Pound the Pavement: Meeting VC's and successful entrepreneurs

There's something paradoxical about meeting with Venture Capitalists. Centrally endemic in our pursuit of entrepreneurship is the core quality of autonomy. You get to call the shots. You determine the strategic direction of your company. You determine your company's image. You. You. You.

But it all dissolves away once you start meeting with the boys with the big checkbooks. Once again, you are returned to a world where you need to sell yourself. You need to justify why you are worth investing in. You need to convince someone that your idea, time, passion, and the previous few months of your life are worth actually worth something. It's a pressure filled experience, and it's uncomfortable.

I've always subscribed to the bootstrapping theory (when possible) myself. Pay your own way, and preserve your equity. But there are definite advantages to having funding, and one of them that interests me is the mentorship that most VC's will provide.

I spent most of my day yesterday meeting with various startup accelerators, looking to land an advisor/mentor for my company. They were all shocked when I told them that I didn't want any funding; instead, I wanted someone with enough connections to bring some serious PR to my company. I'm developing a social media advertising platform, and I have already built a working prototype (I'll post it soon for you guys).

It's almost humorous to read their reactions while you answer the inevitable question "What does your company do?". You can just see them asking themselves "should I throw him out now? Should I let this go on? Oh wait, maybe this is a good idea"..

I had a great chat with a local startup consultant at one of the accelerators, and he's putting me in touch with some very established entrepreneurs (you'd recognize a few of their names); we'll see where it goes.

As someone that's always been averse to seeking funding, I'd recommend meeting with some of the local startup accelerators in your area. Most will take some time to sit down with you and at least provide you with some topical advice for your business. And it also exposes you to the pitch process, which is never a bad thing (unenjoyable yes, but bad, no).

You can basically get free consulting advice from people who have already succeeded as entrepreneurs, and you also can build up your network. What's not to like? It's also free, so it's not going to cost you anything (unlike a phone call to Accenture to provide the same service).

If you're not a fan of networking, this is a great exercise, because startup accelerators are filled with people just like you; most of the time they want to help people like you succeed, and they'll be happy to provide you with a bit of advice. The environment is friendly, and it's an easy way to ease into everything. The team at an Accelerator can put you in touch with VC's (most are VC's themselves), and they can also tell you if your idea sucks (which is good; maybe you need to fix it?). Get to know some of the big boys at your local startup accelerator this week. Make it a personal challenge.

As a new feature, I'm going to start posting a book of the week, of books I've read (or am currently reading). I'm currently reading Do More Faster: TechStars Lessons to Accelerate Your Startup, which is an awesome book, with a lot of advice you will use immediately. You can get it here if you're interested.

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The Need to Fail

Sorry for the delayed absence guys (yes, I'm still alive). I've been working like a maniac on my latest startup (which is going to be released soon), but I'll be posting regularly again from now on.

With startups there's an endemic barrier to entry that can deter just about anyone, and it's important to fight it off. The most depressing (and yet natural) of them all is as follows:

Your idea seems perfect, but you eventually realize that nobody wants to buy it

Before you throw the idea/work in the trash compactor, try to refine it first. I could throw out a lot of different examples to illustrate how, but the easiest one is Play-Doh. If you're a cinefile, you'll note that this story was recently told in the movie 'How do you know' (which was a waste of time by the way).

The short version of Play-Doh: It was created as a wallpaper cleaner. It wasn't doing so hot. They realized that people were using it as pliable clay instead. So they marketed it as such, and it all worked out.

Interestingly, this cyclical repositioning/refining technique appears in almost every successful business to some degree.

There's an important book that most entrepreneurs I've met have all read called Founders At Work: Stories of Startups' Early Days (You can get it by clicking here). The book details how so many businesses have had to shift their focus, and this is what ultimately made them successful.

One of the many examples in the book is PayPal. PayPal basically started as a method of transferring money between two wireless devices. This was their 'idea'. While the idea was cute, it wasn't especially profitable. Thus, the idea was refined, and it ended up taking the form of third party company that assists with transfers online. It's now a titan of the online world.

There are countless other examples in the book of companies that have followed the same cyclical repositioning path. The book is basically a collection of case studies from successful businesses.

This technique of:

  1. Release the product
  2. Collect feedback
  3. Refine (make changes)
  4. Repeat

is at the heart of being an entrepreneur. This is the framework you must follow. You need to fail in order to succeed. Here's a variation of the cycle, which is employed by the vast majority of entrepreneurs who fail:

  1. Release the product
  2. Ignore feedback
  3. Wait out the storm (do nothing)
  4. Try to advertise more
  5. Go down with the ship

The goal of your startup should be continuous refinement/improvement of the product. This technique has become so important, that there's actually a second book that is dedicated entirely to this concept. It's called Getting to Plan B: Breaking Through to a better business model (Get it by clicking here). The book is written by John Mullins, and Randy Komisar (who most know from Stanford University's Entrepreneurial Thought Leader podcasts). The book basically ascertains that your business is almost definitely going to fail in its early stages, and that's fine. In fact, that's natural. Only once you've failed can you start to refine the product and reposition it accordingly.

