What drives entrepreneurs?

According to Daniel Isenberg, “entrepreneurs are contrarian value creators. They see economic value where others see heaps of nothing. And they see business opportunities where others see only dead ends.”

But Isenberg also believes (along with many others) that “the main motivator for entrepreneurs is the chance of making big money.”

Richard Branson believes, “If you get into entrepreneurship driven by profit, you are a lot more likely to fail. The entrepreneurs who succeed usually want to make a difference to people’s lives, not just their own bank balances. The desire to change things for the better is the motivation for taking risks and pursuing seemingly impossible business ideas.”

Branson has a great belief that Profit and social good are not an oxymoron or mutually exclusive.

In Screw Business As Usual Branson says that from the very start his entrepreneurial drive wasn’t for money, but to have the wherewithal to fund his charitable efforts.

And over the years he’s done exactly that by funneling much of his wealth into Virgin Unite and through Virgin Unite to many entrepreneurs in the developing world and beyond, as well as creating and funding The B Team: “Our mission is to deliver a Plan B that puts people and planet alongside profit.”

Three cheers for Plan B and the three Ps.

Video credit: The B Team

I attended my first AlwaysOn Innovation Summit this past week and I was really impressed with the companies, ideas, and technologies highlighted during the summit.  We often read about new companies launching products that are merely a twist on the social network, e-commerce, or the latest industry deemed “ripe for disruption.” The companies highlighted in the Summit certainly had more to offer.

As a capitalist and a social entrepreneur, I believe in the power of technology to improve lives across the socio-economic spectrum.  There are significant economic opportunities in providing solutions to real problems faced by families in the US and the emerging world, that are often overlooked for some reason or another.  The AO Innovation Summit highlighted many companies with technologies and ideas with the potential to change economies, alleviate poverty and, most importantly, save lives.

We heard from Mike Cheiky of V-Grid Energy Systems, whose company focuses on providing cheap energy to help connect the rest of the world to the internet.  More impressive still, the by-product of their process is a fertilizer that can be used in those same regions to improve agriculture and alleviate food-security issues.  Children go hungry every day, and governments have been overthrown as a result of food prices.

The panel on the changing landscape of education stood out for the immense potential impact that technology is having in this area.  We heard from Daphne Koller of Coursera, a company with a mission to provide free and open access to elite education.  In a world where the cost of education is raised beyond the reach of most families, this will undoubtedly improve lives both domestically and abroad.  Imagine a kid in Haiti learning to code on Coursera and creating the next great technology firm.  Speaking of which, Tim Draper, founder of Draper University, is doing what most people say can’t be done – teaching entrepreneurship.  Draper University’s 8-week program fosters skills and provides the kind of experience that can help set-off the light bulb for the next generation’s Steve Jobs or Elon Musk.

The future of fashion will not simply be about the designer on the label, it will benefit from beautifully designed technology solutions that improve our daily lives.  At the AO Innovation Summit, we were treated to a new wave of wearable technologies that will help us be more efficient, assess our health, and provide critical insights.  Dave Icke of MC10 demonstrated their ground-breaking technology that allows parents to monitor their sick baby’s temperature with a simple patch.  Now imagine the infinite possibilities of such a technology and its ability to lower the infant mortality rates in the emerging world.

From discussions with a variety of companies at the Summit, it’s clear there is a cultural shift within our industry.  Businesses should have a lasting positive impact on our community, as well as prove to be sound investment for our partners.  For too long those propositions have been polarized.  At the AO Innovations Summit I was pleased to see more businesses sharing our vision of the future.  I am not saying these solutions will solve all of the world’s problems, but it gives me hope that our best and brightest are tackling real world problems and not merely catering to the latest fad.

Jerry Nemorin is Founder and CEO of LendStreet Financial Inc., a social lending platform whose mission is to help people get out of debt, rebuild their credit, and get a fresh start.

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

I’ve always believed that the ability to multitask is destructive, a crock or, at best, wishful thinking, as I’ve said more than once.

Of course, I’m frequently told that multitasking is the only way to function and that if I were younger I would understand that, blah, blah.

Founders and startup people are especially likely to tell me my advice to focus is dinosaurian, so I’m delighted every time I read the same comments from experts, such as Y Combinator partner Sam Altman,

“For whatever reasons, many founders love to spend time on anything else—worrying about the details of corporate structures, interviewing lawyers, doing a really good job bookkeeping, etc.  All of this pretending-to-run-a-company gets in the way of actually running a company.”

And recent research from Stanford University on the impact of heavy media consumption.

Results showed that heavy media multitaskers  are more susceptible to interference from irrelevant environmental stimuli and from irrelevant representations in memory. This led to the surprising result that heavy media multitaskers performed worse on a test of task-switching ability, likely due to reduced ability to filter out interference from the irrelevant task set.

