Fewer words, greater effect.

I have a good business friend, an experienced manager and teacher with a Harvard MBA, whose creativity and intelligence are admired by many.  But he dilutes his effectiveness with wordy PowerPoint presentations.  It has become a long running joke between us, as I often remind him that most of us have a very limited attention span and ability to recall important points from a presentation.

Note the title and tone of these insights.  Short, to the point.

Mark Twain said, “I didn’t have time to write a short letter so I wrote a long one instead.” He cogently encapsulated the problem.

It is more difficult to reduce your thoughts to a few core sentences, but that is what you should do for maximum effect.

Posted in General | Leave a comment

Could you be the next Ford, Jobs or Musk?

Well, it’s a fair question.

Note that none of these three famous innovators were inventors like Thomas Edison, but visionaries who see a new marketplace or niche or how to reach the mass market in ways not previously attempted.

Innovation does not always equal invention.

Leaders and companies that innovate new products, services and methods of delivery are the ones that stand out in a crowded business world, especially when attempting to gain recognition among the throngs of competitors visible on the web.

And innovation is what creates value.

Innovation is valued by our society, by investors and certainly by consumers.  It is the focus for state and federal governments worldwide, many finding ways to reward innovators with tax incentives or investors with tax credits to finance innovative new enterprises.

My experience describing innovation.

As a keynote speaker on technology trends, I often started presentations beginning with a short history of innovation in the United States, using the twist of examining innovation through the lens of 150 years of cyclic bursts of bubbles, leading to subsequent recessions and depressions.  It is not hard to find strands of gold in the carnage left by failed businesses lost when a bubble bursts, such as in 1857, 1902, 1929, 2001 and 2008.

Sometimes, innovators enable unfinished visions of others.

[Email readers, continue here…]   Innovators make use of golden strands of opportunity left when the unfinished vision of another cries for completion, or when a genuine new concept changes the very way people think about their lives.

ARPANET becomes the Internet.

Leonard Kleinrock and a few of his UCLA computer lab students worked to send the first several text characters from UCLA to Stanford in 1969 over a direct line established for the test.  They could send only the “LO” of “LOGON” before recording the very first crash of what was to become the Internet.  And I’m sure they had no idea what they were fathering with that effort which eventually became ARPANET, and then of course, the Internet itself.  They had no mantra, and a limited vision to connect mainframe computers to share academic information.

The Internet and AI – new opportunities for innovation.

How many entrepreneurs used that new Internet infrastructure to create an expansive vision of what could be?  Tim Burners-Lee wanted to use it to create a friendlier “web” of pages, sharing data like the pages of a massive library of books extending throughout the world.  The result was the worldwide web, upon which Mark Andreeson and his crew in Chicago built the Mosiac browser with his vision to make this data more available to anyone.  Which in turn allowed innovators worldwide to create applications inside a browser, share detailed information previously locked inside libraries and corporations, and ultimately to change the world by making the exchange of information frictionless.

So, who will be the next Ford, Jobs, or Musk for AI?

We can’t help but be amazed by the rapid developments in artificial intelligence and artificial general intelligence (AGI).  Yet, so far, we have the foundation, thanks to development teams at OpenAI, Google and Microsoft among others.  It won’t be long before we hear names of innovators who invent new uses for AI forming highly profitable companies around the work of inventors who laid the groundwork for these yet to come applications.

What about Edison, Bell and tesla?

We can look back to Ford and other visionaries who were not inventors as well as Edison, Bell and Tesla who were inventors – as great innovators of their time.  And perhaps the most impressive invention of recent times is the result of hundreds of people, firms, and institutions, each adding a new brick to the building of the Internet and AI.

Now we have the infrastructure for innovators to create applications with open-source software – building innovations for mobile, artificial intelligence, virtual reality, augmented reality, blockchain and drones.  And millions of innovators are at work extending these capabilities.

So, could you be the next Ford, Jobs, or Musk? 

You don’t have to invent the next big thing, just see the place where you can fit technology into a new, much larger environment.

And who said that “Everything that can be invented has been invented?”  Ah yes. That was Charles H. Duell, U.S. Commissioner of Patents in 1899.   Oops.

