Newsletter from
Adam McGowan
Entrepreneurship
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5-4-3-2-1 Countdown for Entrepreneurs (8/23/23)
5
Keys to effective networking
CREDIBILITY.
While you may be generally satisfied with your reputation, you should try to better understand how referrers and allies view you because their opinions determine how strongly they recommend you to others. In eliciting candid critiques, you may hear things that are unsettling, unfair, even painful, but you’ll gain insights that will help you evaluate and improve your business reputation.
CREATIVITY.
To stand out from your competitors, it’s not just your Unique Value Proposition that brands you -- it’s the creative way you present and explain that UVP. Creativity is key to entrepreneurial success.
CONNECTIVITY.
Your connections are crucial, of course, and quality networks are like compound interest: their value grows at an increasing rate. Be sure to invest your time in ways that build “network wealth.”
CLARITY.
You should write as clearly for networking (emails or Zoom introductions) as you do when writing a pitch for a formal presentation. While you don’t want to sound stiff or scripted, you do want to have the clarity and confidence of a persuasive speech.
CARING.
In networking you should be more than just courteous and considerate; you should be thoughtful about how to help those who deserve encouragement and advice. As I noted in a video, “Views of our startup ecosystem: good, bad and ugly”, the startup community genuinely pays it forward. “Whether it’s mentoring, networking, advising or other assistance, there’s more mutual support here than I’ve seen in any other business sector.” We should always strive to be worthy of that mutual support.
4
Definitions of leadership
Which of these definitions best reflects what you practice and preach as a leader?
“A leader is one who knows the way, goes the way, and shows the way.”
- John Maxwell, author of “the 21 Irrefutable Laws of Leadership”
“My own definition of leadership is this: The capacity and the will to rally men and women to a common purpose and the character which inspires confidence.”
- General Bernard Montgomery, WWII British Field Marshal
“Leadership is lifting a person's vision to high sights, the raising of a person's performance to a higher standard, the building of a personality beyond its normal limitations.”
- Peter Drucker, author known as “the founder of modern management”
“The first responsibility of a leader is to define reality. The last is to say thank you. In between, the leader is a servant.”
- Max De Pree, author of “Leadership is an Art”
3
Rules for “failing successfully”
In this 3-minute video I offer advice to improve business planning. Instead of following the motto, “fail fast” (trying to make losses happen quickly), I urge startups to “fail successfully” by following three rules and executing four steps.
2
Articles to inspire artistic entrepreneurship
“The Hidden Business Lessons in These Hit Songs”
“Tricks of the trade from professional artists, gallery owners, and coaches”
1
Flashback on how startups should address uncertainty
Fifteen months ago, I wrote about 4 forms of uncertainty – and 4 ways startups address it. Here is a passage from that commentary:
Uncertainty can be unsettling. How should founders view and address uncertainty?
RESEARCH. Face the uncertainties and use your doubts as prods to do more and better research. Through experiments and testing, turn unknowns into now-knowns.
REASSESS. If uncertainty turns into certain trouble, reevaluate your options. “Wisdom consists of the anticipation of consequences,” observed author Norman Cousins.
REVISE. If your original plan doesn’t survive first contact with reality, that’s all right. Make changes to your strategy, tactics, and priorities, as needed. Change forces change.
REJUVENATE. By turning uncertainties into challenges, and challenges into opportunities, you can refocus your team and reinvigorate your endeavor.
Stay safe, stay happy, stay in touch!
Adam
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(Newsletter from Adam McGowan Entrepreneurship)
5-4-3-2-1 Countdown for Entrepreneurs (7/12/23)
5
Technologies that will transform our world
In case you missed it, an article in Forbes magazine last year by Bernard Marr identified “The 5 Technologies That Will Change The Future Of The Human Race.”
The author said these technologies will have “the most profound impacts on our society and the human race as a whole.” If you reflect a bit, maybe you can guess what they are. SPOILER ALERT: Artificial Intelligence, Gene Technology, Human-Computer Interfaces, Extended Reality, and 3D Printing.
5 years from now, how do you imagine these technologies will have changed your life?
4
Suggestions for when a startup should raise funds
In this three-minute video, I offer some fundraising advice on when, why, who, and how.
3
Leaders are re-inventing “New England Invents”
New England Invents is “a dynamic non-profit that promotes, protects, and educates independent inventors.” By providing low cost, high quality educational resources and guidance, NEI helps inventors learn how to turn a promising idea into a patentable, manufacturable, commercial product.
George Peters is the Founder and President, Lexa Gandolfo is the Executive Director, and Chris Donovan is Director of Strategic Development. They are all impressive innovators, and they are growing NEI to make it a greater resource for independent inventors of all backgrounds. By empowering inventors throughout the region, NEI will help spark innovation and commercialization that will, in turn, spur economic growth.
To join or sponsor New England Invents, contact George, Lexa, or Chris at the NEI site.
2
Excerpts from the book, “The Mom Test”
I enjoyed Rob Fitzpatrick’s book, “The Mom Test: How to talk to customers & learn if your business is a good idea when everyone is lying to you.” Here are two snippets:
“The world’s most deadly fluff is: ‘I would definitely buy that.’ It just sounds so concrete. As a founder, you desperately want to believe it’s money in the bank. But folks are wildly optimistic about what they would do in the future. They’re always more positive, excited, and willing to pay in the imagined future than they are once it arrives.”
“We go through the futile process of asking for opinions and fish for compliments because we crave approval. We want to believe that the support and sign-off of someone we respect means our venture will succeed. But really, that person’s opinion doesn’t matter. They have no idea if the business is going to work. Only the market knows. You’re searching for the truth, not trying to be right. And you want to do it as quickly and cheaply as possible. Learning that your beliefs are wrong is frustrating, but it’s progress. It’s bringing you ever closer to the truth of a real problem and a good market. The worst thing you can do is ignore the bad news while searching for some tiny grain of validation to celebrate. You want the truth, not a gold star.”
1
Flashback on what motivates entrepreneurs
Sixteen months ago, I wrote a commentary about two factors that motivate entrepreneurs: Risk and Reward. Here is a passage from that analysis:
Beyond the hope of earning a financial bonanza – which some consider “the American Dream” -- founders find their work rewarding in many ways. Here are four key rewards:
Purpose. A sense of purpose is probably the most rewarding byproduct of creating something out of nothing. You start with an idea, you develop it, you put money behind it, you collaborate with others to make it real. You become mission driven. But more than that, you become a pioneer who dares to change the world. That’s fulfilling in a way that can’t be measured by money or any other metric.
Power. By power I mean, empowering. If you think about it, taking the initiative in conceiving and creating a new thing – whether a product, service, project, or strategy – is inherently empowering; you have given that power to yourself by taking the leap.
Prestige. Are you surprised to see the word, prestige, in this list of rewards? Just to be honest, it’s one of the appealing things about entrepreneurship, as is true of other distinguished professions. There’s prestige in succeeding against the odds and creating new jobs and opportunities for others. That’s earned prestige, not reflected glory. And beyond any recognition or gratitude for success, founders rightly feel proud to be part of a community of individualists – plucky, inventive leaders.
Principles. To live according to moral principles is its own reward, and true success as an entrepreneur requires integrity, reason, and compassion to truly earn and enjoy “the good life.” But I also mention “principles” in the more business-like sense of learning what works, grows, and endures through trial-and-error. “Best practices” can be adopted and adapted by observation of what others do, but the thrill of discovering your own principles of research, analysis, product development, etc. is part of the entrepreneurial fun. We learn by trying, failing, and trying again. It's that never-ending process that leads us to appreciate how fortunate we are to be lifelong learners in work that constantly challenges us to be innovative.
Stay safe, stay happy, stay in touch!
Adam
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(Newsletter from Adam McGowan Entrepreneurship)
5-4-3-2-1 Countdown for Entrepreneurs (6/8/23)
5
Superpowers of a Chief Entrepreneurial Officer
My belief that startups need a special kind of CEO -- a Chief Entrepreneurial Officer -- is a contemporary notion, but I’d like to highlight qualities that characterize such a CEO by sharing ancient insights from Marcus Aurelius, Roman Emperor, and Stoic philosopher.
INNOVATION
“Most of what we say and do is not essential. If you can eliminate it, you'll have more time, and more tranquility. Ask yourself at every moment, 'Is this necessary?’''
INSPIRATION
“Look well into thyself; there is a source of strength which will always spring up if thou wilt always look.”
VISION
“You have power over your mind – not outside events. Realize this, and you will find strength.”
COLLABORATION
“Whenever you are about to find fault with someone, ask yourself the following question: What fault of mine most nearly resembles the one I am about to criticize?... Be tolerant with others and strict with yourself.”
CONVICTION
“Never value anything as profitable that will make you break your word or lose your self-respect.”
4
Ways “Shark Tank” is not like the real world of investors judging a pitch
While the popular TV show has helped inspire millions to appreciate entrepreneurship, let’s hope that would-be risk-takers aren’t getting the wrong ideas about how to pitch to prospective investors. As we know, “reality TV” isn’t real. Contestants and “judges” are changed by knowing that they are being filmed, and with all the editing, staging, music... well, it ain’t the real world.
Here are a few ways “Shark Tank” might be giving folks the wrong impression:
Silly stunts, lame singing, and wacky costumes are a plus. In the real world, that’s not going to impress a prospective investor. They’re hoping for serious people, not a laugh.
Teaming up with other judges or trying to upstage a rival judge. In the real world, investors on a pitch panel are not hoping to go into business with another investor who happens to be there, nor do they look for opportunities to comically insult one another.
Emotionally connecting with contestants who share sad stories about their struggles. It’s understandable that celebrity judges don’t want to appear unsympathetic to the vast TV audience. Indeed, they all want to please their fan bases, employees, and customers by being encouraging and supportive. But in the real world, if a contestant makes the pitch about their emotional journey, they can seem desperate, rather than confident.
Decisions are made in 10 minutes, then contestants are passed on to judges’ staff. In the real world, pitches, Q&A, and advice from judges goes much longer than a tightly edited TV segment. That should be good news for would-be entrepreneurs, but it does mean they need to do a lot more work on the presentation, both in substance and style. And the bad news is that, unlike Shark Tank, the investor/judges aren’t usually billionaires who can assure the contestant that they’ll have their expert staffers help with management, marketing, distribution, and finance. No, in the real world, if you don’t have realistic answers on how you’d tackle such things, no sharks will rescue you.
3
Elements of a startup’s “Unique Money Model”
Startups should develop their own “Unique Money Model.” To do that, their CEOs must see clearly into three financial realities: Investment, Cashflow, and Earnings. (I.C.E.)
Entrepreneurs must focus on these elements because they are the lifeblood of a venture. Generally, startups don’t succeed or scale without them.
To illustrate how to apply ICE, let’s say you’re facing a simple choice: Path A or Path B.
To start, first answer the question, “Which option could better help us raise the money we need to help us secure investment?”
Second: “Which option would be better for our cashflow?” This could involve reducing expenses, increasing revenues, or maybe paying bills later or collecting revenue faster.
And third, “How does each option impact our path to profitability? Which creates more earnings for the business? And when?”
These questions are not easy to answer. Usually they require some research, analysis, and assumptions. That’s the reason Decision Strategy consumes so much of my focus in consulting. But applying ICE has one great advantage — it strips away the noise: metrics that don’t matter, and options that don’t make sense in terms of investment, cashflow, and earnings. While it might not make decision-making easy, it makes it clearer, faster, and more realistic.
2
Sources about A.I. you might want to check out
“By far, the greatest danger of Artificial Intelligence is that people conclude too early that they understand it,” said computer scientist Eliezer Yukowsky. So, in that spirit of wariness and humility, let’s learn more about it...before our species goes extinct. (Joke?)
NewScientist has “coverage of AI that explores its potential, pitfalls and ethical issues.”
TechTarget cites “9 top applications of artificial intelligence in business”
1
Flashback on the how-to of Customer Discovery
Fifteen months ago, I shared this advice in the newsletter:
“Most startup customer interviews are totally useless because humans are terrible at seeing the future. And we interviewers are doing it wrong: We’re always asking people what they ‘would’. If this product solves a problem, would you buy? When you buy, what would you pay? How often would you use this? What feature would you add?
“We unknowingly ask everyone to speculate. And we get really unreliable responses but, to us, they sound great. Instead, we should be asking what people ‘did’. Did you try to solve this problem yourself? If so, how much time/money did you spend on it? How did that work out for you?
“We all love talking about what we’ve done. And in our stories the truth comes out. So, the next time you’re interviewing, quit focusing on the future. Concentrate on the past. Innovation will follow.”
Stay safe, stay happy, stay in touch!
Adam
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(Newsletter from Adam McGowan Entrepreneurship)
5-4-3-2-1 Countdown for Entrepreneurs (5/10/23)
5
Motivations of entrepreneurs
In this commentary, I dig into the five major motivations that inspire and sustain most entrepreneurs.
4
Elements in your pitch deck
No two ventures or products are alike, so startup pitch decks should not look alike. But there are four common elements in presentations to prospective investors -- story, solution, scale, and strategy -- with each element usually requiring multiple slides.
Let’s quickly review those elements.
Story. Define the “problem” in a narrative style.
Solution: Explain how your product solves that narrow problem.
Scale: Take your narrow problem/solution and explain how you will get it in front of a broader audience, i.e., turning it from a solution into a business.
