Inc.com

Sure, you can get your own life relatively balanced--but what about managing an entire start-up full of workaholics?

As employers, we all know that the New Year causes our employees to rethink their priorities. This is especially true in small companies and start-ups, where the life part of work-life balance is often malnourished.

But you are a good boss: You want to be known for the stellar treatment of your employees. Maybe you dream of a day when Glassdoor names your company as one of its "Best Places to Work." Before you enact that telecommuting policy, start offering flexible hours, or buy that combination table tennis-foosball-pool table for the break room, here are five things you want to consider:

1. Make it official.

Don't just haphazardly start bending rules. Enact a formal work-life program or policy. Do this by first considering what kinds of work-life benefits would really be recognized as benefits to your employees. Examples of work-life program components include things like flexible work arrangements (such as flexible hours or a compressed workweek), allowing part-time schedules, offering telecommuting options, permitting "shift swapping" (for companies with around-the-clock work shifts), or providing discretionary leave, such as paternity, educational, community-service, or sabbatical.

2. Make it legal.

Understand that not all work-life programs work in all states. For instance, it is very difficult to offer a compressed workweek (such as 10 hours a day for four days a week) without running afoul of wage and hour laws regarding overtime. A work-life program that is properly planned and evenly implemented can provide employers a competitive edge in attracting and retaining a diverse, highly productive workforce. Otherwise, these programs can backfire and become a source of legal risk and low morale.

3. Understand and manage the risks.

Although these policies are enacted by the higher-ups in a company, they are often left to be executed by those in direct management. A typical process has the employee approach her or his manager with a specific request to take advantage of a work-life program. Then the manager decides to grant approval or not--approval is not guaranteed. This can lead to inconsistencies across managers and leave a company open to claims of foul play or favoritism. An employee and a clever plaintiffs' lawyer can always claim that denial was in fact discrimination based on a protected class (provided one exists, of course). My advice is to have a central place where such requests are made (like the HR department) and have it keep track of approvals and denials--so it can ensure fair application of program guidelines.

4. Keep good records.

One way to reduce the risk is to keep accurate documentation that clearly articulates the reasons why a work-life program was authorized or not authorized. This will allow you (or your HR manager) to make sure that the rules are being applied fairly. If a problem comes up, then be sure to investigate and take appropriate action based on the result. Be sure to train or reprimand managers that fail to keep accurate records or fail to apply their discretion consistently.

5. Recognize the FMLA or ADA.

Some requests for a work-life program are actually veiled requests for a protected leave. If an employee wants to work part time to take care of an ailing spouse or a sick child, this should be treated as a "demand" for FMLA leave (Family and Medical Leave Act) and not a "request" for a flexible schedule. Likewise, if you suspect that an employee is requesting a flexible work arrangement because of a medical condition, be sure to first analyze the request according to the definition of "reasonable accommodation" under the Americans With Disabilities Act.

Even though work-life programs offer real advantages to employers and employees, it is necessary to understand the risks that are associated. This is especially relevant when it comes to employment law--an area where the law is both state specific and always changing. Be sure to work closely with employment counsel to reduce your risk to a level that is right for your organization. The time to do this is not after you get in trouble--so be sure to get legal review before you launch the program, and get advice during program implementation. Then you can be safely on your way to that coveted "Best Places to Work" list.

It's well into the cold and flu season. If you get sick and can't take a sick day, here's how to push through and get the job done.

The thing about being sick is that it always feels like this is the worst it's ever been. Like it's never going to end.

And nothing's worse than having to work when you feel like crap--having to think when your head feels like it's filled with cotton; having to sit in meetings when all you want to do is crawl into bed; having to make important decisions when you were up all night coughing and wheezing.

You know exactly what I'm talking about.

There is, however, a silver lining in all the suffering. Over the years, I've tried pretty much everything. So I know what works and what doesn't. Here are seven ways to be effective at work when it's the last thing you feel like doing.

Lighten up and let go. We overachievers have a nasty way of being hardest on ourselves at exactly the wrong time, like when we're sick. Cancel trips and meetings you don't absolutely have to take. And don't let your mood influence your behavior. This is not a time to take on your boss or a problem co-worker. Trust me; it'll end badly. And remember: Stress is bad for your immune system.

Meditate. No, this isn't some mumbo jumbo religious junk. It's science, and it's real. Mindfulness meditation is capable of helping with pain, illness, anxiety, and stress. The hands-down leader in the field is Dr. Jon Kabat-Zinn, professor of medicine emeritus at the University of Massachusetts Medical School and best-selling author of Wherever You Go, There You Are. Get the audio book.

Medicate. Find real medicine that works for you and doesn't produce side effects that are worse than the illness. For example, some decongestants make me hyper and irritable. Not good. Forget Airborne and all those other dietary supplements and homeopathic remedies. They don't do a thing. But if you're particularly susceptible to placebos, by all means, go for it.

Coffee, yes. Alcohol, no. When you have to work, drink tea or anything with caffeine. Just be sure to hydrate with plenty of plain water and juices, as well. Stay away from alcohol, period. It won't do you any good, and it will dehydrate you. Also, sunshine is a great stimulant. Anything to improve your mood. Speaking of which, get dressed. It'll help you feel human again.

Keep it to yourself. Some of us just have to complain when we're sick. I fall into that category. Here's the thing. Don't. Trust me, nobody wants to hear your whining. Want to know what else nobody wants to hear? Your coughing up a lung and blowing who-knows-what out of your nose. Do it in the bathroom. Better yet, whine to your spouse and be disgusting at home.

Find a way, any way, to sleep. When we're sick, we tend to throw all our good habits out the window. We can't sleep, and if we feel like eating at all, we want comfort foods. Thing is, your immune system needs the right foods, fluids, and sleep to fight disease so you can get better faster. However you do it, find a way to sleep. A lot. And don't skip the vegetables.

Set a good example. If you're a boss, listen up. Your people watch you like a hawk. They emulate your behavior and follow your priorities. Send them the right message by taking care of yourself. And when your people are sick, tell them to go home and come back when they're feeling better. If you take care of your employees, they'll take care of you.

This really comes down to common sense. Do smart things that will help you heal quicker and feel better, not dumb things that will make you feel worse and prolong the agony. The most important thing, above all, is to take care of your own and your employees' health. That's absolutely the best way to take care of your business, guaranteed.

Beyond the glamor of the front row, entrepreneurs hustle to produce the fashion world's signature event: New York Fashion Week. At designer Jill Stuart's Fall 2013 show, small firms are involved in everything, from design to production.

Just because failure has become fashionable doesn't mean it's easy to deal with. These 4 tips will get you going again.

I just did a Google search of “succeed by failing” and got more than 18 million results. Not surprising. Over the past few years, more and more entrepreneurs and executives have been going public with the role of failure in their eventual success. Failure has become downright fashionable.

Even my PSDNetwork co-founder, Heather Boggini, is fascinated with failure--well, mostly with my failure. At our weekly check-in meetings, she asks me: “What are the top three screw-ups you made this week?” I always have an answer.

Why is failure so important? My friend Jeanne Sullivan, a general partner at StarVest Partners, says she, like many venture capitalists, will not invest in a CEO who has not experienced failure. That’s because failure is inevitable for entrepreneurs. An investor needs to be able to trust that your response to failure will make you and your business stronger.

