I'll start today with Richard Branson, famous for establishing the brand Virgin. Of all the celebrity CEOs I have studied, he has the most fun with his businesses.

At a recent conference for entrepreneurs in Marina del Rey, California run by PerfectBusiness.com, Branson said the following:

He ought to know. He's been on the brink of bankruptcy multiple times since he started his first business at the age of 16.

Here are my takeaways for you to think about:

• Like children, startups are fragile. Most cannot survive hard blows. On the first flight of his first aircraft of Virgin Atlantic Airways in 1984, without any passengers, (the flight required to certify the aircraft), a flock of birds flew into and destroyed one of the jet engines. His banker refused to lend the money to replace the engine. Branson raced into action, contacted  every business person he knew. Three days later a new banker lent him the needed money. It was a close call. The years following contained numerous blows. At first Virgin Atlantic survived, yet with the skills of Branson, it emerged as a world-class success.
• Entrepreneurs see success beckoning just on the other side of the line of survival. It calls in the night to propel founders in trouble. It generates a powerful call to leap into action in times of deep trouble. It is a call that the entrepreneur always believes in. That is why startup founders are so optimistic. They believe in the impossible, they believe they can find a way through the moments of disaster. That is great. That is dangerous. It motivates with enormous energy. But it may be unwise (time to close the doors and find a better business idea). In either case, the entrepreneur always hears success calling on the other side of the dark river of deep troubles. It seems to be in his genes.
• Wisdom and experience keep entrepreneurs on the right side of the line dividing success from survival. Here is where the serial entrepreneur, have an unfair advantage. They have learned what strategic and operational moves are wise and foolish. They are confident in the people they will hire, based on years of experience. Marketing is one of their great skill sets. Managing people is another ace asset. The first timer has to learn these skills by doing them. The unskilled can benefit from the experiences of people on the board  of directors, and from mentors and counselors. Such borrowed wisdom when combined with a few breaks can lead to success. 
• Entrepreneurs manage cash. It is the measure of health for their startup. It is what fuels the business. Yes, they can read a balance sheet and income statement. They understand the meaning and purpose of a forecast of financial statements. They understand how the cash does flow in their business model. They can explain all of that to anyone, without needing to display the Excel model they have memorized. It all rolls up to a lifetime of managing cash as it comes in and goes out of the new enterprise. That is not delegated. It is done by the CEO. If you cannot, it's time to pause and learn how.

BOTTOM LINE: Branson is wise, he respects the thin line between survival and success. Surviving is no fun.  It grinds people down. If you are there and have been for years, consider packing it in and moving on. Success is a better way to live your life. To find what it takes for success, I advise you to spend time studying and listening to some of the great entrepreneurs. Then discount the high degree of distortion the media puts on what they write about the greats. Find yourself a great local mentor who has been in business for years. Spend time with that person. Discuss what you read said about the great entrepreneurs. Then make up your mind about what you would do when walking the thin line between survival and success. When you can do that, you'll be well on your way to building an unfair competitive advantage.

I wish you The Best on your Adventure.

If you are giving negative responses to those questions, think about why serial entrepreneurs do not.

The veterans of startups have learned to use at least one day of the week for a special task: refreshing body and mind, and regaining perspective.

Why? Because they have learned in the school of hard to do startups that much of the winning is because they were able to be more creative and have more endurance than their competitors. Their insights were sharper and they made wiser decisions. They kept the battles in perspective and won the big war.

For first time entrepreneurs and for workaholics, this may sound counter productive. They think the person who works the hardest wins. But that's not true. Ask the serial entrepreneurs. It takes hard work, yes, lots of it. But the winning startups are lead by people who are fresh and keep life in perspective.

BOTTOM LINE: Don't waste a weekend working hard. Instead, use it to refresh and regain your perspective. That will enrich you in many ways, keep you ahead of your competition and make you a lot more fun to work with. When you learn to do this, you can use it to build a part of your unfair advantage.

I wish you The Best on your Adventure!

Their complaints form a pattern that you also may have experienced:

• I talk to seed round investors and when I finish they tell me they are not investing at this time in seed rounds.
• They tell me to keep them informed about my progress and then they lead me to the exit.
• No matter what I say they do not invest.
• I have this great idea but no investor wants to put money into it.

That is common.

It may surprise you, but it happens in boom times as well as recessions! I've watched it for decades. It is always with us.

Here are some reasons the budding entrepreneur discuss when we talk about why they are not getting the money:

• My presentation skills need some polish.
• If I found the right investor he would eagerly give me the money.
• Maybe I need to build a prototype to get the money.
• I asked for too much money.
• I asked for too little money.
  
• The recession keeps the investors from acting.

Those are frequently noted as why the money is not forthcoming.

But I think they are off target.

These are the reasons startup founders do not get seed round financing:

• Management is missing. Most of the sad founders are solo operators, commonly a lone engineer.
• The business plan is incomplete. It consists of one page in Word and forty PowerPoint slides, mostly about the features of the product/service and the technology details.
• Marketing skills and buzz attraction planning are missing.
• A plan for out-maneuvering the competition is missing (strategy).
• The business model consists of a guess and a hope (e.g. advertising will come).
• Forecast of the financial statements is missing.
• The basic idea is not amazingly different, instead it is only 'better, faster, cheaper" than existing products/services.
• Most of all, the idea does not display power in its competitive advantage, i.e. it is missing an unfair advantage.

Serial entrepreneurs who are famous do not take an idea to investors that they thought up in the shower that morning . Instead they use an initial idea to fill out a business plan that is well prepared. They respect that even they, the famous and successful and experienced, will only get one shot at the investor with the idea as presented. If ill prepared, they expect to get the dreaded response "Keep us informed of your progress." No investor says "Go away" because they might be missing out on the next Google after you get your act together.

There are times when you do need to prove the worth of your idea to investors. That requires you to fund the seed round with your savings. It is commonly required of startups lacking an experienced CEO and of ideas that are radically different and bold in their confidence of outlandish future success.

BOTTOM LINE: So do as the Boy Scout motto says it: "Be prepared." Serial entrepreneurs respect the value of doing the hard work prior to contacting investors. They do not seek money to get a business plan prepared. That they expect to do with their own time, paid for by their savings. Naive first time entrepreneurs that do the same will greatly increase their chances of getting seed funding. Remember that every investor is eager to spot the next great startup before competing investors do. So work on the suggestions above and aim at converting your idea into a business plan that comes across to investors with the power of an unfair advantage. That's how you get your seed money.

I wish you The Best on your Adventure!

"Similar" is a killer word for startups.

That word has such boring implications that startup leaders should delete it from their vocabulary.

If that is what you are bragging about, to investors, employees, bloggers and customers, please go no further. Save yourself the agony of learning the hard way. End it all now (your idea, not yourself!).

