Author Archives: admin

Work at home – full time parent

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I’m a full-time mother at home and very much wanted to start my own business at home were I can support my daughter and still be there. 

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Starting a business while parenting a young child. One very important factor to evaluate when considering starting a business is your personal life chapter. Starting and growing a business requires a tremendous amount of passion, commitment, time and energy. It is, truly, not for the faint of heart or for those who cannot commit most of their time and energy to the endeavor in the beginning phases. Getting a business up and running can easily consume the vast majority of your waking hours for months and months, if not years and years. Balancing that reality with the time and energy demands of a young child is a formula that often adds up to doing neither thing well. It’s very easy to neglegt both the business and the child in an effort to spread yourself between each. Both a young child and a young business are needy, self-centered creatures that are essentially black holes for your personal time and energy: they will take whatever you’ve got and more. While both children and businesses can be tremendously rewarding, they both require sustained investments of high levels of focus, time and energy to be have positive outcomes.

In addition to the time and energy  demands of starting a business there is the economic reality. In 2009 the median income for a woman working full time in the U.S. was $36,278 (source: U.S. Census Bureau http://www.census.gov/newsroom/releases/archives/income_wealth/cb10-144.html ). The economic reality of starting a business, especially one that you could run alone from your home while simultaneously caring for a young child, is that you would be very, very hard pressed to generate $36,278 in after-tax profit even after a year or two of operation. For the overwhelming majority of businesses it takes time to get to a point of profitability. In many cases, it can be months or years before you see your first penny of profit. Evaluate the ideas you have for a home-based business and do some basic economic calculations: Sales – cost of goods sold – cost of operations – cost of sales & maketing (advertising, etc.) – financing costs (interest on credit cards or loans) = profit. Do you have any ideas that can realistically come close to $36,278 annually? Can they come close to that while simultaneously raising a young child?

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The Short Story on Pitches

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The short story on pitches is:

1.      The purpose of the pitch is to get the next meeting. This rule applies to everything from a 30 second elevator pitch to a one hour VC pitch. Note that the purpose is NOT to tell the entire story, especially about your technology, what you built and how it works.

2.      The most important things to talk about in a B2B business model pitch, in priority order:

a.      Relevant and target market size (see stage 1 at Idea to Exit)

b.      Market pain you are solving

c.      Sustainability of that pain (will the pain be around long enough for the company to grow into and be viable over the company’s life cycle)

d.      Level of that pain (who, specifically, is in pain, e.g. CEO, CxO, VP, director, manager, users)

e.      Price they will pay to solve that pain

f.       Recurring revenue aspects of that price

g.      Sales model (type [direct, channel, etc.], sales cycle, signing authority, # of functions you need to sell to, e.g. finance, CMO, IT, etc.)

h.      Distribution channel(s)

i.       Barriers to (competitive) entry (Intellectual Property (IP) rights (patents), proprietary sales/distribution channels, etc.)

j.       Everything else, especially the technology, what you built and how it works

 

Note that what you know the most about, have the most passion for, etc., is down at the bottom.

This is why most pitches fail.

Most startup guys come in and spend 99% of their time on their tech, what they built, how they built it and demoing what they built. That is, in the end, the least important thing when you are pitching.

The most important thing is the pain you are solving, the scale of that pain, the sustainability of that pain and who owns that pain.

The impact on pitching and funding are:

  • Large scale market (.5 – >billion dollar scale) = VC
  • Medium scale market (several hundred million) = Angel & Super Angel
  • Small scale market (<several hundred million) = bootstrap, Friends & Family

You can cover points a – f in less than 90 seconds. That’s enough time for an elevator pitch.

Remember, all you want them to do is follow you off the elevator. The point of the pitch is to get the next meeting.

 

 

Motorcycle Instincts and Startups

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There was a good post today on the Fortune blog titled “Motorcycle Instincts and Startups” here: http://finance.fortune.cnn.com/2011/03/04/motorcycle-instincts-and-start-ups/

I think the post is a good read and draws useful parallels for a few aspects of motorcycling and startups.

I’ve been riding motorcycles for over 40 years both on and off road and on six continents through most of 43 countries.

I’ve personally started about a half dozen businesses (depending on how you count them) and been part of starting dozens more.

You could say this topic resonates with me.

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Questions for the Next Gig

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I was asked to provide career coaching feedback on a new employment opportunity, so I worked up these questions. These questions are equally applicable to a startup or other business opportunity, with suitable modifications around manager / company / product or services .

Ask the questions before you become emotionally invested in the opportunity. Once you get past that line, your emotional investment will color or skew your perceptions to the point you will not be able to be objective about the answers.

Use as many objective, fact-based data points as possible, and keep a log or spreadsheet that rates and weights the answers.

Questions #1 – #3 are absolute show stoppers.

It can be possible to overcome #4 if you can see a clear path to obtaining the necessary skills, etc. Most entrepreneurs get to where they end up by answering “Yes, I can do that,” to every challenge and figuring it out as they go along. That approach does not disqualify you for opportunities, but you need to be honest about how that changes your risk profile.

The answers will never come back all positive, but the goal is to have the majority of the answers to questions 5-11 come back positive. Some negative responses, such as those around customers, products and services, etc., may provide leverage points for negotiations.

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4th Floor Walkup

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Yesterday, an entrepreneur told me of his father, who died at 81. The father lived in a 4th floor walkup until he was 79, when a fire in the building forced a move to a new building. The new building came with a wonderful view of the East River and an elevator. The view was nice, but the elevator eliminated those eight flights of stairs up to the 4th floor. To this day, the entrepreneur is convinced losing that daily climb up the staircase was the death knell for his father.

