Knowing when to sell, and when to not sell

March 7th, 2011 → 9:45 am @

It’s a clear, slightly chilly day in Washington DC.  The Washington Monument and the Capitol Building are creating iconic views from my hotel window, and I’m thinking about the meeting I’ve just attended.  I accompanied the founder of a Health IT company to confer with some of the USA’s leading thinkers on ‘patient-centric’ health.  The meeting was inspirational as the participants spent the morning clarifying the issues and, incidentally, verifying that my founder had a unique, and needed, solution to many of the problems they face.  But we didn’t try to sell at the meeting.

This founder has already built a couple of start-ups.  Although we’d travelled 14,500 Km to be here, he knew that this was not a time to be selling.  Sure, he showed them what his product could do, but he focused on learning more about the participants’ priorities, contributing to the discussion, and building relationships.  As a mature entrepreneur, he won’t sell until he’s sure his offering will meet real needs, as the buyers perceive them… until then, he talks with potential clients about their concerns.

By the end of the meeting a couple of people who ‘got it’ had emerged as champions for our product.  That was a nice bonus.  But many of the people in the room were decision-makers with millions of constituents , who would not have been swayed by any slick pitch.  They won’t buy anything unless they’re sure a product will meet real needs and provide real value.  And they won’t be made to accept those needs by any ‘concept sell’ from us.  They’ll define their needs by conferring with colleagues, as they did at today’s meeting, and only look for product solutions when they, and their peers, are comfortable that they have the issues well mapped.

For us, it was a privilege to be part of that discussion, and for the founder’s work to be recognised as thought-leading.  We hope to have the inside running when it comes time to sell… but now is not the time.

Mentoring entrepreneurs

You’re Not a Real Entrepreneur

March 2nd, 2011 → 6:11 am @

Posted on June 10, 2010 by steveblank

Who is an entrepreneur really? It turns out that there are four distinct types of entrepreneurial organizations; small businesses, scalable startups, large companies and social entrepreneurs. They all engage in entrepreneurship. Yet entrepreneurs in one class think that the others aren’t the “real” entrepreneurs. This post looks at the differences and similarities and explains why there’s such confusion. (more…)

Entrepreneurship

Are we seeing the emergence of a new generation of entrepreneurs?

February 28th, 2011 → 1:20 pm @

That was the question posed by Norman Evans after the final day of the Unlimited Investment Challenge.

Read the full article covered by BusinessDay.co.nz from this link.

Entrepreneur behavior &Entrepreneurship

The Bad Board Member

February 26th, 2011 → 6:10 am @

Over the last 40 years the U.S. has evolved an entrepreneurial ecosystem with two of the most unlikely partners – venture capital investors and technology entrepreneurs. This alliance has led to an explosion of technology innovation, scalable startups and job creation.

Tied at the hip, VC’s and entrepreneurs take large risks together. VC’s invest in startups with minimal tangible assets and no certainty about the product’s viability, market size or customer adoption. Entrepreneurs face all that, and add one more risk to their list: the bad board member. (more…)

Entrepreneurship &Mentoring entrepreneurs

The Challenge of HOW to teach Entrepreneurship?

February 23rd, 2011 → 1:19 pm @

I am increasingly realising that teaching people how to be entrepreneurs and more importantly how to become successful as an entrepreneur is definitely learned and is not innate.

As I say many times in my book, there are some people who instinctively act in an entrepreneurial manner – but these are skills that can be acquired.  You are not born an entrepreneur. (more…)

Economic Development &Entrepreneurship &Start ups &Teaching entrepreneurship

How great entrepreneurs think

February 23rd, 2011 → 10:40 am @

I’ve just come across some interesting research on how entrepreneurs think.  Leigh Buchanan (http://www.inc.com/magazine/20110201/how-great-entrepreneurs-think_Printer_Friendly.html)  quotes some Carnegie Mellon research, saying:

“Sarasvathy concluded that master entrepreneurs rely on what she calls effectual reasoning. Brilliant improvisers, the entrepreneurs don’t start out with concrete goals. Instead, they constantly assess how to use their personal strengths and whatever resources they have at hand to develop goals on the fly, while creatively reacting to contingencies. By contrast, corporate executives—those in the study group were also enormously successful in their chosen field—use causal reasoning. They set a goal and diligently seek the best ways to achieve it.”