Even before the recent fascination with failure, the most frequently-asked questions I would get from women entrepreneurs were about failure. The questions used to be about how to avoid failure. Now they’re about how to embrace failure. The questions may have changed, but the answers have not. Do what the pros do:

Take a breather. It can seem impossible to identify, analyze, and control your emotions when you are living through an epic fail. It’s not. Trust me, I know.

One of the best things you can do to regain your emotional intelligence is to take yourself out of the mix. Turn off your phone, turn off your email. Don’t sign into Facebook, Twitter, or the like. Take a breath. Go for a walk. Go to a coffee shop. Put yourself in a different environment, cut off temporarily from the noise. Creating a new, quieter reality, even for a day, will help you clear your head.

Simulate your worst-case scenario. One of the best pieces of advice I ever received was to simulate the experience of the epic fail that I dreaded. I wrote out exactly what I feared the most, how I felt, and what I thought would happen when I failed. I itemized the issues that I thought would block my ability to rise again. For each item on the list, I created a plan and acted upon it. I regained power over the failure.

Focus on your goal. The best entrepreneurs focus on the big picture. They have a mindset that is open to course corrections (Notice, I didn’t use the word ‘failure’) that bring them closer to achieving a greater purpose. They know that entrepreneurship is tough, and will be tougher if they focus their energies on the noise of success and failure. Instead, they focus their energy on keeping the ship moving. They are human, of course, and they feel the pain. But the pain is temporary. The goals are not.

Stop judging and start learning. The best female entrepreneurs I’ve met understand that life is a test kitchen of trial and error. Sometimes you will succeed. Sometimes you will not. These successful women know that neither the success nor the failure defines them.

When you are in business you have customers. Your job as an innovating entrepreneur is to build a business that fulfills your vision. You are the vehicle. That’s it. You aren’t “less” because something you did failed. It’s not a reflection of you as a person. It’s an indicator that a product or feature, or how it’s being marketed, needs to change. Stop judging yourself or those around you, and start learning. Failure is a great indicator that it’s time for a change.

Are you ready to wear failure as a badge of honor? How have you turned your failures into your successes?

Customers will seldom tell you what's really important to them, but new research reveals their base desires.

Everybody knows that selling entails meeting your customers' needs. However, it's a huge mistake to assume that the most important needs are those that show up on a RFP or in a business discussion.

According to research conducted by the Chally Group (I'm writing a book with their CEO, BTW), customers have six needs that are rarely expressed outright, but which are the true foundation of a customer relationship:

Customers hate "hit and run" sales. If they're working with you, they don't want you to pass the buck to "sales support" or anyone else if something goes sour.

Customers hate being interrogated. Never expect your customers to answer questions about anything that you could have researched yourself.

Customers risk their careers and companies by doing business with you. They expect you to represent THEIR interests and not just your own or your firm's.

Customers, like everyone else, live in a constant state of information overload. They don't want more data, they want you to make sense of the data they've got.

Customers want you to get back to them immediately if they call with a problem or question. If you don't, you're telling them they aren't important to you.

If customers could solve their problems themselves, they would. They're hiring you and your firm because an outside perspective brings new creativity to old problems.

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New research suggests birth order may determine how you tackle goals. Does that mean one sibling will come out on top? Mom and Dad aren't taking sides.

If you have siblings, chances are that you're already familiar with birth-order stereotypes: Older siblings are bossy and parental, while younger siblings are spoiled and carefree. And only children? Yikes. Don't even go there.

However, new research suggests that (in addition to perhaps explaining some of your siblings' more annoying qualities) birth order might have a significant impact on the way you tackle your work--and, maybe, your success. A study conducted by Bernd Carette, Frederik Anseel, and Nico Van Yperen for Ghent University in Belgium examines the differences between first- and second-born children and how they set and achieve goals.

Different Goals

The study found that first-born children are more likely to value "mastery goals," which involve improving one's own performance at certain tasks, while second-born children are more likely to focus on "performance goals" and the pursuit of outperforming others.

The research team attributed this, in part, to their belief that first-born children lack--for a time, at least--siblings with whom to be compared. Therefore, parents are likely to gauge their first-born child's progress against that child's own previous performance, setting the stage for a self-referencing approach to goal achievement.

Parents frequently compare second-born children, on the other hand, to their older siblings--a practice that enourages younger children to reference themselves against others when evaluating their goals and performance.

In other words, older siblings hold themselves to personalized standards, while younger siblings base their standards off of the goals of others around them.

“First-borns may be more motivated to learn, whereas second-borns may be more motivated to win,” conclude the authors.

Sibling Smackdown

That makes sense, right?

Only in a broad sense, says journalist and educational consultant Annie Murphy Paul.

"I'm skeptical in general of birth order theories. The best comment I can remember reading about them is that, while one's position in the family certainly does affect one's experiences growing up, it doesn't affect personality or outlook in any predictable way," she wrote in a recent blog post.

Murphy Paul isn't alone. Deborah Tannen, author of You Were Always Mom's Favorite! Sisters in Conversation Throughout Their Lives, expresses similar skepticism. She doesn't believe that siblings who are self-referencing are any less competitive or likely to want to "win" than those who compare themselves to other people.

"You could say that self-improvement is very self-referencing," she told Inc., "but then you think: Self-improvement to beat others is actually very competitive." At some point, the desire to beat oneself intersects with the desire to beat others.

So in a sibling smack-down between the oldest and youngest children, who comes out on top? That may be impossible to say. There are so many other factors, says Tannen.

"There is no question that birth order plays a large role, but it is always going to interplay with gender, culture, personality--and all of these other things," she says.

Really, she concludes, the personality traits typically associated with either younger or older siblings are the result of differing levels of responsibility in childhood.

Trying to raise a ittle entrepreneur in your footsteps? Take heed: "Birth order [doesn't matter] so much as the responsibility and expectations of behavior that are placed on kids," she says.

The CEO of Tough Mudder is obsessed with company culture and strategy. And with finding new ways to make his customers uncomfortable. (Electric shocks, anyone?)

Conventional wisdom would suggest that forcing your customers to endure electric shocks is probably a bad idea. But it seems to be working out for Will Dean, CEO of Tough Mudder, a $70 million company based in Brooklyn, New York. Tough Mudder hosts extreme events, in which participants work in teams to complete a 10- to 12-mile course. They jump into Dumpsters filled with ice, crawl under barbed wire through puddles of mud, and, yes, dash through live wires carrying up to 10,000 volts. In 2012, nearly 500,000 participants shelled out $95 to $200 to compete in 35 events in the U.S. and overseas. A native of Sheffield, England, Dean, 32, worked in British counterterrorism and then attended Harvard Business School. In 2010, he co-founded Tough Mudder with his friend Guy Livingstone. Now, Dean spends his days teaching Harvard case studies to employees and dreaming up new ways to leave his customers bruised, bloody, and begging for more. --As told to Issie Lapowsky

Running a growing business is a lot like playing pool. In the beginning, it's like you're playing without a cue ball. Then, you have a small team, and you need the cue ball. Suddenly, you have a lot of employees, and it's like you're hitting seven balls in a row. You have to hit that first ball very carefully to get that last one where it needs to go. That's my job now.

I get up early, typically around 4:30 a.m., and I try to get most of my work done by 10 a.m. I clear out emails and get my reading out of the way. I commission about two or three reports a week from my staff on things like what our price structure should be next year or what it costs to cancel an event.

