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Greek Endeavor Entrepreneurs from Hellas Direct give insight on the wonderful world of fundraising

Hellas Direct

Reprinted from the Hellas Direct blog. Original article here.

Raising capital is one of the hardest things you will ever have to do as an entrepreneur. Whether you are seeking your first few thousand euros or looking for tens of millions, pitching to an investor is a test of both character and tenacity.

In setting up Hellas Direct we raised EUR 8.5m in angel financing. We approached more than 2,500 investors and we met up with 300 of them. This was a long rollercoaster ride, which spread over 14 different countries and lasted approximately 18 months. It was a humbling experience, but one that we would not change for the world. It was a journey, which taught us a number of lessons and gifted us tons of entertaining stories to share with friends in gin-and-tonic sessions to come. How else could one have met a Russian oligarch, drink afternoon tea at the House of Lords and find himself bodysearched in a Tel Aviv restaurant, all within two weeks?!

We were lucky enough to have a pretty unique proposition to share with the investment community. At the time that we began our fundraising there were few people looking to set up a new business in Greece, let alone in a sector as highly specialised (and blatantly boring) as car insurance. This helped us differentiate our message and it enabled us to suss out quickly whether a particular investor would be of relevance. Hellas Direct – or ‘Project Dias’ as it was then mystically called – was coined as  «the ultimate contrarian play», and we were often referred to as «those Goldman guys» or «the Greek chaps», alongside different adjectives that in one way or another questioned our sanity. This, in its own right, was helpful. In the goldfish-memory world of international investing we became relevant, we marked our own territory and we made a lasting impression.

If there is one piece of advice that we would like to pass on to all entrepreneurs venturing out to find investors is to make themselves memorable. Find a niche, own it and make sure that everyone appreciates that this is your domain. Become the go-to person in your industry, a knowledge hub. In order to do that, you will need to be 100% consistent in your messaging. One of the greatest mistakes we made at the beginning of our journey was to try and change our tune according to what we thought investors wanted to hear. This is a dangerous game to find yourself playing and it can do much more harm in the long-run than losing out on some immediate investor leads. The investment community is a surprisingly small place, with a lot of interconnected communication channels. In order to build long-term credibility, it is important to be yourself, to stick to your story and to share the same information across the board. Few investors would back a venture without calling some people first to check you out – any ambiguity or mixed feedback there could jeopardise your chances of getting funded.

“In the goldfish-memory world of international investing we became relevant, we marked our own territory and we made a lasting impression.”

So, how does one get started? Is there a magic formula, a plan, a recommended course of action? What we have discovered along the way is that different things work for different people. Most of our successes came from cold-calling. A number of our current shareholders we had never come across before pitching them our idea. Other entrepreneurs have done fantastically well by just relying on their own network and adopting a much more clinical approach. There is no right answer as such.

We thought we’d share with you five quick pointers to help get you motivated and set you off on your fundraising. The below definitely helped us keep sight of our end goal. We hope you find them useful!

 

A.    Get in the ring

• It is not a shame to be asking for money. Most investors have been there before and they respect you for doing so. Whatever your educational or corporate background may be, let your fears subside and start emailing!

• Plan well. It is easy to fall into the trap where you think you are making progress but you end up spinning wheels. Remember the 80-20 rule and seek results not perfection. We put together dozens of target investor lists which proved themselves useless, despite their impeccable formatting and colours.

• Break down the run into smaller, easier to complete, sprints. The aim of an email is to get you a face-to-face meeting. The target of that meeting is to get you a second meeting. The goal of that second meeting is … you get the drill! We had to meet some of our investors close to twenty times before they actually committed. Be patient and keep track of everything.

 

B.    Know your audience

• Reaching out to someone you do not know is never easy. Try to educate yourself about them as much as you can. Ask common friends, google them, flick through newspaper archives. You can never research someone too much.

• Stalk people! By following people’s tweets, checking them out on facebook and tracking them on linkedin can help you get a much better idea as to what these people are like, what drives them and how they express themselves. Think of this as the social media checks you’d do on someone before going on a date.

• Don’t assume that a social media contact is a credible introducer. From our experience, it is often better to approach someone ‘cold’ than getting a ‘lukewarm’ introduction.

 

“It is important to understand that investors do not need you – the only reason they would respond to you is because you managed to attract their attention somehow.”

 

C.    Personalise your approach

• The investors you are reaching out to have been approached by hundreds if not thousands of different entrepreneurs through time. They have probably seen your exact same plan a couple of times before too. It is important to understand that investors do not need you – the only reason they would respond to you is because you managed to attract their attention somehow. We were told by an internet billionaire’s family office that the only reason why they decided to see us out of 700 business plans submitted on that day was because of the title of our email!

• Find a hook. Each investor has a soft-spot. It could be their alma matter, a charity they are involved in, a cause that they believe in. Try to figure the best approach via their social media interactions and use such a ‘hook’ as a means to engage in a more meaningful communication. In all likelihood, the investor will know exactly what you are doing, but they will respect you for the effort and for sticking to the protocol.

• Keep your emails long enough to cover the bare essentials but short enough to keep things interesting. Don’t try to overload people with information. Remember that the goal here is to get any sort of response – even negative – on which you can work on.

