So you want to launch a business...

The inconvenient truth about competitors

2009-11-13T09:00:00-05:00

Competitors are generally smarter than you wish they were.

If you haven't seen the movie Butch Cassidy and the Sundance Kid, picture this.

Two intrepid, highly creative entrepreneurs of the late 19th century have annoyed their competitors. The entrepreneurs are, in fact, notorious train robbers; and the competitors are professional security agents engaged to bring them to justice. The entrepreneurs are trying to outrun their pursuers in the high desert of the American Southwest. They just can't shake the skillful and persistent agents. They are cornered.

Butch Cassidy: They can't track us over rocks.
Sundance Kid: Tell them that.
Butch Cassidy: I couldn't do that. Could you do that? Why can they do it? Who are those guys?
Butch Cassidy and the Sundance Kid, 1969

When Butch and Sundance concocted the business plan for their gang, the Wild Bunch, they fell into a very common trap. They underestimated the competition. They thought they were up against small town sheriffs and civilian deputies. With the element of surprise, strength of numbers, and better horses, they could swoop in, rob the train or the bank, and be practically un-catchable.

Then the railroads changed the game. They hired the Pinkerton Agency to destroy the Wild Bunch. The Pinkerton professionals could ride the best horses, hire expert trackers, and assemble awesome firepower.

By some accounts, Butch and Sundance stole over half a million dollars before they were forced to flee to South America. There are differing versions of their final days; but they most certainly did not die peacefully.

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.

The initial Market advantage provided by your Magic can evaporate almost instantly as a result of defensive action by the previous owner of your customers, or by the appearance of something even more magical that defeats you both. Failure to consider this inconvenient truth can easily result in your untimely demise.

Ouch!

P.S.

The movie is really worth watching, by the way. Here's one reviewer's comment.

"Calling Butch Cassidy and the Sundance Kid a great Western is like calling Dom Perignon a really great bottle of grape juice. Yeah, that's correct, but you're missing the point entirely."
Christopher Null, 2006

Good company leads to good company.

2009-11-09T10:00:00-05:00

"When the character of a man is not clear to you, look at his friends."

Japanese Proverb

In business, as in the more private parts of my life, I am known, at least in part, by the company I keep. I am also supported and encouraged by those around me - or not, depending on who they are. And I am informed and advised by those around me - sometimes to my delight, other times to my dismay - again, depending on what sort of people I have chosen to place at my side.

StartupBooster, Guna Deivendran, asks and answers some serious questions about our networks.

How many true friends do you have? Are you in touch with them on a daily basis? I believe many entrepreneurs don’t take this particular subject seriously before they go about starting their own new business. If you maintain your relationships, it will be one of the best tools you can tap into when you launch your new startup. In most cases, this will not cost you a penny. These are the people you can count on to provide you with some feedback for your new website, new service or a product. They are the people that can spread the words about your products and services. They are your free marketers when you are ready to launch your next startup.

I encourage every company founder who comes to see me to examine, cultivate, and expand that close circle of fellow travelers on the very, very bumpy road of entrepreneurship. There actually is safety in numbers.

What do other have to say about this topic? As you might imagine, it is a very rich subject. Here is a tiny sampling.

"Friendship is born at that moment when one person says to another: What! You too? I thought I was the only one."

C. S. Lewis

"If a man does not make new acquaintances as he advances through life, he will soon find himself alone. A man should keep his friendships in constant repair."

Samuel Johnson

"You can make more friends in two months by becoming interested in other people than you can in two years by trying to get other people interested in you."

Dale Carnegie

"My friends are my estate."

Emily Dickinson

And, perhaps best of all, my friends, if they are truly friends, constant replenish my supply of Moxie. They renew me with their spirits, so that I can stay focused on my vision, and committed to the actions that will make it real.

Now that's just plain cool.

Scratch where it itches.

2009-11-03T10:00:00-05:00

"I have a simple philosophy. Fill what's empty. Empty what's full. And scratch where it itches."

Alice Roosevelt Longworth

And do those things in such as way as to make everyone desire that you be the filler, the emptier, and the scratcher, both now and in the future.