By 10 a.m., I ride my bike about five minutes from my house in Brooklyn Heights to our offices. Tuesdays and Wednesdays are the days I'm usually in the office. Otherwise, I'm traveling. We have 110 employees, and it's probably been more than a year since we were all in the same place together. We have operations in Australia and the U.K. now, and we're opening an office in Germany this year. We're always setting up a venue somewhere. Like it or not, when your company gets to a certain size, the way you manage changes. You go from being a manager to a leader, and in my mind, there are only two things a leader should worry about: strategy and culture. Those two things take up most of my time.

Tough Mudder has a quirky culture. Once a month, we have something called Tough Mudder University, which everyone who's in New York attends. It's an 80-minute discussion of a Harvard Business School case study, based on a theme that's pertinent to Tough Mudder. For example, we did a case about Starbucks in the late '90s, when the core customer was a woman in her 30s. But by the turn of the century, it was becoming a wider national brand, and that created challenges. It's the same with us. Our early adopters were very fit 30-year-old guys. Now we have participants in their 80s, and we need to figure out how to serve those people, too. The case method is great from my perspective, because I get to interact with everyone, and it's a great assessment tool.

Every Tuesday, we have a staff meeting and give out awards. Our Kaizen Ninja Award, which is based on this Japanese concept about making constant improvements, goes to anyone who comes up with a great innovation. We also give out a Credo Award every week to someone who really embodies the values of the company. For example, Antonia Clark, our head of social media, won a Credo recently when she went above and beyond her job description and helped out the events team on many of the fall events. Tough Mudder is all about pushing your boundaries.

I spend a lot of time interviewing potential hires. We're growing so quickly that I probably do two or three interviews a day. I consider it a mental challenge to get someone to give an honest answer. I always ask, "Are you a hunter or a farmer?" It's amazing how many people take that question literally. If you take it literally, you've probably already failed. I also ask people what they would do if they had a month off. A central philosophy at Tough Mudder is that experience is the new luxury. Unlike an iPhone, which depreciates over time, memories and experiences actually appreciate over time. So, the applicants who tell me that with a month off they'd go to this festival and that festival tend to be pretty good cultural fits here. That's what we're really testing. Do you have intellectual curiosity, a natural sense of fun, an adventurous nature? Do you not take yourself too seriously?

I came up with the idea for Tough Mudder in business school. I noticed that people were bored with marathons and triathlons. Running's a bit boring. In what other sport do you have to listen to music to make it passable? I wanted to make something that was Ironman-meets-Burning Man, a test of all-around fitness, but in this fun, slightly quirky environment.

We aspire to become a household brand name, so mapping out a long-term strategy is crucial. I speak with Cristina DeVito, our chief strategy officer, every day, and I meet with the entire five-person strategy team once a week. We just started a new business division to try to figure out what Tough Mudder will look like in five years. I imagine we'll have several types of events related to fitness. I can see us having Tough Mudder gyms and boot camps. Eventually, Tough Mudder events will be just one business unit within an overall event planning and fitness brand.

We go on retreats every quarter to a house in the Catskill Mountains. There's no phone coverage, and the Internet connection is slow. We started the retreats to get everyone thinking about the future. We always have an event coming up, but we also need to think about how we're going to run events in 2014. If you're not answering these questions now, you're just getting less and less efficient and letting things fall further away from you. We've also come up with cool obstacles for our courses during the retreats.

Right now, we prototype the obstacles at our warehouse in Brooklyn, but we're moving into a new 48,000-square-foot office this year, which will have room for a testing facility. Alex Patterson leads our obstacle innovation team. My meetings with him are always about organization. We'll discuss how many obstacles we have at different stages of development, how people are reacting to new obstacles, and what our action plan is for changing obstacles that weren't successful.

A lot of our best obstacles started in different incarnations. Take Everest, our quarter-pipe obstacle. Our original idea was that it would be a ramp, and you'd have to take a running jump to get up. The trouble was, it was just too damn steep. People would run up and go straight back down. The next time, we built it too flat, so people just walked right up. The third time, we came up with this quarter pipe. It's perfect. You get part of the way up, and then you have to jump, and your teammates pull you up.

It's one thing to test an obstacle with 50 people in our warehouse and another to test it with 10,000 people on a course. The crowd mentality takes over. With Funky Monkey, our monkey-bars obstacle, we never considered people would climb up and walk across the top of it, but at the event, for some reason, they did. Our engineers built it so that you can dangle 500 people off it, but just like cars with good braking systems, it doesn't help if the driver's drunk. Now, we've reengineered it so you can't physically get up there.

Safety is a huge concern. We invest phenomenal amounts of money on safety. We have a medical staff at each event. We probably have more lawyers on staff than some law firms do. We have a book of contingency plans that every employee reads and takes a test on. If you don't pass, you have to go through training and have a discussion with a senior manager.

We've sold more than 500,000 tickets, and somehow, we've had no deaths. Statistically, it's amazing. You take that number of people, and if they were sitting at home that day, statistically, we should have had a few heart attacks. I have to tell the team, it's coming. We have to accept that it's going to happen at some point and work to ensure it never does.

My co-founder, Guy, and I don't spend that much time in meetings one on one, but we do have dinner together at least once a week. Guy and I have been friends since high school, and I think that's the most important thing in a partnership--having someone you know really well. You know each other's strengths and weaknesses, and Guy has many strengths that I don't. He's far more patient than I am.

Usually, by late afternoon I'm wiped out. I can probably do four or five hours of meetings a day. Then my attention span's gone. I don't let anyone invite me to last-minute meetings anymore.

I normally head home around 7 p.m. My fiancée, Katie Palms, will typically be home by then. She was at Harvard Law when I was at Harvard Business, and she's now a corporate lawyer. We met at a house party. I was pretty drunk, but she begrudgingly gave me her number anyway. I called her three or four times, and she was having none of it. Eventually, she gave in, and the rest is history. Usually, we have dinner together, and if I don't have some kind of work event, I'm in bed by 10 p.m.

I always tell people I'm probably fundamentally a bit lazy. It sounds like an odd thing to say, but it's true. I frequently gravitate toward slightly easy things, but now, the only things that come to me as CEO are really damn complicated. The great thing is, on a really frequent basis, you're reminded why you're doing this. Occasionally, I'm in a situation where people don't know what I do for a living, and Tough Mudder comes up, and they're talking about how awesome it is. There's nothing like it.

"Groupon clone" is perhaps the biggest Silicon Valley meme of the decade. News of a company merger illuminates why you should avoid getting anywhere near the clone wars.

Joking about the cancerous decay of daily-deal marketplace companies has become something of a Silicon Valley past-time, so we hardly need to point out just how insipid the online-coupon business has become. But news today may provide a slightly different teaching moment for entrepreneurs: Clones are bad. Really, really bad.

Today, AllThingsD reported that CrowdSavings, a discount marketplace start-up founded in Tampa, Florida, in 2009, will be acquired by Half Off Depot, a coupon start-up founded just a year earlier. The two companies will be rebranded as "nCrowd," and will be headquartered in Atlanta.

What's remarkable (and sort of depressing, really) is that the merger of the two companies ends the culmination of 19 previous acquisitions, a disproportionately massive share of total recent M&A activity in the United States.