Posted in Ignition! Starting up | 1 Comment

Sharpen your business vision!

I love absolute statements.

Pardon my English. But this is one of my favorite statements.  You’re at the ignition stage of your newest business venture.  Of course, you have a vision for what you will do to change the world.  Let’s stress test that vision and sharpen it further to help ensure your success.

Stress-testing your vision.

First, if your vision is limited and you will be happy with a successful local dry-cleaning enterprise or small restaurant around the corner, you are not the target for this epic effort to help entrepreneurs build great businesses that do change the world.  (Please take what you can from these weekly posts.  Many will apply directly to you.)

For the rest of you who want to change the world, let me repeat using different words: vision is everything.  A great vision for a new enterprise drives innovation. It serves as the rallying cry for future employees, investors, customers, and suppliers.  It sharpens the understanding for those new to the enterprise and moves them to follow and even to become unpaid advocates for the business.

Think of some of the great visions from the past that did change the world. 

“Absolutely, positively overnight” made FedEx an indispensable name in supply chain management.  “A computer on every desk” made Microsoft a partner in the growth of most every business.   You can think of many more, visions expressed so clearly that their enterprise became critical to your success.

There are other, less dramatic ways to express a vision. 

“Be the largest supplier of laser toner in North America”, or “Make dining into a five-star experience.”

How an entrepreneur’s vision statement affected me…

[Email readers, continue here…]   Years ago, as a panelist at an entrepreneurial seminar, I watched as over fifty aspiring young entrepreneurs filed past a microphone, each tasked with making a thirty second pitch to the panelists of professional investors.  About halfway through this painful exercise, one man walked up to the microphone and said, simply, “We move oil through the Internet” and then he moved on.  Immediately after the panel presentation, I found that one entrepreneur and began a conversation that led to my investing $100,000 in his vision of a supply chain enterprise based upon perfect knowledge of oil delivery systems, precise timing of delivery and coordination of resources to move oil from source to customer using the Internet as a frictionless tool for communication and coordination.

Although that business ultimately failed, I remained in contact with that entrepreneur as he used his experience in a new field, better off because of his learning experience.  I carry no rancor because of the loss, since I bought into the vision, helped as I could with the execution, and came to the realization along with the entrepreneurial team that the number of uncontrollable elements far exceeded those which could be controlled by any third party at that stage of development of the Internet.

Express your vision in just a few words – so that others will remember them and remember you, and hope that they get behind your excitement and singular focus for success.

Posted in Ignition! Starting up, Positioning | Leave a comment

Protect your company secrets!

Let’s create a use case.

Most senior and middle level managers will understand when a subordinate comes to them to resign and begin a new business.  But all will immediately question whether the new business will compete in any way with their enterprise and react to the future entrepreneur in either of two very distinct ways based upon those fears.

Even more suspicious is the action of an employee who resigns suddenly without notice or explanation.  It is natural to worry over whether that person is off on a journey to a competitor.

Differentiating the possible motives…

If the employee who is about to resign tells you that he or she is off to conquer the world in a completely new arena, there is almost always the unspoken sigh of relief and a cooperative attitude that flows from that point on in the conversation.

But if the departing employee is even a little bit reticent to tell of his or her plans, the result is the first stage of what could become an outright war between you and a newly separated past employee, sent away that day with an escort out the door.

Variations on the theme…

[Email readers, continue here…]   You can expect to have the same attitude if a past employee resurfaces after a layoff, resignation or after being fired, with a plan for a competitive business – or as an employee of a competitor.  Most employers have all of their employees sign non-disclosure and confidentiality agreements to protect the company’s trade secrets, customer lists and business plans.  Many states recognize the right of a former employee to work, even if in direct competition with a past employer.  But that right clearly stops when the entrepreneur uses any trade secret data from the past employer, especially customer lists for contacts and confidential business plans.

What could you do if your company secrets are compromised?

Anyone can be sued even if without merit, and responding to a suit can be traumatic in many ways – from expenditure of cash and valuable time to emotional drain from worry over a negative outcome, to loss of industry goodwill by an entrepreneur perceived to have stepped over the line.

