Winning Advice for Aspiring Entrepreneurs – Part 2

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As an evangelist of entrepreneurship and entrepreneurship education, I speak often to groups of students and entrepreneurs.  The last slide in my presentation is always “Advice for Aspiring Entrepreneurs.”  In my Winning Advice for Aspiring Entrepreneurs – Part 1 Blog Post, I discussed the first 5 of 9 pieces of advice I give to audiences whom I address. They are:

Integrity

Do It Now

Great People

Focus on Your Customer

Be Flexible

Here are the final 4 bullets:

Build a Culture EarlyI believe that the Right Culture is one of the 5 keys to building a Hypergrowth company.  And it’s never too early to build the right culture.  The minute you hire employee #1, you have doubled your company headcount.  Your startup is a reflection of you, your values, and your vision.  In order to get your team focused on the mission and how to execute, you need to make sure they all subscribe to YOUR values and vision, i.e. your culture.  Write your mission, vision, and values down, and communicate these constantly, in company meetings, emails, memos, etc.  Give frequent recognition and praise to those who embody aspects of your culture.  If you can have your teammates all living the same culture, you will have a huge competitive advantage over other companies in your space.

Be Persistent – Even the “best” startups fail.  And I bet most fail because the Founder gave up too soon.  It may take you 5 years or more to get to breakeven, so go into your venture knowing that succes will not come easily.  It takes energy, time, effort, sweat, and a little luck.  But if you hang in there and persist, you will get some breaks along the way and you will start to grow.  My company, CyberRep, took 4 years to hit $500k in revenue.  It was a long slog to get to that number.  Countless all-nighters, 85-hour workweeks, and sacrifice.  But we persisted, and by being in business and hanging in there, we started to get some breaks and we leveraged those breaks into little wins.  Then the little wins became bigger and bigger wins.  If we had given up early, we’d have never grown our company to $80 million.

Overcapitalize – When raising money, it’s very important to raise a little more than you need. I have seen so many entrepreneurs spend all their time in capital raise mode, when they should be spending time with their customers and building their team.  Raising money is a big distraction, so you need to make sure you have enough cash to get you to your destination instead of filling up many times along the way.  It’s OK to give up more equity because your payback will be in terms of time saved (and invested with your customers and team) as well as the fact that you’ll reach your destination sooner. This is one of my points in a prior Blog Post about Raising Money.

Have FUN!This is the most important piece of advice.  Life is short, and it flies by quickly….so if you’re not doing something you love, you are basically wasting your time. You have the power to change your situation, and the sooner, the better!  If you’re going to do anything, including starting a business, make sure you enjoy it. Sure, there will be many bad days filled with stress and disappointments, but success is all about doing your best and enjoying the ride.

Thanks very much for reading.  What do you think?  I’d love your feedback and thoughts, so please Comment below…and please sign up for my Blog too!  (See the Signup box on the sidebar of my Home Page)

Featured image courtesy of Robert Scoble licensed via creative commons.

Winning Advice for Aspiring Entrepreneurs – Part 1

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I have had the good fortune of being invited frequently to speak to groups of students (Undergrads and MBAs), and at various trade and industry forums throughout the USA, and even throughout China and in Dubai.  I always end my talks with a slide entitled Advice for Aspiring Entrepreneurs.

It’s my small way of evangelizing entrepreneurship and giving a nudge to those who are trying to muster the courage to start their own businesses.  The slide contains 9 bullets of advice.  Here are the first 5:

Integrity – What do you have if you don’t have integrity?  Say what you do and do what you say.  Do the right thing.  Integrity is the basis of trust which is the basis of all relationships, business and otherwise.  It can’t be faked. And, at the end of the day, you want to be able to sleep soundly at night.  Everyone wants to work with high integrity people, so always operate with the highest degree of integrity.

Do It Now – So many aspiring entrepreneurs are waiting for the exact “right moment” to start their business.  Well, I’ve got news for you.  The “right moment” is NOW.  Why wait? When you think about it, the worst thing that can happen is you fail, and you go back and get a job.  But the learnings you will have amassed are priceless.  With the economy and markets flat these days, a resourceful entrepreneur with a great idea and execution capability can be very successful.  Competitors and established players are in disarray and “playing defense.”  They are cutting costs, and trying to figure out their next pivot while you can start with a blank slate and make a market.  Go for it!

Great People – You can’t win without having a great team around you.  That goes for business, as well as sports, war, etc.  Surround yourself with the very best talent you can recruit for your crusade.  Great people are worth multiples of what you pay them, so take your time and find excellent associates who know how to deliver and who share your passion and values.

