The media loves to focus on young entrepreneurs and Internet startups, most of which offer little real value and solve few problems—other than how to acquire more stuff or a greater online reputation. (Sarcasm intended.)

However, there are exciting things happening that look to solve real problems using real science in totally innovative ways.

One is an effort, driven by scientists, that is pushing to end the scientific elitism fostered by exclusive periodicals, such as the New England Journal of Medicine. It is a movement towards a kind of “open source” science that is gaining traction within the scientific community itself. There’s been an explosion of open access archives on which a scientist can not only share research results, but also find research connections and collaborators they would normally never meet.

Dr. Michael Nielsen and other advocates for “open science” say science can accomplish much more, much faster, in an environment of friction-free collaboration over the Internet.

The DIY movement has made itself felt in many areas of life, but I find none more fascinating than its application to biological research and is another push towards more open scientific endeavor.

“I want to generate the sort of tools that make it easy to do DIYbio at home.” –Cathal Garvey, Cork, Ireland, inventor of the DremelFuge, a small centrifuge that can be fabricated by a 3-D printer, who offers the plans free of charge via the Net.

But the pièce de résistance comes from the National Science Foundation, which announced last summer the founding of the Innovation Corps, a program to turn the scientists of academia into entrepreneurs. This is not a fluff piece or election year propaganda, nor are they twenty-somethings locked in their dorm rooms coding all night. NSF recruited serial entrepreneur and now professor Steve Blank to teach the program—and a very tough program it is.

These weren’t 22-year olds who wanted to build a social shopping web site. Each of the teams selected by the NSF had a Principal Investigator – a research scientist who was a University professor; an Entrepreneurial Lead – a graduate student working in the Investigator’s lab; and a mentor from their local area who had business and/or domain expertise. And they were hard at work at some real science.

Check out what the first teams have done so far.

All of these are signposts of a new wave of entrepreneurs who will do things differently.

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A link at SF Gate led me to When You Should Quit Being An Entrepreneur at Business Insider. It’s one of those articles with an interesting premise written by someone with no authority on the subject and little real-world experience. This was mentioned in the comments, which have more value than the article.

The most glaring misstatement was that shutting down your startup equaled failure.

Admitting that you are riding a dead horse does not equal failure.

It’s also stupid to say that a startup fails if it does anything other than go public.

Based on that Zappos was a failure, as are the thousands (millions?) of startups that grow moderately, if at all, but provide a decent living for the entrepreneur, not to mention jobs for others.

And there are those that choose to stay private, such as SAS and its $2.43 billion in sales.

Shutting down a startup doesn’t mean you quit being an entrepreneur; being an entrepreneur is as much a matter of right idea / right time / right place / right circumstances as it is of your MAP.

And entrepreneur is not the same as entrepreneurial, which you can be in any size company, and defaming corporate jobs as of less value and that by working in one you are a failure is pure garbage.

As so many of the comments pointed out, failure only happens when nothing is learned and even that isn’t failure if you consider Einstein’s comment that expecting different results from doing the same thing over and over is insanity, not failure.

In my book the only time you can actually fail is when you are dead and as long as you weren’t the cause you still didn’t fail.

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A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

I met an interesting guy over the holiday.

“Chris” has a small startup in the financial services sector and is starting to gain traction.

He said it’s been an uphill battle and that he wishes he had spent the same energy doing something “socially responsible,” because it would be a lot more satisfying.

I’ve heard similar comments from other entrepreneurs and small biz owners.

Happily, this is one of those times it is possible to “have it all,” because all it takes is changing the way you look at the world.

Having a socially responsible business doesn’t require a focus on solving social ills and it certainly doesn’t mean forgoing profit—without profit your business won’t be around.

It does mean running your business in a responsible manner

• pricing fairly, passing on savings whenever possible and never gouging
• fair wages and other compensation
• fair employee treatment (not playing favorites, etc.)
• reducing your carbon footprint
• community involvement and contributing whenever possible; and
• believing that it’s not all about you.

None of this is rocket science and all of it makes good, profitable, business sense.

In fact, Chris and others who feel the pull to help fix the world would do well to read Richard Branson’s Screw Business As Usual to see how others are ‘doing well by doing good’.

Note: the unseen pause is between ‘screw’ and ‘business’, not between ‘business’ and ‘as’,

Option Sanity™ is socially responsible

Come visit Option Sanity for an easy-to-understand, simple-to-implement stock process—so easy a CEO can do it.

Warning.
Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.” Use only as directed.

Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

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I read an article on naming a company or product, but it is the need to REname it that I want to focus on today.

Not when, why or what to rename it, but the founder resistance to doing so.

