This is short, entertaining and wonderfully insightful. Plus, it has the number one instruction for the lean start up method -- "Get out of the building".
This is short, entertaining and wonderfully insightful. Plus, it has the number one instruction for the lean start up method -- "Get out of the building".
English: Sir Winston Churchill. (Photo credit: Wikipedia)
The often posed question is why do start ups fail? One often hears that of undercapitalization, market conditions or events beyond the control of the team.
In my experience, the simple answer is that management is unwilling or unable to make them succeed. And that of those two, the more common is that management is unwilling rather than unable to make the business succeed. It can be a fair trade for someone to be unwilling to work 20 hours a day, seven days a week for something likely to fail. It can also simply be more than someone wants to do.
I would acknowledge that sometimes that unwillingness may have its roots in a lack of adequate investor support.
But the fundamental truth is that the weakening of investor support can often be sourced to doubts about management's commitment to succeed in spite of the odds. Many a successful entrepreneur can point to an entreprise that succeeded upon their "will power" -- a business that might have otherwise failed if it weren't for the simple refusal of the entrepreneur to accept that outcome.
English: Sir Winston Churchill signature (Photo credit: Wikipedia)The power of will is one of the entrepreneurs most intrinsic assets. It can create success out of a situation where success is neither likely or expected, ---will can be the basis and foundation of any start up's progression. But managment's has to be "all in" because you can fake a lot of things in life but will power isn't one of them.
Image via Wikipedia
When you're running a company, one quickly becomes acquainted with the thought that everything matters. That everything, every little detail, as it relates to the enterprise and its progression is important. And in that, one is mostly but not completely right.
Some stuff doesn't matter or matter enough. Perhaps, un-intuitively, the surprise is that most of the stuff that turns out not to matter is good news. That is to say, positive events that don't translate into anything additive to the company's growth.
Here are 5 that come to mind:
1. Positive local press
Here it is the Washington Post which is a prominent national publication. And a great write up in it will certainly bring kudos from your Facebook friends. Enjoy for a couple minutes and then get back to things that will grow the company.
2. National TV appearance
Check the numbers on your favorite cable programs. Unless those include Fox's Bill O'Reilly, large numbers of people aren't watching these shows. And, even when they are watching, they are likely not interested in your product. It is exciting and fun. Just consider it a break from the daily routine. You still have to concentrate on communicating your value proposition to probable suspects.
3. Product of Year from a Trade Pub
It is great fun to win and beat your competitors in a "head to head" appraisal. Then again, if you take the same effort that goes into influencing one of these and apply to everyone who doesn't read the trade publication (>99% of the universe) -- it would have been a much better use of time. Plus, there's always a competitive trade publication coming to a different answer and all the trade publication awards have a very short useful life. So, as they say, fame and magazine awards are fleeting.
4. Trade Show Award
Do we really trust these folks? Really? If you have a big enough booth, you're entitled to the award for most innovative product or product of the year. If you aren't profoundly suspect of these, take an afternoon off.
5. Calls from Large Company Bureaucrats
They are interested and enthusiastic but utterly powerless. They are also meaningless in their own organizations but get to be giants within yours. They call expressing powerful interest and you would be forgiven thinking about the potential positive impact. Then again, you might have better things to do than give meaning to someone who has chosen to live a powerless life. Many a small company will find itself turned on its head chasing a huge opportunity that is only the product of a bureaucrat's search for meaning.
I raise these 5 pieces of good news because they are often touted by the CEO's that pitch us as evidence that the company is really gaining traction. Unfortunately, they frequently tend to indicate that the company won't gain traction because its management is chasing good news that would be better ignored.....
Steve Case provides consistent and quality leadership to our community and StartUp America. Here is a short video link worth viewing.
These non-obvious people tend to be the people in your work life who march to a different drummer. Sometimes quirky or just a little different, these folks distinguish themselves via insight or work ethic or activity. You may enjoy their company and appreciate interacting with them without fully appreciating how valuable these folks can be to your career.
These “different drummer” folks, including nut jobs, hustlers, self-promoters and geniuses, may not be your “go to” people in your work life. But if you want to rise as a star, you need a diverse network of “go to” people around you, and these folks can be especially valuable.
Success is facilitated by a network of friends and associates that provide with unique insights and timely support. If you have people in your network that see things others don’t, you will be enabled to jump a step ahead ( or stay there). You may not naturally gravitate to reliance with these types of folks, but strong relationships with them will serve you well. You will need to create ties to them, but first, you need to recognize them. Here are four unusual friends:
1. The Nut Jobs
Image by Stephen Dyrgas via FlickrOK, nut jobs may be a bit harsh as a descriptor. On the other hand, it will frequently be quite an accurate name for those people who have an uncanny knack for identifying emerging trends. These people spot the trends even before the early-adopters. (Think “pre-hipster”). They see things before they are big. And that can make most of them a little crazy to deal with as they impatiently wait for the world to catch up to their worldview. Many people claim to have this visionary insight but most people don’t have it. If you can find someone who is the real deal, make sure you build whatever working relationship is possible with them. Of course, you won’t act on every one of their insights, but you will be informed and you will benefit from their point of view.
2. The Hustlers
Hustlers work relentlessly harder than their peers. They tend to get promoted. Shock of all shocks, people who work harder tend to promoted above all others. If you want to be promoted consistently, you are going to work pretty hard too. Hustlers are easy to identify – literally, because they will be the ones starting early and staying late; and figuratively, because their contributions (and hopefully yours) are the ones that stand out.
Hustlers talk to more people.They do more. They hear more and know more than almost anyone in the environment. They are usually adept at predicting what initiatives will fly and which will fail, whose stock is on the rise and the changing of management focus.
3. The Self-Promoters
Cover of Smart People
Look, you may or may not be adept at self promotion. Either way, you need to identify and cultivate relationships with the great self promoters in your sphere of influence. Self-Promoters are an accurate barometer of the current view of success; and they provide the conventional view of any situation. The self promoter has a valuable skill set and needs a message that sells; while you may need those skills and have a message that needs to be sold.
While you can argue that self promoters are attempting to influence and direct the real time perspective of success and thus their value as a barometer is undermined, it is unrealistic to ignore their innate sensitivity to promoting things that people accept. Get to know a self-promoter and you will get to know the conventional wisdom in your arena.
4. The Geniuses
No matter how bright you are, you will encounter people who are a great deal more intelligent than you. You need to build a cadre of exceptionally smart people who can help you tackle your vexing dilemmas. The true geniuses that you encounter are unlikely to identify themselves. Most people aren’t observant
Image via Wikipediaenough to notice their light, or aren’t engaged enough to care….and geniuses know that. You need to spot them. You need to engage them. And you need to assess the types of problems that each is good at solving. Geniuses will make you smarter. And they are generally happy to have their intellect recognized by anyone.
