Tag Archives: entrepreneurs

The Broken Spreadsheet That Birthed a Business Startup

Business Stories, Reflections, , , ,

I thoroughly enjoyed doing this Mixergy Interview, published this week, about how I bootstrapped Palo Alto Software from zero to about $10 million annual revenues:

Tim Berry on Mixergy
Tim Berry on Mixergy

It started one morning at 2 a.m., when I had to deliver a finished set of financials the next morning. It was 2 a.m. and I was tired and done with the financials but I had done something in either Lotus 1, 2, 3 or Excel because I use both. I don’t remember which one it was but I had done something to break the damn spreadsheet! If the financials are going to work, when you change the assumptions the balance still balances and the cash flow, and so on.

So it was 2 a.m. and I had broken the spreadsheet. I thought to myself, there is so much productizability in this. I have to be [building this out,] assumptions, inputs, outputs [and so on], so that this doesn’t happen again.

Mixergy is a collection of interviews with entrepreneurs. Andrew Warner, founder, does a great job interviewing, and collecting interviews. The goal is a collection of thoughts and stories about entrepreneurship. I’m proud to be included.

Andrew posts the complete transcript along with the interview, so it’s easier to browse. Here’s another snippet, about raising venture capital and buying them back:

But then, and this is what’s important for the story, you need compatibility with your investors. When the whole thing crashed in 2001, then we had completely different business models. Our investors needed us to have an exit, a liquidity event. Valuations were back down onto what they really were, you know, two and a half times revenues, for example, for a healthy software company.

But two and a half times revenues wasn’t enough money to make me and my wife and our family feel like we wanted to just sell the business. I had to be 10 or 20 times revenues. But, our VCs were trapped as minority investors. And they were trapped forever. I now have eight angel investments. I understand how bad it is to be trapped as a minority investor with no hope of a liquidity event. I don’t want investors, even as a minority, who aren’t happy with me or my company, so we negotiated. Their lead partner there told me later that not until the negotiations were done, “Tim, actually I can tell you now, you are our best investment for 1999.”

Andrew led me through a lot of stories: How I failed as a hippy, how we got started on the web, how we realized we needed downloadable software, how I changed my role seven years ago to open the field for a new management team, and others.  This led to a Business Startup.

Do You Want Your Daughter to be a Successful Entrepreneur?

Advice, Business Education, Entrepreneurship, , ,

I stumbled on this question on Quora: How should I raise a 12-year-old girl to be a successful entrepreneur? I have four grown-up daughters. Some of them are “successful entrepreneurs,” all of them have tried, some are still trying. So I care a lot about this subject. 

Quora 12-year-old entrepreneurship

There are good answers already posted. The answer I like best, happily, is the one with the most votes.  It’s also posted by a friend, David Rose, founder of gust.com and head of a New York angel investor group. His highlight is:

By FAR the best thing you can do is be a great role model! Show your sister that girls CAN be entrepreneurs! That being an entrepreneur is cool! That entrepreneurs live larger lives, have a greater impact on society and basically have more fun, than anyone else on the planet!  Tell her stories of Mary Kay Ash and Anita Roddick, of Esther Dyson and Heidi Roizen, of Martha Stewart and Oprah Winfrey…and of yourself!

Although I completely agree with that, I really want to add more. This seems important to me, from my experience:

  1. Do everything you can, as a parent, to promote and encourage academic education in whatever your daughter likes. For every successful entrepreneur who dropped out of college there are thousands more, maybe tens or hundreds of thousands, who didn’t drop out. Life and entrepreneurship are easier with a college degree. 
  2. Fight the stereotype: Don’t let your daughter swallow the stupid and obsolete idea that boys do math and science and technology and girls don’t. That unfortunately is a self-perpetuating myth. It’s dangerous.  
  3. Don’t, however — please — be that parent pushing the poor kid towards specific educational directions. Drop that agenda fast. The more you push for a specific path (business, entrepreneurship, high tech, for example) the less likely you are to really help your daughter. It’s her life, not yours. For the record, I know many more successful entrepreneurs with degrees in liberal arts than with degrees in business or entrepreneurship or computer science. 
  4. Give her as much technology as she wants. That means — within reason of course — the computer, the laptop, broadband, smart phone, etc. And of course you have to be careful, as a parent, because there are those well-known dangers. My daughters grew up with computers. I gave them domain names as birthday gifts when they were as young as 10 years old. All of them had laptops for school. One of them liked computer games, so I got her all the games she wanted.
  5. Don’t push your definition of success on her. Help her find her success. It’s her life, not yours. 

