March 5th, 2013 → 9:17 am @ Norman
When my technology fails me, I get really annoyed!
It’s great having so much technology to help build business. I’ve got tools like PCs, smartphones, and iPads; business systems from Payroll through to Microsoft Office; connectivity through Blogs, Facebook, Twitter, Google Drive, and LinkedIn. My business is loaded with useful technologies! The trouble is, I’m becoming more and more dependent on other people to keep them all working.
The consequences of technology failure are such that any smart entrepreneur puts a lot of effort into backup systems, password protection, and intrusion detection. I have data backed up on portable hard drives, and in the Cloud. I have a password-protected system for storing all my passwords, and my intrusion protection systems are thorough enough to make updating software a nuisance. But I’m still vulnerable.
I’m neither technologically competent, nor interested in technology for its own sake. That makes me dependent on the people who configure and maintain my systems. In engineering we measure the probability of failure of the system by multiplying the reliability of each individual component. So a system with two components, each with 99%reliability will have 98.01% reliability (.99 x .99). Thus, the more components that are added, the lower the system reliability. A system with four components, each 99% reliable, will have an overall reliability of only 96.06%. My business has many technology components, each with an inherent reliability which relates to its design robustness, how it inter-relates with the other technologies, and what happens when a software provider does an update. With so many factors, I get many failures, most of which can be fixed by software patches, system reboots, or throwing a tantrum. But there is yet another source of system failures… other people. (more…)
June 18th, 2012 → 8:12 am @ Norman
Last week I facilitated a discussion of Governance with a Master of Entrepreneurship class. Before the class, I sat over a leisurely lunch reviewing my notes. I felt uneasy, and realised that I wasn’t comfortable about what I was about to say. So I explored the source of my discomfort.
The problem was simple. I had prepared a strong case for good governance in start-up companies, and clearly identified the differences between governing young companies and governing more established ventures. But I had glossed over the biggest ‘real world’ issue …. Most start-ups I’ve come across would have been better off without a Board than with the Boards they assembled. It’s hard to promote something which is theoretically valuable but which has so often proven to be useless or even harmful to the start-up. (more…)
April 12th, 2012 → 8:04 pm @ Norman
It’s 6 am, and I’m sitting in an airport lounge I didn’t intend to be in, at an airport I didn’t want to visit. My flight was cancelled yesterday because of ‘engineering problems’. At the same time, the airline had a problem with its information systems and they ‘lost’ my phone number (so they couldn’t let me know). I rocked up to the airport and received the bad news… too late. There were no more flights last night that were any use to me. My choices were either another night in a hotel at a regional city, or a van trip to a neighbouring city where I have friends I could stay with. I chose the latter, and here I am! (more…)
February 16th, 2012 → 10:24 am @ Norman
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…)
December 2nd, 2011 → 9:49 am @ Norman
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.
November 11th, 2011 → 8:39 am @ Norman
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.
July 15th, 2011 → 12:40 pm @ Norman
Where is Sir Lancelot when you need him? Where’s the organisational champion who’s going to drag my company’s product into his business…
I’ve just come from a meeting with a man who controls a large national budget, and also with a driver of national policy. They’re such important executives that I’d even pulled out my suit and tie for the occasion (not something I do lightly)! I looked just like any salesman, and even had powerpoint slides. It was a two-on-two meeting, with us being there at their invitation… all good so far… and it got better. (more…)
May 17th, 2011 → 8:23 am @ Norman
Investors spend a lot of time keeping young entrepreneurs focused on the critical tasks. Like a dog in a field full of rabbits, the inexperienced entrepreneur tends to run from one opportunity to another without closing any of them. That behaviour, and the techniques used by investors and Boards to keep the founders focused, are well known.
But sometimes the need for focus can be overemphasised, particularly in the seed and start-up phases of company development.
Typically, in the seed phase, the idea is still being turned into a marketable product. In the start-up phase a company is being organised to get that product to market. In each case, there are typically many variables which are unknown… these may include optional features which may be important, extent of functionality validation required, size of each potential market, specific customer needs, correct segments to target, and many other factors. Now that many companies are “born global” the variables are multiplied as geographic, cultural, and other issues become more immediate. (more…)
March 11th, 2011 → 5:40 am @ Norman
We’re in San Diego, meeting with potential business partners. We’re holding court in a hotel, and doing 2-3 meetings per day… that doesn’t sound like a lot, but these are multi-hour strategy sessions, which require preparation and post-meeting follow-up.
Today we met an industry insider who’s looking for a piece of our company. He said, “Don’t worry about getting meetings with big players; that’s easy… the important thing is to have a value proposition which makes them a buck with relatively little risk.” His next move was, of course, to point out that his position within the industry left him well placed to help us to prepare a more powerful value proposition. But, regardless of his motives, his statement was absolutely correct.
Start-up companies frequently focus on getting the big meeting with the company they hope to work with, and neglect to prepare their value proposition adequately. They arrive at the meeting with a long list of benefits, and hope to inspire the target company with the same enthusiasm the start-up has for its technology. Occasionally that approach works. But a surer way is to examine the target company’s strategy, and work out how the benefits brought by the start-up can be gained by the company at relatively low cost, and with relatively low risk of negative fallout (bad press, internal strife in the company, dissatisfied customers, political interference… and so on). Then draft a financial model for the target company. Now, when you walk into the meeting with the company’s managers, you can show them the return on investment they can expect, as well as how all the downside risks will be mitigated. If you’ve really done your homework, you’ll also be able to show the target company how your offering fits into their current strategy, plus why and how they can roll it out right now. That’s much stronger than just promising a raft of benefits, and leaving the target company to ‘fill in the gaps’.
The industry insider was right; it’s easy to get meetings… the hard part is to be properly prepared to bring real value to the target company.
February 23rd, 2011 → 1:19 pm @ Norman
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…)