Befriend, align yourself and otherwise connect with Nut jobs, Hustlers, Self-promoters and Geniuses to fuel and support your career. They each offer a value far greater than the time invested in the relationship. And you may find yourself with unexpected friends.
Originally published on BusinessInsider.com on 11.17.10
I started my business career with the naïve assumption that if I worked hard, kept my head down and contributed well as a team player, I would get noticed and promoted by upper management. You can imagine my shock when I realized that some of my peers chose means other than hard work and valid contribution to pursue recognition and promotion. These folks, ( let’s call them rat bastards), sought advancement via self-promotion, empire building, bandwagon jumping and good old fashioned back-stabbing. What I didn’t originally anticipate was how many rat bastards ( which is ultimately a term of affection) I would encounter along the way. I also underestimated their effectiveness. Nor did I have any tactics to handle them.
By the time I became a CEO, I was able to identify and remove rat bastards or at least shut down their activities. If you’re lucky enough to work in a company where political behavior is frowned upon, the culture will probably declaw these folks. If you’re not, you need to learn to cope with these folks and their maneuvers.
Now, a little self promotion or well-timed politicking may sometimes be a powerful additive to your work efforts. But if self promotion doesn’t come naturally to you, you need to counterbalance the rat bastards without sacrificing your integrity or becoming one of them.
So here is a quick view of some of the rat bastards (“R.B.’s”) and how to handle them. These are some practical yet relatively innocent counter-measures for some typical rat bastard behavior.
The Self Promoting R.B.
Who they are:
Barnum the Rat Bastard is adept at using all media and messaging available to amplify his or her successes, contributions and achievements. The level of achievement or degree of difficulty associated with any success isn’t a primary concern. The primary objective is the communication to a targeted audience for the purpose of inflating perceived value of the self promoting R.B. While you may be toiling away and hoping for mere recognition of meeting significant milestones, this isn’t part of the paradigm of the self promoter. The self promoting R.B. promotes often, loudly and without discernment.
How to deal with them:
As a practical matter, you can’t say or do anything contrary to R.B.’s self promoting messaging regardless of how overblown it is. Instead, you need to re-amplify the message as much as possible. If the self promoter sends out an email trumpeting a personal/organizational achievement, embellish the claims and expand the distribution by forwarding the email to a broader list. Don’t re-amplify every message mind you, but only those messages that are the most transparently self promotional. Yes, there is some downside risk in re-amplification but the upside is that the self promoting R.B.’s credibility typically suffers because anyone broadly understood to be a self promoter ends up with a credibility issue.
The Empire Building R.B.
Who they are:
Julius Rat Bastard, the grabber of headcount, budget and all manner of territory for means and to ends unclear even to himself. For this R.B., the only point that matters is building the kingdom. This R.B. operates with the presumption that more resources equates with more value and importance. There isn’t an evaluation on Julius’ part about making the sum greater than the total of the parts; Julius is just focused on making the sum as big as possible by acquiring more parts.
How to deal with them:
To slow Julius R.B. down in the long term, you need to be “helpful” in the short term. First, take all your marginal performers, known troublemakers and general pains-in-the-neck and get them into a single functional group. Then, task that group with something that either appears to or does overlap responsibilities with a group working within Julius’ organizational functions. This will prompt an irresistible temptation for Julius to petition upper management for the transfer of your troublemaker group into his domain. When the discussion inevitably arises, you agree to the transfer of this function and it’s associated group to Julius R.B. In one move you have reduced your management headaches while transferring them to a place where they can do you some good; and you appear to be a great team player. That can be the end of it. (On the other hand, you may choose to comment on how poorly the group is faring after the move and state that you never had any issues with the team. But that would be perilously close to rat bastard behavior.)
The Bandwagon Jumping R.B.
Who they are:
Like a newly converted 2010 Miami Heat fan, this R.B. will align himself with any obvious winner. Using revisionist history and creative story line gerrymandering, this R.B. can trace his role and contribution into every organization success. In order for him to do this, the Bandwagon jumping R.B. has to constantly monitor people’s perspectives on the status of many initiatives. In order to jump on the right bandwagon at the right time, he must always seek association with potential successful bandwagons.
Image via Wikipedia
How to deal with them:
Your mission is to simply tout the likelihood of successful outcomes for every initiative you’re aware of. Occupy the bandwagon jumping R.B.’s time by recommending initiatives and projects. Help this R.B. claim involvement or create tenuous relationships with many looming victories. The farther afield geographically, organizationally, or functionally the better, as the gravitational pull of any bandwagon is powerful to this rat bastard. And since there won’t be much intellectual honesty about the association or involvement, you can leverage the pull of many bandwagons across a broad array of activities.
The Back Stabbing R.B.
Who they are:
Richard Hatch of the original “Survivor” TV show comes to mind. Sure, you may not know who they are as you won’t hear their musings, statements and mistruths until after they’ve back-stabbed. In my experience most back stabbers are the toughest R.B.s to spot. Some will be your “friend”, most won’t bother with the charade. These are R.B.s who operate in the shadows, making private derogatory comments and accusations that can torpedo your credibility and success.
How to deal with them:
The only proactive method for dealing with these R.B.s is to spot them before they have the (next) chance to backstab. Spotting them is critical to diffusing their effect. Unfortunately, you will probably identify one only when a manager or someone trusted approaches you to validate one of the R.B.’s statements. However, if the R.B. has simply declared that you are an idiot, you won’t likely be provided with the opportunity to address the statement – and spot the back stabber R.B. As a manager, if someone (the prospective back stabber R.B.) tells you a colleague is an idiot, you can respond in one of two ways IF the accused “idiot” is on your team or under your management level First, ask “Does he know he is an idiot?”, and second, declare “If not, let’s get him in here and let him know – or at least let him know you think that. Let’s get this on the table.” Sure, there are real idiots out there. But it is better to deal with these things head on as a manager. This technique keeps you in the management role and “outs” the back stabbing R.B.
If the accused “idiot” is a superior. DO NOT ENGAGE. The Back stabber R.B. will take any conversation (even one-sided) about a superior and put your name on the statements that occur in the conversation.
Once the back stabber R.B. is identified you can call him out in a number of ways. If you hear anything suspect, you can make statements like “I can’t believe anyone would say that….” or “WHO did you hear that from?” or “Gosh, it sounds like you’ve been listening to “Back stabber R.B.” Make sure you circle back to Back stabber R.B. to make him aware of your comment. Back stabbers are a form of bully, just much less direct. And bullies and back stabbers don’t like folks who strike back or have their number.
The presence of political behavior demonstrates the absence of management. If you are now or ever will be in a position to extinquish it within a group, there are few things as beneficial that you can do for your team’s well being. Until the day when you are in a position to vanquish this behavior, there’s no rationale, valor or redemption in accepting these behaviors or failing to handle these rat bastards.