 

D.    Follow up

• It shocks us seeing entrepreneurs who don’t follow up on meetings they had requested in the first place. You would be surprised how many people get this wrong. Sending a polite thank-you note via email is the very least one should do – preferably straight after finishing the meeting.

• Following up on topics specifically discussed during a meeting is always a winner with investors. Books generally come across as a thoughtful approach. We were probably the largest Amazon buyers of Brett King’s «Bank 2.0» when it came out in 2009.

• Following up is particularly important in the case of a negative answer too. Remember that these people may serve as points of reference to future investors you may need. The last thing you would want is for them to express a negative opinion on your manners and etiquette!

 

«if you are going through hell, keep going»…

 

E.    Keep calm and carry on

• You will need to kiss a lot of frogs before you get to your prince.

• You will often think of quitting but don’t let that get you down.

• As Churchill said: «if you are going through hell, keep going»…

 

Endeavor cited in Harvard Business Review: Focus entrepreneurship policy on scale-up, not start-up


Reprinted from Harvard Business Review. Original article here.

By Daniel Isenberg

Would you allocate more of society’s resources to giving birth to more babies or to raising children well? Now, think about enterprise creation and the challenge of economic growth. Societies’ leaders need to rebalance entrepreneurship policy towards scale, not start.

In recent years, we have been witnessing a significant global shift in attitudes towards entrepreneurship in countries around the globe. This is reflected in the dramatic proliferation of start-up programs: Start-up America, Start-up Chile, Start-up Russia, Start-up Britain, Start-up Weekend, and dozens of others. “Start-up” has replaced “Silicon” as the reigning entrepreneurship buzzword: There is hardly a country or city that is lacking a start-up program.

Unfortunately, this is being guided almost exclusively by a narrow conception of entrepreneurship as consisting primarily in the starting-up of an enterprise. Equating entrepreneurship with start-up is not wrong; it is just very incomplete. It is also problematic because of two flawed implied messages: The first is that the most difficult and important task of the entrepreneur is launching his or her venture. The second is a notion we might call “the more the merrier” — i.e., the more start-ups, the more successful the program. Quantity of start implicitly trumps quality of scale.

Both of these messages are doubtful. If we look at entrepreneurship in terms of extraordinary value creation and capture, which I do, then it is clear that value can be created and captured in a large variety of ways, and there is no a priori reason to think doing this from scratch via a start-up is the only or even the best way. Extraordinary value creation may involve acquiring, re-purposing, spinning off, or recombining underutilized or undervalued assets, or what my Stanford colleague George Foster calls “re-starts.” The Kaspersky’s, for example, founded their leading anti-virus company by spinning it out from a struggling Russian institute they worked for. Over the past decade or so, search funds have become an effective vehicle for acquiring undervalued companies to infuse with capital, management and growth. Family businesses, large corporations, R&D centers and universities — any of these can be essential in creating or freeing up assets rich with untapped potential. And yet:

Extraordinary value creation cannot occur without growth, and entrepreneurial growth post start-up has numerous challenges which can be an order of magnitude more difficult than simply starting a venture. Growth entails developing a powerful sales and marketing machine, building an organization by hiring and managing diverse groups of people, and knowing how to acquire strategic inputs such as the right kinds of capital and suppliers. Growth requires amazing amounts of energy and dedication, not to mention smarts. Forward-looking policy, as well as culture and the private sector, must support all these skills and resources more than it does at present.

Indeed, when I dig into examples of start-up programs, ranging from Scandinavia to the Middle East to both North and South America, scale-up is the far bigger challenge: After two years and $12 million, Start-up Chile’s largest resident start-up employs three people, according to Horacio Melo, the CEO. A comprehensive set of start-up programs and policy reforms in Denmark in the early 2000s led to a dramatic increase in the numbers of ventures formed, but when analyzed five years later, the vast majority had plateaued at a few employees, and fewer than 1% met the fairly modest criteria set to be considered “growth” ventures.

Chile and Denmark’s policies are not “wrong” (in fact, in Denmark this finding has provided policy makers additional impetus to strengthen efforts to crack the code of scale). The lesson is: scale-up is so much harder than start-up entrepreneurs (and policy leaders) realize. As one of my successful entrepreneur friends warns, “This is tough bloody s[***].” We need to turn the focus on growth-after-start: growth will not somehow take care of itself. To return to the imperfect analogy of my lede above, anyone who has been a parent knows that the long and complicated job of growing a healthy, educated and moral child is vastly more challenging than giving birth. I vividly remember how our first birthing class spent hours on breathing and epidurals, yet I had no clue about how to change a diaper or deal with a rash let alone be a father of teenagers! And societal resources required to formally and informally prepare parents for and support them in parenthood are immeasurably greater than for the birth process itself.

So it is just now dawning on many in business and government that when these start-up programs are successful in stimulating venture birth rather than venture scale, the tremendous challenges of growth may paradoxically become worse, not better, and can leave many stagnant or overvalued ventures that may have little real prospect of growth.