Observe these practices and you will reasonably assure that you have a powerful core strategy for your startup business. You will very likely master both Market and Magic, two of the Four Fundamental Factors required for entrepreneurial success.

Of course, you will still need a lifetime supply of Moxie and many, many Mentors.

Think about this one more time, please. "Scratch where it itches." How could that be more obvious? And yet, so often, I meet aspiring tycoons who clearly demand that the marketplace learn to itch where they prefer to scratch. They want to sell better mousetraps to people who aren't troubled by mice. They fall in love with their inventions and are blinded by that passion.

Clear, reliable market knowledge is absolutely essential to successful entrepreneurship. Without that any startup is gambling on hunches, rather than investing in opportunities.

A substantial fraction of all house fires begin on the stove top. Wouldn't it be smart to install an automatic fire extinguisher in your range hood? That seems logical at first blush. But the risk is perceived as low by almost all consumers. These devices exist and do not sell well at all. In fact, how many of us even bother to keep a fire extinguisher in our homes? We install smoke detectors, but don't bother with fire extinguishers. Go figure.

But truth is truth, after all. No itch? Don't bother to scratch.

Who you know is what you know.

2009-10-21T09:11:54-04:00

It's not what you know, it's who you know... because who you know is what you know.

Jim Flowers just become a real fan of Karl Fisch. Read what follows and you may, too. Here's a excerpt from a recent post on Karl's blog.

As I was thinking about this the other day for some reason an old phrase popped into my head.

It’s not what you know, it’s who you know.

Now, I’ve never really liked that phrase because it seemed to elevate connections over competence, but I’ve also always realized that there has been some truth in it (whether I liked it or not). But for some reason my brain connected it with my musings about an “elevator pitch” for PLNs, [personal learning networks] and what came out was:

Who you know is what you know.

Let me be clear, I’m not saying that there’s no need to know things – we all still need to know quite a few things, and how to do quite a few things. But I think that phrase is increasingly becoming true, that who you know – your PLN – more and more defines what you “know” and are able to do.

If you have a well-developed, well-nurtured learning network, and you have the access and the skills necessary to utilize it, then you “know” more than someone who does not. You truly have the ability for “just in time” learning. You can reach out to your PLN with a question, with something you want to know more about, and they can help you learn about it. Even if someone in your network isn’t an “expert” on the topic, more than likely someone in your network knows someone who is.

Thank you, Karl, for this incredibly useful clarification. It bears directly on something I recently blogged on Startup Professionals Musings. Relationships are unbelievably powerful tools for entrepreneurs - and for the rest of us, too, of course. Every relationship is a potential Mentor, someone from whom I can receive interpreted information - not instructions, mind you - but the information I need to make better decisions.

Karl echoes and amplifies what my friend and colleague Anne Clelland says in her Handshake 2.0 tag line, "It's still who you know!"

Success - Ten Traits Supporting Four Fundamental Factors

2009-10-13T06:00:00-04:00

"Innovation is the specific instrument of entrepreneurship."

- Peter Drucker

"I'm convinced that about half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance."

- Steve Jobs

"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."

- Jim Flowers

Entrepreneurship definitely does not equal innovation, but they sure do complement each other in powerful ways.

Here are some behaviors/traits/skills that support innovation, according to Professors Jeff Dyer of Brigham Young University and Hal Gregersen of Insead...

Associating - a cognitive skill that supports connections across seemingly unrelated questions, problems, or ideas.
Questioning - an inclination to ask "what if", "why", and "why not" questions that challenge the status quo and open up the bigger picture.
Observing - the propensity to closely observe details, particularly the details of people's behavior.
Experimenting - regularly trying on new experiences and exploring new worlds.
Networking - connecting with smart people who have little in common with them, but from whom they can learn.

These do not match up well with the various lists of entrepreneurial traits that pop up in online investigation of the topic. Recurring themes in definitions of an entrepreneur include...