This is especially true for someone who has sold a business only to surface later to compete in some way with the buyer.  Never underestimate the venomous response from such a threat.

So, here’s the obvious advice to give to departing employees.  “No matter what your circumstance, never, ever be guilty of using trade secret materials or ideas from your past employer, especially customer lists.”

Posted in Protecting the business | Leave a comment

Is it YOU or your great plan?

So, what do you think is more important?

There may be more choices here. But the most important ones for any size business, including start-ups, is: Do you believe it should be the quality of your management team, or the plan you execute so brilliantly toward your success?

Do you want a unanimous answer right away?

Checking with professional investors from angels to VC’s, the answer appears to be near unanimous: the quality of the proposed or actual management team comes in a strong first before the attractiveness of the business plan itself.  The quest for a great management team is not a fluke, but rather a result of backward looks at the failure rate from past investments by those same angel investors and venture capitalists.

Here’s a test:

Several weeks ago, we published statistics of start-up and company failures. If you read that analysis of statistics for startups and early-stage businesses, you have learned the truth that at least half of the businesses backed by professional early-stage investors will die within three years or less.

And it’s a tough test at that.

[Email readers, continue here…]   That reality is a tough one for the professional investor, almost as tough as for those entrepreneurs who lose their businesses.  The latter can start new businesses, flush with the experiences gained from the previous effort and much the better for it.  But the investor’s cash is lost forever – and the experience gained usually is just another notch in their investor belt.

And here is the conclusion:

It is the management team, most often led by a passionate entrepreneur with experience in the industry, which makes the biggest difference between success and failure, even for businesses built upon less than sterling basic ideas.  Among professional investors, almost all would rather back a great team with an average idea before backing a great idea and inexperienced team.  It comes back to coachability and flexibility, also our insight from several weeks ago.

Great teams always have the advantage.

As a reminder of that conclusion: Great teams are flexible and have the advantage of experience in seeing the pitfalls before them from their past.  They are coachable in that they have taken advantage of the vast experience of others in overcoming obstacles and finding ways to speed a product to market faster or create a service whose quality exceeds that of the competition.

Of course, you could be the exception.

None of this is to say that an inexperienced entrepreneur cannot lead a great new business.  But it would be foolish to try without being surrounded with as many experienced co-leaders as possible from the outset.   As a start, that smart entrepreneur will soon “know what they don’t know”, an important qualifier for success in any business endeavor, when combined with the willingness to fill gaps in knowledge with help from those who have the experience to do so.

Even if you are not considering taking in money from professional investors, this advice would serve you well in protecting your own monetary investment.

Posted in Depending upon others, Finding your ideal niche, Growth!, Raising money | 1 Comment

Are you at risk for tech killing your job?

Stop me if you’ve heard this story before.

“My job as a (newspaper publisher telephone installer, stockbroker, travel agent, retail store manager) writer, poet, commercial artist – is safe as this economy continues to grow.”  Yup. Thought so.

We are in a decade of creative destruction that will affect most everybody. 

And the prime motivators of this massive destruction are the same class of entrepreneurs and innovators that have done it before.  This time they are aided by tail winds brought on by the rapid spread of access to the Internet and AI.  Generative AI applications are moving so fast that two applications (ChatGPT and Midjourney) in November, 2022 are now hundreds of applications, many focused upon your particular niche.

 And now everyone has access.

Consider this bit of recent history:  In 1995, thirty-five million people used the Internet. That is six-tenths of one percent of the world’s population.  And only one percent of these who had access also had mobile phones.

Consider the numbers.

[Email readers, continue here…]   By 2024, at least ninety percent of the global population will have regular Internet access.  Add that to the rise of robotics, artificial intelligence, biotech, genetics, augmented and virtual reality, and we will soon see wonders we could only imagine a decade ago.  Meanwhile, in the U.S., an estimated five million jobs will be lost to tech innovations in the next five years, with two million new jobs created in these fields alone.

And then there is robotics.