We can refocus policy on scale-up in a number of ways. One is structural: stop treating venture survival as an indicator of policy success and start looking at those that grow. It is also necessary for policy to facilitate extremely high levels of venture death and recycling in order to avoid a plethora of valueless start-ups. Focus much more attention on enriching the local labor pool, an essential aspect of an effective ecosystem. Entrepreneurs I meet with from Boston to Bangalore to Barcelona who have succeeded in obtaining market traction almost universally complain about the paucity of appropriately skilled people and managers to hire. Entrepreneurial ventures can never grow without talent, and the two basic types of talent needed — new employers and new employees — must evolve together.

Furthermore (and here is where the parenting analogy breaks down), experience and the existing data suggest that a very small number of high-growth ventures may be sufficient to generate almost all of the social and economic benefits of entrepreneurship. One venture which grows to 100 people in five years is probably more beneficial (to entrepreneurs, shareholders, employees, and governments alike) than 50 which stagnate at two. Endeavor has recently shown that just two or three unusually scaling ventures can have an utterly disproportionate impact on dozens of successors, and impact the entrepreneurship culture in a region.

Which is more important, giving birth or raising children? Obviously, birth is necessary, but it is greatly insufficient. In focusing entrepreneurship policy almost exclusively on start-ups we are favoring quantity of start-up at the expense of quality of scale-up.

A chat with Endeavor network member Fadi Ghandour: how to encourage entrepreneurship in the Arab world [Wamda TV]

Reprinted from Wamda. Original article here.

By Nina Curley

http://youtu.be/TvNKcCS7bSA

At the Abu Dhabi Media Summit last month, Fadi Ghandour discussed opportunities and challenges for entrepreneurs in the Arab world, in an hour-long talk, which you can watch here.

Afterwards, we had a frank chat with him where he explained that “the knowledge economy is the future,” noting that it is important for startups in the Arab world, especially in the tech sector, to realize that copying and pasting a model may be ok, but you have to innovate to make your startup relevant to the region.

By observing trends in developed economies, Ghandour explains that we can get a sense for what will happen in the Middle East and North Africa as the ecosystem develops. “What happens there will happen here,” he says, “but with a twist.”

He also stresses the importance of local innovations; “We don’t want to be only a consumer society, because a lot of the knowledge industry needs to be generated here.”

“Entrepreneurs are the creators of future jobs, and there is a high unemployment rate among all youth in the Arab, and that’s the biggest danger for stability in the Arab world – bigger than any other danger. But we’re not doing enough about it,” he explains. It is thus incumbent upon governments to enable entrepreneurship through easier business regulations, stronger broadband infrastructure, free trade in the region, and a freer movement of peoples between countries.

Ghandour adds that governments need to foster competition instead of protectionism to release entrepreneurs to innovate and build better products and services for consumers. “Small and medium-sized enterprises need to be encouraged,” he says, “Access to capital, access to knowledge, access to networks is where the future lies.”

How to find a good mentor (by an Endeavor Entrepreneur mentee)

Reprinted from Wamda. Original article here.

by Abdullah Alshalabi

Starting a new business is like having a baby. I’m no expert in raising kids, yet I know that when your first baby is born you’ll always seek your parent’s advice. The same thing applies when you have your first startup, you should find your parents (mentors) for your newly born baby (startup). Yes, your mentors will be your new parents.

You’ll need mentors that have gone through the ups and downs of an entrepreneur’s life. The mentors should be experienced entrepreneurs that previously built two to three startups and can advise you against making the same mistakes they did. Ideally, they will guide you when you are lost, support you when everyone is laughing at you, and will be honest with you when everyone else is just being nice. Good mentors are usually nice people too, and tend to follow the “Give before you get” mantra.

Unfortunately, good mentors are rare! I’m super lucky to have two great mentors helping us with our startup, fishfishme.com: [Endeavor Entrepreneur] Omar Koudsi, the co-founder of Jeeran.com, and Migeul Angel Ferrero, the co-founder of quehotels.com. They have opened our eyes to great opportunities and have saved us from doing crazy things.

Now, the question is “how do you get access to great mentors?”

Good question: first you need to do your homework. You need to find out who you want to be your mentor, and why. Don’t be limited by geography or nationality. Next, follow them on twitter and get to know a bit more about them. Let them know who you are by retweeting or replying to some of their tweets.

Next, try to find out if they are participating in regional events and try joining these events. Then, you have two options: 1) talk to them directly, in person or over email. 2) Find someone who can introduce you to them (the better option). Don’t mention anything about mentorship yet.

The next step to ask them one or two specific questions about some challenges you are facing at your startup, asking for their advice (over coffee or a Skype call). Do this a couple of times, and then introduce the idea of being a Mentor and a Mentee.

You can’t imagine the value of having a mentor until you have a good one yourself. It’s still uncommon in our region and people still struggle to understand what does the term “Mentor” means. We need to change this, and Wamda is already working on it; last weekend I attended a great event organized by Wamda called Mix N’ Mentor event (which is also coming to Dubai this Thursday). They invite experienced entrepreneurs and VC investors from all over the world to give entrepreneurs some feedback in their startups and to help them find their new parents (mentors).

I never dreamt I would meet Dave McClure of 500Startups in the Middle East, yet that was what exactly happened. I’m glad I got in touch with Omar and the Wamda team and came to this awesome event.

[From the left in the photo above: Omar Koudsi of Jeeran, Mohammed Alzubi of Global Investment House and Sand Hill Angels, and Dave McClure of 500Startups and Geeks on a Plane. ]

Building a culture of creativity: what companies can learn from Ferrari, art, and jazz

Reprinted from Wamda. Original article here.

