Catching the wave, or chasing the rabbits

November 14th, 2012 → 7:24 am @

I was at the first meeting of an ‘Entrepreneurs Club’ the other day.  The discussion focused around how to get into international markets, and specifically whether we should use a traditional goal setting/marketing driven systematic approach, or should instead focus on chasing ‘easy wins’ to build credibility and cashflow.

One academic suggested that entrepreneurs are timid because we often focus on markets we know and contacts we can leverage.  An advisor from a large consultancy firm supported that view, arguing for more market-focused planning to ensure we find and understand the best market to address.

Their views reflect a common opinion of entrepreneurs.  We’re seen as unstructured and often undisciplined, like hounds chasing rabbits in a field of opportunities.  The evidence cited is the lack of a complete plan, and a tendency to abandon opportunities when better ones come along.  But that’s not what I see happening.  Entrepreneurship is more like surfing, and the more innovative the business opportunity the more a surfing analogy applies. (more…)

Entrepreneur behavior &Entrepreneurship

An impatient entrepreneur

May 7th, 2012 → 3:13 pm @

The entrepreneur brought me his plan a few months ago.  I agreed it looked achievable, and was ready to go… a nice web-based business.  I suggested that he generate some sales before the investors committed their money.

Six weeks later he was back to report the first $30,000 or so in sales…. A good start!

The entrepreneur signed our papers, committing him to the deal.  Before the investors would sign, I analysed the actual costs against budget.  The costs were much higher.  The entrepreneur explained that the model he had originally proposed wouldn’t work, and he had modified it.  The modified model had a gross margin of 22%… not enough to build a profitable business. (more…)

Entrepreneur behavior &Entrepreneurship

After success, do I do it again?

February 16th, 2012 → 10:24 am @

Often technology entrepreneurs can choose between attempting to build a larger business, probably requiring external capital and a significant team of people, or focusing on a smaller opportunity which is easily controlled but typically has less upside.  I was reminded of this recently when a software developer came to visit me.  He’d enjoyed a successful exit after a typically agonising company-building process, and had done the usual post-exit activities (paid the mortgage off, traveled, bought a nice car, and chilled out).  Now he was ready to go again. (more…)

Entrepreneurship &Start ups

Moving at speed… or moving too fast

December 2nd, 2011 → 9:49 am @

I’m in the office of a start-up company.  The founder is sitting at one of the two desks.  His local Sales Manager is at the other.  I am perched on a chair with my laptop open.  All three of us have our heads down, as we focus on our keyboards.  We’re waiting for team members from the West Coast of the US to Skype in so we can prepare for client meetings tomorrow.

We’re all multi-tasking; fielding emails, throwing comments back and forth about the upcoming meetings, and coordinating our diaries.  When the Americans join us, we’ll do more of the same, although we’ll primarily focus on establishing the client meeting goals.

I’ve been in business since before the internet, and I relish the speed with which we can now get things done.  But I also see how quickly we can now make mistakes.  Tomorrow’s client meeting almost ‘turned to custard’ yesterday.  As we prepared for the meeting, along with the client, emails were sprayed to and fro.  The leader of the client’s team drew some conclusions about what we were offering, and suddenly his emails became laced with concerns… “Could we really capture the data he wanted?”, “Did we really understand what he was after?”  We were quickly on the back foot.  A new round of emails and phone calls calmed his concerns, but I have to concede that we created the problem by sloppy communication.  We’ve had similar problems with internal communication in the past, again a factor of speed.  We’re moving fast, and paying a price for that.

Yet I look at the gains we’re making as well.  With a very small team we are making great strides in product development, market understanding, and sales.   Our business has a long sales cycle, yet our high speed of action means we can operate for an extended period with a small team, which translates to a small budget.  The investors love that. Clearly there’s a balance between speed and effectiveness.  Too fast, and there will be too many mistakes to be corrected, and strategic opportunities will be overlooked.  Too slow and we’ll burn a lot more money to get where we need to be.  But the cash cost of slowing down is my lesser concern.  I think back to past start-ups I’ve worked on.  All the successful ones had high energy and a high pace.  For the others, a slowing pace was often the first sign that we were headed for failure.

Today our energy levels are high, and they have remained high all year.  It’s easier to drive hard towards our goals than to plod slowly toward them.  For that reason alone, I prefer a high-speed start-up building process.

Entrepreneur behavior &Entrepreneurship &Fast Growth Companies &Start ups

The Brokovich effect; energetic amateurs making a difference

November 11th, 2011 → 8:39 am @

We all love stories of people with boundless energy who take on the established order, triumphing against the odds.  The story of Erin Brokovich stirred us because she was such a person, and it reinforced the notion that you can start off knowing little, learn as you go, and win your day in court.

That same enthusiasm for the untrained, naive underdog pervades the business start-up industry.  It’s somehow more thrilling to see a high-school dropout doing well than to see a person with a business degree and ten years industry experience succeeding. That’s natural because all good sagas include overcoming adversity as part of the story… the bigger the adversity, the better the story.