Clarity - true entrepreneurs absolutely "know" where they are headed.
Focus - successful entrepreneurs stay on task - period.
Persistence - they refuse to give up.
Self-confidence - they never doubt their ability to succeed.
Courage - they take risks that most others would not take.

These entrepreneurial traits may be applied to an innovative vision, to be sure. Apple, for example, was both innovative and entrepreneurial. They may also be applied, on the other hand, to a perfectly common vision, such as opening a snack bar or an auto repair shop.

My simple-minded shorthand for all the entrepreneurial traits is MOXIE. And the innovative traits relate directly to the other three Fundamental Factors: Market, Magic, and Mentors.

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

2009-10-10T23:59:00-04:00

It's really quite simple. Not easy, not by a long stretch. But simple, annoyingly simple.

It annoyed me anyway. Somewhere, somehow, I came to the realization that I was faithfully following the American yuppie rule book. I was nailing "the agenda." Good job, nice house, two cars, wife, kids, church membership, everybody healthy. The trouble was that I couldn't manage to feel fulfilled or contented.

So I set out to fix my life. Getting off the agenda actually proved to be relatively easy. It was expensive, and seriously painful; but it was easy. Quit the job. Get divorced. Find some new friends.

Then reality set in. I didn't have a fresh agenda to replace the one I had discarded.

Possibly the most challenging obstacle on the path to fulfillment and contentment is the requirement to figure out what the heck fulfillment and contentment look like. Achievement is do-able, but the other two are elusive. You can test my bold assertion quite easily. Define those two terms for yourself.

If you can do it easily, I salute your unusual self-awareness. Stop reading this post immediately. You've already wasted some valuable time.

I see that you're still reading. Ha! I was right - for once anyway.

It appears to me that most people can easily name a particular near-term change that would improve their situation; but they struggle mightily with describing a situation that would qualify as ideal.

The most common quick fix is money. Duh. Close, but probably second is love. But what if you could live anywhere in the world? Where would you choose to live? How would you spend your days? How would you value yourself? What sorts of people would surround you? What relationship would you have with each of them? How would you dress? What would you eat?

Too many choices!! Too many options!! My head hurts. Barry Schwartz talks about this in The Paradox of Choice. Jonathan Mead offers help to the most adventurous in Reclaim Your Dreams.

Well, guess what, my friendly entrepreneur. If you can't figure out what you want, that is precisely what you will get. If you let your startup business take you where it wants to go, you have a rather slim chance of arriving at the world headquarters of fulfillment and contentment.

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.

And I suspect it's because they hadn't figured out where they really intended to go.

Four really useful habits

2009-10-07T06:00:00-04:00

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.

1. I try to stay in touch with what really matters.

What really matters to me is not what other people tell me should matter. It's what my own deepest inner voice tells me. It's what I think about when I find myself awake in the middle of the night. It's what I want to share with the people I love. It's my vision of an ideal world. It's how I want my life to work out.

2. I commit to relevant actions, not outcomes.

I can control the actions I take. But, except in trivial cases, I can't control the outcomes they will produce. Life is simply too complicated. There are too many uncontrollable outside influences. If I arbitrarily decide that I will sell 100 widgets, I may or may not succeed. If, on the other hand, I commit to improving the specific skills, techniques, and work habits related to selling, my effectiveness will definitely increase. If I can master the details, I will then sell as many widgets as the marketplace permits me to sell.

3. I constantly test my vision and my actions against my fundamental principles.

I assume you have principles. I do. Most people appear to have at least a few. Some wise person once told me this. "If you can't talk about your vision with your grandmother, think it over just one more time. If you wouldn't want your action to appear on national television, reconsider your commitment to that action."

4. I do my best to stay focused.

Just say no to more good ideas!! I like Jonathan Mead's take on this. He says that people who can ignore their good ideas "don’t chase the stuff that seems to have potential, but doesn’t really matter. They only do the stuff they must do: what they’re insanely passionate about and what they were born to do." Focus also preserves a person's precious supply of MOXIE. That's a big, big deal for an entrepreneur trying to succeed in a risky startup situation.

Aim. Fire. Ready.