Focus on Your Customer – Too many entrepreneurs get enamored with their product or invention, or processes and trivia which have little impact on their startup.  Not to pick on them, but I see this with a lot of engineers and techie entrepreneurs. You may have the best product, the coolest logo, and the most high powered investors and advisors, BUT without a customer, you do not have a business.  The most important thing entrepreneurs need to focus on is their customers, who they are, what they want or need, and how you can help them.  Thrill them and you will be successful.  This needs to be your #1 focus at the beginning, and throughout the life of your company.

Be Flexible – Business plans are awesome.  I have seen many dozens of good ones.  I am a big proponent of planning, because the very act of planning helps you and your team think through challenges and scenarios, etc. and you learn tons through the process. But one thing is certain:  nothing ever turns out as planned.  Because of this, an entrepreneur needs to be flexible.  This could mean changing your solution, modifying your product, selling into a different market segment, etc.  The alternative, being inflexible, could be deadly to a startup.

Thanks very much for reading.  What do you think?  I’d love your feedback and thoughts, so please Comment below…and please sign up for my Blog too!  (See the Signup box on the sidebar of my Home Page)

Featured image courtesy of dierken licensed via creative commons.

3 Types of Startup Founders – a Cooking Metaphor

What do chefs and entrepreneurs have in common?  Both try to use great ingredients, and apply their energy and experience to create masterpieces.

I love to cook, and I love to watch cooking shows.  Maybe it’s because I worked in my Dad’s restaurants as a young kid.  Anyway, I have found that there are 3 basic types of chefs:  1.  Scientist, 2. Magician, and 3. Artist.

To make a meal, the Scientist is the left-brained chef who meticulously measures and weighs ingredients, and follows religiously a 50-step recipe.  The Magician has no recipe and, in fact, has no preconceived idea what kind of meal she’s going to cook. Instead, she goes to the market and sees what’s fresh and in season, then she goes back into the kitchen and conjures up a creation on the spot.  The Artist is a combination of the first two. He has a general sense of what he wants to make, and how he wants to make it, and works within these guidelines to create his meal.  He dosen’t work off an exact recipe, but instead relies on instinct and creativity to work within his themes.

Having observed, invested in, and worked with dozens of startups over the years, I theorize that Startup Founders also fall into 3 categories, each one similar to those in the cooking metaphor above.

For example, the Startup Scientist may have a super detailed business plan and 30 pages of financial projections including a dozen pages of assumptions (ok maybe I’m exaggerating, but you get the drift).  Some years back, a good friend of mine sold his company for a tidy sum and used the 12 month noncompete period to develop a detailed business plan for a consumer-oriented startup.  He raised $10 million in venture capital. His business plan was amazing, and every possible contingency and possibility was covered, this even before his company earned Dollar One.  What happened?  Within 2 years, he burned through all of his cash and folded the venture.  Why?  I think the Scientist and his team were enamored by his plan, they hired too many executives too soon, and failed to be flexible and responsive to clients needs.  I really think his “awesome” business plan worked against him, and he stuck with it even though he should have pivoted and iterated. The bottom line is that startups are not a “science,” and this approach works better for large companies than startups.

The Startup Magician has NO PLAN.  He has a business idea, and gets to work, whether it’s developing a killer app, or acquiring customers and adopters.  He is open to change and creativity, and pivots and pivots until he finds something that works.  This kind of startup has no real business model per se.  Can this kind of company succeed? Remember Google? They had no business model until a year or so before they went public.  What was Facebook’s business model 2 years ago?  Does Twitter have a business model today?  Most would say it is undefined, but it has to be considered a very successful startup.  These are exceptions.  My personal feeling is that it’s very difficult to build a hypergrowth enterprise in this manner.  Some Startup Magicians create successful businesses, some create nice lifestyle businesses, but most either stagnate, or fail, usually because of a lack of direction.

What about the Startup Artist?  This entrepreneur has rough guidelines for what she wants to achieve in her business.  She knows her product or service, her company culture, the kinds of people she wants to hire, and the markets in which she will compete.  She has a general mission and vision for the startup, and a set of core values which serve as guiding principles.  Maybe she doesn’t have an awesome business plan, or a 10-scenario DCF analysis, but those things are not only NOT NEEDED in a startup, they will in fact inhibit growth and innovation. Ideally, she and her team work off a one-page plan with a couple of key areas of focus, and then they concentrate on EXECUTION.  I believe this type of startup has the best chance of winning because it allows for flexibility and adaptation to changing market and business conditions.  The company also has a general sense of its direction, culture, and style, which will keep it from meandering aimlessly.

The lesson here, I think, is that it’s best for a startup NOT to be to be too exact, nor too free form.  Planning is great, but the plan itself should not be Gospel. The benefit of preparing a business plan is in the planning process itself, where you and your team think carefully about your capabilities and differentiators, your customers, your competitors, financial assumptions, and markets.  But, it’s imperative to keep in mind that the one true thing about any startup’s business plan is that things will NEVER turn out as planned.

