So you want to launch a business...

Your baby is ugly!

2010-02-09T07:00:00-05:00

"The great tragedy of Science - the slaying of a beautiful hypothesis by an ugly fact."

"In reality, just about all start-ups are ugly in the early days."

Dharmesh Shah

Encouraging entrepreneurs is a tricky business.

It's a lot like parenting, as condescending as that may seem. I say this because parents are advised to maintain clarity regarding the difference between the child herself and certain annoying, embarrassing, non-productive, and even anti-social behaviors. The child is not "bad." The child is "naughty." I love you, sweetie, but that behavior has got to go, period.

The challenge for any parent or adviser is to encourage course changes without damaging the student's Moxie... and also to preserve your relationship at all costs.

For things to change in any real sense, the difficult child must be presented with information that leads her to draw a fresh set of conclusions about the results of behaviors on her own.

So much for my challenges as an adviser to entrepreneurs. Here's one for you Mr. Entrepreneur.

Please ask yourself, regularly and honestly, "Is my baby ugly?" Have I dreamed myself a Market opportunity instead of actually finding one? Does my response to the perceived Market need really constitute Magic? Or is it just a me-too? Which of my fundamental assumptions carries the lowest confidence factor? What simple tweak in my plan would gain me the most leverage?

Every swan, said Hans Christian Andersen, begins as an ugly duckling. And Dharmesh Shah counsels,

Accept That Your Baby Is Ugly: Just like most parents think they have beautiful babies, most entrepreneurs think they have beautiful start-ups. In reality, just about all start-ups are ugly in the early days. Don’t spend time trying to explain to others why your start-up baby is beautiful. It’s not. Instead, spend energy explaining why your baby is going to grow up into something that’s beautiful.

So, if you're feeling adventuresome and self-confident, try something new today. Re-visit every one of your key assumptions about market size, end-user needs, competitive behavior, advertising effectiveness, contracting systems, manufacturing quality control, raw material costs, and so on. Assume that at least part of your baby could benefit from some plastic surgery.

Ask yourself: how much of my plan's beauty is in only the eye of this beholder - me?

Is it blood? Or just ink?

2010-02-05T07:00:00-05:00

"Projections are bullshit."

Jason Fried

I've become a fan of Scott Ginsberg, otherwise known as "NameTagScott." He blogs on a variety of topics, but one of his recurring themes is honesty. In a recent post, Scott said this...

My definition of writing is as follows:
“Slice open a vein and bleed your truth all over the page.”

KEY WORDS: Vein, blood and truth.
As opposed to “brain, ink and bullshit.”

Suppose we apply that thinking to entrepreneurial elevator speeches, pitches, and business plans. I preach about the Four Fundamental Factors test for the probable outcome of a start-up notion. Market - great! Magic - spell-binding! Mentors - plenty! MOXIE - hmmm.

Thanks, Scott! I will now be asking myself: Am I hearing or reading "vein, blood, and truth?" Or is it "brain, ink, and bullshit?"

I'm pretty darned sure that with enough MOXIE a prospective entrepreneur can find a way to fix a modestly flawed start-up plan. But a bullshit artist will never, never find the MOXIE to make even a well conceived, well written plan really work. Too many things change along the way. Too many obstacles arise in the real world of entrepreneurship. It's just too hard.

Serious success demands some bleeding, I think. Or is it blood, sweat, and tears? (The quotation, by the way, is really "...blood, tears, toil, and sweat." Thank you, Teddy Roosevelt.)

Brain, ink, and bullshit won't cut it. Remember that - whether you are writing a business plan, or reading one.

Thank you, Scott.

Spells and Incantations

2010-02-02T06:00:00-05:00

"We are generally the better persuaded by the reasons we discover ourselves than by those given to us by others."

Blaise Pascal

"You can't convince anybody of anything. You can only give them more information."

Arthur Scharff

If your start-up plan includes exceptional Magic, you have a fighting chance for survival. But simple possession of Magic does not put your wizardry into action. It must be released and directed by means of carefully crafted spells and incantations. Powerful Messages are always required.

My experience tells me that engaging the listener as an informed decision-maker is more powerful than ordering the listener to take some particular action. That is not to say that marketing and advertising messages should be limited somehow to cold, industrial-strength facts. Au contrere! We have all been informed that buyers act on expectations of feelings. So, informing them that others have, in fact and regularly, experienced those feelings by taking the desired actions is a classic strategem. Testimonials work.