By Oubai Elkerdi

Dynamic teams made of passionate, curious, and talented self-starters produce exceptional outcomes.

But building a highly dynamic team is easier said than done. It’s crucial to nurture individual curiosity, develop skills, and create opportunities for personal growth, while designing a workspace that fosters collective ideation, experimentation and improvisation.

Few employers are currently willing to really invest in creating thoughtful institution for growth, but smart companies understand that a focus on team culture is essential to sustainability and success. This is why, a few years ago, Ferrari launched a program that is entirely geared toward employee training and development.

In an HBR article, director of human resources and organization Mario Almondo was asked how Ferrari trains its employees to be creative, to which he responded:

“You can’t methodically teach creativity. But you can provide an environment that nurtures it. Several times a year, we run a program called Creativity Club that is designed to get employees’ creative juices flowing. We have six events at which employees meet various types of artists. We’ve had painters, sculptors, a jazz musician, a writer, a radio DJ, a photographer, a chef, an actor, an orchestra conductor, and others. The goal is for our employees to learn about how artists generate ideas and solutions.”

Ferrari isn’t the only company that cares about the personal growth of its employees. At Pixar University, 110 courses on everything from improv to self defense are taught to all employees. The point of this in-house education “is to push Pixar employees to try new things, work together better and test new ideas.”

In his book Innovate the Pixar Way, dean of Pixar University Randy Nelson says “the skills we develop are skills we need everywhere in the organization. Why teach drawing to accountants? Because drawing class doesn’t just teach people to draw. It teaches them to be more observant. There’s no company on earth that wouldn’t benefit from having people become more observant.”

At IDEO, employees are introduced to new ideas on a weekly basis. Tom Kelley writes, “nearly every Thursday evening, a world-class thinker shows up to share their thoughts with us.” This “Know How” speaker series is not only educational; it also stirs all kinds of fresh conversations and insights.

Environments that stimulate and engage problem-solvers in provocative learning experiences are more likely to give birth to innovative solutions.

Jazz as a first step

But how do we create environments that promote vibrant interplay? Especially when building lean startups?

It turns out there is much to learn from jazz, especially when it comes to mastering the art of improvisation.

A jazz improviser assumes that a melody can be molded out of a chaotic rhythm, so he pays close attention to his surroundings and waits for an opportunity to embellish, to “link the familiar with new utterances, and adjust to unanticipated musical cues that reframe previous material.”

Jazz musicians also take advantage of errors. Which is also how the pacemaker was created, recalls Barrett: “A simple mistake – pulling the wrong resistor out of a bag – and a willingness to stick with it long enough to connect the pulse of the oscillator to [an] overheard conversation about irregular heartbeats… led to an invention that has done untold good.”

Errors are the stuff of new discoveries because they disrupt our expectations and throw us into new territories where we have to look for original approaches and ways to combine previous knowledge with the tools at hand.

This is why innovators like Brian Eno like to disorient the members of a band – while they’re rehearsing in the studio – by having them switch instruments. This may result in less refined music, but “it enlarges the envelope of possibility within which they navigate,” says Eno in a conversation with Stephen Johnson.

Lastly, it is important to allow employees to design their own workspaces within a flexible, relaxed structure. Cross-disciplinary dialogue requires vigilance and followership. It also requires minimal, obtrusive, intervention.

What a manager should do is play the role of the anthropologist; keep her distance and make sure she is observing her team in its most natural state. Or just pick up and instrument and join the groove! Join – as in follow, not lead.

Companies and organizations that are excellent at delivering innovative products and services also happen to be platforms of experimentation and learning, and they often empower employees to become proactive agents of change beyond the walls of their organization.

So go ahead, spread those ideas and give them a try!

16 awesome feature films that showcase entrepreneurship

Reprinted from Under 30 CEO. Original article here.

Q. Name one awesome feature film that showcases entrepreneurship. Even if it’s not completely accurate to the hardships of the startup journey, what about that movie is a true takeaway?

The following answers are provided by the Young Entrepreneur Council (YEC), an invite-only nonprofit organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.

A. Forrest Gump

Although it is historical fiction, Forrest Gump is one of my favorite inspirational movies that has entrepreneurial ties. My takeaway is that everyone has challenges that they have to overcome in life, but how you respond to them is what separates the people who succeed from those who don’t. Also, it is important to persevere and take advantage of unique opportunities presented to you.

Lawrence Watkins, Great Black Speakers

A. Twister

I always watch Twister with a sense of awe. Yes, it’s fiction, but the idea that you believe so much in a solution to risk life and limb to get it out there is inspiring. Throughout the film, they continually test and adapt the solution until it fina lly works. I may not be putting my solution in front of a tornado, but it’s that level of dedication I’m striving towards.

Kelly Azevedo, She’s Got Systems

A. Coco Before Chanel

This movie talks about Coco Chanel and her journey to starting her company. The true takeaway is that you never know what’s going to work in your business, and that sometimes starting with hats will lead to perfume or vice versa. Being uncompromising about your tastes will also lead to having a strong brand.

