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Customers want you to be the kind of person they can truly trust.
Customers want to buy great products and services, of course, but since they can probably buy those same products and services elsewhere, here's what they want from you, personally:
Customers want to do business with people who are serious about what they do, and willing to achieve a deep understanding of their craft.
Integrity means being as good as your word and being willing to take a stand even when it's unpopular with your customer or your company.
To show you care about a customer, you must really listen to the customer and try to see the business and personal situation from the customer's viewpoint.
You don't have to be an expert on everything, but you do need to be an expert on your products, your industry, and how you can help them be more successful.
Customers want you to solve problems and create opportunities in innovative ways that wouldn't naturally occur to them.
When customers see you possess the above traits, they give you back something that's truly invaluable: their personal trust.
Kudos to sales guru Jerry Acuff for this one.
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Not great, argues Vivek Wadhwa, which might have something to teach us about the value of college for entrepreneurs.
A quick scan of the headlines is enough to convince most people of a couple of things: sky high university tuition creates scandalous levels of debt and hardship while entrepreneurship creates wealth and innovation.
It’s a short leap to the conclusion that promising young people should ditch getting a diploma and go straight to starting up instead, so it’s probably no surprise that everyone from business blogs to Will Smith spawn Jaden Smith has publicly called for kids to skip college. But the granddaddy of all the university doubters is PayPal co-founder Peter Thiel who made a huge media splash with his Thiel Fellows program that pays a couple dozen young people $100,000 to drop out of school and pursue their entrepreneurial dreams instead.
Three years into the program, how’s that working out, former entrepreneur and current Stanford and Singularity University lecturer Vivek Wadhwa asked recently on LinkedIn.
In short: meh.
He argues that the results have been underwhelming with some Fellows pursuing gimmicky projects that fall far short of world-changing (hello, caffeine spray!), while others doing more substantive work like Eden Full have returned to academics. At least one fellow has gotten in hot water for pretending to run a company while his parents and brother did all the work. Want hard numbers? They’re no more encouraging when compared with other top tier incubators:
It is certain that the survival rates of Thiel startups pale in comparison with those emerging from Y-Combinator and TechStars-;both of which provide hand-holding and mentorship as the Thiel program does. Of the 129 companies that TechStars (which publishes its success rates), for instance, has accepted over the past three years-;in the same timeframe as Thiel-; 98% are still in operation, and 69% were able to raise venture capital.
So what’s the takeaway here for Wadhwa? Maybe college isn’t so useless after all and maybe the ideal startup founder isn’t a callow 20-year-old college dropout. “The reality is that a bachelors degree is an important foundation for success for most entrepreneurs. Yes, a few, such as Zuckerberg, Jobs, and Gates were able to achieve success after dropping out. But they surrounded themselves with very competent adults-;and they were very lucky,” he writes. “After three years, Peter Thiel’s experiment is beginning to prove that there are no shortcuts to success.”
As horrifying and glaringly-in-need-of reform as college costs are, the data are still on Wadhwa’s side. One three of the 50 highest paid tech CEOs are college dropouts and graduates can expect to earn somewhere around $1 million more in their lives compared to those with just a high school diploma, according to the Census Bureau. Sure, there are exceptions but the statistics don’t lie about the odds for most kids who don’t finish college. And that’s to say nothing about the value to people as individuals and citizens of engaging with history, literature and thorny questions of meaning, power and purpose (college isn’t all keg stands and resume prep after all, or at least it shouldn’t be).
Do you agree with Wadwha that the underwhelming performance of Thiel Fellows thus far speaks to the value of a college degree?
If you want a stranger to give a damn about what you're working on, you'd better give a damn yourself.
Those Myers-Briggs tests that business schools love are notoriously flawed. In fact, several studies have shown that when people take the test a second time, as many as fifty percent of people will get classified as a different personality--even after only five weeks. By all means take the test, but take it about as seriously as your horoscope. I do not believe we're confined to these slots, although we may have predispositions.
I see personality evolution happen in the span of just a few months at Y Combinator. It takes work, primarily practice, to get up on stage in front of people and pitch. That's why YC insists that founders show up every Tuesday for dinner to pitch to their fellow founders. This has two effects: first, it helps people practice the important art of the demo, and in addition, it shames founders into having something new to show every week. If you see your fellow founders every day, it's hard to get a good answer to "What've you been working on?" because it's only been a day. If you haven't got a good answer after a week, something's wrong.
Start pitching. Pitch your cat for practice (they're notoriously hard to impress). The elevator pitch is standard for good reason--you'd better be able to explain your company in an engaging and understandable way within a few sentences--the time it takes to get in the elevator with that potentially life-changing person and successfully pitch her before she gets off at the executive floor.
If you want a stranger to give a damn about what you're working on, you'd better give a damn yourself. Speak sincerely, not like a salesman, and hack away at the words in your pitch until they are as few and as jargon-free as possible. Explain it to the executives like they're five. Well, a precocious five.
Excerpted from WITHOUT THEIR PERMISSION: How The 21st Century Will Be Made, Not Managed, by Alexis Ohanian. Copyright 2013. Reprinted by permission of the publisher, Business Plus. All rights reserved.
Advice from the anchor of ABC's Good Morning America on getting anyone to open up.
When you’re having a one-on-one discussion, it’s often as crucial to get the other person to open up as it is to get your own point across. To that end, we asked George Stephanopoulos, anchor of ABC’s Good Morning America and host of This Week, how he draws compelling answers out of tough interview subjects.
