only thing you can do with a great idea is execute. And nobody in their right mind will pay you until you’ve done that, and more than once. You have valuable ideas: then prove it.

 

Rant: Entrepreneurship, Dropouts, and Bad PR

Business Ethics, Entrepreneurship, Rants

I was writing an email to these folks and I just stopped and deleted the draft. Why waste the time raising entrepreneurs I don’t even know.book cover

My complaint? I got to my office this morning after a few weeks elsewhere and found the results of a concentrated campaign for me to write about a certain entrepreneur and his startup. He’s all about how he’s so successful as a college dropout. I have one package containing a coffee mug with chocolate drops, and another with a copy of his book. Both contain a personalized letter from him, with what looks like a signature. Both contain business cards that are ‘sort of’ from him, but not exactly. And the only contact info I get is an impersonal email address info@[company omitted].

So, let’s get this straight: You want me to write about you, but you don’t even give me your email address? Is that just me, or is it insulting?

I connected this to multiple emails from somebody in his company, pitching me talking to him or interviewing him, also without including his email address. I’d say WTF, but I’m more mild mannered than that, so only WTH.

Besides, the college dropout theme ticks me off. The illustration here is taken from the cover of his self-published book. And the email campaign spins off the college dropout thing. I think that’s building your image around what’s essentially bad advice.

One thing is all the reasons like you or the next person or anybody else had to drop out of college — too bad, but common enough, and nothing for me to judge — but quite another is purposely building your entrepreneurship pitch around you having dropped out of college. Yeah, sure, Bill Gates, Steve Jobs, and Mark Zuckerberg, I know. But none of them ever made that his secret sauce; the college dropout thing just happened. Bill Gates regrets dropping out of college. Steve Jobs hung around Reed College for the education, even after he dropped out. And Zuckerberg? OK he had a tiger by the tail, who can blame him?  But does he go around bragging about it?

Sadly, formal education becomes a luxury for some. I wish it were available for all. But I’m sure anybody who can get an education is better off with it than without it. And that goes for entrepreneurs too. No, you don’t learn to be an entrepreneur in courses. But what you do learn doesn’t hurt. And there’s a whole life outside of business.

3 Things Never to Tell an Entrepreneur About her/his Spouse

Advice, Business Mistakes, Entrepreneurship, Rants, , ,

I just read 7 Things Never to Tell Your Spouse About Business Finances, posted by Barry Molz on Amex OPEN forum. I like Barry and I like his work.  I’ve been on his podcast before and it was great. But his tone of voice in this post makes me uncomfortable. Dont tell your spouse

If you’re curious, compare Barry’s tone in that post to mine in some of my (somewhat confessional) posts on me and my wife and entrepreneurship: My biggest startup boost, for example; or this true story on relationships vs. new business. And yes, my wife and I have been married 44 years, in a relationship that has survived years of scraping to support a startup, and sending five kids through college; so maybe I maybe I know something about this.

It’s not that Barry doesn’t offer some good advice within his post. He does. For example, if you’re dealing with cash flow problems, Barry advises:

Don’t give your spouse a daily cash report, since it’s always changing. Instead say, “Money will be tight for the rest of the year.” You will be right most of the time.

But there is no excuse for the multiple references to the spouse as “she” in that post. I know Barry and he knows better. This is nasty stereotyping. The whole “don’t worry your pretty head” motif is 1.) offensive and 2.) obsolete. Ironically, all of Barry’s advice here has nothing to do with gender so there is no reason whatsoever to make the spouse female. Making the advice gender specific dilutes it.

And secondly, regardless of gender, keeping a spouse in the dark about serious business issues is a really bad idea. Specifically, Barry’s suggestion about what to tell a spouse when a major investor pulls out …

Don’t say anything, and work privately to learn to project your cash flow better so you can survive the bumps in the road.

… is really bad advice. What a terrible thing to suggest. First of all, that idea makes for an incredibly lonely entrepreneur. Nobody normal can help fretting over that kind of situation. Not to share it with the most important person in your life, who is by definition a person who is going to share the consequences if you go under is horrendously bad advice.