I work with both foreign and US entrepreneurs and although I’m not any kind of naming expert I’m often asked what I think of the product or company name (often one-in-the-same).

As a good wordsmith, I can spot many of the obvious problems described in the article, especially those that center on meaning, sound, spelling, etc. (I have no knowledge of legal stuff, other than knowing that domain availability is not sufficient.)

The resistance to any suggestion of name change is almost laughable—not just resistance, but umbrage—about the same reaction you would get if you comment unfavorably on a child’s name.

Yes, startups are often compared to babies and references to founders giving birth are common and no where is that more obvious than when discussing the name.

Falling in love with anything in your company, let alone a name, is never a wise move, since responding to your market is a big chunk of your success.

But strange as it seems, founders are more willing to pivot than they are to change a product name.

Go figure.

Flickr image credit: Jack Dorsey

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Today’s guest post is from Igor Sill, founder of Geneva Venture Partners in Silicon Valley and an active angel investor.

The Start-Up Venture Pitch That Gets Funded

Virtually all of the start-up funding presentations I see by newly minted, bright eyed MBA entrepreneurs are certainly well presented, but are nothing more than just another “idea”.

An innovative technology with a new business model disrupting a huge and growing market idea is great, however, a fundable company it does not make. Evangelistically presenting a slide deck borne out of a great idea is, essentially just that, an idea. It may be your “baby” but it’s just one piece of the overall entrepreneurial pitch.  Unless the other start-up propositions are addressed it rarely finds funding.
There are several risk factors associated with funding early stage startup ventures, as evidenced by the 9 out of 10 failures. There’s:

• the founder risk,
• the technology risk,
• the consumer adoption risk,
• the market size risk,
• the future capitalization needs risk,
• and, most importantly for me, the execution risk.

Let’s look at the technological risk first.  If the technology doesn’t work, generally there’s no money left to start over or re-engineer it.  It may take years to solve the technical issues, and generally some other entrepreneur working on it will inevitably get it done.  Generally, it’s not about technology, as a competent group of engineers can usually program web-based projects, or find portions of the code that have already been developed and then quickly “put together” a working prototype via royalty sharing deals. So, essentially, the technology risk tends to be minimal.

Of all the failed internet businesses that I have invested, the culprit is usually a result of the lack of customers, or as some may tell you “it’s the inability to quickly penetrate the addressable market”.  Business success is all about gaining customer traction, rapid market adoption and offering a compelling business model.  Simply put, internet businesses fail due to lack of customers.

When I reflect on one of the biggest internet successes I funded, from zero revenues to IPO, then growing to $16B in market capitalization within 6 years, I recall that their first product offering was absolutely horrible and the beta customers were less than enthused.  Lots of technical assumptions proved false in the real world.  However, those customers offered key insights into their businesses and the improvements they truly needed—essentially taking a pretty good idea and turning it into an industry changing stellar solution.  The start-up team learned the real value proposition to the customer’s pain.  So, the second iteration grew from a dozen or so customers to hundreds, then thousands, then tens of thousands.  More insight was gained, more customer satisfaction was earned, much greater value was delivered which evolved into higher product prices, more attractive business terms, bigger margins and an acceleration of both, customers and revenues, then profits.

The key lesson: all start-up ideas evolve based on customer usage and feedback.  Generally, your business will evolve into something much more compelling, much more disruptive and industry changing—all of the great internet successes went through a very similar process.

During this stage of the growth process, the entrepreneurial founder’s leadership and company-wide execution was the key to overcoming the early risks, “crossing that chasm” and scaling that business successfully.  The returns to investors proved phenomenal.
So, back to that slide presentation.  Show your prospective investors that your idea was refined via actual customer usage, that you learned great insights and evolved them into a meaningful value proposition for your customers.  That your customers benefitted geometrically and that you can now scale that into hundreds of new paying customers, increasing the profit margin as you grow, and your company’s market valuation.  That you know the sort of talent you’ll need to grow the business to a leadership role and that you’re capable of recruiting and leading that talent.

Essentially, an investor needs to grasp how rapidly you can validate, learn, deploy, evolve and scale that business into the leader of a large, growing market. Investors typically extract that from how committed smart founders are about learning their customer needs and the correlation of market trends and dynamics.  It’s not solely about a brilliant idea and a smart entrepreneur.  It’s not about how great you are, what school you graduated from or that “J” curve chart you displayed in your slides.  It’s about how prepared you are to attack a huge market, your ability to learn from your customers, evolve and design new solutions, and, it’s about people.  Think Steve Jobs, Bill Gates, Larry Ellison, Marc Benioff, Tom Siebel, Larry Page, Sergey Brin, Bernard Liautaud, Marten Mickos, Peter Thiel, Evan Goldberg, Reid Hoffman, Mark Zuckerberg to name but a few.  A clear pattern starts to emerge.