It’s often quoted folk-wisdom that climbing stairs adds years to your life. That’s interesting, since the goal of human civilization, once past the creation of the civilization itself and aside from war, has largely been the elimination of all possible effort associated with life.

From elevators to Google search, anything that eliminates effort is rewarded; from rotary dial phones to manual crank car windows, anything that adds effort is penalized. Day by day, year by year, more and more effort is removed from life, leaving more and more effortless life, more and more elevator rides through existence.

Is there a price to pay for that?

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The Nature of Change

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More than 9 out of 10 patients do not change their lifestyles in response to their doctor’s recommendations.

More than 70 percent of corporate change efforts fail.

Humans hate change.

It’s a simple fact of life. There isn’t any easy way around it. In general, humans hate change.

That rule extends beyond individuals into groups of humans: families, tribes, organizations, companies, communities and nations. Humans hate change.

As individuals and groups, we tend to get locked into a way of doing things, a set of perceptions and a set of expectations. Anything that forces us to change anything about what we consider normal is usually resisted.

Even in the face of overwhelming evidence for the need for change, we will resist change. For example, the majority of people who suffer heart attacks do not make long term changes in their lifestyles to eliminate or limit factors that contribute to heart disease. In other words, even when it’s a matter of life and death, humans hate change so much they won’t change even to save their own lives.

There are university degree programs in change management; multiple national and global professional associations of practicing change management consultants; countless thousands of trained, certified and degreed change management practitioners and a cornucopia of books, videos, workshops and tutorials on implementing change. In spite of all this learning and all these resources, there has been relatively little improvement in change rates in humans or groups of humans.

Why is this so?

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Fear, thy name is Ron Wayne

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One of the little known facts of Apple’s history is that Apple wasn’t the creation of Steve Wozniak and Steve Jobs. Apple was actually founded by three guys: Steve Wozniak, Steve Jobs and Ron Wayne.

The equity split was Wozniak 45%, Jobs 45% and Wayne 10%.

Wozniak recalls, “Steve had 45 percent of this partnership, I had 45 percent, and Ron had 10 percent, because both of us agreed that we could trust him to resolve any dispute, and we would trust his judgment.”

So what ever happened to Ron Wayne, a guy who had 10% founding equity in Apple?

Wozniak relates, “I had no money and Steve had no money. We didn’t own cars, we didn’t have savings accounts, we didn’t have houses. So Ron Wayne figured they’d come after him for his golden nuggets that he kept under his mattress. (He actually tells me it was in a safe-but he was afraid they’d come and get his gold.) So he sold out. It was too risky for him, so he sold out his 10 percent of Apple to [us] for a few hundred bucks. Maybe $600, maybe $800, maybe $300-but a few hundred bucks. And this was even when we had an Apple II designed and were heading toward future business. He was just scared that something was going to catch him.”

Apple’s market capitalization this morning is $181.7 billion, with a B. If Ron Wayne had stayed around (and assuming no dilution), his 10 percent of Apple would be worth $18 billion. With a B.

Fear, thy name is Ron Wayne.

 

Sources:

  • Founders at Work: Stories of Startups’ Early Days by Jessica Livingston
  • Yahoo! Finance

IBM and Creative Destruction

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One of the fundamental aspects of successful capitalism is the principal of creative destruction. In a capitalist system, businesses that are hampered with flawed business models, substandard management, unproductive labor or changing markets, among other things, pass away in a sometimes agonizing fit of destruction. New businesses, with a better take on what the market is willing to buy on an ongoing basis and how to produce that profitably, spring up and thrive. It’s the business version of earth to earth, dust to dust and the circle of life.

Even though we all know this story and can intellectually recognize that it is a required component to make a capitalistic economic system work, when push comes to shove, or more realistically, padlocks come to factory gates, things get a lot tougher. When long-standing, treasured companies die, such as Maytag, it is traumatic, especially for the local communities.

If they are big enough or politically well connected, governments sometimes step in and prop up dying businesses. In the last year we’ve seen multiple examples of this in vehicle manufacturing, insurance, financial services and banking. But even while entire economies are distorted by artificial means, the market keeps changing and creative destruction keeps happening.

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Doing It For Free

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“If they didn’t pay me, I’d do this for free.” – Harry Cabluck

Have you ever had a job in your life where you felt like that? Have you ever invested your time and energy into a career where you literally couldn’t wait to get up in the morning?

Few people have that opportunity. I feel very fortunate that I’ve had more than one.

Many people get exposed to a job early in life and do some variation of that same job the rest of their lives, especially in the trades. Others pick a college major at age 18 or 19 for reasons that often have little to do with their interests, skills or abilities and more to do with factors related to friends or romantic pursuits. They end up with a degree unrelated to their interests or stuck in that career track for the rest of their lives. Others, especially in times like these, take any job that’s available, and as long as the paychecks clear the bank, they stick to it. Others get on a job or career track they don’t intend to pursue for a lifetime but are subsequently locked in by responsibilities such as loans, marriage, mortgages, and children.

In all these cases, it is not unusual for people to wake up one day and realize they are unhappy in their jobs and careers, but feel trapped there due to age, education or skills, unable to seek any alternatives because the barriers to change are too high.

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Propensity to Buy

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In marketing, the goal is to create the perception of need.

In advertising, marketing’s shock troops, the goal is to create the propensity to buy.

I just received this advertisement from CompUSA.com via email.

 

Read that ad copy carefully.

 

Does that ad create the propensity to buy something–anything–from CompUSA.com?

In marketing, perfection is the baseline. First you deliver perfection, on time. Anything beyond that is icing on the cake.

But first, you deliver perfection.

If you don’t, instead of creating the propensity to buy, you create the propensity to consider the brand incapable, if not incompetent.

Which pretty much sums up my thoughts about CompUSA.com right about now.

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