1. Prepare extensively. Good preparation leads to better questions. It also demonstrates a genuine interest, Stephanopoulos says. “Knowing what you’re talking about breeds respect on both sides,” he says. Before a 2009 interview about health care with President Barack Obama, Stephanopoulos prepared extensively to show his guest he had deep knowledge of the subject.
2. Don’t be a know-it-all. After all that prep work, you might feel like an expert. But keep things simple by starting with direct, open-ended questions. Then, use your knowledge to get your subject to expand on pat answers. “I used to try to show off how much work I did,” Stephanopoulos says. “But sometimes it was all wind-up and no question.”
3. Ask “Why?” Ask “What do you do?” at a cocktail party, and people go on autopilot. Ask “Why?” and people give fresher, more thoughtful answers. The same is true for television interviews, Stephanopoulos says.
4. Watch for facial cues. During a conversation, facial cues can indicate if someone wants to say more or less about a topic. For instance, Stephanopoulos says he can tell someone is having a new thought when his or her eyes light up. “You can see it more than you can hear it,” he says. Then, he guides the conversation in that direction.
5. Force yourself to be interested. If you’re bored by the person sitting across from you, your audience will be, too. The key is to find the one thing that does pique your curiosity. Stephanopoulos interviews a lot of actors, but he doesn’t always like their movies. His solution? He finds one scene that he finds remarkable for some reason and focuses on it.
Jennifer Walzer, founder of Backup My Info!, describes how she gauges a job candidate's communication skills.
Despite predictions, Apple breaks its own sales record once again. Here, Inc. columnists give you insights on how you can replicate that success in your own business.
Most everyone who questioned Apple's post-Jobs capability was silenced this weekend. Despite the 33 percent drop in the stock price this year, the public demonstrated its love for Apple products with a record-smashing 9 million sales of iPhones this weekend. This is pretty amazing considering there were minimal changes in technology. What's more, everyone knows that six months from now Apple will release another product that will improve upon the last. Yet millions worldwide act as if this is the last cool product that will ever exist, lining up to be first, even though in a few months they won't have to wait.
There are marketing lessons to be learned here. For one thing, Apple goes to great lengths to add mystery and scarcity to its launches. It's a very different approach than companies that overhype their products only to show up late and disappoint. Apple's fans now actually create the buzz and press that allows the company to act like the Willy Wonka of the tech world. Understate with a sense of intrigue and you are much more likely to attract attention and delight.
Here are more great takeaways from my fellow columnists:
1. Focus on Simplicity, Quality and Consistency
As a professed fanboy, I'll be the first to admit that I totally buy into the magic that is Apple. That said, it's not hype that keeps people coming back to Apple products time and time again. It's a focus on three key factors: simplicity, quality and consistency.
Every Apple product is simple in form, function and beautiful design. Each product is high quality, and Apple delivers consistently with each upgrade. Even when a new version is only incrementally better, customers know they can count on these three things. And that delivers sales. Dave Kerpen--Likeable Leadership
Want to read more from Dave? Click here.
2. Attach Status to Buying
Apple taps into consumer behavior hardwired into many of us: we want to be the "first" with a new product. This desire is a strong consumer driver and few brands speak to it as well as Apple does. People want the opportunity to own something first--especially if it means others will have to wait. This is both an advantage and a potential Achilles heel for Apple. They must continue creating truly innovative products that are worthy of "limited availability" and "first to own" bragging rights.
Any company can tap into this "first to try" desire, and every restaurant that opens in my area does, even with the most minimal advertising. Lines form and people wait for hours, even though the restaurant will certainly be there and much easier to get into a few weeks later. But a few weeks later, everyone's already tried the restaurant and it's hardly worth a mention when chatting with your neighbors at the PTA meeting. Eric Holtzclaw--Lean Forward
Want to read more from Eric? Click here.
3. Make It About the Experience
It's tempting to laugh at Apple fans waiting hours to get a gadget a week before everyone else. But to laugh is to miss the point. Apple's products are revered and its launches are events because of the company's obsessive attention to design, simplicity and customer experience. This isn't only in its devices--it is also true for the stores where they're sold and even the boxes they come in. Bring the same attention to your own products and user experience, and you'll wind up with customers as loyal as Apple's. But you can't take shortcuts or focus on maximizing profits. The devotion to quality must be real. Minda Zetlin--Start Me Up
Want to read more from Minda? Click here.
4. Please Your Customer
Apple sells a lifestyle as well as a superior product--anticipation of the next release while standing in long lines adds to the allure and excitement. But what that really means is that a very specific consumer knows and trusts them, and Apple focuses on only those individuals. Don't try to appeal to the masses; you can't please everyone. But you can please your niche market--the customer you know as well as you know yourself. Identify that niche market and place the emphasis on making them happy. Not just any company can replicate Apple's magic, but your unique signature can generate loyalty and year's worth of repeat business. Marla Tabaka--The Successful Soloist
Want to read more from Marla? Click here.
5. Exceed Fan Expectations
The secret to creating products that have buzz on the level of Apple's iPhone is to create raving fans--the core group of people who absolutely love your products, love your company and love you. In his book Raving Fans, Ken Blanchard offered three ways to accomplish this: (1) First decide what you want, then (2) Discover what the customer wants, and finally (3) Deliver plus one--that is, always deliver, and always deliver a little extra each time. Consistency creates credibility, and the extra one percent of magic creates raving fans--and buzz that just doesn't quit. Peter Economy--The Management Guy
Want to read more from Peter? Click here.