Strategy. Define the ultimate “big” market you’ll reach over time, but also the narrow subset of the market you’ll attack first. Explain why this market will choose your product over alternatives (competitors as well as no action at all). And explain why you and your team are uniquely qualified to make this work.
You’ll then go on to other elements, like how, why, and when the venture makes money. (By the way, keep the financials/projections in the appendix.) And you will get explicit about what you want – aside from money, this can include advice, connections, etc.
But before you ask for money and other help, you must explain the four basic elements. So, think analytically and creatively about each element: story, solution, scale, strategy.
Think from the POV of investors yet stay true to your convictions about what customers want and deserve. Your sincerity is an invisible, fifth element. It won’t be expressed as a slide, but it can be persuasive too.
3
Ways a startup CEO should be “visionary”
In this commentary, I discuss how Chief Entrepreneurial Officers need X-ray vision about product, profitability, and people.
2
Leaders chat with me about their AI success story
I recently sat down with Dan Hess, co-founder and CEO of Squark, and Chris Selland, the venture’s new CEO.
This video captures our discussion of the the evolution of their business. And I think the conversation helps reveal the great, practical advantages of Founder-CEO collaboration.
1
Update on my idea that startups need to develop their own “Unique Money Model”
I’m working on a piece for the next newsletter about “I.C.E.” -- Investment, Cash-flow, Earnings. It will explain why and how startup CEOs need to see clearly into those realities to figure out the best ways to achieve profitability and scale. $o plea$e $tay tuned.
Stay safe, stay happy, stay in touch!
Adam
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(Newsletter from Adam McGowan Entrepreneurship)
5-4-3-2-1 Countdown for Entrepreneurs (4/13/23)
5
Insights about risk
“There is no greater country on Earth for entrepreneurship than America. In every category, from the high-tech world of Silicon Valley, where I live, to University R&D labs, to countless Main Street small business owners, Americans are taking risks, embracing new ideas and - most importantly - creating jobs.”
-Eric Ries, author of The Lean Startup
“If your business had no risk, you could go get a bank loan and call it a day. VCs like risks -- without them, venture capital wouldn't exist. But they need to be risks that VCs are good at assessing and managing.”
-Jose Ferreira, founder of AllCourse, Bakpax, and Knewton
“The same products, services or technologies can fail or succeed depending on the business model you choose. Exploring the possibilities is critical to finding a successful business model. Settling on first ideas risks the possibility of missing potential that can only be discovered by prototyping and testing different alternatives.”
-Alexander Osterwalder, author, and entrepreneur
“New technologies and approaches are merging the physical, digital, and biological worlds in ways that will fundamentally transform humankind. The extent to which that transformation is positive will depend on how we navigate the risks and opportunities that arise along the way.”
-Klaus Schwab, Founder of the World Economic Forum
“Determination, energy, and courage appear spontaneously when we care deeply about something. We take risks that are unimaginable in any other context.”
-Margaret J. Wheatley, author, and management consultant
4
Menus of graphic design trends in 2023
If you are brainstorming ideas for a website, product package, or pitch deck, it’s fun to check out new image options. These creative sites share lists of 2023 design trends:
Dribble – AI design, Abstract 3D, Holographic Surrealism, Modern Nostalgia...
Jukebox – Minimal vintage, Foil printing, Branded illustrations, Brutalism...
Creative Bloq – digital dreamscapes, multidimensional, angular, platform-agnostic...
JUST Creative – motion graphics, inclusive visuals, surrealist maximalism, virtual reality...
3
Tips to help you pitch, persuade, and close
Entrepreneurs constantly sell. Like it or not, it’s part of the job. In this short video, I offer advice on how to be more persuasive.
2
Questions for startup founders
What is your motivation?
Business startups typically strive to disrupt, grow, and achieve profitability. And there are other kinds of startups – social and nonprofits – motivated to serve a public purpose. But when you pitch to investors, how do you express your motivation? If your answer is in vague clichés, think again...introspectively, honestly, and from your audience’s POV.
If you offer a Unique Value Proposition, your motivation should sound unique, as well. Explaining it clearly, sincerely, and interestingly isn’t just a way to make a pitch more appealing; it benefits you in many ways, including the fact that it gives you the kind of confidence that only comes from clarity and conviction.
What is your market?
Is it a new market, an existing market, a re-segmented market, or cloning a business model from a foreign market?
And the more challenging question: How well do you really know your market?
In my commentary, “Nine common mistakes in developing tech products,” the ninth mistake was:
“Forgetting that your market appreciates your ‘game-changing, disruptive technology’ less than you do. Even the greatest technology advances require behavior change on the part of users. Many aren’t ready for it yet.
“As entrepreneurs, we’re in the business of solving problems by building ventures around new products and services. Unfortunately, we often forget that only our customers can determine whether our improvements are solutions worth their time. We might believe our innovative email replacement tool should kill off the inbox for good, and maybe much of the world does too. But unless lots of customers are willing to endure a big behavior change now, our ‘ahead of its time’ technology might be a bit too disruptive, and it could struggle to find success.
“With every challenge comes opportunity. When an entrepreneur strikes the right balance between too little and too much innovation, they can inspire a market to catch on to something new — one step at a time. Executed well, a small change today can drive a much bigger one tomorrow, and your ‘game-changing’ product can still find a path to breakout success. Just be careful not to bite off too much too soon.”
1
Update on my idea that startups need an exceptional kind of CEO -- a “Chief Entrepreneurial Officer”
My short video explaining this concept took off on LinkedIn, sparking 60,000 impressions and a lot of conversation. Judging from viewer comments, I think many entrepreneurs agree that there are three qualities that identify a Chief Entrepreneurial Officer: vision, innovation, and inspiration.
Stay safe, stay happy, stay in touch!
Adam
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(Newsletter from Adam McGowan Entrepreneurship)
5-4-3-2-1 Countdown for Entrepreneurs (3/15/23)
5
Biases that lead to bad startup decisions
Hindsight bias is our tendency to overestimate how well we can predict something -- but only after we learned what actually happened. It’s like after a movie ends with a plot twist that no one would have guessed, yet your friend claims, "Yeah, I totally saw that coming."
The more hindsight bias we apply, the more we convince ourselves that either the result was certain or we’re just really awesome at predicting the future. Both are dangerous. Startups are highly uncertain, and nobody has a crystal ball.
Why does it matter? Because if we convince ourselves that we clearly see the future, we will experiment less. We will challenge fewer assumptions. We won’t push for more validation. All those things lead to bad decisions.
Anchoring bias is our tendency to put too much faith in the first bits of information we collect. A classic example is when a salesperson jacks up the "full price" of an item so when they offer you a “special” discount you feel like you're getting a good deal.
Anchoring is an especially big problem when startups are still sizing the market opportunity or trying to raise money. We have the tendency to "start big" — big markets, big opportunities, big exits. When we do that, opportunities that don't reach that level feel less worthwhile, even if the original "anchor" was not realistic or achievable. That leads to bad decisions.
Availability bias is our tendency to be more influenced by information we receive more often or remember more readily. Imagine visiting the website of a new gadget. Afterward, Google starts blasting you ads for the product, and you think, “Wow, this thing must be great; it’s everywhere!”
In the startup ecosystem, success stories of a venture or entrepreneur are shared 10, 20, maybe 50 times more often than tales of failure. Compared to what is happening in real life, that is upside down. We have ample opportunities to produce success, but availability bias can distort the path to get there. Yes, it leads to bad decisions.
Self-serving bias is our tendency to link our successes to things we control -- like skill. And we blame our failures on things we don’t control -- like luck, or other people. Imagine a golfer hitting a great shot then humblebrags about all their practice time and coaching from a pro. But when their next shot flies into the woods, they ask, “Where the hell did that wind come from?”
Failures happen all the time, even for the most successful ventures, and failures create the best opportunities for learning, innovation, and growth. But when self-serving bias creeps in, we chalk up those “non wins” to tough luck. And that rationalization leads to bad decisions.
Confirmation bias is our inclination to favor ideas, information, and people that reinforce our perspective. An example is when CEOs promote and reward "yes men" more often than team members who raise critical questions and propose more unconventional alternatives.
The operational motto of a startup should be: “Challenge Every Assumption.” Given that startups are uncertain, the winners aren’t the ones who know the most at the start. The winners are those who learn the most as they execute.
Startup leaders blinded by Confirmation Bias learn less. They usually start with a strongly held belief they just “know” is true…and double-down. And yes, indeed, that leads to bad decisions.
4
Attributes of a great entrepreneur
RESOURCEFUL. “However desperate the situation and circumstances, don’t despair. When there is everything to fear, be unafraid. When surrounded by dangers, fear none of them. When without resources, depend on resourcefulness.” Sun Tzu
RESOLUTE. “Some people are more talented than others. Some are more educationally privileged than others. But we all have the capacity to be great. Greatness comes with recognizing that your potential is limited only by how you choose, how you use your freedom, how resolute you are, in short, by your attitude. And we are all free to choose our attitude.” Peter Koestenbaum, Leadership
RESILIENT. “We all have battles to fight. And it’s often in those battles that we are most alive: it’s on the frontlines of our lives that we earn wisdom, create joy, forge friendships, discover happiness, find love, and do purposeful work.” Eric Greitens, Resilience
RESPECT. “Respect your efforts, respect yourself. Self-respect leads to self-discipline. When you have both firmly under your belt, that’s real power.” Clint Eastwood
3
Views of our startup ecosystem: good, bad, and ugly
I love the startup ecosystem, but that doesn’t mean I like everything about it. In this short personal video, you’ll hear my candid critique.
Our startup ecosystem is great and vital. It makes a huge difference for many founders. But it’s important that we understand its good...bad...and ugly elements...so we can make it even more effective.
Let’s start with the good. The startup community genuinely pays it forward. No strings. No ulterior motives. Just genuine help. Whether it’s mentoring, networking, advising or other assistance, there’s more mutual support here than I’ve seen in any other business sector.
Now the bad. For all its benefits, the startup ecosystem often gives status to the wrong things. And getting funded is at the top of that list.
There’s too much status given to successful fundraising, and too little status given to building and growing a sound venture. For so many young startups, becoming “venture-backed” can feel like a bigger accomplishment than becoming cashflow positive, or better yet… profitable.
And when these priorities get mixed up, it makes founders less entrepreneurial… and ultimately… less successful.
Now let's talk about the ugly. It’s what I call “vision creep.”
Vision creep is what happens when a viable startup struggles to raise money because their potential isn't big enough. In order to impress potential investors, they scale up their vision – to something much bigger, but usually not better.
They make their projections bigger; they make their expectations bigger; they make their plans bigger. And while this more ambitious vision might make a venture more fundable, it makes their actual prospects for success...ugly.
Because they can’t realistically achieve those new projections, expectations, and plans. And when they fail -- when investors complain, when employees are demoralized…. the stress is killer.
You can’t entirely blame an ecosystem for the failure of an individual venture. After all, startup founders and CEOs are only human. And entrepreneurship is risky.
But we, as individuals, can work to improve an ecosystem meant to help new founders.
That’s our mission – to help new entrepreneurs, just as we’ve been helped. To pay it forward.
2
Articles to help you create a compelling presentation
“Storytelling tips for Founders” from The Science of Storytelling by Will Storr in Forbes
38 Pitch Deck Examples – How to improve your pitch deck, NEXEA
1
Question for startup CEOs
Do you see yourself as a Chief Executive Officer...
or as the Chief Entrepreneurial Officer?
I proposed this more aspirational title and concept in a commentary several months ago – “The kind of CEO a startup really needs”. And I will be elaborating on it very soon.
We often talk about the need for a leader to have a clear, motivational vision. So true. But a CEO’s vision doesn’t just require an imagining of the future; it’s also a matter of self-vision. And when a CEO sees herself or himself as the Chief Entrepreneurial Officer, that changes not just one’s perspective, but also one’s decision-making and priorities.
It’s an exciting, hopeful idea and I hope you’ll join me in contemplating the possibilities.
Stay safe, stay happy, stay in touch!
Adam
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5-4-3-2-1 Countdown for Entrepreneurs (2/8/23)
5
Elements of effective fundraising
RESPECT. Whether it’s a preliminary chat with a prospect or a formal presentation to a group of investors, you begin by expressing respect. But that means more than just thanking them for their time and interest. It often requires you to do some research about them in advance, so you can appropriately acknowledge their experience, knowledge, and the nature of how they invest. And, of course, respect should go both ways. If you feel disrespect from them, chances are good you won’t want that prospect as an investor.
CONFIDENCE. We shouldn’t mistake humility for a lack of confidence, just as we don’t view arrogance as impressive confidence. But when you speak with genuine conviction because you have real expertise and product proof, you’ll have the kind of confidence that makes people more receptive to hearing about your Unique Value Proposition.
STORYTELLING. The idea that all marketing is storytelling has become a cliché. And too many founders when making pitches seem to think “narrative” means sounding like the narrator of an infomercial. To be engaging, you must tell your “story” in an original way. While there’s no formula for scripting a captivating story, you can start brainstorming by considering the basic elements of a story: setting, character, plot, conflict, and theme.
LISTENING. Whether you Zoom with a potential investor or pitch in person, there will be dialogue. They’ll have questions and you’d better have good answers. But the secret to listening is not to just be thinking about what you should say in response. You want to truly hear what a questioner is saying in a lead-up to the question, or a PS to the question, or pregnant pauses or their tonality.
Such things may sound extraneous, but they are revealing. It’s tempting to hear a topic and start recalling what you wanted to say if asked about it, but you’ll be more persuasive if you speak to the questioner’s underlying concerns, not just their query. So “listen up”: listen at a high level of interest.
