Up and Running Blog

October 2010

Seeing Entrepreneurs Through Investor Glasses

by Tim Berry on October 29, 2010

What? Entrepreneurs stretching the truth when talking to investors? Neil Patel has done 15 investments in 30 months, and he says:

I can’t even count the times I have run into entrepreneurs who embellish. And it isn’t just bad entrepreneurs who embellish; good ones have a tendency to do the same thing as well. The worst is when they tell you everything is great and how the company is doing really well, but a week later they mention how they’ll be out of cash within the next 30 days.

Oh dear: That’s after 30 months as an angel investor. It doesn’t bode well for the future.

I got this from Neil’s very interesting “What I Learned About Entrepreneurship Through 15 Angel Investments,” which he published yesteday on his QuickSprout blog. I was intrigued by the title, browsed the blog a bit, and I’m impressed. I love this quote, from his About page:

I am dumber than I look — Dumb? That’s right, I am not the smartest person out there. I have made a ton of entrepreneurial mistakes that have lost me a lot of money. By reading about my mistakes and learning from them, you’ll increase your odds of success.

That’s well done.  It definitely makes me want to read more.

So, turning back to what Neil’s learned, he’s got some really practical advice here. Like, for example, his “Don’t account for revenue before it hits your bank account:”

Why would you tell your investors that you are going to make $60,000 this month when the month just started? Wait till the end of the month to count your money. Plus if you start accounting for revenue that hasn’t come in yet, you can get yourself into a really messy situation. especially if you start spending that money before it comes in.

And there’s this one, his “business ideas are a dime a dozen, great entrepreneurs aren’t.”

I’ve learned the hard way that business ideas are a dime a dozen. Every time I invested in a cool idea and not the entrepreneur, it ended up losing me money. I don’t think that investing in great entrepreneur guarantees that you’ll make money, but it will at least give you a better shot.

That makes sense to me too. Nice post.

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Sonia and I List 10 Lies of Entrepreneurship

by Tim Berry on October 28, 2010

This list started with 5 Lies of Entrepreneurship on Sonia Simone’s Remarkable Communications blog. She listed:

  1. That entrepreneurs are some kind of special breed of human being; that they’re different from you or me.
  2. That a business has to eat your life.
  3. That entrepreneurs have to be crazy risk-takers.
  4. That there’s a Right Way and a Wrong Way.
  5. That having your own business is all or nothing.

I’d quote her explanations here, but she doesn’t include them. She asks you for your e-mail and sends them to you.

I will add for my own part that even without explanations I like all five, and I agree that they are all common lies. No. 1 calls all those “traits of entrepreneurs” posts into question, including ones that I’ve written. But that’s OK with me; I don’t think those generalizations apply. They’re fun, yes, and they generate interesting discussions, but entrepreneurs are so different, one from the other, that the idea of the special breed doesn’t hold water.

I’ve posted myself before how entrepreneurs aren’t necessarily risk takers, and why I don’t believe in the concept of best practices, so of course I agree with lies three and four.

And her lies Nos. 2 and 5 are about work-life balance, which I believe in, so those are easy for me, too.

Here are my additions, lies number 6 through 10:

6. Being an entrepreneur means being your own boss.

Not true. With due respect to some good writers whose work keys on the be-your-own-boss theme: If you build a business your business, and especially your customers, are your boss. Or else you go under.

7. If you’re stubborn enough, and you keep trying, you’ll succeed.

That one isn’t necessarily true. A business that doesn’t offer something people want to pay for will fail no matter how stubborn the entrepreneur. It has to be a decent business, offering some value, to make it. Running your head into a brick wall repeatedly doesn’t make you successful.

8. Do what you love and love what you do.

That’s closer to true than some of these other lies, but it’s more like half true, because doing what you love doesn’t make it alone. You have to do something other people will pay for, too. Loving your art doesn’t mean other people will pay for those greeting cards. Not everybody can be a professional athlete, artist or musician. Out here in the real world, we make compromises.