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These workers spend years developing their skills and careers, then suddenly drop out.
We often hear CEOs talk about employees being a business’s greatest asset. The unique combination of talent, skills, behaviors and personalities that make up the human capital of a business are the only true competitive advantage that cannot be replicated. In this regard, investors are no different than CEOs. Watch one episode of Shark Tank and you will see that venture capitalists make investment decisions based on the founding team, not just on a great product.
If people are so important, why is a huge talent pool sitting on the sidelines? A talent pool of executives and entrepreneurs who have earned their stripes but are under-utilized simply because they need flexibility? Yes, I am talking about moms.
Opt Out, Lean In, or Neither
Sherry Lombardi, co-founder and CEO of digital media company Hulafrog, believes that women who leave the workforce after having children create a significant gap in the talent pool for leaders and entrepreneurs - even if those women eventually opt back in. Hulafrog recently published an infographic and findings from a survey of over 2,100 U.S.-based women with children aged 18 and under living at home. (Full disclosure: Hulafrog is an Astia client, and I am on the Astia Board of Trustees.)
According to Lombardi, 76% of the survey respondents have a college or advanced degree and 58% of them have between six and 15 years of professional experience. That’s a lot of talent walking out the door.
After spending years investing in her education and career, everything changed when Lombardi and her husband started a family. She didn’t want to leave the workforce, but saw no other viable option. “That’s the black-and-white of opting-out and leaning in. You are forced to make a trade-off decision where someone or something loses out,” says Lombardi.
Like any good entrepreneur will tell you, where there’s pain there is opportunity. This is no exception.
The opportunity for businesses
Creating parent-friendly schedules and work packages enables business leaders to attract and retain exceptional talent who otherwise would take their human capital elsewhere, or nowhere. Fifty-nine percent of the women surveyed by HulaFrog would take a pay cut in order to have a more flexible schedule or virtual work. No one wants to take a sick day when their child has the flu or a doctor’s appointment. Instead of focusing on in-office tactics, Lombardi suggests that human resources departments consider flex-schedules and performance-based pay.
If you are running a start-up, you have to find a way build a family-friendly culture while accelerating toward aggressive start-up goals. Most entrepreneurs and founding teams are not in a position to hire expensive full-time employees. That’s a great opportunity for lean-and-mean start-ups to contract key work such as coding, public relations, design, and sales to skilled moms who are willing to exchange a full-time paycheck for contract work. Says Lombardi: “We use this model at Hulafrog. We get key talent, and mompreneurs are able to be both mom and a valued member of the workforce. Everybody wins.”
Very little is known about the neurological process of learning, but this much is clear: Personal mobile technologies have forever changed the way we consume and retain information. It's time for e-learning to catch up.
"E-learning is learning on Internet time, the convergence of learning and networks," wrote Jay Cross, who developed the first courses for the University of Phoenix and founded the Internet Time Group, when he coined the term "e-learning" back in 1998. "E-learning is to traditional training as e-business is to business as usual."
Cross's 20th-century account of online learning is so full of early dotcom e-speak that we'd hardly blame you for rolling your eyes and dismissing it outright as an irrelevant relic. Not so fast; this is important stuff.
Despite that fact that personal mobile technologies have forever changed the way we consume information in 2013, the proponents of e-learning have largely failed to adapt their methodologies.
"Putting content online and making it accessible outside a classroom was a fresh idea a decade ago," writes Axonify CEO Carol Leaman (@CarolLeaman) in the Wired article "E-Learning: It's Time for a Reboot." "But 10 years later, the reality of how we learn and how other media have become integral to . . . our lives [has] exposed the fact that most e-learning solutions simply replicate the problems mass employee training has always faced: Content is boring. Attention spans are short. Employees forget more than they learn. Many don't even apply their learning to the job--either they're not motivated, or don't remember critical information."
Leaman's observations about technology's pull on human behavior resonate beyond corporate training and development. Marketers are surely nodding their heads in agreement, as is anyone who's ever fielded a customer-service inquiry, drafted an internal memo, or tried to break through the smartphone noise to reach an always-on audience.
How do we overhaul e-learning? Leaman schools us on six different points and offers specific suggestions for moving forward:
1. Our brains are really good at processing four or five bits of information at a time.
"Break learning into smaller, bite-sized segments, and deliver them more frequently," she writes.
2. Repeat, remind, and then repeat some more.
"Many studies [prove] that repeated questioning of core knowledge in short bursts is far more effective . . . than one-time, lengthy learning sessions."
3. You can't improve what you don't measure.
"Measure knowledge, attitudes, and application more frequently. Measurement helps direct ongoing training, and allows the correlation to business performance (i.e., ROE or ROI)."
4. What's in it for me?
"Personalize the learning, so that every employee learns what's needed for their job and then deliver training to specifically fill knowledge gaps."
5. Social is a science.
"Incorporate elements of social networking, gamification, and recognition to the learning process. . . . These techniques are proving to increase employee engagement, driving learning and retention."
6. If it's not mobile, it's crap.
"Allow employees to learn when it's convenient, where it's convenient, and [how] to access just-in-time learning while on the job."
Reddit co-founder and start-up enthusiast Alexis Ohanian argues that anyone can be an entrepreneur. But does that mean everyone should be one?