This research confirms what I call ‘Goal-seeking behavior’ in my book, and relates closely to what Steve Blank calls ‘Pivoting’. 

Regardless of what it’s called, the behavior of entrepreneurs is fundamentally different to that of managers.  (more…)

Entrepreneur behavior

What’s A Startup? First Principles

February 22nd, 2011 → 6:08 am @

Success consists of going from failure to failure without loss of enthusiasm.
Winston Churchill

 Everyone knows what a startup is for – don’t they?

In this post we’re going to offer a new definition of why startups exist: a startup is an organization formed to search for a repeatable and scalable business model.

A Business Model
Ok, but what is a business model?

A business model describes how your company creates, delivers and captures value.

Or in English: A business model describes how your company makes money.
(Or depending on your metrics for success, get users, grow traffic, etc.)

Think of a business model as a drawing that shows all the flows between the different parts of your company.  A business model diagram also shows how the product gets distributed to your customers and how money flows back into your company.  And it shows your company’s cost structures, how each department interacts with the others and where your company fits with other companies or partners to implement your business.

While this is a mouthful, it’s a lot easier to draw. (more…)

Start ups

146 days to raise funds

February 21st, 2011 → 12:47 pm @

An assortment of United States coins, includin...

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I’m returning from the conference of the Australian Association of Angel Investors. Their conferences are world-class, and Angel Investors can learn a lot by attending.

Among the other information presented was the average time to close a deal during 2010… 146 days.

What is reasonable?

Is it reasonable that deals take almost five months, on average, to close?

When I was an entrepreneur trying to raise money, I was always disappointed, and sometimes angry, at how long it took.  Occasionally I’d be in a situation where an investor would hear the elevator pitch, get excited by the opportunity, and write a check immediately; but more often, I went through the long grind of presentations, due diligence, and terms negotiation.

Now I see things differently.

Why I changed my mind

The Angel Investors aren’t looking for a one-night stand.  They want a meaningful, long-term relationship with an entrepreneur they can respect and trust.  So entrepreneurs who do get the quick cash may find they’ve been funded by passive investors who will bring little extra value.  The investors who take the time to get to know the founder, and the business, are more likely to back up their cash commitment with advice, contacts, and perhaps Board work.  Taking a long time to raise funds can be stressful for the entrepreneur, but it allows time to form high quality investor/entrepreneur relationships.

Quick deals versus slow deals

Of course, just as a quick deal may be a great deal, a slow deal may also be poor one.  Some investors do waste a lot of time in their processes, encouraging entrepreneurs to present to them even when they have no intention to invest.  Such people are, in my experience, the exception.

Most investors are as keen to get the deal done as are the entrepreneurs.

The difference is just that most investors have learnt to avoid one-night stands.

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Angel funding &Blog &Start ups

Why Invest in a company with the growth trajectory of a woozy snail?

February 18th, 2011 → 1:05 pm @

I was a judge at the Unlimited Investment Challenge last year and supervised a format that many entrepreneurs are familiar with – a contest to pitch investors, Dragons Den-style to gain a let-up to accelerate their company.

In almost every case, they had “runs on the board” and had demonstrated a market for their products. While most of them were looking for further investment to grow their companies, they were also looking for experienced investors who would come aboard with good advice on how to grow.

“Too often Kiwi start-ups focus on their founder , or product and forget the importance of brand the ability to scale quickly – probably the thing which interests investors most.

After all, why would you put your money into a company with the growth trajectory of a woozy snail?

It’s easy to pick holes in most start-ups and their ambitions. But what I observed was a turning point in New Zealand entrepreneurs and their nascent businesses. Maybe we are beginning to see a tipping point in the kind of people involved in new enterprise.

What I liked is that we are starting to see genuine entrepreneurs coming though. Finally I get people talking brand at me and ultimately that’s all that matters. We saw a group of entrepreneurs pitching to us, not a succession of techos obsessed by their inventions.

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Entrepreneurship &Fast Growth Companies &Start ups

Do you have what it takes to be an entrepreneur?

February 16th, 2011 → 5:57 am @

Hard questions demand hard answers. Here’s my slide deck that I use teaching entrepreneurship to students.

Entrepreneurship &Teaching entrepreneurship