Originally published on Business Insider's Strategy Section on 10/14/10.
Image via Wikipedia
Things take longer than you ever imagine
Everything that involves people, resource, tasks and coordination takes longer than you ever think it should take to get done. It isn't about developing patience, as patience doesn't really help you keep driving things forward. It is about being realistic in your planning and and management.
Items that do succeed tend to do so quickly
I have seen more successes - products, projects, employees, start strongly than slowly. The great salesperson or employee is great from the first day. The strong employees contribute immediately. The product that is going to be a hit gets strong, initial reactions from customers.
People will let you down
In ways you can't even imagine when you start out. Everything from inattentiveness, laziness to fraud and theft can be expected from the people you meet along the way. Your faith in people or belief in them can be a dangerous thing. As Pres. Reagan put it,
"Trust by verify". Blind faith will get your butt kicked again and again. Love and reward your employees but don't have too much confidence in them.
Good employees are really hard to find
Not difficult to find, really difficult to find. And they're the first ones to leave. The truth is that 10% of the world is competent and you're looking for that 10% in every hire. It is hard to do consistently. And it is why organizations that do it with frequency have such strong reputations. If you want to build a business predicated largely on finding, getting and keeping quality employees to succeed -- you should understand that premise will be your greatest risk. Finding a market and profitably selling to it, the usually greatest risks, will take a back seat. Better yet, pursue a business that needs some reasonable percentage of employees to be really good.
Your bad employees rarely quit
For thing they're not really all that motivated to look as that might involve actual performance. For another, no one else is likely to recruit them. Your marginal and weak employees are with you for life unless you move proactively. In many years of running businesses, the only time this wasn't true was during the dot com bubble. At that time, every idiot could get a 15% to 20% raise here in Northern Virginia by changing jobs. And they did. Aside from that blessed time, weak employees are your most "loyal".
You will be lucky and unlucky
Image via Wikipedia
In the fullness of time, you will be assuredly lucky and unlucky. And, good luck for that matter, knowing which events will turn out to be good or bad luck once time has past. This is to say, sometimes what appears to bad luck will turn out to be good -- the weak salesperson who turned down your job offer -- or vice versa. Look you will have ups and downs and you will win or lose things that you don't deserve to win or lose. You will be unlucky and lucky, you just may never know when.
Avoid the myth and misery of sunk cost
See the item about succeeding quickly above. Don't chain yourself to the anchors you lovingly create in pursuit of success. If it isn't working for you or the business, let it go. Understand that it isn't good money after bad money, it is all bad money. Fire that salesperson, let that manager go, stop selling that product, get used to moving on. One makes a lot of decisions in running a business, accept that not all of them will be right.
Fill the pipe, always fill the pipe
The difference between good times and bad times is often reflected in how many of the opportunities, customers, etc. end up closing successfully. In good times, more deals close from a normal opportunity pipeline. In bad times, less deals close from the pipeline. So, fill the pipeline of opportunities, always look to add to the pipeline. Deals don't close for a million reasons. Your only defense is to fill the pipe.
Book covers for the (top left to right) North American (paperback), British (hard cover), British (paperback), Dutch, French, (bottom left to right) Spanish, Portuguese, German, Japanese, and Polish releases (Photo credit: Wikipedia)
Faced with information overload, we have no alternative but pattern recognition. -Marshall McLuhan (Photo credit: Wikipedia)
VC's use "pattern recognition" to assess the viability of deals. Pattern recognition is a method of seeing commonalities between a current , novel concept and previous ideas. And while it is a great tool commonly used by Venture Capitalists, the pattern recognition tool is mostly ignored by entrepreneurs. Which is a shame, because every investor pitch would benefit from substantive comparisons to previous successes and differentiation from previous failures.
I use the adjective "substantive" precisely here. For an entrepreneur to say we are a cross between "Facebook and Twitter" is not substantive.
Substantive comparisons need to be as precise as possible to be worthwhile.
To say, "We anticipate a go-to-market approach quite comparable to Companies X and Y, both of which relied on $5 per lead CPA and conversion rates of 3% to generate first year revenues in excess of $2M" is very substantive. And it is convincing. Substantive comparisons can leverage almost every aspect of an investment pitch.
Picture the proverbial hockey stick revenue slide. One line going out and up, dramatically so, in year 2, 3 or 4. We see a lot of these, at least in investor pitches -- we see a lot of these -- and the entrepreneur that can make it seem highly likely is quite rare. Rarer still is the one that can actually do it. Now picture adding two or three companies historical data, who have grown comparably to the hockey stick slide, and make an argument that your company can do the same. Because, for example, your value proposition is similar or the target audience is the same. Or, specifically, talk about the distribution partners or other critical events in the company's history that led to this hyper growth and what the comparable event will be for the company you're pitching. Do the legwork, people who do their homework tend to succeed. This isn't news.
Simply, turn the power of pattern recognition in your favor by consistently finding factual examples to support your probability of success.
Most of what you need to do this is online. The rest is generally available from current or former employees of the companies that will serve as your com-parables. No, you generally don't want or need secret information. But, even to say something like in a pitch meeting like, " I consider three successful Companies, X, Y, and Z, to be the most comparable. And I've talked to marketing and sales folks from each about the key things that drove their phenomenal growth. It boils down to the following four things that we need to do......".
Holy cow, talking about having me at hello.
Specifically, here are four areas that one can benefit from pattern recognition in an investor pitch.
1. Value Proposition
Finding successful companies with analogous value propositions is compelling and enlightening for anyone considering investment. It validates both the potential market and the likelihood that the market will respond to your offering. You can have the greatest solution to a large, existing problem but people have to want it. The old adage from biotech is that is not just how many people have a condition, it is how many people will seek treatment for the condition. If people want the solution, how will you clearly communicate your product's ability to meet that desire/need. The success of previous value propositions within your target market is just a plain, old good thing to know....
Can what you're selling be profitably sold? You would be surprised how often potential new deals fail to make this argument convincingly. It isn't just about price, though price is a factor. It is about the combination of marketing, sales and price yielding a profitable company. One cannot succeed selling $25k Saas subscriptions with $150k salespeople, the numbers won't facilitate or support a growing company. You can model it any way you want but no one has done it. Here again, showing the pattern by offering an example proves the point. Bringing just a "made up spreadsheet" that you authored doesn't make the point.
Does this team know the processes and approaches critical to success in this company? This is probably the area where most companies do link back to the previous experience of management as a basis for success in the new venture. But precision is frequently lacking in these descriptions, be precise -- "Jack's experience at Acme -- where they used the same telesales model we're intended to use -- is going to be instrumental". Tell with depth and clarity what people learned from the personal/professional experience and company observations related to the company at hand.