Starting a business changed Alexis Ohanian’s life. Now he’s looking to spread the word. Ohanian reaped millions after selling Reddit, the social news site he co-created while in college, to Condé Nast in 2006. Since then, he has become an outspoken critic of government regulation of the Internet and an enthusiastic cheerleader for all things start-up. His new book, Without Their Permission, touts the benefits of entrepreneurial thinking. He recently spoke with Inc.’s Christine Lagorio.
Your book claims that anyone can start a company. Do you really believe that?
Not everyone can be or even wants to be an entrepreneur, but everyone should want to be entrepreneurial. I’d rather err on the side of encouraging entrepreneurship. When I go online and see the resources a start-up founder has today versus what we had back when we started Reddit, it’s orders of magnitude greater. It’s very empowering.
Have all those resources made starting a company too easy? There are a lot of start-ups that go nowhere.
Perhaps there are too many start-ups, and maybe as an investor and an advocate, I am in some way responsible for that. But I find nothing wrong with having an idea in popular culture that basically boils down to, “Work really hard to develop a valuable skill, make things that people enjoy, and then grow that idea by hiring lots of people.” That’s not a bad thing to have in the zeitgeist.
Much of your focus is on college students and recent graduates. Why is that?
“I have a start-up” is the new “I’m in a band.” In fact, starting a company is probably easier than starting a band. Young people have such a great opportunity. They don’t have dependents, their room and board are inexpensive, and they have a lot of free time. I get a little jealous just thinking about what they can accomplish.
Any advice you would give new entrepreneurs?
The people you start your business with are crucial. One mistake I often see is when founders decide to work with friends because they get along well socially. My co-founder, Steve Huffman, and I are an example of when it works out well. But we see lots of entrepreneurial endeavors littered with people who were good friends but who were not compatible when doing business together. It causes a lot of drama.
Are you done founding companies?
I can’t say never, but I have no interest in doing another start-up. There are things I would have done differently, but overall, I’m really satisfied. It’s also a lifestyle decision.
I don’t work much less than I did as a start-up founder, but I’ve got less mental anguish. Start-ups are for crazy people. I should know; I was one.
An academic study suggests if you want a bigger Twitter audience, it's not what you say that matters--it's how confidently you say it.
Putting yourself out there on Twitter can be scary. In an environment where brevity rules, candor is a close cousin. At the same time, offer your frank opinion and if you have any kind of a following at all someone is sure to disagree.
Yet it turns out confidence on the micro-blogging platform is a key ingredient in garnering more followers.
That's according to two economic doctoral candidates at Washington State University who used software to filter more than 1 billion tweets looking for brazen predictions regarding the 2012 baseball playoffs and the 2013 Super Bowl.
Jadrian Wooten and Ben Smith collected tweets that included team names as well as words such as "vanquish," "destroy," "annihilate" and other confident expressions related to the idea of one team beating another. The duo analyzed the tweets of amateurs and professional sports pundits and found both groups weren't particularly accurate in their predictions--they were only right less than half the time. Where the pundits differed, however, was in their level of confidence and the more of it they had, the more people were likely to follow them.
Wooten and Smith did the math and found that the accuracy of a prediction only served to spur a 3.4 percent increase in Twitter followers for pundits, and a 7.3 percent increase in followers for amateurs. But the most confident pros could see a nearly 17 percent increase in followers just by tweeting self-assured quips. An amateur would see even better returns, a nearly 20 percent rise in followers just by tweeting boldly.
The reason? People don't like uncertainty.
"They don't like the idea of a Nate Silver sort of person standing up there and saying, 'I'm only 90 percent sure,'" Smith says.
Wooten likens certainty and Twitter affinity to how people might use a roulette wheel. "If you have somebody just placing bets, that person is kind of boring. But if you have someone going, 'Oh, yeah! It's red!' and they are confident, that's the person that you are interested in," he says.
My Inc. colleague John Brandon has done quite a bit of playing around with growing his Twitter following and found that interacting with followers "like crazy" and showing your personality are other things you can do get people to follow you. He also recommends using Sprout Social because it lets you post one tweet to multiple accounts at once and then track your success in how many people retweet what you say.
Another helpful tool I use is ManageFlitter. It shows you the people you're following who aren't following you back and lets you click to unfollow them.
It's not so much what I did... but what I failed to do when the timing was right.
I paused once. Maybe only for a second, shuffling a bit in my seat and catching my breath. I looked out the window. I didn't answer the question quickly enough.
It was a fateful mistake.
This was about 14 years ago. Having risen through the ranks in the corporate world, stepping on a few toes along the way, I was in a meeting with the vice president of a large retail company. And by "large" I mean one of the largest in the world--50,000 employees scattered across the U.S. at the time plus another several thousand in the corporate office and overseas.
Leading up to that meeting, I had built up my reputation as a hungry corporate hound. My immediate boss came from the world of business consulting and he had a knack for spotting inefficiencies. Sometimes, those "inefficiencies" were living, breathing people who got fired. Sometimes, he would slash a budget or cancel a project suddenly.
He taught me everything I knew.
There's a part of me that regrets those days and a part of me that enjoyed the thrill of being in a position of power and decision-making. My team of several dozen project managers, supervisors, and knowledge workers had conquered many parts of the business outside of our own little island called Information Technology.
And now, a new opportunity had arisen. The vice president asked if I wanted to take on the director role of a new department, one that fit my personality and interests to the letter. The new department needed a thought leader for its computer operations. They would be starting a new record label, helping artists with promotion, and expanding the retail brand. Wow.