But even now that newly-formed nCrowd has become the ultimate matryoshka doll of Groupon rip-offs, the entity will only represent a "fraction of the size of Groupon or LivingSocial."

That's not particularly suprising, but this is: According to the CEO of CrowdSavings, which acquired 15 daily deal companies over the past three years, most acquisitions cost him only "$100,000 to $400,000 apiece." The acquistion of CrowdSavings itself only netted the founders some $6.4 million in cash and stock. Probably not a very good ROI for a 29-person company that raised $1.3 million in debt.

The lesson here for entrepreneurs seeing dollar signs in copycatting the dailly deal market--or, really, any other already-duplicated-to-death space is obvious: Clones suck. They don't just suck because they're "stifling for innovation" and bad for consumer (which, of course, they very often are), but they suck for simpler reasons that should be more obvious--but that we don't always consider in the current buzz-heavy start-up ecosystem.

Start-up clones rarely, if ever, become fast-growing businesses, create sustainable jobs, or help push GDP forward. They are also not to be confused with late entrants into the market, as Google was with Yahoo. They are simply copycats, the result of irrational start-up froth, and they serve little use in our economy.

And, well, that sucks.

When space shuttle commander Mark Kelly led flights into space, he did not delegate. Here he describes his hands-on approach.

With more companies seeking to diversify their supplier base, the opportunity is there to increase your share of the business. Here's how.

Like it or not, single-sourcing for large contracts is becoming a thing of the past. Government agencies and big companies alike seek to have multiple providers for their key materials and services as a way to protect themselves. Ask for a specific reason why this is so, you'll likely get one of the following excuses:

• "We can't put all of our eggs in one basket."
• "We feel like it keeps all of our suppliers honest."
• "It's just our policy."

Because the policies are dictated by either the board or the procurement department, it's not likely that they'll be going away anytime soon. But for all of the chatter about the benefits of diversity in the supplier base, rarely is the spending split equally between all players. For obvious reasons, I refer to the supplier with the largest share as the "tiger." The supplier which has the smaller share I call the "stick," since it will often be used to keep the "tiger" in check. Each has its own risk and opportunity, but the strategy, depending upon your position, may be very different.

The first question to get answered is: Are you the tiger, or are you the stick?

When you are the tiger...The good news is that you have the largest portion. The bad news is that every gain that other suppliers make will probably come from your share. You are the biggest target. Because customers have set up this ongoing competition between the various vendors, you can bet that they will be playing you against each other. You need to discern in this ongoing relationship what your strength is and adjust your strategy accordingly.

• When you're winning—When you are clearly outperforming the other players you can continue to press for increasing volume, but don't expect that you will ever get to single-source. Better to work for longer terms or additional sales of secondary products and services. Besides, when you are the tiger and you are outperforming the competitors, you probably have the most volume their policies will allow.
• When you're losing—Seek to demonstrate that your performance is being compared out of context because of the scale of your work. This is a short-term answer while you work through your performance anomalies and get back on track.
• When things are neutral—A client once told me, "Small vendors are a big annoyance over time." The best time to press for more volume, believe it or not, is not when you are winning. The best time is when things are neutral because—all things being equal—your customer would rather give more work to one player to make his or her own life easier.

When you are the stick...The vendor who has the smaller volume is often times used as a stick to keep the tiger under control. Companies can use the strong performance of a small vendor to get the attention of the tiger and goad it into working harder. The question is how to leverage this performance to gain revenue share.

• When you're winning—If your performance is strong, ask for a 15 percent to 30 percent increase in volume above your current volume. This is a manageable amount for you to take and still provide great results. It also is enough for your customer to scare the tiger into performing better. However, once you have the increase that you can manage and maintain results, the work will likely stay with you.
• When you're losing—If your performance is not as strong as the tiger's, push hard with your client to increase your volume. Explain that the disparity in volume is a contributor to your performance. If the percentage of work you are receiving is too low to be significant, then the measure is not statistically valid. More work provides the kind of volume that will allow you to show a critical mass of results. This may give you the amount of work necessary and the time to improve your results.
• When things are neutral—Similar to the tiger, you want to take the position of pressing for more work. Your approach is to seek parity with the tiger since your results are similar.

Being one of multiple suppliers is a constant push-me-pull-you struggle. It's not ideal, but those are the customer's policies so the best you can do is take make the most of the situation. To win the larger share over time, you have to manage the relationship every day to your best advantage, whether you are the tiger or the stick.

Is your office feeling blah? Learn five ways to perk it up that may surprise you.

Some days, the office is filled with excitement, but on others it feels as if you're dragging though sludge. No workplace should ever feel drab and dreary. With some forethought and action, you can easily perk up the environment.

For inspiration, I consulted a happiness expert. In honor of Valentine's Day, I went to Sarah Endline, founder of sweetriot, a fast-growing chocolate company. We brainstormed on ways to create a happy workplace. To my shock, she did not suggest Oompa Loompas, but between us, we came up with these tips.

Forget the pictures of people with motivational sayings or old garage-sale prints. Get art that conveys emotion and tells stories. Give people in your office the opportunity and budget to find (or make) artwork that really speaks to them. Solicit local artists to show their work on your walls. Studies show that great art improves mood. Sweetriot features real artwork on every package, as well as in its office. It also has photos of cacao trees and cacao farmers, which are an integral part of its chocolate process. An adviser of Endline's once said, Wear your culture on your walls, and so it does.

Making videos is an inexpensive project that boosts team spirit and benefits the company culture. Any smartphone and Mac with iMovie will suffice. Assign teams in your office to create two-minute videos that reflect a company core value. Provide a 30-day deadline so it doesn't interfere with productivity. Require the videos to be humorous and tell a story. (If they need help, give them my book.) Give away nice prizes to the best video makers to get competitive juices flowing. The best videos will be useful for attracting and training future talent.

Creative problem solving is a genuine mood booster. People feel happy when they come up with exciting ideas or resolve complex issues. Set aside specific brainstorming time, so teams can study a problem and find ways to innovate. New ideas will create buzz and energize the office. Broadcast and reward results stemming from ideas that surface in these sessions. Make idea generation fun and exciting for everyone. For example, sweetriot calls any improvement, fix, or innovation a Shazam, and everyone celebrates a new Shazam by shouting.

Aside from the actual health benefits, chocolate is truly a great mood enhancer. I am not suggesting that you leave out large bowls of Snickers bars, where people can gorge themselves silly. Use chocolate appropriately as a reward or on occasion to celebrate. For example, you can give out sweetriot tins, which have tiny little chocolate bursts that put a blast of happiness into any conversation without adding on the pounds. Endline advises: Look for chocolate that is high in its cacao percentage and made by a company that tries to do good in the world.

This seems a bit contraindicative. Why take an unhappy office and unleash more unhappiness? But people may be down partly because they're holding back on expressing dissatisfaction. (As far as you know.) All that negative energy comes out in other ways and takes its toll on the general mood. Structured complaint sessions will act like a pressure-release valve. People will have a channel for legitimate issues and won't stress about not having a voice. Example: Everyone writes down and shares answers to the following questions in 40 words or less:

• What is the difficulty you have observed in the office?
• What do you believe is the root cause of the problem?
• What do you believe is a constructive solution to the challenge?
• What can you do personally to effect positive change?