Image via Wikipedia
Do you know the critical metrics for the business you're pitching? Customer acquisition costs, lifetime value, profitability, churn, etc. are all fundamental to success. Don't make them up, don't estimate them. Research them and find suitable examples. Present those examples in your pitch. Perhaps, even present some you regard as not good examples for comparison and describe why they are not good examples.
A demonstration of real command of expected key metrics and solid examples of those metrics in practice will go a long way to building belief in a model.
Clearly, there are many, many more areas in any pitch that would benefit from pattern recognition. It is my suspicion that there is a material amount of this information at the fingertips of any CEO building an investment pitch. My point would be bring this information forward as it builds credibility while it steers an audience to a point of view.
Image via Wikipedia
Companies tend to fire employees who are jerks ahead of or before incompetents. People who are jerks are just easier to fire because there is little opposition to firing them. Incompetents might be nice enough, regardless of competence, to have supporters. Human nature influences the manager to make popular decisions which puts jerks out the door ahead of incompetents.
Maybe that isn't the best approach, but certainly worse, than not firing at all related to workplace effectiveness. That said, I have been continually impressed throughout my career at the positive impact on employee morale of the terminations of jerks or incompetents. Letting people go makes the real contributors know that there is a conscious management. Management that is aware and concerned about recognizing performance. Or the lack there of.
So companies tend to fire the jerks in their employee bases. But that isn't the only place companies encounter jerks. There are customers who are jerks. There I said it and its true.
But, why then, won't most companies fire jerks or anyone for that matter from their customer base. Can a customer be incompetent? Can a customer be really be a jerk?
Does it matter? Occasionally. I learned that a customer was, to be candid, a bit of a jerk. In the early 90s I was running a software company. In those days pre-bandwidth days software upgrades and improvements weren’t down-loadable. (But I’m not old – I’m experienced.) We developed a major upgrade to our product and improved major rather than minor functionality. Yet we didn’t feel we should charge for these upgrades, especially since we had another upcoming major upgrade already in the works.Sensitive to creating the perception of nickel and diming customers for every modification, we made a strategic decision to provide this upgrade for free and charge for the next. At the same time we weren’t running a charity. We decided to provide the upgrade for free but to charge $4.99 for a CD; the cost covered disc production, packaging, and shipping, and also ensured only the customers who actually wanted the upgrade would order it. (Why produce and ship discs customers didn’t want?)
Those customers exist. Every business has customers that cannot and will not be satisfied. And sometimes you’ll need to sum up the courage to fire them, just like you would an under-performing employee or any other jerk. Some customers are simply too expensive and too problematic to service. The key is to trust yourself and know when to stand on your convictions. When you find people problems, and you will find them, even if you don’t take all the complaint calls, you must act on those problems.When I talk to CEOs – especially CEOs of startups – I often ask, “What are some of your major regrets in running the business?” Almost always the answer is, “You know… I had this guy, I was thinking about firing him, and I worried about it and struggled with it for a long time… and months later I finally fired him. The day after I thought, ‘Jeez… why didn’t I do take care of that months ago? I wish I had fired him sooner."
Image via Wikipedia
Their major regret was not acting on employee suspicions as quickly as they should. They had nagging doubt, nagging questions, nagging indecision… and didn’t act. Yet almost never did they feel their initial suspicions and inclinations were wrong. Start ups and small businesses need every employee to work well together, work well within your company culture, and support your goals and vision.
Start ups and small businesses don’t need jerks. To build that kind of company, you often must let people go – whether employee or customer -- sooner rather than later.
Image via Wikipedia
One of the many gifts of entrepreneurs is to see truths about opportunities ahead of others. Vision, foresight, an ability to see an emerging market prior to its emergence. For VC's, the difficulty is determining which entrepreneurs' projected truths are, in fact, correct. While all claim to be correct, few are with any consistently achieved and reasonably documented track record. But while the entrepreneur propounds a set of truths as the basis for an investment decision, the investor looks at the truths and truth finder. As an entrepreneur, being a truth seeker and finder will get you funded. This, however, isn't widely understood.
All which leads to one of the fundamental disconnects between VC's and entrepreneurs. Which is the VC has to believe the entrepreneurs' truths, but more importantly, the entrepreneur's ability to discover the truth.In the simplest terms, fundings are measured by the amount of truths they discover. If a team runs through money and time to discover the business model, go to market, pricing, positioning and sales strategy, well, they are likely to receive financing which is both adequate and well priced. On the other hand, if the initial funding doesn't deliver insights into what is true, well follow on funding is rather difficult. The teams' skills at truth finding are far more central to a follow on investment decision than is generally understood by start up management teams.
For me, entrepreneurs who test, try out ideas, experiment, succeed and fail and test again, always get the nod at the start up and follow on. The entrepreneur will often arrive to pitch a new set of truths for a follow on funding and not understand that the real issue and decision isn't about the new, potential truths. It is about the entrepreneur's skill at being a truth finding. The entrepreneur will often be surprised at a partnership's lack of faith in the follow on opportunity. For the entrepreneur, the previous money had led to discoveries and understandings. The follow on proposal builds on those. "Why isn't this an easier decision?", the entrepreneur might ask. The investor is looking at the amount of discovery related to the time elapsed and the resources invested and assessing whether the ultimate, "finance-able" truth can be reached with a follow on investment.
Within the VC community, there are a lot of terms of art for time/effort/journey and discoveries associated with getting to knowledge of what and will won't work with a start ups' business model. One of my favorite expressions is to "turn over some cards", which is to use time and invested money to better understand the strength or weakness of a given path. The term illustrates the differing focal points of the investor focusing on the truths serially discovered for time and money versus the entrepreneur's idea of the hand with all the cards visible. It also recognizes that truth seeking is an invest-able proposition.
Which is to say, that including in one's investment pitch a full overview of suspected truths and the methods to uncover them is far more powerful and compelling than people realize generally. If you want to motivate investors, convince them that you have good ideas of which are the emerging truths and great skills at proving your ideas.
Image by Chemical Heritage Foundation via Flickr
In 2012, I will celebrate my 30th year in white collar employment (yes, I will do so quietly, at my desk, without disturbing others). Over that time, I have been to and sat through a lot of meetings. My time as a young executive at IBM and for the last ten years as a Venture Capitalist have been especially meeting heavy. In all those meetings, I tried to be attentive, to listen well but particularly to observe people for greater meaning beyond their words. As a VC, this is unusually important as one needs to assess an individual or team as much or more than an idea within an hour meeting. So over the years, I have developed a short list of "tells". Tells are signs, signals or indications of something other than what the speaker is saying in any moment. The term, tells, is frequently used within the context of card playing. That someone might characteristically rub their forehead when holding a good hand or scratch their chin when holding a bad hand.