PERSUASION. Fundraising is all about persuasion. And it’s not just presenting facts; it’s also appealing to emotions. Yet there is more to it than just making a convincing case. There are four other “P” words you should try to master:
Persistence. If rejected by a prospect, you need to quickly recover and move on to other prospects, or find ways to circle back when ready.
Patience. While the old sales motto is “ABC, Always Be Closing,” that attitude can be counterproductive. People resist aggressive salesmanship; they see through most pressure techniques. So be patient when prospects need more time to ponder your proposal. And realize that the more you suggest a pressing need for funding, the less likely you are to get it.
Personality. Yes, there’s such a thing as a “winning personality,” but it depends on what people admire in others. So, if you’re not as gregarious or witty as others, that’s fine -- just be genuine. When it comes to fundraising, “winning personality” means people trust you and want to work with you. Charm is nice, but authenticity is better.
Preparation. Do research on your prospects in advance of pitching them. They’ll appreciate that you cared enough about them to learn more. And you will be better able to anticipate their questions.
4
Choices that matter in a startup strategy
In a MIT Sloan School of Management blog, “Ideas Made To Matter,” Meredith Somers lays out “4 choices that matter in a startup strategy”:
· Intellectual property strategy
· Architectural strategy
· Value chain strategy
· Disruption strategy
3
Principles to create a startup’s “Unique Money Model”
Every startup needs a Unique Money Model – a financial strategy based on its realistic needs and aspirations, not the conventional planning of an already-established business.
I’ll be explaining this new concept in upcoming newsletters, but I’ve shared some of the underlying principles in recent issues. If you click on the links below you will see how startup CEOs need to think differently to become cash-centric and achieve profitability.
· Startup CEOs should begin to create a UMM by answering my min/max question:
“What is your minimum outcome for ‘success’ and what is the maximum risk that is acceptable?”
· Startups should focus on outcomes, not on exits.
· Startups should focus on their assumptions, not their projections.
2
Perspectives on technology
“Technology is anything that wasn’t around when you were born.”
— Alan Kay, computer scientist
“Science and technology revolutionize our lives, but memory, tradition and myth frame our response.”
— Arthur Schlesinger, historian
1
Critique of the startup ecosystem
As we look at the economy today, we see a huge, missed opportunity: the vast majority of new ventures do not achieve long term success. This outcome is treated like it's inevitable. "Eh, startups are risky; better luck with your next one." Well, I call BS. I think the failure rate of startups is far higher than it should be.
Part of the problem is that the startup ecosystem promotes a fundraising-centric approach more than profit-centric entrepreneurship. It is more investor focused than market focused.
It’s understandable that the startup ecosystem is dominated by what investors want. But investors usually answer to their own investors and have frameworks and timeframes that are different than the founders and CEOs. And few players care about near-term profitability.
Why? Because small, early profitability often doesn’t lead to outsized returns for a venture capital fund. It doesn't do what is necessary to create a few big wins to offset a bunch of failures, which is what a venture capital fund wants for its “success.”
In a strange way, these funds actually “want” some companies to lose. If a meaningful proportion of these ventures aren’t failures, that means they weren’t that risky – and they didn’t have the potential for outsized outcomes. Assuming an investor can’t predict the future, if their portfolio sees 80% or 90% of the investments succeed, that’s not in line with the risk VCs are expected to be taking.
Some shareholders in their fund will say, “What are you doing? If I wanted returns like this, I would open a savings account. Talk to me about the few huge winning investments you made. I don't care about the rest.”
“The rest” flame out because, to keep investors happy, they took outsized risks... and paid the price. That’s the game — That’s the startup ecosystem model.
I realize this critique may be controversial, or at least contrarian, so I might as well go further and argue that the startup ecosystem turns many CEOs against being entrepreneurial. Startup CEOs are conditioned to listen to prospective investors more than to their prospective customers. They worry more about their fundraising than about generating real revenue and achieving early profitability.
Based on the rules we play by now, based on the assumptions people hold true, if you want to build a venture somewhat slowly -- which means maybe you can't quit your job right away -- well, that's no fun. That's not exciting.
The mindset? “I’ve got to quit my job and try to raise a million dollars quickly. If it doesn't work, I’ll chalk it up to a really interesting experience, put it on my LinkedIn and find another job.”
That’s the mindset. It is not: “I’ll go through a testing phase, and bootstrap. It'll be my own money, and I’ll have a slower overnight success, but I’ll generate a lot of valuable metrics, acquire very little outside capital and give up little of my company. Maybe I’ll even pass it to my kids someday.” That is an uncommon ambition. Very few would dare frame it that way. It’s not daring enough to be interesting; not interesting enough for investors.
But an early-stage venture doesn’t have to sound like a mission to change the world. Maybe being entrepreneurial and striving to achieve early profitability is daring enough.
Stay safe, stay happy, stay in touch!
Adam
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5-4-3-2-1 Countdown for Entrepreneurs (1/11/23)
5
Myths that divert startup CEOs from the path to profitability
#1 “When fundraising is necessary, the wants and needs of investors are most important.”
The key word is “most.” Investor needs are indeed important, but trouble looms when startup CEOs put investor needs ahead of all other things, including prudent financial decisions that could most effectively put the venture on the path to being profitable.
Why would an investor want that? After all, they don’t want to undermine the venture. They just might have different motivations and a different timeframe for when they want to see a return on their investment. There are legitimate reasons why they might not match a CEO’s determination to achieve profitability in the shortest period of time.
The myth is that you need to focus on investor needs above all else, when the reality is that you can do two things at once: pursue a cash-centric, mature approach that gives you the greatest chance of success and find investors who want to go along on the ride and will accept your terms for investing in your startup.
#2 “As I raise larger sums of money, I don't need to scrutinize our expenditures as much.”
I call this the “Funny Money Fallacy”: If the amount of money you've raised is large, then every one of your costs is less significant and requires less of your time and attention. It’s as if the big sum you raised doesn't feel all that real or tangible anymore, so it makes your decision-making less cash-conscious.
You figure, “I've got bigger problems to deal with than this minor expense. I'm not going to waste time on whether it's the right price, whether I can get a better deal, whether we're spending too much. It's such a small proportion of the money we raised; it really doesn't matter.”
But that rationalization is contagious. It can quickly roll up and leave you looking back with painful regret at recent expenditures, wondering where the money has gone.
#3 “We can solve sales problems by cutting our price.”
It’s a typical scenario -- a startup CEO is reviewing recent sales numbers, either because they're trying to project for the future or maybe they're getting ready to pitch to an investor. And when they look at the sales count, they're underwhelmed and want to improve it. Their solution is often to adjust the price.
Well, that seems logical. It's simple economics -- supply and demand -- drop the price and, all else being equal, you will increase the number of sales. For an established company — for a scaling venture — that works nicely. Imagine competing in a crowded space. You bring down your price. You're able to get more market share. You're able to attack more of the market...It works.
The myth is that the same rules apply for an early-stage venture. But the rules don't apply -- because what your early-stage venture is trying to do in this uncertain environment is to create value that is somewhat new and different for a well-defined market. So, when you adjust your price down, you are admitting that this value is not fair — it doesn’t warrant its price. And I'd argue it's usually too early to be doing that.
What is more likely is that you've got either a product problem or a market problem, or a combination of the two. From a product perspective, it could be the case that — even though you have the vision and opportunity to create real value for a customer — the way you have structured your product or service is not quite right. Maybe it's missing a feature or a function or some other element, and if you go back to the drawing board and solve for it, maybe you can not only maintain the price, but even increase it. The last thing you want to do in that case is reduce it.
The other issue might be that your product or service is delivering the value, but you’re targeting the wrong audience. Maybe you've missed the mark, or maybe you're being a little too broad and could narrow to a subset of your market that’s truly enthusiastic about what you're delivering. They may be willing to pay more. So, if you were to focus on product and market — instead of price — and reject the myth that price is always the best way to improve sales, you'd put your venture on a more successful path to profitability.
#4 “Cashflow and profitability are issues for my CFO, my accountant, or financial advisors. They'll let me know if there's an issue.”
This attitude is common because startup CEOs are advised to focus on selling, raising money, creating a vision, and building culture, not to analyze financial statements. So, they're motivated to delegate this kind of stuff as soon as they can -- the faster they can hire a CFO, the better. But I think that’s a big mistake. If cash is king, then why isn't being cash-centric a chief focus for CEO decision making? After all, a startup CEO makes decisions every day that shape the business, and those decisions are inextricably tied to, and hugely affect, cashflow and profitability.
So, the idea that startup CEOs should focus on the financial effects of their decision-making only after someone else pulls together information for them is short-sighted and risky. Cash and profitability need to come to the forefront, and it must stay that way until a startup has truly graduated to a much more established level.
#5 “If profitability is a long way away, I don't need to worry about it today.”
It is true that for many startups, profitability is a longer-term prospect. They've got to engage with a market, start generating some sales, find ways to build an efficient system to deliver the product in a profitable way, and then do that for long enough to cover all prior losses.
Yes, it can take a fairly long time to generate profitability, so the idea of focusing on it very early can seem like unnecessary anxiety, analysis, and distraction. But if every decision you're making in your venture, particularly in the earliest days, is critical and has a material effect on the outcome of the business, shouldn't those decisions focus on the opportunity for that company to build a more sustainable financial future?
Shouldn’t it be the primary objective in those earliest days to make sure you're getting off on the right foot, with the right actions, to ensure you're doing everything necessary to shorten the time and increase the likelihood that you achieve profitability?
Well, that takes the ability to stop and ask a simple question: Is what I'm about to choose, or what I’m about to do, going to help or hurt this venture’s ability to be profitable?
4
Reasons why successful startups focus on their assumptions, not their projections
Having observed hundreds of startups, I’ve noticed that successful CEOs focus more on their assumptions – what must prove to be true if they are to achieve their goals – than on their financial projections.
Here are four reasons why that focus on assumptions improves their odds for success. The first two reasons explain why projections are often unreliable:
1. Projections are often lagging indicators.
The traditional construction of financial projections – like revenue or total sales -- produces a lagging indicator. By the time the data is collected and presented to a CEO, if the numbers spell trouble it is often too late to make a change. All sorts of things happened that led to the top line number and, as a result, that metric lags the activities driving it. What is most vital in the functioning of a business happens prior to seeing results in the form of things like total users, units sold, or total revenue.
2. Projections can be like the tail wagging the dog.
Does this scenario sound familiar? A CEO is prepping their deck for an investor meeting, and they've gotten to the financial projections section. They are trying to determine what revenue growth might look like for the next five years. They settle on something reasonable, deliver the pitch, and it’s a good meeting...but the investor feels that the revenue projections just aren’t big enough to be a good fit for them. The investor says, “Let’s stay in touch, and if something changes, please come back.” The CEO leaves but, being ambitious, resolves not to take no for an answer. The CEO goes back to the projections and gets creative about ways to increase the pricing per unit, or ways to generate more recurring sales or renewals of the thing they're trying to get users to subscribe to, or they find another market that would be as interested as the core markets they’d identified. They are on the hunt for more revenue for more growth, and soon they “find” it. They revise their deck, return to the investor and maybe are lucky enough to get funding.
Here's the problem: That venture is now tied to a set of expectations that aren't reasonably achievable. The inflating of projections wasn’t done with bad intent. Startups are uncertain and the future is unknowable. And is the larger projection much less likely than the previous, smaller one? Not necessarily. But the problem is that this venture is then anchored to an expectation much harder to achieve. And this ratcheting up of expectations usually continues and results in unvalidated projections becoming the frame through which the venture is seen and judged by investors. The investors now have expectations that put a great deal of additional, unhelpful pressure on a startup. So, what began as an aspirational spiraling-up turns into a depressing spiraling-down: new projections turn into unachievable expectations, which turn into stressful pressures, which result in bad decisions that ultimately undermine the projections.
Just as projections can be lagging indicators, assumptions can be leading indicators – elements core to the business that reveal what’s likely to happen.
The following two reasons explain why focusing on assumptions gives a startup the advantage of reality-based insight:
3. Analyzing assumptions will uncover risks.
What elements need to be proven true for a startup to be able to achieve its goals? Generating $25 million of revenue might be considered great success, but what must happen 5-10 steps before that? What smaller, earlier assumption must be true to set in motion the next-step assumption, which in turn needs to be proven true, and so on, to fulfill that projection of $25 million in revenue?
Focusing on the assumptions that lead to success is critical for startups because of the risks they face. Given how quickly so many things can change, to focus on a result or a metric that is 10 or 20 steps down the road is foolhardy. The main focus should be figuring out the aspects of the business that are core to its operation in its earliest stages, determine what needs to be proven true, then quickly learn or experiment to determine if assumptions are valid.
For example, let’s say a projection metric is overall sales for a Software as a Service company. A sale might be to an enterprise customer that takes six to nine months to go from being introduced to a product to ultimately signing a big contract. Think about the number of steps in the process to go from initial interest to a sale. It might start with prospects seeing some content or reviewing an ad that might turn into a demo, with the demo prompting a second call, and so on. What might be early assumptions? One assumption might be that a certain percentage of a target audience that views a piece of relevant content will engage with it, and some will follow up or reach out to the SaaS. And if a meaningful proportion reach out, the company can make the case that a meaningful number will turn into a sale. So, now they’re thinking that if they can see positive early engagement, they have a good indication that it’ll turn into sales possibly a few months down the road. In that case, if they can validate the assumption that they’d get a certain percentage of the audience to engage with content, that could be a core indicator to help them determine their ability to generate sales down the line.