Nathalie Lussier, The Website Checkup Tool

A. Zoolander

Zoolander contains the best entrepreneurship wisdom I know: “What is this? A center for ants?…The building has to be at least… three times bigger than this!” It’s a great lesson in remembering your dreams should be at least three times bigger than what you originally thought — and that they’ll be at least three times as much work!

Derek Flanzraich, Greatist

A. Dave

Dave is a classic Kevin Kline movie where he stands in as the President. As the chief, he needs to lead a massive organization: he has to find his own leadership style, rally a team and make compromises on his vision. The most relevant takeaway: he’s successful specifically because he has an outside opinion. Startup success relies on being open-minded and re-examining the way things are done.

Aaron Schwartz, Modify Watches

A. Boiler Room

No, I’m not encouraging or condoning anyone who commits fraud, violates SEC regulations, or acts like a sociopath. However, that does not mean there aren’t some great things for entrepreneurs in the movie. One positive takeaway from Boiler Room is Seth’s relentless hustle and scrappiness. He just crushes through problems (both good and bad) and get’s stuff done!

Seth Kravitz, Technori

A. Don Quixote

From the greatest book ever written, there are lots of movie adaptations, but the 1972 version with Sophia Loren is best. What better representation of an entrepreneur than an idealist who sets out to revive some important value in the world while the world thinks he’s crazy? Through a series of entrepreneurial “adventures.” he comes to greater realizations about life, love, meaning and value.

Luke Burgis, ActivPrayer

A. Startup.com

A film I particularly enjoyed is called Startup.com, which chronicles the short history of the failed website govWorks.com. This site was created to provide citizens an easy way to pay traffic tickets to municipal governments, among other things. The film teaches you that you can’t launch a business based solely on an idea; you must do thorough research it to see if it’s viable and can last.

Andrew Schrage, Money Crashers Personal Finance

A. The Shawshank Redemption

Andy Dufrense is an entrepreneur, even if it’s not obvious: he grows a small tax preparation business inside prison walls into a library and education system into a full-fledged successful prison break. The scene that sticks with me is when Dufrense finds out that his letter writing campaign has paid off — he responds that he’s going to write even more letters, just like a good founder would.

Thursday Bram, Hyper Modern Consulting

A. Catch Me If You Can

Okay, so what the main character does throughout the movie isn’t exactly legal, but the entrepreneurial spirit in this movie is still very present. Leonardo DiCaprio plays the kind of man that can think up a new idea on the spot and execute it with complete confidence — a quality many entrepreneurs use every day.

Caitlin McCabe, Real Bullets Branding

A. Cast Away

Tom Hanks’ character, Chuck Noland, in the movie Cast Away may have been a FedEx employee, but he’s got the heart and hustle of an entrepreneur. He didn’t have money to throw at problems while stranded on the island and had to rely on coming up with cre ative solutions to survive. I also appreciate that he was customer-centric to his core — saving a package to deliver after he made it home.

Natalie MacNeil, She Takes on the World

A. The Pursuit of Happyness

My favorite is The Pursuit of Happyness, which brings the viewer through the real-life struggles of someone who made it big. It’s truly inspiring, and it helps you see that others have overcome difficult times that were probably even worse than your own. It’s hard to make excuses for yourself after seeing that.

Peter Nguyen, Advertiser360

A. The Social Network

This list isn’t complete without The Social Network. The true takeaway of the movie is not to build things to make money, but to build things that people want. The money will come eventually.

Josh Weiss, Bluegala

A. Flash of Genius

In this David vs. Goliath story based on true events, entrepreneur/inventor Robert Kearns spends years in courtrooms fighting the giants of the auto industry when they steal his technology for intermittent windshield wipers. It shows closely the unfair power imbalance that exists between the big companies and small entrepreneurs who sell to them. There is much to be learned from Kearns’ story.

Emerson Spartz, Spartz Media

A. Baby Boom

Your great idea will strike in the midst of a challenge. Classic Diane Keaton, career-driven new mom in the ’80s, quits her demanding job to focus on a baby. While in the midst of her breakdown, she discovers an underserved market with a huge demand in natural baby food. The lesson to take away is that opportunities are everywhere — if you’re paying attention!

Jennifer Donogh, Young Female Entrepreneurs

A. Glengarry Glen Ross

“You know what it takes to sell real estate? It takes brass balls to sell real estate,” is one of the best movie quotes for entrepreneurs. It does take “brass balls” to handle critics, setbacks, and customers. Everything is sales, and this movie reminds us that “coffee is for closers” and “ABC” really means “Always be closing.” With confidence and closing, you will have a successful startup.

Nancy T. Nguyen, Sweet T

Startup psychology: why awareness is awesome

Reprinted from OnStartups. Original article here.

Guest post from Dr. Jared Scherz.

As a well educated psychologist with a successful practice, the decision to launch a startup tech company tested the boundaries of my sense of self confidence and competence, as I was venturing into a field I knew little about. It was embarrassing to have to tell people on a somewhat regular basis that I didn’t really know what I was doing. So how do I feel about that?’ One day I’m plagued by self doubt and the next I’m feeling more confident because I figured something out. The excitement of a potentially lucrative new venture was tempered by the anxiety of self doubt and fear of the unknown. A destructive cycle of confidence and self doubt can develop as a result, and can wear out even the most resilient of people if not recognized so the pattern can change.