So, here are some of my favorite meeting "tells"
1. Raising of voice
When someone is making a weak argument one of the few ways to make it seem "powerful" is to make it louder. And just like speaking English louder to someone who doesn't understand the English language, the impact of volume doesn't impact effectiveness. It is a lousy argument and I can hear all of it clearly, thank you. I am always impressed with how effective it can be in a large group. People use it because it works well.
When people "assure" of how reasonable or competent or intelligent they are, they do so for good reason. They have a lifetime of experience from people who have told them they're not those things. What's the difference between me and those people, those people have gotten to know the speaker much better than I. Since I am possibly going to travel the same road, the speaker is ready to assure me of their reasonableness, competence or intelligence.
3. Silent Sams
A lot of people who are quiet in meetings have nothing of value to add to the discussion. Really, they're quiet because they have nothing to add. Still waters may run deep by Silent Sams usually don't run (they sit in meetings passing the time) and they aren't deep (see first point). It is not that there aren't meetings for which they can add value, because there are, but they're not at one currently.
4. First in line
A throw down gambit that "anyone who would disagree with this argument is dumb" which prompts anyone in disagreement to pipe up and be, at least momentarily, first in line of dummies. This is another that works very well, anyone present that is at least mildly under confident of their counter reasoning will be quieted.
5. The 3Q'er: Question Question Quality
The speaker who assails rather than answers questions. From "that's a dumb question" to "that's not a relevant question", the one sure thing is that question isn't going to be answered. Given that it is neither dumb nor irrelevant to the questioner, this is a surprising approach. It is often disastrous be for the speaker's credibility in the room.
6. Stranger in a Strange Land
When someone asserts that they really "don't need" to be here in this meeting, I take it to mean that they suspect that need to be there quite a bit. In Venture Capital, it is quite common for someone to assert that "We're not really raising money". Which is to say, you've come to an odd place in this meeting with me, if you're not raising money. Why then, don't we end the meeting. Because, I am looking to invest in start ups. Yes, I know, they may be following good advice to create foundational relationships by visiting prior to a raise but many do so with the distinct impression that they will never raise money. All of which is to day, they are pretty convinced that they going to have raise money whether they want to or not.
I am sure there are more but these spring to mind.
Image by Esthr via Flickr
Start up CEO's tend to focus in their reports on beating revenue targets (if that's the available positive spin) or highlight beating the expense line (clear second place in the positive spin department). It is understandable enough, after all, you put the available good news forward. Sure, it is usually better to be the "beat revenue" story rather than the "beat expenses" story. And, of course, one would always like to tell the both "beat revenue and expense" target story. But that isn't always possible. Then again, how one achieves higher revenues or lower expenses determines whether either the results are good news or bad news. Because either can be good or bad news.
That said, I find that both reports in practice tend to under report the "how" they beat revenues or expenses. As the listener, the how one exceeds revenue or beats expense targets is key. For the qualitative appraisal of a board director of these reports, the how is the focal point. In fact, the "how" may be the most important aspect to the report. The how of current achievements is the window to and foundation of future performance.
First, let's level set our understanding.
It is an American maxim and tired joke about one spouse remarking to the other over an armful full of purchases --- "I saved you money as these items were 'on sale' today". Of course, the non-shopping spouse sees the half empty side of the class that money wasn't "saved" but rather "spent" on the sale items. Either way, across varying time lines, both sides of the argument can be viewed as fundamentally correct. This commonsensical view of getting necessary things cheaper via promotional sales is difficult to oppose for most people.
It does have limits as an argument, however, within a business context. Because in business, now is qualitatively better than later. Now is better than later in business because the early an investment is made the sooner it pays off. In smaller or start ups, this early is better can be especially true as small companies are always in a race against time.
Image via Wikipedia
If one, for example, beats expense targets by delays of hiring (which is commonly the case) this has all kinds of downstream effects. Or by same token, keeps marketing spend lower to create a better present and an undermined future. And there is no delay in hiring that will be felt as directly as a failure to hire sales people. If, for example, a salesperson takes 4 months to become a positive contribution to operations, then delays in hiring salespeople create a hole in time and money that can't be filled. That time and money is lost. Like an airplane flight with empty seats, the revenue opportunity is lost. And there is no chance to get it back. It is quite a repeated, though frustrating, moment to hear a CEO imitating success via lower expenses built on the foundation of reduced marketing or understaffed sales. "Great", I think, "we missed revenue and we will keep missing it". But, I get to hear about how we staying under our expense targets. It is not small consolation, it isn't consolation at all.
By the same token, hitting the current revenue target by emptying the next quarter or heavy discounts isn't a victory. Weakening the future or customer price expectations will cost the company and quickly. To hit a revenue target while greatly exceeding expenses has its clear drawbacks as well.
The net of all of this is today's results don't stand alone. They must represent current achievement but also a clear path to future results. In a start up, where the future holds greater prospects of the company's potential --- today's results are more about the future than the present. Everything done today is building a better tomorrow. If exceeding revenue builds a better tomorrow or exceeding expenses contributes more to a better eventual outcome, pursue the latter.
Image via Wikipedia
The differences between larger companies and smaller ones are many and varied. In a large company, the fundamental truths are reasonably well known. The established company knows things like who the customers are, where the customers are, how much they will pay for product, what they like about the product, what they dislike about the product, how much support they need with the product, etc.
In a start up company, not so much. Discovery is key. Communication is vital.
In a start up company, who the customers are and where they are and how much they will pay are all fundamental unanswered questions. As are what the customers like and dislike or will like and dislike about the product. More is simply unknown than known about the market and product. And not only are things unknown, there is usually a limited time to determine the answers.
All this mystery can be quite confusing to employees new to the start up environment. In a large company, there is less need to discover and frequently a great deal of time available to make these smaller discoveries. These formerly large company employees can enter a small business ill-prepared to succeed even though they are fully capable of doing so.
To change that, here are 5 things you should tell them.
Image via Wikipedia
1. Pursue the truth
Tell your new employees to engage with people who know or should know the answers to the questions above. Ask questions, don't be defensive, accept input, encourage open ended conversations, don't ask loaded questions or preempt responses. Discover as much as possible about customers: their perceptions, their reactions and their thoughts. Always, always, attempt to uncover knowledge, understanding and the truth. This is a voyage of discovery.
2. Communicate whatever you discover widely
Assure your employees that if they believe it to be well sourced, they should communicate whatever is discovered as broadly as possible. For the time being, limit analysis and conclusions. Let the truth stand alone. Find facts and share facts. Let the group form the big picture from everybody's facts. Don't spin or manipulate facts.
3. We are trying to effective, not efficient
Large companies wake up every morning and aim to drive cost out of known working processes through improved efficiency. Small companies should get up everyday to create working processes especially ones that find, sell or service customers. If small companies aren't effective, they don't ever get to try to be efficient. What will work/sell/grow is paramount. Doing it more efficiently comes after, and only after, one has a command of what is going to be most effective.