9. You have to be first.

No, you don’t. Not true. You have to offer value and position yourself effectively. Being different is much more important than being first. Second and third movers win markets all the time. There is such a thing as “first mover advantage,” but it’s only one factor. Visicalc was the first spreadsheet, WordStar the first personal computer word-processing product, and dBaseII was the first personal computer database management software. Altair and MIPS made personal computers before Apple or Radio Shack. Atari came before every video game company that still exists.

10. The best idea wins.

Ha! Good marketing with mediocre product often wins over bad marketing with good product. Showing up makes a huge difference. Offering value makes a huge difference. Business is littered with good ideas that failed or, more accurately, companies that failed despite having good ideas (because in many cases the good ideas survived, but the companies didn’t).

Some would say the best marketing wins, others the best product, others the best customer service, maybe the best location. And what about all those businesses that don’t start with new ideas, just variations on existing ones?

(Image credit: Victor Correia/Shutterstock)

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Jump To Your Own Work/Life Conclusion

by Tim Berry on October 27, 2010

Call this a do-it-yourself blog post: establish your preconceived notion first, then do the reading to reinforce what you wanted from the beginning. For this post, we’ll do it with work/life balance in your startup.

If you want to justify total lack of balance, read I don’t Believe in Work Life Balance as a Startup Person, and How to Save Money Running a Startup. And stop there. The first one is a discussion on thefunded.com and the second is a blog post by Jason Calcanis. In that second one, pay close attention to his tip number 11.

And if you’d rather justify the life side of the work/life balance, read read Pamela Slim’s Unicorns, rainbows, and work-life balance on her Escape From Cubicle Nation blog, and Chris Brogan’s Pay Yourself First. Both of those were posted yesterday.

Hmmm … isn’t this upside-down logic exactly what we do in politics these days? Jump to the conclusion first, then read only the arguments that reinforce the conclusion? But that’s an idea for a different blog post.

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Contagious Media and Building Traffic

by Tim Berry on October 25, 2010

The video here (warning: language) was posted last week as Dog Island: A Viral Meetup Case Study on jonsteinberg.com. Jon is president of Buzzfeed. It’s a great story that has the audience laughing all the way through. It’s also a true story. And it has some lessons in it about getting attention, getting traffic, and building web buzz.

The speaker, Paul Berry, was a grad student at NYU when he and a partner did the Dog Island hoax. He’s now CTO of Huffington Post.

If for any reason you don’t see the video here, please try the link to the story on jonsteinberg.com or click here for the youtube site.

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The Secret of Successful Marketing

by Carolyn Higgins on October 21, 2010

Article by Carolyn Higgins

You’ve been in business a while.  You’ve been buying advertising, tweaking your website, spending a fortune on yellow pages and attending all kinds of networking groups. Yet your pipeline is empty; you don’t know from  where your next job, project or sale is going to come– or even if it will come.  You have no idea how you are going to pay next month’s invoices, salaries and rent.  What do you do? If you’re like most small business owners you do the only thing you know how; you buy more advertising and other marketing tactical stuff and hope this time will be different.

But have you really thought about this “strategy”?  Why would you dump more money  into more advertising,  more website tweaks,  more yellow page ads,  more postcards and  more networking that aren’t working?  Are you hoping this time will be different? Hoping you’ll find the Holy Grail, that Secret Sauce of advertising?

So many small business owners keep spending on the Marketing tactics hoping that one of these days, they’ll “get it right”.  Albert Einstein defined insanity as: “doing the same thing over and over again and expecting different results”. Isn’t it time to stop the insanity?

