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
Share
If you enjoyed this issue, please share with others.
Copy and paste this link to email or social media:
Subscribe
Don’t miss an issue of N.A.M.E.
(Newsletter from Adam McGowan Entrepreneurship)