Remember that 9 out of 10 startups will fail.  So the real question is how are you going to continually learn to solve your customer’s biggest problems while minimizing the market risk and scaling your business?  Now, go put those ideas on your slides.

Igor Sill, is a Silicon Valley venture capitalist and founder of Geneva Venture Partners. He is an Angel investor, and Limited Partner in Goldman Sachs Investment Partners, Benchmark Capital, Norwest Ventures, Brentwood Associates, SV Angels, ICO Funds, The Endowment Fund and Granite Ventures. Sill was educated at the University of California, Berkeley, received his MBA from the Said Business School, University of Oxford and is a member of Merton College, Oxford University. He also attended Harvard Business School’s Venture Capital Program, Stanford Graduate School of Business Advanced Management College and Stanford Law School Directors College.

Image credit: Geneva Venture Partners

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A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

Entrepreneurs are a confident bunch; it goes with the territory and it’s a good thing.

They need to be confident to withstand the waves that would otherwise engulf them.

They need to be confident even as others question their vision.

They need to be confident when discussing the wisdom of pivoting with their team and investors.

At the very least, they need to appear confident.

Arrogance is not a good thing.

While the line between confidence and arrogance is nano fine, the results of crossing it are obvious to all.

The confident entrepreneur listens where the arrogant entrepreneur dismisses.

The confident entrepreneur is transparent where the arrogant entrepreneur is opaque.

The confident entrepreneur is authentic where the arrogant entrepreneur is phony.

The confident entrepreneur is honest where the arrogant entrepreneur is deceitful.

The confident entrepreneur is leads where the arrogant entrepreneur bullies.

Talent flocks to the former and runs from the latter.

Which side of the line are you on?

Option Sanity™ fosters confidence.

Come visit Option Sanity for an easy-to-understand, simple-to-implement stock process. It’s so easy a CEO can do it.

Warning.

Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.” Use only as directed.

Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

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For years I’ve told managers ‘you are who you hire‘ and offered them tools so they become more proficient at hiring; this is true whether the company is a startup or it’s been around for decades.

Startup hiring happens in phases, which have a predictable pattern—

1. hire your friends,
2. hire friends of friends,
3. hire ‘outsiders’.

The first two phases usually go smoothly, since friends typically share similar values and, therefore, are at the least synergistic as to the company culture.

Phase three presents a totally different and disconnected challenge.

Accurately identifying a stranger’s values and evaluating how well they mesh with yours is not only difficult, but also time-consuming.

And therein lies the problem—not the difficulty, but the time.

When this subject comes up entrepreneurs often tell me that I don’t understand how busy they are.

They say it’s hard enough just finding the actual skills they need without adding an extra set of cultural hoops for candidates to jump through.

If that doesn’t shut me up they use the ultimate argument, “You haven’t actually done it, so you wouldn’t know.”

However, there must be a reason that Tony Hsieh pays people not to work at Zappos after they go through training and that hiring is number one on his list of how to build a company.

Hire very carefully — you’re creating an enduring culture.
“I’d rather interview 50 people and not hire anyone than hire the wrong person,” Amazon.com chief Jeff Bezos told a colleague in the company’s early days. Why? “Cultures aren’t so much planned as they evolve from that early set of people.” New employees either dislike the culture and leave or feel comfortable and stay. So the culture becomes “self-reinforcing” and “very stable.”

I wrote about using culture as a screening tool way back in 1999 and have reposted it often, most recently in February.

Your culture, no matter how young, is the best filter you have for finding the kind of people you need to follow in the footsteps of Bezos and Hsieh.

Assuming, of course, that you think they are worth following.

Option Sanity™ mirrors and reinforces culture

Come visit Option Sanity for an easy-to-understand, simple-to-implement stock allocation process.  So easy a CEO can do it.

Warning.
Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.” Use only as directed.
Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

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Tony, a founder, called and asked why I kept harping on culture instead of providing real help to startups. He said that culture was all very well, but there was enormous pressure to get the product out, meet with investors and hire people, especially considering the high rate of churn he sees.

In short, Tony believes that culture is a rich CEO’s game; not something a hard-charging founder should be wasting his time on.

I sent him a link to David Hornik, a guy at August Capital who invests for a living, who had this to say in a post on his blog that I saw at Business Insider.

…why am I so high on company culture as an investor in startups? It is because culture matters. Companies with a strong culture inevitably find it easier to recruit like-minded employees. What’s more, a strong culture dramatically decreases attrition. Companies with a shared purpose are more efficient — they work well together in pursuit of a common goal. Employees can appreciate their company’s priorities and focus on the stuff that matters. And, at the end of the day, fun and games matters. People would rather work at a company that they genuinely enjoy and believe in than one that lacks any real sense of purpose.