Why is "similar" so awful for new enterprises? Take a look at these reasons:

• No one (in the know, or who is cool) will spend money on similar when they can buy the original.
• A similar date is boring, the original is hot.
• People wanting change want big change, not similar (think notebooks versus laptops).
• New products that win big are radically different (think iPhone versus all the rest).
• Investors see ten similar ideas every week, they are looking for something very different.

If your idea for your startup is similar to other products on the market, you need to be courageous and create something radically different.

How radical? I'm glad you asked.

Take a look at the findings of new consumer product survey and you'll instantly see what I mean. (It is a quick read). The title says what is in the article: "iPhone vs BlackBerry: Survey Pits Sexy Against the Suits".

So now you get it: Winning is all about what marketing gurus call positioning. Your product is radically different in the mind of the buyer, it is so psychologically different that is will not be called similar by its buyer. That is where you want your product to be in the head of your ideal customer.

BOTTOM LINE: "Similar" is not in the vocabulary of serial entrepreneurs. They have learned to be radically different in the minds of their ideal customers. The customers instantly recognize the difference (between your product and those of the competitors). That is what positioning is all about. When you learn to do that, you'll be on your way to becoming a black belt in marketing, a skill mandatory to win the global new product wars. Use it to build your unfair competitive advantage.

I wish you The Best on your Adventure!

That word has such negative implications that startup leaders should delete it from their vocabulary.

If that is all you have to offer investors, employees, bloggers and customers, please go no further. Save yourself the agony of learning the hard way. End it all now (your idea, not yourself!).

Here is what better means for a startup:

• No better than another startup idea that is better.
• A small percentage more, nothing greater than that.
• Vulnerable to being leapfrogged by the same idea done by a different startup.
• Easily out-maneuvered by competitors who are quicker, faster, cheaper.
• Vaguely more valuable to customers.
• Lacks crisp superiority.
• Unable to respond to breakthrough solutions leaping onto a bold, new market.
• Feels like a warm, fuzzy blanket of comfort.
• Says the founders are safe minded, risk-reducing seekers.
• Boring.

The last is the worst. Boring means none of the stakeholders will get excited enough to go into action (invest, accept job offer, buy the product/service, blog about it).

If your idea is better, you have to drop it or use it in a breakthrough way to solve a huge problem. That is tough, time-consuming work. But well worth it.

BOTTOM LINE: Better is for small businesses in local communities. It works fine for them if they can also figure out how to stand out in an intensely competitive market. But for people (like you, hopefully) who want to convert an idea into a world-class, barn burning, rocket that make people watch in awe, better is a killer. When you understand this, you'll have insight that could lead you to move to greatness that amazes the world. That will be part of your unfair competitive advantage.

I wish you The Best on your Adventure!

That's a common call I get from enthusiastic entrepreneurs.

Nothing wrong with it except for one thing: that first call will be your last unless you are prepared.

What does it mean to be prepared for a call to an investor to talk about your startup?

Try this dialogue to see if you can get what I mean:

SITUATION (dialing the phone for the tenth time after a dozen emails, the founder has finally gotten the great venture capitalist to answer the phone).

FOUNDER: "Hello Mr. INVESTOR. Thank you for taking my call."

INVESTOR: "Glad to, you had a fine introduction from Brad. What can I do for you?"

FOUNDER: "I have this great idea for a startup. I need a seed round. Here is what it is all about . . ."

INVESTOR: (Interrupting) "How much are you seeking?"

FOUNDER: "Well I haven't a specific amount in mind. What do you think is about right?"

INVESTOR: (Ignores answering) "What is this idea of yours?"

FOUNDER: "I was thinking that if somebody did XYZ . . .: (He talks rapidly, stumbling around, for about two minutes, mostly speaking in general terms about the idea, then stops after realizing the investor has been silent). "So what do you think about my idea?"

INVESTOR: (Again ignores answering) "Who else is working on this with you?"

FOUNDER: "It's me and a couple of techie friends so far. I worked for Google for a couple of years after school and quit last year to work in this. I thought you could help me find the people Ineed."

INVESTOR: (Again ignores answering) "Which of you has run a business before?" (He repeats the same question about marketing, business development and engineering leadership).

FOUNDER: (Responds with answers that reveal the startup has people with no managerial experience, have not managed profit centers or been leads in their field of expertise. In fact, most are solo contributors or students with modest working challenges).

INVESTOR: "Send me something in an email." (By now he is looking at his emails online, preparing to end the phone call.)

FOUNDER: "What do you have in mind?"

INVESTOR: "Send me a deck [he means PowerPoint slides] about your idea. I have to go now, thanks for the call. I wish you the best." (Click, the phone call is ended.)

That is how an unprepared founder gets treated by busy, sharp investors. In this case, the investor is being polite to Brad who did the introduction. The founder does not know that over the past four months the investor already has seen a dozen related ideas in the same general area. Two of those have impressed him enough to lead him to dive into research about the related market and competitors, especially potential startup competitors. The result is that our FOUNDER is supplying information and not knowing it, and is not very likely to be contacted again. The INVESTOR did not find outstanding management or idea or market or technology in the idea of the FOUNDER.

How could our FOUNDER have been prepared? Simple: by spending the time (ouch!) and effort (groan!) to write a solid business plan before making the first call to an investor. The result will include an Executive Summary of two to four pages. That is what should be sent to the INVESTOR, not a PowerPoint deck (which lacks the comprehensive words needed to enrich the idea and stir emotions of the reader). After that hard work the FOUNDER will be prepared with solid answers to any question asked by the INVESTOR about management, people, market size, ideal customer, competitors, strategy, unfair advantage, cash needed, when.

BOTTOM LINE: It sounds so easy to take a good idea to an investor, get some money, pay for yourself and some people to figure out what to do next and then build a great success. But my experience shows me the great startups are well thought out before anyone dials for dollars. That is how serial entrepreneurs do it. It is how they become successful, startup after startup. It is part of their unfair advantage. You can do that as well. I highly recommend it.

Think like the Boy Scout motto: "Be prepared." Then you'll have a much greater chance of success when you make your first call to an investor. When you do, you'll be like serial entrepreneurs. You'll have an edge over other startups looking for money.  It will be your unfair advantage.

I wish you The Best on your Adventure!

Today I decided to begin a series on what impacts new enterprises so hard that such events strikes blows to people like you who are leading startups.

My decision to discuss the series was triggered by an event I attended this past weekend. Ina conference center among the coastal redwood mountains near my home, I listened to a group of men share how they had coped with adversity in their lives. Each had a very personal story that we listened to. We benefited from the adverse experiences of other men. This was part of a weekend retreat sponsored by the church I belong to. We focused on testing how we had applied the advice of Jesus to troubling events in our lives. Then we told what had happened.