To this day, I am not sure why I paused at that meeting. I think I even said "um" to the vice president. I may have scratched my head. Why the hesitation? Why the pause? Why did I balk?
We never even talked about salary. He told me to think about the new position and said I could leave. But I knew that my pause had ended my chances for the promotion. I remember driving home that night and thinking about what a mistake it was not to jump on it. Just two years after that meeting, I was out the door after 9/11 looking for a new career.
Have you ever experienced something like that? You're handed the keys to the kingdom and you start wondering if you can handle the responsibility. Or, you're this close to launching your own idea, but you decide to stick with the familiar.
I think there's something a bit perverse about this, at least for me. There are times when I think I questioned my ability to take on that new role. I wondered if I was really the man for the job. Scared, I ended up ruining my own chances to do something amazing and rewarding.
I sometimes wonder, how would things have been different if I had not made this mistake? What if I had jumped whole-heartedly into the position? I would probably not be writing these words right now.
Don't make the same mistake. In business, when you see an opportunity to excel, take it. Push forward. Take the risk. In 20 years of working, I've found that those opportunities only come up a few times--providence smiles and everything fits together. Maybe you even have a decision to make right now. Two words for you: do it.
Plenty of entrepreneurs want an investment, and some really need it. But not many deserve it. Do you?
In my last column, we covered the questions you should ask to help determine whether a venture capital or private equity firm is a structural fit for you. The goal is to not waste your time with no-chance meetings.
Now we’re going to back up. Before you approach any potential investor, you need to take a hard look at your own situation.
This sounds basic and self-evident, but it’s not. Often, entrepreneurs have unrealistic expectations about what capital can or should do, or they haven’t accurately assessed the reality of their personality or their business.
Here’s what you need to be asking before you start talking to the money.
Will capital really fix my problems, or just hide them?
As a CEO, one phrase always made me suspicious: “We need more people.” I heard this in every department, from software development to customer support to sales. When I dove into the details, the problems generally weren’t about staffing. The majority of the time there was a process issue, or our strategy was faulty, or our go to market, revenue or business models needed modification.
This catch-all of “we need more [insert resource here]” is most common in rapid growth businesses where great entry-level workers are rapidly promoted to managers. These folks get their early successes by working harder. Rapidly growing companies, however, cannot solve problems by merely applying more effort in the same ways. As my home economics teacher said about baking, “You can’t just triple the recipe ingredients.”
For example, my company had great success with our first software product. With so many enterprise customers signing up, our customer satisfaction was going down. Our team continued to push on the front-end software they had worked on for years. The real problem, however, was our backend system integration--it was stretching from eight to 12 to 16 weeks.
We could easily have raised money at that point to just add more developers, but it wouldn’t have solved our problem. We needed to change our technology and processes to get the implementation time down. I moved people around and made the front-end enhancements a low priority. Within a year we were down to two-week installation times, and our customer satisfaction was through the roof. We re-deployed our people and didn’t have to raise money after all.
Figuring out whether capital is really the solution--or merely a stopgap--is a challenge for growth company CEOs. It’s hard to look at the product of your blood sweat and tears and say “Hey, money’s not the issue. We were wrong, or need to get better, in these areas, and we need to take the pain to fix this underlying problem.”
Do I need capital, or do I just want it really badly?
I used to see press releases blaring “Company Snags Millions from Investors,” and think two contradictory things. I would cheer “That’s awesome, someone believes in that idea so much that they’re investing millions!” But I would also cringe, because I felt like management was announcing “Hey, look at us, we can’t run this business profitably! Yay!”
The issue of need versus want is a complicated business issue (and yes, I find it a challenging topic with my kids as well). My definition for “need” is, “Without external capital my company will shut its doors within a quarter.” Every other justification is a “want.” Competition catching up, not enough sales or marketing muscle, a product in need of upgrade--these are all really good reasons for totally rational wants, but they are not needs.
In my first business I gave up majority control in my very first round. We had four newly contracted enterprise corporate customers but were five days from being out of money. I was a 28 year-old doctor $200,000 in debt with no business experience. These investors were the only ones out of more than 300 who I’d pitched over 18 months who would give me $5 million. This was the only way “right now” for me to keep the dream alive. That was a need, so I gave up a lot.
Typically, the need versus want questions are more nuanced.
Is the opportunity as big as I believe? Do I believe in it enough to sell a piece of my company so my part will be worth very little unless the company becomes huge?
Will the customers really come if I spend on sales people? Do I believe it enough to take on debt payments that will crush my company if those sales don’t materialize right away?
Do I think my team and I can execute on the opportunity? Do I believe this enough to post a personal guarantee on a bank loan that will bankrupt me if we don’t?
Most critically, do I want capital badly enough to answer to people not in the foxhole with me? Whether it’s equity or debt or friends and family, everyone will want something and think they know better, but won’t really understand. This is not a small issue. Being a CEO is risky and high-pressured enough without the burden of managing people outside the business.
Need versus want, how bad you want it, and how much you believe it, determines what you’re willing to give up. What you’re willing to give up, more than anything, will determine if and what type of capital is right for you.
Do I deserve capital?
As an entrepreneur involved in fundraising--from the garage all the way to a $50 million recapitalization--I’ve believed that my company deserved capital. Great ideas, smart people, hard work, real product for a real problem. What else is there?
Later on, having been on the other side of even more such transactions, I have become more, shall we say, balanced, in how I assess what deserves capital.