2009-09-28T13:08:43-04:00

A leader or a man of action in a crisis almost always acts subconsciously and then thinks of the reasons for his action.

Jawaharlal Nehru

Sometimes the mind, for reasons we don't necessarily understand, just decides to go to the store for a quart of milk.

Diane Frolov and Andrew Schneider, Northern Exposure, Three Doctors, 1993

When it comes to something like dating, we all readily admit to the importance of what happens in the first instant when two people meet. But we won't admit to the importance of what happens in the first two seconds when we talk about what happens when someone encounters a new idea, or when we interview someone for a job, or when a military general has to make a decision in the heat of battle.

Malcolm Gladwell, author of Blink

So - what happens when we act in response to what Gladwell calls "rapid cognition?" What happens to us when others do the same? Do we have a choice? Or does it just happen?

Should grooming matter to an entrepreneur? Must elevator pitches be airtight? What's in a name?

Comments are open. Let's have a hot discussion.

Goal-setting - the ugly secret

2009-09-21T06:00:00-04:00

Inherent in every goal is permission to stop trying.

This is particularly dangerous in competitive environments - business, for example. When specific, static targets are used to define the meaning of the enterprise, outcomes tend to be less than optimal, particularly for start-ups. Why? Because, according to Gene Bellinger, as we near our goals most of us simply do not try as hard. Our motivation wanes. He uses systems theory to explain the phenomenon. I prefer simple metaphors. I use sports.

In 2006, Phil Mickelson led the U.S. Open by a stroke as he stepped to the 18th tee. A par would win. A bogey would force a playoff. He had been playing steadily, reliably. He was nearing his goal. And he lost his edge.

Once focus is lost, once tension is relaxed, the door is open to the adversary. Phil made four poor shots in a row and squandered his chance for a historical run of three grand slam wins in succession.

In the 2007 Fiesta Bowl, upstart Boise State led Oklahoma 28-10 after 3-1/2 quarters of play. Oklahoma sucked it up and roared back with to take the lead. With seven seconds left to play Boise State was 50 yards out. Oklahoma had it won. They only had to survive one more play. Oops. At least they managed the tie that Phil had blown. They didn't lose until overtime. Oklahoma, it might be argued, played the game from a survivor mentality. Boise State, on the other hand, played the entire game, and also the overtime, from an underdog mentality.

Many commentators have suggested that Tiger Woods plays golf as if he were trying to destroy his opponents. His record is not perfect, of course. No one is perfect. But he almost never surrenders a lead. In fact, he typically attempts to build his lead, even when logic might suggest defensive play.

Some football coaches are criticized for continuing to score against a clearly defeated opponent.

Neither Tiger nor the football coaches want to lose their edge. Regaining it is too difficult. They look beyond the current game. Relaxing and permitting sloppy play amounts to practicing mistakes, obviously a sub-optimal application of time and energy. That's why the coaches never tell their starters to let up. But to show good sportsmanship, they do usually send in their less skilled players.

So - what is the substitute for traditional goals?

Bellinger argues for pursuit of continuous improvement as a better model. In industry this is called the Deming Cycle. Vince Lombardi demanded "relentless" pursuit of perfection. (The Super Bowl trophy is named after him, by the way.) It's not just your blogging buddy Jim Flowers arguing that traditionally conceived goals contain the seeds of eventual defeat.

For any entrepreneur, commitment to a powerful, continuous process in support of a grand vision is far more reliable as a motivator, and as a management model.

The Simple Secret of Strong Brand Identity

2009-08-20T06:00:00-04:00

"Almost all absurdity of conduct arises from the imitation of those whom we cannot resemble."

Samuel Johnson

"Always be a first-rate version of yourself, instead of a second-rate version of somebody else."

Judy Garland

Branding expert, Alina Wheeler, relates those personal exhortations to corporate branding.

"In psychology, authenticity refers to self-knowledge and making the right decisions for the right reasons. In branding, companies who know they are, what they stand for, and how they are different, have a competitive advantage."

The secret really is a simple one. Nobody remembers the imitator. They remember the original. Be original, and make your originality obvious to the world!