We can repeat that kind of analysis and reconstruct it for many types of companies at different points in their life cycles. No two companies are the same, no two metrics are the same, and no two points in those companies’ lifecycle will produce the same collection of core assumptions.
4. Testing assumptions will uncover the real opportunities.
When we focus on assumptions, we prioritize things that are essential for a startup: realistic analysis, experimentation, validation, agility, and resilience.
Considering all this, what are we supposed to do? For starters, when it's requested, go ahead and make financial projections. Stopping that work is not what I am suggesting. I'm merely urging that we see the projections for what they are: a tool that might be a minimum requirement for certain aspects of your venture – like pitching an investor, applying for a bank loan, or meeting with your leadership team to do some strategic planning – but unreliable as visions of the future.
So, we should reduce their negative effects by applying much more of our focus to testing assumptions -- what needs to be proven true today to create more opportunities tomorrow. With that focus, we will find and fulfill new opportunities. And that’s the hallmark of a successful startup.
3
Criteria that define a “scaling” venture
Generally, ventures have two phases in their lifecycle: a startup phase and scaling phase. The startup phase is filled with unknowns. Can we effectively develop and sell our product or service? Can that product or service deliver real value to a clearly defined audience? Can we remain financially afloat during all the learning and experimentation? And the entire goal of the startup stage is to get out of the startup stage -- to graduate to become a “scaling” venture.
To many, “scale” implies massive growth in an enormous market. That might be true, but it doesn't have to be true. To me, scale isn't about size; it's about certainty. Here are three criteria for an early-stage venture to be considered “scaling.”
First, a scaling venture is crystal clear about why, what, and how it does what it does -- its purpose, goals and operations are defined, realistic, and embraced.
Second, a scaling venture knows its market inside and out. It consistently delivers valuable offerings to that market, and that market consistently pays for it.
Third – and this is where I get a bit controversial -- a scaling venture has earned the opportunity to maintain or grow its current business. It is economically sustainable. The model works. The venture is profitable or at least on a proven path to profitability.
Let's have no ambiguity about that last point. A path to profitability means if a venture stays on its current course, it will achieve financial success in short order. The revenues created by selling goods and services exceed the cost to run the business. It doesn't need to close a huge new customer; it doesn't need to land another big round of funding; it doesn't need to finalize a major partnership. The business can pursue all those things, but it doesn't need to pursue any of them.
As I noted, none of my criteria cite the size of a business or the speed at which it is growing. I often see hypergrowth ventures raising many rounds of capital that I wouldn't consider scaling. And I often see smaller, younger, less funded, slower growth ventures that I would consider scaling because they've got their money model figured out. Their destiny is in their hands. They can maintain their size. They can look for opportunities to merge or get acquired. They can afford the calculated risks that come with growth.
2
Articles you might find interesting
“Reframing our understanding of remote work”
by Mike Elgan in Computerworld
“The End of the Silicon Valley Myth”
by Brian Merchant in The Atlantic
1
Piece of advice for startups: “Practice like you play”
Growing up and playing sports through college, I heard this exhortation often. To practice like you play is to treat your preparation like it's the main event. We would do that by trying to have our intensity, focus and environment while training match our intensity, focus and environment when competing. Obviously, it wasn't always possible, but we did our best.
Compare a startup CEO to an athlete in training. They both prep for the big show. Whether the goal is to win under Friday Night Lights or graduate from startup stage to scaling stage, they practice for what is to come. For most tech-centric startups, achieving profitability, or any revenue at all, takes time. It also takes money, sometimes a lot of it.
So naturally, in the early stages of a venture, most startup CEOs spend a lot of their time focused on finding and collecting the funds needed to operate the business. In my experience, this quest for capital leads to a common mistake: they don't practice like they play. They make decisions during the startup stage that they wouldn't or shouldn't make once the venture has matured.
They stray off the path to profitability, thinking they'll get back on it later. Sometimes, they even convince themselves they could find success without ever returning to it at all. They fall into bad practice when it comes to their venture’s money -- usually without even realizing it's problematic. But the reality is this: whether they are fundraising or not, profitable or not, generating revenue or not, cash is still king. It is the primary resource required to operate our ventures, no matter what circumstances we're facing. So “practice like you play” means being cash-centric in the here and now; producing value for customers in the here and now; staying focused on profitability in the here and now.
Stay safe, stay happy, stay in touch!
Adam
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(Newsletter from Adam McGowan Entrepreneurship)
5-4-3-2-1 Countdown for Entrepreneurs (12/15/22)
5
Ways to evaluate your startup’s “business reputation”
It’s tempting for leaders of an early-stage venture to think in terms of their “brand” because they feel that is something they can conceive and control through marketing. But “reputation” – earned, deserved, or damaged unfairly – is another test for success.
How is your startup perceived, judged, and talked about in the marketplace? Your reputation grows over time, whether by design or inaction. To understand, safeguard, and improve your startup’s rep, you should occasionally try to view your endeavor through the eyes of those who come to know you – customers, prospective customers, investors, prospective investors, employee contacts, job applicants, vendors, et al.
To get a better sense of your evolving reputation, a startup’s leaders might ponder questions like these from the different perspectives of various constituencies:
Customer-centric. Is your startup viewed as truly dedicated to serving and solving?
Creative. Is your startup appreciated as genuinely and impressively innovative?
Collaborative. Is your startup known as an efficient and enthusiastic team?
Conscience. Is your startup recognized for having high standards of integrity?
Capital. Is your startup perceived as fiscally sound and a smart investment?
4
Insights from Stoic Philosophy for Startup CEOs
“The impediment to action advances action. What stands in the way becomes the way.” – Marcus Aurelius
“Some periods of time are snatched from us, some are stolen, and some simply seep away. Yet the most shameful loss is the loss due to carelessness.” – Seneca
“If anyone can prove and show it to me that I think and act in error, I will gladly change it – for I seek the truth, by which no one has ever been harmed.” – Marcus Aurelius
“You have power over your mind – not outside events. Realize this, and you will find strength.” – Marcus Aurelius
3
Thoughts to Inspire New Year’s Resolutions
“You are never too old to set another goal or to dream a new dream.” — C.S. Lewis
“We must always change, renew, rejuvenate ourselves; otherwise, we harden.” — Johann Wolfgang von Goethe
“If you don't like something, change it. If you can't change it, change your attitude." —Maya Angelou
2
Qs for startups: What is your minimum outcome for “success” and the maximum risk that is acceptable?
Startups are inherently risky. And if that isn't challenging enough, founders and CEOs routinely take on more risk for their venture than is necessary.
But there's a path they can take to increase the likelihood of their venture’s success — without taking on additional risk.
The first step on that path is to answer two core questions about what I call a venture’s “min/max”: What is the minimum outcome your venture needs to achieve for you to deem it a success? And what is the maximum amount of risk or loss that you're willing to accept in pursuit of that outcome?
With many startups, I often see what I call “vision creep.” It goes something like this:
Imagine you've got a new concept and you shop it around a bit, with friends or potential investors, and the earliest conversations don’t seem to generate much interest. But some individuals suggest a few adjustments to your ideas; maybe ways to scale it up to possibly grow the top line revenue or track different markets. Soon, interest starts to pick up and the next conversation tends to go a little further. Before you know it, your modest ideas get bigger and bolder, and people are a lot more encouraging.
That's vision creep. Having a bigger vision and more ambition is great. Indeed, it’s critical in your quest to get a venture off the ground. I'm not trying to dampen that ambition. However, when a startup’s goals grow, the resources required to get them there will also grow. And these resources don't come for free. They require more money, more uncertainty, and more risk.
But when you keep a minimum outcome in mind, you don't take outsized risks. Because once you reach that minimum, you treat everything beyond it like a bonus — like icing on the cake. And you adjust your approach in a way that better protects what you've already achieved.
Now let’s look at the other side of this equation, the max. By having this maximum that you're willing to put at risk, you're introducing two ke y benefits: First, you better accept the risks you are willing to take. This means that when you're operating below this limit, you're not overly concerned about the risks you're taking or the costs you're incurring. Sure, you still need to be thoughtful and calculating, but your decision-making is unclouded and your reaction time is quick — both critical for a successful startup.
Plus, you can better spot and avoid the risks you are not willing to take. They won’t sneak up on you. This helps you avoid undue risk, excessive stress, and decision-making that is rushed and unwise.
This min/max thinking is what we do naturally in other areas. Consider, for example, saving for retirement. Imagine you've got a 25-year window between now and when you expect to retire. In trying to plan for that, you have a vision of what you want your quality and standard of life to be then, so you think about what you’ll need to make it happen. You reflect on what you earn today and how much money you can set aside. You go through that process and start to put money into the stock market. And because you have a long time horizon between now and retirement, you can do some fairly risky investing today. But, as you get closer to retirement, you're willing to take less risk because you’ve got to protect that lifestyle you're hoping to achieve.
So you don't see people with modest savings one year before retirement deciding to buy a chateau in the south of France, with an entire house staff, and live la bonne vie. Nobody has that kind of vision creep. When it comes to retirement, people don’t adjust their approach and decide that with 25-30 years of savings they’ll invest all of it in extremely risky financial instruments because otherwise they can’t afford two yachts. Nobody does that. But in startups, that thinking is not uncommon.
So, if the advantages of this min/max approach are so evident, why is it that more of us aren't doing it? Well, frankly, to define and maintain this min/max approach a CEO has got to be willing to go against the grain of typical startup culture.
Startups are all about constantly striving to be bigger and better. Except for a Minimum Viable Product, the idea of trying to minimize anything in a startup is practically heresy. Investors don't want to hear about your minimum ambitions. They want to know how you're going to change the world and always push for something more. It's going to be hard to impress your founder friends by talking about a success that’s merely “good enough.” So, generally, we don't say that. We say, “go big or go home.” And imagine if we wanted to put a cap on our own personal appetite for risk. We tend to keep that little nugget of information to ourselves. Imagine if word got out that you exhibited the slightest hint of risk aversion. You'd likely be kicked out of your coworking space!
When I work with CEOs to define their unique min/max, I make clear that just because you identify the minimum level of success you’d accept does not mean you are putting any limits on your potential. The sky can still be the limit for your venture. This simply means that you're not willing to sacrifice your baseline achievements to roll the dice for something more. It means you want to boost your odds of winning on your terms. And when those successes come, you want to lock them in. But once they're safe, you can go ahead and keep shooting for the moon.
1
Argument for why startups should focus on outcomes, not exits
Startups can seem obsessed with exits. And why wouldn't they be? After all, IPOs and huge acquisitions are the stuff of tech startup headlines that founders talk about with each other. And frankly, from the perspective of most investors, these types of exits are really the only ways for them to pull material cash out of the startups in which they've made an investment, so for them, it's kind of a prerequisite.
Yes, exits are a huge focus. They are drivers in the overarching success of the startup landscape, and we shouldn't diminish that one bit. However, when decision-making, and thinking around the finances of a venture, are exit first, that can result in founders and CEOs prematurely limiting the options of their ventures. They might put themselves in the precarious position of having to trade off a scenario that creates the greatest likelihood for a near term exit that's big, versus a path that might create the most sustainable, profitable, and viable venture over the longer term.
When it's framed that way, you might think there's not much of a choice -- the second option of being outcome-centric gives young ventures many more opportunities to achieve than the first option of being exit-centric. You're still in the game, you get more at bats -- come to the plate again and swing for the fence. But so often, the startup environment and exit culture drives you toward the first choice.
Let’s consider a real-world example. There's a startup in the health tech space with software as a service or SaaS product. They began with impressive success. Delivering software into healthcare facilities and hospital systems, they were able to get a strong proof of concept and MVP into the market and started to generate early sales from ideal customers -- small and medium ventures. They used that success to raise an early round of capital, and luckily had to raise less than they’d projected because they had enough revenue to offset the cash needs of the business. From there, things got even better because not only were they continuing to attract small to medium business customers who paid; one of their newest paying customers wasn't an SMB but a Fortune 500 healthcare conglomerate, the ideal candidate to be a future acquirer. The CEO of the startup had to admit that the new Fortune 500 customer really started to glow brightly for them, an intriguing and hopeful prospect for growth. That little bit of business didn't necessarily grow their revenue, but the startup caught the attention of more and more folks at the Fortune 500 company -- to the point where they asked the startup if they’d be willing to do a pilot program together so they could roll out some new features to the entire healthcare system. Now, the startup knew that to be able to service that kind of a deal, they would have to take resources from all over the company. They didn't have enough cash to hire more people, not with the revenue they were getting at that point, so they had to put all hands on deck to make this thing happen.
In doing so, some things would have to suffer, like their ability to sell to more of their small business customers and service them well to maintain the products. Well, they made the choice to focus on the Fortune 500 company. And it seemed like a reasonable trade-off even as some of the small to medium businesses had problematic experiences -- they got frustrated, didn't renew contracts, and moved to competitors. But it didn't matter because the startup had this incredible opportunity. None of their competitors had this kind of special pilot program. They were a half step away from creating the kind of partnership that had “huge exit” written all over it. Unfortunately, that all changed when the Fortune 500 skidded into challenging times, had pressure on their stock price, and had to put a pause on all engagements and programs like the pilot program. So, with a snap of their fingers, the program wound down, the startup was left with almost no revenue, few customers left on the roster, and no real chance that a partnership with the Fortune 500 company would ever materialize. They still had a sizable staff, a lot of bills to pay, and in the end, ran out of cash.