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Today let's examine surprises, the bad ones. You know what to do with the good surprise: huge order, hired great person, got the money.

When you understand the inner nature of your gut reaction to bad surprises, you'll be able to react quicker and wiser when they inevitably arrive.

• Bad surprises cannot be predicted. The day and time, which one, none of that will be able to be forecast. Not even by serial entrepreneurs. So don't try to.
  
• Bad surprises can be anticipated. You can expect to lose a key employee (without notice, without sensing something going on with him). You can expect to have a crash in the thing you built (or service you are delivering). You can expect to suddenly find the board of directors strong man pushing back on your strategy (after months of cheering for you). And so on. Serial entrepreneurs have done it all before. Surprises are a way of life in startups. Bad surprises happen with children every day. The same is true with startups. So get used to it.
  
• You can prepare for common bad surprises:
  
  
  • Expect that stealth startups will jump out of the bushes. This is a biggie! It happens. You are not alone, there is always something moving in the bushes out there, in the dark. No idea is unique. A dozen others are working on the same thing, right now. So get prepared:
    
  • SUGGESTION: Draft a press release about a mock stealth startup to use when you are surprised. This will also improve your strategic and tactical thinking. It helps you gather your core management team around your company focus.
  
  
  • Think often of how you will respond emotionally when the shock hits you that another startup is ahead of you, better than yours. This is the beginning of the emotional process that will be triggered by a body blow to your psychological makeup. It is called facing reality: Yes,this bad thing is really happening to me. Once you agree, your emotions will release you to work quickly on a solution. It is more than day dreaming. It is emotional simulation and training.
    
    
    • SUGGESTION: Discuss with your core team how they will feel if such bad news happens (e.g. stealth startup launches before you do). This will begin the emotional training needed. It is simple and effective.
  
  Now repeat this exercise for other bad surprises. For a list, go to Monday's blog, the first in this series. Pick a couple of surprises on the list to openly discuss with your staff. That will help you forge a bond with them, prepare them for thinking and responding, and give you credit for openly talking about things that worry them. A sigh of relief will occur. All of you will add to your skills as outstanding startup leaders.

BOTTOM LINE: Bad surprises are body blows that kill through the emotions. Like the venom from a poisonous snake that attacks the cardiovascular system, bad surprises can paralyze and kill. A startup team can reduce the shock effect by openly discussing what could happen and how they will emotionally respond. That will lead to practical solutions (such as drafting a press release). Central to this is how deep your personal skills are in coping with adversity. When you master that, you'll add a strong element to your arsenal of what it takes to build an unfair competitive advantage.

I wish you The Best on your Adventure!

My decision to discuss the series was triggered by an event I attended this past weekend. Ina conference center among the coastal redwood mountains near my home, I listened to a group of men share how they had coped with adversity in their lives. Each had a very personal story that we listened to. We benefited from the adverse experiences of other men. This was part of a weekend retreat sponsored by the church I belong to. We focused on testing how we had applied the advice of Jesus to troubling events in our lives. Then we told what had happened.

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Today let's talk about people blows. The kind of thing that happens because of the people working on your startup.

• Main technical leader cannot deliver the great thing. It may shock you, but now it has become clear to you. After nearly a year of "Just one more month . . . " you realize the lead technologist is not able to deliver the great thing everyone in the company has been dreaming of, working so hard on.
  
  ACTION = Terminate that person from those responsibilities. Do not prolong the agony. Get it over with. End it. Now. Be tough minded (not tough nosed). Deliver a solution (replace the person immediately). The tech leader may be a co-founder and -- if possible -- you'll be wise to keep him in the company. He will continue to keep the spirit of the startup burning brightly. This is a tough call, but you have to make it, right now.
• Business development leader brings more promises than deals. And another report from the head of biz dev says "We did not close the deal with XYZ Corp." You feel like you've been punched in the gut, you are writhing on the floor in agony. Sales have to happen. Deals have to be done. Startups cannot wait. Neither can you.
  
  ACTION: Terminate the person, replace him immediately. Rally any other biz dev people. Keep selling and deal making alive. Do it yourself for a while. It's the life blood of the startup.
• Media continue to ignore your startup, favor others. Your person in charge of marketing communications brings you yet another report: nothing significant written or spoken about your startup during yet another week. You are reading more on Techcrunch about others than your startup. Bloggers can't find you and don't care. Reporters interview and promise stories, but they don't happen as promised or at all. Spreading the word ("PR") is vital to a new enterprise.
  
  ACTION = Your Marketing leader does not have the skills to position (psychologically) your startup in the minds of the media people. Is this your problem (you are a naive, stubborn old bull) or the marketing leadership's headache (who chose poor messaging)? Get help from outside (neutral) experts. Figure out why your startup is not newsworthy. This is very serious. It could kill your startup. Wrong positioning is poison that works very fast to destroy weak new enterprises. You may end up changing your marketing message, or PR firm, but serial entrepreneurs are more likely to end up terminating existing marketing people and replacing them.
• Next round of financing fails. You hear on the phone the lead investor say "We'll pass on this round." You hang up. It is over. The last in a long list of investors contacted over the year has said no. Your lead VC says everyone on the board says "No more cash from us." End of rope. Cash is gone, in fact you are bridging with existing investors for the third month. You feel everyone in the startup has let you down, from the board of directors to the nightly maintenance crew.
  
  ACTION = Reality arrives at last: no one wants to invest further in your enterprise. Now you have no other alternative left for funding growth. The assets have to be sold (by the investors on the board of directors, not you.). Too late to sell the company with its fine employees and existing (few) customers. Oh the pain! But serial entrepreneurs know that such times come, even to the finest, most experienced. Now is the time for you to show how your character behaves during the darkest of days: shutting down a new enterprise. And while it is happening, keep notes in your daily journal "What I'll Do (Differently) With My Next Startup". Welcome to the club!

How will you cope with such people blows? Are you prepared and able (psychologically) to sustain the blows, to manage through the pain and depressed days? Take a look at my blog yesterday on adversity for a few tips on how to do that. In a nutshell, you'll need a bit of training to prepare (in the school of hard knocks = rotten things happened to you), and you'll need help to keep your spirit up through it all (family, friends, mentor, counselor, religious leader). That's why veteran VCs want to hear -- from you -- all your war stories, the times when all went dark and how you coped, got through it all, learned lessons of life. Such days are always going to happen to startups and their people.

BOTTOM LINE: People get startups into trouble. People have to get the new enterprise out of the messes they have to cope with. Your job is to keep the right ones in key positions of leading employees out of the swamp filled with alligators. It will be a hard test of your character and guts and determination, as well as a challenge to your realism. When you have such skills, you will be top on the list of people the great venture capitalists want to finance, and on the list of people employees want to work for in their next startup. It will be part of your unfair advantage.