I have to add something related to point #5 here, and the qualifier “successful” entrepreneur. That’s a dangerous concept. What we want, as parents, is for them to end up happy, which usually means productive, economically self sufficient, and independent. Is it dangerous that we’re in the context of “successful” entrepreneur instead of entrepreneur? And is a successful entrepreneur happier than than an unsuccessful one, or a professional, or middle manager? Especially where your daughter is involved, always pause to question your assumptions. 

I think I’ll go add this to the question on Quora, but I wanted to put it here first. 

How Small Business, Sole Proprietors, and Entrepreneurs Are Apples and Oranges

Marketing, Politics Big Biz Small Biz, , ,
Fruit Basket 2
Fruit Basket 2 (Photo credit: AditChandra)

This post starts a new category for this blog, named — for lack of a better name — “Politics Big Biz Small Biz.” It’s based on the assumption that politicians and big businesses want votes and money from an extremely diverse collection of people they call small business. Who are in fact some small business owners, some small business managers, some small and single-person service businesses, some startups, some entrepreneurs, and some others, who have relatively little in common with each other.

To understand how this really works, start by exploring the definition of “small business.” Data collectors define that mostly by how many employees, but definitions are all over the map. The federal government’s Small Business Administration (SBA) includes businesses with as many as 1,500 employees and as much as $21.5 million annual sales, depending on type of business details. Other studies and government agencies cut off “small” at 5, 10, 100, 500 employees.

In practices, buying patterns, and decision making, not to mention motivation and definitions of success, how different is a business with 1,500 employees, or doing more than $20 million a year, from the graphic artist or consultant on her own, or the dry cleaner on the corner? That’s huge. These are not the same thing.

And entrepreneurs? Some people think everybody who owns a business is an entrepreneur. Some think that includes the massage therapist and freelance writer, the self employed; but a lot of them would never call themselves entrepreneurs. And thoughts, writing, ads, and products marketed for entrepreneurs won’t reach these people who don’t define themselves as entrepreneurs.

Amazing fact: More than 22 million businesses legally registered in one way or another in the U.S. have no employees. Some are just service people getting by, some are economic freedom fighters, and some are fake businesses that exist for tax purposes only. They defy classification.

True story: I ran into a business that classified the so-called small business market according to the decision making pattern. There were those in which the owner decided, those in which a functional expert decided, those in which a committee decided, and some others.

What do you think: Is it a small business if it has no employees? Is the owner of a 50-person small business an entrepreneur? Are entrepreneurs only the startups looking for funding? Is the family running the new dry cleaner business on the corner an entrepreneurial family?

Amazing fact: business owners’ political opinions are not predictable. Owning a business doesn’t make a person belong to any party or interest group.

Conclusion: People who own businesses, particularly people who start businesses, but also people who run their own one-person small business, are more likely to be go-it-on-their-own type people than joiners or followers. That’s by definition. So we defy classification systems.

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Big Mistake: Meaning Mismatch in Marketing

Business Mistakes, Marketing, , ,

Yesterday I discovered, to my surprise, that a good friend who does licensed massage therapy said she doesn’t think of herself as an entrepreneur.  In her mind, entrepreneurs want to get outside investment, hire employees, and grow their businesses fast. People like her think of themselves as self employed, sole proprietor maybe, small business owners probably. And those professionals, the doctors, lawyers, accountants and such, they don’t think of themselves as entrepreneurs either. I think of them all as entrepreneurs.  But what if they don’t?

Business mistake: What if you want to reach that larger group, and you address them as entrepreneurs in your marketing, but they don’t think of themselves that way? So most of the people you want to reach don’t ever realize you’re talking to them?

What about you? Official stats say there are about 27 million businesses in the United States and about 21 million of them have no employees. What’s an entrepreneur to you? There are only a handful, a few thousand, that meet that stiffer definition. What matters is whether the target potential customer self identifies into the group. If a business is aiming at one group and using a word that stands for the other, that’s a big mistake.

This isn’t just semantics. It’s not about language or definitions. It’s about the fundamentals of marketing.

In human communication, the listener assigns the meanings to the words. Not the speaker. You don’t get to tell the audience what your word means. They tell themselves.