What’s the secret to successful marketing? The only way to “get it right” is to stop the insanity; take a step back and do some basic groundwork – develop a Marketing strategy first. Here is what a Marketing strategy can do for you:

  1. Help you figure out who in the world is most likely to buy what you are selling and where to reach them. For example,  as the owner of a high-end hair salon – the lady who loves her $8 mall haircut is NEVER going to come to your salon- so why market to her? Just because she has hair doesn’t mean she deserves for your valuable marketing dollar.
  2. Spend less money and get more qualified leads. If you know who is most likely to buy you can stop wasting money chasing people who will never buy.
  3. Make you stand out in the marketplace. Do you know how you are different from your competitors?  If you say “Service” or “Fair Price” you’re missing the mark. Who doesn’t offer great service and fair prices?  Developing a marketing strategy will help you find out what that difference is – and how to use it to attract the right customers for your business.
  4. Get a greater ROI (Return on Investment) for your Marketing tactics. Imagine doing some of the “stuff” I mentioned above and actually seeing results? A Marketing strategy can do that for you. Knowing a few basics about your business and putting a little strategy behind your Marketing spend will do wonders for your ROI.
  5. Put a system behind your marketing so you can consistently work prospects down the funnel and into your pipeline.  A  Marketing strategy will help you build a process that continuously feeds prospects and leads into your funnel; when business is slow – and even when it’s busy. A Marketing strategy will help you avoid an empty pipeline.

Investing in a Marketing Strategy for your small business is the best investment you will ever make. It could save you thousands in the long run- and make you money too. Really- stop the insanity, try something different.

ducttapemarketingbadge Carolyn Higgins is the President and founder of Fortune Marketing Company. Her personal mission is to help small businesses stop wasting money on advertising and promotions that don’t deliver and help you implement an effective marketing system that will bring you more customers – consistently.

For more information about Carolyn Higgins and Fortune Marketing Company please visit http://www.FortuneMarketingCompany.com.
Email chiggins@fortunemarketingcompany.com or call us at 707.718.4489.

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What If Somebody Else Launches First?

by Tim Berry on October 21, 2010

A friend asked me this in twitter:

What to do when you’re launching a company and competition launches 3 months before you ?

Build on top of what the competition is doing. Slipstream. Let them pave the way, let them break the ice, and you follow along with a different angle, or different spin. I’ve had personal experience with this problem. It was a couple of decades ago, but it’s perhaps still valid. I was consulting with Therese Myers of Quarterdeck Office Systems in the early 1980s  when VisiCorp came out with VisiOn just a few months before Quarterdeck’s release. VisiOn and VisiCorp failed within a year or two, but Quarterdeck succeeded and was acquired by Symantec in 1987.

That’s in a post on my main blog, titled Second or Third Mover Advantage. My conclusion on that one was:

So yes, being an original is much more satisfying, and if you can seize that advantage and keep it, it’s great business. But being second or third works well too. It’s sometimes easier to explain.

And just in case you think I’m inventing this consolation idea to make you feel better, I posted The Myth of the New and Only Idea on this blog earlier this month. It said:

I say, so what? Is there still a need? Has it been done right? Is that one existing company serving the entire market perfectly, so that nobody else can jump in? Apple wasn’t the first personal computer company, Federal Express wasn’t the first courier/delivery company, and Google wasn’t the first search engine. Microsoft wasn’t the first personal computer operating system. So?

That’s pretty much the same case here. Don’t worry. Go for it.

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Measuring Your Startup's Progress, or Not

by Tim Berry on October 20, 2010

Ah yes, sales. Early sales are the best financing you can get. Early sales are the best validator of sales to come. And early sales are the best way to measure a startup’s progress.

But then that’s the ideal, and the world is full of less than ideal. So what do you do if you can’t show sales? That’s a good question. David Miller of Campus Entrepreneurship recently pointed out Ten Ways To Measure A Startup’s Progress by Martin Zwilling, on Forbes.com. It was published this past summer, so it’s not really out of date. And I like most of it.

Martin calls these.

10 signs of tangible progress they look for — and that will keep you going the extra miles until your new venture really gains traction.

But before I comment, here’s the list.