4. This is a race against time
Tell your employees, "we are in a hurry here", that the small company and they personally need to move quickly. Show me a small company that isn't using time to its advantage and I will show you failure in the making. Smaller size should enable nimble response and agility. Tell your new recruits that if things aren't happening fast enough, they should let you and everyone else know it.
5. There is not them it is just us
The inherent size of large companies and human nature usually gives rise to a "tribal mentality". This mentality conveys that one's first loyalty is to their department (accounting, sales, marketing) or "departmental tribe". And from this, these employees can bring a worldview that departments are tribal or should be -- pitted against one another is the natural state from their point of view. This tribal bias is unavoidable in many large companies. It is ridiculous for a small company. These first time employees need to understand that the tribe is the company, not its departments. In a small company, it is us and us alone. There is no "them" in a small company. And, accordingly, there is no one to blame for our failures. Marketing can't let us down or sales can't fail to deliver -- in a way that everyone in the company doesn't own. It is only us, they must understand, and we -collectively- will succeed or fail.
Many people have told me through the years that they've always wanted to work in a start up. A lot of them view it as much the same as larger company just without the larger company's bureaucracy. And yes, there is or should little bureaucracy, but the differences run deeper and employees that are new to it can benefit from a little explanation.
Image by mars_discovery_district via Flickr
The business development function is uniquely critical and powerful in a small company. Business development folks, unlike sales people, should pursue deals that are trans-formative for the company on an individual basis. Sales, on the hand, pursues deals that are collectively trans-formative - positively if there are a lot of sales and negatively if there are not a lot of sales.
Finding great business development talent is tough and most small companies have to grown their business development talent from former sales people. That transition from sales to business development isn't natural as some of the rules are different.
Since I have advised on a few these transitions, here are my 6 Deals to Avoid.
1. Stay away from deals with other small companies
Small companies can't help other small companies. There is no large sales force, brand name, marketing resources or development talent that can be leveraged by one company in the favor of the other. If your business development doesn't involve sales, it better involve actions (by people).
2. Avoid "You go first partnerships"Steer clear of deals that involve co-marketing to each others' prospects where the request is for you to deliver your list to them first or ones that request the two companies to take a set of actions but all of yours are upfront.
3. Don't do "Barney" Press Release deals
Image by ranesbluesky via Flickr
There is no value in doing press releases where two companies express undying love for one another. If you aren't taking specific steps, you're wasting time.
4. Beware the Bureaucrats
Some companies are simply too bureaucratic to be of much help. If they can't out of their own way internally, they are unlikely to be of much positive effect as your partner. Don't do deals with companies that can't move the ball forward. If they don't have a string of successful deals with smaller companies, you're unlikely to be the first.
5. Understand the heritage
Larger companies with reputations for borrowing/stealing "ideas" or engaging in litigation have earned these reputations. Be respectful of these reputations, there is no amount of legal agreement wrangling that will protect you. Don't do deals with companies expect them to behave differently than their history. Don't do deals with companies that have been accused of purloining ideas on more than a couple of times.
6. Don't do deals with people you don't trust
If you don't trust them, you are probably right not to trust them. And like the heritage point, there is no amount of legal word smithing that will keep someone from screwing you if that is their intent. Trust is a basic, instinctual thing. Rely on your implicit abilities of who to trust. Don't do deals with people you can't trust, you can do plenty of deals with people you don't really like as liking and trusting are different. You can grow to like people you don't initially like as you get to know them. In fact, it is quite commonplace. Growing to trust someone over time that you don't originally trust is rarer. That's because it is harder to trust than like the people you meet in business.
Image via Wikipedia
I had a chance this week to attend the YCombinator Demo Day in Mountain View, CA. This is a great event, or rather series of events, where twice annually a group of start ups are invited to participate in a three month incubation program. The start ups receive coaching, a place to work and a $20k to $30k investment. At the end of the program, there is a Demo Day where the start ups do 4 minute presentations to a room full of investors.
What Paul Graham, YCombinator's founder, has done and is doing with YCombinator is tremendous example of doing well by doing good. He introduced the companies with the caveat that they weren't great presenters as their focus is great product. The presenters were clearly well coached and their development to a consistent level of professionalism wasn't accidental. And I thought they did a great job telling their story in a limited format. The investor turnout was impressive as most of the Sand Hill Road VC's as well as key angel investors were present.
Of the approximately 2 dozen companies, six preferred that no one write about them now, so I won't do so. Of the remainder, there were some interesting companies.
These are in random order. They are all by nature early stage with great prospects but lots to prove out.
Software tools to enable retailers to leverage social media to drive traffic and sales. We know from a myriad of sources that certain individuals within the social graph are influence-rs. These people are thought leaders and do an out sized job influencing their friends and associates as a result. This company's product goes beyond simply causing individuals to refer friends, it identifies the influence-rs, measures their impact and seeks to leverage them by enabling aggressive marketing to these key audience members. Simply, if you cause others to buy, you will be rewarded.
Image via Wikipedia
This company enables people to find and buy data online. If you're a consumer of data from time to time, you know that the results from a Google search tend to be worthless or expensive. Worthless because it isn't recent or applicable or expensive because what you want is locked up in a series of $3k reports which are outside your need and way outside your budget. This paid information exchange allows buyers and sellers to find each other. Imagine your need a question answered like "How many heavy duty truck retailers are in North America by state or province?" You post your question and after some period of time (variable of course but probably 24 hours once the site has some uptake), you receive a response which is a price for your answer. Think, $100 or $200 or some other palatable amount.
The world's color authority which is now reaching over 1M unique visitors a month. Great idea, wonderful execution and well on there way. People react to color and this community enables product marketers to assess and determine colors for favorable response.
A search engine for all your data in the cloud. It indexes Facebook, Twitter, gmail, etc. to enable users to find items across all non-local data sources.
While not represented by the aforementioned companies, there were interesting ideas presented around video on the web. And it is clear, that the volume and importance of video on the Internet is growing geometrically.
First rate event and an excellent execution of a critical process. Absolutely worth the red-eye return flight.Related articles by Zemanta
It is a strange term, "Fire in the Belly", that refers to someone's drive or motivation to achieve success. When you're interviewing prospective employees, especially ones for a start up, finding this quality can be difficult. But, the reward for finding these people is immeasurable.
No one who wishes to be hired in an interview setting is going to say "Hey, when the going gets tough and you need someone to stay with the task until its done, it won't be me". Or, "Regardless of the importance to the company, I won't stay late to perfect tomorrow's presentation under any circumstances". People are socialized well enough to understand that commitment and diligence are valued traits.