It's also perfectly acceptable, and logically important, to lead your listener/decision-maker to your preferred conclusion. I've quoted Barry A. Densa before. Here's a portion of what he says...

Assemble and present your credentialing elements, your evidence–your entire body of incontrovertible proof–in clear and linear fashion.

Allow your proof to lay the groundwork for what is to come. Create strong and overwhelming direction and momentum.

So, my friendly local entrepreneur, it would appear that Mastery of the art of incantation will serve you well. Click here for a comprehensive list of spells revealed in the Harry Potter tales. Or, check out the advice of the various marketing communication wizards available to you, at no cost, courtesy of the world wide web. Above all, start with good writing. That is your personal magic wand.

The Century of the Entrepreneur

2010-01-26T08:00:00-05:00

"You can carve this in stone: the 21st century is the Century of the Entrepreneur. And the world is a better place as a result!"

Jim Blasingame

A few years back Jim Blasingame declared that we were entering the "century of the entrepreneur." He listed four principal factors contributing to his conclusion: rapid advances in technology; an expanding view of market risk as exciting; a cultural shift in the definition of an appropriate work venue, with home now included; and broader public understanding of the power of equity participation.

Now, only ten years into the new century, we find ourselves in the midst of global turmoil. Equity markets are undergoing major re-structuring. Traditional weather patterns are now unreliable, disrupted by climate shift; and famine lurks. Political and religious unrest abounds,including organized terrorism. Piracy is most definitely back. Yikes!

Was Blasingame wrong?

No, he was absolutely correct; but I'd like to offer a handful of of amendments to his list of entrepreneurship accelerators to be considered.

Technology shifts clearly stay at the head of the class. Some specifics, however, are worthy of note. In the industrial 20th century the ability to communicate globally began at near zero, but ended at universally available at almost no cost. A business necessity that once demanded large corporations with economies of scale is now available to you and me, from any location. And, on top of that, modest quantities of just about any product can now be economically transported around the globe in hours or days.

There are also some additional, less visible, but quite powerful, changes in the entrepreneurial landscape. For example, computer-assisted design and manufacturing advances have radically reduced the time and cost of creating new products. Once again, the scale factors required of 20th century industrial giants have been made available to individuals and small enterprises. And the internet. Ah, the internet. Cheap marketing and advertising resources have never been so accessible.

BUT, the increasing cost of energy for transportation is driving many types of production, once centralized for economies of scale and moved around the world chasing cheap labor, to be re-de-centralized to be nearer to supplies of raw material and/or consumer markets. (Sorry about the double hyphenation. It just seems right, but only this once, of course.) This is particularly evident in emerging trends in food production. Decentralization implies smaller units of production, which translates into the opportunity for entrepreneurial entries into markets formerly dominated by large organizations. Global distribution of centrally, mass-produced goods (which was essentially a 20th century invention) is already falling out of favor, for straightforward energy cost reasons.

Risk is, of course, as Blasingame pointed out, exciting. But it's still risk. However, the recent economic shakeout definitely changed the relative attractiveness of entrepreneurship. It suddenly became less risky. What? Yes. Those stable, secure jobs in large industrial and financial institutions just aren't as secure as they once seemed. The relative risk of personal entrepreneurship as compared to traditional employment options has been drastically reduced. Which is better: being at risk and in the dark; or being at risk and calling the shots?

So, the 21st century entrepreneur can design and produce sophisticated products as quickly and cheaply as a large company, communicate with clients instantly, anywhere, and transport goods in small quantities on a global scale, all at a lower relative personal risk than ever before.

The Market is there. The ability to perform Magic is more widely available than ever before. If you have the Moxie, go find some solid Mentors, and give entrepreneurship a try. Jim Flowers agrees with Jim Blasingame. This is most definitely the century of the entrepreneur. And making the world a better place should be a piece of cake. There's unbelievable room for improvement.

Here's to the crazy ones...

2010-01-19T06:00:00-05:00

Here's to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes... the ones who see things differently -- they're not fond of rules... You can quote them, disagree with them, glorify or vilify them, but the only thing you can't do is ignore them because they change things... they push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do.

Steve Jobs

Some people never go crazy. What truly horrible lives they must lead.

Charles Bukowski

Part of being sane, is being a little bit crazy.

Janet Long

Do something. If it doesn't work, do something else. No idea is too crazy.

Jim Hightower

You have to forget about what other people say; when you're supposed to die, when you're supposed to be lovin'. You have to forget about all these things. You have to go on and be crazy. Craziness is like heaven.