To build a hypergrowth company, you must be ready to pivot, to develop new solutions, to move into markets you didn’t originally foresee, and to take on other opportunities without being beholden to some preset plan which was made in theory to begin with.

Thanks for reading, and please leave a Comment below.  What style of Startup Founder do you think has the best chance of succeeding?  Am I being too critical of the Scientist?

And please sign up for my Blog too!  (See the Signup box on the sidebar of my Home Page)

Note:  This Post is dedicated to my good friend Derek Coburn (@cadredc), Founder of CADRE, the UN-networking organization of remarkable advocates.  Thanks D, for suggesting I write a Post about this topic!

FounderCorps – Entrepreneurs helping Entrepreneurs Win!

A few months ago, I joined a group of two dozen or so like-minded tech entrepreneurs and company Founders at the home of Jonathan Aberman of Amplifier Venture Partners to create a new and UNIQUE not-for-profit organization called FounderCorps.

Managed by experienced technology entrepreneurs for the benefit of entrepreneurs, FounderCorps has already assisted a number of community groups and Universities in business formation and mentorship activities, including George Mason University, George Washington University, University of Maryland, Startup XLR8R and others.

There are so many great organizations and resources in our market, so why start FounderCorps?  Do we really need another organization in town?  The answer is YES! We all felt that there exists a tremendous need to promote greater coordination between experienced entrepreneurs and new business creation. There is so much activity in our region, and we wanted to create a group dedicated to providing the experienced entrepreneurs’ perspective to connect the dots between entrepreneurs and technology company creation. The underlying feeling of all of our members is that there is a uniquely successful version of entrepreneurship here in the DC region, and we want to promote and provide resources to this community for sustained growth.

Right now, our membership comprises over 57 experienced technology entrepreneurs who have started, managed or exited successful technology businesses. FounderCorps promotes technology entrepreneurial development by actively partnering with existing organizations to create a supportive infrastructure for technology entrepreneurship. Our core mission is to promote a broader and deeper technology entrepreneurship community in the Greater Washington Region. FounderCorps creates and delivers mentorship and support programs to emerging entrepreneurs who are creating businesses.

Today, FounderCorps announced the establishment of the FounderCorps Fellows Program. The new grant program supports our core mission of promoting technology entrepreneurship in the Greater Washington Region and selects individual entrepreneurs nominated by our members for long-term mentorship and guidance. The initial activity of the FounderCorps Fellows Program will be to provide prizes and assistance to winners of business plan and creation competitions organized by FounderCorps’ partner organizations.  Click here for the link to the press release.

Check us out, and if you are interested in learning more, please visit our website.

Thanks very much for reading.  I’d love your feedback and thoughts, so please Comment below…and please sign up for my Blog too!  (See the Signup box on the sidebar of my Home Page)

Scaling a Hypergrowth Enterprise – Part 3 (Scalable Customers)

This is the third in a series of Posts on scaling a hypergrowth enterprise.  I was the co-founder and CEO of CyberRep, a CRM and call center company which grew revenues nearly 160x (16,000%) to over $80 million over a 9 year period.  In Part 1 of this series, I talked about People as the first of 5 key elements for scaling a hypergrowth company, the other four being Culture, Scalable Customers, Process, and Capital.  I examined Culture in Part 2 of this series, and today we will discuss the 3rd element, Scalable Customers.

SCALABE CUSTOMERS

All customers are NOT equal.  Some are much better fits for your company than others, in terms of how they treat you, their level of dependency on your services, and the degree of difficulty in servicing them. You want to serve customers who are growing fast and who will have more and more needs as they themselves grow.  A “scalable customer” is one which grows and takes you along for the ride.

Partner Mentality – The best kinds of customers take a partnership approach to your relationship (as opposed to a vendor-vendee mentality).  They rely on you for true “value add” solutions that go beyond just providing the bare minimum of what they need.  They rely on you and have a high degree of dependency.  These kinds of customers will continue expanding their scope of business with you, as they grow.  Note:  An added benefit of a customer with a partner mentality is that when things get rocky (and they inevitably will from time to time), they will be more apt to work through the issues with you, since you are a valued “partner” and not just another vendor.

Customers who grow fast – Try and find customers who are in hypergrowth mode themselves.  Whether they are in hot market segments or expanding via acquisition, these customers need you the most because they have challenges supporting their growth.  For example, my company supported Nextel and Microsoft (MSN) in the early 2000s when both companies’ user bases were exploding.  The more customers they added, the more customer service they needed, and the better we performed, the more business they gave us. They expanded astronomically with us.