Robots will perform half of all manufacturing jobs by 2025.  Since 1999, the U.S. manufacturing workforce is down twenty-eight percent, and the U.S. has lost 54,000 manufacturing businesses.  In 1980, it took twenty-five jobs to produce a million dollars in manufacturing output. Today, that can be done with fewer than seven jobs.

Yes, Amazon is partially to blame. 

Last year, Amazon employed 1,541,000 workers. But Amazon displaced at least that number of retail jobs.  Just check your local store fronts.

Higher education needs to catch up.

Our current graduating class of college seniors reflects much of the past needs of our economic society, just as they did in the early 1970’s, when many bet that aerospace jobs would continue to be the hot job ticket.  The mismatch between what employers want today and graduating seniors majored in is striking.  For example, 81% of businesses hiring today want graduates with business or accounting degrees. But only 19% of seniors have majored in this.  Worse, 3.1% of seniors majored in computer science, while 65% of businesses looking to hire need these skills.  And yet, with the rise of AI creating code, we don’t yet know how this will affect the need for new program coders, and shift that educational need to code architects, prompters and testers.

And how about the new jobs to be created for “prompt-masters” and others manipulating or analyzing or checking AI query results.  How will college professors or newspaper editors know that content submitted is or should be original?  And Ai is now writing computer code in many languages.  Programmers or program architects (prompt-masters again) for this next generation of low code-no code?

Predictable work is highest on the chopping block.

What general kinds of jobs will be lost to automation?  Almost eighty percent of jobs performing predictable physical work will be gone.  People in welding, soldering, working on assembly lines, food preparation or packaging of objects will be most at risk.  Then come the unpredictable physical workers.  Twenty-five percent of these will be gone, including jobs in construction, forestry and raising outdoor animals.

White- collar jobs most at risk to the rise of artificial intelligence and machine learning are those in middle management, commodity salespeople, journalists, report writers, and even some doctors.

What jobs will be safe?

And the last jobs to be lost to automation and AI are, not surprisingly, K-12 teachers, professional athletes, politicians, judges, mental health professionals and coaches, advisors and motivators.

Tech entrepreneurs are out there in every corner of the world today finding ways to eradicate disease, provide clean water, change the way we deliver education, fight obesity and climate change, and reduce accidental deaths.  These heroes of the next generation are remaking our lives at hyper-speed.

Old jobs – new jobs

So, will tech take your job, or your offspring’s job or your grandkid’s job?  Old jobs will be gone for sure.  But that same villain, tech, will prove to be a creator of jobs we can’t even imagine today, and will improve the quality of our lives immeasurably at the same time.

These are times to celebrate innovation and trust that, like many eras in the past, the world will be a better place in which to live and work because of their world-changing innovations.

Posted in Depending upon others, Protecting the business | 2 Comments

Are you a dictator about sales deadlines?

Everyone who manages a company, a workgroup or a sales force wants to write as many new deals as possible and is usually wary about doing anything that might threaten the positive outcome of a pending sale.

We hesitate to enforce our own rules.

So, it is common practice to leave an offer containing a discount open, following up periodically to attempt to nudge a prospect into signing.  But without a firm, meaningful deadline, many of these bid-in-hand prospects will want to shop around, or delay the “yes” for budgetary reasons, or just ignore the offer for the short run.

Reasons your customer might hesitate.

If a potential customer’s cash is tight, or if the relationship between the customer and sales rep is not close enough to move the customer to at least respond, then an offer can sit for months or longer with no acceptance.

Deadlines: your best tool to force a decision

There is a proven way to cause enough discomfort to move a potential customer to act, but it carries a degree of risk.  Place a firm deadline for any discount, and make it clear that the date is real, after which the discount will no longer be available.  Do so within the offer document and with a personal comment with delivery of the offer.

Will you enforce a deadline if you could lose the sale?

[Email readers, continue here…]    Plan to enforce this deadline, even at the peril of losing the deal.  Creating a line in the sand and sticking to it will ensure that your prospect takes the discount seriously.   If the deadline expires and the potential customer finally acts, expecting the discount, a significant degree of sales power returns to you.  From a simple, “Well, we’ll extend it for a week” to “Our board is firm, and the best I can do now is (something less.)”