I have a pretty simple threshold for deserving capital: If I were on the side deciding whether to put capital into my business, would I take a meaningful amount of my parents’ money and put it into this deal?
The reason I have this threshold is because it forces me to think really hard from the perspective of the person providing the capital. When I think of my parents in that role, I am much more realistic about the risk, opportunity, deal structure, timing, and every other assumption. I frankly end up holding the deal to a higher standard than I would if I were looking at investing my own money.
For example, I deserved some capital with that first business. I had a product, I had paying customers, I had one really out-of-the-park-homerun installation. But did I deserve $5 million? Probably not. I often tell people that if 28-year-old me pitched 41-year-old me” with that same deal, I probably wouldn’t have funded it.
For example, right now I’m looking at a business that has been self-funded to $9 million in revenue and will probably do $17 million next year. It’s all recurring revenue, with 10% EBITDA. They’ve exhausted the hodge-podge of angel equity vehicles and personally guaranteed debt, their operations are way more mature and sophisticated than is typical at that size, and they have an expanding market with the wind at their backs. They’ve borne the huge risk in the early stages and proven they can run the business. It’s a real opportunity. They want (but don’t need) $5 million, and they really deserve it.
Look at your business honestly. If you deserve capital, find the right type of capital and don’t stop until you get it. If you don’t deserve capital, make a Plan B to get to a point where you do deserve it. Reduce the risk for the other side. Show that you’re pursuing the opportunity because it’s desirable and the time is right, not just because you’re in too deep on a bad bet.
These are the questions you have to ask yourself before you seek capital. In my next column, I’ll talk about the types of capital that might be appropriate and realistic for your business.
When your team starts to drop the ball, these questions will help you effectively troubleshoot and find solutions.
Is your team in a slump? Just like a major league slugger, your team's batting average can hit a rough streak. When this happens, the key is to avoid reflexively solving symptoms and instead focus on the deeper problem. Here are four types of questions you should ask to figure out what's really standing in the way of a victory.
Goals: Does your team have a clearly stated and common goal? Have the team members bought into it? Do your employees see a direct connection between their daily tasks and the team goal?
Roles: Are the team's roles defined and documented? Are expectations consistent? Is the level of authority for each role clear? Do your employees embrace their roles? Does each team member have the necessary skills to effectively perform?
Procedures: Are there clearly defined, documented and communicated processes on how the team makes decisions, shares information, coordinates hand-offs, reviews work, challenges prevailing thought, prioritizes work, and resolves conflict?
Relationships: Is there a reasonable amount of (job-related) respect amongst team members? Do team members know and appreciate the different knowledge, skills and perspectives that each brings? Do they trust each other?
Solve the Problem, Not the Symptoms
You may find that a lack of clarity in one of the top three levels (goals, roles, procedures) opens the door for misperceptions that can lead to interpersonal conflict. For example, if team members do not agree on or understand your common goal, they might start accusing each other of having personal agendas. Or if team roles are not clearly defined, one person might think another dropped the ball.
Your first reflex might be to directly address interpersonal issues, but this should come last. First, make sure you're defining clear goals, roles and procedures. This will eliminate 90+ percent of what appear to be interpersonal conflicts.
So, the next time your team is getting bogged down, ask these questions, starting at the top with goals, to assess the root cause and pull your team out of its slump.
Download free book chapters from the author's book Stick with It: Mastering the Art of Adherence for more tips on leadership and teamwork.
When things get stale, it's easier to make dumb mistakes. Don't let it happen to you.
Dear Norm, I was interested in your response to the restaurateur who had become bored with his core business right when he acquired the mastery necessary to use it as a platform to build a much larger company. As a result, he went to the “new, new thing” too soon and ran into trouble. I completely identify with him. What should we entrepreneurs do when we get bored with the successful business we’re in the midst of building?
--Michael Spraggins, owner, Spraggins Inc., Orlando
As I’ve noted, boredom is an occupational hazard for entrepreneurs. We tend to be a restless lot and need constant stimulation.
Boredom becomes problematic when it leads to bad decisions. But even then, mistakes can teach us quite a bit about who we are and what we want. That kind of self-knowledge is crucial to having a long and successful business career.
Michael Spraggins, the author of the question above, is a classic example. His company distributes and installs products such as cabinets, countertops, and flooring to homebuilders and apartment developers. He took the company over from his father about 20 years ago, when it was 10 years old and had 14 employees. Today, it has 65 employees, does $20 million in sales annually, and is growing rapidly.
His boredom problem surfaced about 15 years ago. By then, he’d figured out the business and was itching for new challenges. He proceeded to open several locations and launch two businesses. After losing a lot of money and creating a lot of chaos, he realized his mistake in trying to grow too fast and do too much. Fortunately, he pulled back before the damage became irreversible. In hindsight, he realized it was boredom that had gotten him into trouble. He wanted me to suggest what he should have done differently.
That’s very hard to say, if only because Michael learned a tremendous amount about himself and the business from the experience. For example, he realized that he’s a “new thing guy,” as he calls it, who likes to innovate and launch ventures but then needs to put other people in charge. “I think of myself as kind of a strategist-coach, not really a team leader,” he says.
With that new bit of self-knowledge, he decided to hire a president to run his main business full time. When he later founded a not-for-profit that franchises clinics and hospitals in Africa, he hired a full-time executive director to run the show. Michael spends about a third of his time on the not-for-profit. “It runs really well and is growing like crazy,” he told me. He says the same about the for-profit business.