Now, an outcome-driven approach may not have saved this company. However, at every point along their journey when they had a critical decision, they could have asked themselves a couple of questions. The first should have been: Am I making this decision based on the outcome or the exit? They could have readily answered that. In every case I described, it was exit. The second question should have been: Do we have a choice? In all those cases, that CEO and the team might have assumed they didn't have a choice. But they did because the ability for that company to continue to service its small to medium business customers and generate that revenue would have given them a chance to fight another day; it would have given them flexibility to be able to negotiate different terms, potentially, with the Fortune 500 company or merely survive when that Fortune 500 company wasn't able to continue the program, or maybe use it as a case study to find another huge venture to continue to pursue their exit ambitions.
Those are the kind of advantages an outcome-driven approach can give a company, yet rarely do founders ask themselves the key questions: Is this outcome or exit driven? Do we have a choice? What alternatives could give us a chance to fight another day?
An early-stage venture should be clear about its desired outcomes, and clear about the outcomes of all the other stakeholders that matter. I'm talking about stakeholders who have real influence in day-to-day operations of the business, which usually comes from founders and/or major investors who have meaningful ownership of the business. They, too, will have a say in how the venture will scale.
Another place where there's a huge advantage and benefit to outcome-centric thinking is when it comes to making decisions about whether to take money, how much to take, or who to take it from when you're out fundraising. When you think about those environments where you're trying to raise money, imagine a scenario like the one I described for the healthcare SaaS company. It’s reasonable to imagine yourself raising money from particular investors or companies. You should be able to understand what they want, how they operate, how they generate returns, and what outcomes look like for them. And if a successful outcome for them doesn't align with what's a successful outcome for you, it doesn't necessarily mean you shouldn't take the money; it just means you should do it with your eyes wide open. It also means you won't be shocked when circumstances arise where you might not see eye to eye with those people or companies when their desired outcomes conflict with yours.
In contrast, if everyone is simply focused on the exit, then when you meet a prospective investor who pump all these ideas of how big you're going to be and how much an exit you can generate, both of you think those outcomes are phenomenal. And both of you are aligned with what you believe you want to do. So the exit-first approach makes the two of you believe that every part of what you want to do together is in lockstep, whereas an outcome-driven approach would show you all the places where you differ -- in a healthy and productive way that gives you every opportunity to decide what is best for the venture, which is your ultimate goal and responsibility.
Stay safe, stay happy, stay in touch!
Adam
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5-4-3-2-1 Countdown for Entrepreneurs (11/09/22)
5
Memorable business characters from famous movies
Rank these I-mean-business movie characters. Who impressed you most, from 1 to 5 -- 5 being the most memorable film performance:
Orson Welles as Charles Foster Kane in Citizen Kane
James Stewart as George Bailey in It’s a Wonderful Life
Michael Douglas as Gordon Gekko in Wall Street
Meryl Streep as Miranda Priestly in The Devil Wears Prada
Daniel Day-Lewis as Daniel Plainview in There Will Be Blood
4
Conditions for Optimal Brainstorming
Do you ever brainstorm about your brainstorming? Specifically, what are the conditions that enable you to effectively focus, analyze, imagine, evaluate, plan, and create?
Try to be introspective and objective in assessing whether you are ready to brainstorm:
PHYSICAL. Do you have a peak time of day for concentration and contemplation? Do you have the energy to sustain a longer-than-usual period of reflection?
MENTAL. Are you in the right frame of mind to question assumptions, conceive options, and make decisions?
EMOTIONAL. Do you feel like being both patient and determined?
ENVIRONMENTAL. Will you be in a comfortable space that helps stimulate thought, but isn’t too distracting? Will things like lighting or music affect your focus and mood?
3
Articles about job titles and responsibilities in startups
9 Make-or-Break startup roles (and why they are important) by Robbie Richards for MassChallenge
10 C-Level Positions That Are Red Flags For Funding by Martin Zwilling for Gust
The New Path To the C-Suite by Boris Groysberg, L. Kevin Kelly, and Bryan MacDonald for Harvard Business Review
2
Insights from a famous pioneer in business strategy
Peter Drucker was a management consultant and author. Here are two of his concepts:
“The aim of marketing is to know and understand the customers so well, the product or service fits them and sells itself.”
“The best way to predict the future is to create it.”
1
Anecdote about Steve Jobs
“I worked at NeXT the summer of 94. I was in the break room with two colleagues when Jobs walked in and started making a bagel. We were sitting at a table eating ours when out of the blue he asked us, "Who is the most powerful person in the world?" I said Mandela since I had just been there as an international observer for the elections. In his confident fashion he stated "NO!...you are all wrong...the most powerful person in the world is the storyteller." At this point I was thinking to myself, "Steve, I love you but there is a fine line between genius and loco...and I think I am witnessing this right now." Steve continued, "The storyteller sets the vision, values and agenda of an entire generation that is to come. And Disney has a monopoly on the storyteller business. You know what? I am tired of that bullshit. I am going to be the next storyteller." And he walked out with his bagel.”
– Tommy Blackrose on Quora
Stay safe, stay happy, stay in touch!
Adam
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5
Lines about how-to-succeed from TV’s “Billions”
The TV series “Billions” is a drama about cutthroat capitalism. The hedge fund owner and his henchmen often break the law as they pursue power, fame, and fortune, so a lot of dialogue is cynical and self-serving. But here are five pieces of savvy advice from the characters – insights that sound like what you might hear from motivational speakers:
“The greats never sacrifice the important for the urgent. They handle the immediate problem and still make sure to secure the future.”
- Bobby Axelrod
“Faith can be a beautiful thing, except when it’s misplaced.”
- Chuck Rhoades
“Nature didn’t select me. I selected myself by harnessing my nature.”
- Bobby Axelrod
“Find whatever greatness lies within you and nurture it. Eventually, it will be seen.”
- Mike Wagner
“When you do something to put yourself back in charge, remind yourself that you are not less but more powerful for what you’ve come through.”
- Bobby Axelrod
4
Criteria for defining a true “entrepreneur”
Entrepreneurship can be defined by four things: commerce, risk, scarcity, and vision.
Commerce. To be entrepreneurial means pursuing a commercial venture. It’s not a hobby or a pet project. And while the venture may be producing social good, it cannot be only a cause. If it’s activism, which is commendable, it must be combined with some sort of commercial nature if we are to call it entrepreneurship.
Risk. Entrepreneurs face material risk. And risk has two components: uncertainty and consequence. Is there something unknown? And is the impact of that unknown fairly material? I’ll illustrate that with an example: Imagine you are preparing to walk out the door in the morning on your way to work and you're deciding whether to grab an umbrella. Whether or not it rains, that's uncertainty. You might have a reasonable forecast, but you still don't know for sure. It is uncertain. Now imagine you're not walking out the door to go to work, but rather to attend your outdoor wedding. 300 people are waiting in line. Several anxious vendors. No tents, completely exposed, and thunder clouds are rolling in. That is consequence. The same level of uncertainty in different contexts has a material difference in how much risk exists.
Scarcity. Resources must be scarce for someone to be entrepreneurial. There's got to be some challenge to it. In a film script, you think about character traits like grit, tenacity, resourcefulness. These don't just show motivation for characters. They are essential because you need those qualities when things are scarce, to overcome adversity.
“Scarcity” can be relative. There is no set number of dollars nor number of people on your team that qualifies what’s "scarce." Imagine a scenario where you have a very small team working on a tightly defined problem that doesn't require massive infrastructure, hardware, things like that, and let's say they had $10 million at their disposal. That might sound like an enormous sum of money that would last them an incredibly long time. But imagine a second venture that also has $10 million, but its mission is to colonize Mars. In that second case, we have an incredible level of scarcity -- not so much in the first.
Now how does that apply to a real-life example, particularly when it comes to a large organization? Let's think about a spinoff coming out of Google. Someone there is trying to create the next Google Drive or Gmail-like product. And if they have the full power of Google behind them and all the resources -- engineers, capital, all the IP — I’d argue that trying to pursue the next big thing at Google is incredibly innovative, but it is not entrepreneurial. It might be intrapreneurial, but not entrepreneurial.
Vision. Jack Welch, the former chairman and CEO of General Electric, summed up the need for entrepreneurial vision when he said, “Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.”
3
Parts of the startup equation: Product, Market, Money
The startup ecosystem is overflowing with promising tactics. We've got gurus, frameworks, books, and courses galore. Some introduce solid ideas, but few, if any, bring together a truly cohesive plan of attack. In theory, they may make sense, but when it comes to applying the ideas in the real world, most just don't cut it. But one concept has a great deal of merit -- Product Market Fit, PMF. This is seen as a crucial, early milestone. Some even describe PMF as the objective of an early round of fundraising – that in your seed round of funding, the purpose of the money is to achieve this goal.
To better understand PMF, let's consider two definitions from key players in the space. The first is from VC Marc Andreessen. He describes achieving PMF as "being in a good market with a product that can satisfy that market". Another definition comes from Steve Blank, who many consider the father of the Lean Startup, alongside Eric Ries. Blank talks about PMF as the moment when you have matched a product's features with its customers.
These are both interesting, helpful definitions. However, they come up short because there's not much specificity. When Andreessen says, “good market”, what does good mean? And to whom? A VC’s definition of good might be very different for a solopreneur who's trying to get a venture off the ground without outside funding. And "satisfying the market"? What does that actually mean? Does it mean that you've solved the problem? Does it mean they paid you for it? What does it mean about the value of what they've extracted from it? And when you think about what Blank has to say — matching product features with customers — what does that mean? Does it serve all their needs? One of their needs? And what type of customer? In many ways, these definitions just open the door to additional questions.
While the concept of PMF is a good start, it comes up short. When I think about how to extend PMF into a more effective tool, I begin with this question: "Can your venture create value for a customer with economics that makes sense?"
Let’s break that question into three parts. The first is the notion of creating value. When I say “creating value” what I mean is that — again, remembering a startup is a commercial pursuit — people are paying, or they're giving up their own resources, for what you are offering. Your product or service causes them to give you something worthwhile — something that's valuable to them -- in return. Hopefully it's money, but in some cases, it might be their attention, their time, their referral, their endorsement. It's something that has value to them, and they're willing to give it up. The notion of creating value is really the essence of product. What is the thing? That can be a service as well, but let’s lump it into this thing we call product. Have we created value in what we're delivering?
The second part of my question is: "for a customer". It's a commercial venture so, of course it's for a customer, whether an individual or company. But this is more important: Who is the customer and how do we define them? Is it based on their desires, their needs, the value they see in the product? I contend it's all those things. So that customer isn't a random collection of people or companies. It's a defined group of individuals or companies for whom you have created a lot of value purposefully for them. Those two realities are the essence of PMF -- product plus the market, linking them together.
But I added a third reality, "Can your venture create value...for a customer... with economics that makes sense". This third part is about money. This is important because imagine you were able to achieve either of the prior definitions of PMF. Let's say you created value for a customer. But if one company can do it by creating $100 of value, and it costs $500 to get that value in a customer's hand, those economics aren't good. Alternatively, imagine someone who's selling a similar product with a $100 value, but they can do it for $20. That's a material difference. In one case, the economics make very good sense. In the other case, they clearly don't.
Now I don't want to be so simplistic as to assume the only way for economics to make sense is that you have substantial profits on every unit you sell. First of all, that doesn't happen — even when you achieve it — immediately. So, the notion of “economics that makes sense” could just mean that we have a savvy plan for how we're going to get to profitability in time: “Here's how the economics makes sense...and here's the path to get there.” They don't have to work today, but you're on the path to profitability.
Another way to have economics make sense may come in the form of companies where what they are producing only works out if they eventually get acquired. This could be true for companies that have a huge capital requirement, like infrastructure firms. It can also happen in life science, pharmaceuticals, and other sectors where there's a huge sum of capital required to bring something to life and it may need to be accepted within a company or acquired or some other means, but it doesn't necessarily translate directly to profitability.
So, I believe the product-market equation needs three parts -- P product, M market, M money. PMM. I think PMM should be the new PMF. It's not an extension of it; rather, it's a replacement of it. And the reason it's a replacement is because PMF doesn't include money -- it doesn't get us all the way there -- and yet PMF has been treated like a destination: "Oh, we are a scaling startup. That means we achieved PMF in the past, and now we're finished with that phase of our company and now we just need to grow." Those might be the famous last words of many startups that have failed because PMF is not a destination... or shouldn't be. PMM is the real journey. PMM is something you are perpetually trying to achieve. And once you achieve it, you have got to keep it...and keeping it is not simple. It is a concerted, focused effort.
PMM shows itself in almost every key decision within a startup. The leaders should be thinking: “How does this choice affect the product, the market and the money? Because those are the elements that drive the ability to make this company work. And if the decision we're trying to make results in the P, M, or second M failing, we probably shouldn't proceed.”
By contrast, that's not the way people think about PMF – Product-Market Fit. If you have a pivotal choice facing your startup, you don't often ask yourself — especially once you're at the stage of scaling — "How does this impact our PMF? Will this change our product-market fit?" What if the discussion has to do with fundraising? What if the decision has to do with hiring? What if the decision has to do with whether to consider an offer from someone for acquiring your venture? You could argue such questions really have nothing to do with PMF, but it has everything to do with the way in which you're going to deliver your product to a market because of the money. So, PMM is a replacement for PMF.