  1. A documented business plan
  2. Realistic objectives and milestones
  3. A well-rounded team
  4. A qualified advisory board
  5. A working prototype
  6. An honest-to-goodness sale
  7. Registered intellectual property
  8. Letters of intent or endorsement
  9. Personal investment
  10. Expert status

This is good stuff, and I’m happy to find Martin Zwilling on Forbes.com, but I don’t buy all of this without some healthy skepticism. Specifically:

  • I want the plan to show that it’s reviewed and revised regularly, and is part of the management process.
  • I’m skeptical about advisory boards. Martin says, “If you can convince a couple of industry experts or experienced executives to join your board, you’ll get serious traction with investors.” I want to know how committed they are, how they are compensated, and what is their actual role with the company. I’ve seen truckloads of advisory boards that are just lists of well-intentioned people who mean to help but won’t ever have enough time unless there’s some real compensation.
  • That honest-to-goodness sale should be No. 1. Not No. 6. But in Martin’s defense, he sets this up as a startup that doesn’t have traction yet.
  • Having registered intellectual property is better than not having it, but don’t think it means that much anymore. Patents mean nothing without the bite of enforceability, and even good patents mean nothing without a budget for enforcement. And people get around patents and copyright all the time. Sad, but true. That and $3 or so will get you a cup of coffee.
  • Letters of intent or endorsement? Only if they really hold up to scrutiny. When they’re weak, they’re bogus.
  • Personal investment means very little to me. It helps a little, but there’s the concept of sunk cost, referring to money spent that will never produce results.

So there’s my opinion. Some of these measuring sticks are better than others. And I bet Martin would agree with me on most of my qualifiers here. And finally, when in doubt, sell.

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Marking and Measuring Online Influence

by Tim Berry on October 19, 2010

It’s very clear to me that we’re heading toward an expanding business landscape with a lot more opportunities for small niche players everywhere. The gatekeepers are disappearing as people find volume connections through technology. This means you can build business awareness in new ways; traditional gatekeepers, like publishers, editors and advertising media, are no longer the concentration point they used to be.

This video, taken from a conference earlier this month in Victoria, British Columbia, is a talk by Megan Berry, marketing manager of Klout.com, that explores what online influence is, why you want it and how it can be measured.

And if for any reason you don’t see the video here, then here’s the link: bchannelnews.tv » Megan Berry on Klout.

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Define Facebook Success

by sara on October 18, 2010

“We’re going on Facebook!”
“Great! What will we do there?”
“We’ll be on Facebook!”
“Umm, ok, yes, but what will we DO there?”
“Do?”
“Yes, do? What are our goals? What will success look like?”
“…”

Sound familiar? Everyone’s excited about social media, but in order to make it work for your business, you need to understand what it is, what it isn’t, what you want to get out of it, and what success looks like. You wouldn’t start a direct mail campaign without marketing goals, so why start your social media campaign without them?

Given that any fans you get are likely coming for tips and specials, have you succeeded if you provide them? Or do you want to reach a certain number or percentage of existing customers, or track your contacts by their response to your posts?

Sprinkles, a cupcake bakery, uses social media instead of traditional advertising. Between April and November 2009, they grew their Facebook fanbase tenfold, to 70,000, through the simple method of giving away a free cupcake to fans who got that day’s Facebook password.

This is a great method, not only for increasing fans, but for creating a trackable interaction with their actual store. How many people come in each day and use the password? Does that promotion vary by time of day or day of the week? Do certain passwords bring in more customers? What else do free cupcake recipients buy when they come in?

Remember that your plan is only successful if it can be implemented, measured, and tracked.

Sara Prentice Manela
Editor

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Things We Take For Granted. Like Water

by Tim Berry on October 15, 2010

Yes, water. Today is Blog Action Day and we’re talking about running water. If you’re reading this blog post, you’re on a computer, and you probably take water for granted. You turn the faucet.

So do I. It’s easy to forget. Three billion people live without running water within a kilometer of their homes. The things we take for granted.

I was just remembering. When I lived in Mexico City in the 1970s we had months at a time when we’d get water through the pipes of our middle-class apartment in two 2-hour shifts per day. A couple hours in the morning, a couple hours in the evening. We had small kids, diapers, and all that.

It was temporary. And it was grueling. And it was nothing, absolutely nothing, compared to the quarter of the world that doesn’t have running water at all.

Entrepreneurs: here’s a problem. Solve it. One village, one area, one project at a time.

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