Category Archives: Starting a Business

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. 

 

Quick Funny Disruptive Game Changing Paradigm Shift Video

Bootstrapping, Starting a Business,

In my post here yesterday I questioned the value of the phrases “game changing” and “disruptive” for what every startup promises investors and few really offer. Right after posting I caught Sramana Mitra’s fun video cartoon here, a quick riff on the similar phrase “paradigm shift.”

Aside from the fun video, I’ve mentioned Sramana before on this blog and I’m happy to mention her again in this post because the world of startups and entrepreneurship needs to be more aware of her 1M/1M program to help people succeed with startups. Sramana’s program, unlike so much of the teaching available for startups, acknowledges the fact that the vast majority of startups make it on their own, bootstrapping, without outside investment. And she tries to deal in that real world, not in the theoretical or academic or high end world in which every startup requires funding by outside investors. The program is named for its goal of helping a million startups get to a million dollars in revenue each.

If you’re curious about that, here’s a link to the program website, and here’s a link to a 30-minute summary on YouTube.

Do You Have What Investors Want?

Angel investment, Starting a Business, Venture Capital, , , ,

What do investors want? I’ve read more than 100 business plans in the last two months. Entrepreneurs are overwhelmingly predictable on this point. Investors want disruptive. Investors want game changing. 

But not just saying it. Being able to believe it. Two of every three plans says it. Only a very few make it actually believable. 

And believable, in this context, is still a matter of huge uncertainty. Nothing in startups is fully believable. The closest you get is an interesting market story about solving a real problem and doing something important differently, and a team that seems to have experience and background that indicates it can execute the idea. 

The best thing I’ve seen in a while on what investors want — at the high end of venture capital — is this one on The Anatomy of a Successful Entrepreneur, that appeared on TechCrunch about a week ago. Post author Rip Empson digs into the recent Kaufmann data on venture capital, adds some analysis by Fred Wilson, Chris Dixon, and others, and comes out with the short list shown here. 

 

 

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. 

On Building a Business Because the World Needs It

Angel investment, Starting a Business, , , ,

I’ve posted about Arcimoto on Up and Running almost two years ago. It’s a local (Eugene OR) business based on building cool, fun, and economically accessible electric cars, like the one shown here.

Arcimoto2012.jpg

It was a startup then, one with a believable team and a vision to build on. Two years later, it’s still a startup, still got a strong team, and sticking to its vision. So time hasn’t been wasted. They’ve been engineering for fun and manufacturing at scale, and they’ve been talking it up too. Search YouTube for Nathon Fillion, the hollywood star, and Arcimoto, and you’ll see what I mean.

Meanwhile, founder Mark Frohnmayer explained the vision behind the startup, a new vision of clean and green transportation, at a recent TEDx conference in Portland. I’m embedding it here because I think he’s got some really important points that go beyond his specific electric car. He titled it “Dude — Where’s My Car.”

If you don’t see that video here, you can click here for the original on YouTube.

This is not an easy startup to build. Founder Mark Frohnmayer has been at it for several years now, has recruited and held onto a team of leaders experienced from the nearby recreational vehicle industry, has raised several million dollars, and has spent a million or more of his own, money he had from a successful exit of a computer games company. I’m still watching with interest, and hoping they make it.

No, by the way, I have no investment in Arcimoto, no financial relationship whatsoever. I just like the company, its founder, and its ideals. And I do want them to get to market. I can’t promise I’m going to spend $20K to own one of these next year, but I do like the idea.

(Image: a screen shot from a business plan … hoping Mark won’t mind that I posted it up here)

Baby Boomer Entrepreneurs: Trick or Trend

Baby Boomer, Current Affairs, Starting a Business, ,

 

Thanks to the Wall Street Journal’s 8 Monday Morning Must Reads I discovered USA Today’s Older entrepreneurs find new niche in startups. This doesn’t surprise me at all, but it was good to see it in print. The quick summary:

Over the past decade, the highest rate of entrepreneurial activity belongs to the 55 to 64 age group, according to a study by the Kauffman Foundation, a Kansas City, Mo.-based entrepreneurship institute. The 20 to 34 age bracket has the lowest rate. Kauffman’s latest study shows that about 23% of new entrepreneurs in 2010 were in the 55 to 64 age group, compared with 15% in 1996.