In fact, I was struck by how happy Michael seems to be. He’s married with three kids and says he has all the time and money he needs. The recession was brutal to his business, as it was to all construction-related businesses, but his company has bounced back and is well on its way to recovering.
Would Michael be in such great shape if he hadn’t gone through that period of disastrous overexpansion? I don’t think so. Some of us need to get whacked in the head before we can discover deeper truths about ourselves and make the necessary adjustments. If we’re lucky, we learn more constructive ways to deal with boredom and maybe even ways to avoid getting bored in the first place. I needed to pass through the dark night of Chapter 11 to see the light. From that perspective, I’d say Michael got off easy.
Just another day of virulent criticism for the cloud-based TV service as it announces launches in four more cities.
A stream of profane tweets directed at the CEO of cloud-based TV company Aereo Monday alleged that the company hacked a competitor's site. One, from the account of FilmOn founder Alki David, read: "What you are doing is like breaking into someone's home and smashing their shit up. Fortunately [you] lame f---, my geeks are smarter."
A day later, Chet Kanojia, the target of the tweets, seemed unfazed. At a Goldman Sachs conference in New York, he took the stage to announce that his company is opening early access to Aereo's service in four more cities: Cincinnati; Columbus, Ohio; Indianapolis; and San Antonio. Aereo service, which for a monthly fee provides TV streaming on Internet-enabled devices, is already available in seven cities, and the company has plans for hyper growth: another 22 U.S. metropolitan areas are targeted this year. Aereo has expanded its user base tenfold over the past quarter, Kanojia said, though he was vague about precise user numbers. The general expansion strategy? "Just knocking these cities out,” he said.
Aereo didn't respond to a request for a comment regarding David's allegations.
Aereo is used to defending itself from more than just angry tweets--it has been under assault from Day 1. Aereo doesn't pay for its programming; it pulls in network broadcasts through its antennas, then relays them to Aereo subscribers. The originators of the programming don't like that a bit, but Aereo won a crucial victory last April in the United States Second Circuit Court of Appeals. The court ruled that Aereo's system of broadcasting does not infringe on the broadcaster's copyrights. (It's complicated, but the crucial factor is that Aereo maintains an individual antenna for each subscriber and hence provides each subscriber a private, rather than public, broadcast.)
The accusatory tweets from earlier this week have since been deleted, but were confirmed to the Verge by David, who also explained his aggressions. Reporter Greg Sandoval writes:The acrimony comes at a time when legal analysts were expecting an alliance between FilmOn and Aereo, since they face a common foe. The country's top broadcasting companies have filed multiple copyright lawsuits against each company in different courts around the country. Aereo, the better known of the two companies, and FilmOn are said to use similar technology to capture over-the-air TV broadcasts and distribute live programming to customers through the web.
While UK-based FilmOn has a billionaire owner, in Aereo's corner is $63 million in venture backing, including investment from IAC, whose chairman is Barry Diller. We'll certainly remain tuned in as Aereo turns on in dozens of major markets across the country this year.
A professor told Wendy Kopp she was "deranged" to think she could raise $2.5 million to start Teach for America, but she went for it anyway.
A leading expert explains the most common content marketing mistakes he's observed and how to avoid them.
As content marketing continues to move past the early-adoption phase, I am noticing more and more companies start to take it seriously. But there are many common missteps.
To better understand what not to do, I spoke to Joe Pulizzi, founder of Inc. 500 company the Content Marketing Institute and the author of the new book Epic Content Marketing. Joe literally wrote the book on content marketing.
Here are the most common mistakes Joe told me marketers make when they do content marketing--and how to steer clear of them:
1. They have no subscription strategy.
Joe told me about the CMO of a large company, who described to him an online content program it was advertising and posting throughout social media. Though the company is producing a lot of content every quarter or so, it isn't simultaneously including a way to get readers to subscribe to it.
Sure, the content has gotten millions of people to come to the company's web site--and, yes, that now has more fans than the company's Facebook page. But it has zero subscribers. Just think about the hundreds of thousands of "content fans" it could have recruited if it had enabled those people to subscribe? If it had, the company could have, say, started to recognize what distinguishes subscribers from nonsubscribers. (Do they buy more? Are they prospects or customers? Are they stay as customers longer?)
2. They fail to inspire brand evangelists.
Joe told me about John Adams, who has been pounding a drum at the Cleveland Indians' home games since 1973, making him, perhaps, the greatest Cleveland Indians fan around. The Cleveland Indians marketing department has been working with John for years to help him publicize his story. Not only do they produce content about John on the team's website on a regular basis, they take him along on radio show interviews and help him get featured in Cleveland's newspaper, The Plain Dealer. John Adams is an inspiration to other Indians fans--and the Indians like foster his loyalty and influence.
But it would be even more powerful if the Indians invited other fans to also submit their own articles, videos, and infographics, and otherwise tell their own stories in support of the team?
3. They still keep their content creators in silos.
Public relations, email marketing, search engine optimization, social media--every one of these groups in an organization, even a small one, has someone in charge of putting the content plan together. Unfortunately in many cases, these people aren't communicating with each other. The result? Stories that don't make sense to customers, and a lot of duplicated efforts.
Joe says that SAS, the largest private tech company in North America, had a similar problem. So each of its teams designated a "content ambassador" to be accountable for that group's efforts. The ambassadors meet on a weekly basis to review its content marketing mission, and work together more productively.