Jimi Hendrix

Some (maybe most) people don't understand MOXIE. They shake their heads in disbelief when apparently intelligent, clear-thinking people decide to chase entrepreneurial dreams instead of finding good jobs that promise stability and security.

This presents a special problem for all you start-up founders. Not only must you identify and overcome all the obvious business challenges, you must also deal with all the skeptics among your friends, family, and the investment community. All too often they fail to understand that you only look crazy - from their perspective, certainly not from yours.

Sometimes they're right, though. So it's not crazy to do one more re-check of the data, one more test of your assumptions. Make sure you're intelligently audacious, not actually crazy.

Are you attacking a real Market, not one you have imagined? Do you have some powerful Magic that will attract spell-bound clients? Have you surrounded yourself with seasoned Mentors who can provide the information and perspective that you lack?

If your business concept can pass the Four Fundamental Factors test, you might even be able to convince the skeptics. And sometimes the Magic really works.

And that's when Jimi is absolutely right. "Craziness is like heaven."

Experts Agree. Best MOXIE Posts of 2009.

2010-01-12T06:00:00-05:00

The polls are closed. The readers have spoken.

The most popular, and presumably most useful, MOXIE posts from the past year are presented below.

1. How to eat a five hundred pound marshmallow.

The vast gorge that lies between noble intent and significant achievement is, of course, quite real, and widely documented. Lofty goals are commonplace. Noteworthy achievement? Not so much. And this is particularly true for entrepreneurs and their ambitious startup plans. (More...)

2. Four really useful habits.

I'm pretty darned sure that these four things will take most anybody a long way down the road to achievement and contentment: clarity of vision, commitment to relevant action, adherence to noble principles, and focus. (More...)

3. Success - Ten Traits Supporting Four Fundamental Factors.

"Success or failure of a new venture is determined very early, on the strength or weakness of only a few fundamental factors, four to be exact. Those four factors are Moxie, Market, Magic, and Mentors." (More...)

4. I'm not losing. I'm learning.

For a scientist, an experiment that does not confirm the hypothesis is not a failure. It is a useful stepping stone to a fresh hypothesis. For a musician, a bad review provides clarity on how the performance can be improved. For an entrepreneur, a rejected product is a clear message about the true needs of the marketplace. (More...)

5. Secret Revealed! How to Get What You Want...

One of the most common reasons given for pursuit of entrepreneurship is the need for autonomy, the need to be in charge. Over and over again, unfortunately, I meet people who have become slaves to the businesses that were supposed to give them freedom. That's just plain sad. (More...)

6. The inconvenient truth about competitors.

A sadly pervasive startup mistake is the presumption that a market leader will not react forcefully or cleverly to the entry of a fresh competitor - or that there will not be yet another entrant, complicating the situation even further. (More...)

Start-up Success - Four Fundamental Factors

2010-01-06T19:12:57-05:00

I've been hanging around start-ups for a while - roughly forty years and counting. Over that time the information I've collected has clustered together to convince me of three things.

Success or failure of a new venture is largely determined very early on the strength or weakness of only a few fundamental factors, four, to be exact.
Those four factors are Market, Magic, Moxie, and Mentors. If these are not "right", nothing else really matters. It's not that a business with some weaknesses in these areas can't survive; but it's highly unlikely that it will flourish.
The most important of these factors is Moxie - the energy, conviction, and determination of the founder/entrepreneur, the leader.

There are always noteworthy exceptions to rules of thumb; but the fact that they are noteworthy means that the general rules are reasonably valid.

I test business concepts proposed to me on those Four Fundamental Factors; and I encourage potential entrepreneurs to test themselves in the same manner. Similar encouragement applies to people considering association with early stage businesses - employees, investors, strategic allies, clients.

And I always, always look first to the fire behind the eyes of the leader. I always START WITH MOXIE.

You can test your own entrepreneurial ideas against the Four Fundamental Factors by using my simple Four Factors Self-Check.

You can also watch and listen to me talk about all this on YouTube.

Three deadly temptations

2010-01-06T11:45:00-05:00

"I can resist anything but temptation."

Oscar Wilde

Three deadly temptations, indeed. There are, of course, many, many more. But three is a good number in a headline - enough to matter, not enough to scare people away.

So which three has Jim Flowers selected for today's sermon? Well, I recently re-read the Book of Pride and found several variations on that time-honored theme that bear directly and regularly on start-up businesses. Succumb to these temptations and you risk serious damage or even failure.