Sure as an entrepreneur, you know that employees by definition won't care about the enterprise like you do. Potential employees will often describe a "passion" for the product, technology or tasks at hand. Which is nice, but fire in belly burns on and passion burns out. Fire in the belly is a continued drive that doesn't ebb or flow while passion rises and falls.
So how do you find it?
Image via Wikipedia
Look for three things, which may appear individually or in combination.
First, look for a history of drive. People with drive have had it their whole life. It's in their DNA. People with real drive have demonstrated it from very, very early on. Ask questions about their very first job. Not the one after college, the very first thing they did for pay. Guess what, they usually started working early in life. And they took the jobs they could get for the pay available. And they were rewarded with more responsibility. You'll often find that they worked very hard in these jobs for low pay. And, if they are who you're looking for, they didn't then and don't now have any problem with working hard. BINGO!!! It's what they do, it is who they are as people. They will work hard for you because that's what they do and have done for every employer they have ever had. They are driven and always will be.
Second, find people with something to prove to the world or a member of it. You do this by asking questions about their role models, relationships, family and long term ambitions. People with drive usually have someone or some groups that have importance to them. Find out who they are, why they are important to them, and what they want to prove at the end of the day. To cut to the quick, it is frequently a parent. Sometimes it is positive, they worship a parent and want to make them proud. Or they have a notably successful parent they want to out do. Sometimes it is negative, the parent has expressed doubts or flat out pessimism about the interviewee prospects for success. Or the folks in their hometown think they are dumb to pursue this field. When you're determined that the candidate will be unrelenting to make a parent proud or prove some one or group wrong, you should be thinking about where he or she will sit in your office.
Third, find people that have overcome obstacles. Real obstacles like the loss of a parent, abusive or alcoholic caregivers, tragedy, or material set backs. Ask about their life growing up and the material conditions or events within it. What were their life changing events? People who have succeeded while balancing drunken parents and abandoned siblings at 15 aren't easily discouraged by the normal setbacks associated with growing a business. Their internal dialogue isn't about giving up or giving way. They don't tell themselves that things are "too tough". They will think to themselves, "hey, if the hell I grew up with wasn't enough to stop me, today's challenges aren't going to stop me either." If you want people who will go through walls to succeed, hire people who already have gone through walls in their life. I don't say this lightly or disrespectfully as these people have experienced real pain.
Find someone with any of these qualities and you will benefit every day they are in your employ. Drive or Fire in the Belly comes to work every day and brings energy to every task.
Image by -RejiK via Flickr
If you read about the decision making process by
investors, including angel investors and venture capitalists, you’ll likely
encounter the term "pattern recognition". Pattern recognition describes an
investor's tendency to attempt to match the existing business proposition
to previous experiences. This match
ideally will be to previous
successful investments and companies.
But it might also be a match
to unsuccessful ones. Investors employ
pattern recognition because it enables faster processing of
opportunities that need evaluation every week.
There are various specific aspects to employing pattern recognition. Sales model, business model, distribution method, customer set and other similarities to previous successes warrant consideration in pattern recognition. And while I will blog again on pattern recognition and its components, today I would like to focus on a trusted technique within pattern recognition.
One of my favorite techniques in applying pattern recognition is to determine if there
evidence of natural lift. That is to say, is this an investment that will benefit
from environmental or systemic factors?
Further, is this a company
where growth and success will come more easily than not? Will this company will be a slog? Is there natural lift to the idea/product. For example;
If you launched a Facebook application
as the Facebook platform was beginning its meteoric rise, that
would be an example of systemic benefit.
Your life and the focus of
your investor would be about managing growth
rather than creating
it. You can start companies whose
success will be difficult and
risky. You can also start ones where
success will be easier and more
between new entrepreneurs and experienced
ones can be the latter's desire to
start companies with natural lift. That
natural lift makes them easy
to raise money for by the way. Natural lift enables customers to
be acquired more cheaply and employees recruited more
easily. Momentum is created in
conjunction with and facilitated by, the
external environment. I find that people
often confuse natural lift
with "buzz". I consider buzz
as a potential side product of
natural lift but different in a fundamental way. Natural lift cannot
be created by the company per se' as it is an external factor. Buzz can be created by the efforts of
the company's staff and
is internally generated ultimately.
(Sometimes faux mentum rather than momentum.....)
The alternative to a company with natural lift is when
the success of the investment is a
complete, endless slog. Where growth and success be fought for and
won on an inch by inch
basis. No wind at your back ever. And while
necessarily gravitate to a slog, there are many that will sign on to the
right one. There are just less investors
that will back an endless slog than will back a company with natural lift. And, no one
can handle many
companies on the slog path as they are time consuming by nature.
Image via Wikipedia
Judgment. Common Sense. Simple Good Judgment is the critical component of any hire into a start up. Give me your Art History, Criminal Justice and Fitness Management majors if they have good judgment, we can make good use of them in any start up. Business major without good judgment won't do you any damn good.
Common sense is a critical skill set for any enterprise that is continually crossing new territory. Most of the situations faced by the start up are completely new. That newness means that is there little or no experience or data about previous encounters with the issue at hand.
All that novelty means no one really knows definitely what to do. Yes, if you are the experienced entrepreneur, you likely know what to do. But, if you're not there, in the moment, you are dependent upon the judgment of the employees you've entrusted with authority. And if they're lacking in judgment, you will pay the price.
You may think that I am overstating this but I will tell you that one of the defining attributes of bad judgment is the ability to always come to the wrong conclusion. Not sometimes come to the wrong decision. All the time to arrive at the incorrect answer. I originally thought that I would sometimes get lucky with my employees that lacked great judgment and that they would sometimes "mistakenly" get to the right answer. But, that doesn't happen in practice. The gift of bad judgment is that it can take any set of inputs and process them into the wrong conclusion, without exception, 100% of the time. That's the gift that keeps on giving if you have these people in your employ.
Of course, this isn't to say that people with good common sense will be right all the time. They won't. But given the alternative, they are a superior choice.
For that matter, given people with energy, commitment and judgment, you are ready to succeed in the face of all odds and obstacles. And given people without, you can fail in the face of no obstacles.
Image by Inno'vision via Flickr
When I ran companies my policy was the phone would always be answered by a person. If a caller was angry or upset – in any way – all employees were instructed to say, “The CEO of our company wishes to speak with anyone who calls and is upset about our products, our services, or with anything about our company. Could I transfer you to him now?”
As you can guess, most callers said, “You’re darned right you can transfer me to the CEO. He needs to deal with this problem now!”
I took those calls. Every single one – even if the call interrupted meetings. (We never interrupted client meetings, though; if I was already with a customer I returned the call as soon as possible.) I took those calls for years, and even some many were decidedly uncomfortable, what often surprised me was how much I could learn by listening to angry customers. Over time I identified more employee problems as a result of those calls than I did by any other means.
In short, our customers not only kept us in business – they also identified issues for me.