To help me climb out of this spin cycle is being able to identify and own my experience. Knowing what I’m feeling and how it influences my behavior or decision making is key to managing this dichotomy. This (internal) awareness helps reduce the chances of letting these unpleasant feelings translate into actions that require more energy and time to correct. If I know what I’m feeling and why, I can differentiate between what is my stuff and what is an organizational matter.

“I think I deserve more shares”: Let’s use conflict with a co-founder as an example. The idea of a partner wanting to renegotiate their terms can be a major pitfall that sinks a startup, according to Noam Wasserman (The Founder’s Dilemmas). This dilemma is common because we don’t know well enough the contributions of each partner early in the project, and roles often change throughout the process. When a partner believes they are contributing more and their worth has increased, they may naturally want more equity and recognition.

Our initial response may be rigidity. Tensing up and digging in our heels, justifying our defensiveness as our partner’s misdirected priorities. How dare they focus on greed as opposed to the company? Aren’t they a team player? Why are they willing to sabotage everything we have been working toward? Then we ask ourselves the question, why does this feel like a betrayal? What’s being evoked may be a loss of control or a feeling of fear that we are losing our grip on the company. Perhaps we lose trust in our partner, conjuring up all the times we have been let down by somebody in the past.

(more…)

Fred Wilson: How to be in business forever


Reprinted from A VC. Original article here.

By Fred Wilson

Last week we talked about long term thinking vs short term thinking. But sometimes, no matter how long term you are thinking, things happen that you didn’t plan for and they can impact your business. Actually, this always happens. And that is when you need to adapt.

You will not stay in business forever if you don’t adapt to changing market conditions. This doesn’t mean adopting the “business model of the hour” model and this doesn’t mean pivoting either. What I am talking about is the once every few years “oh shit moment” when you realize that the path you are on isn’t going to work in a year or two and that you need to make some changes.

This is a frustrating realization. I have a good friend who has been running a business for more than a decade. He told me a few weeks ago that he thinks the market he has been operating in is changing and it is starting to impact his business. And just when he had everything firing on all cylinders.

That’s how it is in business. Just as you are taking the victory lap for the kickass execution you and the team have delivered, the track takes a tilt and things start getting harder. Businesses don’t operate in a vacuum. They operate in a dynamic ever changing market that is going to make things difficult for you, especially if you want to be in business forever.

I think some examples will help. The one that comes to mind front and center is Microsoft. By the middle of the 1990s, Microsoft had it all. They had a dominant share in desktop operating systems and a dominant share in desktop apps. They were literally printing money. Then the commercial internet happened. Netscape showed up. And Microsoft’s market changed, forever.

Microsoft did adapt. They built Internet Explorer in reaction to Netscape and then used their desktop dominance to push it into the market, hurting Netscape so badly that it had to sell to AOL. That got Microsoft into trouble with the Justice Department and they were investigated as a result.

But what Microsoft didn’t see in 1995 was Google because it didn’t exist. And they didn’t see the emergence of cloud based productivity apps because they didn’t exist. In hindsight, it is pretty easy to see how fundamentally transformed Microsoft’s business has been by the Internet and it is also pretty easy to see that they have not been able to adapt sufficiently to maintain any semblance of the dominance they had in the mid 90s. This stock chart tells you everything you need to know about what the Internet did to Microsoft. They may be surviving but they are certainly not thriving.

Another great example is RIM. I don’t even need to tell this story. Everyone knows that the dismissive tone and stance that RIM’s management took toward the iPhone and what it represented was essentially the death knell of a great company. I suspect they wish their stock chart looked like Microsoft’s.

But let’s look at a more positive example. As Ron Ashkenas points out in this HBR article, IBM saw that the hardware market was changing and their competitive position in it was changing with it. They sold their PC hardware business in 2005 to Lenovo and doubled down on consulting and related services. Their stock chart tells the rest of this story.

Adapting doesn’t always mean exiting a business that you decide has issues. You can also retool, reshape, and refocus the business. A company that I’ve worked with for more than a decade saw the industry it services go through some painful transitions in the 2008/2009 downturn. They built an entirely new line of products that service the growth part of the industry while working to maintain the older products through an orderly and gradual decline. It’s been a difficult transition because it has meant that the company’s top line hasn’t grown during this transition. But the company is still in business and the new products are growing quite nicely.

Every situation is different and I don’t have some “silver bullet” to help you all think about how to figure out when to adapt and when to stay the course. But I do have some observations. The comfort of a strong balance sheet (and a nice looking stock chart) is often your enemy not your friend in these situations. The most agressive CEOs I’ve seen in these situations are often the ones with less than a year of cash in the bank and survival instinct in full on mode.

Another observation is that getting your organization to adapt is harder than you might think. Organizations have inertia. The bigger they are the more inertia they have. If you think you need to adapt your business quickly, you will need to figure who is in the boat with you and who is not and make the changes you need, particularly on your senior team, to align the team with mission and get going.

Finally, you cannot be in adaptation mode all the time. If you map out long living successful businesses, you will see they go through periods of great stability followed by periods of great change and then move back into stability mode. You have to know when to get into which mode and you need to see each one through to its logical conclusion.

Given how hard all of this is, you might wonder if you really want to stay in business forever. The answer may be no. But even if it is no, you had better plan for and act like you do. Because I am certain that if you don’t, you won’t.