Granted, your company needs to openly consider the feedback and take action when reasonable for these sessions to be effective. Of course, if you're not willing to solve legitimate issues, maybe the office unhappiness is simply a symptom of poor leadership. Fear is a poor reason not to hear employee feedback. But by applying structure to the discussion, the complaining can be controlled, and you can easily identify those who have legitimate complaints versus those who just want to kvetch. Then you can address both the whines and the whiners and improve the mood overall.

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Politics are the bane of company life. But eliminating them is a lot less complicated than you think. Here's how.

I hate laying people off. I think everyone should. But recently I worked with a company that suffered from a lot of internal demons and an unpleasant, unproductive culture. It occurred to me, listening to the COO recount the company's woes, that the company had too many people and too little work.

What were the signs?

Territorial disputes.

Whenever a new project emerged, everyone wanted to take charge of it. The COO spent a lot of time adjudicating. Sometimes this meant a wide range of potential solutions but more often it was a power grab. That people were willing to waste a great deal of each others' time suggested to me that they had too much of it.

Posturing for credit.

Every successful initiative seemed to me to have a very large number of people claiming credit for it. That implied that they didn't have enough of their own work to celebrate. How come?

Peer criticism.

This company seemed to be full of people who could find fault with every department apart from their own. I wondered how they knew, and why they cared.

I concluded that, because there wasn't enough work to go round, ambitious clever people wound up squabbling over what work there was. Too much time and effort went into in-fighting and not enough into innovation. Nobody was stretched--or challenged--enough.

I recognize that during days of austerity this seems like an odd situation to encounter. But it had come about because a benign management had added people as the company grew. The growth made employees affordable so management had no reason not to hire. Nobody had stopped to think that maybe those who were already there could--and needed to--do more.

I've seen this phenomenon quite often. Really smart people want to be busy, to stretch, and grow. Management's job is to give them a little more than they can handle--not to save money, but to keep everyone fully engaged.

If your company is riddled with politics, one way to change things is to get everyone a very great deal busier.

Competitors in emerging markets can't be allowed the advantage of pirated technology.

On multiple occasions, I’ve come across images of wire and sheet metal baskets on Chinese and Indian competitors’ websites. They don't just look like our baskets. They are our baskets, being portrayed as the fruit of someone else’s engineering.

My IT consultant has come across pilfered images of our baskets on Google searches so often she says it’s like "fishing in a coffee cup." The thieves typically smudge off our watermark with photo software. One telltale sign: The basket is skewed to the bottom of the image so their watermark surgery isn’t so obvious. Other times, they’re so brazen they simply leave the Marlin logo on the photo.

Intellectual property theft is an enormous and growing burden for American business. Count us as one of the many victims. Imitation may be flattery, but in this case it has the potential to flatten businesses.

It’s not just music and movies: This crime hits especially hard for American manufacturing. Although people most identify the sector with the household-name giants that made America the best manufacturer in the world, most manufacturers are small to mid-size shops that can’t weather the wholesale ripoff of their intellectual property. Moreover, the thievery undercuts the very technological advantage that American businesses like mine have against foreign competition. That’s why I recently I joined the advisory board of a new organization called the National Alliance for Jobs and Innovation. It was formed by business and technology experts to more aggressively counter IT and IP theft whether resulting from piracy, counterfeiting or the stealing of trade secrets.

Between 2006 and 2010, information technology spending by U.S. manufacturers grew 20 percent--to $94 billion from $73 billion--despite the recession. Computer-aided design software, once only affordable for huge companies, has become essential for manufacturers of all sizes. When I bought this company more than a decade ago, we had no degreed mechanical engineers. Now they comprise a fifth of the staff. Their basket designs get downloaded directly into robots that bend metal wire and slice sheet metal. That creative work is our bread and butter. It’s why we had record revenue last year and have grown seven years running.

The Marlin basket images on websites in China and India--offenses we’ve reported to Google--undercut our investment in engineering. Think about that across thousands of other small and midsized companies that are being ripped off this way: The cost of such fraudulent behavior to American business overall is in the billions. I had to reinvent Marlin Steel a decade ago to remain viable in the face of foreign dumping of raw steel on the U.S. market. I shouldn’t have to worry about reinventing it again because of intellectual property theft abroad.

These are not isolated cases in far-flung lands. Some of the largest emerging market manufacturers abroad are suspected of the highest rates of software piracy: Indonesia, China, Russia and India, according to studies by the Business Software Alliance and the research firm IDC.

U.S. officials are beginning to recognize the severity of the problem. In 2011, attorneys general from 39 states and territories urged the Federal Trade Commission to vigorously pursue IT theft against U.S. manufacturers. The attorneys general estimated that by reducing IT theft by even 10 percent over four years, the United States could add roughly 25,000 American jobs and $37 billion in gross domestic product. And just weeks ago, the California attorney general filed suit against two apparel manufacturers in China and India for alleged software piracy, arguing that the suspected companies could channel their savings in software to compete more aggressively in California.

The problem is immense. It won’t be easily solved. The U.S. cannot afford to view the problem as victimless or as too limitless and murky to police. It’s a direct hit on American competitiveness and job creation.

There is nothing more exciting than working for a start-up. But it takes a special kind of person to thrive at one.

Anybody that's ever worked at a tech start-up can tell you it's a work experience unlike any other. It is fast paced and unpredictable. Your job description is apt to change with some frequency. Great ideas live in scribbles on white boards, not in power point decks. Meetings happen around a monitor, not in a board room.

In my experience building two web companies, TripAdvisor and now CarGurus, I've had the chance to work with some incredibly smart, talented employees. The best of them share some common traits that I have come to view as the "indicators" for success at a start-up.

I've talked about the 80/20 rule before, and it's just as critical for employees at a start-up as it is for the CEO. There are hundreds of things you could focus on at any given time, but only a few of them will really make a difference to the product and the company. Basically, 20 percent of your work input accounts for 80 percent of your results. The individuals that have the ability to prioritize according to this rule will help the organization work faster and smarter.

In a start-up environment, there's not a lot of time for politeness or diplomacy. The best employees are the ones that brazenly fight for a good idea and boldly say no to a low priority request. They don't worry very much about perceived impertinence or hurting anybody's feelings, nor do they take anything too personally. The ability to dish it out and take it is critical at a start-up.

That goes all the way to the top. At TripAdvisor, there were plenty of times that my partner Steve Kaufer and I disagreed. If we took any of this conflict personally, we couldn't have gone very far. At my current company, CarGurus.com, our most successful people are the ones that are pushy about getting their jobs done and done well. While they can co-exist with others on the team, they are not shy and don't worry about hurting other's feelings. Start-ups are not popularity contests but rather are about generating results.

The best tech start-up employees don't let failure get them down. Whether it's broken code, a failed A/B test, or something much, much bigger, they have the ability to pick up and move on quickly, usually with some humor. Yes, they learn from their mistakes, but they don't expend too much time or energy reflecting back. Instead, they are already looking forward.

At CarGurus, our employees operate with the assumption that we will most certainly fail along the way to making better products or a better consumer experience--that's the job. The greater failure is not moving fast enough to keep testing new ideas.