The most powerful tool you have in a sales environment is a deadline.  If your prospect continually misses a deadline for no good reason, you have an earlier reason than usual to reduce the percentage of close to near zero in your sales prospect system, and that is a good move in making sales forecasts more realistic, if nothing else.

Yes, it takes a little extra gut to pull the plug on an offer or discount.  Ask yourself: “How many long-open offers are actually accepted?”  You’ll have your answer and a tool to enforce change.

Posted in Depending upon others, Growth! | Leave a comment

What are the odds of your startup’s success?

Well, the numbers don’t lie, even if there are several sources of these statistics.  Starting a company is HARD – in so many ways.  And risky too.

Let’s start with a restaurant -not our thing. But…

I read several years ago that the average startup restaurant lasts only about a year.  Ouch! Here I am a professional investor in early-stage companies, and I attempt to find those with the greatest chance of success and growth in value over time.  Restaurant startups would not top my list.

Data does not lie.

We have years of real data to call upon: data that impacts both investors and entrepreneurs. There are two reliable sources of reasonably recent data for us to examine.  The Angel Capital Association recently published a study contributed to by several of my friends quoting that seventy percent of investments made by angel investors to date return less than the amount invested – upon a sale or closing of the business – the great majority of these outright losses as businesses die.

Fortune Magazine and Harvard studies

Attempting to get to the number of real failures for all startups, not just those with angel group investments, Fortune Magazine published an article claiming that 90% of these startups do fail.   The U.S. Census Bureau reports that 400,000 new businesses are started every year in the USA, but 470,000 are dying. What does THAT mean?

Even more credible statistics

[Email readers, continue here…]   John Chambers, former CEO of Cisco, stated that “More than one-third of businesses today will not survive the next ten years.”  And this includes all businesses, not just startups.  Harvard University recently published a study that shows three of every four venture-backed firms fail.  And the U.S. Bureau of Labor Statistics states that 50% of all businesses survive five years or more, and about one-third survive ten years or more. Remember that this includes the Fortune 500…

Here comes the SBA and its analysis.

The Small Business Administration (SBA) claims that 66% of new businesses survive their first two years (and that 50% fail during their first year in business.)  Although these are not parallel studies or similar statistics, most seem to refute Fortune’s claim that 90% of all startups fail.

How about the early-stage investors?

You might be interested in this data as viewed from the early-stage investor’s viewpoint.  Angel investors hold their average investment for 4.5 years before a liquidity event (positive or negative.)  That buries the real data that – if you strip out the short-term company failures or investor losses, the number of average years to a positive return is between eight and nine.  And that is after investment, not after a company’s start-up.  Would you be willing to invest a significant portion of your wealth in “deals” that are completely illiquid for almost a decade on average?

But there is a pay-off for early-stage investors.

And yet, these same early-stage investors – if they diversify into enough companies and wait long enough – see an average annual return on their investments of 22%.  Way above market investment returns. But those returns come from the 3% – yes only 3% – of their investments that pay out more than ten times the amount of the original investment.

Starting up a new company is risky. Investing in a young company is risky.  But the potential returns over time for investors makes this an attractive diversification.  And we hear of successes like the over 1,000 unicorn companies that make us all want to jump in and try our luck – even if the odds are well below 3% for ultimate success.

We are a cadre of optimists and that is unlikely to change.

Entrepreneurs will always start new enterprises. Angel investors will always finance many of them.  We all look forward to the lottery win, and hope to be well-rewarded over time.

Posted in Growth!, Protecting the business, Raising money | Leave a comment

Nothing good happens after midnight!

Here’s another one from my Dad, a very wise man. He gave me this advice right after I received my driver’s license years ago.  It took years to understand the importance of this prophetic statement.

Taking this advice literally:

Gun shots, drunk drivers, mayhem, and even curfews qualify as just some of the things that could bite in the early morning.  And heck, soon I found myself the father of a teen-age female driver, and truly understood my Dad’s admonition.

But how does this have anything to do with our business lives?

Think of our midnights: time and money.