I wish you The Best on your great Adventure!

My decision to discuss the series was triggered by an event I attended this past weekend. Ina conference center among the coastal redwood mountains near my home, I listened to a group of men share how they had coped with adversity in their lives. Each had a very personal story that we listened to. We benefited from the adverse experiences of other men. This was part of a weekend retreat sponsored by the church I belong to. We focused on testing how we had applied the advice of Jesus to troubling events in our lives. Then we told what had happened.

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I will begin today with adversity.

Adversity is one blow to leaders of startups. To some it breaks the will of the person and erodes their character, leading to a personal crash and -- most likely -- failure of the new enterprise. To others it awakens adrenaline and starts them off to respond with energized will and ends in strengthened character and a new enterprise that continues on its quest for enduring success.

"Adversity causes some men to break, others to break records." William A. Ward, writer. 

That was my Twitter of today.

There are blows that hit people in startups. They happen inevitably. They always come. They are always a surprise, are never planned. Here are a list of just a few I have encountered in the lives of people in real startups:

• VP got a heart attack.
• VP hooked on heroin.
• Founder lost girlfriend ("Either me or the startup").
• Lost wife ("I can't take it any more!")
• Three year old child got brain stem tumor.
• Went through window of rental car in crash in London.
• Wife nearly died from first pregnancy -- lost the baby.
• Investors fired me/founder/CEO.
• Investors changed their minds, no more cash.
• Customers changed their minds, went with lying competitor.
• CTO could not deliver, was incompetent.
• CTO sued the startup.
• CTO won a bungled lawsuit.
• CTO that won hired away key engineer.
• Kids say they hate startups.
• Wife agrees.
• Miss second wedding anniversary weekend celebration.
• Miss all birthdays in family the past year.
• Husband says he is having an affair.
• Engineer starts company in Asia by stealing our technology.
• 42 venture capital partners decline to invest.
• Surprise launch of stealth startup for same product as ours occurs nine months before we are ready.

And the list could go on much farther.

Let me ask you a question: "How would you respond to such adversity?"

Your response will determine a great deal of your success (attracting investors, hiring key employees, getting first customers to commit, signing strategic partner deals, and so on).

Why? Because adversity is a constant companion to startup leaders.

Last night I listened to a super-techie say "It's time to pack it in. The technical staff does not have what it takes. Better to cut the losses and live to fight a different battle." That was his response to adversity.

To encourage you, I can tall you that in each of the above examples of adversity, the startup leader got through it with personal victory and the startups kept going. Some had already strong character formed by events that kill people (wars). Others had grown because they found strength and encouragement from a spiritual source and religion. Many sought professional advice (self-help books, in-person coaches and therapists). Family and friends were most often the first line of supportive help. And (it  may surprise some of you) so too were people on the board of directors, as well as other employees.

BOTTOM LINE: Before you go further with your startup idea, think about how well you handle adversity. It is going to come to you and your startup. When you can respond well to adversity, you can inspire your entire startup to do the same. Your entire company culture will be strengthened, it will become a powerful element of your unfair competitive advantage.

This week I'll comment on that topic and give you help anticipating and managing your board.

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When you understand how the power works on your board of directors, you can operate with more realism and effectiveness.

Here is how power works in real startup boards of directors:

• Investors expect to dominate. They have more startup and managerial success than the founder (usually). That is how they became successful venture investors. They are on your board for one purpose: to make the value of the new enterprise rise as fast as possible to as large a number as possible. They are very eager to do that with your company. If you hinder that, you will feel the heat of their wrath.
• Serial entrepreneurs overcome with results. Veterans of startup boards of directors know the CEO will thrive as long as results are delivered. That is the ace power card the CEO has to use with the board. Results bring power to the CEO. Explanations of why things did not come out well lead to the exit door for the CEO.
• Investors do not want to run your startup. Time is the enemy of VCs. They cannot buy it or make it. Managing a startup is a huge use of their time. They want the CEO to run the business. Yes, they may get critical and they may step over the line (start to micromanage), but they do not want to get sucked into the black hole and get the reins turned over to them to manage the startup.
• Your ability to think more creatively overcomes strong suggestions. Better ideas win in power struggles. VC icons like Don Valentine founder of Sequoia Capital, tell each CEO they fund to expect a lot of ideas from the Valentine -- and that he expects the CEO to produce better ones. This pressure is part of the creative process of managing a startup and is expected at every meeting.
• You win power struggles as long as the employees are supporting you. Great morale in your workers -- especially your core management team -- is a powerful asset to use in power struggles. As long as the employees believe you can lead them to success, you have a very strong card to play when needed. They do not want to watch the board get rid of you and hire a stranger. So it takes a lot of bad decisions and rotten behavior on your part to get them to start to wish you were not there. That's one reason serial entrepreneurs are alert to the morale of their employees.
• Work outside the board meetings is how big decisions are made. The old joke is that board meetings are supposed to be boring. Why? Because everyone expects to arrive knowing how the official decisions are going to be made at the meeting. During the weeks between monthly board meetings the CEO will be discussing one on one with board members the sensitive, the important decisions that came up in the last board meeting. The choices are reviewed and the CEO works to get unanimous agreement on each before the next board meeting.
• Independent board members are expected to keep the peace. These people are the go-between person chosen to handle sensitive issues between the CEO and the board of directors. In addition to their startup and domain expertise, the independent person is typically skilled at working out practical solutions to tough people problems. This may call for spending time with the CEO and the techie founder to iron out a working relationship. Or it may be necessary to talk to one of the board members who is out of line with his criticism of the CEO. Such independents are special to startups and important to how well the board operates.
• Boards do not vote on decisions. Everyone is unanimous on every decision. No investor insists on voting his number of shares. Such thoughts are in the heads of naive people. Instead, all key decisions are made during the weeks before each board meeting. Yes, the lead investor has a lot of influence on the decisions, but still he will not vote shares at any meeting.
• Always able to raise cash is key to balancing power. CEOs learn "the man with the gold sets the rules." Without cash the company dies. If you only have board investors, you lose your balancing power. So serial entrepreneurs are always looking for viable alternative investors to the current ones. That gives the CEO confidence he can choose to accept or not accept any strong advice or command given by an existing investor. It is one reason serial entrepreneurs say that "competition (to invest in my company) is the entrepreneur's best friend."

BOTTOM LINE: As you may have realized from the above, your job calls for managing the board of directors. It does not happen for you. It is not done by investors or the independent on your board. You are the one to do it. So study your sources of power and weakness. Think about how you can do well when managing your board members. It will be one of the key elements of building your unfair competitive advantage. It is what serial entrepreneurs have learned to do so well.

I wish you The Best on your Adventure!

This week I'll comment on that topic and give you help anticipating and managing your board.