4. They place traditional marketers in content roles.
Content marketing is, in most cases, better suited to the skill sets of traditional publishers than traditional marketers because publishers more fully understand how to develop engaging content and make sure it meets revenue objectives. In media companies, if content isn't driving sales, it's failing to do its job. Joe acknowledges that traditional marketers don't recognize this about content marketing.
5. They overlook internal marketing goals.
In every one of his 13 books to date, Don Schultz, the father of integrated marketing, writes about the importance of putting internal--rather than external--marketing first. But, in what may be the single greatest content marketing sin companies commit, many such programs are still launched without any knowledge or input from the sales team (or other employees).
Before your next launch, gather input from all your employees, and make sure that they are as involved as possible in your content creation program from the outset. As an example, Kelly Services, a human resources outsourcing firm, asked sales execs to submit ongoing content through their own LinkedIn accounts.
6. They miss out on opportunities to partner with traditional media.
There has never been a time where traditional media companies have been more open to content partnerships with brands than right now. This goes beyond native advertising programs, and into co-creation projects as well. If you're not talking to the leading media outlets in your niche about ways you can help each other, you are missing out on clever chances to cooperatively reach, interact with, and build relationships with interested consumers.
All these content marketing mistakes can be avoided, and you can build an effective content marketing program for your business, whatever the size to drive leads, build buzz--and generate revenue.
Now it's your turn. What kind of content marketing are you doing for your company?
The 11-year-old discovery engine is betting its video strategy on Canadian start-up, 5by.
5by, founded in 2012, bills itself as "curated, free and awesome." Its service is designed to suggest videos you'll like based on previous choices and reactions, somewhat like the thumbs up or down options in Pandora.
StumbleUpon CEO Mark Bartels explained the deal to TechCrunch as “a directional bet on mobile and video" as the future of both advertising and web content consumption. The entire six-person team will continue to develop 5by as a standalone product, though they'll now be working from StumbleUpon's San Francisco office rather than their current location in Montreal.
StumbleUpon, which was founded in 2001, announced last week that it expects to grow revenue between $35 and 40 million this year. This is the company's first acquisition.
Private-company revenue is shrinking, but company owners are operating more efficiently, says a new report.
Small businesses are often the canaries in the coalmine, serving as a bellwether for larger economic trends. So brace yourselves for a gloomy report. The most recent data released by Sageworks on Monday shows that while small business sales are still growing, they are growing at a dramatically lower rate than last year.
"Companies haven't been eager to take on new employees and extra overhead, even when they were seeing double digit sales growth," Brian Hamilton, chairman of Sageworks, said in a statement. He added that the news is especially troubling because the recovery is also approaching the end of the average length of U.S. expansion, which usually lasts between three and four years.
Sales Rose, But Less Than Before
For all private companies, revenue grew at a rate of 3.8 percent in the eight months leading up to and including August 31, 2013, compared to 9.4 percent for the same period a year ago, and 9.9 percent for the period in 2011.
It's also taking longer for private companies to get paid, with payment cycles increasing by nearly a week to net 46 days this year, compared to the prior two years.
Immediately after the recession, in late 2009, private companies profited from pent-up demand, which drove sales growth. That growth perhaps seemed stronger than it was because it was compared to a smaller baseline, Libby Bierman, an analyst with Sageworks said in an email.
The Hardest-Hit Industries
The sectors hardest hit were manufacturing, wholesale, and retail. Sales for manufacturers increased 2.3 percent in the eight-month period, a decrease of more than 10 percentage points from the same timeframe a year ago, and down nearly 13 points compared to the same eight months in 2011.
Similarly, sales for wholesalers were nearly sliced in half to 4 percent, compared to the same eight months a year ago, and down more than nine percentage points for the period in 2011.
Retailers fared worse, eking out revenue increases of less than 1 percent, a decrease of more than six percentage points from the year earlier period, and down nine percentage points in 2011.
By comparison, construction fared better. Sales fell nearly six percentage points to 7.7 percent year over year, and they were down only about 2 percentage points from 2011.
Sales Growth Declines, But Cost Cuts Improve Net Margins
Over the past three to four years, companies have improved their operational efficiencies. Small firms show a net margin--a good indicator of non-production costs--of 9.1 percent for the current period. That's nearly double what it was in 2011, and up nearly three percentage points compared to the same eight months a year ago.
"The momentum in growth has started to subside, as private companies are focusing on improving their net margins," Bierman says.
Sageworks, a provider of private company information, analyzes the financial statements of more than 1,000 private companies every day. Its current quarterly report, which was released yesterday, examines data for the eight months leading up to and including August 31, 2013. Sageworks recently reformulated its monthly small business survey to be released during each of the four quarters.
Resumes are all but pointless, says the Virgin Group founder who hires for cultural fit.
Sir Richard Branson, billionaire and founder of The Virgin Group, doesn't hire people for their skills and qualifications. He hires them for cultural fit with one of his 400 companies.
Branson suggests leaders draw out a candidate's personality during an interview, and look for someone who's not only a good fit with the company but versatile.
"Find people with transferable skills--you need team players who can pitch in and try their hand at all sorts of different jobs," he writes on LinkedIn. "While specialists are sometimes necessary, versatility should not be underestimated."
Of course, a candidate's qualifications and experience should not blind employers to a toxic personality. "If you hire the wrong person at the top of a company, they can destroy it in no time at all," Branson warns.
For more advice from the legend himself, check out Inc.'s video series, Sir Richard Up Close.