Much as I like these numbers, there’s a bit of a statistical ruse here. Basic demographics. there’s The trend may not be anything more than the influence of sheer numbers. Take a look at this chart:

US Birthrate

The line there is births per year, and the pop up in the line, the blue portion, is the baby boom years. The so-called baby boomers — me included — were born from 1946 to 1958. They are the blue portion of that birth rate line above. So in 1996 we were 50 to 38, and therefore not included in the 55-64 stats. In 2010, however, we were 64 to 52, right in the sweet spot of the statistics. So it might easily be that the pop in the stats isn’t a change in trends, but a reflection of higher numbers of people in the 55-64 age group.

On the other hand, I hope it’s not just statistical distortion. I’d like to think it’s a reflection of increasing longevity and a decline in the strength of the myth or retirement. I think retirement is a social tradition developed in the past for very old people; to a lot of the baby boomers, me included, it’s a nightmare. But careers change and life changes around the ages 55-65, as kids grow up and careers stagnate. And a 60-year-old competent person has another 20, 30 or more years of life expectancy. That’s a long time to sit in a rocking chair. For my part, I posted here just last week about me getting involved in new startups. And I’ve posted here before on how much I don’t want to retire, ever.

Furthermore, there’s a bit of a push and shove in these statistics. Try leaving a job and getting another when you’re 55 to 64. Good luck with that. So you build your own job. And more power to you.

 

(image: wikipedia)

Could This Be You? One Great YouTube Launches a Startup

Creativity, Marketing, Starting a Business, True Stories, ,

CNET’s Rafe Needleman posted about DollarShaveClub.com yesterday and I picked it up this morning. It seems that the key to a successful launch was one extremely-well-done one-minute video on YouTube, which I’ve embedded here:

I find this inspirational. It’s fascinating how this one big hit can be so effective. How much would a couple of million views cost in the open market? I haven’t investigated the back story, but whatever that is, this is still one great piece of marketing.

Notice that, although it may be the work of a startup, there is nothing amateurish about this video. Its production values are very high. It’s funny, it’s engaging, but it’s also very strongly focused on a value proposition. I’d love to know background on how it was produced, and how much it cost. (And I’ll add that in if I get it).

This is great work, and a good reminder of how many new ways there are to package an old product, start a new company, and disrupt a market.

True Story: Begin With a Job at a Startup, Then Start Your Own

Business Stories, Entrepreneurship, Starting a Business, ,

The title of this post is taken from Martin Zwilling’s Begin With a Job at a Startup, Then Start Your Own on the Gust blog. In that post, Martin starts with this:

For those of you who want to get in on the ground floor of a new venture, but haven’t yet worked up the nerve to start your own, begin with a job at a startup.

stream_istock_000000904065.jpg

I say that it’s not just the nerve to start your own; it’s also the resume, experience, and resources. And that you shouldn’t feel that every entrepreneur proves him or herself by jumping straight from childhood to business owner. Breathing first, and learning something, is a good idea.

When I was in business school 30-some years ago, Professor Steve Brandt paused on one point, in front of the class, and reflected. He was teaching developing a business plan and getting funded. He said:

Most of you are too young and not ready to jump from school into your own business. Don’t worry about it if that’s the case. If you’re serious about entrepreneurship, just choose the right stream to swim in. Get out of school and do something that relates to what you’d like to do eventually.

I repeated that advice often during my 11 years teaching entrepreneurship one quarter per year at the University of Oregon. Some of my students took it to heart. They didn’t jump straight from college to starting a business. Instead, they worked with startups in their field of interest and eventually started their own.

I’ve noticed since then that the world changes very fast, and the startup leap is happening much more often at a much younger age. But the fundamental value of that advice still applies.

Martin Zwilling goes on to list some concrete specific tips that might help. If you’re interested, that’s a good post to read.

For another taste of that post, let’s finish this post with this quote. I agree with this …

But a word to the wise, be picky about what startup you join. Ask around about the founders. Make sure you meet more than the boss and check the culture before you take the job. Reporting structures are fluid in startups, and unfortunately many startups are like dysfunctional families.

… except that I’d add: well, but not too picky.

(Image: istockphoto.com)

Is The Very Idea of Designing Tech Products for Women Insulting?