Here’s an example. An angry customer is on the phone with a support person. (Or, really, with any company employee; every employee who works for you is ultimately paid to help customers and make them happy.) The customer said, “I spent a lot of money on this product… and it was delivered with a part missing. I need that resolved immediately!”
The employee said, “I understand the problem… but it will take a fair amount of time to resolve. It’s now 4:45 and I get off at 5:00. It will take more than fifteen minutes to resolve this issue; I think it’s best if you called us back tomorrow.”
(I’m not making this up.)
The customer became angrier. (Big surprise.) Another employee overheard the call, stepped in, and had the call transferred to me. I apologized on behalf of the company, determined the problem, brought in a more conscientious employee to help… together we made sure the missing part shipped overnight.
Fortunately for me, but perhaps unfortunately for the original employee, they didn’t have to worry about getting off at 5:00, much less taking the call the next day. I fired him. Treat a customer that way once and you’ll surely do it again. I considered myself lucky to learn about this problem employee when I did.
At least 75% of the time simply by taking angry calls I would learn about employees who were inconsiderate to customers or vendors. I couldn’t be everywhere. I couldn’t see everything. But dealing with angry customers increased my reach and vision dramatically.
The cheapest and the best capital to grow a business comes from customers. Some businesses, like consulting businesses and other services businesses, shouldn't often start with any other type of capital.
Here is a short clip from a recent Fox Business Network appearance about starting a consulting business.
Image by patterbt via Flickr
In a another edition of the Trouble Maker series, let's focus on members of the Board of Directors.
Mr. Ants in His Pants
He joined at the last investment round three months and is now ready to exit the investment. Yes, yes, he came into the round professing his patience and commitment to the long term but that was 3 board meetings ago. Now, he wonders why we aren't leveraging the current moment. Why can't we test the market for the company now?
His condition is terminal so don't invest your time trying to get him to bide his time.
Ms. Young VC
She replaced the senior partner you did the deal with originally. Ms. Young VC works from the proverbial VC playbook and there will be no deviation from it regardless of circumstances. It is her first board directorship and everything is viewed through the prism of how this will make her look to her partners. Any setback or plot twist must be explained as an independent action on your part.
Her Ivy League education means she is solidly grounded in business metrics and accounting forensics. Her emotional intelligence well, not so much. Whatever you do, don't get her frightened as a scared Venture Capitalist is never a pretty sight.
Mr. Strategic Investor's Appointed Representative
He has no idea how to properly direct a company of any size, he's a financial controller at the Strategic Investor. He is accustomed to driving via the rear view mirror. Nor he is at all confident that decisions should be left to management. "Whoa, wait a minute" he'll say, "shouldn't the board look over that Xerox Copier lease prior to you signing it". You may argue that the good people (and lawyers) of the Xerox Corporation aren't actually looking for feedback or any input on their copier lease from a money-losing, under-capitalized start up. But you would be wasting your time.
Image via Wikipedia
Mr. Older VC
He is a great guy but all the optimism has been crushed out of his being over the last 25 years. And while he is encouraged by recent progress, he foresees no need to become optimistic. In fact, he believes we should plan for the worst.
He assumes this will be a long slog with good news and bad news tending to even each other out. Yet, if and when it works out, he will be as happy as anyone if only a little more surprised.
Mr. Recent CEO Independent
Yes, he is "in the bag" for management and can be depended upon to decry low salaries and inadequate stock option grants at any opportunity in any meeting. Aside from the previous dispensation, he is usually one of the most valuable directors in the room. He will frequently offer practical, valuable insights into all company operations. What a concept.
Mr. Independent Director - Man about Town
Where does the money come from? How does he get in these deals? He's like the Dos Equis guy, "the most interesting man in the world" but he's younger. (I may have met the guy who the Dos Equis guy is modeled on in Venezuela 15 years ago, but that's for another blog). In the TV ads they say, “Women want him, men want to be him.” So, yes, he may not make it to every board meeting nor even say a single thing until the end of the meeting when he does -- but what else would you want from this guy? Insights on GAAP?
Other Troublemaker Posts:
Image via Wikipedia
My former secret past with cartoons was exposed on national TV last weekend.
In 1997, I was running a Internet entertainment network of websites that included a joint venture with Universal Studios. The JV with Universal was a website dedicated to entertaining boys and girls between the ages of 7 and 11. Universal Studios had movies, TV shows, record labels, and various other entertainment assets within its company. The "rights" to each property (movie, show, character, artist, song, product) were specifically and individually negotiated by the Studio and the property originator. We wanted to work "Babe -The Pig" (great movie -"that'll do pig") but quickly established that we would need to negotiate separately with the producers/directors of the film who owned "Babe" and the artist who provided Babe's voice. Getting both in the boat at the same time proved impossible at the time as people misunderstood and profoundly mistrusted this new medium -- the Internet. (In hindsight, I should gone after the duck in that movie -- he was a star...)
From there, I went after some famous cartoon assets for which Universal had some distribution rights. But those distribution rights, which mostly dated from the 1960's didn't quite include the Internet. So, I set out to contact and convince the then current owners of the rights to various cartoon properties including "Rocky and Bullwinkle", "Woody Woodpecker" and others, that they should license my company their characters for usage on an Internet website. First, however, I needed to explain what the Internet was and why it was important. "Well, the Department of Defense needed a network architecture that wasn't at all switching oriented...." Ok, I didn't say that but it was a trifle challenging to make the computer network as an entertainment medium point. In the process, I hope I educated them as to this emerging medium and its potential. In return, they thought me a great deal about intellectual property, branding and the power of licensing.
Given that rights were typically in the hands of the children or grandchildren of the creators rather than the creators themselves, it was interesting discussion about the intellectual property, its brand meaning and future. Those conversations about the cartoons, their creations, the creators and product distribution were some of the most interesting ones of my 30 years in business. And it was a life lesson in the power of branding and licensing. From meeting with these folks, I really considered that effective branding often relies on making something that is inanimate into something animate. I had always thought of life less brand attributes. I learned that has to be multi-dimensional and organic. That branding is about creating a genuine relationship between people and a product. People build relationships more readily with living things. That keeping the a brand and its character genuine in its usage over time was critical. When I work with a start up now, I frequently counsel brand the product because it will serve to brand the company. Which isn't necessarily true in the reverse, branding a company doesn't consistently brand its products.
And I learned that licensing is the ultimate game of control. They slice the licenses pretty thinly in Hollywood. And they are wise to do so, as they've seen the rise of new mediums and unexpected opportunities before with radio and TV. So, while I am not a branding expert, I became convinced that it better to brand a product than a company. And that every license is a very sharp, two edged sword. And if you brand well, it will only pay if you control and protect your brand along the way.
But I really didn't expect a cartoon oriented question of TV.