I’m not going to write more, because I would rather you read Altman, Stanford and my old posts and the links in them—I’m sure their opinion will carry more weight.

However, I’m doubtful it will make a difference, since most people consume stuff they don’t want to know through a “but me” filter.

Image credit: HikingArtist

I attended the Founder’s Showcase last Wednesday, and found it tremendously interesting from several perspectives.  As a founder who has started several companies, of which a couple have been successful, it is really interesting to see how the startup and funding environment has changed.

The basic format of the Showcase is that companies are selected to pitch to a panel of VCs who then provide them with feedback and advice after having had a chance to ask questions after the pitch.  Just hearing the feedback from the panel was very interesting, but also to see the different types of companies that were being pitched.  There are a lot of very interesting startups out there…

After sitting through a day of pitches, feedback and interacting with other founders, my main takeaway is that things are getting a lot harder out there for founders who are not well connected in the Silicon Valley environment.  There are a plethora of good companies out there that have created interesting businesses and technologies.

To get funding today, it is not enough to have an idea.  It seems that what is required is to have removed a significant portion of the risk factors (technology risk, development risk, team risk, market risk and business model risk) from the venture to get an investment from an Angel or VC.

Professional and semi-professional investors (VCs and Angels) have so many deals to choose from that, of course, they will choose the ones that will bring the highest potential return.  And this has a strong correlation with low risk and rapid turnaround to the next funding round.  Having a completed product and some customer traction implies that much of the risk has been assessed and surpassed, making an investment very attractive.  If you don’t have a product and paying customers, know that this is what you are competing against.

Some time ago, it was easier to get funding based on an idea or a prototype, but this seems to no longer be the case in the majority of companies.  So founders have to be willing to sacrifice all the way to product and customers before they receive funding.

Another main takeaway from the Founder’s Showcase was the glaring lack of companies doing deeply technological things.

Most of the businesses presenting were essentially new business models with at web/app frontend for a particular industry segment.  Almost none of the companies were working on difficult technological innovations.

But speculation as to why this is must be left for a future post.

KG Charles-Harris is CEO of Emanio and a special contributor to MAPping Company Success.

Wanting to make a difference has been one of the top three reasons for people of all ages and backgrounds to join or leave companies for decades and it’s only increasing with today’s attitudes.

Many of today’s most desirable new grads are applying to Venture for America, a nonprofit organization that selects fellows to work in cities, like Detroit, that aren’t the usual magnets for top, young college grads from the most elite universities.

They are turning down six-figure salaries with prestigious firms for the chance to have real impact.

This is the same reason that most people join startups—small team means a bigger impact by each person.

Outsiders and the media most often focus on startups as a path to riches, but that’s not what’s uppermost in the minds of most candidates.

While many crave work on the bleeding edge, whether of technology, medicine, business process innovation or something else, 99.9% are there to have an impact and make a difference.

Even if the effort doesn’t succeed, they want to look back at that time with satisfaction and know that their own actions helped get it as far as it went.

Efforts like Venture for America and the opportunities they create are the best chance to change the course of potential failures that permeates our country.

We need many more of them.

Image credit: Venture for America

When an entrepreneur spent millions on his wedding during the original dot com boom a very cynical friend of mine commented, “If the wedding costs that much what do you think the divorce will cost?”

While there are still a lot of over-the-top multimillion dollar weddings being staged by the current crop of entrepreneurs (more money than brains IMO), there are plenty of others who aren’t jumping on the lavish bandwagon.

Those of you who think it’s no big deal to indulge yourself after striking it rich might want to consider the case of Halsey Minor, founder of CNET.

Minor was 38 when he started CNET and sold it to CBS for $1.8 billion when he was 42.

But that wasn’t all.

He then started and sold two more companies, Vignette Software and Snap/NBCi, and was a major investor and one of the largest shareholders in salesforce.com.

He just filed for personal bankruptcy.

That’s a hell of a lot of money to burn through in five short years.

Halsey still has $50 million in assets, but that doesn’t go far when you owe $100 million.

For some, it’s wine, women and song; for Minor it was houses, hotels, horses and art.

Perhaps startup founders and employees, along with lottery winners, should adopt caveat emptor as their default before cashing that check.

Flickr image credit: magerleagues

The traditional sources of seed funding are savings, credit cards and friends/family; now crowdfunding has been added to the list.

Recently I suggested Kickstarter to a founder, but he rejected it out-of-hand.

I was surprised, because both his idea and funding requirements seemed made for that solution.

But it was his reason for dismissing it that really blew me away; he believed it wasn’t a “professional solution” and would diminish the success/value/ of his company.

His attitude was even more surprising, since he is in his mid-twenties. I asked him why he felt that way and he said he frequently turned to more experienced people when considering business decisions, especially financial.