• The board is your new boss. Even if you own over half the shares, you will still have to debate with the board of director members what you are going to do, how well you have been doing and your compensation and all the troubles the startup is running into. That's legal. It is in your incorporation bylaws. You cannot get around it. As soon as you have formed a board of directors for your corporation, you get a new boss.
• The board represents the investors, not you. This may sound difficult, but that is the way corporations work. The board is responsible for making decisions in the best interests of the shareholders. You are considered one of the shareholders, so that is in your best interests. But if you start messing up managing the company, then you are exposed and can be terminated. The investors expect good, positive results. Either you deliver or they will find someone else to do so.
• The board votes using special privileges. Preferred shares are what investors get when they invest cash in your startup. That gives them control of the voting of the important decisions of the startup. Voting on your job is one decision, your compensation is another and the big decisions about what the startup is to do next is another. All the rest of the people in the company get common shares, the less expensive shares used for stock options and founders' shares.
• There are no surprises. All the powers of the investors are spelled out in the terms of the deal with them that you signed. The details are in the "term sheet" you got when they offered to invest in your startup. Hopefully you read the documents, discussed the consequences with your lawyer and are now living with the results. There is no excuse for you to be surprised if you did your homework.
• You are not CEO forever. As soon as you have one investor, you are exposed to termination for lack of results (or other sins). No longer is it "your company". No one on the board expects you to be fired, nor do they plan on it. But you should start planning on your successor the day you have your first board meeting. That is most likely to happen.

If you do not like what you have just read, if you insist on being CEO indefinitely, then do not seek outside investors. It is that simple. The startup will be yours as long as you wish.

But if you accept cash from an investor, the game changes. Now you have to execute and deliver. You are in the spotlight, on the hot seat, expected to do amazing things with this startup. If you doubt that, ask the investor.

BOTTOM LINE: Knowing what you get with a board of directors can help you decide on when and who you choose to form a board. That will give you realism and wisdom. Boards are not all bad (I'll discuss their good side tomorrow). A great board can help you convert your idea into a great, enduring startup. In fact, it can help you build an unfair competitive advantage.

I wish you The Best on your Adventure!

I had a recent discussion with a serial entrepreneur about what to do when employees sense a startup is drifting sideways. She had past experience with good people leaving when that happened.

Over the past two years I have had similar discussions with very smart CEOs of startups. So she is not alone, nor are you if you are facing this situation.

My experience is that when this happens, the CEO is then confronted by the company culture with a decision: to continue on as is, or decide to work together in a fresh way to find something that moves the startup from a destiny as a small, dull, private business into a growing, exciting startup that can go IPO within five years.

That inflection point may not be obvious to the CEO, especially not to the enthusiastic founder.

But it is an inflection point that demands a decision. Employees agree. So do investors.</p><p>It is also an opportunity for you to think out of the box, to consider your alternatives.

It is also a time for you to be bold in your thinking.

It may save your company. Without the good employees, you are going to find it harder and harder to lift the business out of its dull sideways movement.

So let me give you some things to dwell on, to discuss with your leaders, your core team, perhaps at an off site location where you will have a fresh perspective on the business:

• Sift your market: Can you think of fresh markets to apply your idea/service/product/technology to? These would be rising, large markets that are open for you to enter in which you can pick a segment to dominate. This would most likely be a related market, but could be a radically different one. Example: the late arriving Japanese facsimile manufacturers moved from police and defense contractors (small but fat profits, dominated by American companies) to consumers (sending hand drawn directions to get people from one place to another in confusing Japanese roads and cities).
• Change business model: Are you offering a product? Consider offering a service instead. Example: Software.com set the example for moving from selling software to renting it and morphed into creation of a new category, software as a service, SaaS.
• Jump on a solution for a big problem in a hot rising wave: Can you solve a big problem for social networking? Or how about video content delivered over the Internet? How about smart energy grid solutions? Those are a few of the tsunamis we are experiencing. You can ride the energy of one of them and not have to push so hard to get your current market started. Example: My Space leapfrogged pioneer Friendster and then Facebook leapfrogged My Space. Each of the leapfrogging companies won huge market share of huge, different market segments.

The hard part for you will be to make a decision that moves your startup in a radically different direction. That is why it is so important for you to have objective friends and mentors and advisors who can be frank with you about what you are thinking and how you are behaving. They can give you perspective and wisdom that may sting and hurt a bit, but it can give you what you need to make a critical decision when you find your employees losing hope.

BOTTOM LINE: All your employees need hope in the outcome of your startup. So do your investors. It is more than hanging on and surviving. It is about how to make a critical decision to alter the business so it can move from dull to exciting, from moving sideways to growth. That is what CEOs are hired to do, even if you are the founder CEO. Letting go can be very frightening. But dropping the dream and moving on realistically can save not only the business and your job, but also can give your people hope once again. That is key to building your unfair competitive advantage.

I found and watched a very simple presentation about the secret to getting that buzz I blogged about Monday. It was so clear and so "on the money" that I wanted to share it with you.

The presenter's advice is: "make great stuff".

In other words, don't try to use buzz to make up for bad stuff you create. That does not work. Nor can you advertise your way around end users bored with your stuff. You have to focus on a great idea for selling great stuff.

So here is your homework for today: watch the 2 minute video and think about your marketing communications plan priorities and its focus.

BOTTOM LINE: Great companies are made from great ideas. Poor ideas plus a lot of time, money and effort do not compensate for poor ideas. Build great stuff and it will generate buzz.  Then you just have to fuel it for a while, and like kindling wood used to start a campfire, soon the blaze is roaring, without any other help from you. Great ideas for great stuff is central to building an unfair advantage. You can do it if you focus on the great stuff rather than great buzz.

I wish you The Best on your Adventure!

If not, you should. Someone is going to get rich doing smart grid startups.

The smart grid is a fresh wave already rising around the world. It will have lasting repercussions on how we live and work, how we make money, and a lot more. You can read further at Wiser wires, a short, comprehensive report on who is doing what about the smart grid. I liked this report because it was quick to read and included both new and established enterprises. 

What stood out to me was this: this new wave is already maturing! Learning what condition a new thing is in can save you a lot of agony, and open the door to opportunity. Here is what I mean:

For instance, startups are already actively working on products and services that solve several of the key problems to building the smart grid and reaping the benefits of its huge potential. Here is a short list of some of the startups mentioned:

• Trilliant Networks and Silver Spring Networks are focused on solving problems of the IT network that connects the smart points of the power grid.
• eMeter helps utilities manage the usage data and combine it with other information to set rates upon demand.
• Control4 and iControl offer "home area network" (HAN) devices that allow consumers to control almost everything in a house that runs on electricity.
• Tendril and GridPoint offer related web based services.