If you follow this type of framework, you'll find yourself much less stressed by early signs of failure in your business. If you go in with the mindset that you're going to need to adjust on the fly, you won't panic when the initial reaction to your business sucks. You'll automatically only worry when you need to; in this case, you only need to worry if you can't reposition the product for success. Only at this point should you be looking to dispose of the idea like it was last week's leftovers.

So don't be afraid of failing. In fact, embrace the need; The Need to Fail.

Just make sure you build off it and come back with a better product.

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Business Opportunities: Identify them with The Birthday Strategy

Identifying business opportunities is the most difficult part of being an entrepreneur; it is also the most critical. If you don't solve an important problem, nobody will pay for what you're offering (no matter how cool it may seem to you)

My birthday is coming up shortly (I'll be turning a cool 27), and as usual, I've been asked for a list of things I need/want. Believe it or not, this 'Birthday List' is actually an excellent analogy for identifying customer problems (always interpret 'customer problems' as 'business opportunities'). Here's how

Birthday Lists: 2 Possible Outcomes
We've all been there (especially at a very young age): Somebody asks you for your birthday list or wants, and you rattle off a few items you'd actually like to have. The eventual gift-giver, now has 2 options:

  1. Listen to my want/need
  2. Decide for themselves what I'd like

We've all exercised the second choice at some point. We rationalize it as "I know he asked for movie gift certificates, but he'll love this sweater" (evidently, he won't). Other people do it to us too ("I know you wanted that particular t-shirt, but I decided to buy you this book about the political system in 1800 instead"). Why don't people (us included) simply stick to the list?

Customers don't care for your opinion
Your customers express their problems ('Lists') all over the internet. It's very easy to find complaints about their needs/wants that are not being filled. You need to understand that they know their needs better than you do

If lots of people ask for an app that stores a simple grocery list, then build exactly that for them. Don't build them an app that lists the manager at every grocery store in a 10 mile radius (even if it seems cooler to you)

Unfortunately, most entrepreneurs fail to realize that you need to listen at all. Most will come up with an idea (that sounds cool in their head), and then build it. Next, they try to find customers who can use it. This is a guaranteed way for your company to fail

If you want to create a product people will buy, use their wish list; you don't like having your wish list ignored, and your customers don't either. The only difference between giving a bad gift and creating a bad product is that you won't get the pretend 'Thanks, I love it' reaction; they simply won't buy it at all

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How Stanford MBA Students are Taught to Identify Business Opportunities

Stanford University is a breeding ground for successful tech startups. One of the interesting elements of their MBA curriculum is a focus on identifying business opportunities. It might seem like an abstract skill, but it can be developed

Tina Seelig, the Executive Director for the Stanford Technology Ventures Program published some of their techniques in a book earlier this year. Her book is an outstanding read (you can get it Here), and I highly recommend it

While the lessons in the book are obviously too vast for this small post, I wanted to point out one of the techniques that I found particularly interesting

How to Recognize Business Opportunities
Tina lays out a very powerful technique in the book for identifying opportunities. A circus is used to demonstrate how the technique works. It goes like this:

  1. Think of the business (a circus in this case)
  2. Take a piece of paper, and draw a line in the middle
  3. On one half, write out everything that comes to mind when you think of the business (clowns, elephants, etc)
  4. Next, examine each thing you wrote down, one by one, and consider if it would be better if the opposite of that item were true (I'll explain in a sec)
  5. Roll everything up into a new business

So how does this work? Let's say that on the left side of the paper, I wrote down the following items:

  • Clowns
  • Elephants
  • Popcorn
  • Loud Noise
  • Death-Defying Stunts

In the next step, I would keep what I liked, and Reverse the things I didn't like. My new list would look like this:

  • Clowns
  • No Elephants
  • Popcorn
  • No Loud noise
  • Death-Defying Stunts

The new business that would emerge would be my second list. It would contain automatic improvements to each of the areas that I didn't like.

What's interesting about this particular example, is that the second list is exactly the type of business that was formed by Cirque du Soleil. It removed the animals, along with the loud noises, and it created a whole new type of circus. It has been a tremendously successful business for them, and has revolutionized the circus

This technique is definitely worth practicing on everyday businesses. The more you practice, the better you will become at identifying business opportunties

Tina Seelig's book is called What I Wish I Knew When I Was 20: A Crash Course on Making Your Place in the World, and is full of many more useful techniques. It's one of the few books for entrepreneurs that offers immediately applicable techniques, and that's a big reason why I recommend it

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