Know when to say “No” to revenue – It hurts to turn away revenue, BUT it’s required if you want to build a hypergrowth company.  Saying “no” is really tough.  It is tempting to want to do any kind of work and take on more than you can handle, or to take on a client that is not “scalable,” but you have to stay disciplined in your business acceptance.  By pursuing the revenue YOU want, and focusing only on clients who will grow with your company, you can marshal your scarce delivery and other resources on becoming an expert at your craft and improving your service offerings with these scalable customers.

Thanks very much for reading.  I’d love your feedback and thoughts, so please Comment below…and please sign up for my Blog too!  (See the Signup box on the sidebar of my Home Page)

Scaling a Hypergrowth Enterprise – Part 2 (Culture)

This Post is the second of a series of posts on the topic of scaling a hypergrowth enterprise. My former company, CyberRep, grew from $550,000 to over $80 million in annual revenue over a 9 year span.  In Part 1 of this series, I talked about People as the first of 5 key elements for scaling a hypergrowth company, the other four being Culture, Scalable Customers, Process, and Capital.  Today, let’s examine Culture.

CULTURE

Culture is the company’s DNA.  It’s the genetic code which governs how the business is built, how customers are acquired and services, how employees are managed and developed, what core values matter, etc.  We sought to build a culture of hypergrowth, opportunism, speed, and flexibility. This was integrated into our “Top Ten” corporate core value set and our “Four Pillars of Success” which I will discuss in future posts.

When should a Culture be established? – Whether you’re starting a new business, a division, group, or team, it’s critical that Culture be established at the very beginning. Why? Because, it’s always easier for new hires to fit into an existing culture, than to change a group’s culture once they are operating.  People hate or fear change.  It’s for this reason that so many M&A deals fail.  Buyers are unable to impose their new culture on the legacy team, so integration is never fully realized and dysfunction sets in, but that’s a topic for another day.

Hypergrowth – It may seem tautological that scaling a hypergrowth enterprise requires a culture of hypergrowth.  Well, that’s right.  Our culture was focused on our “Four Pillars of Success”:  Client Satisfaction, Profitability, Revenue Growth, and Associate Satisfaction. These pillars were interdependent, and our leadership team evangelized the focus on these objectives, including REVENUE GROWTH, on a 24/7 basis.  Our objective was to grow via new customer acquisition, but more importantly, via  our existing client base by expanding current offerings, cross-selling new services, and thrilling the heck out of our them.  Our sales team, client service team, and operations teams formally reported in on their progress on a weekly basis.  We held everyone accountable. By sending a clear, consistent and constant message of hypergrowth, the focus on revenue became a daily responsibility of EVERY associate, and it was was incorporated into our company’s DNA.

Opportunism – In order for a company to get into hypergrowth mode, it MUST be able to identify or create new opportunities. Opportunism is a highly entrepreneurial trait.  A company needs to nurture and support creativity and risk taking in order to establish an opportunistic culture.  While it is very important to focus on key objectives, you have to also keep your eyes open for those windows of opportunity that may open.  This could be something a client needs which you do not currently offer, or perhaps a great acquisition, or even a new line of business.  Keeping a pulse on client requirements, and the market as a whole is crucial.  But the key thing here for hypergrowth enterprises is to keep fostering that culture of opportunism, creativity and risk taking, and letting your smart people come up with great ideas on which you can then capitalize.

Speed and Flexibility – Speed kills.  And so does flexibility.  The big advantage of small organizations is that they are more nimble and responsive that the big guys, and therefore they can grab more market share by doing things that larger and more inflexible competitors can’t do.  And, believe me, customers do appreciate this!  It can be tempting to fall into the trap of wanting to “cookie cut” a product or service offering, and then resist customizing it to a particular client’s specifications.  If you want to create a hypergrowth business, don’t fall into this trap.  For service companies, especially, not being flexible is risky for a bunch of reasons:  client dissatisfaction, revenue loss, lost opportunities, etc.  In our experience, by jumping through hoops for clients and delivering faster and better than our larger competitors, we grew astronomically, not just with these clients, but with others who had similar needs.  Again, it’s up to leadership to create and evangelize this culture of speed and flexibility through any means possible.  So many successful and FLEXIBLE hypergrowth companies have pivoted and morphed their business models into hypergrowth mode successfully, Facebook, Apple, and even Groupon and Living Social, being examples.

Business is Darwinian, and Charles Darwin himself said that it is the “adaptable,” not the strongest or smartest, who will survive:

It is not the strongest of the species that survies, nor the most intelligent that survives.  It is the one that is most adaptable to change.” – Charles Darwin

Part 3 of this series will address “Scalable Customers” as the thrid essential ingredient in scaling a hypergrowth enterprise.

Thank you for reading.  I’d love your thoughts, so please Comment below…and please sign up for my Blog too!  (See the Signup box on the sidebar of my Home Page)