But I don’t build companies to create epic stories.  I’d rather see my companies march to success on predictable paths, with highly skilled and experienced teams.  There’s plenty of drama in the process of starting a business, and I don’t seek out more.

When I look at the successful start-ups I’ve been involved with, the most successful all had experienced teams, and usually had experienced founders.  The failures were overweighted with naivete and lack of technical or business qualification.

One founder  explained very carefully to me why youth was a primary requirement in his Games development company.  He said they were more creative, and weren’t constrained by the way things had been done before.  I think he’d been watching too many televised sagas about untrained business founders; stories which often ignored the boringly experienced people who provided the ‘engine room’ of the company.  He went broke… but I guess he gained some experience at his investors’ expense!  So, much as I enjoy the Brokovich effect in stories, I’ll continue to stack my companies with as many experienced team members as possible.   Not great TV, but good for the bank balance.

Entrepreneurship &Start ups

Living as an entrepreneur

October 26th, 2011 → 4:32 pm @

My mother is dying.  I’m in an airport lounge typing a blog between flights as I head to her death-bed.  A couple of days ago she said to me, “I don’t know why I bother.”  She was referring to how tired she was of being alive, yet incapacitated.  And I guess she’s now decided not to bother any more. (more…)

Entrepreneurship

The benefits of entrepreneurship

October 10th, 2011 → 1:07 pm @

David the tiler is laying new floor tiles in my kitchen.  His wife, Frances, is crouched outside the back door cutting the tiles.   Steve the gardener is trimming bushes in the back garden.  It’s cold and windy, and I feel sorry for Frances and Steve.  Their miserable work environment reminds me of a time many years ago when I was a Lineman, sitting atop the cross-arms of poles on bitterly cold mornings, and trying to keep my fingers warm as I worked on the wires.

Yesterday, David and I had a coffee break together.  He told me that he’d thought about expanding his tiling business but didn’t want the added risk that came from employing staff. Steve also prefers to keep his business a ‘one-man-band’.  In their efforts to minimise their hassle and risk Steve, David and Frances have become dependent on other people taking risk… and succeeding.  This year the farmers are doing well and, thankfully, spending.  Without the risk-takers… the farmers, manufacturers, and entrepreneurs, times would be very tough for David, Frances, and Steve.

It’s appropriate that risk-takers, including entrepreneurs have the opportunity to earn a lot of money from their efforts.  But it’s more than ‘appropriate’… it’s also necessary.  Without the ‘excess profits’ (to use the economic term) from entrepreneurial activity few people would bother taking all the risk and enduring the hassles of building innovative businesses.  And without the successful entrepreneurs, there would be less work for David, Frances, Steve, and the many thousands of other people who benefit from discretionary spending by value-creators.

There’s certainly nothing novel in the idea that the excess wealth created by entrepreneurs ‘trickles’ through the economy.  But I was reminded of it again today.  If I was still a Lineman, then David, Frances, and Steve would be worse off… and I’d have cold fingers.

Economic Development &Entrepreneurship

My wife doesn’t understand me!

September 26th, 2011 → 10:20 am @

My wife and I sat in the conservatory this afternoon, enjoying a cup of coffee and watching the light sparkling on the water of the harbour beside which our house is nestled.

She asked me about an entrepreneur I am working with… what was he like?  I probed her questions to understand what she was really asking.  She had seen the drive, energy, persistence and other desirable behaviours shown by the entrepreneur; but she also saw his weaknesses.  He sometimes seemed out of synch with other people’s ways of seeing the world, leading to communications problems and to people distrusting him.  He was impatient and had unrealistically high expectations of other people.  He talked of what could be as though it already was… did that verge on lying?

I reminded her that entrepreneurs are  typically an unbalanced bunch.  Nobody can be everything to everybody, and it’s unrealistic to expect someone as focused and driven as a high-growth entrepreneur to be ‘normal’.  Nor would many ‘normal’ qualities be of much use: Great patience, and acceptance of the frailties of others are admirable traits in school teachers, but they won’t get a high-performing team assembled and able to deliver dynamically developed products with inadequate resources and against near impossible deadlines.

She accepted my answer, but I felt she was waiting for more.  So I said, “Take me for example…”  Her reaction showed me that I’d hit on what she was really thinking about, so I continued, “…. Look at the way Stephen [name changed] behaved when I was building company X.  He was afraid that he’d be held responsible for any failure, so his focus was on avoiding blame, and ass-covering.  I was focused on sales, and on building the team.  It was inevitable that he’d see me as a cowboy who wanted to drive forward regardless of the risks, while I saw him as an anchor slowing us down.  So friction was inevitable [actually, it came closer to open warfare].

She thought about this and nodded… so I ploughed on…”Now which one of us was normal?  Stephen was making deep pronouncements about managing risk, was demanding endless reports, and refused to make decisions until he was very sure he was right…. pretty normal behaviour.  I was making decisions on the fly, with less supporting information than I would have liked, was taking calculated risks, and was asking the team to trust that my plan (being developed as we went) was going to work… not very ‘normal’ behaviour.

Entrepreneurs aren’t normal… no wonder that even our wives don’t understand us.

Entrepreneurship

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