There are dozens of others I could send, but after our conversation I doubt they would impact him—Tony’s mind is made up.

What about yours?

Option Sanity™ IS culture

Come visit Option Sanity for an easy-to-understand, simple-to-implement stock process.  It’s so easy a CEO can do it.

Warning.
Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.” Use only as directed.
Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

Image credit: Bun in a Can Productions

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Not all startups are Net startups, even when they do business via the Net.

Recently a client was faced with a dangerous situation well known to entrepreneurs who have enterprise startups or provide services (Net or real-world) and to most sales people; I’ve faced it myself in both roles.

“Lindy” is an entrepreneur and here is what she wrote me,

Good morning! So I finally reached out to my first customer via email and offered to arrange a telephone conversation discussing how their company can best use the platform to communicate with its managers (your advice!!!) – here is the response:

“Thanks for the note. We still intend to use this; however, workload has been exceptionally hectic so I have not had time to work with the site and get our staff involved.

Best intentions though!”

They have over 200,000 employees and it would be huuuge if it works out with them… Fingers crossed… Either way, great learning experience for me.

As you can see, “it” is the opportunity to land a giant account.

• For a salesperson it represents a sizable commission, tons of recognition and a possible promotion.
• For an entrepreneur it means money to move the company forward along with impressive validation that helps land more customers.

So what’s dangerous about it?

• The “egg syndrome” is dangerous to both salespeople and entrepreneurs. It happens when too much time and mental energy is spent thinking about it, strategizing what-if scenarios, daydreaming and waiting for the phone to ring or the email to appear. In short, the sale becomes an egg that is sat on, thought about, coddled and worried over to the point that nothing else gets done.
  The best way to avoid this is to first recognize and admit the symptoms—at least to yourself. Then lay out a battle plan, schedule a set amount of time weekly to follow-up or just day dream, then put it out of your mind and work on other projects/sales. It requires some self-discipline, but if you know what to do and when to do it then you don’t have to think about it and it is easier to focus on other things.
• The “swallow you whole” scenario belongs solely to entrepreneurs. In fact, it is an inherent part of being an entrepreneur and something that you continually face. Large clients require large inputs of effort and can end up utilizing all your time and resources leaving you with no ability to chase the next sale. This one has no easy answer.

Lindy is facing both; she runs her startup herself with certain functions being done by partner companies and the assistance of a few other professionals she knows, but right now it is mainly her. She said her productivity had dropped like a stone because she was “sitting on her egg.” She remedied that with a plan, a schedule and specific tasks to drive the sale forward; otherwise she is forcing herself to ignore it.

The harder decision entrepreneurs face is whether to even pursue that opportunity.

I faced one shortly after I started RampUp Solutions.

An employee met someone from Microsoft at a trade show and the result was an invitation to write for MSDN; the articles focused on hiring skills.

I thought it was a terrific opportunity to get known until I received a call from another Microsoft manager. He said he liked what he read was going to lobby to have me hired to coach MS managers.

That scared me silly; I had no resources, I couldn’t hire trainers, since my approach and philosophy were fairly unique at the time, so there was only me.

While I didn’t refuse, I also didn’t pursue it; with no active follow-up it died a natural death.

Did I make a mistake? Would I have landed the account? Could I have pulled it off?

There’s no way to know.

That is what Lindy is thinking her way through now.

What would you do?

Flickr image credit: Citizen Clark

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A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

Experience teaches that if you absolutely need information frame it as a  question and then shut up.

It’s a tried and true method that every good sales person knows (they call them closing questions) and is guaranteed to get whomever you are talking with to answer specifically.

For most people it’s a diffucult strategy to employ in spite of working 99% of the time.

Often the silence stretches, creating pressure to fill the void, so the askER enumerates, adding detail or “what I mean is…” and the askEE is off the hook and rarely responds to the original question.

Even when the askER stays quiet their mental mouth is moving, framing responses, organizing rebuttals, responding to possible scenarios.

Whether physical or mental, your thoughts drive the words and the more thinking the less listening, because the focus is elsewhere.

In order to get funded you need to hear investors.

In order to sell you need to hear your customers.

In order to manage you need to hear your people.

You can’t hear if you are talking.

Shutting up is key and that means shutting your mental mouth along with your physical one.

Option Sanity™ helps you hear

Come visit Option Sanity for an easy-to-understand, simple-to-implement stock process.  It’s so easy a CEO can do it.

Warning.

Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.” Use only as directed.
Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

Image credit: Bun in a Can Productions

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