And here’s another piece of really bad (well, maybe just insulting) advice on what to say when you have a buyer for the company:

If you do tell her about any pending deals, make sure she understands that nothing is set in stone until the money is in the bank. Also, don’t give her the dollar details; when the deal closes and the money is in the bank you can say: “Honey, what can we do with an extra $100 million?

The first part of that advice is not bad, but condescending, and unfortunately also gender specific. The second part is insulting.

My apologies to Barry for a bit of a rant, but I’m the father of four daughters and this stuff really gets my goat.

I’ve discussed this topic in other posts and in my opinion it’s best to be open and honest with your partner. In fact, being candid has immense benefits. Here’s an extract from one of my previous posts that illustrates how essential my partner has been in helping me to succeed:

[This was the] biggest boost to starting a business: My wife said “go for it; you can do it.” And she meant it. At several key points along the way, she made it clear that we would take the risk together. There was never the threat of “I told you so, why did you leave a good job, you idiot!” What she said was “if you fail, we’ll fail together, and then we’ll figure it out. We’ll be okay.”

10 Mistakes Big Businesses Make with Small Business Owners

Business Mistakes, Management, , ,

crowd-question-mark-shutterstock_191948960

For several decades now I’ve been back and forth between working on and building my own business, helping others build theirs, helping people manage small business, and, occasionally, helping larger businesses understand and presumably sell to smaller businesses.

So I watch and listen. And I see how big businesses try to reach the solopreneur, home office, and small businesses. And the mistakes they make. So here’s my list of 10 mistakes big businesses make with small business.

  1. We’re not a market segment. Sorry, that would be nice, but no. Go back to your fundamentals and consider what makes a market segment useful for your marketing. Some factors in common, right? Same gender, same economic level, same town, same activities, same something. And what business owners have in common is only that we own a business; which probably means we’re more likely to be different than the same. Treating us as a group is like trying to organize anarchists. We’re solopreneurs, entrepreneurs, accidental or pushed entrepreneurs, and millions of us don’t even think of themselves as entrepreneurs; they’re just self employed.
  2. We’re short on time and patience. We have a business to run. We don’t have time to research and study, much less to listen to you. Get to the point fast.
  3. We care about quick and easy. Convenience really matters. See point #2.
  4. We’re unpredictable about reading, media, and political preferences. Somebody told me once, in pontificating mode, that “to reach small business you have to advertise in the Wall Street Journal.” That’s not what I see. I think only a few of us read about business. Our politics is as diverse (and polarized) as the rest of the country.
  5. We hate red tape except when we love it. Give us a chance and we’ll complain like hell about government red tape and restrictions. There are large lobbying groups that supposedly represent us that constantly whine about red tape and regulations (I think they actually represent various political interests mostly, and use small business as a platform). But give us a chance to jump onto red tape to prevent competition, and we will. And give us easy ways to deal with red tape (like payroll services, for example) and we’ll love you.
  6. We don’t sweat tax rates, but we really care what’s deductible. The whole tax rate thing is politics, lobbyists, and whining. Tax rates affect profits only, and profits are what’s left over after the deductions. So well love deductible expenses. If you want to unite us, put in more red tape on deductions, like they did with meal expenses a few years ago. Or crack down on travel expenses and conferences and cars. We’ll hate you.
  7. We’re unpredictable about technology. Some of us love computers, smart phones, tablets, and office equipment. Some of us haven’t discovered social media and barely email. We’re about as diverse on that point as any random group of adults.
  8. We don’t divide by generations. You can’t effectively divide us into millennials vs. generation x vs. baby boomers. I’m a baby boomer and I know some millennials who think more like I do about business than some baby boomers.
  9. We like variable costs way better than fixed. Charge us more later after we’ve made the sale and have the money and we’ll pay it. Charge us fixed costs up front, whether we sell or not, and we’ll hate it.
  10. We’re online. Point #7 notwithstanding, business owners want more revenue and that’s mostly online. Some of us love it, some of us hate it, but business owners who aren’t online are endangered species.