At many start-ups (especially technology companies), early employees typically have some kind of an ownership stake in the form of stock options. But the kind of ownership I am talking about is actually more of an attitude. Those that fully embrace the company vision. They care about how the company's product affects its customers; they want to know what customers think. These employees are ever curious about the industry, and they are always thinking, often waking up in the middle of the night with an idea or sending an email to a colleague on a Saturday. Without that sense of ownership, it's just a job that ends when the clock strikes 5 p.m. Like an owner, successful start-up employees think about their "job" seven days a week, 24 hours a day.

Put a lot of people in (typically) small digs and add some stress and there's potential for a disaster. I've talked before about the importance of company culture in the life of a start-up. Most of the best employees I've worked with bring to work a great sense of humor, and whether they realize it or not, that helps to form a great company culture. They know how to defuse tense situations, they find fun in the big challenges, and ultimately they help to make the company a place that people want to work.

Two business owners decided to stop seeking wealth for its own sake and start putting their clients first. Here's what happened.

This is a Jerry Maguire story, of a sort. Just like Tom Cruise's character in the movie, Joseph and JoAnn Callaway had a revelation one night.

After finding themselves 50 years old, broke, and embarking on new careers as fledgling realtors, the married couple realized the deal they were trying to put together wasn't in the best interests of two clients. One family was on a path to buy a house it really couldn't afford from another that was settling for less than it could get for the property.

"When we started off, everything was about us and what we needed," Joseph says.

But that fateful night the Callaways told both families the truth, promised to find them what they needed and hoped the clients would stick around, which they did.

"That next morning it became all about what the client needed," he says.

For the Callaways, this line in the sand changed everything. In the first six months in the real estate business, the couple pulled in $200,000 in commissions.

"In our second year we doubled our income and in year three we hit $1 million in commissions. That's when people started telling us we were doing well... In 2005, we did almost $6 million in gross commission income," reads an excerpt from their book, The Two Word Miracle: Clients First.

The Callaways say three things have been key to their success.

Honesty

Everybody knows honesty is the best policy, right? But think about the times and situations when telling a little white lie or a harmless omission of information seems prudent, especially if doing so might make a customer feel better or if it will make you look better in their eyes.

Big mistake.

If you buy the idea that putting clients first works, then you have to be thoroughly honest with them because doing so is part of your value to them.

Competence

Sure, being forthright with customers will foster trust, but if you suck at your work you'll obviously never succeed. And not only do you need to be competent, you need to be the best at what you do.

The problem, they point out, is any time you're trying to serve more than one person (and unlike Jerry Maguire, most companies can't thrive with only one customer), the level of attention you can give individual clients diminishes simply because there's only so much of you to go around.

The solution? Get help and make sure anyone working for you buys into the "Clients First" mentality. Then give them the autonomy to become experts at something.

"Today we have 30 licensed assistants on our team... Our clients are better served than they would be if JoAnn and I had only one client. The reason they are better served is because the aggregate experience and expertise of 30 agents far exceeds anything we could supply alone," the book reads.

Caring

Before you roll your eyes, think of it as adopting the goals of your clients as your own.

"When you put clients first, it can't be about your money, it has to be about their money," the book reads. In fact, Mr. Callaway says after he and his wife started living out the "Clients First" mentality they:

"...never again thought about the commission. We never again begrudged the hours of futility when a home didn't sell for what the sellers wanted or when buyers couldn't find what they had to have. We never again brooded over the expenses on an individual property. We simply knew that as long as we kept the client nothing else mattered. As long as the client's needs came first, we would be rewarded in the satisfaction that we were doing the right thing."

While such thinking might seem counterintuitive and maybe even phony, the Callaways do a number of things that show they really do run their business differently than most.

They don't use voicemail, for one thing. Every phone call into their office is answered by a human being who takes a message, all of which are returned same day.

And Mr. Callaway tells a story in the book about how instead of their usual tack of sending clients Christmas ornaments one year, they donated $70,000 to Habitat for Humanity.

"We never played on that single act of charity. But then one day we learned that one of the officers at a bank for which we sold foreclosed homes was very active with Habitat for Humanity. He told us he remembered what we did and that it was one of the reasons the bank went with us and stayed with us. This bank is local, and it ended up giving us all the business it had, which was enough to make the difference between our making it and not making it through our darkest market times."

At the end of the day the Callaways believe the more you give, the more you get. Sounds like a team you might want to hire, right?

Want people to feel that way about you? Remember the Callaway mantra: Clients first, with a dedication to honesty, competence, and caring.

New research looks into the real effects of flattened firms and comes up with results that will surprise you.

In the world of start-ups, flatter is generally better, and middle manager is almost a dirty word. Want examples? GitHub managed to make it to 60 employees with "no managers," while gamemaker Valve has generated huge buzz with its radical employee manual describing its leaderless organizational structure.

These may be among the more extreme embodiments of the flattening impulse, but they speak to a real fervor for flat structures as up-and-coming companies try to keep their teams cohesive, responsive, and agile.

Does this enthusiasm for flattened companies hold up to careful study, though?

That's the question asked by Julie Wulf in a new Harvard Business School working paper. Through quantitative research and more qualitative interviews and CEO time-use surveys, Wulf and her team looked into the actual effects when larger companies eliminated layers of management.

She concedes that the impulse behind this delayering sounds sensible. By pushing decisions downward, flat companies aim not only to boost accountability and morale but also "to remain competitive in the face of increased competition" and "pursue a streamlined, efficient organization that can respond more quickly to customers."

The only trouble is that things don't work out as advertised. In fact, the effect of flattening an organization is, in many ways, the opposite of these stated intentions. Wulf writes:

In line with the conventional view of flattening, we find that CEOs eliminated layers in the management ranks… But, using multiple methods of analysis, we find other evidence sharply at odds with the prevailing view of flattening. In fact, flattened firms exhibited more control and decision-making at the top. Not only did CEOs centralize more functions, such that a greater number of functional managers (e.g., CFO, Chief Human Resource Officer, CIO) reported directly to them; firms also paid lower-level division managers less when functional managers joined the top team, suggesting more decisions at the top. Furthermore, CEOs report in interviews that they flattened to “get closer to the businesses” and become more involved, not less, in internal operations. Finally, our analysis of CEO time use indicates that CEOs of flattened firms allocate more time to internal interactions.

When middle management is stripped away, then, the powers it once held don't necessarily flow down to frontline team members. Instead, these decisions often get relocated to the very top of the organization. Or, in other words, flattened firms often look less like a democracy of empowered citizen-employees and more like a monarchy, with "a more hands-on CEO at the pinnacle of the hierarchy." The findings may have come from studying large companies, but small-business owners and founders are probably not immune to these unintended effects.

If you're interested in reading more about flat organizations, several other studies have also looked into the idea and found there are often negative consequences when firms go flat.

Have you ever experienced CEO control freakery masquerading as a flat organization?

It's too easy to lose focus after reaching this all-important milestone. Stay the course postfunding with these tips.

Sometimes growth is impossible without a significant chunk of funding to fuel that growth.

But say you do manage to beat the odds and attract capital--then what?

Check out the following advice from Ashish Rangnekar, the co-founder of BenchPrep, creators of test-prep and subject-based interactive courses for computers, mobile phones, and tablets. BenchPrep raised more than $2 million in 2010 and an additional $6 million last year.