That’s why so many marketing images show an arrow hitting a target. This kind of meaning mismatch is one really powerful way to miss.

(Image: bigstockphoto.com)

 

Business Owners: Take Care of Yourself First

Advice, Entrepreneurship, ,

We all know the routine. We hear it every time we fly. If the oxygen masks pop out, we’re supposed to put ours on first before we take care of the small children next to us.

The same idea is really important for entrepreneurs and business owners. Take care of yourself before you take care of your business. And take of your people too, before the business.

Yes, I know that’s tough. You’ve got the business weighing you down, there’s that magnetic pull you have to finish the post, finish the white paper, finish the programming, finish the collateral, finish that last email … so you skip the kids’ soccer game, or dinner, or that day off on the weekend.

It happens all too often. We end up overweight, not sleeping well, not getting enough exercise, stressed, and hard to live with. And it’s all for the business, which we say is for the people we care about.

Don’t do it. It’s tempting, of course, and hard to resist. But don’t do it.

(Image: sjlocke/istockphoto)

Are Entrepreneurs Made or Born That Way?

Business Stories, Entrepreneurship, ,

There’s been a fair amount of discussion since Vivek Wadhwa posted Can Entrepreneurs Be Made? on TechCrunch late last month. He quotes Kauffmann Center research indicating, he says, that entrepreneurs aren’t really born that way.

We found that the majority didn’t have entrepreneurial parents. They didn’t even have entrepreneurial aspirations while going to school. They simply got tired of working for others, had a great idea they wanted to commercialize, or woke up one day with an urgent desire to build wealth before they retired. So they took the big leap.

different strokes

I think the problem is that we try to generalize way too much. Everybody wants to find a pattern, but things are more random than that. Entrepreneurs aren’t a homogeneous manageable type or group. They are a bunch of very diverse individuals.

This is just anecdotal data, obviously, but it makes me think. My wife and I have five grown-up children, all raised in a household steeped in entrepreneurship, serial startups, and chronically broke. Of our older three, all in their middle thirties now, one is certain he never wants to start his own company, one is immersed in entrepreneurship and has been involved in virtually nothing but startups, and one is really hard to tell one way or the other. With the other two, still in their twenties, it’s too soon to tell.

I’m one of four siblings. None of the others are entrepreneurs, and I am. Our parents were not entrepreneurs.

Every case is different. Every startup is different. Business education helped me get going on my own, but not the next person. Growing up with it helped one of our children, but not the next one.

Find your own place.

I Don’t Have to Show You No Stinkin Labels

Social media, Weblogs, Writing, , , ,

Labels, and labels. Two days ago I complained here about self-proclaimed “experts” and “gurus.” And today I realize that I do the same thing myself, calling myself an entrepreneur. I ran into this interesting thought:

I must admit that when I hear the word (which inundates conversation and — more interestingly– the personal summaries of seemingly everyone over the age of twenty on my two favorite social networks), a little voice in my head channels Inigo Montoya in The Princess Bride, and I say to myself in a nerdy accent to the entrepreneur in cyberspace, “You keep using that word. I do not think it means what you think it means.”

Gulp. She — Colleen Dilenschneider, in The Mind-Numbing Evolution of the Term “Entrepreneur” — has a point. She goes on:

The title of entrepreneur– especially when said in description of oneself– is losing its meaning to me and I wonder how long it will be until the word has virtually no meaning at all.  Perhaps my scope is skewed, and this is an issue among all social network users, regardless of generation.  When I read entrepreneur in a person’s description, I think, “I need to learn more.”

Well said. And while Colleen links all the entrepreneurship to Gen Y traits …

by izzie whizzie on Flickr

With the rapid onset of social media, does the word entrepreneur mean less because we are all entrepreneurs? Is generation Y an entire generation of entrepreneurs? We certainly seem to be.

… I think it’s more than that. It’s most of our entire solopreneur-enamored, pushed entrepreneurs, baby boomer recession-survival Western world.

We love labels. Experts, gurus, entrepreneurs, nonconformists, bloggers, professionals, rock-star programmers, middle managers, and out-of-the-box thinkers all of us. We like working with labels and slogans because, as with the 30-second news byte, it makes life easier. We all need our labels. Sometimes it seems like the beginning of a board game, choosing your token to play monopoly.

And if everybody has the same label, the game doesn’t work.

(photo credit: izzie_whizzie on Flickr)