Then I read of the existing players and saw they ranged from recent IPOs to established giants, powerhouses to be greatly respected. Here are some of them:

• EnerNOC went IPO in 2007 in the demand response business, a new market category.
• Oracle offers software similar to eMeter.
• IBM helps utilities connect their disparate systems.
• Cisco is expected to enter the IT networks grid market, HAN solutions, and more. Siemens has its eyes on several of the market segments.
• Microsoft and Google offer products for consumers to track their power usage.

When you read of a pattern like this, where startups in a new field are being mentioned in mass media reports, and where giants are publicly declaring their intentions about it, then you know a new wave has arrived and is well on its way to growth and expansion.

Foundation Capital partners chose to focus on investing in smart grid startups. Other VCs have invested in related startups (simply Google "smart grid venture capital" and watch what you get.)

• GridPoint and Silver Spring Networks have raised $220m and $170m respectively.
• iControl recently raised $23m.
  

BOTTOM LINE: The trick is to realize that a new wave in this condition is already maturing rapidly, from the point of view of startups and venture capitalists. It is also nearly too late to be one of the startups that will lead one of the new market segments that are created as the early market grows and splinters. Instead you will have to spot a fresh splinter forming before one startup takes the lead (in becoming the dominant gorilla of a fresh market segment/category). When you can do that, you can time the launch of your startup and catch a ride of a lifetime! Such skill is part of the unfair advantage of the winning startups.

I wish you The Best on your Adventure!

Buzz happens when a lot of people get excited about your startup and begin to pass the word around. Tweeting, blogging, on Facebook messages, texting and over lunch with friends. It grows and grows, spreads around the world, gathers speed and momentum. It takes time.

Hype happens when suddenly a lot of people, especially writers, take notice and publish something about your startup. Following this is a quick rush of reporters who missed the first wave of publicity. Then the mass media spreads the word to the public who then become excited about the news and rush to see what the startup is all about. It reaches a crescendo, peaks, but instead of enduring, it disappears, like a roman candle fireworks. It happens very quickly.

Examples of buzz include Amazon selling one million book titles on-line. And the growth of use of Google's more effective search engine.

Examples of hype include Second Life, the virtual world created by Linden Labs in San Francisco (take a look at in a good article written Sunday in Silicon Valley by Chris O'Brien). Remember the Segway, the two wheel vehicle that would replace the car? Next Computer Inc. (Steve Jobs)? They all don't die, but they all do fade into the background to be forgotten.

Some wonder about the enormous economic value of the hyped YouTube and now Twitter. Was Facebook about buzz or hype? Or both? They claim to now be converting business models to money makers.

Buzz wins because end users "get it" and find it "way cool." People get excited about something special in your product/service offering. They use it and "Wow!" happens and they can't wait to text about it to a friend. I saw a grade school girl in a mall with her father today, walking with a pink iPhone clutched in both hands, staring at the screen with a beaming face. You can bet all her friends will know about her new phone in less than an hour. Remember the people who slept overnight outside the stores to buy the first iPod?

Buzz works like an avalanche. First there is a real user experience that triggers the first movement of a few snowflakes (other users and a few observers). They impact more and then more, and soon a large chunk of snow moves an entire slab (bloggers) that starts an entire mountainside of white flakes (mass media, mass public) crashing down to the valley below, enormous in its power and momentum.

Like an avalanche, buzz can be influenced and initiated and even guided at first. But after it starts you can only join it or get out of the way and watch. Buzz on a roll cannot be stopped.

BOTTOM LINE: That is where you want your startup to be: offering something to end users that is so cool it gets them buzzing. You can influence that with your marketing messaging (marcom positioning message). You can alert bloggers and help enthusiasts spread the good word (e.g. social networking group). And there is a lot more in this technique we label as public relations. When you can do buzz, you have a powerful element to add to your competitive advantage. You competition will complain it is unfair.

I wish you The Best on your Adventure.

CONSTANT INNOVATION

"Even rarity soon grows stale'" said Wedgewood. So he picked up on growing fascination among the aristocracy for Greek and Roman antiquities, producing "jasperware" which typically depicts classical scenes, painted white against a blue background.

BRANDING

He put his name on every item he made, becoming what business historians say is the grandfather of modern branding.

GUARANTEES AND COMMISSIONS

Wedgewood was the first manufacturer known to have offered money-back guarantees and free shipping, and his salespeople were the first to be paid on commission,

RETAIL OUTLETS AND SAMPLES

He created well-lit showrooms in London where customers could touch his wares. That was an early version of modern "experiential retailing." He gave away china to the aristocracy, imparting a cachet to his products that attracted buyers from the emerging middle class. This created value added and a reason to pay more for it than other china.

MANUFACTURING MANAGEMENT METHODS

Wedgwood built on of the first factories to employ "division of labor" techniques being developed by Adam Smith. He used a time clock and campaigned to improve roads and canals to transport goods more efficiently.

LABOR FORCE RETENTION

He developed, motivated and retained skilled workers by building homes for them and providing training, medical care and a pension.

HIRING COMPETENT MANAGERS

Wedgewood hired the best managers he could find. He trusted them to manage while he embarked on one of his many sales and marketing trips.

EGO MANAGEMENT

Biographers wrote he was not encumbered by and ego that blows up like and air bag. He acknowledged what he could and could not do. He hired competent people to do the latter.

WEALTH

Upon his death, Wedgwood was worth the equivalent of today of $100 million.

LESSONS FOR MODERN ENTREPRENEURS

• Note the many additional things Wedgewood added to his original idea.
• He used each to build an unfair competitive advantage.
• That produced an enduring gorilla: the business is still is in operation today.

Tip of the week tomorrow.

I wish you The Best on your Adventure!

CONSTANT EXPLORATION

Wedgewood constantly explored materials and techniques. It was inspired by his Unitarian minister grandfather who preached that knowledge based on reason, experience and experiment was preferable to dogma.

Josiah also followed the Unitarian code that wealth should enrich society,not just the individual. That was a confrontation with the views of the established society of the time, but was gaining in popularity with leaders challenging the established order.

CONNECTIONS WITH PEOPLE

Wedgwood's religious and political views led him to Thomas Bently, the worldly Liverpool merchant. Bently helped Wedgwood the potter enter aristocratic society, and the two men stayed business partners.

INVENTIONS

By the early 1700s, Wedgwood's experiments had yielded a creamy look that resembled porcelain and attracted the nobility's interest. The ivory-white, smoothly glazed surface was decorative and strikingly different from common brown wares locally produced.

Orders poured in. Author Brian Dolan, of "Wedgwood: The First Tycoon," wrote "nothing excited aristocrats more than the early hint of a new trend." Britain's Queen Charlotte ordered a creamware tea set in 1765. She was so happy about it that she commanded that it be called Queen's Ware and dubbed Wedgwood "her majesty's potter."