Here are Rangnekar's tips, in his own words, for what to do right away--and just as important, what not to do:

1. Don't hire anyone for the first month.

We raised $6 million. That puts a lot of pressure on you to grow, and grow fast. After all, the story you tell investors is one of growth and how money will allow you to grow. But expanding the company doesn't always mean expanding the team. Growth is not just hiring more people.

2. When you do hire, start hiring differently.

There can be a big difference in the kind of people you want to hire when you are a small, underfunded company and the kind you want to hire when you're well funded and squarely in the growth phase.

When you're smaller, you typically want people who are generalists, because you can't afford to hire specialists. Once you have money in the bank, you should hire specialists who can put their heads down and focus on one aspect of the business.

That's why you should wait before you start hiring. It will take time for your hiring practices to adapt.

Our prospective employee pipeline was filled with generalists who could do multiple jobs. Now we need to create a new pipeline of candidates.

If you hire just in the first four weeks, you might not be hiring for the next stage of your company. Use the first four weeks to start socializing, start putting the word out there, and then build a new pipeline. We started getting a lot of inbound interest from talented candidates.

Give yourself time.

3. Don't hire talented people and assume you'll figure out their job later.

It's tempting to hire good people thinking you'll figure out later how to deploy them. In a way, that does make sense, because smart people will often create opportunities for you, but you have to realize that just because you now have money in the bank doesn't mean the scale you operate on has changed.

For example, you can't hire an online marketing expert and expect him or her to perform well if you haven't built the infrastructure for his or her role and his or her talents.

That's another reason to wait at least a month; that gives you time to shift your perspective, think about your organization, and figure out how you need to change to take on talented people so they can truly benefit your company.

Plus, when you hire talented people and assume they'll create work for themselves, that can lead to another issue...

4. Help the team maintain a true sense of goal and vision.

Raising money is an overwhelming task. A massive amount of activity, prefunding, is focused on achieving that milestone.

Once you do raise capital, there can be a vacuum of direction. It was a very exciting time, everyone was working really hard, the product was doing really well, we landed a number of new customers, and then there was this big feeling of validation because the investment community believed in us.

That's exciting--and that can create confusion as to what is next.

For the first four weeks, we had team meetings every Tuesday, recommunicating the implications of raising money, talking about immediate next steps, discussing how we would use the funds. It's important to enjoy the influx of capital, but it's equally important to bring it back into context and keep the vision straight.

5. Don't forget your investors.

During prefunding, you spend a lot of time talking to investors. Once you close, it's tempting to want to get back to work and focus on customers and building products, etc.

Although you have been talking to them for months, the conversations were more about long-term positioning and midterm execution. You rarely talk about the next three months and the next decision. Essentially you talk numbers, you talk vision, you talk about where you want to go.

Make your investors part of your tactical decision-making process. We scheduled the first official meeting four months after closing. That was too late. In those four months, we lost at least two months of valuable time where they could have helped make decisions and make a positive impact. Call an all-hands, follow-on in one room, within the first four weeks.

6. Hire an accountant.

Don't mess around with one-off spreadsheets or financial models you've created on your own. It's time to hire an accountant.

One, now you have real money and the obligations of managing financials, cash flow, etc. Two, now you have investors who want to know financial performance in various ways.

One may want a cash-flow analysis, another an income statement, another the tax implications of a new product. For a company that is not finance driven, those analyses may be distracting. Not doing them is not an option, and doing them on your own is not efficient. Once you're funded, the value a professional accountant provides is very, very high.

7. Create open dashboards.

Pick four or five key indicators of business performance and start sharing them with investors and employees.

In our case, with our subscription model, three key metrics are how many courses a single user takes, how long a user takes a course, and the rate of conversion from free trials to paid subscriptions. We look at revenue, marketing spending, etc., but those are numbers that make or break our company.

We looked at a lot of great tech companies, and the common theme for all was that their customers love their products. That's our goal, and our open dashboards tell everyone in the company exactly how we're doing.

All the greats know one thing: Nothing prepares future business leaders better than learning to survive and thrive under adverse conditions.

We tend to think of stress, competition, and adversity in a negative way. If you have no aspirations or happen to live in Utopia, you might get away with that. But if you want to go places in the real world, you'd better learn to embrace those concepts.

It's often said that successful executives and entrepreneurs thrive in highly competitive and high-stress environments. Indeed, they do. But they're successful because they learned to survive and thrive under adverse conditions, not the other way around. Nothing, and I mean nothing, will prepare you better to lead.

I was just reading an article that points out this interesting dichotomy. Working at technology companies like Apple, Amazon, and Intel can be highly demanding and stressful, but employees seem to thrive there.

In fact, many of those same companies are sited as great places to work. Young up-and-comers flock to them. Why? Because they know they're breeding grounds for the entrepreneurs and executives of tomorrow.

The cause and effect relationship between adversity and leadership doesn't start at work. Leaders often attribute their success to their upbringing or conditions where they grew up. New York City, for example, has spawned far more than its fair share of success stories.

Of 23 secondary schools that produced two or more Nobel laureates, nine are in the Big Apple. My high school in Brooklyn alone accounts for three Nobel Prize winners, not to mention dozens of famous executives, scientists, engineers, athletes, musicians, actors, and politicians.

Why? The ultracompetitive environment. Everybody was a character. We were always fighting for positions on sports teams, to stand out, or just to fit in. Also, we didn't grow up with much. If you wanted more out of life, you knew what you had to do. You really had to be tough. You had to be a winner.

Loads of successful executives and entrepreneurs started with nothing--except perhaps adversity. Starbucks founder and chief executive Howard Schultz grew up not far from where I did. So did Goldman Sachs CEO Lloyd Blankenfein's. His dad was a postal worker. So was mine.

Steve Jobs and Oracle founder and CEO Larry Ellison were both adopted by working class families. Former Verizon CEO Ivan Seidenberg started as a cable splicer's assistant right out of high school. AT&T CEO Randall Stephenson's first job out of school was working in Southwestern Bell's Oklahoma IT department.

And this isn't just an American phenomenon, either. Masayoshi Son, the founder and CEO of Softbank and Japan's second richest man, grew up in an illegal shack in southwest Japan. His Korean parents used a Japanese surname to hide their heritage and avoid discrimination.

Don't get me wrong. I'm not saying that, to be successful in this world, you have to have grown up dirt poor. I'm sure that plenty of top executives didn't have to fight for table scraps. But if you had spent as much time in boardrooms and start-up companies as I have, you would know how competitive and stressful it is. It's just one crazy problem after another. You're always making tough decisions under pressure and with too little information.

The truth of the matter is this. If you want to succeed in that environment, if you want to become a successful executive, entrepreneur, or business leader, then you need to embrace or at least learn to deal with stress, adversity, and competition. One thing's for sure. Avoiding it won't get you there. If you're looking for a stress-free work life, as they say in New York, fugetaboutit.

Before they even start to negotiate, entrepreneurs and investors often start off on the wrong track. How to better understand the person across the table.

What, exactly, is a 90-Day Wonder? It's a special kind of deal. The kind where, 90 days after you sign the papers, you wonder why you ever did the transaction in the first place.

For many investors, each new deal and each new entrepreneur is a distinct set of experiences - some good, some not so much - and it's an ongoing education for both sides. It can be very instructive and also very painful. Education is expensive, no matter how you get it.