8 core beliefs of extraordinary entrepreneurs


Reprinted from Quick Sprout. Original article here.

By Neil Patel.

What does it take to be an extraordinary entrepreneur? You know, an entrepreneur who has a vision for a business, rallies support to build it and then grows it into one of the most innovative companies in the world….what does it take to be an entrepreneur like that?

Well, I may be young but I have been an entrepreneur for over ten years. My first SEO consulting job was in high school where I built and ran a successful agency. And from there I co-founded a few software companies. Luckily for me, I was fortunate to grow up in a family of entrepreneurs, so I’ve heard a lot of great advice about what it takes to succeed as an entrepreneur.

And I’ve also seen that all great entrepreneurs hold closely to a core set of beliefs. So what are those beliefs? Here are eight:

Belief #1: Make a decision and go!

This was one of the first lessons I learned when starting my first business and it was extremely hard to get used to making a decision and then taking action on that decision.

I was so afraid I was making a mistake. Since then I’ve learned that making a mistake is not a bad thing. You actually learn from those mistakes, which helps you make better decisions down the road.

You will struggle with hiring and firing people, project budgets, office space and advertising creative. When you first start off in business you will take days and even weeks to answer these questions.

This core belief actually came back to me when I lost a million dollar client. They were happy with the service I was providing, but they wanted to know what else I was going to do to take their business to the next level. I had a few ideas, but I didn’t make a decision on which idea I was going to act on. Long story short, I took too long to make a decision and I lost a $1.2 million client.

Belief #2: Show passion, not perfection

It’s a lot easier to work on a project for closed doors for years until you get it perfect and then ship, but that just won’t work these days.

Often when I talk to young entrepreneurs who are “working” on a project behind closed doors I realize they are afraid to ship because they don’t want to be ridiculed. But I always encourage them that what people don’t want a perfect product…what they want is a passionate person behind the project.

If you can show people you are passionate about creating a perfect product by releasing it, then getting feedback and iterating…then people will jump on board…especially if the product solves a real-world problem.

Don’t try to perfect anything because if you perfect something that no one wants to use, you will just end up wasting money.

At KISSmetrics we created 2 other versions of our product that are no longer live. We spent over $500,000 on the first version, trying to perfect it, instead of just getting it out there. Since then we have scrapped that product. If we used the minimal viable product approach instead of trying to create a perfect product, we probably would have saved that money.

Belief #3: Avoid the ugly baby syndrome

One thing that entrepreneurs are in the habit of doing is falling in love with their ideas…even if it is a bad idea. This is like parents who fall in love with their new baby, even though everyone knows newborns are ugly.

You need to be objective in your business, with your plan and your product. Everything on the table needs to be up for debate if you truly want to succeed.

Seek out mentors to help you, and get advice from them on a regular basis. Listen closely to what they are saying. Listen closely to what your partner is saying and more importantly your customers.

This doesn’t mean you have to surrender every idea, but sometimes you may have to make drastic changes.

The CEO of Starbucks, Howard Schultz, tells a story about how they were going down the wrong path and brought in the founder of Costco, Jim Sinegal for advice. Jim said, “You know, I don’t want to be rude but this is exactly the wrong thing to do.”

Schultz listened, realized Sinegal was right, and shifted their strategy.

One way to protect yourself from falling in love with your idea is to train yourself to fall in love with solving people’s problems. It doesn’t matter what you create to solve their problems, but as long as you do it in a simple, easy, and ideally an affordable way, you will be fine.

Belief #4: Find the sweet spot, then scale it

Once you have reached product market fit, there will come a time when you need to figure out how to scale your product.

If you scale your product before people fall in love with it, you’ll tarnish your brand. What I mean by this is that people won’t be happy with your product so they will say negative things about it. This will cause churn, a decrease in sales, and a bad brand that will be hard to fix. Once people think negatively about your product or brand, it’s hard to change their perception… even after you fix your product.

When I first started Crazy Egg we spent thousands of dollars on marketing before we launched the product. We had a ton of churn in the beginning, as there were a lot of product issues we faced when we launched. The marketing spend had a negative ROI and if I had to do it all over again, I would scale the business once I fixed the major product problems.

Belief #5: Don’t think about taking a leap, just take it

Speaking of perfection, there is never a perfect time to become an entrepreneur. Though being young and without a family is certainly a better time than when you are older and have a family.

Once you take the leap though…you are committed. You need to quit your job and become your new business. That’s a huge risk for sure, but if you don’t take the risk what’s to encourage a partner or investor to take the risk on you?

This commitment needs to infuse everything you do…and never think of minimum amounts. Never think that you need to secure just 4 clients a month to succeed or you just need to make 200 calls before the money pours in.

That never happens. Your projections will more than likely fail. This means you need to have a mantra that says there is no failure…just wild success! So stop wasting time and take the leap.

One of the most common emails I get is from people asking if I would invest in their business idea. When I ask them how far they have gotten, most people tell me that they are still at the idea stage and don’t have the time to go further as they have a full time job. If you can’t take the leap into entrepreneurship, investors won’t fund you because it shows that you don’t believe in what you are doing if you aren’t willing to quit your job.