Do you want to go to the research and check out my data, to see if it’s valid. Don’t bother. I’m a business owner. I don’t need to show you no stink’n data.

Strategist? No, Please; not Me

Business Mistakes, Business Strategy, Social media

I don’t want to be a strategist. Yeah, like you, I like to be a thinker. I like analysis. And strategy sounds cool. But the term strategist is too much pomp, arrogance, a relative of using utilize instead of use, or at that point of time instead of then. 

Social Media Strategy, business social media

What reminded me was The Difference Between a Social Media Strategist and a Person Who is Just Good on Social, over on on Business 2 Community blog. I like the post and it’s core content, but I hate the way they label strategist as good and just good on social media as bad. They’ve got their labels reversed.  They say: 

A social media person will get your ball rolling, a strategist figures out how that ball plays into every aspect of your business and gives you tools and training to deliver. They lay the groundwork to be ready to respond, and deliver. A social strategist doesn’t just focus on marketing, they focus on the big picture and help you put actionable items into place to support your long term goals.

I disagree. They’re using the words wrong. Here’s what I tweeted after I read that post. 

//platform.twitter.com/widgets.js

What’s up with that? What’s my problem? I don’t like the way people push up the vocabulary that makes  business seem more remote, higher up the ivory tower. 

One of the nicest perks of having a fancy MBA degree is being able to call out the business speak for what it is. And my advice is beware of people calling themselves strategists. Look for people promising to get things  done, not to analyze and define. 

And I suppose I have to explain that the phrase “just good on social media” might be the underlying problem. What does that mean to you? To me “good on social media” in business context means understanding that business social media needs business purpose, target market, and curation that serves the business purpose by offering what the target market wants. To me, “getting the ball rolling” doesn’t mean social media clutter. It means building a business presence. It’s extending the strategy that should be obvious. 

I’m Too Busy To Read That Book on Busyness

Books, Personal Productivity, , ,

This interesting book review came out this morning on slate.com:

Slate.com book review Overwhelmed Brigid Schulte

In her new book, Overwhelmed: Work, Love, and Play When No One Has the Time, Washington Post reporter Brigid Schulte calls this cultural epidemic the “overwhelm,” and it will be immediately recognizable to most working adults. “Always behind and always late, with one more thing and one more thing and one more thing to do before rushing out the door.”

I haven’t read the book and I probably won’t. But I certainly recognize the condition. 

I also like the title on the Slate piece, which you can see in the illustration, and you probably can’t see the subtitle there, which is:

Also, by talking about it so much, you’re wasting time.

Exploring the book, post author Hanna Rosin discovers:

busyness of a certain kind—meaning not the work-three-menial-jobs-and-put-your-kids-in-precarious-day-care-by-necessity kind—became a mark of social status, that somewhere in the drudgery of checklists and the crumpled heaps one could detect a hint of glamour. 

And I liked this thought too:

The answer to feeling oppressively busy, he says, is to stop telling yourself that you’re oppressively busy, because the truth is that we are all much less busy than we think we are. And our consistent insistence that we are busy has created a host of personal and social ills which Schulte reports on in great detail in her book—unnecessary stress, exhaustion, bad decision-making, and, on a bigger level, a conviction that the ideal worker is one who is available at all times because he or she is grateful to be “busy,” and that we should all aspire to the insane schedules of a Silicon Valley entrepreneur.

Last Sunday was a particularly gorgeous Spring day like we don’t often get this time of year in rainy Western Oregon. About mid morning I sat down with a really good cup of coffee and a really good computer looking forward to writing, editing some video, revising a website, and at some point taking a good walk through the university campus. I paused, thought about how I had multiple interesting rewarding things to do, but trouble choosing.

And it occurred to me, at that moment, that having too much to do is a blessing, not a curse.