MARKETING

In a bold marketing move, Wedgwood trumpeted his new title in a newspaper advertisement.

In 1773, Russia's Catherin the Great ordered a massive dinner set for use on state occasions. It is now part of Russia's Heritage Museum's collections. More to feed the growing fire of publicity.

LESSONS FOR MODERN STARTUP LEADERS:

• Constant innovative thinking marks great entrepreneurs, they never stop such thinking.
• Deep spiritual values are the foundation for motivation of the great startup kings and queens.
• People connections of the highest commitment come from shared values and lead to friendships.
• Door opening comes through friends connected with the other side.
• Distinctly different marks the great winning startups and their products/services.
• Very hot sales marks the startup which is "first to get it right" with a new family of products that triggers a wild purchasing wave.
• Great products attract great customers who spread the word (for free) to other great customers.
• Public relations makes a startup stand out and makes it very difficulty for competitors to say "Me too!"
• Gorilla power arrives as sales grow and grow, from great customer after great customer, and everyone spreads the word on the exciting new product and its company.

More tomorrow about what Wedgwood do to remain in the lead and how he pioneered modern branding techniques.

I wish you The Best on your Adventure!

BORN INTO POVERTY

Josiah Wedgwood grew up the 12^th child of a struggling pottery maker in a damp thatched-roofed cottage north of London. A bout of smallpox weakened one leg so much it had to be amputated. No longer could he turn the wheel to shape pottery for sale. As the youngest he had no claim on the family business. He would have to make do on his own.

USED HIS BRAINS

Wedgwood (1730-95) knew he would have to use his mind rather than his hands to be successful. And he did exactly that. Over the next 50 years, he produced some of the world’s finest ceramics while pioneering many of the sales, marketing and manufacturing techniques used today.

GOING IT ALONE

He started as an apprentice to his eldest brother, Timothy who had taken over the family’s pottery business after the death of the father in 1739. Later he worked for Thomas Whieldon, the best known English pottery maker of that era, before striking out on his own. I’ll expand on that innovative side of Josiah in tomorrow’s  blog.

SPURRED TO INNOVATE

Josiah had bigger ideas than churning out the same dull, porous earthenware common at the time. He was fed by boundless curiosity, a desire to improve his products and an ability to forge connections with people who could help promote his business.

LESSONS FOR MODERN STARTUP LEADERS

Here are some things from Josiah Wedgwood’s life for you to think about applying to your startup:

·         Adversity stimulates entrepreneurs, does not discourage them.

·         Losses are turned into winnings by entrepreneurial minds.

·         Relying on oneself is typical of startup leaders.

·         Brains triumph over brawn when creating fresh businesses that win.

·         Learning from a great boss in a great company is seen as a precursor to doing a great startup.

·         Boundless curiosity is one characteristic of great entrepreneurial minds.

I’ll expand on that innovative side of Josiah in tomorrow’s  blog.

I wish you The Best on your Adventure!

Here is how it all happened:

• My fishing buddy and I arrived at our camping spot to find record high 92F temperature, fish sleeping, sky blue, windless. Set up tents, cooked a never-to-be-forgotten dinner of smoked wild Norwegian salmon penne pasta (part of the secret is in the vodka, whipping cream, and fresh dill). Talked until sunset, skipped fishing in the hot weather, hoped for the weatherman to be right: cold front moving in tomorrow as the jet stream drops south from Canada.
• • STARTUPS expect one situation and adapt to what they find when they arrive (at the next stage in their march to create an enduring business).
• Woke to weather dropping 20F overnight, skies cloudy, wind picking up. Decided to fill backpacks, string fishing rods, make lunch and start hiking up the river. Expected that the cooler weather will make the fish hungry, biting, eager to play.
• • STARTUPS act on an adjusted plan, expecting the best.
• Fishing was good though not great during the morning, as expected. Small fish, but fun to catch and release. But by 11:00 a.m. the rain started. Half an hour later the sleet started. By i:00 p.m. the snow started. Wind began to howl. We got very cold, hiked back to my Jeep, got colder, and finally arrived and turned on the Jeep's high temp heater to recover.
• • STARTUPS encounter adversity, face reality, give up on pushing harder, return to home base, hunker down and re-think the plan.
• Returned to camp, did another great dinner, early, as the temperatures headed toward freezing. Started adding extra clothing, built a hot camp fire to warm up, finished the Norwegian salmon and aquavit. Discussed possibilities for fishing in the morning, agreed on three. Will decide over coffee at breakfast. Headed to bed as the sun went down. Kept all clothing on as we climbed into our sleeping bags.
• • STARTUPS agree on another set of modified courses of action, gather scarce resources, get some sleep and agree to make a decision in the morning after thinking it over a bit longer.
• Woke to 28F temperature, ice frozen in the dish washing basin, blue skies, no wind. Put on fleece cap and gloves to make hot coffee. Finger tips went numb. My fishing buddy and I decided to break camp, fish an alternative river an hours drive down the mountain and return early to home. We remained positive and continued to enjoy our time together and the beauty of our surroundings.
• • STARTUP leaders choose sharply different plans when the prior one and its modifications do not work well. They remain optimistic and hopeful. They continue to enjoy what they are doing and look forward to more time working together.
• Arrived at the alternative river to find sun, clear skies, no wind and 65F temperatures. Started fishing, soon caught a few eager smaller fish, and began to change flies, experimenting to find the patterns that attracted the larger fish. As the day progressed and we moved down the river to the toughest fly fishing section, our fly selections became more and more effective. We caught more and more fish, larger and larger sized. They were strong, healthy, beautiful in coloring. We took photos and released all of them. At 3:00 p.m. my buddy hooked a huge trophy sized rainbow trout, fought it until it succeeded in wrapping the skinny line (tippet) downstream, around a rock and broke off. It was amazing! What a great day!
• • STARTUP leaders execute revised plans creatively, with determination and patience, executed with agility. When they get it right, the success is amazing!
• We stored our rods and drove to Mariposa to eat in our favorite restaurant, The Mining Cafe. Ordered the Senior Specials, laughed and talked about our experiences on this trip. Agreed on things learned and what we will do differently next time.
• • STARTUPs celebrate success. And they reflect and learn from it. Then they move on, ready for the next chapter in the company's long term march to victory.
• The weather report for the next day said it snowed two feet that night in our campground. We had made the best decision.

BOTTOM LINE: Startup leaders that are creative and agile win. They triumph over competitors who stubbornly stick to an original plan, or don't have a plan. They learn from every change, encounter the unexpected with realism, and decide on every turn in the trail. It is how they build a winning startup, one that endures, that grows its competitive advantage day after day until the competition complains it is unfair. You can do it too.

I wish you The Best on your Adventure!