PMM is something that you need to try to achieve continuously. You start by making sure you have problem-solution fit. You have a problem worth solving. You have a need that must be met. And you are validating it constantly. You are understanding your audience and making that target audience narrow enough that you can say: "I'm clear about what it is that this unique set of individuals or organizations truly need, or truly want, or truly are suffering with as a problem or missing as an opportunity. And our product or service delivers that."
The ability to do that customizing and then repeat it — turn one narrow market into many, have one product or service expand into a collection, and be able to routinely produce PMM over and over and over — that's the recipe for scale.
That’s the pathway to profitability.
2
Questions that define the stages of a startup
I describe the earliest stages of a startup as the "starting" phase. During the starting phase, you're trying to answer the question, "Is there really a business here?"
The goal is to try to graduate to the next phase of a startup, which I’d describe as the "scaling" phase. In scaling, you're trying to answer the question, "How can I sustainably grow this business?"
1
Vision about the coming “metaverse”
First, a definition of “metaverse” from Wikipedia: “In futurism and science fiction, the metaverse is a hypothetical iteration of the Internet as a single, universal and immersive virtual world that is facilitated by the use of virtual reality (VR) and augmented reality (AR) headsets. In colloquial use, a metaverse is a network of 3D virtual worlds focused on social connection.”
Writing in Forbes, Tommaso Di Bartolo, a serial entrepreneur and author, made four “predictions for the Metaverse in 2030”:
“The next phase of the metaverse will be phygital.
“The metaverse will revamp the education system.
“The workforce will move to the metaverse.
“Digital properties will have a greater impact on GDP.”
He acknowledges that “the metaverse is a long-term game” but concludes with advice on how businesses can prepare for this new world of 3D virtual worlds.
Stay safe, stay happy, stay in touch!
Adam
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5
Fallacies about Product-Market Fit that can trigger costly mistakes
“Field of Dreams” delusion
Some startup execs believe that if you build a great product, customers will naturally show up. In most cases the opposite is true. It is extremely rare that a market is enormous due to a strong, unmet need because someone would have built a solution already. So, it’s not just the features of a product that matter, but the realities of a market.
“Early Revenue Proves Fit” fantasy
There are many ways companies can generate meaningful revenue without product-market fit. One can argue, “Who cares if we have product-market fit if we're making money?” But, for a venture that must answer to investors and likely raise additional capital, early revenue that doesn’t scale holds little value.
The Curse of Consulting
This is one example of early revenue that can be misleading. Let’s say a software-as-service startup has a useful product. They get introduced to a prospective customer who heads a big corporation. That new prospect says, “Your product is promising, but you meet only our A, B, and C needs. We also need X, Y, and Z. Add those and we’ll do a deal.” Even with the knowledge that X, Y and Z aren’t core to their product, the startup will likely reply, “OK, we’ll make it happen.”
And I get it: In an early-stage venture, you need to do whatever it takes to generate some initial revenue. But the problem is that most ventures in this scenario believe they just made a sale of their product. They didn’t. What they sold was unscalable custom consulting on top of a product the customer wasn’t buying.
Engaging a marquee customer this way can disguise itself as PMF. But it’s actually the opposite. In these “imposter PMF” cases, the market is telling a venture their core product is NOT a fit at all. Without unique changes that don’t appeal to a broad market, there would be no sale. There’s no fit. Yet startups find this encouraging because they are generating cash and getting good feedback. And the lure of landing a big-ticket client — regardless of the method — is really strong. So, this pattern can easily repeat, and pretty soon you’re not a true product company anymore.
Imposter PMF is dangerous because it not only takes your eyes off the prize, it also fools you into thinking you achieved something you did not achieve. And that becomes a huge problem.
Newness Shine Wears Off
Early sales can be misleading because they are often due to the charisma of the founder or other top-level executives in the early-stage company. Charisma can close deals and help a startup hit a milestone, but that is not scalable or sustainable. It’s not just because you can’t replicate that person in your salesforce; it’s that the appeal of the newness wears off. Plus, early sales can come from prospects who were already receptive to helping you out personally, so that too is not evidence of true product-market fit.
Over-Embrace the Early Adopter
Early-adopter customers are a great asset. They are first in line to buy your product and can become some of your best — and most cost-effective — early marketers. And they tend to be more accepting of blemishes that can accompany an early product release. But it’s a common mistake to assume that eager early adopters are evidence of PMF. In most cases, their enthusiasm is atypical, and they don’t represent a large enough audience to make a product successful over time. Early adopters offer great value by helping a startup know they’ve created a “product” but can that product truly “fit” a market? That’s not a question the early adopter was meant to answer.
4
Thoughts to ponder about PMF
• Product-Market Fit is a catalytic concept. It is an evolving goal and a strategic vision. ·
• Startup teams need to achieve it and investors need to see proof of it.
• PMF is crucial because the ability of a venture to generate repeatable sales and predictable scale comes down to its ability to achieve Product-Market Fit.
• PMF is widely misunderstood. If you asked a typical founder of an established startup, “What’s more important for achieving PMF – product or market?” they’d likely weight the P as 90% important and M as 10%. Their assumption is that their product is so novel and valued that the product will find its own market. However, that’s not the reality. While there is no definitive ratio on the importance of P vs. M, it’s best to think of it as inherently balanced. It’s like the law of supply and demand in economics.
3
Books that illuminate the art and science of engaging a market
Crossing the Chasm: Marketing and Selling Disruptive Products to Mainstream Customers by Geoffrey A. Moore
The Innovator’s Dilemma: the revolutionary book that will change the way you do business by Clayton M. Christensen
Hooked: How to build habit-forming products by Nir Eyal
2
Metrics for figuring out Product-Market Fit
The key to figuring out and achieving Product-Market Fit is focusing on the things that matter. Many metrics help reveal what you need to define, calculate, and optimize PMF, but let’s focus on two:
Customer acquisition cost. (CAC) What’s the incremental cost to create one new buyer? The basic formula is simple enough – add all sales and marketing expenditures, then divide by the number of customers acquired. However, determining which costs to include in the CAC formula can be tricky. For example, the cost of pay-per-click ads on Google should clearly be included in CAC, but what about the salary of a team member who spends a fraction of their time helping with marketing?
On the flip side, the software engineering expense to develop an app’s core functionality should not be included in CAC, but what about the cost to build a few non-core features added solely to close some key customers?
For this to be an accurate and revealing calculation, you need to analyze all factors and be honest in assessing what should apply.
Customer lifetime value. (CLV or CLTV) How long does a customer stay with you, and what are they worth? On paper, the calculation seems easy enough – add what customers spend over their lifetime with you and divide by the number of customers. But for most early-stage ventures, calculating “customer spend” requires lots of assumptions. For example:
· For an existing customer, how long will we expect them to pay?
· How will our pricing grow over time? Will existing customers still buy?
· Are a few large buyers making today’s average spend unsustainably high?
· Do we have enough customers to reliably predict the behavior of future buyers?
As a new venture ages, the accuracy of their CLTV calculation will improve. But in the early days — during the heart of the PMF quest — this formula is dominated by estimation and crossed fingers. As with CAC, startup teams need to pay careful attention to how they predict CLTV. An overly optimistic set of assumptions could suggest a market fit that doesn’t exist.
What do these metrics say about PMF?
A “low” CAC suggests a product has really targeted the ideal audience and the promise to that audience meets a very real need for them -- or, hopefully, both. Put another way, you’ve achieved PMF. But founders and startup execs can easily and unwittingly underestimate CAC — and that’s a problem they must avoid.
Similarly, a “high” CLTV indicates that a customer truly values what you have to offer. They are happy to pay, and they are willing to stay. That type of commitment screams “PMF”.
But CAC and CLTV alone don’t tell the whole story. For some products, a CAC of $50 is incredibly cheap, while for others it would put them out of business. What really matters is the ratio of value to cost: CLTV over CAC. To survive and scale, a venture must achieve a CLTV that is substantially greater than its CAC, and sustainably so. And if a venture can’t put itself on that path, they are not achieving PMF.
1
Methodology for achieving Product-Market Fit
I’ve developed a methodology for mapping the most effective course of action for entrepreneurs, and it works exceedingly well for achieving Product-Market Fit.
It’s called Market Advantage Proof (M.A.P.). It enables entrepreneurs to identify, test, and improve the best pathways toward profit; pathways to develop new products and ventures; and pathways to achieve market fit.
I won’t get into a detailed explanation of how it is carried out, but basically, when applying the MAP Method, you use tools and skills in phases:
Phase One: Identify your highest priority outcome. In map terms, this is your desired destination.
Phase Two: Define the circumstances of where you start — the specific realities that you’re facing.
Phase Three: Brainstorm possible paths from start to finish.
Phase Four: Select a path that promises the most progress with the least risk.
Phase Five: Capture insight and learning by actualizing that path through testing and action.
The MAP Method brings objectivity, structure, and results to the search for PMF. It helps avoid the mistakes that derail so many ventures, and it drives reliable and actionable metrics — the ones that turn early traction into sustainable success.
Stay safe, stay happy, stay in touch!
Adam
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5-4-3-2-1 Countdown for Entrepreneurs (8/10/22)
5
Tips from the stars of “Shark Tank”
Sometimes I disagree with the well-meaning advice given by sharks on the TV show, but I realize their editors select colorful soundbites rather than long, complex explanations to keep the show fast paced and entertaining. In any case, “Shark Tank” has certainly helped promote entrepreneurship and deserves credit for inspiring many new founders. Here’s some of the shark advice that reflects their impressive experience and success:
Chart your own course. “Your customers can tell you the things that are broken and how they want to be made happy. Listen to them. Make them happy. But don’t rely on them to create the future road map for your product or service. That’s your job.”
- Mark Cuban
Be original. “I think it’s harder if you’re a ‘me too’ business or you’re one of many. I think if you really have an innovative idea and you’re first to market, there’s no shortage in money.”
-Robert Herjavec
Be candid.
“If you can’t come clean and tell investors how and why you failed, that raises a red flag. They need to see that you learned from it and came back stronger.”
-Daymond John
Set the right example.
“Whatever you do, don’t stay up in a stuffy office away from your people. Get right in there, side by side with your employees. Get hands-on and show them there’s no task beneath you.”
-Lori Greiner
Stay optimistic.
“You have to see everything as half-full even though everyone is saying you have nothing in your glass.”
-Barbara Corcoran
4
Ways to build “network wealth”
Quality networks are like compound interest: Their value grows at an increasing rate.
Here's how to build “network wealth”:
PRIORITIZE QUALITY OVER QUANTITY. 10-20% of the relationships you start will produce nearly all your network’s value. Seek out those connections. Nurture them.
OPEN WITH A GENUINE OFFER. Listen intently to discover what you can offer that fills a real need they have currently.
ALWAYS FOLLOW THROUGH. Many "networkers" make offers, but then they don't deliver. Follow-up promptly. Set yourself apart by being conscientious and reliable.
DON’T FORGET TO ASK. Great connectors love opportunities to help. They want to provide value. Help them help you. From time to time, try this ask: “Can you think of one or two people in your network I should be talking to?”
3
Signs of “disclosure-itis”
“Disclosure-itis” is a very serious condition affecting numerous founders. I’ve lost track of the number of times that founders have asked me to sign an NDA before they’d share details about their startup. And this was happening in FIRST MEETINGS!
I’m all for wanting to protect your inspired vision but, frankly, if you can’t talk about your idea until someone signs on the dotted line, one of three things is likely going on:
• YOU NEED A BETTER PITCH.
For about 99% of startups, founders should be able to make an engaging intro to their venture without giving away the “special sauce.”
• YOUR IDEA OR EXECUTION NEEDS WORK.
If someone merely needs to hear a summary of your venture to seriously compete with you, your idea or execution isn’t very strong.
• YOU NEED AN INTELLECTUAL PROPERTY ATTORNEY.
If your idea is so novel and valuable, and yet so potentially reproducible, you need some serious protection beyond an NDA.
“Disclosure-itis” is usually a warning sign of much bigger challenges to come, but... By addressing it now, you’ll start building a stronger and more protectable venture.
2
Insights from ancient philosophers
FOCUS
“Most of what we say and do is not essential. If you can eliminate it, you'll have more time, and more tranquility. Ask yourself at every moment, 'Is this necessary?’''
-Marcus Aurelius, Roman Emperor and Stoic philosopher
DILIGENCE
“Pleasure in the job puts perfection in the work.”
-Aristotle, philosopher and polymath
1
Kind of CEO that startups really need: Chief Entrepreneurial Officer
“No matter what stage a startup is in – no matter how well established or promising – a venture that is trying to scale typically needs its CEO to be more than just the Chief Executive Officer.
It is not enough to manage the managers. It’s not enough to develop a plan by consensus and oversee its execution. To ensure ultimate success, CEOs must think and act like entrepreneurs. Indeed, they should aspire to be a Chief Entrepreneurial Officer...
Stay safe, stay happy, stay in touch!
Adam
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5
Tactics for startups to win more while risking less
Old rules for startups are under attack. For example, founders are discovering that they can make more progress with less funding.
Tell me if this sounds familiar:1. Find a problem you think is worth solving. 2. MVP a solution as quickly as you can. 3. Achieve “Product-Market” fit. 4. Grow like crazy.
And what happens BETWEEN steps often looks like this -- 1 to 2: Raise some pre-seed money. 2 to 3: Raise more seed capital. 3 to 4: Raise Series A funding. And once you pass step 4...Unicorn here we come.