Belief #6: Entrepreneurship isn’t a war, it’s about solving problems and turning a profit

Some entrepreneurs treat business like it’s a war that you need to defeat and destroy your competition. But even if you can actually do that and become number one in your market, you will still fail if you aren’t turning a profit.

For instance, at KISSmetrics we don’t focus on killing our competition even though they copy our features and steal our designs, instead we focus on solving our customers’ problems and growing our revenue.

The truth is that if you can find a way to differentiate yourself from your competition in a meaningful way, your revenues will go up. Plus if you are in a new market that is big enough, it doesn’t matter what your competition is doing, as there is enough room for both of you.

Belief #7: Hire slow, fire fast

The single most critical part of running a successful business is to hire the right people…and fire the wrong ones fast.

A lot of people spend a lot of time and energy trying to select the right person based upon past performance, but I’ve often found that what you learn in an interview with somebody doesn’t equal good performance down the road.

I like to see people get their hands dirty and how they adapt to stressful situations. When I interview people, I rarely talk about what they have done or even look at their resume, instead I ask them questions related to what they would do for my company and how they’ll get that work done in a timely fashion.

And if you happen to hire a few bad people, keeping them hurts your business as it will probably do more damage then good. Mark Zuckerburg famously fired people who were loyal to him but couldn’t handle the growth. And Zappos even paid people to leave the company if things weren’t working out to make the transition easy.

Belief #8: Learn from your first, earn from your second, give back with your third

If you are a serial entrepreneur…or you’re on your first business but think you have two or three more in you…then you will likely get a lot of experience, business wisdom and wealth out of those ventures. It will take years before you get there, but if you keep at it, sooner or later you will do well.

Your first business is going to be full of mistakes and lessons learned…that’s a good thing! You can apply those lessons learned to your second where you should get it right and become successful. Then on your third business you can give back.

You can give back money to other startups but you can also give back experience and help out other entrepreneurs or volunteer for charities. Don’t ever expect anything in return, but instead just give back like your mentors did with you.

Conclusion

Now, do you have to have all of these core beliefs in place on day one as an entrepreneur, you are going to become extraordinary, right? The answer is no. The thing about starting and growing a business is that you will grow as a person yourself…and that is one of the best educations an entrepreneur can get!

So take a minute to re-read the core beliefs I shared above, then print them out…and start working on becoming the next Bill Gates or Larry Page.

What other core beliefs do you believe that extraordinary entrepreneurs have?

How to hold productive meetings that people don’t actually hate


Reprinted from Duct Tape Marketing. Original article here.

By John Jantsch

Scheduled communication may be one of the most powerful team and accountability building tools available when done the right way.

Meetings are an essential aspect of getting things done, collaborating and delegating, but for many they are the bane of business life. People actually leave companies because of the life draining nature of their meeting culture.

This commonly accepted feeling about meetings comes about because most people have been trained to handle meeting in one of two ways.

One is the “I hate meetings, so just come to me if you have a problem” method. Of course this is quite possibly the most frustrating approach for all concerned. This approach leads to lots of wasted time and the every ten minute or so interruption.

The other approach is what I refer to as the “I’ve called a meeting, but it’s really a reading” approach. In this approach managers read from a list of to-dos that could have been sent via email and then propose some things to try to get buy in.

This second approach eventually leads to adopting the first “I hate meetings” attitude and drains any sense of commitment from all involved.

Here’s the deal: you need meetings, perhaps frequently, but you need them to be energetic, useful and in the words of consultant Al Pittampalli – modern.

In Read This Before Our Next Meeting, Pittampalli lists the seven attributes of what he calls the modern meeting. This is a great framework for how to think about meetings that generate energy and action.

1. The Modern Meeting supports a decision that has already been made.
2. The Modern Meeting starts on time, moves fast, and ends on schedule.
3. The Modern Meeting limits the number of attendees.
4. The Modern Meeting rejects the unprepared.
5. The Modern Meeting produces committed action plans.
6. The Modern Meeting refuses to be informational. Reading memos is mandatory.
7. The Modern Meeting works only alongside a culture of brainstorming.

Read Pittampalli’s book before your next meeting and consider making it a gift to everyone in your organization.

Adopting this approach to meetings and making it the “accepted meeting protocol” in your organization will reduce the need for meetings that drain, hold anyone that calls or attends a meeting accountable for action and even keep the boss on task. (Well, maybe)
Pittampalli’s last point can’t be emphasized enough.
Brainstorming is an essential business tool as well, but it’s not the same as a meeting. Meetings are for making decisions, brainstorming sessions are to throw out ideas, discuss constraints, test theories and get feedback on ideas.

You need an entirely different framework for brainstorming. You need to frame the idea, throw roles and titles and encourage big thinking. (And, don’t forget to feed everyone well.) In fact, brainstorming sessions should be held offsite in settings that encourage and foster creativity.
Far too many meetings are really just protracted brainstorming sessions where little gets done. Hold advertised brainstorming sessions as special events to take advantage of this unique tool, but resist the temptation to bring this dynamic into meetings.

Again, meetings are for making decisions, most everything else can be handled with email, IMs and texts.

This applies to team meetings, all hands meeting and even one on one meetings.
Embrace this mindset and watch what happens to the energy, accountability and action produced from meeting that nobody hates.

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