He said there were several financial executives among this group and that is who he queried. All held or had held senior financial positions in Fortune 500 companies and they agreed that having crowdfunding in the company’s history might make it difficult to go IPO. An additional two, who are lawyers, warned him that the law hadn’t caught up with the world and that crowdfunding might blur ownership in the event of an acquisition.

Listening to him, Monday’s post about the embrace of peer pressure to the point that opinions on everything are open to review and need to match what is considered “correct” as dictated by social media took on a whole new meaning and pointed out a glaring problem.

To which crowd do you listen?

Flickr image credit: Cambodia4kids.org Beth Kanter

I’ve worked for years with the tech world, particularly startups and young/growing companies mostly run by guys.

Too often by guys who know it all and/or have little use for wisdom that comes from outside the tech world.

What I tell them is that wisdom comes from everywhere and every level and if they plan to succeed they had better open their minds along with their ears.

What can you learn from an entrepreneur who sells dog food?

A hell of a lot, actually.

Jen Guzman is C.E.O. of Stella & Chewy’s, which sold $8 million worth of organic veggie/raw meat frozen or freeze-dried dog and cat food nationally in 2010 and making it number 424 on the Inc. 5000 in 2011.

Eight million dollars isn’t chickenfeed and I know of no business of any size that wouldn’t kill for comparable testimonials.

Here are three major (IMO) points that any founder would do well to remember.

The right candidate isn’t always a star or the strongest or possess the hottest skills.

The right one is the one who fits best.

I try to hire the best person for what the organization needs, and who can fit into the culture, rather than just hiring the person with the strongest résumé.

These are great questions to ask a candidate, but paraphrased, they are also great questions for investors to ask an entrepreneur.

Why do you want this job? Why do you think you would be good at this job? And what do you think are the five most important qualities or things that you need to be good at this job?

Guzman came from private equity where one of her jobs was assessing potential CEOs.

I looked for people who could explain their business and how they were going to succeed in simple terms, as in: “This is my business model. This is why it works. This is what I think we’re going to achieve next year, and this is how we’re going to do it.” Someone who can boil it down to something very simple, to me, really has their arms around their business. If it’s too complex, how are their employees going to follow it?

The key here is “simple;” a term often seen as offensive when used in conjunction with any one, let alone all, of her questions.

Out of the hundreds of entrepreneurs I’ve talked with over the years maybe a third of them could respond well to these questions.

Be sure you are one of them.

Flickr image credit: Stella & Chewy’s

I hear the viral thing from a lot of entrepreneurs; it has practically achieved Holy Grail status when talking about marketing.

Not just from entrepreneurs, but from companies across the spectrum of size, industry or any other category you can think of.

Ask anyone directly or indirectly involved about their latest marketing campaign and you’ll likely hear someone say, “we hope it goes viral.”

I’ve also heard when something went viral that it was “more luck than brains,” but I never believed it.

I assumed that, like most thing that succeed, it was mostly brains with a dollop of luck that made it happen.

Now Jonah Berger, a Marketing professor at Wharton has proven my gut instinct was accurate.

Berger did the research and just published the results in Contagious: Why Things Catch On; not only the proof, but some good guidance on increasing your viral chances.

Word of mouth isn’t random and it’s not magic. By understanding why people talk and share, we can craft contagious content.

He found six key drivers that shape what people talk about and share; he calls them STEPPS, an acronym for

• Social Currency,
• Triggers,
• Emotion,
• Public,
• Practical Value, and
• Stories

So, the next time you craft a marketing scheme that includes a desire for viral think about STEPPS and even luck, but forget about hope.

Flickr image credit: seanrnicholson

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

Jody Foster is chair of the department of psychiatry at Pennsylvania Hospital; immediately after receiving her MBA she has a very different experience assessing startup teams for VCs considering investing.

…to understand who the main players in that company were, how the team functioned together, what kinds of personalities they had, and which ones needed watching as the company, and the venture capitalists’ investment, grew.

I’ve said for years that people aren’t faucets and can’t/don’t turn their feelings and attitudes on and off depending where they are; Foster puts it differently.

“People are people, no matter what industry they are in, and they bring their basic personalities to work,” says Foster. “When they act out in inappropriate ways — by, for example, bullying employees who work under them, compulsively micro managing, displaying narcissistic tendencies — it can be devastating to the entire workplace.”

Founders need to evaluate potential new hires as objectively as Foster would.

That means ignoring their skills and looking at the whole person warts and all.

Your team can survive a person with great attitude, but weaker skills, until they strengthen and grow.

What your team won’t survive is the so-called star with superb skills who brings with them the traits Foster mentions or any that are in direct opposition to the culture you are creating.

They will destroy you.

Image credit: HikingArtist