While this approach has produced success stories, it’s also resulted in a huge number of failures because it introduces so much risk. If a team runs into trouble moving step to step, often because of fundraising challenges, progress and opportunity can fall apart.
I’m excited about an alternative. Armed with fresh tools and tactics, I’ve seen startups…
1. Extract market insights with more speed and evidence
2. Accumulate more validation with far less funding
3. Generate product-market fit BEFORE building
4. Drive giant adoption in narrow market
5. Replicate that traction for scale
By executing 1 through 5, a startup can win more while risking less. My new MAP Method helps founders achieve this. I’ll share more about it in future newsletters.
4
Steps to improve your fundraising pitch
Here’s an exercise that can improve your next startup pitch.
Step 1) PROBLEM
Talk about the problem for 3 minutes straight. This should include details like:
- Who, specifically, faces this challenge
- What they are doing (and spending) to solve it today
- How well (or not well) those solutions are working out
Step 2) SOLUTION
Describe your solution in 2 minutes or less. Forcing yourself to do this in so little time will feel hard. That’s the whole point. Give it a go. Pro Tip: Trim everything that doesn’t directly speak to the problem as you described it.
Step 3) FIT
Spend 1 min on why your solution is uniquely positioned to solve this specific problem for this targeted market. If step 2 felt hard, then this might feel impossible, but it’s OK. Don’t get hung up on the clock.
Step 4) PROPOSITION
Distill your Unique Value Proposition (UVP) down to one sentence. What defines your product or service as distinct and valuable for the target market?
All four of these steps can help you achieve clarity and confidence for a presentation. The ratio of time for the steps (3 minutes, 2 minutes, 1 minute, 1 sentence) doesn’t have to be exact, BUT... If you can’t spend the most time on the problem, you likely don’t understand it well enough. If your solution description runs long, you’re getting too deep in the weeds. If you can’t describe “fit” concisely, you don’t truly know the market. And if you can’t distill your UVP concept, you’re not ready to discuss possible marketing.
But if your problem → solution → fit → proposition is compelling, I bet your next pitch will really deliver.
3
Questions to ask yourself before giving out equity
Startup founders should be very careful when sharing equity. I’ve seen plenty of ventures passing it out like candy. But it’s a scarce resource — so treat it that way.
In the earliest days of a startup, every resource is tight. And nothing feels more scarce than cash. So, when a hire, advisor, or vendor is willing to take equity, their offer seems nearly impossible to refuse. Big potential progress for little or no cash — what’s not to like? Well, a lot. Aside from your time, equity is your most valuable asset.
Before giving up equity, ask yourself 3 questions:
1. If you had cash, would you still pay with equity?
2. Are this person’s responsibilities explicitly defined?
3. Can you clearly measure the value of those contributions?
Unless you can answer a resounding *yes* to each, think twice about sharing your pie.
2
Ways to identify an “Affinity Angel”
All angel investors are not created equal. When it comes to your startup’s first money in, find yourself an “Affinity Angel.”
When raising your startup’s first outside investment, you’re likely looking to individual angel investors or possibly some angel groups. But within the angel universe, there’s a pocket that could serve you best: Affinity Angels.
I define an Affinity Angel as an individual investor who fits two criteria:
1) Much of their career and success (financial or otherwise) came from one particular industry, area of focus, or type of technology.
2) This investor’s “area of affinity” perfectly overlaps with you and your venture.
To be clear, if a venture isn’t fundable, no amount of affinity will turn an investor’s “no” into a “yes.” But assuming your venture has merit, an Affinity Angel is an optimal first investor for three reasons:
A) Their knowledge and connections in your space will be greater and more valuable than most other investors.
B) If you succeed and positively impact a space they really care about, they benefit beyond a cash return. This can translate into more favorable terms for you.
C) Their experience will allow them to make a “go/no go” decision about you with more speed and clarity. Whether a yes or no, this saves you times and effort.
So, as you try to close your first round of investment, don’t be the only one answering some questions. Press angels to see just how deep their affinity runs.
1
Thought about a leader’s vision
“A team aligned behind a vision will move mountains. Sell them on your roadmap and don’t compromise — care about the details, the fit and finish.”
- Kevin Rose, Founder of Digg, and Partner at Google
Stay safe, stay happy, stay in touch!
Adam
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5-4-3-2-1 Countdown for Entrepreneurs (6/9/22)
5
Tactics for startups to weather a downturn
Markets and financial indicators aren’t great, and the startup ecosystem is certainly not immune. As conditions for investors deteriorate, startup fundraising will suffer, as well. For you and your venture, that means your next round is less likely to close; valuations are being pushed down; terms and timing will worsen.
In this environment, you should consider five steps to recession-proof your venture:
· Anticipate what happens if a round doesn’t close
· Seek business models that require less cash
· Find faster ways to get cash flow positive
· Lengthen your runway to 2+ years
· Trim non-essential costs
With a focus on solid fundamentals, you’ll reduce risks and boost your venture’s odds of success – regardless of market conditions.
4
Steps to NOT “fail fast”
“Fail fast” may take the award for worst startup advice, yet it is often touted to early-stage founders. This advice was partly born from a bigger concept: “We learn more from failure than from success.” Thus, failing faster is better – more insight in less time. In theory, that makes some sense, but there’s a sizable problem: Not all failures are created equal, and most don’t create any useful learning. So, speeding up un-successes? That usually just makes matters worse.
But you can increase your odds of successful failures, if you keep three key rules in mind:
· Control the experiment. If you execute a strategy with very few moving parts, when things go wrong, you can pinpoint the cause.
· Limit your exposure. Even if you learn a ton, if a failure kills your venture all that insight is of little use.
· Don’t bail too quickly. “Fail fast” can tempt you to throw in the towel too early. If you follow the first two steps, staying in the game longer can create valuable turnaround opportunities.
Instead of trying to make losses happen quickly, I recommend applying the following 4 steps to any major business decision or objective:
Step 1: Visualize “failure” just as much as success.
Step 2: Measure what matters (and most things don’t).
Step 3: Be as decisive with “bad” news as with good.
Step 4: Find opportunity in every unexpected result.
3
Imperatives in sales
As an entrepreneur, you are constantly selling. Whether you realize it, or like it, it’s part of your job description. As Daniel Pink put it, “To sell is human.” We try to affect the behavior of others.
Just think about all the places we sell: Motivating the team to support your vision; courting a candidate to accept your offer; getting an investor to write a check; landing a strategic partnership; signing up a new customer; asking a colleague for a favor...
The effectiveness of any “sale” comes down to getting three things right:
IDENTIFY. Be sure to understand your target extremely well. Get as narrow and specific as you possibly can.
INTERRUPT. Assume no one is ever patiently waiting for your request. You need to arrest and hold their attention.
INFLUENCE. Once you get the attention of your narrowly defined audience, find the intersection of the behavior you want and the motivation that truly drives them.
Before your next attempt at persuasion, think through these three “i” words. Your selling will get a lot easier.
2
Keys to effective decision-making
Exceptionally successful people seem to get so much done. But, in reality, they do less to accomplish more. The trick? They do two things extremely well...
As both General and President, Dwight Eisenhower’s decision-making was stellar. His approach lives on via the “Eisenhower Matrix.” His approach focuses on importance and urgency.
If a decision is:
· Important and urgent. Do it now.
· Important but not urgent? Do it later.
· Urgent but not important? Delegate it.
· Not urgent and not important? Delete it.
The most successful leaders focus on the last two: delegate and delete.
As General and President, Ike’s teams were vast, so delegating was easier for him than for most. But today, even the solopreneur can delegate well. Think: tech, automation, and the gig economy.
Deletion might just be decision-making’s MVP. “No” distinguishes the busy from the successful. The next time your plate is overflowing, don’t hunt for more time or efficiency. Focus on how to do less.
1
Call to action
Marcus Aurelius, the wise Roman emperor, wrote, “...there is a limit to the time assigned you and if you don’t use it to free yourself it will be gone and never return.”
He wrote that as a reminder to himself, but it applies to any of us considering a leap – like when entrepreneurs stare down great uncertainty and decide to start a new venture.
Don’t get me wrong. As an adviser, I never pitch unbridled risk. But there’s a yearning to do something daring within us all. Sometimes we need to act on it before it slips away.
Stay safe, stay happy, stay in touch!
Adam
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5-4-3-2-1 Countdown for Entrepreneurs (5/11/22)
5
Positive reactions when you admit, “I don’t know”
When you take questions from investors or interview for a job, you are probably reluctant to say, “I don’t know.” But that non-answer answer can be a plus from the POV of the questioner. Ironically, “I don’t know” can be the most revealing response...
HONESTY. When you admit you don’t know something, you candidly tell the truth.
HUMILITY. When you acknowledge you don’t know everything, you are clearly not a know-it-all.
LEARNING. If you say, “I don’t know, but I’ll find out,” you demonstrate that you are dedicated to self-improvement and product-improvement.
LISTENING. If you respond, “I don’t know; what do you think?”, you express respect for the questioner.
CONFIDENCE. When you reply, “I don’t know,” you show that you are not so insecure that you feel impelled to try to evade, bluff or filibuster.
4
Forms of uncertainty...
and 4 ways startups address it
Uncertainty appears in many forms.
DREAD. Sometimes we just feel, at a gut level, that we’re not anticipating the real threats or preparing for the right contingencies. “What if?” can be a springboard for great brainstorming, but it can also trigger scary speculation. And when the dread is ominous, it’s hard to reason your way to squelching it. Uncertainty can produce the kind of doubts that turn into debilitating pessimism or indecision.
FLUKE FACTOR. In the earliest stages of a venture, new information comes in all the time – anecdotes about prospective customers, well-intentioned opinions from family, friends, allies, and vendors. The info can be fluky. It’s not data from experiments or surveys, so you don’t want to over-interpret the feedback. However, fluky things can turn into patterns. Maybe one person’s criticism of the product turned out to reveal a broader consumer skepticism than imagined.
ALARM BELLS. Sometimes, uncertainty morphs into a threat. Maybe you heard a rumor that a competitor is developing a product like yours. You don’t want to overreact, and you don’t want to underreact. So, you have a new uncertainty: how best to react?
MARKET SIGNALS. It’s tempting to look for encouraging signs for your venture in the macro economy or your industry. After all, a rising tide lifts all boats. But a new venture might be more like a submarine that hasn’t surfaced yet, so the tide doesn’t affect it. And when it does surface, it has its own mission to carry out. So, don’t get distracted by, or put too much faith in, large and external forces.
Uncertainty can be unsettling. How should founders view and address uncertainty?
RESEARCH. Face the uncertainties and use your doubts as prods to do more and better research. Through experiments and testing, turn unknowns into now-knowns.
REASSESS. If uncertainty turns into certain trouble, reevaluate your options. “Wisdom consists of the anticipation of consequences,” observed author Norman Cousins.
REVISE. If your original plan doesn’t survive first contact with reality, that’s all right. Make changes to your strategy, tactics, and priorities, as needed. Change forces change.
REJUVENATE. By turning uncertainties into challenges, and challenges into opportunities, you can refocus your team and reinvigorate your endeavor.
3
Qualities that are essential for long-term success
PERSEVERANCE. “We will either find a way, or make one.” -- Hannibal
The Carthaginian general led one of the most legendary attacks in military history, surprising his Roman enemies by crossing the Alps with 40,000 troops and dozens of elephants. He was a model of perseverance: resolute and resourceful. Such determination to figure out the right path and prevail against competitors is not just inspiring, it’s imperative for entrepreneurs.
PATIENCE. “Only those who have patience to do simple things perfectly ever acquire the skill to do difficult things easily.” -- James. J. Corbett
“Gentleman Jim” is best known as the only boxer who defeated heavyweight champion John L. Sullivan. He was quite the showman, but most notably he applied a scientific approach to boxing, stressing technique over sheer strength. His daily training regimen was widely adopted by other boxers and is still employed today.
Patience can sound effortless -- just waiting for the right opportunity. But it usually takes great mental and emotional discipline to be patient and “acquire the skill to do difficult things easily.”
PRIORITIZING. “The art of being wise is the art of knowing what to overlook.” -- William James
“The Father of American psychology” first studied medicine, at Harvard, then “drifted into psychology and philosophy.” He later recounted, “I never had any philosophic instruction, the first lecture on psychology I ever heard being the first I ever gave.”
Entrepreneurs who look back on their journey often realize that they too “drifted” into endeavors they didn’t intend or expect. But along the way, they learned to prioritize and plan. They figured out what’s essential and concentrated on that. Yes, it involves some psychology. “Know thyself” can mean: know your limitations, temptations, and ambitions. But prioritizing is a practical tool to “know thy business” and optimize your resources -- time, money, people, and imagination.
2
Things that make a speech compelling
CONFIDENCE. Part of what makes a speech persuasive is the confidence of the speaker. Not arrogance, not necessarily forcefulness or certitude...but genuine confidence.
What makes a speaker confident? Conviction. If you know your subject and speak knowledgeably when challenged, you speak with conviction. It’s not the contrived projecting of an attitude. It is strong belief in what you know and a sincere desire to share your insights.
How is such conviction achieved? A speaker must be convinced herself before she can convince others. To make a powerful case, you must be convinced that your arguments don’t just sound good but are true when tested. And to be fully convinced, you must do a lot of preparation – anticipating questions, scripting answers, and rehearsing your delivery to ensure absolute...