I'm back from the high Sierra Mountains at Yosemite National Park in California. Reflecting on the week, I again concluded that fly fishing is like doing a startup: to succeed you need a lot of creativity and agility.

Here is how it all happened:

• My fishing buddy and I arrived at our camping spot to find record high 92F temperature, fish sleeping, sky blue, windless. Set up tents, cooked a never-to-be-forgotten dinner of smoked wild Norwegian salmon penne pasta (part of the secret is in the vodka, whipping cream, and fresh dill). Talked until sunset, skipped fishing in the hot weather, hoped for the weatherman to be right: cold front moving in tomorrow as the jet stream drops south from Canada.
• • STARTUPS expect one situation and adapt to what they find when they arrive (at the next stage in their march to create an enduring business).
• Woke to weather dropping 20F overnight, skies cloudy, wind picking up. Decided to fill backpacks, string fishing rods, make lunch and start hiking up the river. Expected that the cooler weather will make the fish hungry, biting, eager to play.
• • STARTUPS act on an adjusted plan, expecting the best.
• Fishing was good though not great during the morning, as expected. Small fish, but fun to catch and release. But by 11:00 a.m. the rain started. Half an hour later the sleet started. By i:00 p.m. the snow started. Wind began to howl. We got very cold, hiked back to my Jeep, got colder, and finally arrived and turned on the Jeep's high temp heater to recover.
• • STARTUPS encounter adversity, face reality, give up on pushing harder, return to home base, hunker down and re-think the plan.
• Returned to camp, did another great dinner, early, as the temperatures headed toward freezing. Started adding extra clothing, built a hot camp fire to warm up, finished the Norwegian salmon and aquavit. Discussed possibilities for fishing in the morning, agreed on three. Will decide over coffee at breakfast. Headed to bed as the sun went down. Kept all clothing on as we climbed into our sleeping bags.
• • STARTUPS agree on another set of modified courses of action, gather scarce resources, get some sleep and agree to make a decision in the morning after thinking it over a bit longer.
• Woke to 28F temperature, ice frozen in the dish washing basin, blue skies, no wind. Put on fleece cap and gloves to make hot coffee. Finger tips went numb. My fishing buddy and I decided to break camp, fish an alternative river an hours drive down the mountain and return early to home. We remained positive and continued to enjoy our time together and the beauty of our surroundings.
• • STARTUP leaders choose sharply different plans when the prior one and its modifications do not work well. They remain optimistic and hopeful. They continue to enjoy what they are doing and look forward to more time working together.
• Arrived at the alternative river to find sun, clear skies, no wind and 65F temperatures. Started fishing, soon caught a few eager smaller fish, and began to change flies, experimenting to find the patterns that attracted the larger fish. As the day progressed and we moved down the river to the toughest fly fishing section, our fly selections became more and more effective. We caught more and more fish, larger and larger sized. They were strong, healthy, beautiful in coloring. We took photos and released all of them. At 3:00 p.m. my buddy hooked a huge trophy sized rainbow trout, fought it until it succeeded in wrapping the skinny line (tippet) downstream, around a rock and broke off. It was amazing! What a great day!
• • STARTUP leaders execute revised plans creatively, with determination and patience, executed with agility. When they get it right, the success is amazing!
• We stored our rods and drove to Mariposa to eat in our favorite restaurant, The Mining Cafe. Ordered the Senior Specials, laughed and talked about our experiences on this trip. Agreed on things learned and what we will do differently next time.
• • STARTUPs celebrate success. And they reflect and learn from it. Then they move on, ready for the next chapter in the company's long term march to victory.
• The weather report for the next day said it snowed two feet that night in our campground. We had made the best decision.

BOTTOM LINE: Startup leaders that are creative and agile win. They triumph over competitors who stubbornly stick to an original plan, or don't have a plan. They learn from every change, encounter the unexpected with realism, and decide on every turn in the trail. It is how they build a winning startup, one that endures, that grows its competitive advantage day after day until the competition complains it is unfair. You can do it too.

I wish you The Best on your Adventure!

It triggers a lot of emotions. Especially in founders burned by past ideas that were sunk by bad leadership and bad investors.

So what to do when in that situation?

Here are my suggestions, they are based on lots of experience with painful meetings, tears, screams, lawsuits and disasters, as well as some amazing winners. I hope these help you make a wise decision:

= Strong VCs got there by facilitating great management teams that built enduring companies. Recent examples include Google financed by Sequoia Capital.

= Not all ideas are ruined by follow-on CEOs. Yahoo succeeded dominating the portal space with a successor to the two founders. So have other startups.

= Ruin is not just the new CEO’s fault. Conflict with the founders is a great concern of investors. It always is. Who is in charge when founders and CEO disagree on a vital strategic decision? Who is right. Sometimes both are, but cannot agree on one course of action. The conflict ruins the startup, both parties are at mutual fault.

= Solo founders are often solo people who cannot build a great management team. Some founders would be happiest in a small business they can run alone. There is nothing wrong with that. Not all quarterbacks are team builders or great coaches.

= The abundant pattern of success lies where founders are supplanted as the startup quickly grows beyond their abilities to manage it. Those are 99% of the sample. Going against the pattern is not impossible, just nearly impossible. The media loves to write about such examples (to provoke you to read the advertisements), so you think that is how the heros of startups should do it. In statistical terms, such cases are insignificant.

So what should you do if you are still keen on going on as THE CEO? Try thinking about these tips:

= Demonstrate a huge winner potential and attract the missing talent on your own. Big surges in first product success attract great people. With a hot starter product, you are on your way to finding the management you will need to succeed in spite of what you are lacking to manage the hot startup.

= Fat profits in a bootstrap give you time to find the right people. This is very hard to do, but can be done. Michael Dell did it. Your timing has to be nearly perfect: riding a fresh wave (first PCs) to fast sales, immediate profits and instant positive cash flow. That is a tall order for a startup.

= Seek naïve investors. They are rare but they are out there. But be careful, they also have money to pay for lawyers if they need to.

= Look at angels for a small seed round, people who know your space. They can do a small seed round and help you while you remain CEO. It has worked in the past in many cases.

= Be content with less and be patient for a long time. Dolby did that, became a world-class brand and eventually went public (the only way to pass on shares to his family without a huge tax burden).

= Don’t do your startup at this time, learn to manage and later do a great startup. Many have done that and succeeded well. It is how Palm became a winner.

BOTTOM LINE: I hope this has helped you think clearly about a very sensitive issue. It is very difficult to expect to be THE CEO forever. It is hard to find investors who will accept your inadequacies as a first-time CEO. Yes, it can be done. But you’ll find your attempts to do so will run against you. You’ll feel like you are swimming alone up the giant Amazon river filled with Parana fish. It is not how to build an unfair competitive advantage.