Current Affairs, Entrepreneurship, Starting a Business, Technology, , , ,

(note: I posted this on the Huffington Post first, just about 10 minutes ago)

Maybe it’s because I’m father to four daughters, maybe because of simple fair play, but if you read my stuff I’ve been a chronic complainer about the relatively low numbers of women in high tech and tech in general. And I don’t believe it’s because the women like it that way, either. So why then does Don’t Be Afraid To Go Pink: Designing Great Tech Products For Women on TechCrunch today make me nervous?

My answer starts with a true story: in the late 1990s, at Palo Alto Software, we had a team brainstorming session to deal with the problem of under representation of women in among our Business Plan Pro users. The team at the time was half women, and for the record, our company is 49% women owned.pink tech

But that brainstorming session turned up nothing but bad ideas. Business planning is a great example of something that has no gender specificity. Most of the suggestions made were unintentionally insulting to women, as if being female means you plan your numbers less, or are more intuitive or less rigorous, which is a crock. Pink packaging? We did take it to heart with our packaging, putting the image of a happy female user all over the back of the box. But that was it. Business planning has no gender component.

The TechCrunch post has five suggestions, starting with don’t be afraid to go pink. Say what? Here’s how post authors Sarah Paiji and Sanby Lee explain that point:

We don’t mean that your product literally has to be pink. However, you shouldn’t be afraid to make a product that is only for women, and to signal this through your aesthetic and branding. For our mobile shopping app, we chose a name and color scheme that was decidedly feminine. We had men complain that they didn’t feel comfortable using the app, or posting in a community dominated by women. But that’s the point — we didn’t want men as our initial audience.

That bothers me. I think we have to make some logical distinctions here.

First, some products have gender specificity. Clothes, sporting goods, personal hygiene for example: of course they’re different for men or women.

Second, some content has gender specificity. Obviously some television programming, movies, magazines and other media have gender behaviors built into them.

So if you put these two assumptions together, then there’s absolutely nothing troublesome to me about gender-specific products where there are gender differences, and gender specific marketing that takes advantage of those differences, whether for gender-specific product or not, to focus market dollars more effectively. Sure, they advertise beer on football games and tampons on soap operas. So what?

But I really don’t like trying to build gender specifics into products that don’t have them. Very few tech products are inherently gender specific. Maybe the authors’ shopping app is, but if so, it’s one of a very few. And for the most part, trying to design tech for women ends up, well meaning or not, assuming women are dumber than men. Which is a dumb assumption.

Which I think we see in that post. After making that first point, the authors follow with 2.) resist feature overload, 3.) find the key influencers, and 4.) enable discovery. How are those factors gender specific? I’m a man, and I don’t want feature overload, I get influenced and I influence, and discover is good for me. How are those points women centric?

Then, finally, fifth of five: have women on your team. Doh! Of course! The work force is 50-50-ish, then so too should be every team on every company that isn’t doing gender-specific product. And I don’t mean by law, or forced by anybody; but rather, just common sense and a natural process over time.

(Image: istockphoto.com)

 

The Joy of Startups, Revisited

Back to Fundamentals, Business Stories, Starting a Business,

Getting really into a new startup, when it goes well, is exciting like a clear mountain morning, like a warm spring rain, like falling in love.

Sprout_iStock_000000951888Smallest.jpg

Cheesy? Sure. But I’m doing it again, and loving it. I’m not just saying what people always say; I’ve been there, and I’m there again right now.

If you’re a regular here you may have noticed I dropped my normal posting rate from five per week to just one last week and this is only the third this week. One reader emailed to ask if I’m okay, which made my week, (and, by the way, if that isn’t a good reason for blogging, I don’t know what is.)

The long-term business love of my life, Palo Alto Software, is going just fine, thanks, and I’m still there a lot physically and there in spirit always. But some new startups are making me feel that spark again, the excitement of building something new.

Unfortunately, neither of them are ready for prime time yet. If you’re curious, you could go look at apps37.com but that’s just a bare-bones placeholder, and doesn’t say much.

And, because these have come up in twitter lately, I think I should clarify that neither of these startups is either LiftFive or Rebelmouse. Yes, the founders of those two, @meganberry and @teamreboot, respectively, are two of our five grown-up children. And I’m pleased that they occasionally share ideas with me. But those two startups are their things, not mine.

I love the smell of a fresh new startup in the morning.