CLARITY. If you can’t express all your ideas with clarity, you are not ready to make your case. If an idea is too complex or abstract to put into words, your problem isn’t merely finding the right metaphor or anecdote to illustrate the idea. It means you haven’t fully thought it through. Only when you are clear in your reasoning can you write a speech that is truly compelling.
1
Reason to be grateful to your competitors
“Pay attention to your enemies, for they are the first to discover your mistakes,” said Antisthenes, the ancient Greek philosopher.
Always appreciate fellow competitors. We learn from their successes and their failings. They inspire us to innovate because we want to win over their customers. And they inspire us to work harder and longer because we fear losing to them.
We should be able to relate to rivals in friendly terms. Like us, they have family and neighbors, hopes and dreams, loans and worries. It’s unfair and counterproductive to demonize them. Indeed, we should respect and admire them. After all, they too employ people and serve customers.
Most important, competition should bring out the best in us. We profit by learning from friendly foes.
Stay safe, stay happy, stay in touch!
Adam
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5-4-3-2-1 Countdown for Entrepreneurs (4/13/22)
5
Wordle words for entrepreneurship
Certain 5-letter words help founders solve the puzzle of how to create a new product:
Dream. Doubt. Probe. Chart. Build.
Dream – you begin with an inspired idea, usually a vision of how to solve a problem.
Doubt – you then question whether there’s a market and if you can achieve market fit.
Probe – you research and brainstorm, then test the idea through customer discovery
Chart – you map your course based on the desired destination and pathways to profit.
Build – you build the product, build the team, and build a venture designed to grow.
4
Steps to reduce blind spots
The power of positive thinking has huge benefits, but when it comes to our startups, we need more. It’s time to focus on failure.
Sports psychologists train athletes to visualize the result they’re after: “Close your eyes. See yourself make the shot.” This positive reinforcement has proven results, so founders should indeed think ambitious thoughts. Picture yourself achieving all that you want; that’s a valuable, reinforcing activity. But don’t stop there.
Try this 4-step exercise before embarking on your next significant project:
1️⃣ Envision you’ve just completed this project.
2️⃣ Imagine the outcome was not a success.
3️⃣ Describe a realistic scenario causing the miss.
4️⃣ Brainstorm tactics to defend against this.
This “pre-mortem” exercise can work wonders. It uncovers blind spots and identifies risks that might not have been obvious at first.
And if anyone objects, calling you a pessimist, be sure to correct their honest mistake: “Nah. I’m an optimist with a backup plan.”
3
Delusions in customer discovery
Founders with great expertise in a field are huge assets to startups, obviously. But when it comes to customer discovery, more experience can actually hurt.
When a startup is pre-product and has nothing to show, nothing to demo, interviews should have one focus: Listen to a customer’s story to see if there’s a problem worth solving. Refrain from sharing your take on the problem. Don’t describe your “solution.”
When you stray from just listening, you are more likely to:
⚠️ Discount perspectives that conflict with yours.
⚠️ Nudge the interviewee toward your point of view.
⚠️ Generate misleading insights.
As the experience and the authority of the person asking the questions goes UP, so do the chances of generating these problematic results.
So, at the earliest of stages, remember: You are not selling the market your solution; the market is selling you their problem.
2
Fails in fundraising
If you want to ruin your next investor pitch here are 2 surefire ways to make it happen…
1: Don’t do your homework.
Investors have different strategies and objectives. And your pitch may or may not be a fit for them. By researching an investor and their portfolio, you can shape the pitch to the audience.
NOT doing your homework? That’s an unforced error.
2: Make it all about you.
Slide 2: The Team
Slide 3: More team
Slide 4: Our Solution
Slide 5: …yadda...
Slide 6: …yadda...
Slide 7: Still talking about our amazing product.
Robust solutions are paramount. And great teams are critical. But this deck is a miss. Where’s the problem, customer, and competition? If you bury these elements in a pitch or if you skip them altogether, your audience will notice. And not in a good way.
1
Question for your mirror
Let’s stop treating “risk” as a four-letter word -- at least not for startups and their founders. For them, without risk, what would be left?
If someone told a founder facing huge uncertainty, “I can magically make all of your startup risks disappear,” do you think they should take the deal? I hope they wouldn’t.
For most of us, risk evokes images of harm, danger, and loss. And in many cases, that’s true. But “no risk, no reward” is a common saying for a reason. And nowhere is that truer than with a startup.
So the next time you’re staring uncertainty in the face, ask yourself: “How can I use this risk to my advantage?” The results might surprise and inspire you.
Stay safe, stay happy, stay in touch!
Adam
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5-4-3-2-1 Countdown for Entrepreneurs (3/10/22)
5
Articles to help stimulate your startup strategizing
“Corporations are scrambling to get into the venture game” – TechCrunch
“The Companies We Admire Most – Best in Business 2021” -- Inc.
“The Four Cringe-worthy mistakes too many startups make with data” -- First Round Review
“Make Your Startup a Design Masterpiece by Doing These 3 Things” – Entrepreneur
“Do these 5 things and you’ll never run out of new ideas” – Fast Company
4
Insights from movie directors for my founder friends
Martin Scorsese:
“I can never get the film that’s in my head up onto the screen. Reality imposes its limits.”
David Mamet:
“You can’t just say, ‘I’m the boss.’ You establish your authority in rehearsals and it carries over to the set.”
Joe Berlinger:
“Critics have power disproportionate to their talent and labor, but they’re a fact of film-making life... Just welcoming them to the screening and telling them why I made the film, humanizes me. It’s harder to savage someone you’ve met.”
Sidney Lumet:
“I always call ‘Action’ in the mood of the scene. If it’s a gentle moment, I’ll say ‘Action’ just loud enough to be heard. If it’s a scene that requires a lot of energy, I’ll bark it out like a drill sergeant.”
3
Quotes from SciFi authors that inspire entrepreneurs
Arthur C. Clarke: “Every revolutionary idea seems to evoke three stages of reaction. They may be summed up by the phrases: 1- It's completely impossible. 2- It's possible, but it's not worth doing. 3- I said it was a good idea all along.”
Ray Bradbury: "If we listened to our intellect we'd never have a love affair. We'd never have a friendship. We'd never go in business because we'd be cynical: ‘It's gonna go wrong. Or ‘she's going to hurt me.’ Or, ‘I've had a couple of bad love affairs, so therefore…’ Well, that's nonsense. You're going to miss life. You've got to jump off the cliff all the time and build your wings on the way down."
Isaac Asimov: “It is change, continuing change, inevitable change, that is the dominant factor in society today. No sensible decision can be made any longer without taking into account not only the world as it is, but the world as it will be.”
2
Speeches that stirred the world of business
Steve Jobs’ 2005 Stanford Commencement address. In his famous speech, the CEO and co-founder of Apple Computer and of Pixar Animation Studios shared three stories from his life, urging the graduates to view obstacles as opportunities to learn and grow. He said, “The only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do.”
Bill Gates’ 2007 Harvard Commencement address. In a profound speech, the founder of Microsoft, investor, and philanthropist, answered a question he had posed to himself: How can you do the most good for the greatest number of people with your resources? He explained that he changed his approach to business to develop creative business models that would produce profits and solve problems. “Humanity’s greatest advances are not in its discoveries — but in how those discoveries are applied to reduce inequity.”
1
Idea about Customer Discovery
Here’s some advice I posted on LinkedIn:
Most startup customer interviews are totally useless because humans are terrible at seeing the future. And we interviewers are doing it wrong: We’re always asking people what they "would"...
- If this product solves a problem, would you buy?
- When you buy, what would you pay?
- How often would you use this?
- What feature would you add?
We unknowingly ask everyone to speculate. And we get really unreliable responses but, to us, they sound great. Instead we should be asking what people “did”...
- Did you try to solve this problem yourself? How?
- How much time/money did you spend on it?
- How did that work out for you?
We all love talking about what we’ve done. And in our stories the truth comes out. So, the next time you’re interviewing, quit focusing on the future. Concentrate on the past. Innovation will follow.
Stay safe, stay happy, stay in touch!
Adam
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5-4-3-2-1 Countdown for Entrepreneurs (2/9/22)
5
Magazines to stimulate business brainstorming
Sometimes it helps to scroll and skim through magazines to shake up one’s thinking about a new product or potential market. It might be news, interviews, commentary, or entertainment that inspires you to view something from a new angle. You never know. Here are five small business magazines that might help stir your imagination:
WIRED magazine is devoted to new technology, science, and business ideas.
TradePub helps you find publications and research by specific industry.
YFS Magazine features glam stories about entrepreneurs and the startup world.
Small Business Trends offers useful tips and advice for small business owners.
Fast Company focuses on innovation, leadership, design, and creativity.
4
Boston entrepreneurs making waves
Amy Spurling is founder and CEO of Compt, a venture that helps companies build, streamline, and scale employee perk stipends. Amy has been a star in varied roles over the past two decades, providing leadership to ventures ranging from early startup to high-growth ventures preparing to exit.
Spencer Taylor is co-founder and COO of Knox Financial, the smart and frictionless way to turn your current home into an investment property. 2021 was a big year for Spencer and Knox, as they closed a $10M Series A from investors including G20 and Pillar VC.
Nabiha Saklayen is co-founder and CEO of Cellino – whose proprietary technology makes personalized stem cell-derived therapies scalable for the first time. In addition to leading Cellino to nearly $100m in funding, in 2021 Nabiha was named Tory Burch Fellow by the Innovative Genomics Institute.
Ailis Tweed-Kent is CEO of Cocoon Biotech and an attending physician at Massachusetts General Hospital. Cocoon uses the science of silk to build a healthier population, a sustainable planet, and a brighter future.
3
Articles about business trends in 2022
Wise entrepreneurs realize it’s not enough to have a vision about their own product; they also need foresight that comes from understanding market trends. Here are three thought-provoking articles about trends that are transforming the world of business.
“11 Trends that will shape work in 2022 and beyond” – Harvard Business Review
“Three Tech Trends that will revolutionize brand experiences in 2022” – Forbes
“5 Startup Trends to Watch in 2022” – Fast Company
2
Factors that motivate founders: Risk & Reward
My new commentary looks at both sides of the entrepreneurial coin: risk and reward. Each motivation may seem simple, but the more you ponder them, the more profound and complex each factor is. Risk is energizing and tests your ability and your conviction. Reward isn’t just about money; it’s about purpose, power, prestige, and principles.
1
Conversation with a popular business guru
Steve Snyder is a Partner and Entrepreneur-in-Residence at Gesmer Updegrove, a Boston law firm for technology companies and emerging businesses. He is a great connector of people and companies. And he’s helped build many businesses, learning lessons at every level. View our video chat to benefit from his sage advice and insights.
Stay safe, stay happy, stay in touch!
Adam
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5-4-3-2-1 Countdown for Entrepreneurs (1/12/22)
5
Entrepreneurs who go above and beyond
Adam Goldberg is the founder and CEO of Torchlight, the only complete caregiver support solution for employers and member organizations. A few weeks ago Adam achieved an enormous and well-deserved milestone — Torchlight was acquired by LifeSpeak Inc. Prior to Torchlight, Adam co-founded and directed the Goldberg Center for Educational Planning, successfully guiding thousands of students over the course of a decade.
Allison Byers is the founder and CEO of Scroobious, a platform that is increasing diversity — and humanity — in the fundraising process for startups. Her commitment to providing education, tools, and community has already helped more than 200 founders create investor-ready pitch material and become more easily discovered by investors.
Johnny Nguyen is a lifelong entrepreneur and serial founder. His areas of leadership span strategy, product, and growth, creating and scaling opportunities for himself and countless others along the way. Whether dropping into teams in need of a boost or innovating via his own ventures, Johnny brings passion and performance to the startup ecosystem.
Meghan Braley is the founder and CEO of ScootRoute, the made-for-riding navigation solution that maps the faster, safer way to go. She’s making it easier and more fun to ride on 2 (or 3) wheels. Meghan’s pre-ScootRoute experience in consulting and product management helped her make a successful leap into entrepreneurship.
Jonathan Conelias is the founder and CEO of ReElivate, a marketplace that connects experience providers and companies to deliver unique, memorable virtual and physical experiences to build trust, connections and just have fun. Given Jonathan’s success in prior CFO and leadership roles, reElivate’s recent $2M round of seed funding comes as no surprise.
4
Insights for early-stage founders
My latest commentary: Entrepreneurs should routinely question their assumptions about even positive, basic things, like innovation, networking, fundraising, and team-building.
3
Tips on interviewing candidates for a job
“How to Hire the Right Person” by Adam Bryant in the New York Times has sage advice for employers:
1) Avoid the standard job interview – be creative, be challenging, allow your employees to help.
2) Get away from your desk, take them on a tour and watch how they behave.
3) Throw some curveballs – unusual questions to get them to open up and provide insights into what makes them tick.
2
Biographies to spark your imagination
Walter Isaacson authored two acclaimed biographies about innovators who reimagined technology and creativity: Leonardo da Vinci, the Renaissance genius, and Steve Jobs, cofounder of Apple. When you want to view your work with a fresh, hopeful perspective, consider reading about extraordinary visionaries.
1
Conversation with an inspiring CEO
Jessica Lynch is Founder and CEO of Wishroute, a venture that helps wellness companies increase their engagement with users. In this video chat, you’ll see why she has become a popular mentor and entrepreneurial role model. She offers savvy advice about fundraising, health, fear, and the challenges of creating a startup.
Stay safe, stay happy, stay in touch!
Adam
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