If you want to avoid the 90-Day Wonder, it helps greatly if investors and entrepreneurs have a little insight into the way the other works. In this column we'll look at the biases that can trip you up before you get to the term sheet. In the next column, we'll look at what happens when you get down to brass tacks.

At the outset:

Don't Starve the Baby

Building a business may take less money than it used to, but it still takes some basic amount of capital. In negotiating an initial deal, both sides are perversely incented to starve the business. The entrepreneur wants to conserve equity to avoid early dilution at a low valuation. The investor wants to put as little capital at risk as possible. The upshot: A very real chance that the business is undercapitalized from the outset and never has the resources necessary to get a serious start.

Go Beyond the Boy Wonder

The investor, not the entrepreneur, has to make sure that the final deal provides for the entire management team and for players who will be named at a later date.

Many entrepreneurs see their business as a mission and a sacred crusade. He or she would basically work for free. This isn't usually the case for most of the other senior people, especially if they were lateral later additions rather than co-founders or early members of the team.

Because entrepreneurs are so intensely committed themselves, they very often fail to appreciate the differing levels of commitment that exist among the rest of the members of their team. They almost always fail to adequately provide for the rest of their team when they are dealing with the investors. It's very rarely an issue of selfishness. Usually, it's just the fact that they're so focused that they're oblivious.

Ask the Hard Questions

Making an investment is very often a time-constrained process. In a typical business deal, everyone's in a hurry. Because everyone wants to get to a deal, bad and ultimately unworkable agreements get made on a frighteningly frequent basis. Here are some of the things to watch out for:

• Hard and time-consuming issues get papered over or buried to be resolved "later" by someone else (often through litigation) because no one wants to be the "bad" in someone else's day.

• Otherwise smart and prudent people ignore their attorneys' advice on certain risks and with regard to undocumented or researched concerns. Instead, they focus only on the upside prospects of the deal.

• In the interests of smooth sailing, even seasoned veterans will accept superficial assurances and smiles instead of concrete answers, and will then go on to confuse good manners, pleasantries, and bad jokes with real agreement.

• The negotiators push the problems forward and delude themselves into believing that the details will all be settled during the implementation phase. It just doesn't work that way. In complex deals, you can bet that the easier the deal is to get done, the harder it will be to implement. And deals rarely, if ever, get better during implementation. Problems don't work themselves out or disappear - they fester and persist until someone takes responsibility for them and gets them resolved.

• Finally, instead of acknowledging and accepting that there are remaining open items and uncertainties, and instead of working together to construct metrics and contingency plans, the parties engage in mutual fantasies and shake hands on deals which are full of holes and more porous than Swiss cheese.

Data is changing business as you know it. Check out this excerpt from the forthcoming book, Too Big to Ignore: The Business Case for Big Data.

The following is excerpted from Too Big to Ignore: The Business Case for Big Data. John Wiley & Sons will be publishing this in early March 2013.

Much like the baseball revolution pioneered by Billy Beane, car insurance today is undergoing a fundamental transformation. Just ask Joseph Tucci. As the CEO at data storage behemoth EMC Corporation, he knows a thing or 30 about data. On October 3, 2012, Tucci spoke with Cory Johnson of Bloomberg Television at an Intel Capital event in Huntington Beach, California. Tucci talked about the state of technology, specifically the impact of Big Data and cloud computing on his company--and others. At one point during the interview, Tucci talked about advances in GPS, mapping, mobile technologies, and telemetry, the net result of which is revolutionizing many businesses, including car insurance. No longer are rates based upon a small, primitive set of independent variables. Car insurance companies can now get much more granular in their pricing. Advances in technology are letting them answer previously unknown questions like these:

• Which drivers routinely exceed the speed limit and run red lights?
• Which drivers routinely drive dangerously slow?
• Which drivers are becoming less safe--even if they have received no tickets or citations? That is, who used to generally obey traffic signals but don't anymore?
• Which drivers send text messages while driving? (This is a big no-no. In fact, texting while driving [TWD] is actually considerably more dangerous than DUI. As of this writing, 14 states have banned it.)
• Who's driving in a safer manner than six months ago?
• Does a man with two cars (a sports car and a station wagon) drive each differently?
• Which drivers and cars swerve at night? (This could be a manifestation of drunk driving.)
• Which drivers checked into a bar using FourSquare or Facebook and drove their own cars home (as opposed to taking a cab or riding with a designated driver)?

Thanks to these new and improved technologies and the data they generate, insurers are effectively retiring their decades-old, five-variable underwriting models. In their place, they are implementing more contemporary, accurate, dynamic, and data-driven pricing models. For instance, in 2011, Progressive rolled out Snapshot, its Pay As You Drive (PAYD) program. PAYD allows customers to voluntarily install a tracking device in their cars that transmits data to Progressive and possibly qualifies them for rate discounts. From the company's site:

How often you make hard brakes, how many miles you drive each day, and how often you drive between midnight and 4 a.m. can all impact your potential savings. You'll get a Snapshot device in the mail. Just plug it into your car and drive like you normally do. You can go online to see your latest driving details and projected discount.

Is Progressive the only, well, progressive insurance company? Not at all. Others are recognizing the power of new technologies and Big Data. As Liane Yvkoff writes on CNET, "State Farm subscribers self-report mileage and GMAC uses OnStar vehicle diagnostics reports. Allstate's Drive Wise goes one step further and uses a similar device to track mileage, braking, and speeds over 80 mph, but only in Illinois."

So what does this mean to the average driver? Consider two fictional people, both of whom hold car insurance policies with Progressive and opt in to PAYD:

• Steve, a 21-year-old New Jersey resident who drives a 2012, tricked-out, cherry red Corvette
• Betty, a 49-year-old grandmother in Lincoln, Nebraska, who drives a used Volvo station wagon

All else being equal, which driver pays the higher car insurance premium? In 1994, the answer was obvious: Steve. In the near future, however, the answer will be much less certain: it will depend on the data. That is, vastly different driver profiles and demographic information will mean less and less to car insurance companies.

Traditional levers like those will be increasingly supplemented with data on drivers' individual patterns. What if Steve's flashy Corvette belies the fact that he always obeys traffic signals, yields to pedestrians, and never speeds? He is the embodiment of safety. Conversely, despite her stereotypical profile, Betty drives like a maniac while texting like a teenager.

In this new world, what happens at rate renewal time for each driver? Based upon the preceding information, Progressive happily discounts Steve's previous insurance by 60 percent but triples Betty's renewal rate. In each case, the new rate reflects new--and far superior--data that Progressive has collected on each driver.

Surprised by his good fortune, Steve happily renews with Progressive, but Betty is irate. She calls the company's 1-800 number and lets loose. When the Progressive rep stands her ground, Betty decides to take her business elsewhere. Unfortunately for Betty, she is in for a rude awakening. Allstate, GEICO, and other insurance companies have access to the same information as Progressive. All companies strongly suspect that Betty is actually a high-risk driver; her age and Volvo only tell part of her story--and not the most relevant part. As such, Allstate and GEICO quote her a policy similar to Progressive's.

Now, Betty isn't happy about having to pay more for her car insurance. However, Betty should in fact pay more than safer drivers like Steve. In other words, simple, five-variable pricing models no longer represent the best that car that car insurance companies can do. They now possess the data to make better business decisions.

Big Data is changing car insurance and, as we'll see throughout this book, other industries as well. The revolution is just getting started.

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