Deadly Temptation Number One: attack on too many fronts. When your product may be reasonably applied across a variety of markets or industries, it's really easy to lose focus and spread yourself too thin. Example, suppose you invent a uniquely effective point-of-sale advertising device. Such an item might be valuable to any business that sells something in a face-to-face mode. That would include at least book stores, restaurants, and real estate agents. Just imagine the variations required in your pricing models, promotional schemes, distribution channels, and even niche-specific product features to address all those markets. One set of Magic tricks simply can't mystify all audiences.

Deadly Temptation Number Two: underestimate your competition. I've talked about this before. How many times have you heard someone say "We really don't have any competitors. Our product is truly revolutionary." Ha! If you really have no competition, then there may well be no market at all. At a minimum your prospects have the option to take no action whatsoever, leaving you with a great product, but no sales.

Deadly Temptation Number Three: believe your own hype. There are fine distinctions between and among appropriate self-confidence, pride, and vanity. The first is about reliably knowing that you are good by some independent set of measures. The second is about personally valuing your "goodness" above that of others. The third is about valuing the opinions of others above your verifiable worth.

There is, as you might expect, a vast library of thoughtful commentaries on pride and its close relatives. Here is a sampling...

"Pride is a powerful narcotic, but it doesn't do much for the auto-immune system."

Stuart Stevens

"Swallow your pride, you will not die, it's not poison."

Bob Dylan

"Pride grows in the human heart like lard on a pig."

Alexander Solzhenitsyn

I know who grows my arugula

2009-12-29T14:18:56-05:00

"Each man takes care that his neighbor shall not cheat him. But a day comes when he begins to care that he does not cheat his neighbor. Then all goes well -- he has changed his market-cart into a chariot of the sun."

Ralph Waldo Emerson

Gwynn Hamilton and Robert Webster grow food for my family. They garden at the Stonecrop Farm in Newport, Virginia, with the faithful assistance of their five-year-old daughter, Zoe.

We always stop at their booth at the Blacksburg Farmers' Market. They know our names, remember what we like, and apologize when we arrive late and they have sold out of our favorite, arugula. But they definitely are not our private gardeners. It's quite clear even to a casual observer that they genuinely care about all their customers, not just us. And to reciprocate that caring, by being a friendly and faithful repeat buyer, just comes naturally.

What if each business relationship had that depth, that warmth? World peace would be within our reach. I'm sure of it. Swords would become plowshares, no question.

Every entrepreneur makes a choice as to how to relate to clients. The seller/buyer interaction is part of each business's Magic formula. And I am convinced that people prefer to do business with other people, rather than with machines or systems. There is intrinsic human value in community, even when the individual relationships are digitally enhanced.

It's not easy for a global company to create local relationships. But it's not impossible. Wal-Mart is not required to employ smiling greeters. Rackspace is not required to provide "fanatical support" from pop-up, human "rackers."

So, I offer you this simple strategic consideration for 2010.

As the New Year emerges, fresh life rising from the composted past, I challenge myself, and you as well, to seize the opportunity to beat at least one sword into a plowshare, to change one humble market-cart into a warm and radiant chariot of the sun.

I'm not losing. I'm learning.

2009-12-17T08:00:00-05:00

"Life is like playing a violin in public and learning the instrument as one goes on."

Samuel Butler

Breaking news. You heard it here first! Unskilled violinists don't receive much applause. And off-target products and services don't sell.

So, what happens to the aspiring violinist who cannot move his audience? What happens to the entrepreneur whose first product flops?

My son is a musician. His career choice has exposed me to all sorts of people and situations that would have otherwise been forever hidden from me. A few years ago, we were visiting a college as part of the audition tour required of every music major. During such visits the aspiring performer is interviewed and then demonstrates his skill for the professors who will be charged with transforming him into a reliable applause generator. The parents wait in the hall.

The halls of these music institutes are festooned with all sorts of flashy concert posters and album ads, of course. But they are also home to a wealth of inspirational materials. Here is a keeper.

"Amateurs practice until they get it right. Professionals practice until they can't get it wrong."

Wannabee entrepreneurs (and musicians) try only until they hit the first serious obstacle. Then they lose, precisely because they believe they are losing.

Winners keep at it until they succeed. They win because they understand that they are not losing, but that they are learning.

Product acceptance is disappointing? You have two choices. Declare defeat and go find a job. Or address the current biggest complaint and try again. Then repeat the cycle as long as your Moxie holds out.

Ultimately, you will learn so much about your Market that you can't get it wrong. You will have mastered your Magic.

By the way, the musicians and the scientists all have Mentors. They are built into the system. I'm just saying...