Take deadlines for example.  We often miss them, sometimes by a long shot. Every day a deadline for development, rollout, marketing campaign or even corporate reorganization is missed, we burn fixed overhead – money.  And we know that there is only so much available to burn at that.

Time management:

[Email readers, continue here…]    Companies have gone out of business from a lack of time management, especially when additional capital is not available when most needed.  Time management is a critical element in an early-stage business for this reason.  The sense of urgency senior management must create is a real and necessary skill.  Like most management skills – not easy nor pleasant.  But necessary.

Money – the asset we take for granted until low or gone.

We admonish our CEO’s to keep six to twelve months of liquidity available.  We know from experience that raising money may be nearly impossible when economic times are tough, and when we have under-performed on our business plan.  We tell our CEO’s to raise cash when not needed – because that is the time when it is easiest to raise.  Or when the news is particularly good.  Or the terms offered are especially favorable.  Or even just when available at any reasonable cost in equity or interest.

Good managers are good students – easily coached by those on their boards or advisors who have been through eh rough times in their business lives.

So, it is true for us in business too.   Nothing good happens after midnight – that event when money or time catches up to our business plan and begins to bite.  Gun shots, drunk drivers, cash crises, deadlines missed.

Do you have that sense of urgency?

Posted in General | 2 Comments

So, what’s a company board good for, anyway?

Some of you have gotten along forever without a board of directors, or used your spouse as the “other” board member from the start.  But there are some very good reasons to build a great board composed of some outside members.  And good board members can add real value to you and the company.

Where to learn more…

In other posts (and in our book, “Building Great Boards” – available on Amazon and other booksellers) we cover legal responsibilities of a board, how to pay board members, the limits of their responsibilities, dealing with under-performing or “noisy” board members, and more.  Today, we cover an ideal board’s collective mindset.

If you are responsible for forming a board, managing it, or evaluating its collective performance, consider these three important modes of engagement as you guide…

Generative thinking:  Do you have board members who often ask “why?” or “What if…” Or “What are the alternatives?” Or the important one: “Is this idea on mission?”  These are generative thinking questions.  Hmm. Generative. Now there’s a word perhaps you have never heard, and should be added to your corporate toolset and vocabulary.

[Email readers, continue here…] Generative thinkers are relentless in asking questions that get to the core of an idea, often making the originator think more deeply about the effects over a longer period of time.  Some ideas sound unbelievably creative – and may be that.  But sometimes there is a barrier, an impossibly high cost not considered, a social backlash never thought of, or competition already covering the idea that is unknown to the originator.  Which leads us to the second class of creative board thinking…

Strategic thinking:  Board members who ask: “What is the competitive landscape?” or “How about the public relations impact?” or “Does this idea move us toward our goals?” or “Is this just too little value for too much money?” – are adding to the dialogue in valuable ways and should be encouraged, not just tolerated.

Most of us in management have too little time for strategic thinking.  “Ah ha” moments are too few when there are lists of urgent things to do that never seem to be completed.  Good board meetings allow time, and the chairman encourages members to ask strategic questions to help focus the board on its best use of that time.

Fiduciary thinking:  Most board members, especially those composed of members from larger businesses, are good at the fiduciary questions.  “Is this legal?” “Is it feasible (financially, with our resources, with our capabilities?)” “Can we afford to do this?” “Is this idea sustainable?”  These are typical fiduciary questions.  Importantly, these also help a board to cover the legal “duty of care” for the health of the company. But that, too, is the subject for another time.

The punch line:

Investing in the creation of a governance board is not enough.  We must encourage a constant use of generative, strategic and fiduciary thinking from  board members, encouraging this most appropriate mindset.  And we must present our ideas in board meetings or documents in such a clear manner that such questions will be asked, and discussion allowed.

Most importantly, we must leave enough time in a board meeting for these discussions. Which means reducing the time spent in routine reporting, delivering materials well in advance when possible, and encouraging participation from all board members.  This is not easy. But the potential for great results leads to the board giving “macro governance” and not delving into the micro details that management deals with on a daily basis.  A better company is the goal.  And what CEO or board wouldn’t want that?

Posted in General | 4 Comments